Jackson, Individually and on Behalf of the Estate of Betty Jackson, Deceased v. Diversicare Humble, LLC d/b/a Oakmont Healthcare and Rehabilitation Center of Humble
MEMORANDUM OPINION AND ORDER granting 7 MOTION to Compel Arbitration and Motion to Stay Proceedings Pending Arbitration. (Notice due by 4/17/2017.) (Signed by Judge Sim Lake) Parties notified. (aboyd, 4)
United States District Court
Southern District of Texas
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF TEXAS
CASSANDRA JACKSON, Individually
and on Behalf of the Estate of
BETTY JACKSON, Deceased;
BRIDGET JACKSON; and ANTHONY
DIVERSICARE HUMBLE, LLC d/b/a
OAKMONT HEALTHCARE AND
REHABILITATION CENTER OF
HUMBLE; DIVERSICARE MANAGEMENT
SERVICES CO.; and MEMORIAL
HERMANN HEALTH SYSTEM d/b/a
MEMORIAL HERMANN NORTHEAST
March 28, 2017
David J. Bradley, Clerk
CIVIL ACTION NO. H-16-2776
MEMORANDUM OPINION AND ORDER
Pending before the court is Defendant Oakmont's Motion to
Arbitration (Docket Entry No. 7).
For the reasons stated below,
the motion will be granted.
suffered a stroke on August 29,
and was admitted to Memorial Hermann Hospital that day. 1
Rehabilitation ("Oakmont") for continuing physical rehabilitation.
See Plaintiffs' First Amended Complaint, Facts Applicable to
All Counts, Docket Entry No. 15, pp. 4-7 ~~ 10-22.
Decedent's health deteriorated, and she died at ICON Hospital on
of complications caused by infected pressure
ulcers and sepsis.
Cassandra Jackson signed,
on Decedent's behalf,
titled "Arbitration Agreement." 2
Section II.A. of the Agreement
The Parties agree that any claim arising out of or
relating to treatment and/or services received by
Resident shall be resolved exclusively by binding
arbitration of all claims including, but not limited to,
any claim for payment, nonpayment or refund for services
rendered, violations of any right guaranteed to Resident,
violation of state and/or federal law,
contract, fraud or misrepresentation, negligence, gross
negligence, wrongful death, survival action, health care
liability claim, malpractice, or any other claim based on
the departure from accepted standards of medical or
health care or safety whether sounding in tort or
Under Section III, titled "Arbitration Process," the Agreement
states that "[a] ny mediation or arbitration that is conducted shall
be administered by the National Arbitration Forum under its Code of
Procedure in effect at the time this Agreement is entered." 4
Agreement also contains a severance provision, which states:
Exhibit 1 to
Defendant Oakmont's Motion to Compel Arbitration and Motion to Stay
Proceedings Pending Arbitration, Docket Entry No. 7-1, pp. 52-54.
Id. at 53.
Id. at 54, Section III.D.
The Parties agree that all of the provisions
contained in this Agreement are severable. In the event
that any provision of the Agreement, or portion thereof,
is held to be invalid by a court of competent
jurisdiction, this Agreement shall be interpreted as if
the invalid provision or portion was not contained
herein, and the remaining provisions of the Agreement
will remain in full force and effect and shall continue
to be valid and enforceable and binding upon the Parties.
This Agreement will not fail because any part, clause or
provision hereof is held to be indefinite, invalid, or
Cassandra Jackson filed this action against Oakmont in the
164th Judicial District Court of Harris County,
diversity jurisdiction and moved to compel arbitration.
Decedent's daughters, Bridget Jackson, and Decedent's son, Anthony
"Plaintiffs") have since joined Cassandra
Jackson as plaintiffs.
Plaintiffs have sued Diversicare Management
("Diversicare Management") and Memorial Hermann Health System
d/b/a Memorial Hermann Northeast Hospital ("Memorial Hermann") as
interstate commerce is "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; see also id.
Id. at 54, Section II.F.
FAA is "the fundamental principle that arbitration is a matter of
AT&T Mobility LLC v. Concepcion, 131 S. Ct. 1740, 1745
(internal quotation marks omitted); see Washington Mutual
LLC v. Bailey,
364 F.3d 260,
(5th Cir. 2004)
("The purpose of the FAA is to give arbitration agreements the same
force and effect as other contracts -
no more and no less.") .
Thus, "courts must place arbitration agreements on an equal footing
with other contracts, and enforce them according to their terms."
Concepcion, 131 S. Ct. at 1745 (internal citations omitted).
agreement to arbitrate the dispute requires the court to consider
agreement to arbitrate between the parties" -- and
"whether the dispute in question falls within the scope of
that arbitration agreement."
JP Morgan Chase & Co. v. Conegie, 492
F.3d 596, 598 (5th Cir. 2007).
Although there is a strong federal
arbitration does not apply to the determination of whether there is
a valid agreement to arbitrate between the parties."
GGNSC Southaven, L.L.C., 817 F.3d 169, 176 (5th Cir. 2016)
American Heritage Life Insurance Co. v. Lang, 321 F.3d 533, 537-38
principles that govern the formation of contracts." Id.
Webb v. Investacorp, Inc., 89 F.3d 252, 258 (5th Cir. 1996)).
Plaintiffs argue that the Agreement is invalid because the
arbitrator it names is no longer available. 6
In support of their
argument Plaintiffs rely on two unpublished opinions from the same
See Ranzy v. Tijerina,
Ranzy v. Extra Cash of Texas,
393 F. App'x 174
Civil Action No. H-09-3334,
2011 WL 6719881 (S.D. Tex. Dec. 21, 2011).
The parties in Ranzy
agreed to arbitrate and selected the National Arbitration Forum
Ranzy v. Extra Cash, 2011 WL 6719881 at *1.
NAF was no longer an available forum, the plaintiff contended that
the arbitration provision was invalid.
responded that the court should appoint a new arbitrator using the
mechanism provided by
5 of the FAA.
Id. at *4.
because "the NAF was clearly an integral part of the arbitration
Id. at *5.
The Fifth Circuit agreed, reaffirming its
earlier holding that "where the parties' agreement specifies that
the laws and procedures of a particular forum shall govern any
As a preliminary matter, the court notes that Plaintiffs do
not argue, either in Plaintiffs' Response to Defendant Diversicare
Humble, LLC's Motion to Compel Arbitration (Docket Entry No. 20) or
in Plaintiffs' Sur-Reply in Support of Plaintiffs' Response to
Defendant Diversicare Humble, LLC's Motion to Compel Arbitration
(Docket Entry No. 27), that the non-signatory plaintiffs are not
bound by the Agreement if the court concludes that it is valid.
Nor do Plaintiffs argue that their claims are beyond the scope of
the Agreement or otherwise not arbitrable. Oakmont does not argue
that defendants Diversicare Management and Memorial Hermann are
bound by the Agreement.
'important' part of the arbitration agreement."
Ranzy v. Tijerina,
393 F. App'x at 176.
Plaintiffs argue that the reasoning from Ranzy applies here.
Defendants argue that this case is distinguishable because the
Agreement contains a severance provision.
Plaintiffs respond that
the agreement in Ranzy also contained a similar provision.
this argument is unpersuasive because neither of the Ranzy opinions
addressed the relevance of the severance provision. 7
to black letter law, 'a question not raised by counsel or discussed
in the opinion of the court' has not 'been decided merely because
De La Paz v. Coy, 786 F.3d 367, 373 (5th Cir. 2015)
(citing United States v. Mitchell, 46 S. Ct. 418, 419-20
HENRY CAMPBELL BLACK, HANDBOOK ON THE LAW OF JUDICIAL PRECEDENTS,
OR, THE SCIENCE OF CASE LAW 37 (1912)).
concludes that the essence of the Agreement is that the parties
arbitrate, not the forum in which they do so.
As the Fifth Circuit
severance provision cannot be used to sever an essential provision.
But the presence of a severance provision is also evidence of the
See Coronado v.
Nor have any subsequent
Ranzy addressed this issue.
D N. W.
("The presence of a severability clause sheds
light on the agreement's
'essential purpose. '
(citing John R.
Ray & Sons, Inc. v. Stroman, 923 S.W.2d 80, 87 (Tex. App.--Houston
[14th Dist.] 1996, writ denied)).
The severance provision in the
Agreement, when read in conjunction with the provision selecting
the NAF, indicates that the selected forum is not an essential part
of the contract.
The Agreement in this case differs from the one in Ranzy in at
two-page Arbitration Agreement rather than a single
provision in a credit agreement.
The Agreement contains multiple
The only reference to the NAF appears in a single
sentence in one section.
Second, the Agreement contains a provision that allows for the
severance of "any provision of the Agreement, or portion thereof
is held to be invalid. 118
The Agreement states that it
"shall be interpreted as if the invalid provision or portion was
not contained herein, and the remaining provisions of the Agreement
will remain in full force and effect and shall continue to be valid
and enforceable and binding upon the Parties. 119
reflects the parties'
intent that it "will not fail because any
Agreement, Docket Entry No. 7-1, p. 54, Section II.F.
part, clause or provision hereof is held to be indefinite, invalid,
or unenforceable." 10
Finally, and perhaps most important, the provision naming the
NAF provides an alternative method for choosing an arbitrator. 11
The alternative process for choosing an arbitrator evidences the
intent that the selected forum and procedures are not
essential to the Agreement. 12
reasonable reading of the contract omitting any
reference to the NAF still provides a procedure for the parties to
select an arbitrator,
the court concludes that the portion of a
provision naming the NAF as a forum is not essential.
unavailability of the selected forum is the only remaining issue
raised by Plaintiffs,
the court concludes that the Agreement is
valid and binding.
1\\If the parties cannot agree to a single arbitrator to
resolve the claim(s) under these procedures, the parties agree to
submit the claim to a panel of three (3) arbitrators." Exemplar of
Agreement, Exhibit to "Per the Court's Request Defendant Oakmont's
Supplement to Its Motion to Compel Arbitration and Motion to Stay
Proceedings Pending Arbitration," Docket Entry No. 28-1, Section
III. D, p. 11.
Because the original signed Agreement was not
entirely legible, Defendant Oakmont provided an exemplar with
identical language accompanied by an affidavit. No objections have
been raised by Plaintiffs as to its accuracy.
This also eliminates the need for the court to appoint an
arbitrator under § 5 of the FAA at this time.
As a result, the
court does not opine on the applicability of § 5 when the selected
forum is unavailable.
Conclusion and Order
For the reasons stated above,
the court concludes that the
parties are subject to a valid and binding arbitration agreement.
For that reason, Defendant Oakmont's Motion to Compel Arbitration
and Motion to Stay Proceedings Pending Arbitration (Docket Entry
No. 7) is GRANTED.
The parties are ORDERED to notify the court on
or before April 17, 2017, of the name of an arbitrator or panel of
arbitrators -- determined by the process described in the Agreement
-- that they have agreed upon for the court to appoint.
parties cannot agree on an arbitrator or panel of arbitrators by
April 17, 2017, they are ORDERED to provide the court by that date
a list of five agreed qualified arbitrators from which the court
can select one arbitrator.
Further proceedings against defendant
Oakmont are STAYED pending the outcome of arbitration.
SIGNED at Houston, Texas, on this 28th day of March, 2017.
UNITED STATES DISTRICT JUDGE
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