Biller v. S-H Opco Greenwich Bay Manor, LLC

• Citation: 961 F.3d 502
• Decision Date: 05 June 2020
• Docket Number: No. 19-1865,19-1865
• Parties: Kara BILLER, as attorney in fact for Joan M. McKenna; Joan M. McKenna Plaintiffs, Appellees, v. S-H OPCO GREENWICH BAY MANOR, LLC, a/k/a Brookdale Greenwich Bay ; Brookdale Senior Living Communities, Inc., a/k/a Brookdale Senior Living, Inc.; BKD HB Acquisition Sub, Inc. ; BKD Twenty-One Management Company, Inc.; S-H Twenty-One Opco, Inc. Defendants, Appellants.
• Court: United States Courts of Appeals. United States Court of Appeals (1st Circuit)

961 F.3d 502

Kara BILLER, as attorney in fact for Joan M. McKenna; Joan M. McKenna Plaintiffs, Appellees,

v.S-H OPCO GREENWICH BAY MANOR, LLC, a/k/a Brookdale Greenwich Bay ; Brookdale Senior Living Communities, Inc., a/k/a Brookdale Senior Living, Inc.; BKD HB Acquisition Sub, Inc. ; BKD Twenty-One Management Company, Inc.; S-H Twenty-One Opco, Inc. Defendants, Appellants.

No. 19-1865

United States Court of Appeals, First Circuit.

June 5, 2020

Joseph H. Desmond, with whom Morrison Mahoney LLP was on brief, for appellants.

Anthony R. Leone, II, with whom Leone Law LLC, Cranston, RI, was on brief, for appellees.

Before Howard, Chief Judge Thompson and Barron, Circuit Judges.

THOMPSON, Circuit Judge.

Joan M. McKenna and her daughter, Kara Biller, brought this lawsuit against McKenna's former assisted living facility, Brookdale Greenwich Bay (we'll call it "Brookdale"),¹ because (they allege) Brookdale agreed to take responsibility for administering McKenna's thyroid medication (methimazole

) but dropped the ball. Without her medication, McKenna's thyroid levels spiraled "out of control," she suffered health complications, and she had to be hospitalized. In answer, Brookdale sought to have the case sent to arbitration, fingering an arbitration clause in McKenna's residency agreement. But at Biller and McKenna's urging, the district court denied arbitration and kept the case in court. In its view, the arbitration agreement had expired in 2017, so there was nothing left to enforce.

On appeal, Brookdale argues (as it did below) that the Federal Arbitration Act (FAA) required the district court to send this case to arbitration. According to Brookdale, it was the arbitrator's job to decide when the residency agreement terminated; and even if the rest of the contract did expire, that doesn't mean the arbitration clause lapsed along with it. On this record, we have to agree; given our precedent, we could hardly do otherwise. As such, we conclude that the arbitration agreement remains in effect and binds McKenna and Biller to arbitrate their claims.

I. Background²

McKenna moved into Brookdale's Greenwich Bay facility in March 2016.

When she got there, Brookdale gave her a contract (the parties call it the "residency agreement") that set out a payment schedule for the services she'd get during her stay -- though Brookdale (and only Brookdale) reserved the "right to modify fees, rates and charges, [and] amend services provided" without another writing signed by both parties. The contract said that it would continue indefinitely, but that either party could terminate it "immediately upon written notice in the event of [McKenna's] death or if [she] must be relocated due to [her] health."³

Among other provisions, the residency agreement also contained an arbitration clause, which read:

Any and all claims or controversies arising out of, or in any way relating to, this Agreement or any of your stays at the Community, excluding any action for involuntary transfer or discharge or eviction, and including disputes regarding interpretation, scope, enforceability, unconscionability, waiver, preemption and/or violability of this Agreement, whether arising out of State or Federal law, whether existing or arising in the future, whether for statutory, compensatory or punitive damages and whether sounding in breach of contract, tort or breach of statutory duties, irrespective of the basis for the duty or the legal theories upon which the claim is asserted, shall be submitted to binding arbitration, as provided below, and shall not be filed in a court of law. The parties to this Agreement further understand that a judge and/or jury will not decide their case.

The clause added that any arbitration would be held before an unbiased arbitrator chosen by the parties, and the parties would divide the costs equally.

Presented with this residency agreement, McKenna's daughter and attorney-in-fact Kara Biller signed on her mother's behalf, and McKenna began her stay.

Things didn't go as planned. When McKenna arrived at Brookdale in March 2016, she was under a doctor's order to take methimazole

to treat a thyroid condition. At the time, her family members handled her medication; the residency agreement didn't mention it. Some months later, though (in July 2016), Brookdale agreed to take on the task of administering McKenna's meds, including methimazole. But they didn't follow through. According to the plaintiffs, Brookdale didn't give McKenna methimazole for over a year -- from July 2016 until August 2017. As a result, her thyroid stopped functioning properly and she suffered health complications.

In July 2017, McKenna was transferred from Brookdale's assisted living unit to the facility's memory care unit, a locked ward for patients with dementia

. When they moved her, Brookdale gave McKenna and Biller an updated residency agreement for Biller to sign.⁴ A month later, McKenna was admitted to a hospital, where she and her family first learned that she had not been taking methimazole

. Shortly after she left the hospital, McKenna moved out of Brookdale for good.

Two years later, she and her daughter sued Brookdale in Rhode Island state court. Biller and McKenna brought state-law claims for negligence; negligent hiring, training, and supervision; corporate negligence; respondeat superior; and breach of contract. These claims were all based on Brookdale's alleged failure to administer methimazole from July 2016 to August 2017.

Brookdale timely removed the suit to federal district court based on diversity jurisdiction and moved to compel arbitration. Brookdale argued that the state-law tort claims and state-law contract claims were unequivocally within the scope of the arbitration agreement.⁵ So as Brookdale saw it, the FAA obligated the district court to refer the claims to an arbitrator.

In opposition, Biller and McKenna did not dispute that the arbitration agreement purported to cover their state-law tort and contract claims. Rather, they argued that the arbitration agreement was not "in effect between the parties" for three relevant reasons. First, they argued that the July 2017 "relocation to the new unit due to Ms. McKenna's health terminate[d] the March 2016 residency agreement" that contained the arbitration clause. Second, they argued that the parties formed a new, implied-in-fact "common-law" contract in July 2017 that "supersede[d] the earlier agreements between the parties and ... d[id] not contain a signed forced arbitration provision." Third, they argued that "the forced arbitration provision that the defendants seek to enforce is unconscionable."

In reply, Brookdale contended that Biller and McKenna had simply raised further disputes as to the scope or enforceability of the arbitration agreement itself. Because the parties had agreed to have an arbitrator decide those threshold disputes, Brookdale argued, the FAA obligated the district court to refer them to an arbitrator.

In the alternative, Brookdale argued that even if the district court were to adjudicate these disputes, it should conclude that the arbitration clause in the March 2016 residency agreement remained in effect. In Brookdale's view, the termination clause in the residency agreement had not been triggered, because McKenna merely "receiv[ed] different services over time at the same facility" throughout her stay; and there was no superseding agreement, because the March 2016 residency agreement contemplated additional services and fees. Therefore, Brookdale argued, the 2016 agreement was still in effect and compelled arbitration.

After a hearing, the district court denied the motion to compel arbitration from the bench. It concluded that "there is no signed agreement containing an arbitration clause which would otherwise be enforceable by this Court," because "[t]he March '16 agreement terminated when Ms. McKenna was moved to a memory unit from her assisted living unit where she had been before." The district court therefore refused to send "any question to an arbiter." Brookdale timely appealed. See 9 U.S.C. § 16(a)(1)(B).

II. The FAA

The Federal Arbitration Act provides: "A written provision in ... a contract ... to settle by arbitration a controversy ... 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. Designed to counter "widespread judicial hostility to arbitration," Am. Express Co. v. Italian Colors Rest., 570 U.S. 228, 232, 133 S.Ct. 2304, 186 L.Ed.2d 417 (2013), the Act makes arbitration "a matter of contract, and courts must enforce arbitration contracts according to their terms," Henry Schein, Inc. v. Archer & White Sales, Inc., ––– U.S. ––––, 139 S. Ct. 524, 529, 202 L.Ed.2d 480 (2019). "We review both the interpretation of arbitration agreements and orders compelling arbitration de novo." S. Bay Bos. Mgmt. v. Unite Here, Local 26, 587 F.3d 35, 42 (1st Cir. 2009).

"A party seeking to compel arbitration under the FAA must demonstrate ‘that a valid agreement to arbitrate exists, that the movant is entitled to invoke the arbitration clause, that the other party is bound by that clause, and that the claim asserted comes within the clause's scope.’ " Dialysis Access Ctr., LLC v. RMS Lifeline, Inc., 638 F.3d 367, 375 (1st Cir. 2011) (quoting InterGen N.V. v. Grina, 344 F.3d 134, 142 (1st Cir. 2003) ). If the movant makes that showing, the court has to send the dispute to arbitration "unless the party resisting arbitration specifically challenges the enforceability of the arbitration clause itself ... or claims that the agreement to arbitrate was ‘never concluded.’ " Granite Rock Co. v. Int'l Bhd. of Teamsters, 561 U.S. 287, 301, 130 S.Ct. 2847, 177 L.Ed.2d 567 (2010) (quoting Buckeye Check Cashing, Inc. v. Cardegna, 546 U.S. 440, 444 n.1, 126 S.Ct. 1204, 163 L.Ed.2d 1038 (2006) (cleaned up)). Those issues, which implicate "[w]hether or not a dispute is arbitrable," are typically for the...