Can a nursing home arbitration agreement compel wrongful death beneficiaries to arbitrate?

FutureCare Northpoint, LLC v. Peeler, 229 Md. App. 108; 143 A.3d 191(2016)

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Contract Law, Arbitration agreement: In a wrongful death action brought by the daughter of a woman who died while residing in a nursing facility, the circuit court properly denied the nursing facility’s motion to compel arbitration, which was based on an arbitration agreement entered into by the decedent, because a decedent’s arbitration agreement ordinarily does not bind the decedent’s family members to arbitrate a claim under the Maryland wrongful death statute.

“While certainly based on the death of another person, [a wrongful death action] is not brought in a derivative or representative capacity to recover for a loss or injury suffered by that person but, rather, is brought by a spouse, parent, or child, or a secondary beneficiary who was wholly dependent on the decedent, to recover damages for his or her own loss accruing from the decedent’s death.” Eagan v. Calhoun, 347 Md. 72, 82, 698 A.2d 1097 (1997).

The wrongful death action is, both in form and substance, a controversy between Ms. Peeler and FutureCare; it is not a continuation of any controversy between Mrs. Butz and FutureCare. Furthermore, Mrs. Butz never owned the right to recover damages under CJP § 3-904 for her own wrongful death, and hence she had no power to bind the person who has that right — Peeler — to an agreement to arbitrate.

In sum, Melitch stands for the proposition that, under some circumstances, the pre-death release of a personal injury claim effectively prevents statutory beneficiaries from establishing an element of a wrongful death claim arising from the same injury.10

An injured party’s agreement to arbitrate a personal in-jury claim, by contrast, does not negate the ability “to maintain an action and recover damages.” In particular, an arbitration agreement does not destroy the viability of the underlying claim “from the outset[,]” (id.), nor does it “affirmatively and purposefully . . . extinguish the underlying claim” as does a pre-death release.

Therefore, we hold that under Maryland law a decedent ordinarily cannot bind his or her wrongful death beneficiaries to arbitrate their wrongful death claims.

What is the difference between a release and a covenant not to sue or a covenant never to sue?

What is the difference between a release and a covenant not to sue or a covenant never to sue?

Kaye v. Wilson-Gaskins, 227 Md. App. 660, 135 A.3d 892, cert. denied, 449 Md. 420, 144 A.3d 710 (2016):

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Kaye represents in wrongful termination suit.  Obtains $1.4M verdict.  Client disputes entitlement to attorney’s fees.  Come to agreement and sign release.  Client sues Kaye and others.  Circuit Court grants motion to dismiss or for summary judgment on the basis that Client failed to allege a prima facie case (not on basis of release).  Affirmed on appeal, but CSA also holds release was not unconscionable, was enforceable and barred suit.  Kaye then sues Client for breach of the release.

What is the difference between a release and a covenant not to sue?  A release discharged the right or obligation without regard to who benefitted.  So, when release given, the release is performed; nothing else to do.  No further performance or obligation applies. Therefore, there can be no breach of a release. The covenant not to sue addresses the relationship between the obligor and the obligee. Accordingly, the covenant not to sue had the practical effect of providing an obligor with immunity against those seeking to enforce the underlying obligation.  Release of right do not possess:  is actually a covenant not to sue.  But better treated as a release.  Holds:  (1) prior ruling “law of the case” and (2)

In such an instance, the promise never to sue remains executory in nature. As soon as the obligee’s claim against the obligor becomes viable that claim is discharged automatically as a matter of law. Simultaneously, the obligee’s performance under the covenant never to sue is complete, and the obligee’s obligation is discharged. On the other hand, we will construe a promise never to sue as an ongoing executory promise that can be breached if we can clearly discern from the agreement’s text that the parties intended for the obligor to recover consequential damages resulting from the obligee’s failure to honor that discharge.