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NO. COA12-702 NORTH CAROLINA COURT OF APPEALS Filed: 15 January 2013 LUCILLE CROSSMAN, as Administrator of The Estate of LIONEL CROSSMAN, Deceased, Plaintiff-Appellee, v. LIFE CARE CENTERS OF AMERICA, INC.; DEVELOPERS INVESTMENT COMPANY, INC.; LIFE CARE MANAGEMENT, LLC; HENDERSONVILLE MEDICAL INVESTORS, LLC; and MICHELLE MORROW, Defendants-Appellants. Henderson County No. 11 CVS 52

Arbitration and Mediation -- arbitration unenforceable -- failure in material terms

agreement

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The trial court did not err in a case involving an agreement to arbitrate by denying defendant's motion to dismiss and to compel arbitration. The agreement was unenforceable because it was impossible to perform due to a failure in its material terms.

NO. COA12-702 NORTH CAROLINA COURT OF APPEALS Filed: 15 January 2013 LUCILLE CROSSMAN, as Administrator of The Estate of LIONEL CROSSMAN, Deceased, Plaintiff-Appellee, v. LIFE CARE CENTERS OF AMERICA, INC.; DEVELOPERS INVESTMENT COMPANY, INC.; LIFE CARE MANAGEMENT, LLC; HENDERSONVILLE MEDICAL INVESTORS, LLC; and MICHELLE MORROW, Defendants-Appellants. Henderson County No. 11 CVS 52

Appeal by Defendants from orders filed 24 January and 7 February 2012 by Judge Eric L. Levinson in Henderson County

Superior Court. Heard in the Court of Appeals on 25 October 2012. Smith Moore Leatherwood LLP, by Terrill Johnson Harris and Elizabeth Brooks Scherer, for Defendants-Appellants. Connor & Connor, LLC, by Kenneth L. Connor, for PlaintiffAppellee. STEPHENS, Judge. Facts and Procedural History On 14 January 2011, while serving as administrator of her husband's estate, Ms. Lucille Crossman ("Ms. Crossman") filed a

-2wrongful death complaint against Life Care Centers of America, Inc., Developers Investment Company, Inc., Life Care Management, LLC, Hendersonville Medical Investors, LLC, and Michelle Morrow, (collectively, "Defendants") in Henderson County Superior Court. Defendants own, operate, and manage Life Care Center of

Hendersonville ("Life Care" or "the Facility"). The basis of Ms. Crossman's complaint centered on the medical care given Mr.

Lionel Crossman

("Mr. Crossman")

from 5 July 2007 through 5

March 2009, while he resided at Life Care. In the year 2000, Mr. Crossman suffered a stroke while on vacation partially Despite capacity in Florida with and Ms. with Crossman. limited That event left him

paralyzed these and

communication Mr. Crossman's

ability. mental

physical

limitations, ability

decision-making

remained

"cognitively

intact," and he continued to live at home with his wife until May of 2004. At that time, Mr. Crossman could no longer remain at home and entered Life Care as a full-time resident. Upon entry, he signed a document entitled "Voluntary Agreement for Arbitration" ("the Arbitration Agreement" or "the Agreement"), which stipulated that the parties agreed to submit all claims arising out of the care and treatment of Mr. Crossman at Life Care to binding arbitration. The Agreement also specified that

-3such disputes would be handled via an arbitration hearing

"before a board of three arbitrators selected from the American Arbitration Association ("AAA")" and that the arbitrators would apply the applicable rules of the AAA. The Agreement was not signed by Ms. Crossman. Mr. Crossman remained at Life Care until 5 March 2009 when he was discharged to the hospital. One week and six days later, on 18 March 2009, he died under hospice care. fraud, Ms. Crossman and

alleges

ordinary

and

medical

negligence,

willful

wanton conduct, and unfair and deceptive trade practices on the part of Defendants, claiming that their actions and inaction as caretakers occurring between 5 July 2007 and 5 March 2009 were, together, the proximate cause of Mr. Crossman's injuries1 and eventual death. On 23 February 2011, Defendants filed a motion to dismiss the case and to compel arbitration based on the Agreement,

signed by Mr. Crossman when he entered the Facility in May of 2004. On 9 June 2011, the trial court filed an order denying Defendants' motion and requiring the parties to complete

1

The injuries allegedly suffered by Mr. Crossman while a resident at Life Care include malnutrition, dehydration, hypernatremia, metabolic encephalopathy, pain and suffering, mental anguish, physical decline, disfigurement, physical impairment, and loss of enjoyment of life.

-4discovery as "to the existence of an enforceable agreement to arbitrate." The order halted all discovery on the merits of Ms. Crossman's allegations until the arbitration controversy was

resolved. Discovery on the arbitration matter ensued, and the trial court held an evidentiary hearing concerning Defendants' motion to dismiss and compel arbitration on 7 November 2011. On 24 January 2012, the trial court filed an order denying Defendants' motion to dismiss and to compel arbitration. The Honorable Eric L. Levinson ("Judge Levinson"), Superior Court Judge presiding, found no basis on which to enforce arbitration of the claims made by Ms. Crossman. Despite Mr. Crossman's

established capacity to enter into the Arbitration Agreement on his own behalf, the court concluded that the Agreement was

unenforceable because (1) it was impossible to perform due to a failure in its material terms, and (2) arbitration agreements signed by decedents do not bind wrongful death beneficiaries. Two weeks later, on 7 February 2012, Judge Levinson filed an order denying Defendant's motion to reconsider. Defendants filed notice of appeal on 22 February 2012. Standard of Review "[A]n appeal from an order denying arbitration, although interlocutory, is immediately appealable because it involves a

-5substantial right which might be lost if appeal is delayed." HCW Ret. & Fin. Servs., LLC v. HCW Employee Benefit Servs., LLC, __ N.C. App. __, __, 731 S.E.2d 181, 185 (2012) (internal quotation marks omitted). "The standard governing our review of this case is that `findings of fact made by the trial judge are conclusive on appeal if supported by competent evidence, even if . . . there is evidence to the contrary.' . . . `Conclusions of law drawn by the trial court from its findings of fact are

reviewable de novo on appeal.'" Tillman v. Commercial Credit Loans, Inc., 362 N.C. 93, 100

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