Kenneth Pace v. Lake Emory

THIS OPINION HAS NO PRECEDENTIAL VALUE. IT SHOULD NOT BE
CITED OR RELIED ON AS PRECEDENT IN ANY PROCEEDING
EXCEPT AS PROVIDED BY RULE 268(d)(2), SCACR.

THE STATE OF SOUTH CAROLINA
In The Court of Appeals

Kenneth Pace, Individually and as Personal
Representative of the Estate of Earl E. Pace, Respondent,

v.

Lake Emory Post Acute Care; THI of South Carolina at
Camp Care, LLC; THI of South Carolina LLC; THI of
Baltimore, Inc.; Fundamental Administrative Services,
LLC; Fundamental Clinical and Operational Services,
LLC; Fundamental Clinical Consulting, LLC;
Fundamental Long Term Care Holdings, LLC; and Kerry
L. Wheeler, D.O., Defendants,

Of which Lake Emory Post Acute Care; THI of South
Carolina at Camp Care, LLC; THI of South Carolina
LLC; THI of Baltimore, Inc.; Fundamental
Administrative Services, LLC; Fundamental Clinical and
Operational Services, LLC; Fundamental Clinical
Consulting, LLC; Fundamental Long Term Care
Holdings, LLC, are Appellants.

Appellate Case No. 2022-001059

Appeal From Spartanburg County
R. Keith Kelly, Circuit Court Judge

Unpublished Opinion No. 2024-UP-261
Submitted June 1, 2024 – Filed July 17, 2024
AFFIRMED

Stephen Lynwood Brown, Donald Jay Davis, Jr., Russell
Grainger Hines, Ted Ashton Phillips, III, all of Clement
Rivers, LLP, of Charleston, for Appellants.

Jennifer Spragins Burnett and Anthony Lee Harbin, both
of Harbin & Burnett, LLP, of Anderson, for Respondent.

PER CURIAM: This case arose from a wrongful death and survival action
alleging nursing home negligence. The Facility 1 argues the circuit court erred in
denying its Motion to Compel Arbitration and the Other Appellants'2 Motions to
Stay. We affirm.

FACTS

In July 2014, Earl E. Pace (Mr. Pace) was placed into the protective custody of the
South Carolina Department of Social Services (DSS) as a vulnerable adult. The
family court appointed a Guardian ad Litem (GAL) and an attorney to represent
Mr. Pace. In January 2015, while under DSS custody, Mr. Pace was admitted to
Lake Emory. A DSS employee, Calvin Hill, executed Mr. Pace's entry paperwork
for Lake Emory, which included an Admission Agreement and a separate
Arbitration Agreement. Subsequently, DSS petitioned the court to be relieved of
custody and recommended Lake Emory designate Mr. Pace's son, Kenneth Pace3,
as representative. DSS, with the consent of the GAL, the attorney for the GAL,

1
"The Facility" refers to Defendant/Appellant Lake Emory Post Acute Care (Lake
Emory) and Defendant/Appellant THI of South Carolina at Camp Care, LLC
(Camp Care), collectively. Lake Emory is the name under which Camp Care does
business as a skilled nursing facility in Spartanburg County.
2
The "Other Appellants" refers to Defendants/Appellants THI of South Carolina,
LLC; THI of Baltimore, Inc.; Fundamental Administrative Services, LLC;
Fundamental Clinical and Operational Services, LLC; and Fundamental Long
Term Care Holdings, LLC, collectively. The Facility and the Other Appellants are
referred to collectively as "Appellants."
3
Kenneth Pace is the Plaintiff/Respondent in this case as Personal Representative
of the Estate of Mr. Pace.
and Mr. Pace's court appointed attorney submitted a consent order seeking to
relieve DSS of custody of Mr. Pace, thus, relieving the GAL and court appointed
attorneys. The Laurens County Family Court entered an Order on April 24, 2015
relieving (1) DSS of custody, (2) the GAL, (3) the attorney appointed for the GAL
and (4) the attorney appointed for Mr. Pace.

Kenneth filed a Survival and Wrongful Death Action on October 21, 2019. The
action claimed the Facility administered unnecessary blood sugar medication that
led to Mr. Pace's diagnosis of hypoglycemic encephalopathy and subsequent death.
The Facility filed a Motion to Dismiss and Compel Arbitration on April 13, 2020,
alleging it was entitled to compel this matter to arbitration pursuant to the
Arbitration Agreement. The Facility also sought a stay of the proceedings. The
Facility asserted Mr. Hill was acting pursuant to "court ordered powers" and DSS
had the authority to execute an arbitration agreement on behalf of an individual in
its custody pursuant to South Carolina Code Section 43-35-10 (2015). The Other
Appellants subsequently filed Motions to Stay the proceedings. The circuit court
denied the motions, and this appeal followed. 4

STANDARD OF REVIEW

Unless the parties otherwise provide, the question of the arbitrability of a claim is
an issue for judicial determination. Zabinski v. Bright Acres Assocs., 346 S.C. 580,
596, 553 S.E.2d 110, 118 (2001). Appeal from the denial of a motion to compel
arbitration is subject to de novo review. Chassereau v. Global Sun Pools, Inc., 373
S.C. 168, 171, 644 S.E.2d 718, 720 (2007). Also, "[w]hether an arbitration
agreement may be enforced against a nonsignatory to the agreement is a matter
subject to de novo review by an appellate court." Wilson v. Willis, 426 S.C. 326,
335, 827 S.E.2d 167, 172 (2019). Under this standard of review, "a circuit court's

4
We acknowledge certain facts of this case differ from our previous, recent line of
cases. Prior to this case, this court has dealt with family members executing
admission and arbitration agreements on behalf of the nursing home resident.
Here, a DSS caseworker signed on behalf of the resident. See Estate of Solesbee
by Bayne v. Fundamental Clinical and Operational Services, LLC, 438 S.C. 638,
648, 885 S.E.2d 144, 149 (Ct. App. 2023), reh'g denied (Apr. 14, 2023), cert.
denied (Apr. 16, 2024) ; Coleman v. Mariner Health Care, Inc., 407 S.C. 346, 755
S.E.2d 450 (2014); Hodge v. UniHealth Post-Acute Care of Bamberg, LLC, 422
S.C. 544, 813 S.E.2d 292 (Ct. App. 2018); and Thompson v. Pruitt Corp., 416 S.C.
43, 784 S.E.2d 679 (Ct. App. 2016)).
factual findings will not be reversed on appeal if any evidence reasonably supports
those findings." Id.

LAW/ANALYSIS

I. The Facility's Motion to Compel

Appellants argue the circuit court erred in denying the Facility's Motion to Compel
Arbitration.

Our supreme court recently addressed the circuit court's denial of a Motion to
Compel Arbitration in Sanders v. Savannah Highway Automotive Co.:

We review this issue de novo. See Chassereau v.
Global-Sun Pools, Inc., 363 S.C. 628, 631, 611 S.E.2d
305, 307 (Ct. App. 2005) ("Appeal from the denial of a
motion to compel arbitration is subject to de novo
review."). However, we must honor the factual findings
of the circuit court pertinent to its arbitration ruling if
those findings are reasonably supported by evidence in
the record. Partain v. Upstate Auto. Grp., 386 S.C. 488,
491, 689 S.E.2d 602, 603 (2010). We recently addressed
the notion that the law "favors" arbitration in Palmetto
Construction Group, LLC v. Restoration Specialists,
LLC, 432 S.C. 633, 856 S.E.2d 150 (2021). We noted:
"[O]ur statements that the law 'favors' arbitration mean
simply that courts must respect and enforce a contractual
provision to arbitrate as [they] respect[ ] and enforce[ ]
all contractual provisions. There is, however, no public
policy—federal or state—'favoring' arbitration." Id. at
639, 856 S.E.2d at 153.

440 S.C. 377, 382, 892 S.E.2d 112, 114 (2023), reh'g denied (Sept. 27, 2023).

"Arbitration agreements, like other contracts, are enforceable in accordance with
their terms." Munoz v. Green Tree Fin. Corp., 343 S.C. 531, 539, 542 S.E.2d 360,
364 (2001) (citing Volt Info. Sciences, Inc. v. Bd. of Trustees of Leland Stanford Jr.
Univ., 489 U.S. 468, 478 (1989)). "To decide whether an arbitration agreement
encompasses a dispute, a court must determine whether the factual allegations
underlying the claim are within the scope of the broad arbitration clause, regardless
of the label assigned to the claim." Zabinski, 346 S.C. at 597, 553 S.E.2d at 118
(citation omitted). "A 'broadly-worded arbitration clause applies to disputes that
do not arise under the governing contract when a 'significant relationship' exists
between the asserted claims and the contract in which the arbitration clause is
contained.'" Id. at 598, 553 S.E.2d at 119 (quoting Long v. Silver, 248 F.3d 309,
316 (4th Cir. 2001)).

A. Authority to Sign5

Appellants argue Mr. Hill had authority to sign on behalf of Mr. Pace under the
Adult Protection Act.

"Arbitration is a matter of contract and a party cannot be required to submit to
arbitration any dispute which he has not agreed to submit." Gissel, 382 S.C. at
241, 676 S.E.2d at 323. "Well-established common law principles dictate that in
an appropriate case a nonsignatory can enforce, or be bound by, an arbitration
provision within a contract executed by other parties." Pearson v. Hilton Head
Hosp., 400 S.C. 281, 288, 733 S.E.2d 597, 600 (Ct. App. 2012) (quoting Int'l
Paper Co. v. Schwabedissen Maschinen & Anlagen GMBH, 206 F.3d 411, 416-17
(4th Cir. 2000)). "Whether an arbitration agreement may be enforced against
nonsignatories, and under what circumstances, is an issue controlled by state law."
Wilson, 426 S.C. at 338, 827 S.E.2d at 173-74. "South Carolina has recognized
several theories that could bind nonsignatories to arbitration agreements under
general principles of contract and agency law, including (1) incorporation by
reference, (2) assumption, (3) agency, (4) veil piercing/alter ego, and (5) estoppel."
Id. at 338, 827 S.E.2d at 174. "In the arbitration context, the doctrine recognizes
that a party may be estopped from asserting that the lack of his signature on a
written contract precludes enforcement of the contract's arbitration clause when he
has consistently maintained that other provisions of the same contract should be
enforced to benefit him." Id. (quoting Int'l Paper Co., 206 F.3d at 418).

5
While South Carolina courts have yet to address a DSS caseworkers' authority to
sign on behalf of an incapacitated adult, outside jurisdictions have held that an
appointed caseworker does not have the authority to bind the incapacitated adult to
arbitration. See Williamson v. Windsor House One, LLC, 712 S.E.2d 745 (N.C.
Ct. App. 2011) (finding the text of the Designation of Authority expressly limited
the personal representative's authority to consent to release of information forms
and administration of medications and treatment; therefore, the representative did
not have did not have apparent authority to sign the Dispute Resolution
Agreement).
The Facility argues the circuit court's analysis of DSS's authority under the Adult
Protection Act is erroneous; therefore, the court should have found Mr. Hill was
authorized to execute the Arbitration Agreement on Mr. Pace's behalf. The Adult
Protection Act defines "protective services" as:

[t]hose services whose objective is to protect a vulnerable
adult from harm caused by the vulnerable adult or
another. These services include, but are not limited to,
evaluating the need for protective services, securing and
coordinating existing services, arranging for living
quarters, obtaining financial benefits to which a
vulnerable adult is entitled, and securing medical
services, supplies, and legal services.

S.C. Code. Ann. § 43-35-10(9) (2015).

The Facility argues "[t]he legislature’s deliberate use of this expansive and open-
ended language reflects its intent to leave the scope of 'protective services'
unrestricted and to broadly empower DSS to exercise its discretion to act for the
protection of persons in its custody." However, we find the plain reading of this
provision provides that DSS is expected to arrange for living quarters, secure
medical care, and hire an attorney for the vulnerable adult if one is needed. We do
not believe that the statute grants authority for any person employed by DSS to
waive a constitutional right of a vulnerable adult.

The circuit court held the Adult Protection Act sets forth the authority and
procedure for the State of South Carolina to take a vulnerable adult into custody.
The court held the provisions of the Adult Protection Act would grant authority to
DSS to hire a doctor or medical facility for Mr. Pace and would authorize DSS to
hire an attorney to provide legal services for Mr. Pace but the statute did not give
DSS authority to perform legal services for Mr. Pace nor execute an arbitration
agreement that waived the constitutional right to a jury trial. The circuit court
further found the provision of "legal services" did not encompass executing an
arbitration agreement or waiving constitutional rights.

This court and our supreme court have found the arbitration agreements to be
unenforceable where a family member signed an arbitration agreement near the
time of admission to a skilled nursing facility for the decedent and did not have any
actual or implied authority. See, e.g., Estate of Solesbee by Bayne v. Fundamental
Clinical and Operational Services, LLC, 438 S.C. 638, 648, 885 S.E.2d 144, 149
(Ct. App. 2023), reh'g denied (Apr. 14, 2023), cert. denied (Apr. 16, 2024);
Coleman v. Mariner Health Care, Inc., 407 S.C. 346, 755 S.E.2d 450 (2014);
Hodge v. UniHealth Post-Acute Care of Bamberg, LLC, 422 S.C. 544, 813 S.E.2d
292 (Ct. App. 2018); and Thompson v. Pruitt Corp., 416 S.C. 43, 784 S.E.2d 679
(Ct. App. 2016)).

Like these cases, we find Mr. Hill did not have the authority to sign on behalf of
Mr. Pace.

B. Merger and Equitable Estoppel

Appellants argue even if Mr. Hill lacked authority to sign on behalf of Mr. Pace,
the Admission Agreement merged with the Arbitration Agreement and Respondent
is equitably estopped from denying enforcement of the Arbitration Agreement.

This case is similar to this court's recent case of Solesbee.6 This court evaluated
the merger and equitable estoppel claims in Solesbee as compared to prior
arbitration cases and found the Admission Agreement and Arbitration Agreement
did not merge, and neither the Adult Health Care Consent Act nor limited general
agreement power of attorney gave the son in Solesbee the authority to sign and
bind the nursing home resident to an arbitration agreement. 438 S.C. at 650, 885
S.E.2d at 150. This court cited to Coleman, where our supreme court held:

In South Carolina, "[t]he general rule is that, in the
absence of anything indicating a contrary intention,
where instruments are executed at the same time, by the
same parties, for the same purpose, and in the course of
the same transaction, the courts will consider and
construe the documents together. The theory is that the
instruments are effectively one instrument or contract."

6
Appellants assert this court's merger analysis in Solesbee was erroneous and
should not control the disposition of the case. However, in the same argument,
Appellants concede the merger/equitable estoppel argument in Solesbee is
"substantially the same as the Facility's here." They further concede the
Arbitration Agreement and the Admission Agreement at issue here are the same
form documents at issue in Solesbee. In any event, our supreme court denied the
Solesbee appellants' petition for a writ of certiorari on April 16, 2024.
407 S.C. at 355, 755 S.E.2d at 455 (quoting Klutts Resort Realty, Inc. v.
Down'Round Dev. Corp., 268 S.C. 80, 88, 232 S.E.2d 20, 24 (1977)). The
Coleman court found the documents in that case were executed at the same time,
by the same parties, for the same purposes, and in the course of the same
transaction; thus, unless there was a contrary intention, there was a merger. Id.
However, the court determined that "[b]y their own terms, the contracts between
these parties indicated an intent that the common law doctrine of merger not
apply." Id. And, even if a clause in the contract created an ambiguity as to merger,
the law is clear that any ambiguity in such a clause is construed against the drafter.
Id. at 355-56, 755 S.E.2d at 455. Thus, there was no merger in that case and the
appellants' equitable estoppel argument was properly denied. Id. at 356, 755
S.E.2d at 455.

In Hodge, this court held the admissions agreement and arbitration agreement did
not merge because: (1) the admissions agreement indicated it was governed by
South Carolina law, whereas the arbitration agreement stated it was governed by
federal law; (2) like in Coleman, the arbitration agreement recognized the two
documents were separate, stating "[a]ny and all claims or controversies arising out
of or in any way relating to this Agreement or the Patient/Resident's Admission
Agreement"; (3) the arbitration agreement stated it could be revoked within thirty
days, whereas the admission agreement contained no such indication and instead
provided the admissions agreement could only be amended; (4) each document
was separately paginated and had its own signature page; and (5) the arbitration
agreement stated signing it was not a precondition to admission. 422 S.C. at 562-
63, 813 S.E.2d at 302.

The Facility argues the circuit court should have found the Arbitration Agreement
merged with the Admission Agreement and, given Mr. Pace's receipt of direct
benefits under the Admission Agreement, Kenneth should be equitably estopped
from denying the enforceability of the Arbitration Agreement. For equitable
estoppel to apply to the case at hand, there must have been a merger of the
Admission Agreement and the Arbitration Agreement. As the Thompson and
Hodge courts noted, there was no evidence the resident being admitted to the
nursing home took any action to create an agency relationship for the person who
signed the arbitration agreement. See Thompson, 416 S.C. at 55, 784 S.E.2d at 686
("[T]he authority conveyed by a principal to an agent to handle finances or make
health care decisions does not encompass executing an agreement to resolve legal
claims by arbitration, thereby waiving the principal's right of access to the courts
and to a jury trial."); Hodge, 422 S.C. at 572, 813 S.E.2d at 307 (quoting
Thompson).

Here, the Arbitration Agreement is a completely separate contract under which Mr.
Pace derived no benefits. At a hearing on the matter, counsel for Appellants
admitted the following before the circuit court, "There was an arbitration
agreement. Well there's two documents that are essential to our argument. One is
an admission agreement where [Mr. Pace] was admitted to our facility in January
of 2015. The other is an arbitration agreement. It's a separate document that was
signed in conjunction with his admission." Further, there is no mention of
arbitration in the Admission Agreement, and admission to the Facility was not
contingent upon execution of the Arbitration Agreement. Additionally, the
Admission Agreement provides it is governed by South Carolina law, while the
Arbitration Agreement is governed by federal law. The Admission Agreement and
Arbitration Agreement were separately paginated and had their own signature
pages. Like the Coleman and Hodge courts held, we find there was no merger in
this case and the Facility's equitable estoppel argument was properly denied.

We find there was no merger of the Admission Agreement and the Arbitration
agreement; therefore, Respondents are not estopped from denying enforcement of
the Arbitration Agreement.

II. Other Appellants' Motions to Stay

Because we find the circuit court did not err in denying Appellants' motions to
compel arbitration, the underlying motions to stay are moot and we need not
address this issue. See Futch v. McAllister Towing of Georgetown, Inc., 335 S.C.
598, 613, 518 S.E.2d 591, 598 (1999) (declining to address the remaining issues
because its resolution of a prior issue was dispositive).

CONCLUSION

Based on the foregoing, the decision of the circuit court is

AFFIRMED. 7

THOMAS, MCDONALD and VERDIN, JJ., concur.

7
We decide this case without oral argument pursuant to Rule 215, SCACR.