Northport Health Services of Arkansas, LLC, doing business as Covington Court Health and Rehabilitation Center; NHS Managment, LLC; Northport Health Services, Inc. Plaintiffs - Appellees
Mark Wesley Posey, Individually and as Special Administrator of the Estate of Clyde Wesley Posey, and on Behalf of the Wrongful Death Beneficiaries of Clyde Wesley Posey Defendant-Appellant
Submitted: March 7, 2019
from United States District Court for the Western District of
Arkansas - Ft. Smith
BENTON, MELLOY, and SHEPHERD, Circuit Judges.
SHEPHERD, CIRCUIT JUDGE.
the estate of his deceased father, Clyde Posey, Mark Posey
appeals the district court's adverse grant of summary
judgment in his wrongful death action against Northport
Health Services of Arkansas, LLC (Northport). Having
jurisdiction pursuant to 28 U.S.C. § 1291, we reverse.
September 2, 2004, Clyde and another son, Matt Posey, arrived
at a residential rehabilitation center owned by Northport and
sought Clyde's admission to the facility. Clyde was
experiencing disorientation, delusions, and hallucinations.
As part of the admission process, Matt and Clyde received an
admission agreement (the Agreement) that included an
arbitration agreement and waiver of jury trial. Both Clyde
and Matt signed the Agreement; Clyde signed as the
"Resident," Matt as the "Responsible
Party." The Agreement defined Responsible Party as a
legal guardian, attorney-in-fact, "or some other
individual or family member who agrees to assist the Facility
in providing for [the resident's] health, care, and
maintenance." It also noted that "[t]he Responsible
Party represents to the Facility that he or she manages,
uses, directs or controls funds or assets which may be used
to pay for Resident's Facility charges and/or that he or
she tends to make decisions for or otherwise act on behalf of
Resident." It is undisputed that Matt was not his
father's legal guardian or attorney-in-fact.
admitted Clyde as a resident to its center, where he stayed
until his death in January 2016. A few months later, Mark
Posey, as special administrator of his father's estate,
sued Northport in Arkansas state court for wrongful death.
Northport filed a separate action in federal court, seeking
to stay the state court action and compel arbitration of the
wrongful death claim pursuant to the Agreement. The parties
then filed competing motions for summary judgment. The
district court denied Mark's motion and granted
Northport's motion to the extent that it sought to compel
arbitration. Basing its reasoning solely on the Agreement,
assuming without finding that Clyde was incompetent at the
time of his admission, and recognizing that Matt was not his
father's legal representative, the district court used
the third-party beneficiary theory to find as a matter of law
that Matt, in his individual capacity, entered into a binding
arbitration agreement with Northport, for which Clyde was the
intended beneficiary. Therefore, the district court directed
Clyde's estate to arbitrate the dispute. This appeal
follows, with Mark asserting that the district court misused
the third-party beneficiary theory when no underlying
agreement was present between the Poseys and Northport.
review de novo the district court's grant of summary
judgment, applying the same standards as the district
court." Dulany v. Carnahan, 132 F.3d 1234, 1237
(8th Cir. 1997). The record must indicate an absence of a
genuine issue of material fact and that the moving party is
entitled to judgment as a matter of law. Id. (citing
Fed.R.Civ.P. 56(c)). "In the summary judgment context,
we view the facts and the inferences to be drawn from them in
the light most favorable to the nonmoving party."
P.H. v. Sch. Dist. of Kan. City, 265 F.3d 653, 656
(8th Cir. 2001).
there is a "liberal federal policy favoring arbitration
agreements," Moses H. Cone Mem. Hosp. v. Mercury
Constr. Corp., 460 U.S. 1, 24 (1983), "[a] matter
should not be sent to arbitration unless there is a valid
agreement to arbitrate and the underlying dispute falls
within the scope of that agreement." Telectronics
Pacing Sys., Inc. v. Guidant Corp., 143 F.3d 428, 433
(8th Cir. 1998). While "any doubts concerning the scope
of arbitratable issues should be resolved in favor of
arbitration[, ] . . . a party who has not agreed to arbitrate
a dispute cannot be forced to do so." Lyster v.
Ryan's Family Steak Houses, Inc., 239 F.3d 943, 945
(8th Cir. 2001) (internal quotation marks omitted).
determine whether a valid agreement to arbitrate exists, we
look to the forum state's contract law-here,
Arkansas's. Baker v. Golf U.S.A., Inc., 154 F.3d
788, 791 (8th Cir. 1998). In doing so, we "are not bound
to follow the decisions of intermediate state courts,"
but we consider their decisions "highly persuasive"
and follow them "when they are the best evidence of
state law." First Tenn. Bank Nat. Ass'n v.
Pathfinder Exploration, LLC, 754 F.3d 489, 490-91 (8th
Cir. 2014) (internal quotation marks and alterations
omitted). Arkansas lists five contractual elements for a
valid arbitration agreement: "(1) competent parties, (2)
subject matter, (3) legal consideration, (4) mutual
agreement, and (5) mutual obligations." Tyson Foods,
Inc. v. Archer, 147 S.W.3d 681, 684 (Ark. 2004).
Arkansas also recognizes the third-party beneficiary theory,
typically used when a third-party beneficiary seeks to hold a
contract party liable for breach of contract. See Perry
v. Baptist Health, 189 S.W.3d 54, 58 (Ark. 2004).
Arkansas Trial Lawyers Association's amicus brief argues
the district court used the third-party beneficiary doctrine
inappropriately, given that the doctrine developed in common
law to allow beneficiaries to enforce agreements against
promisors and not vice versa. However, we need not reach this
argument because the district court's use of the
third-party beneficiary doctrine was premised on the
conclusion that Matt Posey signed a contract with Northport
in his individual capacity and that Matt did not sign as a
representative for his father. Arkansas courts have
repeatedly declined to find that individuals like
Matt-relatives without power-of-attorney or other legal
authority who admit a family member to a nursing home-possess
valid authority to bind their relatives to arbitration under
a third-party beneficiary theory. See Courtyard Gardens
Health & Rehab., LLC v. Quarles, 428 S.W.3d 437,
444-45 (Ark. 2013); Hickory Heights Health & Rehab.,
LLC v. Cook, 557 S.W.3d 286, 292 (Ark. Ct. App.),
reh'g denied (Oct. 24, 2018); Pine Hills
Health & Rehab., LLC v. Talley, 546 S.W.3d 492, 497
(Ark. Ct. App. 2018); Broadway Health & Rehab, LLC v.
Roberts, 524 S.W.3d 407, 412 (Ark. Ct. App. 2017);
Progressive Eldercare Servs.-Chicot, Inc. v. Long,
449 S.W.3d 324, 327 (Ark. Ct. App. 2014). The Arkansas Court
of Appeals considered a factually similar case in Hickory
Heights: a nursing home resident's daughter, who was
not the resident's legal representative, signed an
admission agreement as the resident's "Responsible
Party" upon the resident's admission to a nursing
center. 557 S.W.3d at 288. The agreement included a
definition of "Responsible Party" virtually
identical to the one in this case. Id. at 289. When
the resident sued the nursing center, it, like Northport,
responded by filing a motion to compel arbitration.
Id. The Court of Appeals held that there was an
ambiguity in the contract as to whether the daughter
attempted to sign as her mother's representative, and it
construed the ambiguity against the agreement's drafter,
the nursing center. Id. at 290. It therefore
"conclude[d] that [the daughter] attempted to act in a
representative capacity. Lacking authority to so act, there
is no valid underlying contract to enforce against [the
resident]." Id. The Court thus declined to
order the dispute to arbitration.
the form contract prepared by Northport states that its terms
and conditions are agreed by Clyde; Clyde's Responsible
Party, Matt; and Northport. As in Hickory Heights,
the definition of Responsible Party in the Agreement equates
a Responsible Party to a legal guardian, attorney-in-fact, or
legal representative. The Agreement goes on to state that
"[t]he Responsible Party represents to the Facility that
he . . . tends to make decisions for or otherwise act on
behalf of Resident." In the absence of other evidence,
including testimony, we find as a matter of law that the term
"Responsible Party" as used in the Agreement
describes a representative similar to a legal guardian.
See Byme, Inc. v. Ivy, 241 S.W.3d 229, 236 (Ark.
2006) ("[A]mbiguities in a written contract are
construed strictly against the drafter." (citing
Universal Security Ins. Co. v. Ring, 769 S.W.2d 750,
752 (Ark. 1989)).
based on this record, Matt Posey attempted to sign in a
representative capacity; he did not sign a contract with
Northport in his individual capacity. See Hickory
Heights, 557 S.W.3d at 290. As Matt was undisputedly not
his father's legal guardian or attorney-in-fact, he
lacked the capacity to sign the contract as his father's
representative. Because the district court relied on the
existence of a valid underlying agreement between Northport
and Matt Posey in his ...