July 14, 2017

Power of Attorney - Agent's Authority

When a principal appoints an agent, the agent's authority is limited by the scope of the authorizing document. 

For example, if the principal only permits the agent to sell the principal's house while they are on vacation, this would not entail allowing the agent to mortgage the property, lease the property or host a massive party at the house by a local fraternity such as Lambda Lambda Lambda. 

Conversely, if the principal gave the agent the authority to encumber the property, in addition to selling it, the agent would be permitted to mortgage the property. Similarly, if the principal gave the agent the authority to retain any outside professional necessary to sell the property, the agent could retain a plumber, roofer, carpenter, etc.

In a recent appellate decision, the central issue in the case was whether "whether an attorney-in-fact who admitted her principal to a residential care facility for the elderly made a "health care" decision. If she did, as the trial court found, she acted outside the scope of her authority under the power of attorney, and the admission agreement she signed, and its arbitration clause this appeal seeks to enforce, are void."

Hutcheson v. Eskaton Fountainwood Lodge (2017) __ C4th__

In this case, the agent admitted the principal to a residential care facility because of health issues. "A medical appraisal performed the day of her admission disclosed Lovenstein was suffering from dementia and seizures. She was confused and disoriented. She engaged in inappropriate, aggressive, and wandering behaviors. She was not able to follow instructions consistently, and she was depressed. She required "complete" supervision."

The principal's doctor recommended that the agent return the principal to her home because the residential care facility allegedly over-medicated the principal. Unfortunately, matters went awry when the agent went to retrieve the principal.

"On March 22, 2012, Charles went to FountainWood to pack Lovenstein's belongings and move Lovenstein into her home. However, Lovenstein choked on her lunch at FountainWood that day and was transferred to a hospital. Doctors allegedly diagnosed her with aspiration pneumonia and severe dysphagia (difficulty in swallowing). She remained hospitalized until March 28, 2012, and died on April 11, 2012."

Ultimately the court found that the agent had made a health care decision by admitting the decedent to a residential care facility. Thus, the agent had acted outside her authority under the power of attorney agreement, as it did not authorize her to make a "health care decision." Consequently, the arbitration clause was not binding on the plaintiffs because the principal, through her agent, had not validly executed the binding arbitration agreement.