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Cullinane v. Beverly Enterprises - Nebraska, Inc.

Supreme Court of Nebraska

June 15, 2018

Thomas Cullinane, as Special Administrator for the Estate of Helen Cullinane, deceased, appellee,
v.
Beverly Enterprises - Nebraska, Inc., doing business as Golden LivingCenter - Valhaven, appellant, and Thomas Larson, Jr., DPM, et al., appellees.

         1. Arbitration and Award. Arbitrability presents a question of law.

         2. ___. Whether a stay of proceedings should be granted and arbitration required is a question of law.

         3. Judgments: Jurisdiction. A jurisdictional issue that does not involve a factual dispute presents a question of law.

         4. Judgments: Appeal and Error. When reviewing questions of law, an appellate court resolves the questions independently of the lower court's conclusions.

         5. Arbitration and Award: Appeal and Error. The standard of review as to the issue of arbitrability summarily tried to the court is the same as in a bench trial of a law action.

         6. Judgments: Appeal and Error. In a bench trial of a law action, a trial court's factual findings have the effect of a jury verdict and will not be set aside on appeal unless clearly wrong.

         7. ___: ___. In reviewing a judgment awarded in a bench trial of a law action, an appellate court does not reweigh evidence, but considers the evidence in the light most favorable to the successful party and resolves evidentiary conflicts in favor of the successful party, who is entitled to every reasonable inference deducible from the evidence.

         8. Jurisdiction: Appeal and Error. Before reaching the legal issues presented for review, it is the duty of an appellate court to determine whether it has jurisdiction over the matter before it, and this is so even where neither party has raised the issue.

         9. Jurisdiction: Final Orders: Appeal and Error. For an appellate court to acquire jurisdiction of an appeal, there must be a final order entered [300 Neb. 211] by the court from which the appeal is taken; conversely, an appellate court is without jurisdiction to entertain appeals from nonfinal orders.

         10. Federal Acts: Arbitration and Award: Final Orders: Appeal and Error. In order to determine whether state law governs the finality for purposes of appeal of an order denying a motion to compel arbitration under the Federal Arbitration Act, courts must first apply state procedural rules to determine whether the order is final for purposes of appeal and then determine whether the result of that inquiry would undermine the goals and policies of the act.

         11. ___: ___: ___: ___. A direct appeal from an order denying a motion to compel arbitration furthers the objectives of the Federal Arbitration Act by permitting final resolution of the issue of arbitrability without having to first conclude a judicial proceeding on the merits, at which point the arbitral remedy would be rendered essentially meaningless.

         12. Final Orders: Appeal and Error. Under Neb. Rev. Stat. § 25-1902 (Reissue 2016), the three types of final orders which may be reviewed on appeal are (1) an order which affects a substantial right and which determines the action and prevents a judgment, (2) an order affecting a substantial right made during a special proceeding, and (3) an order affecting a substantial right made on summary application in an action after judgment is rendered.

         13. Arbitration and Award: Final Orders. The denial of a motion to compel arbitration is a final, appealable order because it affects a substantial right and is made in a special proceeding.

         14. Arbitration and Award. Arbitration is a matter of contract, and a party cannot be required to submit to arbitration any dispute which he or she has not agreed so to admit.

         15. Federal Acts: Arbitration and Award: Contracts. If arbitration arises from a contract involving interstate commerce, it is governed by the Federal Arbitration Act.

         16. Constitutional Law: Waiver: Intent. A party has a constitutional right to adjudication of a justiciable dispute, and the law will not find a waiver of that right absent direct and explicit evidence of actual intent of a party's agreement to do so.

         17. Arbitration and Award. Unless the parties clearly and unmistakably provide otherwise, the question of whether the parties agreed to arbitrate is to be decided by the court, not the arbitrator.

         18. Arbitration and Award: Contracts. Disputes about arbitrability for a court to decide include threshold questions such as whether the parties are bound by a given arbitration clause or whether an arbitration clause in a concededly binding contract applies to a particular type of controversy.

         [300 Neb. 212] 19. Arbitration and Award: Intent. Parties can agree to arbitrate gateway questions of arbitrability, such as whether the parties have agreed to arbitrate or whether their agreement covers a particular controversy, if they do so with clear and unmistakable intent.

         20. Arbitration and Award. A valid delegation clause requires the court to refer a claim to arbitration to the arbitrator to decide gateway arbitrability issues.

         21. Arbitration and Award: Contracts. Enforcement of an arbitration agreement involves two analytical steps: The first is contract formation-whether the parties entered into any arbitration agreement at all. The second involves contract interpretation to determine whether this claim is covered by the arbitration agreement.

         22. Federal Acts: Arbitration and Award: Words and Phrases. A delegation clause is an agreement to arbitrate a threshold issue and is simply an additional, severable, antecedent arbitration agreement the party seeking arbitration asks the court to enforce, and the Federal Arbitration Act operates on this additional arbitration agreement just as it does on any other.

         23. Federal Acts: Arbitration and Award: Contracts. Arbitration in Nebraska is governed by the Uniform Arbitration Act as enacted in Nebraska, but if arbitration arises from a contract involving interstate commerce, it is governed by the Federal Arbitration Act.

         24. Federal Acts: Arbitration and Award. Where a transaction falls within the scope of the Federal Arbitration Act, the substantive issue of whether the motion to compel arbitration should be granted is a question of federal law.

         25. ___: ___. Under 9 U.S.C. § 4 (2012) of the Federal Arbitration Act, the court shall hear the parties, and upon being satisfied that the making of the agreement for arbitration or the failure to comply therewith is not in issue, the court shall make an order directing the parties to proceed to arbitration in accordance with the terms of the agreement. If the making of the arbitration agreement or the failure, neglect, or refusal to perform the same be in issue, the court shall proceed summarily to the trial thereof, if no jury trial be demanded by the party alleged to be in default.

         26. Arbitration and Award. Under Neb. Rev. Stat. § 25-2603(a) (Reissue 2016), on application of a party showing a valid arbitration agreement and the opposing party's refusal to arbitrate, the court shall order the parties to proceed with arbitration, but if the opposing party denies the existence of the agreement to arbitrate, the court shall proceed summarily to the determination of the issue so raised and shall order for the moving party; otherwise, the application shall be denied.

         [300 Neb. 213] 27. Federal Acts: Arbitration and Award. Neb. Rev. Stat. § 25-2603 (Reissue 2016) does not defeat the Federal Arbitration Act's objective, expressed in 9 U.S.C. § 4 (2012), that if the making of the arbitration agreement or the failure, neglect, or refusal to perform the same be in issue, the court shall proceed summarily to the trial thereon.

         28. Appeal and Error. An appellate court will not consider an issue on appeal that was not passed upon by the trial court.

         29. Federal Acts: Arbitration and Award: Contracts. The Federal Arbitration Act makes arbitration agreements valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract.

         30. Contracts: Fraud. In the absence of fraud, one who signs an instrument without reading it, when one can read and has had the opportunity to do so, cannot avoid the effect of one's signature merely because one was not informed of the contents of the instrument.

         31. ___: ___. The doctrine that the carelessness or negligence of a party in signing a writing estops him or her from afterward disputing the contents of such writing is not applicable in a suit thereon between the original parties thereto when the defense is that such writing, by reason of fraud, does not embrace the contract actually made.

         32. ___: ___. Fraud in the execution goes to the very existence of the contract, such as where a contract is misread to a party or where one paper is surreptitiously substituted for another, or where the party is tricked into signing an instrument he or she did not mean to execute.

         33. ___: ___. Fraud in the inducement goes to the means used to induce a party to enter into a contract; in such cases, the party knows the character of the instrument and intends to execute it, but the contract may be voidable if the party's consent was obtained by false representations.

         34. Fraud: Proof. A fraudulent misrepresentation claim requires a plaintiff to establish the following elements: (1) A representation was made; (2) the representation was false; (3) when made, the representation was known to be false or made recklessly without knowledge of its truth and as a positive assertion; (4) the representation was made with the intention that the plaintiff should rely on it; (5) the plaintiff did so rely on it; and (6) the plaintiff suffered damage as a result.

         35. Fraud. Fraudulent misrepresentations may consist of half-truths calculated to deceive, and a representation literally true is fraudulent if used to create an impression substantially false.

         36. ___. Whether a party's reliance upon a misrepresentation was reasonable is a question of fact.

         37. ___. A party is justified in relying upon a representation made to the party as a positive statement of fact when an investigation would be required to ascertain its falsity.

         [300 Neb. 214] 38. Fraud: Proof: Circumstantial Evidence. In fraud case, direct evidence is not essential, but proof of fraud drawn from circumstantial evidence must not be guesswork or conjecture; such proof must be rational and logical deductions from facts and circumstances from which they are inferred.

         39. Trial. Under Neb. Rev. Stat. § 25-1127 (Reissue 2016), in the absence of a request by a party for specific findings, a trial court is not required to make detailed findings of fact and need only make its findings generally for the prevailing party.

         40. Trial: Judgments: Evidence: Appeal and Error. Where trial is to the court and no request for specific findings is made, if there is a conflict in the evidence, an appellate court, in reviewing the judgment rendered, will presume that controverted facts were decided by the trial court in favor of the successful party and the findings will not be disturbed unless clearly wrong.

         41. Affidavits. An affidavit is admissible in certain enumerated situations, including motion practice, which includes the use of affidavits relating to preliminary, collateral, and interlocutory matters.

         42. Judgments: Evidence: Appeal and Error. Even though an appellate court is, in the absence of oral testimony, equally capable as the trial court of examining the evidence and drawing conclusions therefrom and is under a duty to do so, and even though a case was submitted to the trial court without oral evidence, the duty of the appellate court to evaluate the facts does not extend to the right or duty to make an independent evaluation thereof without regard to the findings below. In such a case, an appellate court is loath to overturn the findings of an experienced trial judge unless in the opinion of the court they are clearly wrong.

         43. Affidavits. Statements in affidavits as to opinion, belief, or conclusions of law are of no effect.

          Appeal from the District Court for Douglas County: Gregory M. Schatz, Judge. Affirmed.

          Jeanelle R. Lust and Charles E. Wilbrand, of Knudsen, Berkheimer, Richardson & Endacott, L.L.R, for appellant.

          Shayla M. Reed, of Reed Law Offices, PC, L.L.O., for appellee

          Thomas Cullinane. Heavican, C.J., Miller-Lerman, Cassel, Stacy, and Funke, JJ.

         [300 Neb. 215] FUNKE, J.

         Beverly Enterprises - Nebraska, Inc., doing business as Golden LivingCenter - Valhaven (GLCV), appeals the denial of its motion to dismiss or stay proceedings and compel arbitration. GLCV moved to enforce an agreement to arbitrate against Thomas Cullinane, as special administrator for the estate of his mother, Helen Cullinane; Thomas had filed a wrongful death action against GLCV. Thomas objected to GLCV's motion, and the court ruled in his favor, finding the execution of the "Alternative Dispute Resolution Agreement" (the ADR Agreement) was not binding upon Helen or her estate. GLCV appealed, and for the reasons set forth below, we affirm.

         I. BACKGROUND

         Helen was a resident of GLCV, a skilled nursing facility located in Valley, Nebraska. She was 88 years old at the time of her admission in 2010 and suffered from dementia. She passed away on February 2, 2015. Thomas became the special administrator of Helen's estate and filed a wrongful death action against GLCV on behalf of the estate.

         GLCV filed a motion to dismiss or, in the alternative, stay proceedings and compel arbitration pursuant to § 4 of the Federal Arbitration Act (FAA), [1] in accordance with the terms of a written arbitration agreement between GLCV and Helen. GLCV asserted that Eugene Cullinane, Helen's husband, age 84, while acting as Helen's attorney in fact, agreed to resolve disputes through arbitration when he signed the ADR Agreement on September 28, 2010, the date Eugene and Helen were admitted to the facility.

         The front page of the ADR Agreement contains a title written in bold and capitalized letters and large font which states: "Alternative Dispute Resolution Agreement." The following language, in bold and capitalized letters, appears [300 Neb. 216] below the title: "This agreement is not a condition of admission to or continued residence in the facility." The ADR Agreement states:

The Parties agree that any disputes covered by this Agreement ("Covered Disputes") that may arise between them shall be resolved exclusively by an ADR process that shall include mediation and, where mediation is not successful, binding arbitration. The parties to this Agreement acknowledge and agree that upon execution by Resident, this Agreement becomes part of the Admission Agreement, and that the Admission Agreement evidences a transaction in interstate commerce governed by the [FAA].

         The ADR Agreement further includes the following language, in bold and capitalized letters:

The parties understand, acknowledge, and agree that they are selecting a method of resolving disputes without resorting to lawsuits or the courts, and that by entering into this agreement, they are giving up their constitutional right to have their disputes decided in a court of law by a judge or jury ....

         The ADR Agreement provides: "Covered Disputes, including the determination of the scope or applicability of this Agreement, shall be determined by arbitration . ..." A section in the agreement titled "Resident's Understanding" states: "The Resident understands that ... his or her signing of this Agreement is not a condition of admission to or residence in the Facility . . . ." The signature page of the document states in bold and capitalized letters and in large font: "This agreement governs important legal rights. Please read it carefully and in its entirety before signing."

         At the hearing on GLCV's motion to compel arbitration, GLCV offered the affidavit of Trisha Weberg, the business manager of GLCV. The affidavit included a copy of the durable power of attorney signed by Helen on July 23, 2008, which appointed Eugene as her attorney in fact. Weberg, who [300 Neb. 217] was not present when the ADR Agreement was executed, stated her personal knowledge concerning the facility's routine procedure with respect to its resident admissions. Weberg stated that when she assisted in the admission process, she would do the following: present the ADR Agreement to the resident and allow the resident and the resident's family members to read the paperwork; explain that by signing the ADR Agreement, the resident would waive his or her right to a trial and agree to submit any dispute to arbitration, but state that signing the ADR Agreement was not required to become a resident at the facility; obtain the resident's signature; and sign the document on behalf of GLCV. Weberg stated it is her belief that the normal procedure was followed with regard to Helen's admission. GLCV did not present an affidavit from its employee who executed the ADR Agreement on its behalf.

         Thomas offered affidavits from himself and Eugene. According to Eugene's affidavit, he and Helen sought admission to GLCV when Helen was transferred from the hospital on September 28, 2010. Helen was taken to a room, and a GLCV staff member led Eugene and Thomas into a small office. Eugene stated, "[W]e sat down and the female staff member presented me with a stack of papers which she said was 'the paperwork I needed to sign to admit my wife' and another stack to admit myself." He stated, "The staff member handled the papers, turned the pages and told me she needed my signature 'here' and directed me where to sign." Eugene conceded that he signed the ADR Agreement, but stated that he did so because it was his understanding that if he did not sign the paperwork, Helen would not have been admitted to receive health care. He stated he was not informed that any document in the stack of papers was optional, that the paperwork included an arbitration agreement, or that he was waiving his or his wife's right to a jury trial. Eugene stated he would have not signed the ADR Agreement had he known what it meant and that it was not required.

         [300 Neb. 218] Thomas stated in his affidavit that when he and Eugene met with the staff member in the office, she specifically stated that "'these are standard forms we need you to sign.'" Thomas stated she turned the stack of papers to face Eugene, flipped up the bottom half of the pages, and pointed to the place where she wanted him to sign. He stated that he was present during the entire meeting and that at no time did the staff member state any of the documents were optional or would have the effect of waiving legal rights.

         Based on the evidence, the district court entered an order which found that "Eugene ['s] execution of the arbitration agreement cannot be binding upon Helen . . ., nor her estate, and that [GLCV's] motion should be dismissed, and [GLCV] ...


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