United States District Court, N.D. Illinois, Eastern Division
JOSEPH TESTA, on behalf of SAMUEL J. TESTA, Plaintiff,
EMERITUS CORPORATION, d/b/a EMERITUS AT ORLAND PARK, Defendant.
MEMORANDUM OPINION AND ORDER
E. CHANG, District Judge.
Testa brings this personal-injury action on behalf of his
father, Samuel Testa, to recover for injuries that Samuel
allegedly suffered when he lived at an assisted living
facility run by Emeritus Corporation. Emeritus believes
that a valid arbitration agreement binds the parties, so the
company moved to compel arbitration. In response, the Testas
argue that the arbitration agreement is invalid. In an
earlier opinion, the Court explained why the validity
determination boiled down to one issue: whether either an
Illinois power of attorney or an Arizona power of attorney
signed by Samuel gave Joseph the actual, express authority to
bind Samuel to the arbitration agreement. On consideration of
the parties' supplemental briefs, the answer is no, so
the Court denies Emeritus's motion to compel arbitration.
the background facts, which are not in dispute, are taken
from the prior Opinion. R. 18, 9/4/15 Opinion at 2-5,
Testa v. Emeritus Corp., 2015 WL 5183900 (N.D. Ill.
Sept. 4, 2015). Samuel Testa was admitted to Emeritus
at Orland Park, an assisted living facility, on October 25,
2012. R. 1, Exh. A, Compl. Â¶ 5. (For convenience's sake,
this Opinion refers to both the facility itself and the
company as "Emeritus."). On November 1, 2012,
exercising a power of attorney for his father, Joseph Testa
signed an "Assisted Living Establishment Contract,
" which set the terms of Samuel's residence at
Emeritus. R. 8, Exh. 2, Establishment Contract. Three weeks
later on November 22, Joseph signed, as Samuel's
"Authorized Representative, " a separate
Arbitration Agreement with Emeritus. R. 20-4, Exh. 4,
Arbitration Agreement. That second contract is entitled
"Agreement to Resolve Disputes by Binding Arbitration,
" and it states in relevant part that "any action,
dispute, claim or controversy of any kind... arising out of
the provision of assisted living services, healthcare
services, or any other goods or services provided under the
terms of any agreement between the Parties... shall be
resolved exclusively by binding arbitration ...."
Id. Â¶ 2 (emphasis in original). The Arbitration
Agreement further provides that "[a]dmission to the
Community is not contingent upon signing this
Agreement." Id. at 2.
Joseph signed either the Establishment Contract or the
Arbitration Agreement on his father's behalf, Samuel had
given Joseph two powers of attorney:
June 2010, an Illinois Statutory Short Form Power of Attorney
for Health Care ("Illinois POA"), R. 20-2, Exh. 2;
and (2) in March 2001, an Arizona durable power of attorney
("Arizona POA"), R. 20-1, Exh. 1. The purpose of
the Illinois POA, according to its prefatory notice, is to
give Joseph "broad powers to make health care decisions,
including... to require, consent to or withdraw any type of
personal care or medical treatment for any physical or mental
condition and to admit [Samuel] to or discharge [him] from
any hospital, home or other institution." Illinois POA
at 1. Consistent with this purpose, Paragraph 1 of the
Illinois POA gives Joseph the authority "to make any and
all... personal care, medical treatment, hospitalization, and
health care" decisions. Id. Â¶ 1. The Illinois
POA also specifies that it "is intended to be as broad
as possible so that [Joseph] will have authority to make any
decision [Samuel] could make to obtain or terminate any type
of health care." Id. The Illinois POA then sets
forth Joseph's powers, some of which are quoted from the
Illinois Power of Attorney Act's section on health-care
power of attorneys, 755 ILCS 45/4-10. One provision is an
enabling-type authority, meaning it gives Joseph the
authority to execute the other powers: "The agent may
sign and deliver all instruments, negotiate and enter into
all agreements and do all other acts reasonably necessary to
implement the exercise of the powers granted to the
agent." Id. at 5 (quoting 755 ILCS 45/4-10(c)).
Arizona POA is premised on Arizona law. ARS Â§ 14-5501
(governing durable power of attorney). Articles I, II, and
III of the Arizona POA govern "asset control, "
"health care decisions, " and "administrative
provisions, " in that order. Article I states broadly
that Joseph "shall have full power and authority to do
any and all acts for [Samuel's] benefit which [Samuel]
might do if [he] were present." Arizona POA, art. I.
Several examples are then listed "by way of illustration
but not by way of limitation, " including "to ask,
demand, sue for... sums of money, " "to sell,
assign, and transfer stocks" and other securities,
"to borrow money, " "to manage real property,
" and "to make and verify income tax returns."
Id. art. I Â¶Â¶ 1-11. Another power is "to retain
counsel on [Samuel's] behalf, to appear for [him] in all
actions and proceedings to which [he] may be party in the
courts of Arizona or elsewhere, to commence actions and
proceedings in [his] name and to sign and verify [his] name
on all complaints, petitions, answers and other pleadings of
every description." Id. art. I Â¶ 9.
January 2015, Joseph filed suit on Samuel's behalf in
Cook County Circuit Court, alleging that Samuel-who left
Emeritus in March 2014-had suffered physical injuries,
including fractured bones, as a result of Emeritus's
negligence during his stay. Compl. Â¶Â¶ 8-19, 23-27. Emeritus
removed the action to federal court, R. 1, and then moved to
compel arbitration under the Arbitration Agreement that
Joseph signed on November 22, 2012. R. 8, Def.'s Mot.
earlier Opinion, the Court rejected Joseph's arguments
that the Arbitration Agreement lacked consideration and
mutual assent. 9/4/15 Opinion at 6-11. But at the same time,
the Court also rejected Emeritus's agency arguments that
Joseph had implied or apparent authority to enter into the
Arbitration Agreement, id. at 20-21, as well as the
argument that Samuel had ratified the Arbitration Agreement,
id. at 22-23. What remained, the Court explained,
was more briefing on whether Joseph had actual, express
authority to bind Samuel to arbitration on the basis of the
Illinois or Arizona powers of attorney. Id. at
11-19. As explained next, neither power of attorney granted
Joseph the authority to enter into the Arbitration Agreement,
so Emeritus's motion to compel arbitration is denied.
Federal Arbitration Act, which applies to "[a] written
provision... evidencing a transaction involving commerce,
" 9 U.S.C. Â§ 2, governs this dispute. Under the FAA, an
arbitration agreement "arising out of such contract or
transaction... shall be valid, irrevocable, and enforceable,
save upon such grounds as exist at law or in equity for the
revocation of any contract." Id. "Although
it is often said that there is a federal policy in favor of
arbitration, federal law places arbitration clauses on equal
footing with other contracts, not above them."
Janiga v. Questar Capital Corp., 615 F.3d 735, 740
(7th Cir. 2010) (citing Rent-A-Center, West, Inc. v.
Jackson, 561 U.S. 63, 68 (2010)). That is, the FAA was
intended to respect parties' agreements to arbitrate and
"put arbitration on a par with other contracts and
eliminate any vestige of old rules disfavoring
arbitration." Stone v. Doerge, 328 F.3d 343,
345 (7th Cir. 2003).
parties have a valid arbitration agreement and the asserted
claims in a lawsuit are within its scope, then the
arbitration requirement must be enforced.
U.S.C. Â§Â§ 3-4; Sharif v. Wellness Int'l Network,
Ltd., 376 F.3d 720, 726 (7th Cir. 2004) (citing
Kiefer Specialty Flooring, Inc. v. Tarkett, Inc.,
174 F.3d 907, 909 (7th Cir. 1999)). Whether a binding
arbitration agreement exists is determined under principles
of state contract law. Janiga, 615 F.3d at 742
(citing First Options of Chicago, Inc. v. Kaplan,
514 U.S. 938, 934 (1995)). And "the party seeking to
invalidate or oppose the arbitration agreement bears the
burden of demonstrating that the arbitration agreement is
unenforceable and that the claims are unsuitable for
arbitration." Paragon Micro, Inc. v. Bundy, 22
F.Supp. 3d 880, 887 (N.D. Ill. 2014) (citing Green Tree
Fin. Corp.-Ala. v. Randolph, 531 U.S. 79, 91-92 (2000)).
The FAA also "establishes that, as a matter of federal
law, any doubts concerning the scope of arbitrable issues
should be resolved in favor of arbitration." Moses
H. Cone Mem'l Hosp. v. Mercury Constr. Corp., 460
U.S. 1, 24-25 (1983).
argues that the Arbitration Agreement is invalid because he
never had the authority to bind Samuel to arbitration under
the Illinois and Arizona POAs. Emeritus responds that both
POAs established an agency relationship and expressly gave
Joseph the power to enter into the Arbitration Agreement.
basic agency principles are the same in Illinois and Arizona.
An agent's authority to act for the principal can be
either actual or apparent. See Patrick
Eng'g, Inc. v. Naperville, 976 N.E.2d 318, 329 (Ill.
2012); Ruesga v. Kindred Nursing Ctrs., LLC, 161
P.3d 1253, 1261 (Az. Ct. App. 2007). In turn, actual
authority-meaning the principal actually gave
authority to the agent-can be either express or implied.
Id. "Express authority is directly granted to
the agent in express terms by the principal and extends only
to the powers the principal confers upon the agent."
Curto v. Illini Manors, Inc., 940 N.E.2d 229, 233
(Ill.App.Ct. 2010). One way to confer express authority is
through a power of attorney. See id.
("[Express] authority may be granted through a written
contract, a power of attorney or a court-ordered
guardianship." (citations omitted)); Amcore Bank,
N.A. v. Hahnaman-Albrecht, Inc., 759 N.E.2d 174, 181
(Ill.App.Ct. 2001) ("The power of attorney lists
specific powers given to the attorneys-in-fact."). The
other form of actual authority is implied authority, which
"arises when the conduct of the principal, reasonably
interpreted, causes the agent to believe that the principal
desires him to act on the principal's behalf."
Curto, 940 N.E.2d at 233. Separate from actual
authority is apparent authority, which applies even when the
principal has not actually given the agent any authority; put
another way, apparent authority exists "where a
principal has created the appearance of authority in an
agent, and another party has reasonably and detrimentally
relied upon the agent's authority."
Patrick, 976 N.E.2d at 329-30 (citations omitted).
The party alleging an agency relationship must prove it by a
preponderance of the evidence. See Granite
Properties Ltd. P'ship v. Granite Inv. Co., 581
N.E.2d 90, 92 (Ill.App.Ct. 1991); Curran v. Indus.
Comm'n of Ariz., 752 P.2d 523, 526 (Az. Ct. App.
earlier opinion, the Court rejected the arguments that Joseph
had actual implied authority or apparent authority to sign
the Arbitration Agreement for his father. 9/4/15 Opinion at
20-22. What's left is whether the Illinois and Arizona
POAs gave ...