
    CIRCUIT COURT OF THE CITY OF NORFOLK
    Melissa Gibson v. Medical Facilities of America, Inc., Gregory Yanta, and Mark Albright
    September 25, 2009
    Case No. (Civil) CL09-3289
   By Judge John R. Doyle, m

This matter came before the Court for argument on September 16, 2009, upon two motions by Defendants Medical Facilities of America and Gregory Yanta, by counsel, and one motion by Defendant Mark Albright, which are as follows:

(1) Motion To Transfer Venue by Medical Facilities of America and Gregory Yanta;

(2) Motion To Transfer Venue by Mark Albright; and

(3) Plea in Bar and Motion To Compel Arbitration by Medical Facilities of America and Gregory Yanta.

The court addresses each in turn below.

I. Motion To Transfer Venue by Medical Facilities of America and Gregory Yanta

A. Facts

According to the Virginia State Corporation Commission records, Medical Facilities of America is the general partner of at least thirty-one healthcare facilities throughout the Commonwealth of Virginia. (Pl.’s Obj. Brief Ex. B.) This includes both the Chesapeake Health & Rehabilitation Center, where the assault at issue in this case took place, and the Norfolk Healthcare Center located in the City of Norfolk. Medical Facilities of America acts as the General Partner in each Limited Liability Partnership which owns these healthcare centers. (Med. Fac. of Am.’s Reply to Pl.’s Obj. Brief p. 3.) Medical Facilities of America provides management oversight, site visits, and inspections.

Defendant Gregory P. Yanta is employed at Chesapeake Health & Rehabilitations Center and resides in Chesapeake. (Med. Fac. of Am.’s Mot. Br. 9.)

Defendant Mark Albright has a residence in Portsmouth and currently is incarcerated in Chesapeake. (Albright’s Mot. to Transfer Venue.)

B. Analysis

In order for venue to be proper, it must be in accordance with the provisions ofVa. Code §§ 8.01-261 through 8.01-262. Va. Code § 8.01-260. Va. Code § 8.01-261 enumerates cases in which there is a “preferred venue.” The case at hand does not fall into one of these categories. Va. Code § 8.01-262 specifies what are “permissive venues” in all other cases, such as this one. Permissive venue is where “the defendant regularly conducts substantial business activity.” Va. Code § 8.01-262(3).

Medical Facilities of America regularly conducts substantial business in Norfolk, Virginia, making venue there proper. Medical Facilities of America is the sole general partner in the limited liability partnership that owns the Norfolk Healthcare Center in the City of Norfolk. As the sole general partner, they play a key management role in Norfolk Healthcare Center. This management role is sufficient to make the City of Norfolk a permissive venue for any case in which the Medical Facilities of America is a named defendant.

The Court finds this case distinguishable from the Barnett case relied on by the Defendants. In Barnett, venue in the City of Richmond was denied even though the Defendant was a majority stockholder and supervisor of an air conditioning and heating company which had customers in Richmond. Barnett v. Kite, 271 Va. 65, 624 S.E.2d 52 (2006). All of the parties and witnesses in the case resided in Powhatan or Chesterfield. Id. The differentiating feature in that case is that the company on which venue was based was not headquartered in Richmond and only five percent of then customers were in Richmond. Id. The Plaintiff based his venue argument on the fact that the company bought equipment from suppliers in Richmond. This situation is clearly different from the relationship between Medical Facilities of America and the City of Norfolk. Medical Facilities of America plays a management role in a company that is located in Norfolk.

Venue may be transferred from a permissive venue if “good cause” is shown. Va. Code § 8.01-265. Good cause may be a substantial inconvenience to the parties or witnesses. Id. The burden to demonstrate good cause or substantial inconvenience falls on the defendant. Virginia Electric & Power Co. v. Dungee, 258 Va. 235, 245, 520 S.E.2d 164 (1999). The Court has discretion in determining whether the defendant has demonstrated good cause to transfer, and the plaintiffs forum selection should be given favor. Norfolk & W. Ry. v. Williams, 239 Va. 390, 392, 389 S.E.2d 714 (1990).

Good cause to transfer venue has not been shown. There is no demonstration of substantial inconvenience to the parties or witnesses. Chesapeake and Norfolk are so close in proximity that there is not a substantial difference in difficulty in getting to one courthouse or the other.

II. Motion To Transfer Venue by Mark Albright

A. Facts

Defendant Mark Albright has a residence in Portsmouth and currently is incarcerated in Chesapeake. (Albright’s Mot. to Transfer Venue.)

B. Analysis

Venue is proper to all defendants if it is proper to one defendant. Va. Code § 8.01-263. As the Court found above, venue in this case is proper in Norfolk for Medical Facilities of America. Thus, venue is also proper for Mark Albright.

HI. Plea in Bar and Motion To Compel Arbitration by Medical Facilities of America and Gregory Yanta

A. Facts

Melissa Gibson has been a resident at Chesapeake Health & Rehabilitation Center (CHRC) since November 1, 2007. She was comatose at the time of her admission and has been so since.

Ms. Gibson was formerly a resident of a nursing home in West Virginia. Ms. Gibson was admitted to CHRC by her sister, Putiona Lige, who signed a Business Contract as a “Responsible Party” for Ms. Gibson. Ms. Lige informally had assumed the responsibility for caring for Ms. Gibson for some time. Ms. Lige resided in Chesapeake, Virginia. Ms. Lige desired to relocate Ms. Gibson to a nursing home in Chesapeake so as to have her close to where Ms. Lige lived. Ms. Lige thus entered into discussions with the defendant Nursing Home that led to the transfer of Ms. Gibson to that facility and the signing of the contract.

The Business Contract signed by Ms. Lige on November 1, 2007, for admittance of Ms. Gibson includes a Binding Arbitration Agreement. This provision states, “Resident and Healthcare Center agree that ALL CLAIMS, DISPUTES, OR DISAGREEMENTS BETWEEN THEM . . . shall be submitted to BINDING ARBITRATION____”

The contract designated the parties as Melissa Gibson, Putiona Lige, and CHRC. The contract contained signature lines for “resident” and “responsible party.” Ms. Lige signed on the line as “responsible party.” The “resident” line is unsigned.

At the time the contract was signed on November 1,2007, Ms. Lige did not have a power of attorney (Ms. Gibson’s coma apparently came on suddenly from cocaine intoxication) or legal guardianship over Ms. Gibson (no one had yet petitioned to be appointed guardian of the comatose Ms. Gibson). Ms. Lige and another sister, Pertia Lige, did ultimately petition the Chesapeake Circuit Court and were appointed co-guardians of Melissa Gibson on January 7,2009, several months after the tort at issue occurred.

Thus, at the time the contract was executed, Ms. Gibson was comatose and all arrangements and decisions were made by Ms. Lige. Further, the transfer from one nursing home to another was occurring so as to locate Ms. Gibson in the city where Ms. Lige resided. Finally, the only authority by which Ms. Lige was operating was that of a loving sister seeking the twenty-four hour professional care for Ms. Gibson that the situation required and that she was unable to personally provide.

On July 3, 2008, Defendant Albright, a male nurse employee of the nursing home, sexually molested Ms. Gibson.

There were Readmission Agreements signed by Ms. Lige after Ms. Gibson had to be taken out of the CHRC for hospitalization and then returned. This was done on November 4, 2008, January 8, 2009, and April 17, 2009.

The Defendants move the Court to Order the parties to arbitration as called for by a provision in the residency contract in effect at the time of the incident.

B. Analysis

The Defendants set forth five grounds on which Ms. Gibson could be found to be bound by the Business Contract, and thus the arbitration agreement. They are (1) ratification of the Contract by Ms. Lige subsequent to Ms. Lige’s being appointed legal guardian of Ms. Gibson, (2) Virginia Code § 32.1-138(E) giving rights to closest family member of incapacitated persons, (3) the agency of Ms. Lige, (4) the apparent agency of Ms. Lige, and (5) Ms. Gibson’s status as a third-party beneficiary of the Contract. The Court will take each argument in turn.

1. Ratification of the Contract Subsequent to Obtaining Guardianship

The last day Mark Albright sexually abused Ms. Gibson was July 3, 2008. Therefore, the Contract that would have been in effect on July 3,2008, was the original Business Contract signed by Ms. Lige on November 1,2007. At that time, Ms. Lige was not the legal guardian of Ms. Gibson.

The Defendants argue that, by signing the Readmission Agreements on January 8, 2009, and April 17, 2009, after becoming a legal guardian, Ms. Lige has ratified the original contract as legal guardian of Ms. Gibson. Thus, Ms. Gibson was bound by the contract on the date of the sexual abuse. This is the equivalent of retroactively applying the power of guardianship. The Court does not find merit in this argument.

While the Readmission Agreements incorporate the provisions of the original Contract, they do not retroactively bind Ms. Gibson, through her guardian Ms. Lige, to the original Contract. At the time of the abuse, the contract in effect was the original Contract that was signed by Ms. Lige as a Responsible Party for Ms. Gibson, not as a legal guardian. The Court finds that the subsequent Readmission Agreements have no affect on the original contract.

2. Virginia Code § 32.1-138(E), Patient’s Bill of Rights

The Defendants rely on Virginia Code § 32.1-138(E)asasourceofMs. Lige’s authority to sign on behalf of Ms. Gibson. Virginia Code § 32.1-138 is commonly known as the Patient’s Bill of Rights. Subsection E gives “[a]ll rights and responsibilities specified in subsection A” of an incapacitated person to his or her “guardian, next of kin, sponsoring agency, or representative payee.” This subsection merely gives all of the notification and information rights listed in subsection A to the next of kin of an incapacitated person who is residing in a healthcare facility. There is no indication in Virginia Code § 32.1-138 that the section was meant to automatically give authority equivalent to legal guardianship. The Court will not find that this statute gives implicit authority to Ms. Lige to bind Ms. Gibson in a contract.

3. The Agency of Ms. Lige

The Defendants argue that signing the original contract as a “responsible party” meant that Ms. Lige had the authority and agency to bind Ms. Gibson to the contract. In support of this contention, the Defendants cite the Virginia Administrative Code’s definition of “responsible party.” The VAC defines a “responsible party” as “an individual authorized by the resident to act for him as an official delegate or agent.”

First, the Court finds that it is obvious Ms. Lige had no real authority to bind Ms. Gibson to this contract. She did not have legal power of attorney or legal guardianship. Thus, there is no actual agency. Further, CHRC was in the position to know the legal regulations of signing on behalf of another person, and CHRC could have remedied the lack of agency had they wanted Ms. Lige to have the authority to sign on Ms. Gibson’s behalf.

Second, the Court finds that reliance on the VAC to bind Ms. Gibson to the contract is misplaced for two reasons. First, the contract that Ms. Lige signed did not define “responsible party” and never referred to the VAC definition. By signing as Ms. Gibson’s “responsible party,” Ms. Lige was not making a statement that she had authorization from Ms. Gibson to sign as her agent. In fact, due to Ms. Gibson’s comatose state, there would be no reason to believe that Ms. Lige had any authorization from Ms. Gibson. Indeed, Ms. Lige did not sign on behalf of Ms. Gibson on the signatory line for “Resident.” Second, the statute continues on to state, “A responsible person or party is not a guardian unless so appointed by the court.” Therefore, simply being a “responsible party” does not give one the legal ability to bind another person in contract. The Court finds that this statute does not allow the inference that Ms. Lige had any authority to sign for Ms. Gibson.

4. The Apparent Agency of Ms. Lige

Apparent agency exists when “one... permits another to hold himself out as agent and appears to acquiesce in that assumption of authority.” Giordano v. Atria Assisted Living, Virginia Beach, L.L.C., 429 F. Supp. 2d 732, 736 (E.D. Va. 2006) (quoting Sanchez v. Medicorp Health Sys., 270 Va. 299, 618 S.E.2d 331 (2005)). There must be (1) an appearance of agency, (2) acquiescence by the principal, and (3) reasonable reliance by a third party. Id.

In this case, there was neither an appearance or representation by Ms. Lige that she had the agency to sign for Ms. Gibson, nor any acquiescence by the principal, Ms. Gibson, nor reasonable reliance by CHRC.

First, Ms. Lige never represented that she had a legal guardianship or power of attorney. CHRC could have easily asked her if she had any authority to sign for Ms. Gibson and simply advised her to get one from the Court in a reasonable amount of time. There is no indication that Ms. Lige meant to give the appearance of having guardianship over her sister or held herself out as a guardian. By signing the “Responsible Party” line on the contract, it is reasonable to believe she thought it meant exactly what it stated, she was responsible for her sister’s care.

Second, there cannot be apparent agency in this situation because the comatose Ms. Gibson was obviously unable to acquiesce or object.

Finally, there is no apparent authority because it would be unreasonable for CHRC to believe Ms. Lige had legal guardianship simply because she signed on the “Responsible Party” line. CHRC is in a business where guardianships and powers of attorney are regular and frequently seen. As a medical facility, CHRC should be familiar with the legal requirements when signing for another person, and, as the drafter of the contract, CHRC was in a better position to ensure that it was executed correctly. The Court cannot find in this situation that Ms. Gibson is bound to the contract due to the apparent authority of Ms. Lige.

5. Ms. Gibson’s Status as a Third-Party Beneficiary

The third-party beneficiary rule is an exception to the general rule that a person must be a party to a contract to invoke it. Va. Code § 55-22. A person is a third-pariy beneficiary if the contract intended to confer benefit upon him. Professional Realty Corp. v. Bender, 216 Va. 373, 739, 222 S.E.2d 810, 812 (1976). A third-party beneficiary must directly benefit, not simply incidentally benefit, from the contract in order to sue. Norfolk-Portsmouth Newspapers, Inc. v. Stott, 208 Va. 228, 231 (1967).

The Defendants ask the Court to apply this rule in reverse, claiming that, if Ms. Gibson is a third-party beneficiary with the ability to sue under the contract, she should also be held to the burden of the arbitration provision in the contract. The Court finds that this argument is irrelevant to this case because Ms. Gibson’s claims are not reliant on the contract.

When the Plaintiff brings an action in tort rather than contract, asserts no claim under the contract, and does not require the existence of the contract to proceed, the arbitration provision of the contract is not applicable to the controversy. See Bishop v. Medical Facilities of Am., 65 Va. Cir. 187 (2004). However, simply suing in tort does not excuse a plaintiff from the provisions of the contract, the claim must not be significantly intertwined with the contract. Id.

Ms. Gibson has not brought a breach of contract claim, and her claims are not intertwined or dependent upon the contract. First, she alleges medical malpractice due to a breach of the standard of care. (Compl. ¶ 25.) In Virginia, medical malpractice cases may be brought in tort or contract. Va. Code § 8.01 - 581.1. Medical malpractice cases brought in tort are adjudicated on the duty of reasonable care that a healthcare provider owes a patient outside of a contract. Fairfax Hospital v. Curtis, 254 Va. 437, 442, 492 S.E.2d 642, 644 (1997). This claim does not require the contract as a basis, and Ms. Gibson does not allege any duty based on the contract. Second, Ms. Gibson alleges negligence. Parallel to medical malpractice, negligence is not based on a duty arising from the contract. Instead, the negligence alleged by Ms. Gibson in the Complaint arises from a breach of the duty of reasonable care. (Compl. ¶ 30.) Finally, the claim for battery is clearly not grounded in contract.

Therefore, the Court finds that, even if Ms. Gibson was first found a third-party beneficiary to the contract, which actually had the primary purpose of transferring her to a location more convenient to her sister and then also found to be bound by the arbitration provision, the arbitration provision would not apply to the causes of action alleged in her Complaint because they are brought in tort and are not substantially intertwined with the contract.

Conclusion

The Court fust finds that venue is appropriate in Norfolk for all parties. The Motions To Transfer Venue made by Medical Facilities of America, Gregory Yanta, and Mark Albright are all denied.

The Court also overrules Defendants Medical Facilities of America’s and Gregory Yanta’s Plea in Bar and denies the Motion To Compel Arbitration.  