Warning Regarding Assisted Living Contracts

A recent case in Multnomah County, Drury v. Assisted Living Concepts, considered whether an arbitration clause in an assisted living contract precluded a wrongful death lawsuit brought by the children of deceased facility resident, Dorothy.

Dorothy was suffering from dementia and her mental capacity was severely impaired at the time her son, Eddie, admitted her to the defendant’s assisted living facility. Eddie signed the facility’s admission paperwork and residency agreement. At that time he was not yet Dorothy’s guardian or conservator and did not then have a power of attorney for her.

The residency agreement included a clause requiring arbitration for all claims or disputes relating to the agreement or the services provided “to You by Us.” After about a year in the facility, Dorothy died as a result of injuries sustained in a fall. Her estate’s personal representative sued the facility for wrongful death resulting from negligent conduct. The defendants (unsuccessfully) moved to compel arbitration, arguing that the estate was bound to the residency agreement as a third-party beneficiary of the contract.

On appeal, the court agreed that Dorothy’s estate was not bound to the agreement and its arbitration clause. Under general contract law principles, a third-party beneficiary is presumed to assent to a contract when it accepts benefits or otherwise seeks to enforce rights under that contract. Dorothy was a “third-party donee beneficiary” of the residency agreement signed by her son. The critical issue for the court was Dorothy’s mental capacity – or lack thereof. Even though Dorothy accepted the contract’s benefits (the facility’s services and apartment), her lack of requisite mental capacity meant that her acceptance of benefits did not ratify the contract. 

This case emphasizes the importance of getting one’s legal affairs in order BEFORE you become incapacitated, particularly your estate plan that includes a power of attorney and an advance directive for medical care. 

Recent WA Case: Insanity = No Inheritance

 

From time to time we will publish recent local cases or legislative bills:

Man murdered his mother, stepbrother, and his mother’s boyfriend.  Jury found him not guilty by reason of insanity.  The mother’s estate then received money from a wrongful death case.  In re Estate of Kissinger ruled the slayer could not inherit from his mother’s estate because the Washington slayer statute applied and the slayer was treated as having predeceased his mother.  RCW 11.84.010.    

Comment:  It’s good when the law aligns with common sense; just because the jury finds you not guitly by reason of insanity does not mean you still get to inherit for your misdeeds.   

Recent Ruling: Personal Representative Compensation

From time to time, we will publish blurbs on recent local court opinions and state legislation:

Brown v. Hackney, — P.3d –, 2009 WL 1394832 (Or App 2009)

Background: Brother of the decedent, a beneficiary through intestate (without a will) succession, challenged the payment of the personal representative from funds acquired through the settlement of a wrongful death action initiated by the personal representative.

 

Holding: The personal representative may be compensated based on the proceeds of a wrongful death settlement. ORS 116.173 bases personal representative compensation on the “whole estate” which is greater than the intestacy “estate.” The decedent’s “whole estate” is “comprised of all property both within the jurisdiction of the probate court as well as property outside the jurisdiction of the probate court.”

 

Comment:  This fight was over an amount of $5,200.  $5,200!  Really!?!  Can’t we negotiate matters like grownups, instead of taking them up to the court of appeals?