A Tennessee appellate court has held that apparent agency cannot exist without some predicate act by a competent principal, even in light of alleged "exigent circumstances."

In Barbee v. Kindred Healthcare Operating, Inc., No. W2007-00517-COA-R3-CV, 2008 WL 4615858 (Tenn. Ct. App. Oct. 20, 2008), Barbee admitted his mother, Glenn, to Kindred's nursing home facility. Upon admission, Barbee signed an admission contract containing an arbitration agreement. After Glenn died, Glenn's estate brought various negligence claims against Kindred. Kindred moved to compel arbitration. The trial court granted the motion.

On appeal, the estate argued that Barbee did not have the authority at the time of admission to bind Glenn and the estate to arbitrate the negligence claims.

After deciding that Glenn was not competent to contract at any time during her admission or residence, the Court examined whether Barbee had "apparent authority" to bind Glenn to the arbitration agreement. Kindred and Barbee agreed that Barbee did not hold power of attorney or other actual authority at the time of admission, but Kindred argued that Barbee's actions gave rise to apparent agency.

The Court disagreed, noting that a party cannot possess apparent agency without an act by Glenn, because this type of authority "stems from the actions of the principal." Here, the parties agreed that Glenn no longer possessed her faculties at any time during admission or residence. "If the Decedent could no longer act on her own behalf," posited the Court, "how could she have clothed Barbee with the appearance of authority to act on her behalf?" The Court also noted Kindred had presented no authority for the proposition that apparent agency could be created by "exigent circumstances."

The Court then turned to Kindred's argument that Barbee could bind Glenn to the arbitration agreement as a "health care surrogate" under the Tennessee Health Care Decisions Act (THCDA). Tenn. Code § 68-11-1801, et seq. The Court observed that the THCDA required both an incompetency determination by the patient's appointed physician and an identification of a surrogate. Because there was no determination of incompetency or identification of a surrogate, the Court found Barbee could not have acted under the THCDA.

Accordingly, the Court vacated the order compelling arbitration and remanded the matter for further judicial proceedings.