Jerry Erwin Assocs., Inc. v. Estate of Asher, CIV 16–0016 JB/LF

Decision Date30 November 2017
Docket NumberNo. CIV 16–0016 JB/LF,CIV 16–0016 JB/LF
Citation290 F.Supp.3d 1213
Parties JERRY ERWIN ASSOCIATES, INC., d/b/a JEA Senior Living, Plaintiff, v. ESTATE OF Lucille ASHER, Deceased, BY AND THROUGH Personal Representative, Kevin ZANGARA, Defendant.
CourtU.S. District Court — District of New Mexico

Michelle A. Hernandez, Tomas J. Garcia, Modrall Sperling Roehl Harris & Sisk PA, Albuquerque, New Mexico, for Plaintiff.

James H. Wood, Thomas Gordon Wood, Law Office of James H. Wood PC, Albuquerque, New Mexico, for Defendant.

MEMORANDUM OPINION 1

JAMES O. BROWNING, UNITED STATES DISTRICT JUDGE

THIS MATTER comes before the Court on: (i) the Plaintiff's Motion to Compel Arbitration, filed January 8, 2016 (Doc. 2)("Motion"); and (ii) the Defendant's Motion to Dismiss Plaintiff's Complaint to Compel Arbitration and Memorandum Brief in Support, filed February 4, 2016 (Doc. 15)("Zangara's Motion"). The Court held a hearing on March 29, 2016. The primary issues are: (i) whether the Court has subject-matter jurisdiction in this case because of the parties' diversity, despite the existence of possible non-diverse parties in the underlying state court action who are not before this Court; (ii) whether decedent Lucille Asher's conservator had the authority to bind Lucille Asher and her estate to the Arbitration Agreement, Resident Admission Agreement at 3, filed January 8, 2016 (Doc. 3–2)("Arbitration Agreement"); (iii) whether the Arbitration Agreement is within the scope of the Federal Arbitration Act, 9 U.S.C. §§ 1 – 16 ("FAA"); (iv) whether the claims asserted are within the Arbitration Agreement's scope; (v) whether Plaintiff Jerry Erwin Associates, Inc. ("Erwin Associates") has the power to enforce the Arbitration Agreement, even though it is not a party to the Arbitration Agreement; and (vi) whether the Arbitration Agreement is unconscionable. The Court concludes that: (i) the Court has subject-matter jurisdiction in this case, because the parties before the Court are diverse, and the Court should not "look through" to the state court action to determine diversity; (ii) Lucille Asher's conservator had the authority to bind her and her estate to the Arbitration Agreement; (iii) the Arbitration Agreement is within the FAA's scope; (iv) the claims asserted are within the Arbitration Agreement's scope; (v) Erwin Associates has the power to enforce the Arbitration Agreement; and (vi) the relevant part of the Arbitration Agreement is not unconscionable. Accordingly, the Court grants the Plaintiff's Motion and denies Zangara's Motion.

FACTUAL BACKGROUND

In 2011, a state district court issued an order appointing a Guardian of Person and a Conservator of the Estate for an elderly woman named Lucille Asher ("L. Asher"). See Order Appointing Guardian of Person and Conservator of Estate of An Incapacitated Person at 3–4, filed January 8, 2016 (Doc. 3–1)("Guardianship Order"). Specifically, the Guardianship Order appointed William R. "Randy" Asher ("W. Asher"), L. Asher's son, as Guardian of Person, and Urbielewicz Murphree CPAs, P.C. ("Murphree CPAs") as Conservator of the Estate. See Guardianship Order at 3–4. The Guardianship Order declares that "William R. 'Randy' Asher shall have the final and ultimate authority to make all medical decisions for the incapacitated person, including but not limited to making decisions regarding where the incapacitated person should reside." Guardianship Order at 4.

W. Asher "decided to try to admit Lucille to North Ridge" Alzheimer's Special Care Center ("North Ridge"), a nursing home that Erwin Associates manages and operates. Defendant's Response to Plaintiff's Motion to Compel Arbitration at 3, filed January 29, 2016 (Doc. 14)("Response 1"); Plaintiff's Memorandum of Law in Support of Plaintiff's Motion to Compel Arbitration at 1, filed January 8, 2016 (Doc. 3)("Memorandum"). Erwin Associates has a Management Services Agreement with Albuquerque Care Group, LLC ("Albuquerque Care"), a company that owns the nursing home. See Management Services Agreement at 1, filed February 16, 2016 (Doc. 17–3)("Management Agreement"). According to the Management Agreement, Erwin Associates "will perform all services necessary to provide and maintain quality care and management for the Facility and the Residents ... including ... [r]epresenting the Facility in all dealings with regulatory authorities, creditors, Residents, Facility Employees and other personnel and insurers." Management Agreement at 2.

L. Asher was admitted to North Ridge, and Murphree CPAs, but not W. Asher, signed the Resident Admission Agreement. See Arbitration Agreement at 3. The other party to the Arbitration Agreement is "Albuquerque Care Group, LL[C], doing business as North Ridge Alzheimer's Special Care Center" and not Erwin Associates. Arbitration Agreement at 1. In key part, the Arbitration Agreement reads:

Agreement to Resolve Disputes Through Arbitration:
The Facility, Resident, and the Resident's Representative agree, as an important and integral part of this Agreement, that any and all claims and disputes arising from or related to this Agreement or to Resident's care, services, or residency at the Facility shall be resolved by submission to neutral, binding arbitration rather than a trial before a judge or jury (except for the specific claims and disputes set forth in the following paragraph).... This arbitration clause binds all parties to this Agreement and their spouses, heirs, representatives, executors, administrators, successors, and assigns, as applicable.
Actions Not Subject to Arbitration:
The parties agree that any claim or dispute involving or related to unlawful detainer (eviction) proceedings shall not be subject to arbitration unless both parties agree to arbitrate such proceedings. Furthermore, any action arising out of or relating to this Agreement for which arbitration is not allowed by law, or which the parties have agreed (herein or otherwise) not to arbitrate, shall be brought in the appropriate court before a judge rather than a jury.

Arbitration Agreement at 3. W. Asher, and not Murphree CPAs, signed other forms on L. Asher's behalf, including an Authorization for Medication Assistance and a Notification of Rights and Responsibilities with Incident Reporting. See Arbitration Agreement at 10–11.

L. Asher died in 2012. See Memorandum at 4. Allegedly, "Ms. Asher went to the emergency room ... [and] [f]ollowing abdominal surgery, she was diagnosed with suspected perforated appendicitis

resulting in an abscess and a large area of infection." Estate of Lucille Asher, Deceased, by and through Personal Representative, Kevin Zangara v. JEA Senior Living, Inc., d/b/a North Ridge Alzheimer's Special Care Center, and Tamara Goodman, MD,

LLC, ¶ 13, at 3, D–820–CV–2015–00311 (Eighth Judicial District Court, County of Taos, State of New Mexico), in file at January 8, 2016 (Doc. 3–5)("State Court Complaint"). According to the State Court Complaint, "Ms. Asher died ... of septic shock due to the abdominal infection." State Court Complaint ¶ 14, at 3. Allegedly, North Ridge was negligent "by failing to timely and properly diagnose Ms. Asher's appendicitis." State Court Complaint ¶ 16, at 3. According to the State Court Complaint, "North Ridge was negligent in hiring unqualified staff and in granting clinical privileges to and permitting the continued exercise of clinical privileges by physicians North Ridge knew or reasonably should have known were not qualified to exercise clinical privileges with reasonable skill." State Court Complaint at 4.

Defendant Kevin Zangara was appointed L. Asher's Personal Representative for the purpose of bringing a wrongful death action against Erwin Associates. See Memorandum at 4. Zangara filed such an action in state district court. See State Court Complaint ¶ 1, at 1.

PROCEDURAL BACKGROUND

Erwin Associates moves the Court to compel Zangara to arbitrate claims that Zangara has asserted in state court against Erwin Associates. See Memorandum at 1. Zangara moves to dismiss the Plaintiff's Motion. See Zangara's Motion at 1. The Court will summarize the parties' arguments.

1. Erwin Associates' Motion and Memorandum.2

Erwin Associates contends that the claims which Zangara asserts in the state court action are subject to a binding arbitration provision. See Memorandum at 4. Erwin Associates further contends that the FAA governs the Arbitration Agreement, because there is a valid written arbitration agreement and the dispute is within the agreement's scope. See Memorandum at 6. Erwin Associates asserts that, because Murphree CPAs signed the Arbitration Agreement on L. Asher's behalf, L. Asher and her estate are bound. See Memorandum at 4. In the alternative, Erwin Associates argues that L. Asher was "bound to arbitrate as the intended beneficiary and third-party beneficiary" of the Arbitration Agreement, because "the resident is the person named in the agreement who is admitted to the facility and is conferred certain rights and benefits." Memorandum at 9.

Next, Erwin Associates asserts that the Defendant is "estopped from denying the validity of the arbitration provision." Memorandum at 12. Specifically, Erwin Associates argues that Murphree CPAs "made a promise to JEA to be bound by the terms in the Admission Agreement, including the arbitration provision. Thus, Erwin Associates reasonably relied on ... Murphree's promise to abide by the terms of the arbitration provision." Memorandum at 12.

Finally, Erwin Associates contends that the "Defendant's claims are clearly within the scope of the arbitration provision." Memorandum at 13. Erwin Associates notes that the Arbitration Agreement says that " 'any and all claims and disputes' " are subject to arbitration, and that the Arbitration Agreement binds all " 'spouses, heirs, representatives, executors, administrators, successors, and assigns.' " Memorandum at 13–14. Erwin Associates thus concludes that the claims at issue are within the Arbitration Agreement's scope. See Memoran...

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    ...are not using contract defenses such as unconscionability to destroy the FAA. See Jerry Erwin Associates, Inc. v. Estate of Asher by and through Zangara, 290 F.Supp.3d 1213, 1244 (D.N.M. 2017) (Browning, J.). See also Wallace Mendelson, The Judge's Art, 109 U. PA. L. REV. 524, 533 (1961) ("......
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    ...to arbitrate is valid, courts look to general state contract law ...."). See also Jerry Erwin Assocs., Inc. v. Estate of Asher by & through Zangara, 290 F.Supp.3d 1213, 1249 (D.N.M. 2017) (Browning, J.) (concluding that where parties to an arbitration agreement agreed to submit all claims t......
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