Bergman v. SSC Monroe Operating Company LLC et al
Filing
23
ORDER granting 7 Motion to Compel. Claims against Dft. SSC Monroe Operating Co are referred to arbitration; action is stayed pending arbitration. Signed by Senior Judge Graham Mullen on 12/16/11. (bsw)
IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF NORTH CAROLINA
CHARLOTTE DIVISION
3:11-cv-494
ROENA BERGMAN, Administrator of the
Estate of STANLEY BERGMAN, Deceased,
Plaintiff,
v.
SSC MONROE OPERATING COMPANY
LLC (d/b/a Brian Center Health &
Retirement/Monroe) et al,
Defendants.
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ORDER
THIS MATTER is before the Court on Defendant SSC Monroe Operating Company
LLC’s (“SSC Monroe”) Motion to Compel Arbitration and Stay Proceedings (D.I. 7), SSC
Monroe’s Memorandum of Authorities in support of its Motion (D.I. 8), Plaintiff Roena
Bergman’s Response (D.I. 16), and SSC Monroe’s Reply (D.I. 18).
I. PROCEDURAL AND FACTUAL BACKGROUND
On August 22, 2011, Plaintiff filed this case in Superior Court in Union County, North
Carolina. The case was removed to this Court on October 3, 2011.
Plaintiff, the surviving spouse of Stanley Bergman (“Mr. Bergman”) and Administrator
of the Estate of Stanley Bergman, claims that Mr. Bergman was admitted to the Brian Center,
operated by Defendant SSC Monroe, on August 18, 2009. Complaint at ¶ 49. 18 days later, Mr.
Bergman was discharged from Defendant’s facility to Carolinas Medical Center (“CMC”) with a
pressure sore. Id. at ¶ 52. Mr. Bergman underwent an operation on his pressure sore, was
subsequently admitted into an inpatient rehabilitation program at CMC, and then died on
September 22, 2009 allegedly as a result of the injuries he sustained at SSC Monroe’s facility.
Id. at ¶¶ 53-55.
Plaintiff alleges that Mr. Bergman, while under the care of the SSC Monroe facility,
suffered from pressure ulcer wounds, infection, and dehydration. Id. at ¶¶ 56-64. Based on
these allegations, Plaintiff asserts claims for negligence, malpractice, wrongful death, and
punitive damages against SSC Monroe. Id. at ¶¶ 65-90, 111-125.
On October 7, 2011, Defendant SSC Monroe filed its Motion to Compel Arbitration.
SSC Monroe further requested that this matter be stayed while arbitration is conducted. D.I. 7,
8. SSC Monroe attached to its Motion a copy of an “Agreement for Dispute Resolution
Program” entered into between Roena Bergman and the SSC Monroe facility on August 19,
2009. D.I. 8, Exhibit B. The “Agreement for Dispute Resolution Program” bears the signatures
of Roena Bergman and a facility employee. Id. Page 1 of the Agreement, in bold upper-case
font, provides in pertinent part as follows:
This Agreement is subject to arbitration disputes.
By agreeing to have all disagreements resolved though the dispute resolution
program, the parties agree to waive the right to a judge or jury trial and to have
the dispute resolved through various steps, culminating in a decision by an
arbitrator.
Defendant also attached to its Motion a copy of an “Advance Directive for Heath Care Living Will” entered into by Stanley Bergman and Roena Bergman on December 18, 2003. D.I.
8, Exhibit C. Defendant claims that the “Advanced Directive for Health Care - Living Will”
authorizes the Plaintiff to act on Mr. Bergman’s behalf. Attached to Plaintiff’s Response is a
“General Power of Attorney” entered into on December 18, 2003 between Stanley Bergman, the
principal, and Roena Bergman, the agent, which appoints the Plaintiff to act as Mr. Bergman’s
attorney in fact to, among other things, “sign... contracts” on Mr. Bergman’s behalf. D.I. 16,
Exhibit 1.
In her brief, Plaintiff opposes Defendant’s Motion on grounds that: (1) Ms. Bergman
could not bind Mr. Bergman, his estate, and his wrongful death beneficiaries to an arbitration
agreement that waives their constitutional right to a jury trial; (2) Mr. Bergman should have
signed the arbitration agreement because he was physically able to do so; (3) the arbitration
agreement lacks mutuality of intent because it lacks the signature of two facility witnesses; (4)
there is no capacity to bind the Estate or wrongful death beneficiaries to the arbitration
agreement; (5) the agreement fails for lack of consideration and lack of mutuality of intent
regarding the arbitration forum; and (6) the Defendant does not explain how it can expect to send
its case to arbitration and leave its co-defendants proceeding in a trial court proceeding.
SSC Monroe’s reply addresses Plaintiff’s arguments, clarifies some of the authority cited
by Plaintiff in her response brief, and argues that the claims made by the Plaintiff in this action
are the type of claims covered by the “Agreement for Dispute Resolution Program”.
Defendant’s Motion has been fully briefed and is, therefore, ripe for determination.
II. DISCUSSION OF CLAIMS
The Federal Arbitration Act (“FAA”) establishes a federal policy favoring the
enforcement of written agreements to arbitrate. Specifically, the FAA provides that arbitration
clauses “shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in
equity for the revocation of any contract.” 9 U.S.C. § 2. The FAA requires courts to stay the
proceeding and compel arbitration in the event of a refusal to comply with a valid agreement to
arbitrate. 9 U.S.C. § 3. The Court must compel arbitration even if the disputed claims are
exempted from arbitration or otherwise considered nonarbitrable under state law. Perry v.
Thomas, 482 U.S. 483, 489 (1987) (state statute that required litigants to be provided a judicial
forum for resolving wage disputes “must give way” to Congress’ intent to provide for
enforcement of arbitration agreements); Am. Gen. Life & Accident Ins. Co. v. Wood, 429 F.3d
83, 90 (FAA preempts state law barring arbitration of certain claims).
The Supreme Court has held that “questions of arbitrability must be addressed with a
healthy regard for the federal policy favoring arbitration.” Gilmer v. Interstate/Johnson Lane
Corp., 500 U.S. 20, 26 (1991) (quoting Moses H. Cone Mem’l Hosp. v. Mercury Constr. Corp.,
460 U.S. 1, 24 (1983)). “Pursuant to that liberal policy, any doubts concerning the scope of
arbitrable issues should be resolved in favor of arbitration, whether the problem at hand is the
construction of the contract language itself or an allegation of waiver, delay, or a like defense to
arbitrability.” Moses H. Cone, 460 U.S. at 24-25; see also Choice Hotels Intern., Inc. v. BSR
Tropicana Resort, Inc., 252 F.3d 707, 710 (4th Cir. 2001); Long v. Silver, 248 F.3d 309, 315-16
(4th Cir. 2001); O’Neil v. Hilton Head Hosp., 115 F.3d 272, 273-74 (4th Cir. 1997).
The Fourth Circuit stated that: “[t]he heavy presumption of arbitrability requires that
when the scope of the arbitration clause is open to question, a court must decide the question in
favor of arbitration. Thus, we may not deny a party’s request to arbitrate an issue unless it may
be said with positive assurance that the arbitration clause is not susceptible of an interpretation
that covers the asserted dispute.” Long, 248 F.3d at 315-16 (internal citations omitted). On the
other hand, “arbitration is a matter of contract and a party cannot be required to submit to
arbitration any dispute which he has not agreed to so submit.” United Steelworkers v. Warrior &
Gulf Navigation Co., 363 U.S. 574, 582 (1960); see also AT&T Technologies, Inc. v.
Communications Workers, 475 U.S. 643, 648 (1986); Johnson v. Circuit City Stores, Inc., 148
F.3d 373, 377 (4th Cir. 1998); Arrants v. Buck, 130 F.3d 636, 640 (4th Cir. 1997).
Therefore, prior to determining the scope of an arbitration agreement, the Court must
determine that a valid agreement to arbitrate exists between the parties by applying “ordinary
state-law principles that govern the formation of contracts.” First Options of Chicago, Inc. v.
Kaplan, 514 U.S. 938, 944 (1995). Specifically, “courts should remain attuned to wellsupported claims that the agreement to arbitrate resulted from the sort of fraud or overwhelming
economic power that would provide grounds for the revocation of any contract.” Gilmer, 500
U.S. at 33 (internal quotations and citations omitted). For instance, “generally applicable
contract defenses, such as fraud, duress, or unconscionability, may be applied to invalidate
arbitration agreements without contravening [9 U.S.C.] § 2.” Doctor’s Assocs., Inc. v.
Casarotto, 517 U.S. 681, 687 (1996).
Arbitration, as it is on the federal level, is favored in North Carolina. Tillman v.
Commer. Credit Loans, Inc., 655 S.E.2d 362, 369 (N.C. 2008) (citing Cyclone Roofing Co. v.
David M. LaFave Co., 321 S.E.2d 872, 876 (N.C. 1984). In North Carolina, “[a] two-part
analysis must be employed by the court when determining whether a dispute is subject to
arbitration: (1) whether the parties had a valid agreement to arbitrate, and also (2) whether the
specific dispute falls within the substantive scope of that agreement.” Munn v. Haymount Rehab
& Nursing Ctr., Inc., 704 S.E.2d 290, 294 (N.C. Ct. App. 2010). Additionally, “[t]he law of
contracts governs the issue of whether there exists an agreement to arbitrate”... and “the party
seeking arbitration must show that the parties mutually agreed to arbitrate their disputes.” Id.
(citing Harbour Point v. DJF Enters., 688 S.E. 2d 47, 50 (citations and quotation marks
omitted).
In the present case, the Plaintiff signed the arbitration agreement in question and
Defendant SSC Monroe is seeking to enforce that agreement. Plaintiff Roena Bergman clearly
had the authority to sign, on behalf of Stanley Bergman, the agreement in question in light of the
“General Power of Attorney” that she entered into with her late husband on December 18, 2003.
The fact that the “General Power of Attorney” was not presented to the Brian Center at the time
that Roena Bergman signed the “Agreement for Dispute Resolution Program” does not vitiate
her power to enter into such an agreement on behalf of Mr. Bergman. Furthermore, the
Plaintiff’s act of signing the agreement is sufficient to establish that the “Agreement for Dispute
Resolution Program” is a valid agreement to arbitrate because North Carolina law generally
requires that a contract must only be signed by the party to be charged or by some other person
lawfully authorized. See, e.g. River Birch Assoc. v. City of Raleigh, 388 S.E.2d 538, 551 (N.C.
1990); Carlton v. Anderson, 173 S.E.2d 783, 784 (N.C. 1970). Nothing on the record before this
Court indicates that the “Agreement for Dispute Resolution Program” is invalid.
The specific disputes at issue before this Court falls within the substantive scope of the
“Agreement for Dispute Resolution Program.” The Plaintiff’s claims against SSC Monroe
include negligence, malpractice, wrongful death, and a claim for punitive damages. The plain
language of the “Agreement for Dispute Resolution Program” does not exclude these claims
from arbitration. The “Agreement for Dispute Resolution Program” excludes only a “claim or
dispute involving solely a monetary claim in an amount less than $50,000.00.” In order for this
case to proceed against the Defendants in federal court, the case must satisfy all the requirements
for diversity jurisdiction including the mandate of 28 U.S.C. § 1332 that the amount in
controversy exceeds the sum of $75,000.000, exclusive of costs and interest. The Complaint
alleges that Plaintiff has been damaged in an amount “in excess of $10,000 in compensatory
damages and in excess of $10,000 in punitive damages against each Defendant.” If this amount
is aggregated against SSC Monroe Operating Company LLC and the nine (9) other LLC’s
against which Plaintiff brought suit and which constitute SSC Monroe Operating Company
LLC’s corporate structure (D.I. 1 at ¶¶ 3-5), then Plaintiff’s monetary claim against SSC Monroe
Operating Company LLC’s overall corporate structure amounts to at least $200,000.
In sum, this Court finds that Defendant SSC Monroe has shown that the parties reached a
valid agreement to arbitrate and that the specific dispute falls within the scope of that agreement.
Munn, 704 S.E.2d at 294. This Court also finds that, here, there are no generally applicable
contract defenses that may be applied to invalidate the arbitration agreement. Casarotto, 517
U.S. at 687.
Accordingly, for the reasons set forth herein, the Motion to Compel Arbitration and Stay
Proceedings is GRANTED. The claims against Defendant SSC Monroe Operating Company
LLC are referred to arbitration per the terms of the “Agreement for Dispute Resolution Program”
made between the parties. This action, including any discovery, is stayed pending the outcome
of arbitration.
IT IS SO ORDERED
Signed: December 16, 2011
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