If an elderly mother gives her adult son the legal power to manage her affairs, do other parties have the right to assume he is acting on her behalf when he signs a contract?

That was the issue the California Court of Appeal was asked to consider in a recent case (Gordon v Atria Management Co.)

In June of 2019, Janet Randall signed a Durable Power of Attorney and Nomination of Conservator ("DPOA"), appointing her son Randall as her “attorneys-in-fact.” The DPOA authorized Randall to act on Janet's behalf and in her “name, place and stead,” including in regard to her assets, taxes, and other matters.

The DPOA was clear that Randall would have broad powers to act on Janet's behalf, including giving Randall the authority to make real and personal property transactions, and to make medical and health and decisions for Janet's benefit.

Through the DPOA, Randall was given discretionary power to decide whether Janet required admission to a residential facility such as a convalescent hospital or skilled nursing home. Essentially, Randall could enter into necessary transactions for the benefit of Janet's health and well-being.

Importantly, the DPOA authorized Randall to "demand, arbitrate, and purse litigation" and to enter into contracts on Janet's behalf.

A month after signing the DPOA, Janet moved into a residential care facility, Atria Walnut Creek. At the time of Janet's admission, Atria asked Randall, as Janet's attorney-in-fact, to sign a one-page agreement that required all disputes such as legal claims or civil actions related to Atria's care for Janet to be resolved through arbitration. However, Atria's “Agreement to Arbitrate Disputes” was not a prerequisite to Janet's admission. Despite this, Randall agreed to sign the agreement.

Unfortunately, within days after moving into Atria, Janet fell and broke her hip.

A year later, Randall, acting within his powers and as Janet's guardian ad litem, sued Atria for elder neglect and abuse, negligence, negligence per se, fraud, and unfair business practices. The lawsuit claimed Atria failed to provide the assistance Janet required which led to her fall and injury.

Atria asked the court to enforce the arbitration agreement Randall signed on Janet's behalf and for the dispute to be settled through arbitration.

Janet opposed the petition, contending the arbitration clause was not enforceable because the agreement was not signed by Janet or by someone who held her power of attorney specifically for Janet's healthcare.

The trial court denied Atria’s petition to compel arbitration finding that the personal care power of attorney Randall held did not authorize him to make healthcare decisions, and that admitting someone to a residential care facility for the elderly was a health care decision. The trial court relied on the fact that Atria issued Janet an “alert-lanyard” to use in cases of emergency, which suggested that Atria was providing Janet with medical care.

Atria appealed asking the appellate court to find that the DPOA gave Randall the authority to sign the arbitration agreement on Janet’s behalf, therefore making the arbitration agreement binding regardless of whether Randall was authorized to make healthcare decisions for Janet.

The justices noted that the DPOA empowered Randall to “enter into contracts . . . with respect to provision of residential care for [Janet] in [a] residential facility,” and the Arbitration Agreement is a contract that was executed in connection with Janet’s residential care at Atria Walnut Creek. Moreover, the DPOA clearly authorized to arbitrate and pursue litigation on Janet's behalf.

Thus, because the DPOA granted Randall authority to move Janet to Atria and to enter into contract on Janet's behalf, and because the DPOA was not a requirement before Janet could receive residential assistance from Atria, Randall’s decision to execute the arbitration agreement was binding on Janet. The appellate court therefore reversed the lower court's decision and remanded the case for further proceedings.

By Jessica Stemple