Preferred Care of Delaware, Inc. et al v. VanArsdale

Filing 19

MEMORANDUM OPINION & ORDER: (1) matter is STAYED pending the parallel action in Madison Circuit Court; (2) that pending motions are DENIED AS MOOT; (3) that plas are ORDERED to file a Notice of Status of State Court Proceedings once every 6 months un til the state court proceeding has been fully adjudicated; (4) that plas are ORDERED to file a Notice of Completion of State Court Proceedings as soon as the state court action has been full adjudicated. Signed by Judge Joseph M. Hood on 1/26/16.(KJR)cc: COR

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF KENTUCKY
CENTRAL DIVISION at LEXINGTON
PREFERRED CARE
OF DELAWARE, INC., et al.,

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Plaintiffs,
v.

SIMM VANARSDALE,
as Administrator of Estate
of Judith VanArsdale,
Defendant.

**

On

November

16,

**

2015,

Action No. 5:15-cv-342-JMH

MEMORANDUM OPINION AND ORDER

**

**

**

Plaintiffs

filed

their

complaint,

seeking a declaration that Defendant’s nursing home negligence
claims against them must be arbitrated, as opposed to being tried
before a jury in Madison County Circuit Court, where a suit is
pending.

On December 2, 2015, Plaintiffs moved for a preliminary

injunction,

asking

this

court

to

enjoin

the

state

court

proceedings. In particular, Plaintiffs wished to prevent the state
court

from

agreement.
that

ruling

on

the

enforceability

of

the

arbitration

Citing the Federal Arbitration Act, Plaintiffs argued

federal

enforceability.

court

was

the

proper

forum

to

decide

its

Based on the provisions of the Anti-Injunction

Act, however, this court had no authority to stay the state court
proceedings at that time.

See DE 18.

While the parties briefed

the enforceability of the arbitration agreement in this court, the
same issue was pending in state court.

On December 14, 2015, the

Madison Circuit Court issued a ruling holding that the arbitration
provision was unenforceable, as there had been no agreement to
arbitrate the matter between the parties.1

See DE 14-1.

Plaintiffs argue that since no final judgment has issued in
state court, neither res judicata nor issue preclusion applies,
and this court is not bound by the state court’s decision.

The

court agrees, see Hapgood v. City of Warren, 127 F.3d 490, 493
(6th Cir. 1997), Yeoman v. Com., 983 S.W.2d 459, 465 (Ky. 1998),
but deems it appropriate to determine whether Colorado River
abstention should be applied in this instance.

See Colorado River

Water Conservation Dist. v. United States, 424 U.S. 800, 817
(1976).

The court notes that, despite the “virtually unflagging

obligation of the federal courts to exercise the jurisdiction given
them, considerations of judicial economy and federal-state comity
may justify abstention in situations involving the contemporaneous
exercise of jurisdiction by state and federal courts.”
Compuserve

Corp.,

160

F.3d

337,

339

(6th

Cir.

Romine v.

1998).

In

considering whether to abstain from exercising jurisdiction, the
court must consider several factors.

The threshold determination

1

Based on the Kentucky Supreme Court’s decision in Ping v. Beverly Enterprises,
Inc., 376 S.W.3d 581 (Ky. 2012) along with the Sixth Circuit’s decisions in
Richmond Health Facilities, et al. v. Nichols, No. 15-5062, 2016 WL 192004 (6th
Cir. Jan. 15, 2016) and Pine Tree Villa, LLC v. Brooker, 612 F. App’x 340 (6th
Cir. 2015), this Court agrees.

2

is whether the concurrent state and federal actions are actually
parallel.

Id.

The court concludes that they are.

The parties

are identical, save one—one of two nursing home administrators.
Importantly, there is certainty that the state litigation, if seen
through to its conclusion, will dispose of all claims presented in
the federal case.

See AEP Indus., Inc. v. UTECO Am., Inc., 1:14-

cv-96-GNS, 2015 WL 1298556, *7 (W.D. Ky. March 23, 2015).
Having concluded that the federal and state court proceedings
are parallel, the court turns its inquiry to the other Colorado
River factors.

See 424 U.S. at 818–19.

The first factor, whether

the state court has assumed jurisdiction over any property, weighs
against abstention, as there is no indication that it has.

The

second factor weighs slightly against abstention, as there is no
indication that the federal forum in Lexington is less convenient
to the parties than the state forum in Richmond, where the events
at issue took place, approximately 20 miles away.

An additional

consideration is the order in which jurisdiction was obtained.
Romine, 160 F.3d at 341.

VanArsdale filed his complaint in state

court approximately one month before Preferred Care and the other
plaintiffs filed theirs here.

Accordingly, this factor weighs in

favor of abstention.
The consideration that was paramount in Colorado River itself
was avoiding piecemeal litigation.

Id. (citing Moses H. Cone

Memorial Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 19 (1983)).
3

“Piecemeal litigation occurs when different courts adjudicate the
identical

issue,

thereby

duplicating

judicial

potentially rendering conflicting results.”
proceed

on

parallel

tracks

in

federal

and

Id.
state

effort

and

When cases
court,

the

legitimacy of the court may be placed in jeopardy by “duplicative
suits that are the product of gamesmanship or that result in
conflicting adjudications.”

Id. (quoting Lumen Constr., Inc. v.

Brant Constr. Co., 780 F.2d 691, 694 (7th Cir. 1985)).

This

consideration favors strongly toward abstention.
Another consideration is the source of governing law, state
or federal.

Moses H. Cone, 460 U.S. 23–26.

While the Federal

Arbitration Act “embodies the national policy favoring arbitration
and places arbitration agreements on equal footing with all other
contracts . . . a party cannot be required to submit to arbitration
any dispute which he has not agreed so to submit.”

Richmond Health

Facilities v. Nichols, No. 15-5062, 2016 WL 192004, *2 (6th Cir.
Jan.

15,

2016)

(citations

omitted).

In

determining

the

enforceability of an arbitration agreement, we apply state law of
contract formation.

Id.

“When it comes to state laws applicable

only to arbitration provisions, however, the FAA preempts those
state laws.”

Id. (citations and alterations omitted).

In Ping v.

Beverly Enterprises, Inc., 376 S.W.3d 581 (Ky. 2012), the Kentucky
Supreme Court held that a nursing home resident’s daughter did not
have authority to enter into an arbitration agreement based on a
4

“general” power of attorney that referred exclusively to property
and finances.

In Pine Tree Villa, LLC v. Brooker, 612 F. App’x

340, 345 (6th Cir. 2015), the Sixth Circuit concluded that Ping
was not hostile to arbitration and, thus, was not preempted by the
FAA.2

The court distinguished Ping from a case in which the agent

did have authority to agree to arbitration because, for example,
the POA authorized the agent “to draw, make and sign any and all
checks, contracts, or agreements.”

Id. at 345 (citing Oldham v.

Extendicare Homes, Inc., No. 5:12-cv-199, 2013 WL 1878937 (W.D.
Ky. May 3, 2013)), see also GGNSC Vanceburg, LLC v. Taulbee, No.
5:13-cv-71, 2013 WL 4041174, *8 (E.D. Ky. Aug. 7, 2013) (attorney
in fact was explicitly authorized to “make contracts” and “draw,
make and sign . . . all checks, promissory notes, contracts, or
agreements.”).

Because the FAA does not preempt Ping, and state

law applies to the enforceability of the arbitration agreement,
this factor weighs in favor of abstention.
There

are

three

additional

factors

left

to

consider,

including: the adequacy of the state court action to protect the
federal plaintiffs’ rights; the relative progress of the state and
federal proceedings; and the presence or absence of concurrent
jurisdiction.

Romine, 160 F.3d at 341 (citations omitted).

As

2 While Nichols, No. 15-5062, 2016 WL 192004, *2 (6th Cir. Jan. 15, 2016),
focused on a patient’s inability to bind her executrix to arbitration of
wrongful death claims, the Sixth Circuit reiterated that Ping is not preempted
by the FAA.

5

the

court

has

stated,

the

enforceability

agreement is an issue of state law.

of

the

arbitration

There is no indication that

the state court cannot or will not adequately protect Plaintiffs’
interests going forward.

With respect to the progress of the

proceedings, the state court issued a ruling on the arbitrability
of the underlying claims on December 14, 2015.

The Court can only

assume that litigation has been progressing in the usual manner
since then. Further, as it appears that this matter may be settled
more

expeditiously

in

state

court,

this

compulsion to exercise [its] jurisdiction.”

court

is

“under

no

Will v. Calvert, 437

U.S. 655, 662 (1978).
After a careful balancing of all the factors articulated
above, the court concludes that abstention is appropriate in this
instance.
(1)

Accordingly, IT IS ORDERED that:
That this matter is hereby STAYED pending the parallel

action in Madison Circuit Court;
(2)

That the pending motions in this matter, [DE 6, 8], are

hereby DENIED AS MOOT;
(3)

That the Plaintiffs are ORDERED to file a Notice of

Status of State Court Proceedings once every six (6) months until
the parallel state court proceeding has been fully adjudicated;
and

6

(4)

That the Plaintiffs are further ORDERED to file a Notice

of Completion of State Court Proceedings as soon as the parallel
state court action has been fully adjudicated.
This the 26th day of January, 2016.

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