OLOTOR, L.L.C. v. Townsend

• Decision Date: 13 April 2020
• Docket Number: CASE NO. 5:20-CV-5013
• Citation: OLOTOR, L.L.C. v. Townsend, CASE NO. 5:20-CV-5013 (W.D. Ark. Apr 13, 2020)
• Parties: OLOTOR, L.L.C. d/b/a WALNUT GROVE NURSING AND REHABILITATION CENTER, BRIAR HILL MANAGEMENT, LLC, WGNC HOLDINGS, L.L.C., DAVID W. ROTOLO, AND ROBERT S. ROTOLO PLAINTIFFS v. JANICE TOWNSEND, as special Administratrix of the estate of Ina Grigg, and on behalf of the wrongful death beneficiaries of Ina Grigg DEFENDANT
• Court: U.S. District Court — Western District of Arkansas

OLOTOR, L.L.C. d/b/a WALNUT GROVE NURSING AND REHABILITATION CENTER,BRIAR HILL MANAGEMENT, LLC, WGNC HOLDINGS, L.L.C.,DAVID W. ROTOLO, AND ROBERT S. ROTOLOPLAINTIFFS v. JANICE TOWNSEND, as special Administratrix of the estate of Ina Grigg,and on behalf of the wrongful death beneficiaries of Ina GriggDEFENDANT

CASE NO. 5:20-CV-5013

UNITED STATES DISTRICT COURT WESTERN DISTRICT OF ARKANSAS FAYETTEVILLE DIVISION

April 13, 2020

MEMORANDUM OPINION AND ORDER

PlaintiffsOLOTOR, L.L.C. d/b/a Walnut Grove Nursing and Rehabilitation Center ("OLOTOR"), Briar Hill Management, LLC("Briar Hill"), WGNC Holdings, L.L.C.("WGNC"), David Rotolo, and Robert Rotolo(collectively, "Plaintiffs") bring this diversity action pursuant to 9 U.S.C. § 4 of the Federal Arbitration Act("FAA").Plaintiffs ask this Court to compel DefendantJanice Townsend to arbitrate a medical malpractice case now pending in the Circuit Court of Washington County, Arkansas, and to stay that case.¹Plaintiffs have filed a Petition for Expedited Consideration (Doc. 5) and a Motion for Judgment on the Pleadings(Doc. 12).Ms. Townsend has filed Responses to both (Docs. 9, 15), as well as an Answer (Doc. 8).For the reasons set forth below, the CourtGRANTSPlaintiffs' Petition for Expedited Consideration and Motion for Judgment on the Pleadings(Docs. 5, 12).

I.BACKGROUND

Ms. Grigg was a resident of OLOTOR's Walnut Grove Nursing and Rehabilitation Center from February 1, 2018, until her death on February 28, 2018.Following Ms. Grigg's death, her daughter Ms. Townsend, on behalf of Ms. Grigg's estate, sued Plaintiffs in the Circuit Court of Washington County, Arkansas, alleging negligence, medical malpractice, breach of contract, violations of the Arkansas Long-Term Care Facility Residents Rights Act and the Arkansas Deceptive Trade Practices Act, civil conspiracy, and intentional interference with a contractual relationship.Plaintiffs are all citizens of states other than Arkansas.Ms. Townsend also sued other individuals in the state court case: Ronald Cluck, Timothy Darnell, and five John Does.Mr. Cluck and Mr. Darnell are administrators of OLOTOR's nursing home, and they are both citizens of Arkansas.(Doc. 2-1, p. 5).In response, Plaintiffs commenced this action to compel arbitration of Ms. Townsend's claims.Plaintiffs did not include Mr. Cluck or Mr. Darnell in this action, as they are nondiverse parties whose presence would have defeated diversity jurisdiction.

When Ms. Grigg was admitted to OLOTOR's nursing home in February 2018, Ms. Townsend signed the Admission Agreement with OLOTOR as a "Resident Representative.SeeDoc. 2-2, pp. 5-16.The Admission Agreement contains an Arbitration Provision, which provides that "[t]he Facility and the Resident agree to have an arbitrator (not a court) decide any and all claims or disputes arising out of or relating to the Admission Agreement, and/or any medical, nursing or personal care provided to the Resident by the Facility."Id. at 10.The parties to the Arbitration Provision are definedas "the employees, agents, officers, affiliates of any parent, subsidiary, or management company of the facility and its medical director" as well as "any person whose claim is or may be derived through or on behalf [of] the individual resident."Id.The Admission Agreement also contains a Delegation Provision which provides that "[t]he arbitrator, and not any . . . court . . . , shall have exclusive authority to resolve any dispute relating to the interpretation, applicability, enforceability or formation of the Arbitration Provision . . . ."Id. at 11.Ms. Townsend also signed an "Arbitration Checklist" in which she acknowledged understanding the Arbitration Provision.Id. at 15-16.

Ms. Townsend's authority to sign the Admission Agreement on Ms. Grigg's behalf allegedly arises out of a General Power of Attorney ("POA") and a Durable Power of Attorney for Health Care ("HPOA"), both of which were executed by Ms. Grigg on May 19, 2008, and are attached to Plaintiffs' Complaint.Id. at 18-22.The POA provides that Ms. Townsend "shall have full power and authority to act on [Ms. Grigg's] behalf" and that Ms. Townsend is authorized to "exercise all of [Ms. Grigg's] legal rights and powers . . . [which] shall include, but not be limited to . . . , enter binding contracts on [Ms. Grigg's] behalf."Id. at 18.Two witnesses executed the POA, and it is also notarized.Id.The HPOA appoints Ms. Townsend as Ms. Grigg's agent to "make any and all health care decisions" on Ms. Grigg's behalf.Id. at 22.Two witnesses executed the HPOA.Id.Now, Ms. Townsend argues that the Admission Agreement and the arbitration clauses therein are not enforceable because she did not have authority to sign the Admission Agreement on Ms. Grigg's behalf.Alternatively, she argues that if she did have such authority, she did not intend to bind Ms. Grigg to the Admission Agreement.

Below, the Court discusses the following issues: (1) its subject-matter jurisdiction over this action; (2) the validity and enforceability of the Delegation Provision; and (3) the appropriateness of staying the state court action.

II.LEGAL STANDARD

The FAA requires courts to enforce written agreements to arbitrate disputes and reflects a "liberal federal policy favoring arbitration agreements."Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24(1983)."[C]ontract provisions directing arbitration shall be enforceable in all but limited circumstances."Kelly v. Golden, 352 F.3d 344, 349(8th Cir.2003).Further, contracting parties may include delegation provisions by which they agree to have an arbitrator decide threshold questions of arbitrability, such as the validity or enforceability of the arbitration agreement.Rent-A-Center, W., Inc. v. Jackson, 561 U.S. 63, 68-69(2010);Shockley v. PrimeLending, 929 F.3d 1012, 1018(8th Cir.2019).A delegation provision is "a severable and presumably valid provision of a contract" that must be enforced unless "specifically challenged."Shockley, 929 F.3d at 1018.When an arbitration agreement contains a clear and unmistakable agreement to arbitrate gateway issues of arbitrability, arguments regarding the arbitration agreement's validity or enforceability are for the arbitrator to decide.Rent-A-Center, 561 U.S. at 69 n.1.However, when a litigant specifically challenges the validity of the delegation provision, and not just the general validity of the arbitration agreement, the court should determine whether the delegation clause is valid.If the court finds that the delegation provision is valid and enforceable, the court's analysis is at an end: it must refer the matter to arbitration.

Typically, where matters outside of the pleadings are raised by the parties, a motion to compel arbitration is properly analyzed under Federal Rule of Civil Procedure 56 as a motion for summary judgment.SeeCity of Benkelman v. Baseline Engineering Corp., 867 F.3d 875, 882(8th Cir.2017).When deciding a motion for judgment on the pleadings under Rule 12(c), however, courts may consider "matters of public record, orders, items appearing in the record of the case, and exhibits attached to the complaint."Greenman v. Jessen, 787 F.3d 882, 887(8th Cir.2015)(quotingPorous Media Corp. v. Pall Corp., 186 F.3d 1077, 1079(8th Cir.1999)(quotation omitted)).Here, the POA and HPOA are attached to Plaintiff's Complaint, so Plaintiffs' Petition for Expedited Consideration and Motion for Judgment on the Pleadings are properly considered under Rule 12(c)."A grant of judgment on the pleadings is appropriate 'where no material issue of fact remains to be resolved and the movant is entitled to judgment as a matter of law.'"Poehl v. Countrywide Home Loans, Inc., 528 F.3d 1093, 1096(8th Cir.2008)(quotingFaibisch v. Univ. of Minn., 304 F.3d 797, 803(8th Cir.2002)).The Court considers "all facts pleaded by the nonmoving party as true and grant[s] all reasonable inferences in favor of that party."Id.(citingSyverson v. FirePond, Inc., 383 F.3d 745, 749(8th Cir.2004)).

III.DISCUSSION

Plaintiffs ask the Court to enforce the Delegation Provision and immediately compel arbitration to determine the preliminary matter of whether Ms. Townsend's state court claims must be resolved through arbitration.Preliminarily, the Court notes that, although Ms. Townsend did not explicitly raise the issue, the Court's subject-matter jurisdiction is in question.Further, Ms. Townsend argues that the Delegation Provisionis not binding upon Ms. Grigg's estate for the following reasons: (1) the FAA does not apply to the Admission Agreement;²(2) federal Medicaid regulations at 42 C.F.R. § 483.70(n) preclude arbitration of her claims; and (3)she did not have authority to sign the Admission Agreement on Ms. Grigg's behalf and did not act as Ms. Grigg's agent when she signed the Admission Agreement.Finally, even if the Court enforces the Delegation Provision, Ms. Townsend argues that this Court cannot stay her state court claims against Mr. Cluck and Mr. Darnell, both of whom are not parties to this case.

For the reasons discussed below, the Court concludes that it does have subject-matter jurisdiction over this matter.The Court also finds that the Delegation Provision is valid and enforceable against the parties to this action, and the Court will therefore enforce it.Finally, the Court determines that the state court action should be stayed, in part.

A.The Court Has Subject-Matter Jurisdiction

The FAA does not create independent federal question jurisdiction; instead, § 4 of the FAA"provides for an order compelling arbitration only when the federal district court would have jurisdiction over a suit on the underlying dispute . . . ."Moses H. Cone Mem'l Hosp., 460 U.S. at 26 n.32.Here, Plaintiffs assert that subject-matter jurisdiction exists due to diversity of citizenship, see28 U.S.C. § 1332, which requires complete diversity among the parties...