Pine Tree Villa, LLC et al v. Lasley

Filing 28

MEMORANDUM OPINION AND ORDER signed by Judge David J. Hale on 11/23/2016. For the reasons set forth, this matter is DISMISSED without prejudice and STRICKEN from the Court's docket. All dates and deadlines are VACATED. All pending motions are DENIED as moot. cc: Counsel(RLK)

UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF KENTUCKY
LOUISVILLE DIVISION
PINE TREE VILLA, LLC, et al.,

Plaintiffs,

v.

Civil Action No. 3:16-cv-570-DJH

SANDRA LASLEY, as Attorney in Fact of
Clarence Smith,

Defendant.

* * * * *
MEMORANDUM OPINION AND ORDER
Plaintiffs, various nursing-home entities, filed this action under § 4 of the Federal
Arbitration Act to compel arbitration of claims asserted in state court by Sandra Lasley on behalf
of Clarence Smith, a resident of one of Plaintiffs’ facilities.1 (See Docket No. 1; D.N. 1-3,
PageID # 25) Initially, Plaintiffs invoked the Court’s diversity and federal-question jurisdiction,
alleging that the parties were completely diverse and that a federal question existed because the
state court’s application of Kentucky Supreme Court precedent would violate the FAA and the
United States Constitution. (D.N. 1, PageID # 2-4) They failed to provide sufficient information
for the Court to determine that the parties were in fact diverse, however, and they ultimately
abandoned their allegation of diversity. (D.N. 19, PageID # 272-73; see D.N. 10, 13) The Court
must therefore determine whether it possesses federal-question jurisdiction before proceeding.
See IMHOFF Inv., L.L.C. v. Alfoccino, Inc., 792 F.3d 627, 631 (6th Cir. 2015) (“Courts must
resolve questions of subject matter jurisdiction before ruling on the merits of the claim.” (citing
Gross v. Hougland, 712 F.2d 1034, 1036 (6th Cir. 1983)).

1

The plaintiffs are Pine Tree Villa, LLC; Genesis Healthcare, LLC; HBR Kentucky, LLC; GEN
Operations I, LLC; GEN Operations II, LLC; and GHC Holdings II, LLC. (See D.N. 1, PageID
# 1)
1

Plaintiffs argue that their challenge to the validity of Extendicare Homes, Inc. v.
Whisman, 478 S.W.3d 306 (Ky. 2015), constitutes a federal question. (See D.N. 19, 21) In
Whisman, the Kentucky Supreme Court held that a delegation of authority to waive the right to
trial by jury should not be inferred absent “a clear and convincing manifestation of the
principal’s intention to do so.”2 478 S.W.3d at 313. The majority in Whisman concluded that a
broad grant of power to make contracts on behalf of the principal did not confer the requisite
authority. See id. at 324-26.
According to Plaintiffs, application of Whisman in the parties’ underlying state-court
action would violate the Fourteenth Amendment “by denying Plaintiffs’ fundamental right to
enter into contracts, specifically the right to enter into enforceable arbitration contracts freely
with [nursing home] residents’ agents,” such as Lasley. (D.N. 19, PageID # 274) They further
contend that Whisman runs afoul of the Supremacy Clause and the FAA itself. (D.N. 21, PageID
# 279) Plaintiffs thus maintain that the Court may exercise subject-matter jurisdiction pursuant
to 28 U.S.C. § 1331 because their “claims arise under the United States Constitution . . . and the
laws of the United States.” (D.N. 19, PageID # 273) Their attempt to recharacterize the relevant
dispute is unpersuasive.
As Plaintiffs acknowledge, the FAA does not confer subject-matter jurisdiction; rather,
there must be “‘an independent jurisdictional basis’ over the parties’ dispute.”3

2

Vaden v.

The United States Supreme Court granted certiorari in Whisman on October 28, 2016. See
Kindred Nursing Ctrs. Ltd. P’ship v. Clark, No. 16-32, 2016 U.S. LEXIS 6407 (Oct. 28, 2016).
The outcome of that case is not relevant to the question presented here, namely whether the
Court has subject matter jurisdiction over this action by virtue of the plaintiffs’ argument that
Whisman is unconstitutional.
3
Section 4 of the FAA provides:
A party aggrieved by the alleged failure, neglect, or refusal of another to arbitrate
under a written agreement for arbitration may petition any United States district
court which, save for such agreement, would have jurisdiction under Title 28, in a
2

Discover Bank, 556 U.S. 49, 59 (2009) (quoting Hall St. Assocs., L.L.C. v. Mattel, Inc., 552 U.S.
576, 581-82 (2008)). To determine whether federal-question jurisdiction exists in a § 4 action,
the Court “look[s] through” the petition to see if it is “predicated on an action that ‘arises under’
federal law.” Id. at 62. Only if the “underlying substantive controversy” presents a federal
question does the Court have jurisdiction under § 1331. Id.
Here, the “underlying substantive controversy” is found in the state-court complaint,
which alleges negligence and state statutory violations. (See D.N. 1-3, PageID # 28-36) Such
claims do not “aris[e] under” federal law. 28 U.S.C. § 1331. Nor does the defendant’s expected
reliance on Whisman give rise to a federal question (see D.N. 5-1, PageID # 94); it is well
established that “[f]ederal jurisdiction cannot be predicated on an actual or anticipated defense.”
Vaden, 556 U.S. at 60 (“It is not enough that the plaintiff alleges some anticipated defense to his
cause of action and asserts that the defense is invalidated by some provision of [federal law].”
(alteration in original) (quoting Louisville & Nashville R.R. Co. v. Mottley, 211 U.S. 149, 152
(1908))). Although the plaintiffs assert violations of the Due Process and Equal Protection
Clauses, alleging that Smith has “abridge[d] Plaintiffs’ Constitutional right[s]” by pursuing his
claims in reliance on Whisman (D.N. 1, PageID # 10, 12), the parties’ true dispute is the one
pending in Jefferson Circuit Court—without it, the claims asserted in this action would be purely
hypothetical.4

civil action or in admiralty of the subject matter of a suit arising out of the
controversy between the parties, for an order directing that such arbitration
proceed in the manner provided for in such agreement.
9 U.S.C. § 4.
4
The Court notes that Smith is not the proper defendant for Plaintiffs’ due process and equal
protection claims in any event, as the Fourteenth Amendment’s prohibitions apply to states, not
individuals. See U.S. Const. amend. XIV, § 1.
3

Irrespective of this Court’s (and others’) views as to the wisdom of Whisman, see
GGNSC Louisville Hillcreek, LLC v. Watkins, No. 3:15-cv-902-DJH, 2016 U.S. Dist. LEXIS
25372, at *13 n.3 (W.D. Ky. Feb. 29, 2016), Plaintiffs’ argument concerning its constitutionality
does not provide the necessary “independent jurisdictional basis” in this case. Vaden, 556 U.S.
at 59 (internal quotation marks and citation omitted). And nothing in the parties’ briefs on the
various pending motions suggests any other potential basis for jurisdiction. In the absence of
diversity or a federal question, this action must be dismissed. See Fed. R. Civ. P. 12(h)(3).
Accordingly, and the Court being otherwise sufficiently advised, it is hereby
ORDERED that this matter is DISMISSED without prejudice and STRICKEN from
the Court’s docket. All dates and deadlines are VACATED. All pending motions are DENIED
as moot.
November 23, 2016

David J. Hale, Judge
United States District Court

4