In its reported opinion filed on July 28, 2016, the Court of Special Appeals of Maryland (“Appellate Court”), which is Maryland’s intermediate appellate court, refused to compel the wrongful death beneficiary to arbitrate her Maryland wrongful death claim against a Maryland nursing home, holding that “a decedent’s arbitration agreement ordinarily does not bind the decedent’s family members to arbitrate a claim under the Maryland wrongful death statute.”
The Appellate Court also held that an order denying an independent, free-standing petition to compel arbitration is a final judgment from which the aggrieved party has the right to appeal (“the denial of a petition to compel arbitration may be an appealable final judgment if the petition is brought as a separate action in which the sole claim is the arbitrability of a dispute”); however, there is no right to appeal a denial of an application to compel arbitration if the application is filed in a related pending proceeding.
The Maryland Nursing Home Arbitration Agreement
The decedent was admitted to the defendant Maryland nursing home in February 2012. At the time of her admission, the decedent executed a written agreement to resolve a broad range of potential controversies by binding arbitration pursuant to the Maryland Uniform Arbitration Act (“MUAA”). The scope of the arbitration agreement extended to “any action, dispute, claim or controversy of any kind . . . now existing or hereafter arising between the parties in any way arising out of, pertaining to or in connection with or relating to” the provision of services by FutureCare, acts or omissions of FutureCare’s agents, as well as “any survival action or wrongful death claim[.]”
Another section of the arbitration agreement stated it would “inure to the direct benefit of and bind the parties and their respective personal representatives, heirs, successors and assigns, including . . . all persons whose claims derive through, or on behalf of, the Resident, including those of any parent, spouse, child, guardian, executor, administrator, legal representative, or heir of the Resident, as well as any survivor or wrongful death claim [sic] . . . .” The agreement further stated that the parties were “each relinquishing and waiving their right under applicable law to have any claim decided in a court of law before a judge and/or a jury.”
At the time of her death in the Maryland nursing home on March 24, 2012, the decedent was survived by her daughter, who filed a Maryland wrongful death medical malpractice action on August 1, 2014, seeking compensatory damages for mental anguish, emotional pain and suffering, and loss of society, comfort, advice, and guidance that she claimed to have experienced as a result of her mother’s death. The daughter also sought to have her Maryland wrongful death medical malpractice lawsuit tried before a jury.
In its response to the Maryland wrongful death lawsuit, the defendant nursing home contended that the daughter’s wrongful death claim was subject to an enforceable binding arbitration agreement. The defendant nursing home moved to stay the Maryland wrongful death action pending the outcome of a separate petition to compel arbitration, which it filed on August 25, 2014. The daughter responded by denying the existence of an agreement between herself and FutureCare: she never signed the arbitration agreement, she never intended to be bound by the agreement, she never had given her mother authority to enter an agreement on her behalf, she was not a third-party beneficiary of the agreement, and she had never attempted to enforce any of its provisions.
The trial court subsequently denied the defendant nursing home’s petition to compel arbitration of the daughter’s wrongful death claim. The nursing home appealed.
The Appellate Court’s Decision
The Appellate Court stated that under Maryland’s arbitration statute, “a provision in a written contract to submit to arbitration any controversy arising between the parties in the future is valid and enforceable[.]” CJP § 3-206(a) (emphasis added). The Appellate Court further stated that contract principles govern a court’s decision about the existence of an arbitration agreement, and although Maryland law looks with favor upon arbitration as a method of dispute resolution, it does not look with favor upon sending parties to arbitration when there is no agreement to arbitrate. (However, as an exception to the general rule that arbitration agreements impose no obligations on third parties, a third party may be required to arbitrate if that third party is acting in a representative capacity on behalf of a party to the agreement.)
The Appellate Court stated that an action under Maryland’s wrongful death statute is separate, distinct, and independent from a survival action, even when those actions arise out of a common tortious act (“a Maryland wrongful death claim is derivative of the decedent’s claims only in the limited sense that ‘[t]he two actions stem from the same underlying conduct, which must have resulted in the decedent having a viable claim when she was injured'”).
In the case the Appellate Court was deciding, the daughter was not a representative of her mother’s estate seeking recovery for her mother’s injuries when she asserted her wrongful death claim against FutureCare; she was not a representative of her mother’s estate seeking recovery for her mother’s injuries; and, she was acting on her own behalf to recover for her own losses. The Appellate Court stated that the wrongful death action is, both in form and substance, a controversy between the daughter and FutureCare: it is not a continuation of any controversy between the decedent and FutureCare. Furthermore, the decedent never owned the right to recover damages under CJP § 3-904 for her own wrongful death, and hence she had no power to bind the person who has that right (her daughter) to an agreement to arbitrate. In short, notwithstanding that the agreement purports to require the daughter to arbitrate her wrongful death claims against FutureCare, basic contract principles support the conclusion that she has no such obligation.
The Appellate Court held that neither the language of the Maryland wrongful death statute nor the cases construing that language support the conclusion that decedents may contractually obligate their statutory beneficiaries to arbitrate the beneficiaries’ wrongful death claims (“under Maryland law a decedent ordinarily cannot bind his or her wrongful death beneficiaries to arbitrate their wrongful death claims”).
Source FutureCare Northpoint, LLC v. Peeler, No. 2602, September Term, 2014.
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