Diversicare Leasing Corp. et al v. Allen
Filing
12
MEMORANDUM OPINION & ORDER: (1) Plf's Motion to Compel Arbitration and to Enjoin Deft DE 5 be SUSTAINED; (2) Deft shall prosecute all of her claims arising out of Benny Bowens residency at Wurtland Nursing & Rehabilitation Center in ac cordance with the terms of the arbitration agreement; and (3) that this matter is hereby DISMISSED WITH PREJUDICE and STRICKEN from the active docket of the Court. This Court will retain jurisdiction over this matter for the purpose of enforcing any arbitration award. Signed by Judge Henry R. Wilhoit, Jr on 8/18/16.(KSS)cc: COR
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF KENTUCKY
NORTHERN DIVISION
ASHLAND
CIVIL ACTION NO. 15-60-HRW
DIVERSICAIRE LEASING CORP. d/b/a
WURTLAND NURSING & REHABILITATION CENTER
and
DIVERSICAIRE HEALTHCARE SERVICES, INC.,
PLAINTIFFS,
MEMORANDUM OPINION AND ORDER
v.
MARY JANE ALLEN, Administratrix of the
ESTATE OF BENNY BOWENS,
DEFENDANT.
This matter is before the Court upon Plaintiffs' Motion to Compel Arbitration and Enjoin
Defendant [Docket No. 5]. The motion has been fully briefed by the parties [Docket Nos. 5-1, 6,
7 and 11 ]. For the reasons set forth herein, the Court finds that the arbitration agreement which
forms the basis of this lawsuit must be honored.
I.
On April 4, 2014, Benny Bowens executed an Ohio Health Care Power of Attorney
("POA"), naming Mary Jane Allen as his agent authorized to make health care decisions and, as
described herein, various other decisions on his behalf. [Docket No. 5-4].
The authority granted to Ms. Allen in the POA includes, but is not limited to, the power
to do the following:
"To execute for me any releases or other documents that may be
required in order to obtain medical and related information."
"To execute consents, waivers, and releases of liability for me and
for my estate to all persons who comply with my agent's
instructions and decisions."
"To select, contract for my admission to, transfer me to, or
authorize my discharge from any medical or health care facility,
including but not limited to, hospitals, nursing homes, assisted
living facilities, hospices, adult homes and the like."
"To complete and sign for me ... consents to healthcare treatment
... and any other document desirable to implement health care
decisions that my agent is authorized to make pursuant to this
document."
Id., pg. 4-5.
A month later, Ms. Allen executed admissions documents both on behalf of herself
personally and on behalf of Benny Bowens in connection with Mr. Bowens's admission to
Wurtland Nursing & Rehabilitation Center ("Wurtland"). [Docket No. 5-5]. The Admission
Agreement contains an Addendum, also executed by Ms. Allen personally and on behalf of Mr.
Bowens. That Addendum, also titled "Arbitration Agreement," provides for any claims arising
out of the Admission Agreement or related to Mr. Bowens's medical care at Wurtland to be
resolved exclusively through binding arbitration. The Agreement expressly states that it was
made between Wurtland, Mr. Bowens, and his Authorized Representative, both in her individual
capacity and on behalf of Mr. Bowens. The Arbitration Agreement further specifies that "The
Resident's Authorized Representative agrees to be bound by this Agreement as a party, both as a
representative of the Resident and in an individual capacity." Id., pg 1.
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Pursuant to the Arbitration Agreement, the parties agreed "that any legal dispute, controversy,
demand, or claim that arises out of or relates to the Resident Admission Agreement or is in any
way connected to the Resident's stay at the Facility shall be resolved exclusively by binding
Arbitration and not by a lawsuit or resort to other court process." Id The Agreement expressly
included the following:
any claim for payment, non-payment, or refund for services
rendered to the Residency by the Facility, claims arising out of
State or Federal law, claims based upon breach of contract, breach
of fiduciary duty, violation of rights, fraud, or misrepresentation,
common law or statutory negligence, gross negligence,
malpractice, abuse, neglect or any other claim based on any
departure from accepted standards of medical or nursing care,
whether such claims be for statut01y, compensat01y, or punitive
damages, and whether arising in the future or presently existing.
Id., pg. 2.
Directly above Ms. Allen's signature in her capacity as the Representative of Mr.
Bowens, the Arbitration Agreement emphasized:
The Parties acknowledge that we have read this entire
Agreement and we understand and agree that by entering into
this Arbitration Agreement we are giving up and waiving our
Constitutional rights to have any claim or dispute that falls
within the scope of this agreement decided in a court of law
before a judge and jury.
By signing as the Resident's Representative, I acknowledge
that I am either the Resident's court-appointed guardian,
attorney-in-fact with authority to execute this Arbitration
Agreement, or I have been expressly and fully authorized by
the Resident to execute this Arbitration Agreement.
Id,pg. 5 (emphasis in original).
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The Arbitration Agreement also states that Ms. Allen and Mr. Bowens had the right to
consult with an attorney prior to signing the agreement. Id, pg. 4. The Agreement further states
that Ms. Allen or Mr. Bowens could rescind the Agreement by providing written notice to the
facility within 30 days. Id. Neither Ms. Allen nor Mr. Bowens provided such notice after Ms.
Allen signed the Agreement.
On July 21, 2015, in disregard of the terms of the Arbitration Agreement, Ms. Allen filed
an action in the Greenup Circuit Court seeking money damages for alleged injuries to Mr.
Bowens arising out of his residency at Wurtland Nursing & Rehabilitation Center (the "State
Court Action").
Plaintiffs allege that Ms. Allen has refused to arbitrate her claims. Therefore, they
brought this petition under § 4 of the Federal Arbitration Act. Plaintiffs now move this Court to
compel arbitration and enjoin the proceedings in the State Court Action.
II.
The Federal Arbitration Act ("FAA"), 9 U.S.C. § 1 et seq., "manifests a liberal federal
policy favoring arbitration agreements." lvfasco Corp. v. Zurich American Ins. Co., 382 F.3d 624,
626 (6th Cir.2004) (quoting }.efoses H Cone lvfem'l Hosp. v. Mercwy Constr. Corp., 460 U.S. I,
24, 103 S.Ct. 927, 74 L.Ed.2d 765 (1983)) (internal quotation marks omitted).
Under the FAA, when contracts contain arbitration clauses, federal courts "are to examine
the language of the contract in light of the strong federal policy in favor of arbitration," and are
required to resolve any ambiguities in the agreement or doubts as to the parties' intentions in
favor of arbitration. Stout v. J.D. Byrider, 228 F.3d 709, 714 (6th Cir.2000); see also AT & T
Techs., Inc. v. Communications Workers ofAm., 475 U.S. 643, 650, 106 S.Ct. 1415, 89 L.Ed.2d
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648 (1986) (explaining that when a "contract contains an arbitration clause, there is a
presumption of arbitrability in the sense that an order to arbitrate the particular grievance should
not be denied unless it may be said with positive assurance that the arbitration clause is not
susceptible of an interpretation that covers the asse1ted dispute. Doubts should be in favor of
coverage.") (internal citations and quotation marks omitted).
Before compelling an unwilling party to settle a dispute by arbitration, the Court must
apply a two-part test "to determine whether the dispute is arbitrable; meaning that a valid
agreement to arbitrate exists between the parties, and that the specific dispute falls within the
substantive scope of that agreement." Javitch v. First Union Sec., Inc., 315 F.3d 619, 624 (6th
Cir. 2003). The Sixth Circuit has recognized hat even when applying state-law principles of
contract interpretation," 'due regard must be given to the federal policy favoring arbitration, and
ambiguities as to the scope of the arbitration clause itself resolved in favor of arbitration.' "
Bratt Enterprises, Inc., 338 F.3d at 613 (quoting Volt Info. Scis., Inc. v. Bd. of Trustees ofLeland
Stanford Junior Univ., 489 U.S. 468, 475-76, I 09 S.Ct. 1248, 103 L.Ed.2d 488 (1989)). The
comt then "shall order arbitration upon being satisfied that the making of the agreement for
arbitration or the failure to comply therewith is not in issue." Rent-A-Center, 130 S.Ct. at 2776
(quoting 9 U.S.C. § 4).
Finally, in evaluating motions to compel arbitration, "courts treat the facts as they would
in ruling on a summary judgment." Kovac v. Superior Dairy, Inc., 930 F.Supp.2d 857, 864
(N.D.Ohio 2013). Therefore, the party opposing arbitration bears the burden of"showing a
genuine issue of material fact as to the validity of the agreement to arbitrate." Great Earth Cos. v.
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Simons, 288 F.3d 878, 889 (6th Cir.2002).
III.
In denying the validity of the arbitration clause, Defendant argues that the power of
attorney given to Ms. Allen is not broad enough to have given Maty Jane Allen authority to sign
an arbitration agreement for Benny Bowens' personal injury claims. In supp01i of her argument,
Defendant relies upon Extendicare Homes, Inc. v. Whisman, 478S.W.3d 306, (Ky. 2015), as
corrected (Oct. 9, 2015), rehearing denied (Feb. 18, 2016), petition for Certiorari filed (July I,
2016). In Whisman, the Kentucky Court held that a POA granting the power to "institute or
defend suits concerning my property rights" did not confer authority to enter into a pre-dispute
arbitration agreement because arbitration is not a "suit" as the term is commonly understood, but
rather a process designed to avoid suits. Id. at 323.
As Whisman painstakingly percolates through the federal judicial system, federal Court in
Kentucky have held on several separate occasions that Whisman violates the Federal Arbitration
Act. See, Brandenburg Health Facilities, LP v. ivfattingly, 2016 U.S. Dist. LEXIS 79729 (W.D. Ky.
June 20, 2016), Diversicare Highlands, LLC v. Lee, 2016 U.S. Dist. LEXIS 80905 (W.D. Ky. June
21, 2016) and Preferred Care of Del., Inc. v. Estate ofHopkins, 2016 U.S. Dist. LEXIS 81620 *11
(W.D. Ky. June 22, 2016).
For example, in Brandenburg, the District Court declined the apply Whisman "to the
extent that it conflicts with U.S. Supreme Court precedent by treating an agreement to arbitrate
differently than any other contract." 2016 U.S. Dist. LEXIS at* 13. The Court explained that,
despite Whisman's holding that a power of attorney must expressly grant the authority to enter into
an arbitration agreement, "[t]he FAA's purpose ... is to place arbitration agreements upon the same
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footing as other contracts." Id. at* 12 (internal quotation omitted). Thus, as Whisman violated the
FAA and United States Supreme Court precedent, the Court found that the arbitration agreement
signed in connection with the decedent's admission to a nursing home was enforceable.
Likewise, in Hopkins, the Court again found that "[a]pplying Whisman to invalidate the
arbitration agreement signed by Decedent's husband would run afoul of the FAA." Because Whisman
contravened the FAA, the Court declined to apply its rule regarding the authority required to enter
into arbitration agreement and enforced the arbitration agreement signed in connection with the
decedent's admission to a nursing home. 2016 U.S. Dist. LEXIS at *12.
Moreover, Whisman may not have any relevance in this instance. The POA in this case
differs from the wording of the POAs in Whisman in at least one important way: As noted repeatedly
by the Kentucky Supreme Court in Whisman, the Court in that case was concerned about the fact that
there was not an express reference in the Power of Attorney denoting the ability of the attorney- infact to enter into waivers ofrights.However, in this case, the POA expressly gave Ms. Allen the
authority to execute consents, waivers, and releases of liability.
Although Defendant attempts to minimize the authority granted to Ms. Allen in the power of
attorney document at issue in this case by relying on the title of the document, the authority granted
to her far exceeded that of a health care surrogate with authority to make only health care decisions.
As set forth in Plaintiffs' Motion to Compel Arbitration, the power of attorney document at issue in
this case expressly gave Ms. Allen the authority to execute consents, waivers, and releases of
liability.
The Court finds that Ms. Allen, individually and as attorney-in-fact for Benny Bowens,
entered into a valid Arbitration Agreement. The Arbitration Agreement is neither unconscionable nor
against public policy and, therefore, must be enforced. Further, the Arbitration Agreement
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encompasses the very claims Defendant has asserted against Plaintiffs in the State Court Action.
Having found that Defendant must submit her claims to arbitration, the question remains
whether this Court should enjoin her from pursuing her parallel action in state cou1i. The Court
finds that such an injunction is necessary, and the Defendant is enjoined from proceeding in
Greenup Circuit Court. "Although the FAA requires courts to stay their own proceedings where
the issues to be litigated are subject to an agreement to arbitrate, it does not specifically authorize
federal courts to stay proceedings pending in state courts." Great Earth Companies, Inv. v.
Simmons, 288 F.3d 878, 893 (6'h Cir. 2002) (internal citations omitted). For this reason, "the
District Court's authority to enjoin state-court proceedings is subject to the legal and equitable
standards for injunctions generally, including the Anti Injunction Act." Id. Pursuant to the
Anti-Injunction Act, "[a] court of the United States may not grant an injunction to stay
proceedings in a State court except as expressly authorized by Act of Congress, or where
necessary in aid of its jurisdiction, or to protect or effectuate its judgments." 28 U.S.C. § 2283.
An injunction in this case "properly falls within the exception for injunctions 'necessmy to
protect or effectuate [this Court's] judgments.'" Great Earth, 288 F.3d at 894. The Court has
determined that the parties entered into a binding arbitration agreement covering the scope of
Defendant's claims. Having made such a determination and compelling him to submit to
arbitration, it is necessary to enjoin Defendant from pursing his claims in any alternative forum,
including state court. Otherwise, she would be permitted to circumvent her arbitration agreement
and in doing so, circumvent this Court's judgment that she be compelled to arbitrate his claims.
Accordingly, the Court will order that Defendant be enjoined from proceeding with her pending
state-court action.
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IV.
A valid and binding arbitration agreement was executed. This matter must be referred to
arbitration.
Accordingly, IT IS HEREBY ORDERED:
(I)
Plaintiffs' Motion to Compel Arbitration and to Enjoin Defendant [Docket No. 5)
be SUSTAINED;
(2)
Defendant shall prosecute all of her claims arising out of Benny Bowen's
residency at Wurtland Nursing & Rehabilitation Center in accordance with the
terms of the arbitration agreement ; and
(3)
that this matter is hereby DISMISSED WITH PREJUDICE and STRICKEN
from the active docket of the Court.
This Court will retain jurisdiction over this matter for the purpose of enforcing any
arbitration award.
;
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