In a decision just handed down by the Third Appellate District of the California Court of Appeal, the Court in Rebecca Bush v. Horizon West (2012) 205 Cal.App.4th 924 ("Bush Case") ruled that, under Code of Civil Procedure § 1281.2(c), arbitration could not be compelled in an elder abuse case where an adult child of the Plaintiff separately sued for negligent infliction of emotional distress.
The facts of the Bush Case are common enough. In that matter, Plaintiff Rebecca Bush, approximately 82 years old, sued the operator of a skilled nursing facility for elder abuse based on the facility operator's alleged neglect in providing her care and treatment at the facility. In the same Complaint, Mrs. Bush's daughter, Plaintiff Charmaine Jennings, sued the same Defendants for negligent infliction of emotional distress based upon her alleged observation of the harm that the facility caused her mother. The Defendants in the Bush Case moved to compel arbitration pursuant to a written agreement with Plaintiff Bush. The Trial Court exercised its discretion under Code of Civil Procedure § 1281.2(c)1 and denied the Motion to Compel Arbitration because of the possibility of conflicting rulings between Plaintiff Bush's claim for elder abuse, which was subject to arbitration, and Plaintiff Jennings' claim for negligent infliction of emotional distress, which arguably were not subject to arbitration.
1 Code of Civil Procedure § 1281.2(c) provides, in pertinent part:
If the court determines that a party to the arbitration is also a party to litigation in a pending court action or special proceeding with a third party as set forth under subdivision (c) herein, the court (1) may refuse to enforce the arbitration agreement and may order intervention or joinder of all parties in a single action or special proceeding; (2) may order intervention or joinder as to all or only certain issues; (3) may order arbitration among the parties who have agreed to arbitration and stay the pending court action or special proceeding pending the outcome of the arbitration proceeding; or (4) may stay arbitration pending the outcome of the court action or special proceeding
On appeal, the Defendants who were petitioning for arbitration argued, based on equitable estoppel, that Plaintiff Jennings was bound by her mother's arbitration agreement because there was a sufficient identity of the parties and Plaintiff Jennings could not be considered to be a third party to the arbitration agreement. In that regard, the Defendants argued, among those things, the fact that Plaintiff Jennings was Plaintiff Bush's daughter, Plaintiff Jennings was the designated agent to make healthcare decisions for Plaintiff Bush, and Plaintiff Jennings acted as Plaintiff Bush's legal representative for purposes of entering into the arbitration agreement with the nursing facility in the first place. The Defendants also argued that the California Supreme Court's recent decision in Ruiz v. Podolsky (2010) 50 Cal.4th 838 ("Ruiz Case") - a case where the California Supreme Court held that wrongful death claimants in a medical malpractice case were bound by the arbitration agreements signed by the decedent - supported their position.
The Court of Appeal affirmed the ruling of the Trial Court.
In the published portion of its opinion, the Court of Appeal held that the California Supreme Court's ruling in the Ruiz Case did not apply because the Bush Case did not involve a wrongful death claim predicated on medical malpractice, but instead involved a claim of negligent infliction of emotional distress predicated on alleged elder abuse. The Court of Appeal's reasoning appears to mark a change in position as to the parameters of Code of Civil Procedure § 1281.2(c).
Also, in an unpublished portion of the same opinion, the Court of Appeal in the Bush Case also ruled that Plaintiff Jennings was not equitably estopped from claiming that she was a third party to the arbitration agreement and appeared to broadly construe the definition of what a third party could be for purposes of Code of Civil Procedure § 1281.2(c). In that regard, the Court of Appeal held that it made no difference that Plaintiff Jennings was the legal representative of Plaintiff Bush or that Plaintiff Jennings signed the arbitration agreement with the facility on Plaintiff Bush's behalf. The Court of Appeal indeed found that there is nothing "to indicate Jennings was acting in any capacity other than as Bush's representative…." The Court of Appeal, in the unpublished portion of its holding, also distinguished the recent decision in JSM Tuscany, LLC v. Superior Court (2011) 193 Cal.App.4th 1222 ("JSM Tuscany") which has been previously reported in The Morrison Law Journal, on the basis that the JSM Tuscany decision held that equitable estoppel applies to prevent a non-signatory plaintiff from avoiding arbitration because it would be unfair to allow the third party plaintiff to sue for breach of contract that includes an arbitration provision and at the same time avoid the obligation of the arbitration provision in the first place. The Court of Appeal's logic appears to be somewhat
strained in this regard but, in any event, that portion of the opinion was not published.
The Bush decision is certainly another interesting ruling in regard to the enforceability of arbitration clauses. While it appeared to be fairly settled last year, based upon the decision in JSM Tuscany, that a non-signatory Plaintiff could be compelled to arbitrate a claim against a non-signatory defendant, the waters could be muddied in the mind of some jurists. Moreover, and specifically in elder abuse cases, an arbitration contract may be avoided, at least potentially, if the claim for elder abuse is accompanied by a claim for negligent infliction of emotional distress by a child of the elderly plaintiff.
About the Authors: Edward F. Morrison, Jr. is the founding partner and Ronald L. Helmuth is Of Counsel to The Morrison Law Group, a professional corporation. Their biographies can be viewed at www.morrisonlawgroup.com.
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