Golden Gate National Senior Care, LLC et al v. Addington
Filing
12
MEMORANDUM OPINION & ORDER: IT IS ORDERED: (1) Dft Addington's 6 Motion to Dismiss is DENIED; (2) Dft Addington's 9 Motion for Extension of Time to File Response to Plas' Motion to Compel Arbitration is DENIED; (3) Plas' 8 Motion to Compel Arbitration & to stay the state court action is GRANTED; (4) Dft shall prosecute all of his claims arising out of his residency at Golden Living CenterStanford in accordance w/ the terms of the ADR Agreement that he signed, submitt ing this matter to mediation &, where mediation does not successfully resolve the dispute, binding arbitration; (5) Addington is ENJOINED from pursuing the pending state court action against Plas before the Lincoln Circuit Court; (6) this matter is S TRICKEN FROM THE ACTIVE DOCKET, & following the conclusion of any arbitration proceedings, either party may petition the Court to reopen this matter to take appropriate action as necessary. Signed by Judge Joseph M. Hood on April 3, 2015. (MWZ) cc: COR
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF KENTUCKY
CENTRAL DIVISION at LEXINGTON
GOLDEN GATE NATIONAL SENIOR
CARE, LLC d/b/a GOLDEN
LIVING, et al.,
Plaintiffs,
v.
MELVIN ADDINGTON, as executor
of the Estate of Mary Helen
Addington,
)
)
)
)
)
)
)
)
)
)
)
Civil Case No. 14-cv-327-JMH
MEMORANDUM OPINION & ORDER
Defendant.
***
This
matter
is
before
the
Court
on
several
motions:
Defendant Melvin Addington’s Motion to Dismiss [DE 6; Response
at DE 7] and his Motion for Extension of Time to File Response
to Plaintiffs’ Motion to Compel Arbitration [DE 9].
Plaintiffs
have filed a Response [DE 10], stating their objection to the
Motion for Extension of Time.
Finally, the Court will consider
Plaintiffs’ Motion to Compel Arbitration [DE 8].
These motions
are ripe for consideration.
As an initial matter, Defendant seeks dismissal of this
matter for lack of subject matter jurisdiction pursuant to Fed.
R. Civ. P. 12(b)(1) and for failure to join a necessary party
pursuant to Fed. R. Civ. P. 12(b)(7).
Defendant also asks this
Court to abstain from exercising any jurisdiction that it might
have under the Colorado River abstention doctrine, which permits
a federal court to dismiss a cause pending before it in favor of
a
parallel
state
court
action
in
certain
circumstances.
Finally, Defendant asks this Court to dismiss Plaintiffs’ claim
pursuant
to
12(b)(6)
grounds
that
the
unenforceable.
for
failure
subject
to
ADR
state
Agreement
a
is
claim,
on
invalid
the
and
By their Motion, Defendant asks this Court to
enforce the parties’ ADR Agreement and compel the arbitration of
Defendant’s claims against them.
this
Court
against
enjoin
them
in
a
Defendant’s
pending
They seek, as well, to have
prosecution
state
court
of
those
proceeding.
claims
For
the
reasons set forth below, Defendant’s Motions will be denied, and
Plaintiffs’ Motion shall be granted.
I.
Mary Helen Addington was admitted to Golden Living Center–
Stanford
(“GLC–Stanford”),
a
nursing
home
operated
by
GGNSC
Stanford, LLC, in Stanford, Kentucky, on or about September 4,
2010, where she resided until the date of her death, November
25,
2013.
named
her
Prior
to
Ms.
Addington’s
attorney-in-fact
in
a
admission,
Power
of
Defendant
Attorney
was
document,
executed on October 18, 1999, which vested him with authority
to:
[M]ake contracts, lease, sell, or convey any
real or personal property that I may now or
hereafter own, to receive and receipt for
any money for which may now or hereafter be
due to me, to retain and release all liens
2
on real or personal property, to draw, make,
and sign any and all checks, contracts, or
agreements, to invest or reinvest my money
for me; to institute or defend suits
concerning my property or rights, to take
charge of my person in case of sickness or
disability of any kind, and to remove and
place me in such institutions or places as
he may deem best for my personal care,
comfort, benefit, and safety; and for said
purposes to use and disburse any or all said
bank
deposit
monies
or
other
personal
property that I own; and generally to do and
perform for me in my name all that I might
do if present . . . .
[DE 1-3 at 1, Page ID#: 52.]
As
Stanford
part
of
and
in
Ms.
his
Addington’s
capacity
admissions
as
process
attorney-in-fact
at
GLC–
for
Ms.
Addington, Defendant signed an “Alternative Dispute Resolution
Agreement.” The Agreement requires the arbitration of:
[a]ny and all disputes arising out of or in
any way relating to this Agreement or to the
Resident’s
stay
the
Facility
or
the
Admissions Agreement between the Parties
that would constitute a legally cognizable
cause of action in a court 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 one
Party’s failure to satisfy a financial
obligation to the other Party; a violation
of a right claimed to exist under federal,
state, or local law or contractual agreement
between
the
Parties;
tort;
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.
3
[DE 1-2 at 3, Page ID#: 49.] The Agreement further states that
it is binding upon Ms. Addington’s Estate and Plaintiffs and
their successors and assigns.
[DE 1-2 at 1, Page ID#: 47.]
The
Agreement specifically provides that it shall be governed by the
Federal Arbitration Act, 9 U.S.C. §§ 1–16.
[Id.]
On July 9, 2014, Defendant filed suit against Plaintiffs in
Lincoln Circuit Court, Lincoln County, Kentucky, Division II,
Civil Action File No. 14-CI-00228 (the “State Court Action”),
asserting claims against Golden Gate National Senior Care, LLC;
GGNSC
Stanford:
GNSC
Administrative
Services,
LLC;
GGNSC
Holdings, LLC; GGNSC Equity Holdings, LLC; GGNSC Equity Holdings
II, LLC; Golden Gate Ancillary, LLC; GGNSC Clinical Services,
LLC;
GPH
Stanford,
LLC;
Timothy
Peek,
in
his
capacity
as
Administrator of Golden Living Center-Stanford; Jennifer Thomas,
in
her
capacity
as
Administrator
of
Golden
Living
Center-
Stanford; Dawn L. Lincoln, in her capacity as Administrator of
Golden Living Center-Stanford; William Ralph Watson II, in his
capacity
as
Administrator
of
Golden
Living
Center-Stanford;
Timothy F. Travis, Jr., in his capacity as Administrator of
Golden
Living
Center-
Stanford;
Kevin
C.
McCowan,
in
his
capacity as Administrator of Golden Living Center- Stanford; and
John
Does
1
through
5
for
negligence,
medical
negligence,
corporate negligence, violations of long term care residents’
4
rights, wrongful death and punitive damages arising out of her
stay at GLC–Stanford.
Some but not all of the defendants in the Lincoln County
suit, Golden Gate National Senior Care, LLC; GGNSC Stanford;
GGNSC Administrative Services, LLC; GGNSC Holdings, LLC; GGNSC
Equity Holdings, LLC; Golden Gate Ancillary, LLC; GPH Stanford,
LLC; and GGNSC Clinical Services, LLC, filed suit in this Court
asking that this Court enforce the parties’ Agreement, compel
Defendant to arbitrate his claims, and enjoin Defendant from
proceeding against them in the Lincoln County suit.
Notably,
the individuals who serve as administrators at GLC–Stanford and
who are named as defendants in the Lincoln County lawsuit are
not
plaintiffs
in
this
matter.
Plaintiffs
claim
that
the
parties’ Agreement precludes the assertion of these claims in a
civil action and, instead, requires that they be resolved in
arbitration under the Agreement and the FAA.
To
date,
no
substantive
rulings
relating
to
the
enforceability of the Agreement have been made in the State
Court Action, nor are any motions currently pending in the State
Court Action relating to enforceability of the Agreement. Thus,
the
State
Court
Action
has
not
significantly
progressed
in
considering the enforceability of the Agreement or, indeed, with
any aspect of the Action.
5
II.
This issues presented in Defendant’s Motion to Dismiss are
familiar
to
the
undersigned,
Belcher,
5:14-cv-107,
see
Memorandum
Preferred
Opinion
Care,
and
Inc.
Order,
DE
(E.D.Ky. March 31, 2015), and to others in this district.
v.
9
See
Richmond Health Facilities – Kenwood, L.P., et al. v. Nichols,
5:14-cv-00141-DCR,
2014
WL
4063823
(E.D.Ky.
Aug.
13,
2014);
GGNSC Vanceburg, LLC, d/b/a Golden Living Center-Vanceburg et
al. v. Hanley, Civil Action No. 0:13-106-HRW, 2014 WL 1333204
(E.D.Ky. Mar. 28, 2014); GGNSC Vanceburg, LLC et al. v. Taulbee,
Civil Action No. 5:13-cv-71-KSF, 2013 WL 4041174 (E.D.Ky. Dec.
19, 2013); GGNSC Frankfort, LLC v. Hunter, 3:11-CV-000333-WOB
Report and Recommendation [DE 16] (E.D. Ky. October 18, 2011).
Having considered the arguments presented by the parties and the
facts
in
this
matter,
this
matter
is
not
so
different,
and
Defendant’s Motion to Dismiss shall be denied.
A.
As an initial matter and in the face of Defendant’s Motion
to
Dismiss
Plaintiffs’
claims
pursuant
to
Fed.
R.
Civ.
P.
12(b)(1) and (7), the Court concludes that it has jurisdiction
to consider this matter.
Defendant argues that there is no
jurisdiction because Plaintiffs have failed to join a necessary
party under Rule 19 and, once the citizenship of that necessary
party is taken into account, there is a lack of subject-matter
6
jurisdiction under 28 U.S.C. § 1332 because (1) the parties will
not be of diverse citizenship and (2) the Federal Arbitration
Act
will
not,
alone,
create
a
federal
question
which
would
confer jurisdiction under 28 U.S.C. § 1331 in this matter upon
this Court.1
As explained below, the Court disagrees with this
analysis.
At issue in a Rule 12(b)(1) motion is the trial court's
jurisdiction—its very power to hear the case. In this context,
the trial court may proceed as it never could under 12(b)(6)—no
presumptive truthfulness attaches to either party's allegations
and the existence of disputed material facts will not preclude
the
trial
court
from
jurisdictional claims.
evaluating
for
itself
the
merits
of
If lack of subject-matter jurisdiction
is raised in a motion to dismiss, the plaintiff “has the burden
of proving jurisdiction in order to survive the motion.” Mich.
1
Under the FAA, a district court has jurisdiction over a
petition to compel arbitration only if the court would have
jurisdiction over “a suit arising out of the controversy between
the parties” without the arbitration agreement. 9 U.S.C. § 4.
That is, the FAA “‘bestow[s] no federal jurisdiction but rather
require[s] an independent jurisdictional basis' [for access to a
federal forum] over the parties' dispute.” Vaden v. Discover
Bank, 556 U.S. 49, 59 (2009) (quoting Hall Street Assoc., LLC v.
Mattel, Inc., 552 U.S. 576, 581–82 (2008) (internal quotation
marks omitted)); see also Moses. H. Cone Mem’l Hosp. v. Mercury
Const. Corp., 460 U.S. 1 (1983). Section 4 of the FAA “neither
expand[s] nor contract[s] federal subject matter jurisdiction.”
Stroh Container Co. v. Delphi Indus., Inc., 783 F.2d 743, 747 n.
7 (8th Cir. 1986). Thus, a petitioner proceeding under § 4 must
assert an independent source of subject matter jurisdiction.
Here, the plaintiffs assert only that the Court has diversity
jurisdiction pursuant to 18 U.S.C. § 1332.
7
S. R.R. Co. v. Branch & St. Joseph Cntys. Rail Users Ass'n, 287
F.3d 568, 573 (6th Cir. 2002) (citing
Moir v. Greater Cleveland
Reg'l Transit Auth., 895 F.2d 266, 269 (6th Cir. 1990)); RMI
Titanium Co. v. Westinghouse Electric Corp., 78 F.3d 1125, 1134
(6th Cir. 1996)(citations omitted).
28 U.S.C. § 1332 provides that “district courts shall have
original jurisdiction of all civil actions where the matter in
controversy exceeds the sum or value of $75,000, exclusive of
interest and costs, and is between ... citizens of different
States,” and Plaintiff contends that this Court has jurisdiction
based on the diversity of the parties.
In the instant action,
there is no dispute that the amount in controversy exceeds the
sum
or
value
of
$75,000,
exclusive
of
interest
and
costs.
Further, there is no dispute that Defendant is a resident of
Kentucky and that each of the named Plaintiffs in this action is
a citizen of another state.
Defendant
states
that,
upon
information
and
belief,
the
individuals, all of whom serve as nursing home administrators
and who Defendant has sued along with the plaintiffs in this
case in his Lincoln County lawsuit but who are not parties in
the present matter, are citizens of Kentucky.
Plaintiffs do not
deny this.
Thus, Defendant claims that complete diversity of
citizenship
among
the
parties
cannot
be
maintained
because,
while the administrators are not named as plaintiffs in this
8
action, they are indispensable parties under Fed. R. Civ. P. 19
and their joinder would destroy the complete diversity among
parties required by 28 U.S.C. 1332(a)(1).
The existence of non-diverse parties in the related state
court action does not, on its own, destroy diversity:
Rule 19 deals with what were historically
known as “necessary” and “indispensable”
parties.
The
terms
“necessary”
and
“indispensable”
are
terms
of
art
in
jurisprudence
concerning
Rule
19,
and
“necessary” refers to a party who should be
joined if feasible, while “indispensable”
refers to a party whose participation is so
important to the resolution of the case
that, if the joinder of the party is not
feasible, the suit must be dismissed. If a
necessary party cannot be joined without
divesting
the
court
of
subject-matter
jurisdiction, the Rule provides additional
criteria for determining whether that party
is indispensable, but if the court finds
that the party is anything less than
indispensable, the case proceeds without
that party, and if, on the other hand, the
court finds that the litigation cannot
proceed in the party's absence, the court
must dismiss the case.
GGNSC Vanceburg, LLC, v. Hanley, Civil Action No. 13-106-HRW,
2014 WL 1333204, *3 (E.D. Ky. Mar. 28, 2014).
Accordingly,
the
Court
first
considers
whether
these
administrators are even necessary parties. They are necessary
parties
accorded
if,
“in
among
[their]
those
absence,
already
complete
parties”
or
relief
“they
cannot
be
claim[]
an
interest relating to the subject of the action and [are] so
9
situated that the disposition of the action in [their] absence
may . . . , as a practical matter, impair or impede [their]
ability to protect the interest” or their absence would “leave
an existing party subject to a substantial risk of incurring
double, multiple, or otherwise inconsistent obligations because
of the interest.”
Addington’s
Fed. R. Civ. P. 19.
claims
against
the
defendants
in
the
state
court action, which group of defendants includes the various
Plaintiffs to this action and the individual administrators, are
based on the same occurrence——the actions or inactions at the
nursing home that resulted in injury to her.
The arbitration
agreement, by its terms, governs claims against the corporate
parties as well as the administrators and its enforceability
with respect to all parties, including Addington, is a matter
pending before the state court.
court
were
to
reach
If this Court and the state
different
conclusions
concerning
the
enforceability of the arbitration agreement, Addington could be
placed
in
a
position
where
he
was
obliged
to
arbitrate
the
claims with some of the parties covered by the agreement and to
proceed in litigation before the state court with respect to
other parties, the individual administrators, who are arguably
covered
by
the
agreement.
Thus,
Addington
is
subject
to
a
substantial risk of incurring inconsistent obligations because
of the administrators’ interest in this matter.
10
Accordingly,
the
Court
concludes
that
the
individual
administrators
are
necessary parties to the action.
As
the
joinder
of
these
administrators,
citizens
of
Kentucky, would destroy diversity jurisdiction, the Court must
determine whether they are
“indispensable.” Thus, the Court
must balance the following factors: (1) the extent to which a
judgment rendered in their absence might prejudice them 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 their absence would be adequate; and (4) whether
Plaintiff
would
have
an
adequate
remedy
if
the
action
were
dismissed for non-joinder. Fed. R. Civ. P. 19(b).
Addington
argues
that
he
will
not
be
afforded
complete
relief in the absence of the administrators as plaintiffs to
this action. He asserts that there could then be a duplication
of proceedings and that he will be unduly and unnecessarily
prejudiced if he is subjected to arbitration with just the named
Plaintiffs. The Court is not persuaded of his position.
The
duplication of proceedings alone in these circumstances is not a
disqualifying factor.
simultaneously
in
both
“[T]he possibility of having to proceed
state
and
federal
court,”
or
in
two
separate arbitrations for that matter, “is a direct result of
[Addington’s] decision to file a suit naming [Plaintiffs and the
11
individual administrators] in state court rather than to demand
arbitration
under
the
[arbitration
agreement].”
Inc. v. Cohen, 276 F.3d 197, 202 (6th Cir. 2001).
possibility
of
piecemeal
litigation
is
a
PaineWebber,
Moreover, “the
necessary
and
inevitable consequence of the FAA's policy that strongly favors
arbitration.” Id.
The Court considers that, while there is a
risk that the state court will reach an inconsistent outcome
regarding
the
arbitration
agreement
administrators, it is a low risk.
as
it
relates
to
the
This does not rise to the
degree of prejudice required to conclude an absent party is
indispensable.
Id.
at
203.
Furthermore,
where
the
risk
of
prejudice is minimal, the Court need not consider how protective
provisions in the judgment, the shaping of relief, or other
measures might reduce the risk of prejudice. Id. at 205.
Finally, Addington argues that an adequate remedy exists in
state court if this Court dismisses the case.
This is true, but
the factors, when balanced, do not militate in favor of the
conclusion that the administrators are an indispensable party.
It
follows
dismissal.
that
the
failure
Ultimately,
the
to
join
them
requirements
does
of
not
warrant
diversity
of
jurisdiction have been met, and this Court has subject matter
jurisdiction over this case.
12
B.
Next, the Court considers whether it should, as Defendant
contends, abstain from exercising its jurisdiction in favor of
the state court proceedings.
The undersigned and several other
courts in this district have recently concluded that abstention
is inappropriate in circumstances substantially similar to those
presented in this matter.
5:14-cv-107-JMH,
March
31,
See Preferred Care, Inc. v. Belcher,
Memorandum
2015);
Richmond
Opinion
and
Health
Order,
DE
9
(E.D.Ky.
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. 0:13106-HRW,
2014
Vanceburg,
LLC,
WL
v.
1333204
Taulbee,
(E.D.Ky.
Civil
Mar.
Action
2013 WL 4041174 (E.D.Ky. Dec. 19, 2013).
28,
No.
2014);
GGNSC
5:13-cv-71-KSF,
In each instance,
there was an allegation of harm resulting from care or the lack
of care provided at a nursing home.
The party claiming injury
filed a civil action in state court, and the nursing home then
asserted that the state court claims were subject to the binding
arbitration
agreement
between
the
parties
and
demanded
the
dispute be referred to arbitration and the state court case
dismissed with prejudice. In each instance, the nursing home
then filed a complaint in the federal court, alleging federal
13
jurisdiction by way of diversity (and omitting the nursing home
administrators, arguably subject to the arbitration agreement
but without diverse citizenship, as a party in the federal court
action), arguing that the arbitration agreement was valid and
enforceable, and asking the federal court to compel the party
claiming injury to arbitrate his or her state claims and to
enjoin him or her from further pursuing his or her claims in
state court.
In Taulbee, the Hon. Karl S. Forester summed up abstention
doctrine as follows:
Even where federal courts properly have
jurisdiction over the matter, a district
court
may
abstain
from
exercising
its
jurisdiction and refrain from hearing a case
in limited circumstances,
Saginaw Hous.
Comm'n v. Bannum, Inc., 576 F.3d 620, 625
(6th Cir.2009). This exception is narrow
because a district court presented with a
case
that
arises
under
its
original
jurisdiction has a “virtually unflagging
obligation” to exercise the jurisdiction
conferred upon it by the coordinate branches
of government and duly invoked by litigants.
Colorado River Water Conservation Dist. v.
United States, 424 U.S. 800, 817, 96 S.Ct.
1236, 47 L.Ed.2d 483 (1976). Abstention is
an “extraordinary and narrow exception to
the duty of a district court to adjudicate a
controversy properly before it.” Id. at 813.
GGNSC Vanceburg, LLC, v. Taulbee, Civil Action No. 5:13-cv-71KSF, 2013 WL 4041174, *2 (E.D.Ky. Dec. 19, 2013).
Abstention is
appropriate under certain limited circumstances, as follows:
14
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
court 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 court 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.
Id.
The analysis is straightforward.
No one disputes that the
present action is parallel to the state court proceedings; thus,
the Court applies the eight factor test.
PaineWebber, 276 F.3d at 206).
As the Court sees the matter,
only two factors favor abstention.
the
federal
forum
is
less
See id. at *3 (citing
First, it is possible that
convenient
to
the
parties,
since
Lexington is some distance from Stanford (in which the injuries
allegedly occurred and near which the Court presumes that most
of the witnesses reside).
court
action
is
no
doubt
See id. at *3.
adequate
15
to
Second, the state
protect
the
federal
plaintiffs’ rights because, under the Supremacy Clause, a state
court is bound by the requirements of the FAA. Id.
The others favor federal jurisdiction, keeping in mind that
“the
balance
[is
to
be]
heavily
weighted
in
favor
of
the
exercise of jurisdiction.” Moses H. Cone Mem’l Hosp. v. Mercury
Const. Corp., 460 U.S. 1, 16, (1983).
The parties agree that
the case does not involve real property or the assumption of
jurisdiction over any res or property.
Thus, the first factor
weighs in favor of the exercise of federal court jurisdiction
and against abstention.
PaineWebber, 276 F.3d at 207 (citing
Romine v. Compuserve Corp., 160 F.3d 337, 341 (6th Cir. 1998)).
The third factor offers little to no support for Defendant’s
argument
piecemeal
in
favor
of
litigation
abstention,
is
since
insufficient
the
to
desire
overcome
to
a
avoid
strong
federal policy in favor of arbitration or, in this instance, the
exercise of jurisdiction.
With
obtained
respect
by
each
to
Id.
the
court,
order
in
“priority
which
should
jurisdiction
not
be
was
measured
exclusively by which complaint was filed first, but rather in
terms of how much progress has been made in the two actions.”
Moses H. Cone, 460 U.S. at 21. A call to the Lincoln Circuit
Clerk
reveals
that
little
has
happened
since
the
time
this
matter was removed to this Court and the present motions were
filed.
An
answer
was
filed,
16
warning
order
attorneys
were
appointed, and, mostly recently, the state court judge signed an
order approving the reports of warning order attorneys appointed
in that matter.
Addington
filed
The instant action was filed a month after
in
state
court.
As
Judge
Forester
noted
in
Taulbee, “[t]he passage of [a month] is too insignificant to
justify the use of abstention, especially when both cases remain
in the early pleading stage.” Taulbee at *4. Thus, the fourth
factor weighs against abstention.
For much the same reason, the
seventh factor—the relative progress of the state and federal
proceedings—weights against abstention as there has been limited
progress in the state court to date.
As to the fifth factor, regarding the source of law, while
it is true that state law will govern the standard contract
defenses Addington raises against the arbitration agreement, the
Federal
Arbitration
arbitration
presents
a
agreements
“liberal
Act
governs
generally
federal
the
and
policy
enforceability
applies
here.
favoring
The
of
FAA
arbitration
agreements” that must be taken into account even when state-law
issues are presented. Moses H. Cone, 460 U.S. at 24. It follows
that this factor weighs in favor of federal court jurisdiction
or, at the very least, not against it in this instance.
The
final factor under Colorado River is the presence or absence of
concurrent jurisdiction. While there is concurrent jurisdiction,
this fact only marginally favors abstention, if at all. As noted
17
above,
the
governing
law
is
the
FAA,
which
“expresses
a
preference for federal litigation,” The existence of concurrent
jurisdiction “is insufficient to justify abstention” under the
circumstances. PaineWebber, 276 F.3d at 208–09.
On balance, the circumstances in this matter do not present
the “exceptional” circumstances necessary to compel this Court
to abandon the “virtually unflagging obligation of the federal
courts to exercise the jurisdiction given them.” Colorado River,
424
U.S.
at
817–18.
Accordingly,
this
Court
declines
to
abstain.
C.
Finally, Defendant asks the Court to dismiss Plaintiffs’
Complaint
pursuant
to
Plaintiffs
fail
state
granted
because
to
the
Fed.
a
R.
Civ.
claim
underlying
ADR
upon
P.
12(b)(6)
which
Agreement
relief
is
because
may
invalid
be
and
unenforceable as (1) it does not evidence a contract involving
interstate commerce; (2) Plaintiffs lacked authority to bind the
wrongful death beneficiaries; and (3) is unconscionable and void
as against public policy.
The Court has carefully considered
each of these arguments and concludes that they are without
merit.
The purpose of a motion to dismiss pursuant to Fed. R. Civ.
P. 12(b)(6), is to allow a defendant to test whether, as a
matter of law, the plaintiff is entitled to legal relief. See
18
Mayer v. Mylod, 988 F.2d 635, 638 (6th Cir. 1993). This requires
a consideration of and a ruling upon the merits of a claim. In
determining whether dismissal is warranted under Rule 12(b)(6),
the complaint must be construed in the light most favorable to
the nonmoving party and its allegations taken as true. Miller v.
Currie, 50 F.3d 373, 377 (6th Cir. 1995). If, in doing so, the
Court determines that the case is legally insufficient, it will
be dismissed.
Even assuming that Addington correctly contends that the
care provided to the decedent occurred only within the borders
of the Commonwealth of Kentucky, this is a case which clearly
falls
within
“contract[s]
the
scope
evidencing
of
a
the
FAA.
transaction
The
FAA
involving
applies
to
commerce,”
9
U.S.C. § 2, and extends to transactions “in individual cases
without showing any specific effect upon interstate commerce if
in the aggregate the economic activity would represent a general
practice
...
subject
to
federal
control.”
Citizens
Bank
v.
Alafabco, Inc., 539 U.S. 52, 56–57 (2003) (quoted in Nichols,
2014 WL 4063823 at *8; Brookdale Sr. Living Inc. v. Stacy, No.
CIV.A. 5:13-290-KKC, 2014 WL 2807524, at *14 (E.D.Ky. June 20,
2014)). “The Supreme Court has “interpreted the term ‘involving
commerce’ in the FAA as the functional equivalent of the more
familiar
term
‘affecting
commerce’
–
words
of
art
that
ordinarily signal the broadest permissible exercise of Congress'
19
Commerce Clause power.”
Id. (citing Allied-Bruce Terminix Cos.,
513 U.S. 265, 273-74 (1995)).
Interstate commerce is interpreted broadly and healthcare
is
an
economic
activity
that
represents
a
general
practice
subject to federal control. See Ping v. Beverly Enter., Inc.,
376 S.W.3d 581, 589 (Ky. 2012) (citing Summit Health, Ltd. v.
Pinhas, 500 U.S. 322 (1991). Defendant argues, however, that
Ping
teaches
that
the
Agreement
cannot
bind
wrongful-death
beneficiaries with respect to the requirement of arbitration.
Plaintiffs argue that, to the extent that Ping holds that a
wrongful-death claim is independent and thus one’s agreement to
arbitrate
his
or
her
personal
injury
claim
does
not
bind
wrongful death claimants to arbitration “because they were not
parties
to
the
agreement,”
the
opinion
federal law and preempted by the FAA.
is
inconsistent
with
Because it is impossible
to identify all possible wrongful death claimants at the time an
arbitration agreement is signed and the resident is alive, the
Ping
holding
would
effectively
nullify
arbitration
in
wrongful death context, which is precluded by the FAA.
the
See,
e.g., Marmet Health Care Center, Inc. et al v. Clayton Brown et
al., 132 S.Ct. 1201, 1203 (2012) (citing the FAA’s “‘emphatic
federal
policy
in
favor
of
arbitral
dispute
resolution’
and concluding that the text of the FAA “includes no exception
for personal-injury or wrongful-death claims”) (quoting KPMG LLP
20
v. Cocchi, 565 U.S. ––––, ––––, 132 S.Ct. 23, 25 (2011) (per
curiam)).
It is well established that, under the Supremacy Clause of
the U.S. Constitution, a state law that “stands as an obstacle
to the accomplishment and execution of the full purposes and
objectives
of
Congress”
is
preempted.
AT&T
Mobility,
LLC
v.
Concepcion, --- U.S. ----, 131 S. Ct. 1740, 1753 (2011) (quoting
Hines
v.
Davidowitz,
312
U.S.
52,
67
(1941)).
As
federal
substantive law, the FAA preempts all contrary state law. See
Id.
at
1748.
The
FAA
was
enacted
in
order
to
promote
arbitration, and courts have frequently characterized the Act as
embodying
a
“national
policy
favoring
arbitration,”
Buckeye
Check Cashing v. Cardegna, 546 U.S. 440, 443 (2006), and “a
liberal
federal
policy
favoring
arbitration
agreements,
notwithstanding any state substantive or procedural policies to
the contrary.” Moses H. Cone Mem’l Hosp., 460 U.S. at 24 (1983).
Under
arbitration
the
FAA,
courts
agreements
are
under
not
state
permitted
laws
to
“invalidate
applicable
only
to
arbitration provisions.” Doctor’s Associates, Inc. v. Casarotto,
517 U.S. 518, 687 (1996). “Arbitration is a matter of contract”
and
courts
must
place
“arbitration
agreements
on
an
equal
footing with other contracts . . . enforcing them according to
their
terms.”
Concepcion,
131
S.Ct.
at
1745
(citing
Buckeye
Check Cashing, 546 U.S. at 443. Concepcion teaches that it is
21
incorrect to apply “common law” defenses so that they apply only
to
arbitration
contract’s
or
derive
existence.
their
meaning
Concepcion,
131
from
an
S.Ct.
arbitration
at
1746.
The
Concepcion Court reiterated its ongoing frustration with state
court
bias
against
enforcement
of
arbitration
agreements,
holding: “[W]hen state law prohibits outright the arbitration of
a particular type of claim, the analysis is straightforward: The
conflicting rule is displaced by the FAA”. Id. at 1743. The U.S.
Supreme
Court,
as
discussed
above,
has
recognized
that
Concepcion applies to nursing home arbitration contracts like
the one at issue in this case.
Marmet Health Care Center, Inc.,
132 S.Ct. at 1203-04.
Further, Courts in the Eastern District of Kentucky, as
well as others, have found that similar nursing home residency
agreements
are
contracts
“evidencing
a
transaction
involving
commerce” and enforceable under the FAA. See Nichols, 2014 WL
4063823 at *8; Caudill, 2014 WL 3420783, at *9; see also Stacy,
2014 U.S. Dist. LEXIS 84460, at *38–39;2014 WL 2829751 Hanley,
2014 U.S. Dist. LEXIS 42355, at *22–24;2014 WL 1333204 GGNSC
Vanceburg, LLC v. Taulbee, No. 5:13–CV–71–KSF, 2013 U.S. Dist.
LEXIS
110878,
at
*4,2013
WL
4041174
(E.D.Ky.
Aug.7,
2013)
(courts have looked to the acceptance of Medicare as evidence of
interstate commerce); and Warner, 2013 U.S. Dist. LEXIS 178136,
at *8.
22
The arbitration agreement in this case is a component of a
larger
contract
that
interstate commerce.
other
courts
durable
have
medical
evidences
a
transaction
involving
See Stacy, 2014 WL 2807524, at *14.
pointed
supplies
come from somewhere.”
out,
that
Id.
“[t]he
[the
food,
medicine,
plaintiffs]
at *14 (quoting
As
provided
and
must
GGNSC Louisville
Hillcreek, LLC v. Warner, Civil Action No. 3:13-cv-752-H, 2013
WL
6796421,
Addington's
*8
(W.D.Ky.
argument
unenforceable
under
Dec.
that
the
FAA
the
19,
2013)).
arbitration
because
it
does
Accordingly,
agreement
not
is
evidence
a
transaction involving interstate commerce is without merit.
Defendant argues next that the procedural and substantive
nature
of
the
Unconscionability,
ADR
in
Agreement
the
renders
Commonwealth
it
of
unconscionable.
Kentucky,
is
a
doctrine that exists as a narrow exception to the rule that,
absent
fraud
in
the
inducement,
a
written
agreement
duly
executed by the party to be held, who had an opportunity to read
it, will be enforced according to its terms. Conseco Finance
Servicing Corp. v. Wilder, 47 S.W.3d 335, 341 (Ky. Ct. App.
2001).
It
is
“‘directed
against
one-sided,
oppressive,
and
unfairly surprising contracts, and not against the consequences
per se of uneven bargaining power or even a simple old-fashioned
bad bargain.’” Id. (quoting Louisville Bear Safety Serv., Inc.
23
v. South Central Bell Tel. Co., 571 S.W.2d 438, 440 (Ky. Ct.
App. 1978)).
Defendant complains arbitration agreements in the health
care context are per se conscionable, which is unsupported by
the law.
v.
See, e.g., Ping, 376 S.W.3d at 588; see also Insight
Schnuerle,
Conseco
state
376
court’s
policy
S.W.3d
561,
reasoning
favoring
and
577
(Ky.
noting
the
2012)
the
(adopting
strong
enforceability
the
federal
of
and
arbitration
agreements and the overarching goal of the FAA to “reverse the
longstanding judicial hostility to arbitration agreements that
had
existed
at
English
common
law
and
had
been
adopted
by
American courts and to place arbitration agreements upon the
same footing as other contracts.”)
Further,
something
the
more,
form
of
this
document
does
render
it
unconscionable.
not,
without
Conseco
Finance
Servicing Corp., 47 S.W.3d at 342-43 (noting that the fact that
an arbitration clause appeared single spaced on the back of a
preprinted form does not render it procedurally unconscionable).
The agreement in question is not a clause buried in the fine
print of a long document.
paper,
separately
the
titled
Rather, it is on separate sheets of
in
admissions
bold
print,
package
and
during
presented
the
as
a
component
of
admissions
process.
The Agreement is conspicuously titled. Although the
Agreement is part of the admissions process, acceptance of the
24
Agreement is not required for admission to the facility, as
plainly
stated
defines
in
in
the
bold
unambiguous
title
print
language.
of
its
The
the
document.
implications
Agreement
does
The
Agreement
using
clear
and
not
limit
the
resident’s right to recovery. Moreover, the obligations in the
Agreement are reciprocal and mutual: the Parties have agreed to
arbitrate any claims they may have against the other party.
In
other
words,
there
is
nothing
to
suggest
that
the
agreement is “one-sided, oppressive and unfairly surprising” or
that the dichotomy between the parties, a health care company
and an individual seeking nursing home care, accompanied by his
family in seeking that care, resulted in some sort of bargain
that should not be enforced.
courts
applying
Kentucky
Id. at 341.
law
have
found
For this reason,
that
arbitration
agreements similar to the one at bar and presented as part of
the
nursing
home
admission
process
were
not
procedurally
unconscionable. See, e.g., Nichols, 2014 WL 4063823 at *9; see
also Abell v. Bardstown Medical Investors, Ltd., Civil Action
No. 3:11-cv-86-H, 2011 WL 2471210, *1–3 (W.D.Ky. June 20, 2011).
Moreover,
something
more,
the
arbitration
void
against
agreement
public
is
policy
not,
as
without
Defendant
suggests. It is well established that there exists “an emphatic
federal policy in favor of arbitral dispute resolution.” KPMG
LLP v. Cocchi, ––– U.S. ––––, 132 S.Ct. 23, 25 (2011); see also
25
Marmet Health Care Center, Inc.,
132 S.Ct. 1201 at 1203–04.
Neither 42 C.F.R. § 483.10 (setting forth resident rights in
long
term
residents’
care
facilities)
rights
statute)
nor
for
KRS
bid
216.515
(Kentucky’s
arbitration
agreements
neither would nor do they trump the FAA as Defendant suggests,
and his motion will be denied for this reason, as well.
For all of the reasons stated above, Defendant Addington’s
Motion to Dismiss shall be denied.
III.
The
Court
next
considers
Defendant’s
Motion
for
an
Extension of Time to Respond to Plaintiffs’ Motion to Compel
Arbitration and concludes that it is without merit.
While the
Court might be willing to grant a timely request on the barest
of arguments at times, it does not believe that the late-filed
request, filed with no excuse other than Defendant believed the
Motion to Compel Arbitration to be “premature,” warrants relief.
In considering Defendant’s arguments in support of his Motion to
Dismiss, the Court has already considered and discounted many of
the arguments which would likely be offered in response to the
Motion
to
Compel
Arbitration.
Accordingly,
the
Court
will
consider Plaintiffs’ arguments as set forth in their Motion to
Compel Arbitration at this time.
26
IV.
Finally, the Court considers Plaintiffs’ Motion to Compel
Arbitration, in which they ask the court to require Defendant to
arbitrate his dispute with them and to stay the state court
action
pending
arbitration
by
the
parties.
As
an
initial
matter, Plaintiffs have satisfied their burden in establishing
that the parties agreed to arbitrate because a party seeking to
enforce an arbitration agreement need only provide copies of a
written
and
signed
agreement
to
arbitrate.
See
Louisville
Peterbilt, Inc. v. Cox, 132 S.W.3d 850, 857 (Ky. 2004); see also
MHC Kenworth-Knoxville/Nashville v. M & H Trucking, LLC, 392 S.W.3d
903 (Ky. 2013).
Thus the burden shifts to Defendant to avoid
enforcement of the agreement by proving that there was no valid
agreement to arbitrate, and the Court has already considered and
rejected
its
arguments
in
support
of
its
Motion
elsewhere in this Memorandum Opinion and Order.2
to
Dismiss
M & H Trucking,
LLC, 392 S.W.3d at 906.
2
The Court notes, as well, Plaintiffs’ argument that
Defendant had the authority to enter into that agreement because
the decedent had executed a clear and unambiguous Power of
Attorney document that vested him with authority to “draw, make,
and sign any and all checks, contracts, or agreements” and
“institute or defend suits concerning my property or rights.”
[DE 1-3 at 1, PageID#: 52 (emphasis added).]
The Court will
honor that clear and unambiguous language and concludes, in the
absence of evidence or argument to the contrary, that Addington
had the authority to enter into the Arbitration Agreement. See
Ping, 376 S.W.3d at 593 (citing Wabner v. Black, 7 S.W.3d 379,
382 (Ky. 1999); Ingram v. Cates, 74 S.W.3d 783 (Ky. Ct. App.
2002)) (determining that POA at issue in case did not confer
27
The parties have “agree[d] that any disputes covered by
this Agreement . . . shall be resolved exclusively by an ADR
process that shall include mediation and, where mediation does
not successfully resolve the dispute, binding arbitration.”
1-2 at 1, Page ID#: 47.]
[DE
The “Covered Disputes,” section of the
ADR Agreement 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 court 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
one Party's failure to satisfy a financial
obligation to the other Party; a violation
of a right claimed to exist under federal,
state, or local law or contractual agreement
between
the
Parties;
tort;
breach
of
contract;
fraud;
misrepresentation;
negligence; gross negligence; malpractice;
death or wrongful death and any alleged
departure
from
the
applicable
federal,
state,
or
local
medical,
health
care,
consumer or safety standards.
authority upon attorney-in-fact to enter into ADR agreement
where POA specified that authority was limited to financial,
real estate and health care decisions); see also Kindred
Healthcare, Inc. v. Cherolis, 2013 WL 5583587 (Ky. App. 2013)
(designated to be published) (motion for discretionary review
pending) (holding that attorney-in-fact had power to execute ADR
agreement where power of attorney included power to “make
contracts,” “draw, make, and sign . . . any and all checks,
promissory notes, contracts or agreements” and to “generally . .
. do and perform for [Fuqua] and in [her] name] all that [she]
might do if present.”)
28
[DE 1-2, at 3, Page ID#: 49.]
Defendant’s State Court Action alleges negligence, medical
negligence, “corporate negligence”, violations of long term care
resident’s rights, and negligence against the administrator. All
of these claims clearly fall within the broad scope of claims
encompassed
Agreement
in
the
outlined
“Covered
above.
Disputes”
Further,
as
section
plainly
of
the
stated
ADR
in
the
provisions of the ADR Agreement specifically cited above, any
disputes
regarding
interpretation
of
the
agreement
are,
if
mediation is not successful, to be referred to the arbitrator
for a decision.
While the FAA requires a federal court to stay their own
proceedings, it does not specifically authorize federal courts
to stay pending state court cases. Great Earth Co., Inc. v.
Simons, 288 F.3d 878, 893 (6th Cir. 2002). Rather, the federal
court's authority to enjoin state-court proceedings is subject
to the legal and equitable standards for injunctions generally,
including the Anti–Injunction Act, 28 U.S.C. § 2283.
Circuit
has
concluded
that
a
district
court's
The Sixth
injunction
of
state-court proceedings after compelling arbitration does not
violate
the
Anti–Injunction
Act
because
the
injunction
fell
“within the exception for injunctions ‘necessary ... to protect
or
effectuate
[district
court]
judgments.’”
Great
Earth,
288
F.3d at 894. It concluded that “[a]n injunction of the state
29
proceedings [was] necessary to protect the final judgment of the
district court on this issue.” Id. Since enjoining the state
proceeding is not barred by the Anti–Injunction Act and such
injunction would serve to protect or effectuate this Court's
judgments, Addington is enjoined from pursuing the pending state
court action before the Lincoln Circuit Court.
Accordingly, IT IS ORDERED:
(1)
That Defendant Addington’s Motion to Dismiss [DE 6] is
DENIED;
(2)
Time
to
That
File
Defendant
Response
Addington’s
to
Motion
Plaintiffs’
for
Motion
Extension
to
of
Compel
Arbitration [DE 9] is DENIED;
(3)
That Plaintiffs’ Motion to Compel Arbitration and to
stay the state court action [DE 8] is GRANTED;
(4)
That
Defendant
shall
prosecute
all
of
his
claims
arising out of his residency at Golden Living Center–Stanford in
accordance with the terms of the ADR Agreement that he signed,
submitting this matter to mediation and, where mediation does
not successfully resolve the dispute, binding arbitration;
(5)
That Addington is ENJOINED from pursuing the pending
state court action against Plaintiffs before the Lincoln Circuit
Court;
(6)
and
That this matter is STRICKEN FROM THE ACTIVE DOCKET,
following
the
conclusion
of
30
any
arbitration
proceedings,
either party may petition the Court to reopen this matter to
take appropriate action as necessary.
This the 3rd day of April, 2015.
31
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