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Because one who comports to act merely as "next friend" of a mentally incompetent person is "wholly without authority to make any contract that would bind her (or) her estate," the Supreme Court of Alabama, in a 5-4 decision, has ruled that a daughter-in-law's signature on a nursing home admission agreement did not bind the estate to arbitration.
In Noland Health Services, Inc. v. Wright, No. 1060061, 2007 WL 1300721 (Ala. May 4, 2007), Noland Health Services, Inc. (Noland) owned and operated a nursing home in which 86-year-old Dorothy Willis died, allegedly of neglect and medical malpractice.
Noland attempted to enforce an arbitration clause from the admission agreement against the estate's executor, Wright, who like the patient herself, was a non-signatory to the agreement. The only person who signed the admission agreement was a non-plaintiff, the patient's daughter-in-law Vicky Willis (Vicky).
In holding that neither the patient, nor Wright and the estate, were bound by the agreement, the Court noted that Vicky had not signed the agreement with or in Dorothy's name. Also, she had signed the agreement on a line labeled "responsible party" rather than the one labeled "legal representative," which was left blank.
The Court concluded that because Vicky did not sign Dorothy's name in any purported capacity and made no claim to be a legal representative, she was effectively signing as a "next friend." Consequently, neither "Wright nor Dorothy…expressly agreed to arbitrate" claims against Noland.
The Court also found Noland's other argument, that Wright had manifested his assent to the agreement by making a breach of contract claim, unpersuasive. The Court held that the case was in substance a tort claim filed under the Alabama Medical Liability Act, rather than a breach of contract case. Because the claims arose independently of the agreement, Wright could not waive his independent right to sue simply by averring that Noland's actions violated the agreement.
The dissenting justices disagreed with the majority that simply because an independent cause of action may exist, Wright could not have assented to the Noland contract. Unlike cases cited by the majority, where plaintiffs attempted to frame a tort claim as a contract action to avoid a pleading deficiency, Wright alleged both a medical malpractice claim and a breach of contract claim. By asserting the breach of contract action in his complaint, Wright ratified the agreement and assented to its terms, including arbitration, the dissent stated. Because he was now seeking to enforce the benefit of the agreement, he should also be bound by its obligations, including the obligation to arbitrate.
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