Florida Supreme Court Settles District Appellate Court Conflict Regarding Whether Residents Are Bound by Arbitration Agreements Signed By Other Parties

As previously discussed, nursing homes occasionally use Arbitration Agreements, which funnel liability disputes to an arbitrator instead of the state or federal civil court system. Recently, several opinions have been issued from Florida District Courts of Appeal that have ruled on whether or not a nursing home resident is bound by the arbitration agreement when she or he did not sign the agreement prior to her or his stay at the facility. The courts have come to conflicting conclusions on this matter. The Supreme Court clarified what’s appropriate under the law in Florida in Mendez vs. Hampton Court Nursing Center, LLC (No. SC14-1349).

In Mendez, the son of a now-deceased resident filed suit against the nursing home for negligence after his father lost his left eye due to an infection acquired during his stay at the facility. The father passed away during the proceeding, and the son moved forward with the case on the estate’s behalf. The nursing home moved to compel arbitration, and the Second District granted it, ruling the resident father was bound by the agreement as a third-party beneficiary, even though the son was the one who signed the agreement. The son appealed.

The Supreme Court first cited 21 Williston on Contracts § 57:19, at 181 (4th ed. 2001), which states that third persons who are not parties to an arbitration agreement are generally not bound by the agreement. The court markedly rejected the approach taken by the First and Third Districts, which held that a resident is bound by the contract. The defendant encouraged the court to apply the doctrine of third-party beneficiaries, under which a person sues to enforce a contract, even if they are not a party to the contract. In this scenario, the clear or manifest intent of the contracting parties that the contract primarily and directly benefit the third party must be shown.

The Supreme Court pointed out that this doctrine enables a non-contracting party to enforce a contract against a contracting party, rather than the other way around. The court noted that the father did not bring suit as a third-party beneficiary for the benefit of a contract signed by others. Instead, the nursing home sought to enforce an agreement signed by its agent and the son. The court disagreed with the prior assessment that the son was acting as the father’s representative. The father had not granted the son any written authorization to act as the father’s agent prior to his admission to the nursing home facility. The court also ruled that the father’s mental capacity did not affect the outcome of this case, since the nursing home conceded mental capacity or competence is irrelevant to the question of whether or not an individual can be bound to the terms of the contract as a third-party beneficiary. The court reversed the Third District’s ruling in favor of the nursing home and remanded the case to the trial court, where the estate is free to pursue its negligence action.

The Florida elder abuse attorneys at Donaldson & Weston have the legal experience and knowledge you need to analyze an arbitration agreement or insurance policy connected to your case. Our attorneys work tirelessly and will aggressively pursue all damages available. For a free confidential consultation, contact our office at 772-266-5555 or 561-299-3999.

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