- Are statutory wrongful death beneficiaries bound by an arbitration agreement that was executed by the decedent or the decedent’s legal representative?
- Was the selection of the forum set forth in the arbitration agreement an integral part of the agreement such that the unavailability of the forum rendered the arbitration agreement unenforceable or was the choice of forum an ancillary logistical concern such that a court may appoint a substitute forum?
On July 22, 2013, Respondent, Peggy Sue Davis, initiated a civil action in the Circuit Court of Kanawha County on behalf of herself and the other statutory beneficiaries of Lillie May Gibson, seeking damages for the injuries sustained by Lillie Mae Gibson while a resident of the Mercer Nursing & Rehabilitation Center and her ultimate death on August 14, 2011. The Complaint asserts both survivorship claims and wrongful death claims. Upon being served with the Complaint, Petitioners filed a Motion to Dismiss and Compel Arbitration. Petitioners sought to enforce an arbitration agreement signed by Charles Gibson, Lillie May Gibson’s son, pursuant to a durable power of attorney, on November 10, 2008 when she was admitted to Mercer Nursing & Rehabilitation Center. The arbitration agreement at issue requires any claims between the parties to be resolved through binding arbitration and incorporates the National Arbitration Forum’s Code of Procedure. Because the NAF had ceased arbitrating consumer cases by the time Respondent filed her Complaint in the Circuit Court of Kanawha County, Respondent argued that the arbitration agreement failed under its own terms.
On February 18, 2014, after briefing and oral argument, the Circuit Court of Kanawha County entered an Order granting, in part, and denying, in part, Petitioners’ Motion to Dismiss. The Circuit Court held that statutory beneficiaries under West Virginia’s wrongful death statute are not bound by an arbitration agreement executed by the decedent or the decedent’s legal representative. In so holding, the Circuit Court found that neither the decedent nor her durable power of attorney had “the authority to waive the constitutional right to a jury trial of her subsequent wrongful death beneficiaries and bind them to arbitration.” The Circuit Court further found that the under the terms of the arbitration agreement, the availability of the NAF as an arbitration forum was an ancillary logistical concern rather than an integral part of the agreement to arbitrate. Accordingly, the Circuit Court of Kanawha County denied the Motion to Dismiss to the extent it sought to dismiss the wrongful death claims of the statutory beneficiaries and force them into arbitration and granted the Motion to Dismiss as to the decedent’s personal survivorship claims, ordering those claims to be resolved by arbitration.
The Circuit Court framed its ruling with respect to the wrongful death claims as an answer to a certified question allowing Petitioners to pursue an immediate appeal to the West Virginia Supreme Court. Specifically, the Circuit Court certified the following question and answer: “Question: Are the statutory wrongful death beneficiaries bound by an arbitration agreement that was executed by the decedent or the decedent’s legal representative? Answer: No.” Petitioners appealed the February 18, 2014 Order. Respondent filed a cross-appeal with respect to the ruling regarding the designation of the NAF as an arbitral forum to be an ancillary logistical concern.
Petitioners (AMFM, LLC, et al.):
The Circuit Court’s answer to the certified question is error and misinterprets clear precedent from the West Virginia Supreme Court and the Supreme Court of the United States. Petitioners argue that statutory wrongful death beneficiaries are bound by an arbitration agreement signed by a nursing home resident or her legal representative because a wrongful death action is a derivative action. According to Petitioners, the West Virginia Supreme Court found in Davis v. Foley, 193 W.Va. 595, 457 S.E.2d 532 (1995), that West Virginia’s wrongful death statute creates a cause of action for wrongful death which is derivative of the decedent’s personal injury claim. Petitioners argue that jurisdictions which have addressed the issue have consistently found that where the wrongful death claim is deemed to be a derivative claim, the statutory beneficiaries are bound by an arbitration agreement signed by the decedent or the decedent’s legal representative. Additionally, the Petitioners argue that the statutory wrongful death beneficiaries have no standing to challenge the arbitration agreement because their claims are derivative claims.
Additionally, Petitioners argue that the Circuit Court exempted an entire category of claims, i.e. wrongful death claims, from arbitration in violation of federal law. According to Petitioners, the Federal Arbitration Act, as interpreted by the United States Supreme Court, prohibits states from adopting a rule of law which categorically exempts a particular type of claim from arbitration. Because finding in favor of Respondent would create a rule of law which exempts wrongful death claims from arbitration agreements, Petitioners urge the Court to find in favor of Petitioners by finding that arbitration agreements signed by nursing home residents or their legal representatives are binding upon statutory wrongful death beneficiaries.
Petitioners also argue that the Circuit Court correctly found that the decedent’s personal survivorship claims are subject to the arbitration agreement. According to Petitioners, the arbitration agreement only requires use of the NAF’s Code of Procedure and does not require the claims to be decided by the NAF. Petitioners argued the Circuit Court correctly found that the NAF’s requirement that it administer its Code of Procedure is not binding and there is no evidence that Mr. Gibson would not have agreed to arbitrate absent the availability of the NAF as the forum. Thus, Petitioners argue the Circuit Court correctly found the naming of the NAF in the arbitration agreement to be an ancillary logistical concern rather than an integral part of the agreement under Credit Acceptance Corp. v. Front, 231 W. Va. 518, 745 S.E.2d 556 (2013).
Respondent (Peggy Sue Davis, Individually and on behalf of the Estate and Wrongful Death Beneficiaries of Lillie May Gibson):
Respondent argues that the Circuit Court of Kanawha County correctly found that statutory wrongful death beneficiaries are not bound by an arbitration agreement signed by a decedent or the decedent’s legal representative. Respondent argues Petitioners overstate Davis and maintains that Davis stands simply for the proposition that a statutory wrongful death claim is, by definition, derivative because it arises from the death of the decedent. According to Respondent, the issue before the Court goes beyond the origin of a wrongful death claim and focuses instead on the holder of the wrongful death rights, the statutory beneficiaries. “The rights retained and/or obtained by the wrongful death beneficiaries are separate and distinct from any that the decedent could have asserted during her lifetime and through her estate after her death. As such, neither the wrongful death claim nor the wrongful death beneficiaries’ right to recover is defined by the decedent’s rights.” Respondent argues that an independent right in designated survivors to sue for damages is created by the wrongful death statute, a right which belongs not to the decedent or the decedent’s estate, but to the individual survivors. Because the right to sue for wrongful death does not belong to either the decedent or her estate, neither the decedent nor her legal representative had the ability to agree to arbitrate claims that belong to others or to waive the survivors’ constitutional right to a jury trial.
Respondent distinguishes the cases relied upon by Petitioners for the proposition that derivative claims are subject to arbitration by pointing out the distinctions between West Virginia’s wrongful death statute and the wrongful death statutes in the jurisdictions referenced by Petitioners. Additionally, Respondent focuses upon decisions in other jurisdictions which have found that as an independent claim, a wrongful death claim is not subject to an arbitration agreement signed by the decedent. Respondent also notes decisions which find that as statutory wrongful death beneficiaries are not bound by arbitration agreements because they are not parties to the contract.
Respondent also cross-appeals the Circuit Court’s finding that the decedent’s survivorship claims are subject to the arbitration agreement. Respondent argues that the NAF was an integral part of the arbitration agreement and its unavailability renders the agreement unenforceable. Respondent distinguishes Front on the basis that the arbitration agreement at issue in Front provided for alternative forums. The arbitration provision signed by Mr. Gibson, however, does not provide for alternative forums or any other “opt-out” provision. Respondent argues that a finding that the selection of the NAF as the forum was an integral part of the agreement to arbitrate currently before the Court is supported by decisions from other jurisdictions.
The Supreme Court’s decision in this case will be significant as arbitration agreements have become standard operating procedure for nursing home admissions. A decision that statutory wrongful death claims are not subject to an arbitration agreement signed by the decedent or the decedent’s representatives will allow nursing homes to be held accountable in the courts of this State when a nursing home resident’s death is caused by the negligence of the nursing home and/or its employees. As the case has been placed on the Supreme Court’s Rule 20 docket, it is anticipated that the Court will issue a new point of law.