Diversicare Leasing Corp. et al v. Helmick
Filing
18
MEMORANDUM OPINION & ORDER: (1) Plf's Motion to Compel Arbitration and to Enjoin Deft DE 12 be SUSTAINED; (2) Dft shall prosecute all of her claims arising out of Marian Sammons' residency at Carter Nursing & Rehabilitation Center 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. Signed by Judge Henry R. Wilhoit, Jr on 9/7/16.(KSS)cc: COR
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF KENTUCKY
NORTHERN DIVISION
ASHLAND
CIVIL ACTION NO. 16-48-HRW
DIVERSICARE LEASING CORP. D/B/A
CARTER NURSING & REHABILITATION CENTER;
OMEGA HEALTHCARE INVESTORS, INC.;
DIVERSICARE HEALTHCARE SERVICES, INC.
F/K/A ADVOCAT, INC.; AND DIVERSICARE
MANAGEMENT SERVICES COMPANY,
v.
PLAINTIFFS,
MEMORANDUM OPINION AND ORDER
BRANDON HELMICK, Executor of the
MARIAN SAMMONS,
DEFENDANT.
This matter is before the Com1 upon Plaintiffs' Motion to Compel Arbitration and Enjoin
Defendant [Docket No. 12]. The motion has been fully briefed by the parties [Docket Nos. 12-1,
16 and 17]. For the reasons set forth herein, the Comt finds that the arbitration agreement which
forms the basis of this lawsuit must be honored.
I.
Marian Sammons was admitted to Catter Nursing & Rehabilitation Center on Janumy 23,
2015. At that time, Ms. Sammons's daughter, Sharon Suttles, was Ms. Sammons's attorney-in-
fact.
In connection with Ms. Sammons's admission, Ms. Suttles executed admissions
documents on behalf of herself and Ms. Sammons. The Admission Agreement, entered into
between Ms. Suttles, Ms. Sammons, and Carter Nursing & Rehabilitation Center, provided that
"[b]y signing this Agreement, you and your Responsible Patiy make certain agreements and
promises, and the Facility makes certain agreements and promises." [Admission Agreement,
Docket No. 12-5 at p. 1]. Marian Sammons is expressly designated as the resident to be admitted
to Carter Nursing & Rehabilitation Center and Sharon Suttles is designated as the Responsible
Party. Id.
On that same date, Ms. Suttles executed an Arbitration Agreement on behalf of herself
and her mother. The Arbitration Agreement, an Addendum to the Admission Agreement,
expressly states as follows:
This Agreement is made between Catier "Facility" and Thomas
Riley and Marian Sammons "Resident" and, if applicable,
"Resident's Authorized Representative," individually and on
behalf of the resident, and is an addendum to and part of the
Admission Agreement. The Resident's Authorized Representative
agrees to be bound by this Agreement as a patiy, both as a
representative of the Resident and in an individual capacity.
[Arbitration Agreement, Docket No. 12-2 at p. 1].
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 co mi process." Id.
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The Agreement expressly included the following:
[A]ny 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 fiducia1y duty, violation of rights, fraud, or misrepresentation,
common law or statuto1y 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, compensato1y, or punitive
damages, and whether arising in the future or presently existing.
Id. at p. 2.
The parties acknowledged that they were "agreeing to mutual arbitration, regardless of
which of us may make a claim, and that we will mutually benefit from the resolution of disputes
through arbitration." Id. at p. 1.
On March 1, 2016, Brandon Helmick filed an action in the Cmier Circuit Com1 seeking
money damages for alleged injuries to Marian Sammons arising out of her residency at Carter
Nursing & Rehabilitation Center ("the State Court Action").
Plaintiffs allege that Defendant has refused to arbitrate his 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." Masco Corp. v. Zurich American Ins. Co., 382 F.3d 624,
626 (6th Cir.2004) (quoting Moses H Cone Mem'l Hosp. v. MerculJ' Constr. Corp., 460 U.S. 1,
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
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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. JD. 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
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 asserted dispute. Doubts should be in favor of
coverage.") (internal citations and quotation marks omitted).
Before compelling an unwilling patty to settle a dispute by arbitration, the Court must
apply a two-patt 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. Scio'., Inc. v. Bd. a/Trustees ofLeland
Stanford Junior Univ., 489 U.S. 468, 475-76, 109 S.Ct. 1248, 103 L.Ed.2d 488 (1989)). The
court 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).
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Finally, in evaluating motions to compel arbitration, "courts treat the facts as they would
in ruling on a summaty judgment." Kovac v. Superior DailJ', 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.
Simons, 288 F.3d 878, 889 (6th Cir.2002).
III.
Defendant contends that the Arbitration Agreement is not enforceable. He argues,
specifically, the power of attorney did not contain sufficient language to authorize Ms. Suttles to
agree to arbitration of a wrongful death claim. Defendant maintains that pursuant to Ping v.
Beverly Enterprises, 376 S.W.3d 581 (Ky. 2012), because the decedent's daughter executed the
arbitration agreement pursuant to a written power of attorney, rather than the decedent herself the
agreement is unenforceable.
When presented with similar facts and arguments, multiple courts in this District as well
as the Western District of Kentucky have considered and rejected this very argument.
The power of attorney in Ping, unlike the power of attorney in the present matter,
"relate[d] expressly and primarily to the management of [the principal' s] property and financial
affairs and to assuring that health-care decisions could be made on her behalf." Ping v. Beverly
Enterprises, 376 S.W.3d at 592. While there was a general grant authorizing the attorney-in-fact
"[t]o make any and all decisions of whatever kind, nature or type regarding ... medical care," the
court determined that "[t]he general expressions ... did not give [the attorney-in-fact] a sort of
universal authority beyond those express provisions." Id. Moreover, the comt determined,
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"[a]bsent authorization in the power of attorney to settle claims and disputes or some such
express authorization addressing dispute resolution, authority to make such a waiver is not to be
inferred lightly." Id. The absence of this express and specific grant of authority was central to the
Kentucky Supreme Court's determination that the arbitration agreement at issue was
unenforceable.
Unlike the power of attorney document at issue in Ping, the power of attorney in the
present matter expressly grants to Ms. Sammons' daughter the authority to sign contracts and
institute or defend suits. Pursuant to terms of the written POA, Ms. Sammons expressly and
unequivocally granted the attorney-in-fact the authority "to draw, make, and sign any and all
checks, contracts, or agreements," "to institute or defend suits concerning my property or rights,"
and "generally to do and perform for me in my name all that I might do if present."
Moreover, the power of attorney at issue in the present matter contains Ping's requisite
"express authorization" to give an attorney-in-fact sufficient authority to enter into an arbitration
agreement on a principal' s behalf. Thus, Defendant's claim that the Ping decision, "standing
alone would require the overruling of the Plaintiffs motion," is simply without merit.
In a last ditch attempt to undermine to validity of the Arbitration Agreement, Defendant
relies upon Extendicare Homes, Inc. v. Whisman, 478S. W.3d 306, (Ky. 2015), as corrected
(Oct. 9, 2015), rehearing denied (Feb. 18, 2016),petitionfor Certiorari filed (July 1, 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
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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. kfallingly, 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 of Hopkins, 2016 U.S. Dist. LEXIS
81620*11 (W.D. Ky. June 22, 2016).
For example, in Brandenburg, the District Comi 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 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
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differs from the wording of the POAs in Whisman in at least one imp01iant 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- in-fact 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. Suttles 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. Suttles the authority to execute
consents, waivers, and releases of liability.
The Arbitration Agreement is valid and neither unconscionable nor against public policy
and, therefore, must be enforced. Futiher, the Arbitration Agreement encompasses the ve1y
claims Defendant has asse1ied against Plaintiffs in the State Court Action.
Having found that Defendant must submit his claims to arbitration, the question remains
whether this Court should enjoin her from pursuing her parallel action in state court. The Court
finds that such an injunction is necessmy, and the Defendant is enjoined from proceeding Carter
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
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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 necessmy 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 comi. 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 his pending
state-court action.
IV.
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.
12] be SUSTAINED;
(2)
Defendant shall prosecute all of her claims arising out of Marian Sammons'
residency at Carter Nursing & Rehabilitation Center in accordance with the terms
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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~ay
of September, 2016.
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