West et al. v. Bowser et al.

Factsⁱ

In the case of West et al. v. Bowser et al., the appellant appealed a trial court judgment granting the appellee’s Motion to Compel Arbitration. In 2021, the court reversed the order compelling arbitration based on existing precedent from CL SNF, LLC v. Fountain, 355 Ga. App. 176 (2020) (“Fountain I”). However, the Georgia Supreme Court subsequently reversed Fountain I. See CL SNF, LLC v. Fountain, 312 Ga. 416 (2021) (“Fountain II”).

Because Fountain I was the basis for the Court of Appeals original decision in West v. Bowser in 2021, the Georgia Supreme Court granted certiorari in West and remanded the case to the Court of Appeals for reconsideration based on Fountain II.

Based on the new precedent in Fountain II, the Court of Appeals affirmed the trial court’s original ruling to compel arbitration.

In June 2017, the probate court of Carroll County appointed Jobe West as guardian and conservator of his father, Ronald West. One month later, Jobe admitted Ronald to Provident Village at Creekside for specialized care. Jobe signed the Resident Agreement as the “responsible party” and a separate Arbitration Agreement. Ronald did not sign either agreement.

Later, a Provident employee shoved Ronald, causing him to fall. Ronald eventually died of these injuries. Jobe, acting as executor of Ronald’s estate and with his siblings, filed a wrongful death law against Provident.

Provident answered the complaint and filed a Motion to Dismiss and Compel Arbitration, citing the Arbitration Agreement. The trial court granted the motion.

The Plaintiffs appealed this decision, claiming Jobe did not have the authority to sign the Arbitration Agreement. When the Court of Appeals first heard this case, it agreed with the Plaintiffs and reversed the trial court decision. Since Jobe lacked authority, the court did not need to examine further issues regarding enforceability.

However, the Georgia Supreme Court remanded this case back to the appellate court after determining the Guardianship Code grants a guardian authority to enter into these agreements. CL SNF, LLC v. Fountain, 312 Ga. at 416 (2021).

The Appellate Court vacated its original holding, now determining that Jobe had the authority to sign the Arbitration Agreement. It then continued addressing other enforceability issues in this opinion.

Also, the Plaintiffs filed a Motion for Reconsideration regarding Jobe’s capacity in which he intended to sign the Arbitration Agreement. They claimed he signed it as a family member, not as Ronald’s guardian. However, since Ronald signed the agreement after he was appointed guardian and conservator, the court believed he did so as a legal representative.

Issues and Holdings

The issues in this case were:

1. Was there sufficient consideration for the Arbitration Agreement?
2. Was the Arbitration Agreement void due to fraudulent inducement?
3. Was the Arbitration Agreement void under the Remedies for Residents of Personal Care Homes Act and Bill of Rights for Residents of Long-Term Care Facilities?
4. Was the Arbitration Agreement void as against public policy?
5. Did Jobe sign the agreement in his capacity as Ronald’s guardian?

The court ruled:

1. Yes
2. No
3. No
4. No
5. Yes

Reasoning

The Plaintiffs had four arguments against enforcing the Arbitration Agreement:

• The Arbitration Agreement required distinct and separate consideration from the Residential Agreement.
• Provident fraudulently induced Jobe to sign the Arbitration Agreement.
• Arbitration Agreements by care facilities are void under the Remedies for Residents of Personal Care Homes Act and Bill of Rights for Residents of Long-Term Care Facilities.
• The Arbitration Agreement was void as against public policy.

The Plaintiffs also wanted the court to reconsider Jobe’s authority to sign the agreement. They argued that since he signed the agreement as a family member, rather than as Ronald’s guardian, there was no meeting of the minds that made it an enforceable contract. Plaintiffs argued that this at least created a genuine issue of material fact.

Consideration

The court evaluated the Arbitration Agreement using state law and principles of contract formation. One of these elements involved consideration for the agreement.

The Plaintiffs argued that the Arbitration Agreement was separate from the residential agreement and required separate and distinct consideration. They generally claimed they only offered consideration for the residential agreement—not the Arbitration Agreement.

The Defendants countered that argument by stating the mutual promise to arbitrate was the consideration. Citing previous case law, the Court of Appeals agreed. Under Georgia law, mutual promises and obligations count as consideration. West, 365 Ga. App. at 519.

Fraudulent Inducement

Plaintiffs also claimed that the Defendant made Jobe feel he needed to sign all the documents before him, including the Arbitration Agreement. However, the court did not find this persuasive.

Under Georgia law, a party cannot claim fraud the matter is “equally open to the observation of all parties where no special relationship of trust or confidence exists.” Furthermore, in the absence of special circumstances, a party must exercise ordinary diligence to read the agreement and make an independent verification of contract terms and representations.

Here, there was no special relationship. In holding that fraudulent inducement did not exist, the court found the following facts persuasive:

• The Defendant did not prevent Jobe from reading the Arbitration Agreement.
• Jobe signed the agreement without reading it.
• The Arbitration Agreement stated in bold all-caps, “IF THIS AGREEMENT IS NOT SIGNED, THE RESIDENT WILL STILL BE ALLOWED TO RECEIVE SERVICES AT THE FACILITY.“

Generally, the court rested most of its argument on the fact the Defendants did not stop Jobe from reading and verifying the contract. The fact that he failed to read it only confirmed this position for the court. Also, the bold print indicated that his father would still receive care even if Jobe did not sign the Arbitration Agreement.

Personal Care Homes Act & Bill of Rights for Residents of Long-Term Care Facilities

The Plaintiffs cited these provisions to claim current statutes voided arbitration agreements:

• OCGA § 31-8-133: Residents’ rights include all rights listed in the rules and regulations of the Department of Community Health, including, but not limited to, procedural protections relating to resident admission, discharge, or transfer.
• OCGA § 31-8-136 (a): Residents or their representatives may bring actions in courts of competent jurisdiction to recover actual and punitive damages against a care home or its governing body, administrator, or employee for any violation of a resident’s rights.
• OCGA § 31-8-136 (c): Residents or their representative maintain their rights to seek remedies or causes of action under other statutes or common law.
• Comp. R. & Regs., r. 111-8-63-.16 (1): Assisted living facilities cannot use written contracts that, when signed by a resident or their representative, waives or attempts to waive a resident’s rights.

According to the Plaintiffs, these provisions prevent the Defendants from issuing arbitration agreements, much less enforcing them. But this argument failed because the Federal Arbitration Act (FAA) controlled the agreement—not state law. As a result, the FAA preempted any conflicting state laws and required that the Court of Appeals enforce the arbitration agreement. West, 365 at 521-22.

Void Against Public Policy

Voiding a contract due to public policy is a delicate matter with a high standard of proof. Courts must be free of doubt when making that declaration. Any public injury must be apparent if the court fails to void the contract. West, 365 at 522. 

However, the Plaintiffs failed to present cases showing an arbitration agreement rendered void due to being against public policy. The Court of Appeals noted that binding arbitration agreements are generally not against public policy. But in any event, the FAA preempted Georgia law and prevented the Court of Appeals from treating the arbitration agreement differently than other agreements based on public policy considerations.

Representative Capacity

The Plaintiffs brought up representative capacity in a Motion for Reconsideration because they felt the question at least presented an issue of material fact. It focused on whether Jobe signed the agreement in his capacity as guardian or just as a family member. If he signed as a family member, then there was no “meeting of the minds” between him and Provident.

The agreement offered multiple signature blocks, including “family member,” “healthcare agent,” “resident,” and others. It did not include a block for guardians, so Jobe opted for “family member.”

The Court of Appeals ruled that Jobe signed in his capacity as guardian because:

• He signed the agreement after the probate court finalized his appointment; and
• The agreement contained a provision stating, “A person signing who routinely makes decisions for the Resident, if not the Power of Attorney or Guardian/Conservator, will be considered a Legal Representative.” West, 365 at 526.

Conclusion

West is important because it shows how courts will interpret arbitration agreements following Fountain II. Generally, unless there is a lack of capacity, fraudulent inducement, or other unique circumstances, the court will enforce arbitration agreements.

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Citation: West et al. v. Bowser et al., A21A0055 (Ga. Ct. App. Aug. 19, 2022)

ⁱ Facts from the earlier case of West v. Bowser, 360 Ga. App. 103, 860 S.E.2d 904 (2021)