Oasis Health & Rehab of Yazoo City, LLC. v. Smith, Civil Action No. 3:14CV294TSL–JMR.

• Decision Date: 06 August 2014
• Docket Number: Civil Action No. 3:14CV294TSL–JMR.
• Citation: 42 F.Supp.3d 821
• Court: U.S. District Court — Southern District of Mississippi
• Parties: OASIS HEALTH AND REHAB OF YAZOO CITY, LLC., Plaintiff v. Marvin SMITH, Individually and as Personal Representative of the Heirs and Wrongful Death Beneficiaries of Minerva Garrett, Deceased, Defendant.

42 F.Supp.3d 821

OASIS HEALTH AND REHAB OF YAZOO CITY, LLC., Plaintiff
v.
Marvin SMITH, Individually and as Personal Representative of the Heirs and Wrongful Death Beneficiaries of Minerva Garrett, Deceased, Defendant.

Civil Action No. 3:14CV294TSL–JMR.

United States District Court, S.D. Mississippi, Northern Division.

Signed Aug. 6, 2014.

42 F.Supp.3d 823

Lisa Williams McKay, William W. McKinley, Jr., Currie, Johnson, Griffin & Myers, PA, Jackson, MS, for Plaintiff.

Ralph Todd Willis, Jr., Hawkins Gibson, PLLC, Jackson, MS, for Defendant.

CORRECTED MEMORANDUM OPINION AND ORDER

TOM S. LEE, District Judge.

From January 2010 until her death in September 2012, Minerva Garrett was a resident at a nursing home facility owned and operated by Oasis Health & Rehab of Yazoo City, LLC (Oasis). On August 27, 2013, counsel for defendant Marvin Smith (Ms. Garrett's grandson) sent Oasis a notice of claim letter, advising of his intent to sue based on the following allegations:

[T]he nursing staff at Oasis Health and Rehab of Yazoo, LLC negligently allowed Ms. Garrett to fall resulting in a fracture to her left hip causing her the need for medical treatment and causing her to suffer significant mental and physical pain and suffering. Moreover, following this incident, Ms. Garrett suffered several decubitus ulcers which were insufficiently treated and were allowed to progress to major wounds causing additional pain and suffering. Eventually, Ms. Garrett was taken to Central Mississippi Medical Center where upon admission she was found to be severely malnourished and suffering from several infected stage IV decubitus ulcers and sepsis. These injuries sustained by Ms. Garrett caused her to suffer a change in condition that greatly decreased her overall enjoyment of life and significantly compromised her health and well-being and ultimately proximately contributed to her death.

In response, Oasis filed the present action pursuant to § 4 of the Federal Arbitration Act, 9 U.S.C. § 4, contending that Smith's claims are governed by a certain alternative dispute resolution (arbitration) agreement entered between Oasis and defendant Smith, Ms. Garrett and Earnest Garrett (wrongful death beneficiary of Minerva Garrett). Upon being served with process, Smith filed a motion to dismiss or, alternatively, for summary judgment, contending that the subject arbitration agreement is unenforceable because the proposed forum under the agreement is unavailable and because the agreement is substantively unconscionable. Oasis responded to Smith's motion and filed a cross-motion for summary judgment for enforcement of the agreement. Notwithstanding his securing an extension of time until July 17, 2014 to respond to Oasis's motion and to file a rebuttal in support of his own motion, Smith has not responded to Oasis's motion or filed a rebuttal.

“The ‘principal purpose’ of the FAA is to ‘ensur[e] that private arbitration agreements are enforced according to their terms.’ ” AT & T Mobility LLC v. Concepcion, ––– U.S. ––––, 131 S.Ct. 1740, 1748, 179 L.Ed.2d 742 (2011) (quoting Volt Information Sciences, Inc. v. Board of Trustees of Leland Stanford Junior Univ., 489 U.S. 468, 478, 109 S.Ct. 1248, 1255, 103 L.Ed.2d 488 (1989) ). Section 2 of the FAA provides that written agreements to arbitrate controversies arising out of an existing contract “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. Section 4 requires courts to compel arbitration “in accordance with the terms of the agreement” upon the motion of either party to the agreement.

A district court adjudicating a motion to compel arbitration must engage in a two-step process. Hadnot v. Bay,

42 F.Supp.3d 824

Ltd., 344 F.3d 474, 476 (5th Cir.2003). “The court must first determine whether the parties agreed to arbitrate the dispute. This determination involves two considerations: (1) whether there is a valid agreement to arbitrate between the parties; and (2) whether the dispute in question falls within the scope of that arbitration agreement. The court then must determine if any legal constraints foreclose arbitration of those claims.” Brown v. Pacific Life Ins. Co., 462 F.3d 384, 397 (5th Cir.2006) (internal citations omitted). “The FAA expresses a strong national policy in favoring arbitration of disputes, and all doubts concerning arbitrability of claims should be resolved in favor of arbitration.” Primerica Life Ins. Co. v. Brown, 304 F.3d 469, 471 (5th Cir.2002). “The party resisting arbitration has the burden of demonstrating why arbitration is not appropriate.” Kisner v. Bud's Mobile Homes, 512 F.Supp.2d 549, 556–557 (S.D.Miss.2007) (citing Green Tree Fin. Corp. v. Randolph, 531 U.S. 79, 81, 121 S.Ct. 513, 517, 148 L.Ed.2d 373 (2000) ).

In the case at bar, defendant does not challenge the validity of the agreement. Nor does he dispute that the claims he asserts are within the scope of the agreement, which provides that

any legal controversy, dispute, disagreement or claim of any kind (collectively “Dispute”) now existing or occurring in the future between the parties arising out of or in any way relating to this Agreement, the Admission Agreement or the Resident's stay at the Facility shall be resolved through an ADR process (as defined herein), including, but not limited to, all Disputes based on breach of contract, negligence, medical malpractice, tort, breach of statutory duty, resident's rights, any departures from accepted standards of care, and all disputes regarding the interpretation of this Agreement, allegations of fraud in the inducement or requests for rescission of this Agreement. This includes any Dispute involving a claim against the Facility, its employees, agents, officers, directors, any parent subsidiary or affiliate of the Facility or any Dispute involving a claim against the Resident, the Resident's Legal Representative or Responsible Party or family member.

Defendant contends, though, that the agreement is unenforceable because (1) it fails to provide a forum or an arbitrator and (2) is substantively unconscionable. Both arguments are addressed below.

The subject agreement states:

[T]he Parties agree to participate in formal Mediation and Arbitration to be conducted by ADR Associates, LLC through its Dispute Resolution Process for Consumer Healthcare Disputes (“ADR Associates Rules”), which are incorporated herein be reference, and as more fully set forth below. If ADR Associates, LLC is unable or unwilling to conduct the ADR process at the time of the dispute, the parties shall mutually agree upon an alternative organization that is regularly engaged in providing ADR services to conduct the Mediation and Arbitration. If the Parties cannot agree on a mediator/arbitrator, each party shall select one mediator/arbitrator and they together shall choose a third mediator/arbitrator who shall conduct the ADR Process.

Defendant states that whereas the parties agreed that the arbitration would be conducted by ADR Associates, LLC, that entity in fact had ceased to exist well before the arbitration agreement was signed. He submits that under the circumstances, the agreement is unenforceable as there is no provision for an arbitral forum. In support of his position, defendant relies on

42 F.Supp.3d 825

Magnolia Healthcare, Inc. v. Barnes, 994 So.2d 159 (Miss.2008), and Covenant Health & Rehabilitation v. Moulds, 14 So.3d 695 (Miss.2009). However, both cases are clearly distinguishable.¹

The arbitration agreement in Moulds mandated that any covered dispute would be “resolved by binding arbitration administered by the American Arbitration Association (AAA) and its rules and procedures.” 14 So.3d at 706. Subsequent to execution of the agreement, the AAA announced that it would no longer accept administration of cases involving individual patients without a post-dispute agreement to arbitration. Id. Since the forum chosen by the parties had refused to accept the dispute and was thus unavailable, the Mississippi Supreme Court refused to enforce the agreement, reasoning that “[a] court should not be used to reform a contract...