Hager v. Smithfield E. Health Holdings, LLC
Hager v. Smithfield E. Health Holdings, LLC
Opinion
*569 *351 A daughter's difficult decision to admit her father, who suffered from dementia, to a long-term assisted living and memory care facility as his attorney-in-fact did not create a fiduciary duty between the father and the facility.
This case arises out of a medical malpractice, negligence, and wrongful death action brought by the plaintiff Patricia Hager ("Ms. Hager"), daughter to and executrix of the Estate of Albert Hoffmaster ("Mr. Hoffmaster") against defendants Smithfield East Health Holdings, LLC d/b/a Gabriel Manor Assisted Living Center ("Smithfield East"), Smithfield Operations, LLC ("Smithfield Operations"), Saber Healthcare Holdings, LLC ("Saber Holdings"), Saber Healthcare Group, LLC ("Saber Healthcare"), and Sherry Tabor ("Tabor," collectively with Smithfield East, Smithfield Operations, Saber Holdings, and Saber Healthcare as "Defendants"). Defendants appeal the trial court's order denying their motion to compel arbitration, which found both the existence of a fiduciary relationship between Smithfield East and Mr. Hoffmaster and a breach of the corresponding fiduciary duty because Smithfield East failed to fully disclose the significance of an arbitration agreement presented to and signed by Ms. Hager as attorney-in-fact for Mr. Hoffmaster. After careful review of the record and applicable law, we reverse the order of the trial court in part and remand for entry of an order compelling arbitration of the claims against Smithfield East. We affirm the trial court's denial of the motion to compel arbitration by all other defendants except Smithfield Operations, and remand for the trial court to make findings and conclusions regarding that defendant.
I. FACTUAL AND PROCEDURAL HISTORY
The record tends to show the following:
From September 2014 until late October 2015, Ms. Hager cared for her father, Mr. Hoffmaster, who suffered from dementia, in her home in Johnston County. On the morning of 27 October 2015, Ms. Hager found Mr. Hoffmaster in the bathroom after he had urinated on the carpet and disassembled a lamp in his bedroom. He insisted that he had called for Ms. Hager all night, though she had checked on him frequently throughout that time. Ms. Hager immediately decided she needed to admit Mr. Hoffmaster to a long-term care facility; she later explained in an affidavit *352 that she "did not feel as though [she] could violate his dignity by bathing and toileting him" and "had told [Mr. Hoffmaster] that when the day came that [she] could not care for him with bathing and personal care [she] would have to make that decision."
Ms. Hager called her chiropractor's office for a recommendation to a nursing home facility close to her home. Ms. Hager's chiropractor referred her to Gabriel Manor, a facility where the chiropractor provided treatment to some residents. Ms. Hager telephoned Gabriel Manor and asked if there was a room available in the memory ward, which serves patients with dementia and other cognitive disabilities. Ms. Hager stated that she needed an immediate placement for her father; in response, the representative from Gabriel Manor offered Ms. Hager the opportunity to bring Mr. Hoffmaster by that day, tour the facility, and have lunch. Though she did not have the heart to tell her father, Ms. Hager had already resolved to admit him to Gabriel Manor before they left their home. She also called a family friend, Esta List ("Ms. List"), about the morning's events. Ms. List accompanied Ms. Hager and Mr. Hoffmaster to Gabriel Manor later that morning.
After arriving at Gabriel Manor, the three toured the facility and ate lunch in its dining room. Ms. Hager "decided right then that she was going to admit her father to Gabriel Manor that day" and informed facility staff.
*570 Ms. Hager entered a conference room with a Gabriel Manor representative where, as part of the intake process, she was presented with multiple documents to sign as Mr. Hoffmaster's attorney-in-fact. Among the documents she signed were an Assisted Living Residency Agreement, Patient Information Forms for Doctors Making Housecalls, and the Resident and Facility Arbitration Agreement ("Arbitration Agreement"). In completing the forms, Ms. Hager provided confidential information regarding Mr. Hoffmaster, including his social security number, contact information for his physicians, a list of medications, his Alzheimer's diagnosis, health insurance cards and policy numbers, credit card numbers, and signed authorizations to release Mr. Hoffmaster's medical records to Doctors Making Housecalls.
Of the several documents presented to Ms. Hager, no particular attention was directed towards the Arbitration Agreement. The representative did not discuss the Arbitration Agreement with Ms. Hager, and she did not ask any questions concerning it; indeed, Ms. Hager signed the document without ever reading it.
The Arbitration Agreement itself, which by its terms is governed by the Federal Arbitration Act ("FAA"), begins with the text " NOT A *353 CONDITION OF ADMISSION - READ CAREFULLY " in bolded, all capital letters. It also includes, in bolded typeface, provisions: (1) allowing Ms. Hager to cancel the agreement for any reason within 60 days of signing it; (2) allowing Ms. Hager the opportunity to read, ask questions, and propose revisions to the document prior to signing; and (3) informing Ms. Hager of her right to retain counsel to review the agreement and advising her to do so. The final provision of the agreement, in bolded and italicized capital letters, states that " THE PARTIES UNDERSTAND THAT BY ENTERING INTO THIS AGREEMENT, THE PARTIES ARE GIVING UP THEIR CONSTITUTIONAL RIGHT TO HAVE ANY CLAIM DECIDED IN A COURT OF LAW BEFORE A JUDGE AND A JURY, AS WELL AS ANY APPEAL FROM A DECISION OR AWARD OF DAMAGES ."
After signing the documents presented to her, Ms. Hager was provided with copies of each in a folder. She took them home and never looked at them again, and at no point exercised her right to cancel the Arbitration Agreement. Ms. Hager discarded the documents after Mr. Hoffmaster passed away on 25 February 2016, four months after his admission to Gabriel Manor.
Ms. Hager filed suit on behalf of her father's estate against Defendants, alleging claims of negligence, medical malpractice, and wrongful death in the passing of her father while in Defendants' care at Gabriel Manor. The complaint further alleged that each of the Defendants "was the agent, partner, joint venturer, representative, and/or employee of the remaining Defendants, and was acting within the course and scope of such agency, partnership, joint venture, and/or employment." Defendants filed a combined answer, motion to dismiss, and motion to compel arbitration, admitting that Smithfield East owns Gabriel Manor but denying any other alleged connection between the facility and the remaining Defendants. Saber Healthcare's general counsel filed an affidavit concurrently with the Defendants' pleading, stating that Saber Healthcare and Saber Holdings are not licensed in North Carolina and have "no involvement in the management of staff, the provision of care, control over the day to day operations, or oversight of the operation or management of Smithfield East[.]"
The motion to compel arbitration came on for hearing on 8 January 2018. In a written response to the motion and during the hearing, counsel for Ms. Hager asserted that: (1) there was no evidence that any of the Defendants was a party to the Arbitration Agreement and therefore they lacked standing to compel arbitration; and (2) Defendants, if parties to the Arbitration Agreement, owed and breached a fiduciary duty to Mr. *354 Hoffmaster in failing to fully disclose the terms and consequences of the Arbitration Agreement prior to obtaining Ms. Hager's signature. The trial court agreed with Ms. Hager, finding in part in a written order filed 6 February 2018 that Smithfield East was the only defendant party to the Arbitration *571 Agreement and concluding that it breached a fiduciary duty owed to Mr. Hoffmaster in "requesting that Ms. Hager sign a document with substantial legal ramifications and which they believed to be of benefit to themselves without full disclosure to Mr. Hoffmaster" through Ms. Hager as his attorney-in-fact. The trial court's order also made factual findings, consistent with the history recited above, to support its ruling. Defendants timely appealed.
II. ANALYSIS
Defendant's appeal presents three principal questions: (1) whether Smithfield East owed a fiduciary duty to Mr. Hoffmaster through Ms. Hager; (2) whether that duty, if it existed, was breached by Smithfield East's failure to press upon Ms. Hager the significance and ramifications of the Arbitration Agreement prior to her signing it; and (3) whether all Defendants have standing to compel arbitration. In their briefs, the parties seek to resolve the first question by either distinguishing or analogizing our Supreme Court's
de facto
fiduciary duty analysis undertaken in
King v. Bryant
,
A. Appellate Jurisdiction
Ordinarily, interlocutory orders are not immediately appealable.
Griessel v. Temas Eye Center, P.C.
,
B. Standards of Review
On review of an order containing factual findings, unchallenged findings of fact are binding on appeal while conclusions of law are
*355
reviewable
de novo
.
King
,
C. Fiduciary Relationships
North Carolina recognizes two types of fiduciary relationships:
de jure
, or those imposed by operation of law, and
de facto
, or those arising from the particular facts and circumstances constituting and surrounding the relationship.
Lockerman
v. South River Electric Membership Corp.
, --- N.C. App. ----, ----,
De facto
relationships are less immediately identifiable, as "[c]ourts of equity have carefully refrained from defining the particular instances of fiduciary relations in such a manner that other and perhaps new
*572
cases might be excluded."
Abbitt
,
The relation may exist under a variety of circumstances; it exists in all cases where there has been a special confidence reposed in one who in equity and good conscience is bound to act in good faith and with due regard to the interests of the one reposing confidence. ... It is settled by an overwhelming weight of authority that the principle extends to every possible case in which there is confidence reposed on one side and the resulting superiority and influence on the other. The relation and the duties involved in it need not be legal; it may be moral, social, domestic, or merely personal.
*356
As noted
supra
, counsel for Ms. Hager advocated that we expand the category of
de jure
fiduciary relationships to include assisted living facilities with memory wards and their residents, as licensed memory wards "possess[ ] 'special knowledge and skill' " concerning the care of those afflicted with cognitive impairments.
Black v. Littlejohn
,
First, to create a
de jure
fiduciary relationship on the basis of special knowledge and skill alone would greatly expand the "limited" list that our Supreme Court has "not add[ed] to ... lightly."
CommScope
, 369 N.C. at 52,
Turning to the existence of a
de facto
fiduciary duty, our Supreme Court's decision in
King
presents the most relevant precedent. Mr. King was referred by his primary care physician to a surgeon to treat an acute medical condition.
King
, 369 N.C. at 455-56,
On a second appeal, we affirmed the trial court, and the Supreme Court allowed discretionary review.
The uncontroverted evidence and findings of fact made by the trial court in this case are readily distinguishable from the extensively developed facts that led to the conclusion that a fiduciary relationship existed in King . Ms. Hager was not referred to Gabriel Manor by a person who already owed her father a pre-existing fiduciary duty, but instead was *358 referred by her chiropractor, who had never treated her father and who had no personal knowledge of his condition. Unlike Mr. King, Ms. Hager was not asked to sign the Arbitration Agreement before she could evaluate the care offered by Gabriel Manor; prior to signing the agreement, she toured the facility and was provided the opportunity to ask questions. She signed the agreement after assessing the facility with her friend, Ms. List, who also had the opportunity to offer her independent thoughts on the facility. The record below does not disclose Ms. Hager's degree of education. In light of these factual distinctions, King 's factually specific analysis and holding is not controlling here.
We also disagree with Ms. Hager's argument that the findings and evidence show she placed Mr. Hoffmaster with Gabriel Manor because of its staff's specialized skill and knowledge in caring for people suffering from Alzheimer's. The trial court's findings of fact, which Ms. Hager does not dispute, include that on 27 October 2015 she "realized that the time had come that she could no longer care for her father in her home.
She did not feel as though she could violate his dignity by bathing and toileting him
." (emphasis added). The trial court also found that "Ms. Hager was desperate to place her father in a facility because she could no longer meet his needs[,]" which, reviewing her affidavit submitted to the trial court and uncontroverted by any other evidence, related to "bathing and personal care[,]"
i.e.,
needs common to all people, not just those with Alzheimer's and/or dementia.
2
Ms. Hager had cared for her father while he had dementia for over a year in her own home prior to admitting him to Gabriel Manor. We therefore distinguish
King
on this ground, as it does not appear that Ms. Hager sought out an assisted living facility because she was unable to exercise specialized knowledge or skill in caring for Mr. Hoffmaster's medical needs, and we do not weigh this factor in favor of concluding a fiduciary duty existed.
See
King
, 369 N.C. at 465,
The only two facts common to both this case and
King
are the provision of confidential information by the party asserting the existence of
*359
a fiduciary duty and their lack of legal expertise. While it is true that the provision of confidential information places confidence in the recipient, that alone does not create a fiduciary duty; for example, people seeking home financing are often required to provide confidential information to lenders, yet those transactions "are considered arm's length and do not typically give rise to fiduciary duties."
Dallaire
,
D. Standing to Compel Arbitration
Defendants also appeal the trial court's determination that the only party with standing to compel arbitration is Smithfield East, 3 based on the conclusion that "[t]here is no competent evidence that [the remaining Defendants] are agents of Smithfield East ... such that they would benefit from their non-signatory status to the Arbitration Agreement." Indeed, with the exception of Smithfield East, each Defendant has denied the allegations in the complaint asserting the existence of relationships between them, and Saber Healthcare's general counsel filed an affidavit asserting that Saber Healthcare and Saber Holdings had "no involvement in the management of staff, the provision of care, control *360 over the day to day operations, or oversight of the operation or management of Smithfield East[.]" 4 From this record, we hold that the trial court did not err in concluding only Smithfield East had standing to invoke the Arbitration Agreement, as there is no evidence to show a relationship between the Defendants within the scope of the Arbitration Agreement such that Mr. Hoffmaster agreed to arbitrate claims against the non-signatory Defendants. 5 However, because the trial court failed to resolve this issue as to one of the non-signatory Defendants, Smithfield Operations, we remand to the trial court *575 for further factual findings addressing that party.
Defendants rightly point out that in two decisions, this Court has allowed non-signatories to compel arbitration where an agency relationship exists between a non-signatory defendant and a signatory to a relevant arbitration agreement.
Brown v. Centex Homes
,
In
Revels v. Miss America Organization
,
It is undisputed that the [contract] was not signed by [the defendant]. Moreover, it is clear from [the defendant's] pleadings and the arguments of its counsel that, for purposes of defending against the merits of plaintiff's breach of contract claims, [the defendant] has throughout this litigation denied acceptance of the [contract] as a contract between itself and the plaintiff. Because the arbitration clause contained within the [contract] was the sole basis for [the defendant's] amended motion to compel arbitration, we hold that the trial court's findings support its conclusion that [the defendant] failed to carry its burden of proving the existence of a written agreement between plaintiff and [the defendant] to arbitrate[.]
We are not convinced, based on the evidence introduced below, that the non-signatory Defendants in this case have standing to compel arbitration when they have denied the existence of all alleged relationships and failed to introduce any evidence of some other recognized connection to Smithfield East. We acknowledge that there exists a presumption in favor of arbitration; however, that presumption applies to the issue of whether the claims fall within the scope of a valid arbitration agreement, not to the initial determination of whether there exists a valid agreement to arbitrate
between the parties in
*576
question
.
*362
AVR Davis Raleigh, LLC v. Triangle
Construction Co., Inc.
, --- N.C. App. ----, ----,
Our holding, however, does not reach Smithfield Operations. The trial court failed to make any findings or conclusions concerning Smithfield Operations in the order denying the motion to compel. On remand, the trial court must make findings from the evidence concerning Smithfield Operations' relationship with Smithfield East and resolve whether that party has standing to compel arbitration.
III. CONCLUSION
For the reasons set forth above, we reverse the trial court's determination that Smithfield East owed and breached a fiduciary duty to Mr. Hoffmaster such that the Arbitration Agreement is unenforceable. We affirm its conclusion that the non-signatory Defendants lacked standing
*363
to compel arbitration, with the exception of Smithfield Operations, and remand for further findings and conclusions concerning whether that entity has standing. On remand, the trial court shall enter an order staying and ordering arbitration of all claims against Smithfield East; it shall also determine whether the claims against the remaining Defendants shall be stayed pending arbitration.
See
Sloan Financial Group, Inc. v. Beckett
,
REVERSED IN PART, AFFIRMED IN PART AND REMANDED.
Judge DAVIS concurs.
Judge BRYANT concurs in the result only.
At oral argument, Ms. Hager's counsel argued that this factor alone was entirely dispositive of the Supreme Court's decision in
King
. Such a reading is not supported by the language of the opinion.
One of the documents presented to Ms. Hager in the course of admitting Mr. Hoffmaster was an "Inquiry Information" form. That form, given to all persons seeking to admit someone to Gabriel Manor, asks whether the person to be admitted needs help being bathed and clothed and, separately, whether the person should be placed in assisted living or memory care.
Neither party argues that the trial court erred in concluding Smithfield East was a party to the Arbitration Agreement.
The parties pointed to no other evidence in the record concerning the existence or nature of any relationships between the Defendants.
At oral argument, counsel for Defendants stated that this outcome would have no practical effect on the underlying litigation or arbitration should we reverse the trial court's order invalidating the Arbitration Agreement with Smithfield East. We nonetheless must reach this issue because it was properly presented to the trial court and appealed to this Court.
We note that there are other legal doctrines beyond those pertaining to agency relationships that may allow for a non-signatory to compel arbitration, such as estoppel.
Carter v. TD Ameritrade Holding Corp.
,
Although the substantive provisions of an arbitration agreement may be governed, for purposes of substantive law, by the FAA, it is nonetheless governed by the procedural provisions of North Carolina's Revised Uniform Arbitration Act when the issue of its arbitration is raised in our Courts.
Carter
,
We note that at least one federal circuit appeals court has held, albeit in an unpublished opinion, that a non-signatory defendant failed to meet its evidentiary burden to compel arbitration where it denied the agency relationship alleged in the complaint and introduced evidence disclaiming such a relationship.
Roes v. SFBSC Management, LLC
,
Case-law data current through December 31, 2025. Source: CourtListener bulk data.