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Enforcing Arbitration Agreements Just Got Harder in Georgia

Legal Alert

Enforcing Arbitration Agreements Just Got Harder in Georgia

In a matter of first impression, the Georgia Court of Appeals recently held that a nursing home arbitration agreement signed by a probate-appointed legal guardian is not enforceable without a power of attorney instrument.  See CL SNF, LLC et al. v. Fountain, as next friend of Leroy Wiggins, -- Ga. App. --, (Docket No. A20A0773; decided May 19, 2020).

Prior to the Wiggins decision, there were no Georgia cases interpreting the powers of a probate-appointed guardian under the Georgia guardianship statute, O.C.G.A. § 29-4-20 et seq. Following Wiggins, it is now clear that neither the guardianship statute nor a probate guardianship instrument will confer sufficient authority on a guardian to execute an arbitration agreement. In short, the Court of Appeals foreclosed all arguments that a letter of guardianship instrument is akin to a power of attorney.  

In Wiggins, a Georgia nursing home appealed a trial court’s order denying the nursing home’s motion to compel arbitration in an action filed by Minnie Fountain on behalf of her nephew and adult legal guardian, Leroy Wiggins. The nursing home defendants contended that the trial court erred in finding that an arbitration agreement signed by Mr. Wiggins’ legal guardian pursuant to a letter of guardianship instrument was unconscionably “one-sided.” The Court of Appeals stopped short of ruling that the terms of the arbitration agreement were unconscionable and instead focused on the question of authority of a legal guardian in Georgia. Ultimately, the Wiggins court held that Ms. Fountain did not have sufficient authority to bind her adult legal guardian to arbitration.

The powers of a legal guardian in Georgia are derived by appointment from a probate court and memorialized in the form of legal guardianship letters. Additionally, the Georgia Code vests certain automatic powers in a legal guardian within O.C.G.A. § 29-4-23. Subsection (3) of O.C.G.A. § 29-4-23(a) gives a guardian the power to “[b]ring, defend, or participate” in legal, equitable, or administrative proceedings, including alternative dispute resolution, if they are “appropriate for the support, care, education, health, or welfare of the ward.” See also O.C.G.A. §§ 29-4-22 (a), (b) (6).

The Court of Appeals held that the plain language of the guardianship statute (“to bring, defend, and participate in ... alternative dispute resolution”) “did not extend to signing the voluntary pre-dispute Arbitration Agreement on behalf of [the resident].” The court further held that the decision to waive a guardian's right to a trial by jury is “not a decision made in the best interest of the ward” and is not consistent with the fiduciary nature of the guardian representative’s duties. Finally, the Court rejected the argument that a letter of guardianship instrument is akin to a power of attorney instrument.

While applied in the context of a nursing home arbitration agreement, the Wiggins decision has wide-ranging implications given the push for arbitration as a means to a faster, cheaper, and more efficient avenue of dispute resolution across industries.

Authored by Brannon Arnold and Anna Idelevich.

This alert provides a general overview of recent legal developments.  It is not intended and should not be relied upon as legal advice.

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