2d DCA: Arbitration agreement fails if power of attorney did not expressly authorize it
This case is yet another example of the distinction between the agency-law principals governing power-of-attorney disputes, versus the fiduciary-law principals governing trustee and personal-representative disputes. This distinction is significant and goes a long way towards understanding how Florida's appellate courts have consistently interpreted Florida law governing powers of attorney.
Florida law is clear: an attorney-in-fact's authority is limited solely to actions "specifically enumerated in the durable power of attorney." F.S. 709.08(7)(a). This authority is much narrower than the general scope of authority granted to personal representatives and trustees [click here for past examples].
In the linked-to case the issue was whether a decedent's estate was bound by an arbitration agreement signed prior to her death by her son and attorney-in-fact. Nothing in the power of attorney granted the attorney-in-fact authority to enter into an arbitration agreement. Unfortunately this point was lost on the trial-court judge, who ruled the arbitration agreement was binding. The 2d DCA explained its rationale for reversing the trial-court's ruling as follows:
Lesson learned?Ms. McKibbin's son presented a durable power of attorney to Alterra to demonstrate that he had the legal authority to enter into the residency agreement on behalf of his mother. Nothing in that power of attorney, however, gave Ms. McKibbin's son the legal authority to enter into an arbitration agreement on behalf of his mother. See Kotsch v. Kotsch, 608 So.2d 879, 880 (Fla. 2d DCA 1992) (holding that powers of attorney are strictly construed to grant only the powers specified). Furthermore, there was no other basis upon which to bind Ms. McKibbin to the arbitration agreement. Hence, the Estate was not bound to arbitrate, and the trial court erred in granting Alterra's motion to compel binding arbitration. See id.; Regency Island Dunes, Inc. v. Foley & Assocs. Constr. Co., 697 So.2d 217, 218 (Fla. 4th DCA 1997) (“One who has not agreed, expressly or implicitly, to be bound by an arbitration agreement cannot be compelled to arbitrate.”). Accordingly, we reverse the trial court's order granting the motion to compel binding arbitration.
If you're an estate planner, you want to make sure the powers of attorney you draft explicitly authorize those actions that are most important to your clients. If you're a litigator, the starting and end point of your case will be the actual text of the power of attorney. If the disputed action is not expressly authorized by the text of the power of attorney, chances are it's not legally binding.
We've just reviewed our most commonly used power of attorney form. I think many planners just come up with a broad form and stick to it without thinking. Clients don't want to pay much for a form "they can get for free over the internet". In many ways, the power of attorney can be more dangerouse than the will or more valuable than the will, so there's a need to discuss the terms, however broad or narrow, with each client, not the person designated to act, and charge accordingly.
Jeff-
I agree with your point re POA's being potentially more dangerous than wills.
We use Lawgic's very broadly drafted POA form (it's 4 pages long) and unless there's a specific issue, don't spend much time going over it with the client. However, if the POA is being drafted for a specific transaction or is intended to be used right away, we then focus a lot of attention on it.
Juan