The Tennessee Court of Appeals refused to compel arbitration in a case where a daughter signed a nursing home arbitration agreement for her mother, as the mother was still competent, and the daughter did not have her mother's power of attorney and did not purport to be her mother's attorney-in-fact.

In Thornton v. Allenbrooke Nursing and Rehabilitation Center, LLC, No. W2007-00950-COA-R3-CV, 2008 WL 2687697 (Tenn. Ct. App. July 3, 2008), Ira Lee Jones was admitted into the Allenbrooke Nursing Center, and her daughter, Patricia Raybon, signed several documents for Ms. Jones's admission, including an arbitration agreement.

Later, Raybon sued Allenbrooke, alleging that her mother suffered injuries as a result of Allenbrooke's neglectful and deficient care. Allenbrooke moved to compel arbitration based on the arbitration agreement that Raybon had signed for her mother.

The trial court denied the motion to compel, holding that Raybon lacked the requisite authority to waive her mother's right to access the courts and a trial by jury. The trial court reasoned that Raybon had no power of attorney and was not a court-appointed guardian or conservator; consequently, she was not a person lawfully authorized to sign any legally binding document on her mother's behalf. Allenbrooke appealed.

On appeal, Allenbrooke argued that Raybon had actual and apparent authority to contract on behalf of her mother, and even if she didn't, Ms. Jones, through her inaction, ratified the arbitration agreement signed by her daughter.

The Court rejected Allenbrooke's arguments and affirmed the trial court's holding. The Court held that under Tennessee law, authority to contract for another exists if given expressly, either through oral expression or via a power of attorney document. However, no authority exists if the principal does not exhibit some sort of act to convey the authority. The Court held that because Allenbrooke could not cite a single action by Ms. Jones that indicated that Raybon was her agent, Raybon did not have authority to bind her mother to the arbitration agreement.

Furthermore, the Court noted that although Raybon assisted Ms. Jones in being admitted to Allenbrooke, Raybon's involvement in most aspects of Ms. Jones's life was quite limited, as Ms. Jones managed her personal affairs. In addition, no power of attorney existed until five months after Raybon signed the arbitration agreement, and Raybon did not purport to be Ms. Jones's attorney-in-fact. Thus, the Court held that Raybon was not her mother's agent and could not bind her mother to the arbitration agreement.

Allenbrooke argued that Ms. Jones ratified her daughter's action in signing the arbitration agreement by not taking any action to protest or repeal her daughter's action, even though Ms. Jones knew that her daughter had signed the arbitration agreement. The Court rejected Allenbrooke's argument, holding that ratification requires "full knowledge" of the facts, and that Ms. Jones never discussed or knew the material terms of the contract.