Can a State Hold that Powers of Attorney Will Only Bind Principals to Arbitration if Binding to Arbitration Is Expressly Mentioned in the POA?

A wife has a general power of attorney to act on behalf of her husband. A daughter has a general power of attorney to act on behalf of her mother. Using the powers of attorney they sign their loved ones into a nursing home. The paperwork includes a binding arbitration clause. When the husband and mother die, the wife and daughter blame the deaths on the nursing home and sue it. The nursing home moves to dismiss the suits to stick the plaintiffs with binding arbitration.

The trial court rules in favor of the plaintiffs, as does the court of appeals, as does the Kentucky Supreme Court. They hold that under Kentucky law a power of attorney can only bind a principal to arbitration only if the right to bind the principal to arbitration is expressly provided in the power of attorney.

The Supreme Court of the United States ruled in favor of the nursing home. They held that the Federal Arbitration Act superseded any state rule disfavoring arbitration, and, that, therefore, Kentucky's rule was contrary to that act.

Justice Kagan wrote for seven members of the court. New Justice Gorsuch recused himself, and Justice Thomas dissented consistently with earlier opinions of his that the Federal Arbitration Act doesn't apply to state court proceedings.

Kindred Nursing Centers, v. Clark, No. 16-32, 581 U.S. _____, (May 15, 2017.)

Some disputes are better suited to arbitration than to trial.  Arbitration with choice of law is good for international trade disputes, especially where the contracting parties can each pay the costs of hiring the arbitrators, etc.  Otherwise, an unscrupulous party could grow a million flowers of delay that could drag on for years. Arbitration has worked pretty well between stockbrokers and their customers. They make sense where our brains are miswired to make a disinterested decision (For more on this read Predictably Irrational by Dan Ariely. I could even see that nursing home wrongful death cases might qualify.

Arbitration makes me uncomfortable in arm's length consumer transactions, especially when the consumer is expected to pay in the low four figures or above in advance for the arbitrators and must \ additionally a lawyer who knows about arbitration and the subject matter of the dispute. Often the location is very convenient for the business (in a town where one of their main offices are) and very inconvenient for the claimant who, along with counsel,  might have to make multiple cross-country trips.

Arbitration can burden a claimant with high costs and strip a claimant of many of the protections of the constitutions (federal and state), statutes (federal and state), and procedures of courts- arbitration of manufactured housing disputes, workplace discrimination, software license agreements, etc. Furthermore, these contracts are often contracts of adhesion.  Don't agree to arbitration? Well, then no mobile home for you, or job, or use of vital software.

Notwithstanding all that, if arbitration is sometimes advisable, I am sympathetic with courts. like the one here in Clark, making it very difficult to weasel out of arbitration agreements, It would not take  very many exceptions to make the FAA a dead letter.

One spouse might get a large discretionary bonus each year, based in part on good work done during the community property period. Other spouse gets what?

Miguel Angel Loya had a job in which he got a sizeable bonus every Spring. He and his wife Leticia B. Loya were getting a divorce and executed a mediated settlement agreement dividing their property. They did this shortly before he got one of his bonuses.When it came, Miguel wanted it, and Leticia said that it wasn't in the property division. The trial court agreed with Miguel, saying, among other things, that it had already been divided in his favor as his future income.
Leticia appealed to the 14th Court of Appeals where Justice Sharon McCally (one of my very favorite classmates in law school)

a majority opinion for herself and for Justice William J. Boyce

 favoring her. Chief Justice Ms. Kem Thompson Frost 

dissented, agreeing with the husband. The husband took up the case to the Supreme Court of the State of Texas, where a unanimous court-- their opinion written  by Justice Debra Lehrmann

 found for the husband.

The lesson-- write those MSAs very carefully. Texas state appeals justices will say that a thing is in MSA rather than develops rules that open up their finality.

Trial Court Admits Expert Testimony, or Not, at Its Discretion; Attorneys' Fees Must Be Segregated between Fee-Recovering and Non-Fee-Recovering Causes of Action

Beaumont Court of Appeals Chief Justice Steve McKeithen, writing for a panel including Justices Charles Kreger and Hollis Horton withdrew an earlier opinion in State Farm Lloyds v. Webb, No. 09-15-00408-CV. Webb sued State Farm Lloyds for breach of contract and unfair settlement practices. State Farm attacked the admissibility of a plaintiff's expert's testimony. Beaumont's Ninth Court of Appeals finds that admission of the testimony was not an abuse of discretion. They found that Webb could not recover extra-contractual damages beyond the policy benefits for his claim under the Insurance Code because he failed to demonstrate damages independent from the loss of the benefits. They concluded that the evidence did not enable reasonable and fair-minded people to find that State Farm engaged in a deceptive act or practice. And, following from that, denied extra-contractual damages. In the next issue, State Farm offered a field note from one of their adjusters, which the trial court would not admit. The panel found that even if State Farm were right, and that the note should have been admitted, that exclusion would not have changed the verdict, especially since evidence making the same point had been admitted. State Farm complained that cross-examination of State Farm's corporate representative-- also an adjuster-- as to the effect in this action of an unrelated Texas Supreme Court case in which State Farm was found to have acted in bad faith. The panel said that this issue was moot since it had struck the extra-contractual damages. As to Webb's attorneys' fees, it was held that he needed to segregate recoverable attorney’s fees-- the contract-breach fees- from the Insurance Code fees for claims that they lost on appeal, and which are unrecoverable. Tha appeals court rejected Webb's claims that:

1. Taking five percent out of the total contingent fees adequately segregated the two types of action, and
2. In this case, generally, the legal work on one cause of action was inextricably intertwined with the work on all the others, and that under such circumstances, segregation was not required.

The appeals court remanded the case to the trial court to get the different attorneys' fees amounts segregated, and for the amount attributable to the common law tort actions to be removed.

We often think over here that Texas Republican appeals courts are too easy on insurers in unfair practices cases, but in this case, I just don't find any of the horrors that I often read about in case reports and remember from my time clerking in a law firm that often accused insurers of unfair practices, and, at least once represented an insurance company in conservatorship against an abusive insured. This appears to have been a genuinely close case, but which, in the end, the courts overturned the insurer's in-house finding that it lacked liability. Surely the delays attended by all the insurer's investigations were frustrating to Mr. Webb, but it seems that all the insurer did, in this case, was to recheck the various changes of the claims, with adjusters suited to those changes.

This case should also remind contingent fee trial lawyers bringing-- as they should-- all the proper claims they can think of-- to keep time records pre-segregated to the different causes of action. If you're suing State Farm Lloyds with a number of causes of action-- some of which recover attorneys' fees and others which do not-- in Beaumont Texas you should know that State Farm is likely to fight your fees at trial and-- if you are successful at trial-- on appeal (No Democrat appellate justices for you at all) you should start planning your strategy for maximizing your fees, before or only shortly after you file the suit. Real-time time records contemporaneously segregated are much more credible than after-the-fact time records. I understand the argument that doing this might end up cutting your fees at the early part of the suit, but, as a practical matter, you're likely never getting cuttable fees anyway. To think otherwise is to be in denial.

State Farm Lloyds v. Webb, No. 09-15-00408-CV, (Tex. App.-- Beaumont, May 4. 2017, no pet. h.)