Georgia Supreme Court: Guardian Has Authority To Enter Into Pre-Dispute Arbitration Agreement On Ward’s Behalf

In CL SNF LLC v. Fountain, a September 21, 2021 opinion, the Georgia Supreme Court concluded that the Georgia Guardianship Code grants a  guardian authority  to  enter  into  a  binding  pre-dispute  arbitration  agreement  where  the  exercise  of  such power  is  reasonably  necessary  to provide  adequately  for  the  ward’s support, care, health, and welfare.

The Facts Of CL SNF, LLC v. Fountain

Minnie Fountain served as guardian for her adult nephew, Leroy Wiggins, who is now deceased.  The Georgia probate court issued letters of guardianship to Fountain charging her with responsibility for Wiggins’s care, subject to applicable law and further orders of the court.

In March 2014, Wiggins was admitted as a resident at CHC (Clinch Healthcare Center), a skilled nursing facility, and in connection with his admission, Fountain signed a “Facility Admission Agreement” containing an arbitration clause.  Fountain also signed a separate, three-page binding “Arbitration Agreement,” which directed that all claims associated with care provided by CHC be submitted to arbitration and expressly stated that Wiggins had the right to seek legal counsel concerning the agreement; that the signing of the agreement was not a precondition to Wiggins’s admission to, or his receipt of services from, CHC; and that the agreement “may be revoked by written notice to the Facility from the Resident within thirty (30) days of signature.”

In March 2019, Fountain filed a lawsuit against CHC and related corporations arising out of sexual battery committed against Wiggins by another resident at CHC.  CHC moved to compel arbitration.

The Georgia probate court denied the motion to compel arbitration for various reasons, including that it violated federal law, was commercially unreasonable, and was unconscionable.

The Georgia Court of Appeals granted CHC’s application for interlocutory appeal.  The Court of Appeals affirmed that denial of CHC’s motion to compel arbitration, but based its decision on a determination that neither the letters of guardianship nor the Guardianship Code granted Fountain the authority to bind Wiggins to the pre-dispute Arbitration Agreement.

The Georgia Supreme Court granted certiorari, asking the parties to address whether the Court of Appeals correctly concluded that a legal guardian of an adult ward appointed by a probate court and acting under letters of guardianship did not have the authority to enter into a pre-dispute arbitration agreement on behalf of the ward.

Georgia Requirements For Letters Of Guardianship

OCGA § 29-4-13 sets forth the requirements for orders granting guardianship.  Among the items that must be specified in an order granting guardianship are any limitations on the guardianship and a specific listing of any of the additional powers that are granted to the guardian.

In the order here, the Georgia probate court found that Wiggins was in need of a guardian, appointed Fountain, and provided that it was the guardian’s duty:

  • To see that the ward is adequately fed, clothed, sheltered and cared for
  • To see that the ward receives all necessary medical attention

 

The letters also informed Fountain that her authority to act pursuant to the letters of guardianship was subject to applicable statutes and to any special orders entered in the case.

The letters of guardianship did not explicitly address whether Fountain had the authority to enter into a pre-dispute arbitration agreement on Wiggins’s behalf.

A Georgia Guardian’s Duties Include Making Decisions For the Ward’s Well-Being

The Georgia Supreme Court began its analysis of whether a Georgia guardian was empowered to enter into a pre-dispute arbitration agreement on behalf of the ward by looking at a guardian’s general duties under the Georgia Guardianship Code.

OCGA § 29-4-22(a)sets out the general duties of a guardian and states that “[e]xcept as otherwise provided by law or by the court, a guardian shall make decisions regarding the ward’s support, care, education, health, and welfare.” The statute also directs that a guardian “shall consider the expressed desires and personal values of the ward” to the extent they are known and “shall at all times act as a fiduciary in the ward’s best interest and exercise reasonable care, diligence, and prudence.”).

Consistent with the broad authority granted in subsection (a) of the statute, subsection (b) describes other duties that the guardian shall perform, including “[a]rrang[ing] for the support, care, education, health, and welfare of the ward, considering the ward’s needs and available resources.”

OCGA § 29-4-23 outlines what powers a guardian may exercise “unless inconsistent with the terms of any court order relating to guardianship.”  The guardian may “exercise those other powers reasonably necessary to provide adequately for the support, care, education, health, and welfare of the ward.”

Does the Georgia Guardianship Code Explicitly Empower a Guardian To Enter Into an Arbitration Agreement On Behalf Of the Ward?

No, the Georgia Guardianship Code does not expressly address whether a guardian may enter into a pre-dispute arbitration agreement, but does reference alternative dispute resolution as a procedure that a guardian may seek in connection with providing care for the ward. OCGA § 29-4-23 (a) (3) states that a guardian may:

Bring, defend, or participate in legal, equitable, or administrative proceedings, including alternative dispute resolution, as are appropriate for the support, care, education, health, or welfare of the ward in the name of or on behalf of the ward.

Here, CHC asserted that the power to “bring” an arbitration proceeding necessarily implies that the guardian may enter into a pre-dispute arbitration agreement because binding arbitration cannot occur without the parties’ agreement. The Georgia Supreme Court noted, as recognized by the Court of Appeals, that a guardian may bring a legal proceeding and then agree to arbitration, so the authority to enter into a pre-dispute arbitration agreement is not necessarily implied to give effect to this provision.

Is the Power To Enter Into An Arbitration Agreement One That Is Reasonably Necessary To Adequately Provide For the Ward?

Yes, according to the Georgia Supreme Court, the power to enter into a pre-suit arbitration agreement can be “reasonably necessary” to adequately provide for the ward under OCGA § 29-4-23 (a) (4).

The Georgia Supreme Court stated:

No one questions that Fountain, as guardian, had the authority to enter into the Facility Admission Agreement to allow Wiggins to receive skilled nursing care from [CHC]. But included in that agreement is an arbitration clause, and if we accept Fountain’s argument that she had no power to enter into a pre-dispute arbitration agreement because it was not necessary to secure care for Wiggins, then a guardian considering a contract proposed by a care provider that includes terms later determined to be not absolutely necessary to the provision of such services would be able to avoid those terms of the contract even though the guardian in the exercise of her fiduciary duties may have concluded at the time of contracting to agree to those terms. Alternatively, if the guardian recognizes at the outset that the term is not absolutely necessary, the guardian would be required to return to the probate court for permission to enter into such agreement or, at least, into any unnecessary contractual provisions.

With respect to the pre-dispute arbitration agreement in this case, we cannot say as a matter of law that a guardian may never properly decide that entering a pre-dispute arbitration agreement would serve the ward’s needs, any more than we can say as a matter of law that a competent person may never find it prudent to enter into such a contract.

 

The Georgia Supreme Court concluded that the power to enter into a pre-dispute arbitration agreement under these circumstances is reasonably necessary to the guardian’s authority to arrange for care for the ward, and Fountain had the power to execute a pre-dispute arbitration agreement on the ward’s behalf in connection with the provision of care.

General Probate Issues