Golden Living Center - Vanceburg v. Reeder et al
Filing
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MEMORANDUM OPINION & ORDER, 1) granting Plaintiff's 4 Motion to compel Arbitration and Enjoin defendant 2) denying 6 MOTION to Dismiss by Maurice Reeder, Jr, Maurice Reeder, Jr 3) Defendant shall prosecute all of her claims arising ou t of Maurice Reeder's residency at Golden Living Center - Vanceburg in accordance with terms of the arbitration agreement and 4) matter is DISMISSED WITH PREJUDICE AND STRICKEN from docket Case Terminated.; Court will retain jurisdiction over this matter for purpose of enforcing any arbitration award and all other issues that may become germane. Signed by Judge Henry R. Wilhoit, Jr on 9/7/16.(SMT)cc: COR
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF KENTUCKY
NORTHERN DIVISION
at ASHLAND
CIVIL ACTION NO. 16-9-HRW
GOLDEN LIVING CENTER-VANCEBURG
a/k/a GGNSC VANCEBURG, LLC,
v.
PLAINTIFFS,
MEMORANDUM OPINION AND ORDER
MAURICE REEDER, JR., I11dividually
and as Administrntor of
THE ESTATE OF MAURICE REEDER,
DEFENDANT.
This matter is before the Comt upon Plaintiffs' Motion to Compel Arbitration and
Enjoin Defendant [Docket No. 4] and Defendant's Motion to Dismiss [Docket No. 6]. The
motions have been fully briefed.
I. BACKGROUND
This case arises from Maurice Reeder' s residency at the Golden Living Center in
Vanceburg, Kentucky from October 11, 2011 until early 2015. While residing at the facility,
Mr. Reeder allegedly suffered physical and emotional injuries due to inadequate care [Docket
No. 1-2]. His son, Defendant Maurice Reeder, Jr., per Order of the Lewis District Comt, was
appointed as his Emergency Limited Guardian before his admission to the nursing facility
[Docket No. 6-3]. Defendant Reeder filed a state court action against the Plaintiffs in Lewis
Circuit Comt, lvfaurice Reeder, .Jr. v. Golden LivingCenter-Vanceburg, eta!., Commonwealth
of Kentucky, Lewis Circuit Court, Lewis County, Kentucky, Case No.: l 5-CI-157. In his state
court action, Reeder alleges claims for negligence, medical negligence, corporate negligence,
and violation of long term care resident's rights [Docket No. 1-2]. In addition to the named
Plaintiffs in the action pending before this Court, the Defendant named Kari Shields, M.D. and
Bellefonte Primary Care of Grayson as defendants in his state court action. Id.
In response to the action filed in the Lewis Circuit Comi, the Plaintiffs filed the
instant suit, asserting that the Defendant's state court claims are subject to an Arbitration
Provision within the Admission Agreement signed by Mr. Reeder on behalf of his father
upon his admission to the nursing facility. Notably, Dr. Shields and her practice are not
included as Plaintiffs in the action before this Court. The Plaintiffs invoke this Comi's
diversity jurisdiction and seek relief under§ 4 of the Federal Arbitration Act (FAA).
The "Covered Disputes," section of Arbitration Provision provides as follows:
This Agreement applies to any and all disputes arising out of
or in any way relating to this Agreement or to the Resident's
stay at the Facility or the Admissions Agreement between the
Parties that would constitute a legally cognizable cause of
action in a comi of law sitting in the state where Facility is
located. Covered Disputes include but are not limited to all
claims in law or equity arising from ... a violation of a right
claimed to exist under federal, state, or local law or
contractual agreement between the Parties; to1i; breach of
contract; consumer protection; fraud; misrepresentation;
negligence; gross negligence; malpractice; and any alleged
departure from any applicable federal, state, or local medical,
health care, consumer, or safety standards.
[Docket No. 1-1, pg. 2
at~
3].
Plaintiffs assert that this arbitration agreement covers all of the Defendant's state
court claims. As such, the Plaintiffs seek an order from this Cou1i compelling the
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Defendant to submit his claims to binding arbitration and enjoining him from proceeding
with his action in Lewis Circuit Court.
II. ANALYSIS
A. Defendant's Motion to Dismiss
Defendant makes three arguments in suppo1i of his Motion to Dismiss. When
presented with similar if not identical facts, multiple comis from this District as well as the
Western District of Kentucky have considered and rejected the precise arguments the
Defendant now makes. In addition, the Sixth Circuit and other Circuits have previously
heard, and also rejected, many of the Defendant's arguments. Based on the overwhelming
weight of the relevant precedent and lack of any novel, meritorious arguments, this Court
will likewise deny the Defendant's motion.
First, Defendant argues that Dr. Kari Shields and Bellefonte Primary Care of
Grayson are indispensable parties to this action under Rule 19, and that the Plaintiffs'
failure to join them warrants dismissal pursuant to Fed. R. Civ. P. Rule 12(b)(7).
"Rule 19 of the Federal Rules of Civil Procedure establishes a three-step analysis
for determining whether a case should proceed in the absence of a pmiicular party."
PaineWebber, Inc. v. Cohen, 276 F.3d 197, 200 (6th Cir. 2001). The first step is to
determine whether a party not joined is necessary under Rule 19(a). kl If the pmiy is
necessmy, the court must next determine whether joinder is feasible, considering whether
the party is subject to personal jurisdiction and if joinder will destroy the court's subject3
matter jurisdiction. Id. Finally, ifjoinder will destroy subject-matter jurisdiction-for
instance, through joinder of a non-diverse party-the court must examine whether the party
is "indispensable." Id.
This Court must first consider whether Dr. Shields and her practice are necessary
pat1ies. They are necessary pat1ies if they "claim[] an interest relating to the subject of the
action and [are] so situated that the disposition of the action in [their] absence may ...
leave an existing patiy subject to a substantial risk of incurring double, multiple, or
otherwise inconsistent obligations because of the interest." Fed. R. Civ. P. 19(a)(2)(ii).
In support of its motion, Defendant cites cases in which where coutis have
determined that administrators are "necessaty pat1ies" because administrator defendants are
"arguably covered by the agreement," they could be the victim of inconsistent obligations
due to a state court that refuses to enforce an agreement that a Federal com1 enforces. In
these cases, the com1 deemed the administrator "necessaty."
Defendant's reliance upon these cases is baffling, as they argue vociferously that
Dr. Shields and her practice did not assert the ADR Agreement in their answer, and are not
parties to the ADR Agreement. If they are not patiy to the ADR Agreement, Dr. Shields
and her practice will face no inconsistencies in interest or obligation to the enforcement of
that agreement. There is no risk of even the possibility of inconsistent enforcement and,
therefore, they are not "necessaty" parties to this litigation.
Even if this Court were to deem Dr. Shields and her practice as "necessary" parties,
the question remains as to whether they are "indispensable" under Rule 19(b). As
residents of Kentucky, their joinder would destroy diversity and, hence, divest this Court
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of jurisdiction. Under Rule 19(b), "the court must determine whether, in equity and good
conscience, the action should proceed among the existing parties or should be dismissed."
A party is neither necessaty nor indispensable simply because they are an alleged joint
tortfeasor. Temple v. Synthes Corp., Ltd., 498 U.S. 5, 8 (1990). Rule 19(b) provides four
factors this Court must evaluate: (1) the extent to which a judgment rendered in the
person's absence might prejudice that person or the existing parties; (2) the extent to which
any prejudice could be lessened or avoided by protective provisions in the judgment,
shaping the relief, or other measures; (3) whether a judgment rendered in the person's
absence would be adequate; and (4) whether the plaintiff would have an adequate remedy if
the action were dismissed for nonjoinder. Fed. R. Civ. P. 19(b). The Sixth Circuit
considered arguments similar to those the Defendant now makes in Paine Webber, Inc. v.
Cohen, 276 F.3d 197, 200-06 (6th Cir. 2001) and held that non-diverse individual
Defendants involved were not indispensable parties in a parallel federal court action to
compel arbitration. In PaineWebber, the plaintiff sought to compel the heirs of its former
employee to submit their state-law tort claims to arbitration. Like the instant case, the
plaintiff in Paine Webber filed a diversity action to compel arbitration in federal comt and,
as here, the defendant objected to the suit on the grounds that a non-diverse individual sued
in the underlying state action was indispensable. Id. The Sixth Circuit weighed the Rule
19(b) factors and rejected the defendant's argument, stating:
Although we acknowledge the seriousness of [the
defendant's] concerns, his characterization of the risks fails to
take into account several important factors. These
considerations indicate that the potential prejudice to [the
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defendant] or [the nonjoined party] if this action proceeds
without [the nonjoined party] is minimal.
As an initial matter, the possibility of having to proceed
simultaneously in both state and federal court is a direct
result of [the defendant's] decision to file suit naming [the
plaintiff] and [the nonjoined pmiy] in state court rather than
to demand arbitration under the [parties'] Agreement.
Even ifthe parallel proceedings were not the result of [the
defendant's] pending state court action, the possibility of
piecemeal litigation is a necessary and inevitable
consequence of the FAA's policy that strongly favors
arbitration.
[The possibility that] the federal and state courts will reach
conflicting interpretations of the arbitration
clauses does not present the degree of prejudice necessary to
suppo1i a conclusion that [the nonjoined party] is an
indispensable party.
Id. at 202-03 (internal citations omitted).
The same analysis applies here. This Circuit's precedent is clear. The possibility of
inconsistent rulings coupled with the burden on the defendant in pursuing duplicative
litigation is not sufficiently prejudicial to find a pmiy indispensable. Paine Webber, 276
F.3d at 202-03.
Defendant's second argument in support of its dispositive motion is that the FAA is
not implicated because there is no valid agreement to arbitrate. Specifically, Defendants
contends that Maurice Reeder, Jr. did not have authority as his father's limited guardian
to enter into the arbitration agreement.
Defendant appears to suggest that because an emergency guardianship is instituted
prior to a full guardianship proceeding, an emergency guardian has less authority than a full
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guardian. This position has no basis or suppott in statutory or common law, and, would
essentially nullify the powers of an emergency guardian.
The relevant statute provides:
The court may exercise the powers of a limited guardian or limited
conservator or may appoint an individual or agency to exercise such powers
if, during the pendency of a proceeding for a determination of partial
disability or disability or an appeal therefrom it appears that there is danger
of serious impairment to the health or safety of the respondent ... if
immediate action is not taken.
KRS § 397.740(1).
This section provides no limitations on the powers of a "temporary"
guardian, as suggested by the Defendant. In fact, the statute explicitly states that the
emergency guardian possesses the same powers as a limited guardian. Further, an
examination of the Emergency Guardianship order itself clarifies the powers granted
to the Emergency Guardian. Maurice Reeder, Jr. was given the authority to dispose
of property, execute instruments, enter into contractual responsibilities, to determine
living arrangements and consent to medical procedures.
Moreover, there are no limitations written into the order by the judge, and
the only power not granted to the guardian is the handling of day to day financial
responsibilities. No further order is necessary to grant the emergency guardian the
authority necessary to sign the arbitration agreement.
In further denouncing the validity of the arbitration clause, Defendant
argues that whatever authority Mr. Reeder had was not broad enough to bestow
upon him authority to sign an arbitration agreement on behalf of his father. In
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support of this argument, Defendant cites 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
Comt held that a power of attorney 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.
Mattingly, 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 ofDel., 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 Comt 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 footing as other contracts." Id. at *12 (internal quotation omitted). Thus, as
Whisman violated the FAA and United States Supreme Comt precedent, the Court
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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 Vi1hisman 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 has little relevance in this instance. A guardian is a
ve1y different creature than a Power of Attorney and, as such, Whisman is not
dispositive in this case.
Finally, in seeking dismissal, Defendant argues that this Court should
abstain from from exercising jurisdiction in this case under the Colorado River
doctrine because similar litigation is pending in state court. "Abstention from the
exercise of federal jurisdiction is the exception, not the rule," Colorado River Water
Conservation Dist., 424 U.S. 800, 813 (1976), because federal courts have a
"vhiually unflagging obligation ... to exercise the jurisdiction given them." Id at
817. Abstention is an "extraordinary and narrow exception to the duty of a district
court to adjudicate a controversy properly before it." Id at 813. One court described
the circumstances in which abstention is appropriate as follows:
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Under Colorado River, the threshold issue is whether
there are parallel proceedings in state court. Crawley
v. Hamilton Cnty. Comm'rs, 744 F.2d 28, 31 (6th
Cir.1984). Once a court has determined there are
parallel proceedings, the Supreme Court identified
eight factors that a district comt must consider when
deciding whether to abstain from exercising its
jurisdiction due to the concurrent jurisdiction of state
court. PaineWebber, Inc. v. Cohen, 276 F.3d 197, 206
(6th Cir.2001). Those factors are: (1) whether the state
comt has assumed jurisdiction over any res or
property; (2) whether the federal forum is less
convenient to the parties; (3) avoidance of piecemeal
litigation; (4) the order in which jurisdiction was
obtained; (5) whether the source of governing law is
state or federal; (6) the adequacy of the state court
action to protect the federal plaintiff's rights; (7) the
relative progress of state and federal proceedings; and
(8) the presence or absence of concurrent jurisdiction.
Id.
GGNSC Vanceburg, LLC, v. Taulbee, Civil Action No. 5:13-cv-71-KSF, 2013 WL
4041174, *2 (E.D.Ky. Dec.19, 2013). Impo1tantly, "the balance (is to be] heavily
weighted in favor of the exercise of jurisdiction." Moses H Cone Mem 'l Hosp. v.
Mercwy Const. Cmp., 460 U.S. 1, 16 (1983).
A plethora of comts in this district have refused to abstain under circumstances that
are substantially similar to those found in this case. Golden Gate Nat. Senior Care,
LLC v. Addington, No. 14-CV-327-JMH, 2015 WL 1526135, at *5 (E.D. Ky. Apr.
3, 2015); Preferred Care, Inc. v. Belcher, 5:14-cv-107-JMH, Memorandum
Opinion and Order, DE 9 (E.D.Ky. March 31, 2015); Richmond Health
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Facilities-Kenwood, LP v. Nichols, Civil Action No. 5:14-141-DCR, 2014 WL
4063823 (E.D.Ky. Aug.13, 2014); Brookdale Senior Living, Inc. v. Caudill, Civil
Action No. 5:14-098-DCR; 2014 WL 3420783 (E.D.Ky. July 10, 2014); GGNSC
Vanceburg, LLC, v. Hanley, Civil Action No. 0:13-106-HRW, 2014 WL 1333204
(E.D.Ky. Mar.28, 2014); GGNSC Vanceburg, LLC, v. Taulbee, Civil Action No.
5: 13--{)v-71-KSF, 2013 WL 4041174 (E.D.Ky. Dec.19, 2013).
It is clear that abstention under Colorado River is not warranted in this case. First,
the state court has not assumed jurisdiction over any res or property. Second,
nothing indicates that this Court would be less convenient, as the Defendant filed
the state court action in the Fayette Circuit Court. Third, the desire to avoid
piecemeal litigation is insufficient to overcome a strong federal policy in favor of
arbitration. Paine Webber, 276 F.3d at 207. Fourth, while the state comi proceeding
was filed shortly before the present action, the time difference is minor. Moreover,
"priority should not be measured exclusively by which complaint was filed first, but
rather in terms of how much progress has been made in the two actions." Jllfoses H
Cone, 460 U.S. at 21. The state court matter, according to the Plaintiffs, has not
proceeded beyond the initial pleadings. [DE 5 at 16.] Fifth, while the Defendant is
challenging the enforceability of the arbitration agreement on state law grounds, the
Sixth Circuit has held that where the FAA applies, this factor tilts in favor of a court
exercisingjurisdiction. Paine Webber, 276 F.3d at 208. The sixth factor is the
strongest element favoring abstention, as the state court is adequate to protect the
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Plaintiffs' rights because a state court is bound by the requirements of the FAA
under the Supremacy Clause. Golden Gate, 2015 WL 1526135 at *6. The seventh
factor is similar to the fourth factor, and both weigh in favor of exercising
jurisdiction because there is no meaningful difference in the progress of the state
and federal actions in this matter. Finally, while there is concurrent jurisdiction, the
eighth factor favors abstention only marginally, if at all. Id. at 7. The existence of
concurrent jurisdiction is "insufficient to justify abstention" under the
circumstances. Paine Webber, 276 F.3d at 208-09.
It is clear that this case does not present the type of exceptional
circumstances that would justify abstention. This Court sees no reason to depart
from the well-reasoned decisions of other courts in this District that also refused to
abstain.
B.
Plaintiffs Motion to Compel Arbitration
Turning to the Plaintiffs' Motion to Compel Arbitration, they request that
this Court enforce the arbitration agreement by requiring the Defendant to arbitrate
his state court claims. "When considering a motion to ... compel arbitration under
the" FAA, courts engage in a four-step analysis. Stout v. JD. Byrider, 228 F.3d 709,
714 (6th Cir.2000). The first is to "determine whether the parties agreed to
arbitrate." Id. If so, then the second step is to consider the scope of the agreement.
Id. Third, "if federal statutory claims are asserted, [the Court] must consider whether
Congress intended those claims to be nonarbitrable." Id. Finally, "if the court
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concludes that some, but not all, of the claims in the action are subject to arbitration,
it must determine whether to stay the remainder of the proceedings pending
arbitration." Id See also Compuserve, Inc. v. Vigny Int'! Finance, Ltd, 760 F.Supp.
1273, 1278 (S.D.Ohio 1990).
In this case, the Plaintiffs satisfied their initial burden by presenting the
arbitration agreement. It is clear that the claims arising out of Mr. Reeder's residency
at the nursing facility that the Defendant alleges in his state coutt action, namely
negligence, medical negligence, corporate negligence, and violations of long term
care resident's rights, clearly fall within the broad scope of the signed arbitration
agreement. Defendant's arguments against the validity of the agreement were
considered and rejected supra.
Thus, the arbitration agreement in this case is valid and enforceable. The
Defendant's state coutt claims must be submitted to arbitration according to the
agreement's terms.
Having found that Defendant must submit his claims to arbitration, the
question remains whether this Court should enjoin him from pursuing her parallel
action in state court. The Coutt finds that such an injunction is necessary, and the
Defendant is enjoined from proceeding in Lewis Circuit Coutt. "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 comts
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
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reason, "the District Court's authority to enjoin state-comi 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 comi 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
'necessary to protect or effectuate [this Comi'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 he be compelled to arbitrate his
claims. Accordingly, the Court will order that Defendant be enjoined from
proceeding with his pending state-court action.
III. CONCLUSION
A valid and binding arbitration agreement was executed. This matter must be
referred to arbitration.
Accordingly, IT IS HEREBY ORDERED:
( 1)
Plaintiffs' Motion to Compel Arbitration and to Enjoin Defendant
[Docket No. 4] be SUSTAINED;
(2)
Defendant's Motion to Dismiss [Docket No. 6] be OVERRULED;
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(3)
Defendant shall prosecute all of her claims arising out of Maurice
Reeder' s residency at Golden Living Center - Vanceburg in
accordance with the terms of the arbitration agreement; and
(4)
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 and all other issues that may become germane.
This
1+.Y
day of September, 2016.
Signed By:
Henry R. Wilhoit. Jr.
United States District Judge
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