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What Powers Does a Power of Attorney Give Me?
A power of attorney (POA) is a document that authorizes a person (the “agent” or “attorney in fact”) to act on behalf of another person (the “principal”). Different kinds of POAs grant different kinds of authority. (For more on the basics of the financial power of attorney, the health care power of attorney, and the difference between limited, general, durable, and springing powers of attorney, check out this blog.)
If you’ve been named as an agent in a power of attorney, or if you are the principal, you might be wondering exactly what powers a power of attorney grants.
The answer is that it depends. The exact powers you have as an agent, or grant as a principal, depend on the wording of your power of attorney. That’s why it’s important to know exactly what’s in your POA(s). Sometimes the powers granted come down to the interpretation of just a word or two, as one woman who signed a document on behalf of her father discovered in a recent South Carolina Supreme Court case, Arredondo v. SNH SE Ashley River Tenant, LLC (read the opinion here). That case is discussed in detail below to show just how important the language in your estate planning documents can be.
But first, here are some examples of powers that POAs commonly grant to agents.
Powers Commonly Granted by a Power of Attorney
Different types of POAs grant different types of powers. Here are some examples.
A health care power of attorney, also called a medical power of attorney, may include the power of the agent to:
- Make decisions about the principal’s treatment, medication, surgery, pain relief options, and other care
- Discharge the principal from the hospital or other facility
- Access the principal’s medical records
- Sign documents related to the principal’s care
A financial power of attorney (which may be “general” or “durable”) may include the power of the agent to:
- Open, close, and access bank accounts and other financial accounts
- Buy and sell the principal’s property, like their house or stocks and bonds
- Collect debts owed to the principal and settle debts owed by the principal
- Financially care for principal’s family with assets from the principal’s estate
- Sign legal documents
Note that these lists are not exhaustive.
Both types of POAs typically include language to the effect that the agent must act in the best interest of the principal. Generally, the agent is not held liable for mistakes made in good faith when carrying out their role as agent.
Words Matter: Close Reading of Powers of Attorney in Arredondo
Remember that the bullet points above are just examples of the types of powers that POAs can grant. Because POAs are not standardized documents, it means that the exact powers granted depend on the exact wording in an individual power of attorney. Arredondo v. SNH SE Ashley River Tenant, LLC is a case in point. At the heart of the matter is whether a woman was authorized under a POA to sign an arbitration agreement on behalf of her father.
We’re going into detail here in order to show just how important individual words and phrases can be in legal documents. It’s also an interesting look at the way different courts in South Carolina interpret the same language to come to different conclusions.
In October 2012, Thayer W. Arredondo placed Hubert Whaley, her 84-year-old father suffering from dementia, into an assisted living facility in Charleston owned by the Respondents in the case. At the time her father was admitted, Arredondo had authority to act as her father’s agent under two separate powers of attorney, a General Durable Power of Attorney (GDPOA) and a Health Care Power of Attorney (HCPOA).
As her father’s agent, she signed several documents when they first arrived at the facility. She signed more a while later, including an arbitration agreement. The agreement waived the right to a trial by judge or jury and required arbitration for claims over $25,000, barred appeals, prohibited punitive damages, limited discovery, and gave Respondents the unilateral right to amend the agreement.
In February 2014, Whaley was admitted to Bon Secours St. Francis Hospital where he died six days later. Arredondo brought a wrongful death claim against Respondents, stating that the Respondents’ negligence and recklessness caused her father’s death. The Respondents moved to compel arbitration based on the agreement she had signed.
Arredondo argued that 1) the POAs that named her as an agent for her father did not give her the authority to sign the arbitration agreement, so she was not bound by it, and 2) even if they had, the agreement was “unconscionable” and therefore unenforceable.
The circuit court found in favor of Arredondo, ruling that neither POA gave Arredondo the authority to sign the arbitration agreement and that even if they had, the agreement was unconscionable. The South Carolina Court of Appeals reversed this decision, holding that Arredondo did have the authority and that the agreement was not unconscionable.
The case then went to the Supreme Court of South Carolina, which reversed the appeals court’s decision, finding that Arredondo didn’t have authority to sign the agreement under the POAs. It did not address the question of whether the agreement was unconscionable.
Interpreting the Language in the POAs
How is it that the appeals court and the supreme court came to opposite conclusions?
First let’s look at the relevant sections in the POAs.
The general durable POA gave Arredondo the power “To make, sign, execute, issue, assign, transfer, endorse, release, satisfy and deliver any and all instruments or writing of every kind and description whatsoever, whether sealed or unsealed, of, in or concerning any or all of my business affairs, property or other assets whatsoever, including all property, real, personal or mixed, stocks, securities and choses in action, and wheresoever situated, including, without limiting the generality hereof thereto, notes, bonds, mortgages, leases, deeds, conveyances, bills of sale, and assignments, endorsements, releases, satisfactions, pledges or any agreements concerning any transfers of the above or of any other property, right or thing.” (Emphasis added.)
The health care POA gave Arredondo the power “To take any other action necessary to making, documenting, and assuring implementation of decisions concerning my health care, including, but not limited to, granting any waiver or release from liability required by any hospital, physician, nursing care provider, or other health care provider; signing any documents relating to refusals of treatment or the leaving of a facility against medical advice, and pursuing any legal action in my name, and at the expense of my estate to force compliance with my wishes as determined by my agent, or to seek actual or punitive damages for the failure to comply.” (Emphasis added.)
At first reading, these long paragraphs of dense legalese sound (at least to the layperson) like they cover pretty much everything. Surely Arredondo was authorized under one or both of these paragraphs to sign the arbitration agreement in question, wasn’t she?
But the SC Supreme Court’s close reading found that this wasn’t so, and it countered all the arguments of the Respondents and the SC Court of Appeals.
Argument 1: “Choses in action”
The GDPOA contains an old term that comes from common law and isn’t used often in modern law, “choses in action.” The SC Supreme Court defines it here as “a type of property interest or a proprietary right to a claim or debt.” The appeals court interpreted the term broadly enough to encompass the signing of the arbitration agreement. But the supreme court agreed with Arredondo that the appeals court’s definition was too broad, and “the arbitration agreement did not concern a chose in action or any other property right Whaley possessed at the time Arredondo signed it.”
(As a side note, Justice Few wrote a separate concurring opinion making known his dislike of the continued use of the imprecise, “obsolete,” and “antiquated” term.)
Argument 2: “Any other property, right or thing”
The SC Court of Appeals also stated that Arredondo was authorized to sign the arbitration agreement under the GDPOA because the authority it gave her extended to “any other property, right or thing.”
But this short phrase is taken out of context, the supreme court says; a longer reading of the text changes its meaning. Arredondo was given the authority to execute “any agreements concerning any transfers of the above or of any other property, right or thing.” (Emphasis added by the supreme court.) The arbitration agreement was essentially a series of waivers and had nothing to do with transferring any kind of “property, right or thing”; therefore, this language in the GDPOA doesn’t give Arredondo the authority, either.
Argument 3: Title of GDPOA
The Respondents argued that the very title of the POA – “General Durable Power of Attorney” – was intended to give Arredondo broad authority to act as an agent for her father’s care. But the supreme court states that it does not rely on a title, but rather the provisions within the POA to determine what the scope of her authority was, continuing, “Certainly, the GDPOA could have been drafted to give Arredondo the broad power to sign all documents Whaley could sign himself or otherwise do anything Whaley could do himself, but it was not so drafted.”
Argument 4: “Necessary”
Moving on to the HCPOA, the supreme court asked: Was it “necessary” for Arredondo to sign the arbitration agreement in order to act in the best interest of her father’s health?
Arredondo submitted an affidavit in which she said that the facility representative told her she had to sign the arbitration agreement for her father to be admitted. But the Respondents “consistently maintained” that signing the arbitration agreement was not a requirement for Arredondo’s father to be admitted to the facility. And indeed, by the time Arredondo signed the agreement, her father had already been admitted and given a room. At that point, Whaley had statutory protections and could not be discharged from the facility on the basis of Arredondo refusing to sign the arbitration agreement.
Since signing the arbitration agreement was not “necessary,” it was not authorized under this HCPOA.
Argument 5: “Required”
Similarly, was signing the arbitration agreement “required” by the facility to provide the care Arredondo’s father needed?
By the same reasoning above, the answer is no. Whaley was already admitted to the facility before Arredondo signed the agreement, so it could not have been a requirement.
Argument 6: Authority to pursue legal action
The appeals court also held that the clause above gave Arredondo the authority to pursue any legal action in her father’s name, which included signing the arbitration agreement. But the supreme court notes that the language gives Arredondo authority only to pursue legal action to “force compliance,” which is not applicable here. Citing a Kentucky Supreme Court decision Wellner, the South Carolina Supreme Court held that a pre-dispute arbitration agreement was not authorized by the HCPOA as it did not constitute the pursuit of legal action.
The Takeaway: Know What’s in Your POA
The SC Supreme Court went point by point and found that none of the language in either of the powers of attorney gave Arredondo authority to sign the arbitration agreement as her father’s agent, and it reversed the decision of the SC Court of Appeals.
While this ultimately worked out in Arredondo’s favor, it came at the cost of a long legal battle, during which time she was not able to pursue her original claim against the Respondents.
You cannot rely on the South Carolina Supreme Court finding in your favor. The easier thing to do is to know exactly what’s in any POA you sign or that names you as an agent. Don’t assume anything! Read your POA closely and take it to an estate planning attorney to discuss it if you’re unclear.
Personalized Estate Planning and Advice
For help with estate planning in South Carolina, including powers of attorney, call attorney Gem McDowell of the Gem McDowell Law Group. Gem believes that every situation is different and that estate planning documents should be tailored to the individual and family to reflect their unique circumstances.
Gem and his team can help you draft or revise powers of attorney as well as wills, trusts, and other estate planning documents. They can also give advice on contracts and other legal documents before you sign them so you know exactly what you’re signing and you have someone looking out for your best interests. Call the law office, located in Mt. Pleasant and serving the Charleston area and beyond, today at 843-284-1021 to schedule a free, no-obligation consultation.