Agency: Third District Agrees Durable Power Of Attorney At Issue Did Not Confer Authority To Agent To Agree To Arbitrate

Authority To Make Medical Decisions Is Not The Same As Authority To Consent To Arbitration.

        In Lombardo v. Gramercy Court, C098857 ( 3rd Dist. 12/31/24) (Robie, Earl, Mauro) the plaintiffs, Lisa Lombardo and others, sued Gramercy Court for wrongful death, negligence, elder abuse, and gross negligence after Elizabeth Stein, their relative, died following inadequate care at the defendant's facility. Gramercy Court sought to compel arbitration based on an agreement signed by Lombardo as Stein's agent under a durable power of attorney (DPOA). The trial court denied the motion, finding Lombardo lacked the authority to bind Stein to arbitration. The appellate court affirmed this decision.

        The court determined that Stein’s DPOA did not grant Lombardo authority to sign arbitration agreements. Specifically, Stein left unchecked the section authorizing the agent to handle “claims and litigation,” which would have included arbitration authority. Furthermore, the DPOA explicitly excluded healthcare decisions, and arbitration agreements are distinct from medical decisions. The court also rejected Gramercy Court's argument that Lombardo had ostensible authority to bind Stein, finding no evidence of Stein’s conduct to justify such a conclusion.

        The appellate court similarly ruled that the arbitration agreement did not bind Lombardo or other heirs individually. It interpreted the agreement's language as ambiguous and construed it against the drafter, Gramercy Court.

        COMMENT: We have posted many times on nursing facilities that ran in to trouble enforcing arbitration agreements. Frequently a relative signs documents for an older relative, and unless all i's are carefully dotted and t's are carefully crossed, courts may find that authority was not conferred on the agent. There is also the issue with durable powers of attorney as to the scope of powers conferred under the DPOA -- does it just cover medical decisions, or does it include the power to agree to arbitrate disputes. And if there is an agency, does it cover the patient's disputes, or the disputes of heirs?