A man was admitted to a nursing home. Upon admission, his son signed a contract with the nursing home providing for the father’s residency and care. The contract included an arbitration clause. The father did not sign the contract.
Two years later, while under the nursing home’s care, the father developed an eye infection that eventually required the removal of his left eye.
The son filed suit on the father’s behalf in the Circuit Court for the Eleventh Judicial Circuit, Miami–Dade County, alleging negligence and statutory violations. The nursing home moved to compel arbitration and stay the judicial proceedings. The trial court granted the motion. The father appealed, but passed away while the appeal was pending.
The Third District Court of Appeal of Florida affirmed the trial court’s grant of the nursing home’s motion to compel arbitration. The appellate court found that the father was bound by the arbitration provision contained in the agreement for care executed by his son, and to which the father was the intended third-party beneficiary. The appellate court emphasized that the resident was bound irrespective of whether the resident signed the contract, or whether the signing party had authority to act on the resident’s behalf.
The son, as personal representative of the estate, sought review of the appellate court’s decision on the ground that it expressly and directly conflicts with decisions of Florida’s district courts of appeal on whether a nursing home resident is bound by an arbitration clause in a nursing home contract, when the resident neither signed nor otherwise agreed to the contract. The district courts of appeal that conflicted with the appellate decision in this case analyzed the facts using an agency law framework and held that a resident was not bound by a contract that he or she did not sign, where the signing party did not agree to the contract on the resident’s behalf or lacked the authority to act for the resident.
The Supreme Court of Florida reversed. The court held that the father was not bound by an arbitration clause in a nursing home contract that was not signed by the father; the court refused to adopt the appellate court’s reasoning that under the third-party beneficiary doctrine, a nursing home resident may be bound by a contract to which the resident never agrees; and the father’s mental capacity did not impact the outcome of the case.
The court refused to adopt the appellate court’s reasoning that under the third-party beneficiary doctrine, a nursing home resident may be bound by a contract to which the resident never agrees. The court noted that the third-party beneficiary doctrine enables a non-contracting party to enforce a contract against a contracting party—not the other way around. The third-party beneficiary doctrine does not permit two parties to bind a third—without the third party’s agreement—merely by conferring a benefit on the third party. The appellate court’s reasoning was not in accord with this principle. The father’s estate sued for negligence and statutory violations—not to enforce the son’s contract with the nursing home. The purpose behind the third-party beneficiary doctrine is to do justice for the non-contracting third-party beneficiary.
The father’s mental capacity did not impact the outcome of the case. The nursing home explicitly conceded that a nursing home resident’s mental capacity or competence was irrelevant to the question of whether an individual can be bound to the terms of a contract as a third party beneficiary. If the nursing home were concerned that the father lacked the required mental capacity to execute binding contracts, it could have availed itself of Florida’s comprehensive statutory scheme governing incapacitated individuals. Any adult person—presumably including an individual affiliated with the nursing home—could have petitioned for a court to adjudicate the father incapacitated and appoint a guardian. An appointed guardian would have held the power to contract on the father’s behalf for his residency at the nursing home. The nursing home elected not to seek appointment of a guardian, and the court decline to use common law contract principles to conduct an end-run around the legislature’s comprehensive guardianship scheme.
The Supreme Court of Florida reversed the trial court’s grant of the nursing home’s motion to compel arbitration.
See: Mendez v. Hampton Court Nursing Center, LLC, 2016 WL 5239873 (Fla., September 22, 2016) (not designated for publication).
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