A California appellate court has upheld a trial court’s decision to deny arbitration in an elder abuse and wrongful death lawsuit against a memory care operator in the state. The operator may appeal.

The California 4th District appellate court on Aug. 7 upheld an Orange County Superior Court ruling denying arbitration in a complaint filed against Silverado. The court ruled that a 77-year-old resident’s adult children, who were appointed temporary conservators, did not have the legal authority to sign a resident/community arbitration agreement on her behalf.

Jeff Frum, Silverado’s senior vice president of sales and marketing, said the Irvine, CA-based company believes the court’s ruling is wrong.

“We believe the ruling is incorrect as the appellate court disregarded established law,” Frum told McKnight’s Senior Living. “We are considering an appeal to the California Supreme Court.”

Diane and James Holley sued Silverado for elder abuse and neglect, negligence, breach of contract and wrongful death, alleging “substandard treatment” of their mother, Elizabeth Holley, who had dementia and other medical issues when she moved into the Newport Mesa Memory Care Community in Costa Mesa, CA, on Nov. 1, 2017.

Three days later, Elizabeth Holley was transferred to Hoag Hospital after an X-ray showed a humeral fracture. She also had a hip fracture and several bruises, according to the complaint. She had surgery on Nov. 10, 2017, and died Feb. 10, 2018.

James and Diane Holley filed suit on Jan. 22, 2019. Silverado filed a motion to compel arbitration in October 2019 based on Diane Holley’s signature on the arbitration agreement.

In court documents, Diane Holley said she signed “a stack of paperwork” relating to her mother’s admission to the memory care community. 

“There was a great sense of urgency to the admissions process in which I signed these numerous forms,” Diane Holley had said, indicating she was told several times that “beds go very quickly at Silverado and that if I did not get all the forms signed and completed and a check deposited, that the bed could go to someone else on the waiting list.” She said no one from Silverado explained the resident/community arbitration agreement as a condition for admittance to the community. 

The Superior Court denied Silverado’s motion, saying there was insufficient evidence to show that Diane Holley had the authority to bind Elizabeth Holley to the arbitration agreement she signed as a temporary conservator. 

The appellate court agreed, finding that Diane and James Holley lacked the power to bind their mother to an agreement “giving up substantial rights without her consent,” and that they were constrained from making long-term decisions without prior court approval.