Valid Power-of-Attorney Must Be Given by the Principal

Valid Power-of-Attorney Must Be Given by the Principal

      A recent decision of the Kentucky Court of Appeals ultimately addresses the simple fact that in order for a power-of-attorney to be valid, it must be given by the principal.  GGNSC Stanford LLC, v. Rowe, No. 2012-CA-002330-MR, ___ S.W.3d __, 2012 WL 4208924 (Ky. App. Sept. 21, 2012).

      Deborah Rowe, the child of Clara LaVon Rowe and William Henry Rowe, was mentally incompetent from birth.  Her parents cared and provided for her into her adulthood.  Likely crucial for this decision, however, Clara and William never obtained an order of guardianship with respect to Deborah.  In October, 2001, Clara and William executed a “power of attorney” naming Nancy Meadows as Deborah’s attorney in fact.  In that power of attorney, Clara and William identify themselves as Deborah’s “parents and guardians.”

      In 2007, Deborah was placed in a nursing home; Nancy signed Deborah’s admission papers as “PoA” and presented a copy of her power-of-attorney to the home.  Those admission papers included an arbitration agreement.  Two years later, Deborah passed away at that same home.  Thereafter, Deborah’s brothers, as co-administrators of her estate, brought a wrongful death action against that nursing home and certain of its affiliates.  The defendants sought to refer the dispute to arbitration.  In turn, the co-administrators asserted that there existed no binding agreement to arbitrate.  The trial court agreed with that ruling, which determination was appealed to the Court of Appeals. 

      With respect to assertions that Nancy had, on Deborah’s behalf, both actual and apparent authority to enter into the arbitration agreement, the court engaged in a discussion of both bodies of law.  Ultimately, the court found these arguments to fail on the simple basis that Nancy’s purported authority, whether actually granted by Clara and William or otherwise, must fail because it was Deborah, not Clara and William, who was sought to be bound:

The principal problem with the nursing home’s argument, however, that it is based upon a faulty premise:  Deborah’s parents were not and could not be the principals in this set of facts.  Nancy was purporting to act on Deborah’s behalf, not on behalf of Clara and William.  Attempts to trace Nancy’s so-called apparent authority to Deborah’s parents then, must be unsuccessful because their actions could not create a reasonable belief in [the nursing home] that Nancy had authority to act on Deborah’s behalf.

      Although not addressed by the court, it can be inferred that the opposite holding would have been rendered had Clara and William taken the step of being legally appointed as Deborah’s guardian.  Needless to say, for those adult parents and other relatives who are caring for disabled children, siblings and other relatives who have reached the age of majority, formal guardianship procedures need to be followed.