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Is Binding Arbitration Binding?

Posted on: June 16th, 2016
In our capacity as estate planning attorneys, we work with our clients to prepare documents such as wills, trusts, and powers of attorney.  Further, we advise our clients and their agents on how to use these tools to protect their estates during transitions such as moving from one’s home to assisted living continuing care communities or nursing facilities.

A recent California appellate case demonstrates how a personal representative of an estate can act on someone’s behalf after his or her death.  In Monschke v. Timber Ridge Assisted Living, LLC, Marjorie Fitzpatrick, who was having memory issues, entered the Timber Ridge Assisted Living facility. Her daughter, Valerie Monschke, signed the residency agreement as Marjorie’s agent under a power of attorney.
Timber Ridge was specifically chosen by Valerie because it had a memory care unit. Unfortunately, Marjorie wandered away from the facility unattended one evening and ended up sustaining injuries that ultimately resulted in her death.  Valerie, as Marjorie’s agent for her estate, sued the facility for elder abuse and wrongful death.

The home claimed that the arbitration clause in the residency agreement, which Valerie had signed on Marjorie’s behalf, as her legal representative, precluded Valerie from filing suit.

In the Court of Appeal, it was held that Valerie was not bound by the arbitration agreement, even though she had signed it in her capacity as agent and that the agreement bound all “heirs” from filing suit. The court affirmed that an agreement can only bind the parties to it, which, in this case, were Marjorie and the facility. As personal representative, Valerie was suing on behalf of the heirs, not her mother. Since the heirs (including Valerie) were not parties to the agreement, they could not be bound by it, even though the agreement purported to bind the heirs.

This case is an important reminder of the importance of proper planning and defining the roles of those charged with carrying out someone’s wishes and protecting an individual’s estate.  Make sure you know your rights and those of your loved ones.
Let us help. Call Terri Hilliard at 805-778-0111 or e-mail thilliard@terrihilliard.com.  
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