Facts
- Manda Baker, an elderly immigrant with limited English proficiency, relied increasingly on her son, Frank Koricic, to help manage medical and related paperwork as her health declined.
- Frank described his role as an advisor and interpreter who signed documents only after discussing them with Manda and with her agreement.
- Manda was never adjudicated incompetent and never granted Frank a power of attorney.
- In November 2005, Manda was admitted to a nursing home; it was undisputed she was competent at admission.
- A facility employee took Frank to an office where he signed admission-related documents, including an arbitration agreement.
- The arbitration agreement was presented as optional and expressly stated it was not a condition of admission.
- Frank did not show Manda the arbitration agreement or discuss it with her after signing.
- After Manda’s death, Frank (as trustee for heirs/next of kin) sued the facility operators alleging negligence and related claims arising from Manda’s care.
Issues
- Whether Frank had actual authority to bind Manda to an optional arbitration agreement signed during admission.
- Whether Manda’s conduct created apparent authority permitting the facility to rely on Frank’s signature for an optional, nonessential arbitration agreement.
- Whether the arbitration agreement could be enforced against Manda’s estate to compel arbitration and dismiss the judicial action.
Decision
- The Nebraska Supreme Court reversed the order compelling arbitration and dismissing the lawsuit.
- Frank had authority to sign mandatory admission paperwork, but lacked authority to sign the optional arbitration agreement.
- Because Frank lacked authority and Manda did not sign the agreement, Manda and her estate were not bound to arbitrate.
- The case was remanded for further proceedings in court.
Legal Principles
- Actual authority depends on the principal’s manifestations to the agent and is limited to the scope granted; authority to act in some matters does not create general authority to act in all matters.
- Authority to complete necessary admission or medical paperwork does not, without evidence of specific authorization, include authority to enter a separate, optional arbitration agreement that waives access to court.
- Where an arbitration agreement is expressly “not a condition of admission,” its optional nature supports treating it as outside an agent’s implied authority derived from handling necessary admission documents.
- Apparent authority requires manifestations by the principal to the third party that reasonably indicate the agent has authority; an agent’s actions alone are insufficient.
- Arbitration is contractual; a party may be compelled to arbitrate only upon a valid agreement signed by the party or an authorized agent.
Conclusion
The court held that a competent nursing-home resident was not bound by an optional arbitration agreement signed by her son during admission because he lacked actual or apparent authority to waive her right to litigate, making the agreement unenforceable against her estate.