Boyd Nursing & Rehab. v. Wells
| Decision Date | 30 August 2022 |
| Docket Number | Civil Action 22-011-DCR |
| Parties | BOYD NURSING AND REHABILITATION, LLC, et al., Plaintiffs, v. LEONARD J. WELLS, as Administrator of the Estate of Opal L. Wells, Defendant. |
| Court | U.S. District Court — Eastern District of Kentucky |
Plaintiffs Boyd Nursing and Rehabilitation, LLC and Boyd Nursing and Rehabilitation Holdings, LLC (“the plaintiffs” or “Boyd Nursing”) seek to compel Defendant Leonard J. Wells (“Leonard” or “the defendant”), Administrator of the Estate of Opal L Wells (“Opal”), to submit to arbitration pursuant to the Federal Arbitration Act (“FAA”) and enjoin his related case in the Boyd Circuit Court (“the State Court Action”). Leonard has filed a motion to dismiss the plaintiffs' petition, asserting a multitude of arguments why this matter should not proceed.
Most of the defendant's arguments are frequently litigated and just as frequently rejected in this district. Only one argument concerning his authority to sign the arbitration agreement at issue (“the Arbitration Agreement”) is novel and, potentially, viable. However, dismissal on this basis is not an appropriate remedy. Thus, while this case presents one of the rare instances in which a defendant opposing arbitration survives the initial stage of an FAA proceeding, the Court will not dismiss this action. Instead this matter will proceed to trial on limited issues as set forth in further detail below.
Opal executed an “Unlimited Power of Attorney” (“the Power of Attorney”) on August 10, 2010, providing her son Leonard with powers to take certain actions on her behalf as her attorney-in-fact and agent. [Record No. 1-3] On November 26, 2013, Opal was admitted to the Boyd Nursing and Rehabilitation Center, a nursing home in Ashland, Kentucky where she would live for the remaining years of her life. [Record No. 1-2, | 3] “When . . . new owners took over the Boyd Nursing and Rehabilitation” in 2019, “they undertook steps to obtain signatures on paperwork regarding Opal.” [Record No. 9-5, | 6] This new paperwork included the Arbitration Agreement. [Record No. 1-1]
The Arbitration Agreement is ostensibly marked as paragraph 16 of a larger document and occupies pages 9 through 11 of that document. [Id.] The defendant acknowledges this point by claiming that the Arbitration Agreement is “embedded in a lengthy admission agreement rather than being a stand-alone, conspicuous document.” [Record No. 6-1, p. 23] The Arbitration Agreement nonetheless has its own signature block, and Leonard signed it as his mother's “Responsible Party.” [Record No. 1-1, p. 3]
Opal passed away on September 9, 2020, and Leonard filed the State Court Action on July 23, 2021, acting on behalf of her estate and wrongful death beneficiaries. [Record No. 6-1, pp. 1-2] The operative January 20, 2022 second amended complaint in that case proceeds against, inter alia, the plaintiffs in this action and Cindy Salyers in her capacity as administrator of Boyd Nursing and Rehabilitation Center. [Record No. 1-2] Leonard alleges claims in the State Court Action for negligence, medical negligence, corporate negligence, and wrongful death against the plaintiffs, as well as negligence and wrongful death claims against Salyers. [Id.]
The plaintiffs filed this action on February 11, 2022, petitioning the Court to compel arbitration pursuant to the Arbitration Agreement and the FAA, 9 U.S.C. § 4. [Record No. 1] The plaintiffs claim that the Power of Attorney provided Leonard with the authority to sign the Arbitration Agreement on Opal's behalf. [Record No. 1, | 16] The Complaint also requests that the Court enjoin the defendant from further pursuing his claims in the State Court Action consistent with the Anti-Injunction Act, 28 U.S.C. § 2283. [Id.] The defendant filed the pending motion to dismiss on March 7, 2022, and it has now been fully briefed. [Record Nos. 6, 7, and 9]
This action was initially assigned to Senior United States District Judge Henry R. Wilhoit, Jr., but later transferred to the undersigned on August 8, 2022. [Record No. 10] Having reviewed the parties' filings, the Court will address the relevant issues in the context of the motion to dismiss, except as where otherwise stated below.
Leonard claims that several threshold issues require dismissal of this action, including a lack of subject matter jurisdiction, a failure to join an indispensable party, and the Colorado River abstention doctrine. Because these issues pertain to jurisdiction (or the exercise of jurisdiction), the Court will address them in turn before proceeding to the arguments concerning the validity and enforceability of the Arbitration Agreement.
First, the defendant asserts that this action should be dismissed for lack of subject matter jurisdiction under Rule 12(b)(1). A motion to dismiss for lack of subject matter jurisdiction may proceed as a facial or factual challenge under Rule 12(b)(1). Cartwright v. Garner, 751 F.3d 752, 759 (6th Cir. 2014). “A facial attack goes to the question of whether the plaintiff has alleged a basis for subject matter jurisdiction, and the court takes the allegations of the complaint as true for purposes of Rule 12(b)(1) analysis.” Id. “A factual attack challenges the factual existence of subject matter jurisdiction.” Id. The “court has broad discretion with respect to what evidence to consider in deciding whether subject matter jurisdiction exists, including evidence outside of the pleadings, and has the power to weigh the evidence and determine the effect of that evidence on the court's authority to hear the case.” Id. at 759-60. As the parties asserting federal jurisdiction, the plaintiffs “bear[] the burden of establishing that subject matter jurisdiction exists.” Id. at 760 (citing DLX, Inc. v. Commonwealth of Kentucky, 381 F.3d 511, 516 (6th Cir. 2004)).
The FAA is “something of an anomaly” in jurisdictional terms because it “bestows no federal jurisdiction but rather requires for access to a federal forum an independent jurisdictional basis over the parties' dispute.” Vaden v. Discover Bank, 556 U.S. 49, 59 (2009) (cleaned up). Specifically, the statute 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 civil action or in admiralty of the subject matter of a suit arising out of the controversy between the parties ....
9 U.S.C. § 4. Here, the plaintiffs assert that the Title 28 basis for subject matter jurisdiction is diversity of citizenship under 28 U.S.C. § 1332. Under 28 U.S.C. § 1332(a)(1), “district courts shall have original jurisdiction of all civil actions where the matter in controversy exceeds the sum or value of $75,000, exclusive of interest and costs, and is between . . . citizens of different States ....”
The Complaint alleges that Plaintiff Boyd Nursing and Rehabilitation, LLC is a citizen of New York because its sole member is Plaintiff Boyd Nursing and Rehabilitation Holdings, LLC, which itself has one member who is a New York citizen. [Record No. 1, ¶¶ 3-4] Thus, the plaintiffs are both citizens of New York. See Akno 1010 Market Street St. Louis Missouri LLC v. Pourtaghi, --- F.4th ----, 2022 WL 3148057, at *2 (6th Cir. 2022) (). The Complaint also alleges that Leonard is a citizen of Kentucky, satisfying the requirement that the parties be completely diverse. [Record No. 1, ¶¶ 5-6]
The plaintiffs have provided the operative State Court Action pleading, which specifically alleges compensatory damages for “significant medical expenses, . . . embarrassment, physical impairment, and loss of life.” [Record No. 1-2, | 78] It also asserts a claim for punitive damages. [Id. at | 79.] The Complaint in this matter alleges that, because the defendant seeks these compensatory and punitive damages in the State Court Action, the requirement that the amount in controversy be in excess of $75,000.00, exclusive of interests and costs, is satisfied. [See Record No. 1, | 7.] Leonard does not dispute these points. Instead, he relies on the United States Supreme Court's “look through” approach in Vaden.
This Court has previously summarized Vaden as follows:
[A] credit card company, Discover, sued a cardholder for past-due charges in state court. The cardholder asserted state law counterclaims that Discover considered preempted by federal banking law. Discover also filed a § 4 petition in federal district court to compel the arbitration of the counterclaims. Tracking the language of 18 U.S.C. § 1331, the [Supreme] Court held that a federal court should “look through” a § 4 petition to determine whether it is predicated on a controversy that “arises under” federal law. The Vaden Court found that, when looking through to the whole controversy between the parties, the action did not qualify for federal-court adjudication because there was no federal question. Thus, the Supreme Court held that the district court lacked subject matter jurisdiction.
Brookdale Senior Living, Inc. v. Caudill, No. 5: 14-098-DCR, 2014 WL 3420783, at *2 (E.D. Ky. July 10, 2014) (internal citations omitted).
Leonard argues that the Court should apply Vaden in the diversity jurisdiction context and find that the parties to the underlying controversy are not completely diverse destroying jurisdiction. [Record No. 6-1, pp. 5-11] Specifically, Leonard contends that Salyers (a defendant in the State Court Action) is a citizen of Kentucky, and her presence destroys complete diversity because he, a Kentucky citizen, is ...
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