Arbitration Agreement not enforceable
The Mississippi Supreme Court recently ruled in Adams Community Care,Center L.L.C. v. Reed against one of the more ridiculous positions that the nursing home industry has put forth in arbitration disputes, the third party beneficiary argument even when a valid arbitration agreement doesn't exist. See Opinion here.
The Court ruled that the son did not have authority to bind his mother's claim to arbitration:
"To determine whether there is a valid arbitration agreement, we apply the law of contracts. See Grenada Living Ctr., LLC v. Coleman, 961 So. 2d 33, 36-37 (Miss. 2007). The elements of a contract are “(1) two or more contracting parties, (2) consideration, (3) an agreement that is sufficiently definite, (4) parties with legal capacity to make a contract, (5) mutual assent, and (6) no legal prohibition precluding contract formation.” Id. at 37. At issue is element four, whether James or Larry Wesley had the “legal capacity” to enter into the admissions agreement with ACNC which contained an arbitration provision.
ACNC argues that James and Larry Wesley had apparent authority because they represented to the nursing home via DeLisa Smith that each was the responsible party for Annie Reed. In order to recover under a theory of apparent authority, the claimant must put forth “sufficient evidence” of “(1) acts or conduct of the principal indicating the agent’s authority, (2) reasonable reliance upon those acts by a third person, and (3) a detrimental change in position by the third person as a result of that reliance.” Eaton v. Porter, 645 So.2d 1323, 1325 (Miss. 1994) (emphasis added). After reviewing the record, we find that ACNC has failed to put forth any evidence of prong one; therefore, the Court need not address prongs two and three.
For a third-party beneficiary to exist, there must first exist a valid contract executed by one with “legal capacity” to enter the contract. See Grenada Living Ctr., LLC v. Coleman, 961 So. 2d 33, 36-37 (Miss. 2007). ACNC has failed to put forth any evidence of James or Larry Wesley’s legal capacity to execute the admissions agreement.