Taxation & Estate Planning

1st DCA: power of attorney authorized execution of binding arbitration agreement

By Juan C. Antúnez

Five Points Health Care, Ltd. v. Mallory, --- So.2d ----, 2008 WL 5411834 (Fla. 1st DCA Dec 31, 2008)

Under Florida law an attorney-in-fact's authority is limited solely to actions "specifically enumerated in the durable power of attorney." F.S. 709.08(7)(a). Sounds simple enough. But the question courts have to grapple with is how specific does the enumerated grant of authority in the durable power of attorney (DPOA) have to be?

With respect to arbitration agreements, the 2d DCA has recently come out at both ends of the spectrum. In January of 2008 the 2d DCA ruled in In re Estate of McKibbin that a specific reference to the arbitration agreement in the DPOA was needed. Having apparently experienced a change of heart, a few months later in September of 2008 the 2d DCA basically reversed itself, ruling in Jaylene, Inc. v. Moots that a general grant of authority in the DPOA was all you need.

My guess is that most Florida appellate courts will err on the side of enforcing arbitration agreements whenever they can. So I expect they'll enforce arbitration agreements executed under broadly-stated grants of authority in DPOA's more often than not. And that's exactly what happened in the linked-to opinion.

In the linked-to opinion the 1st DCA described the key provisions of the contested DPOA as follows:

The nursing home admission agreement which contained the arbitration clause was signed by Carlene Mallory under the durable power of attorney (POA) granted her by her mother. The “Durable Power of Attorney” signed by Alfreda Mallory a year before she was admitted to the nursing home stated, in part:

All acts done by my attorney-in-fact pursuant to this power shall bind me, my heirs, devisees and personal representatives; provided, however, that all such acts performed hereunder shall be for my benefit only and not for the benefit of my attorney-in-fact.

The POA listed seventeen paragraphs specifying the powers of the attorney-in-fact, one of which stated that the attorney-in-fact was authorized to: “Prosecute, defend and settle all actions or other legal proceeding touching my estate or any part of it or touching any matter in which I may be concerned in any way.” The seventeenth paragraph authorized the attorney-in-fact to: “Do anything regarding my estate, property and affairs that I could do for myself.” 

Based on the foregoing, and relying in part on the 2d DCA's McKibbin decision, the trial court ruled that because the DPOA didn't contain a specific reference to arbitration agreements, the contested arbitration clause was unenforceable.  The 1st DCA reversed, basing its analysis on the less stringent standard applied in the 2d DCA's Jaylene opinion:

[W]e find persuasive Jaylene, Inc. v. Moots, 2008 WL 4181140 (Fla. 2d DCA Sept. 12, 2008), in which the Second District Court of Appeal declined to follow its prior opinion in McKibbin, noting that “the opinion in McKibbin does not set forth the language of the power of attorney under review in that case” and “is not controlling here where the POA unambiguously makes a broad, general grant of authority to the attorney-in-fact.” Id. at p. 3. In Jaylene, the court reversed an order denying a motion to compel arbitration in circumstances similar to the case at issue.

.  .  .  .  .

We note that the trial court did not have the benefit of the opinion in Jaylene when it entered its order. Nevertheless, we find the reasoning in that opinion persuasive, and we find that the POA at issue is sufficiently similar to the POA at issue in that case to warrant application of that reasoning to the case at issue.

The order denying the motion to compel arbitration is REVERSED and the case is REMANDED for further proceedings.

Lesson learned?

I have no doubt that the specific context of this case and others addressing the enforceability of arbitration agreements signed by attorneys-in-fact operating under DPOA's is significant. Which means you need to be careful when looking to these opinions in the types of cases probate lawyers usually run into as part of their practice: DPOA's being used to change estate planning documents [click here] or change life-insurance beneficiary designation forms [click here, here] or otherwise defraud elderly clients [click here]. In those cases I expect you'll find appellate courts will demand a much higher level of specificity in terms of the authority granted under the DPOA.

Full post as published by Florida Probate Litigation Blog on January 18, 2009 (boomark / email).