Wisler v. Manor Care of Lancaster PA, LLC
124 A.3d 317, 2015 WL 5215963, 2015 Pa. Super. 189 (2015)
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Rule of Law:
A third party who deals with an agent has an affirmative duty to ascertain the nature and extent of the agent's authority at the time of reliance. If the third party fails to review the written document granting authority, such as a power of attorney, it acts at its own peril and bears the burden of proving the agent had the specific authority to enter into the agreement in question.
Facts:
- Herbert C. Wisler was a resident at a ManorCare nursing home for two separate stays in 2010.
- At the time of his first admission, Wisler had numerous significant medical conditions and required assistance with all activities of daily living.
- His son, H. Randall Wisler, held a power of attorney (POA) for his father and handled the admissions process.
- During both admissions, H. Randall Wisler signed admissions paperwork and separate Arbitration Agreements on his father's behalf.
- H. Randall Wisler informed ManorCare staff that he possessed a POA for his father.
- ManorCare never obtained, requested a copy of, or reviewed the actual POA document to determine the extent of H. Randall Wisler's authority.
- The Arbitration Agreements were not a precondition for Herbert C. Wisler's admission to the ManorCare facility.
- Herbert C. Wisler died on February 6, 2011.
Procedural Posture:
- H. Randall and Keith Wisler (Executors), as co-executors of Herbert C. Wisler's estate, filed a complaint in a state trial court against ManorCare, alleging professional negligence and reckless conduct.
- ManorCare filed preliminary objections to the complaint, which included a request to compel arbitration based on agreements signed by H. Randall Wisler.
- The parties engaged in discovery related to the enforceability of the arbitration agreements.
- The trial court entered an order overruling ManorCare's objection to compel arbitration, finding that H. Randall Wisler lacked the authority to sign the agreements on the Decedent’s behalf.
- ManorCare, as the appellant, appealed the trial court's order refusing to compel arbitration to the Superior Court of Pennsylvania.
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Issue:
Does an agent have the authority to bind a principal to an arbitration agreement, thereby waiving the principal's right to a jury trial, when the third party seeking to enforce the agreement relied on the agent's claim of having a power of attorney but never reviewed the document itself to ascertain the scope of that authority?
Opinions:
Majority - Stabile, J.
No. An agent does not have the authority to bind a principal to an arbitration agreement when the third party fails to verify the scope of the agent's authority from the governing document. ManorCare, as the party asserting the existence of an agency relationship, bore the burden of proving it by a preponderance of the evidence and failed to do so. The court rejected ManorCare's arguments for express, apparent, and estoppel authority. Express authority could not be established because ManorCare, having been put on notice that authority was granted by a written document, failed its duty to inspect that document and now acts at its peril. Apparent authority was absent because such authority must emanate from the actions of the principal (Herbert Wisler), not the agent, and there was no evidence of any word or conduct by the principal. Authority by estoppel was also not found, as there was no evidence the principal knew of the agreements and negligently failed to disavow them. Finally, the court refused to draw an adverse inference against the Executors for not producing the POA, stating that an adverse inference is not evidence and cannot satisfy ManorCare's burden of proof.
Analysis:
This decision reinforces the principle that third parties carry the risk when dealing with agents acting under a written power of attorney. It establishes that a third party, like a healthcare facility, has an affirmative duty to inspect the POA document to confirm the agent's authority, especially when the agent is waiving a fundamental right like a jury trial. The ruling protects principals from being bound by agreements that may exceed the scope of authority they granted and discourages third parties from relying solely on an agent's verbal assurances. Consequently, facilities will likely implement stricter procedures to obtain and review POA documents during intake to ensure the enforceability of arbitration and other agreements signed by an agent.
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