GGNSC Louisville St. Matthews LLC v. Badgett
| Decision Date | 22 March 2018 |
| Docket Number | Case No. 17-5963 |
| Parties | GGNSC LOUISVILLE ST. MATTHEWS LLC, dba Golden Living Center - St. Matthews; GGNSC ADMINISTRATIVE SERVICES, LLC; GGNSC HOLDINGS, LLC; GGNSC EQUITY HOLDINGS, LLC; GGNSC EQUITY HOLDINGS II, LLC; GOLDEN GATE NATIONAL SENIOR CARE, LLC; GOLDEN GATE ANCILLARY, LLC; GGNSC CLINICAL SERVICES, LLC; GPH LOUISVILLE ST. MATTHEWS, LLC Petitioners-Appellants, v. WALLACE BADGETT, as Administrator of the Estate of Joseph Badgett, Deceased, Respondent-Appellee. |
| Court | U.S. Court of Appeals — Sixth Circuit |
NOT RECOMMENDED FOR FULL-TEXT PUBLICATION
File Name: 18a0150n.06
ON APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF KENTUCKY
Before: MERRITT, CLAY, and SUTTON, Circuit Judges
MERRITT, Circuit Judge. The district court phrased this issue of first impression exactly as we would: "When a patient signs an arbitration agreement at one nursing home, but later disclaims an identical agreement at a facility owned by the same parent company, may the first agreement be enforced?" GGNSC Louisville St. Matthews, LLC v. Badgett, No. 3:17-CV-00188-TBR, 2017 WL 3097534, at *3 (W.D. Ky. July 20, 2017). Because the second arbitration agreement here constituted a novation of the first agreement and clearly expressed the intent of the parties, we hold that no valid agreement to arbitrate exists and AFFIRM the judgment of the district court.
Joseph Badgett was admitted to Golden LivingCenter ("GLC") Mt. Holly, a nursing home in Louisville, Kentucky owned by Golden Gate National Senior Care ("GGNSC"), LLC and its related entities, in June 2013. He signed an admissions agreement and an optional Alternative Dispute Resolution Agreement ("Mt. Holly arbitration agreement") as part of his paperwork. The Mt. Holly arbitration agreement stated that it "is entered into by GLC - Mt. Holly, ('Facility'), and Joseph Badgett." "Facility" is defined as "the living center, its employees, agents, officers, directors, affiliates and any parent or subsidiary of Facility." It goes on to say that "[i]t is the intent of the Parties that this Agreement shall inure to the benefit of, bind, and survive them, their successors, and assigns." Unless the agreement is revoked in writing within 30 days, the agreement "shall remain in effect for all care and services rendered to the Resident at or by the Facility regardless of whether the Resident is subsequently discharged and readmitted to the Facility without renewing, ratifying, or acknowledging this Agreement."
The Mt. Holly arbitration agreement required any "Covered Disputes" between the parties to be resolved by mediation or arbitration. "Covered Disputes" include "any and all disputes arising out of or in any way relating to this Agreement or to the Resident's stay at the Facility or the Admissions Agreement between the Parties." Upon execution, the agreement "becomes part of the Admission Agreement" and is "governed by the Federal Arbitration Act." Badgett and a GLC Mt. Holly representative both agreed to arbitration and signed on the last page. Badgett did not revoke the agreement.
It is unclear how long Badgett resided at GLC Mt. Holly; however, he was admitted to the hospital by January 2015. He also lived at his home and a non-GGNSC nursing home at times. In September 2015, he was admitted to GLC St. Matthews, another GGNSC facility, where he remained until he died on February 16, 2016.
Upon admission to GLC St. Matthews, Badgett executed two documents, an admissions agreement and another Alternative Dispute Resolution Agreement ("St. Matthews arbitration agreement"). The first document, an admissions agreement, contained the following provision:
The second document, the St. Matthews arbitration agreement, was identical to the Mt. Holly agreement, except that "GLC, St. Matthews" is substituted as the "Facility" and on the last page it offered the resident a choice of whether to accept or decline arbitration. Badgett signed below the line stating, "The Alternative Dispute Resolution Agreement above set forth is hereby DECLINED."
After Badgett's death, Wallace Badgett, as administrator of Badgett's estate, brought a negligence and wrongful death action in Kentucky state court against several GGNSC-related entities, nursing home administrators, and John Doe defendants. GGNSC then filed an action in federal district court seeking to compel arbitration of the state court action, to stay the state court action pending arbitration proceedings, and to enjoin the estate from further pursuing its claims in state court. In support, GGNSC relied upon the Mt. Holly arbitration agreement that Badgett signed in June 2013 and contended that it remained binding. In response, the estate moved to dismiss the action, arguing that the Mt. Holly agreement did not require the estate to arbitrate claims arising from Badgett's stay at St. Matthews and that the St. Matthews admissions documents applied.
The district court held that the St. Matthews arbitration agreement constituted a novation of the prior contract and found that no valid arbitration agreement existed between the parties. Accordingly, it denied GGNSC's motion to compel arbitration and granted the estate's motion to dismiss. GGNSC appeals.
We review de novo a district court's decision on whether to compel arbitration pursuant to the Federal Arbitration Act. Burden v. Check Into Cash of Ky., LLC, 267 F.3d 483, 487 (6th Cir. 2001). GGNSC argues on appeal that the district court erred when it failed to (1) apply the liberal federal policy favoring arbitration, (2) hold the estate to its heavy burden in establishing that the first arbitration agreement was revoked, (3) enforce the unambiguous agreement according to its terms, (4) resolve any doubts in favor of arbitration even if the agreement was ambiguous, and (5) recognize that the elements of a novation were not met.
The Federal Arbitration Act ("the Act") makes arbitration agreements "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. There is a "liberal federal policy favoring arbitration" and "any doubts concerning the scope of arbitrable issues should be resolved in favor of arbitration." Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24-25 (1983). "[C]ourts must place arbitration agreements on an equal footing with other contracts, and enforce them according to their terms." AT&T Mobility LLC v. Concepcion, 563 U.S. 333, 339 (2011) (citations omitted). Because arbitration agreements are fundamentally contracts, we review the enforceability of an arbitration agreement according to the applicable state law of contract formation. First Options of Chi., Inc. v. Kaplan, 514 U.S. 938, 944 (1995).
GGNSC correctly argues that the law favors arbitration agreements. Notwithstanding this, "arbitration is a matter of contract and a party cannot be required to submit to arbitration any dispute which he has not agreed so to submit." United Steelworkers of Am. v. Warrior & Gulf Nav. Co., 363 U.S. 574, 582 (1960). Therefore, we must apply Kentucky law to determine whether the Mt. Holly arbitration agreement is enforceable.
"The court must determine whether the dispute is arbitrable, meaning that a valid agreement to arbitrate exists between the parties and that the specific dispute falls within the substantive scope of the agreement." Mazera v. Varsity Ford Mgmt. Servs., LLC, 565 F.3d 997, 1001 (6th Cir. 2009) (internal quotation marks omitted). "Moreover, '[i]n the absence of anyexpress provision excluding a particular grievance from arbitration . . . only the most forceful evidence of a purpose to exclude the claim from arbitration can prevail.'" Nestle Waters N. Am., Inc. v. Bollman, 505 F.3d 498, 503 (6th Cir. 2007) (emphasis added) (quoting AT & T Techs., Inc. v. Commc'ns Workers of Am., 475 U.S. 643, 650 (1986)).
It is undisputed that the Mt. Holly arbitration agreement was entered into by the parties and broadly covers any disputes that arise. Therefore, GGNSC is correct that because a valid agreement exists, Badgett has a heavy burden of rebutting this agreement. GGNSC argues that because the Mt. Holly arbitration agreement is unambiguous, it should be enforced according to its terms. While it is a fundamental principle of Kentucky contract law that unambiguous agreements should be strictly enforced, Ky. Shakespeare Festival, Inc. v. Dunaway, 490 S.W.3d 691, 694 (Ky. 2016), this argument fails to consider the existence of the St. Matthews arbitration agreement. The question we must first answer is which arbitration agreement applies.
In Veech v. Deposit Bank of Shelbyville, the Court of Appeals of Kentucky, then the state's highest court, stated that, "[d]ifferent instruments relating to and constituting a part of the same transaction may be interpreted together in determining the intention of the parties." 128 S.W.2d 907, 913 (1939). The Restatement agrees that "[a] writing is interpreted as a whole, and all writings that are part of the same transaction are interpreted together." Restatement (Second)...
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