Preferred Care of Del., Inc. v. Crocker

Decision Date24 March 2016
Docket NumberCIVIL ACTION NO. 5:15-CV-177-TBR
Citation173 F.Supp.3d 505
Parties Preferred Care of Delaware, Inc., et al., Plaintiff, v. Dorothy Crocker, as attorney-in-fact of Frances Elizabeth Tyler, Defendant.
CourtU.S. District Court — Western District of Kentucky

Donald L. Miller, II, Quintairos, Prieto, Wood & Boyer, PA, Louisville, KY, J. Peter Cassidy, III, Anthony B. Gray, Quintairos, Prieto, Wood & Boyer, PA, Lexington, KY, for Plaintiff.

Brent L. Moss, Brian D. Reddick, Matthew D. Swindle, Robert W. Francis, Reddick Moss PLLC, Little Rock, AR, for Defendant.

MEMORANDUM OPINION AND ORDER

Thomas B. Russell

, Senior Judge, United States District Court

The parties have engaged in extensive briefing of this matter. The Plaintiffs filed this action pursuant to Section 4 of the Federal Arbitration Act, 9 U.S.C. § 4

, seeking to compel arbitration of Defendant Dorothy Crocker's state law claims and to enjoin the state court action under the Anti-Injunction Act, 28 U.S.C. § 2283. (Docket No. 1.) The three main disagreements between the parties facing the Court at this time are (1) Ms. Crocker's joinder of additional counter-defendants; (2) whether or not the parties' dispute is arbitrable; (3) whether or not this Court should grant an injunction enjoining the civil action in Trigg County Circuit Court. The Court will address these issues below. At the conclusion of this Opinion, the Court will individually address the multitude of motions filed in this action.

Background

Plaintiffs are all business entities associated with the Shady Lawn Nursing and Rehabilitation Center (Shady Lawn), a skilled nursing facility in Cadiz, Kentucky. (Docket No. 15–2 at 1-3.) Defendant Dorothy Crocker is the attorney-in-fact for Frances Elizabeth Tyler. (Docket Nos. 1 at 2; 23-3 at 1-3.) This dispute arises from injuries allegedly suffered by Ms. Tyler while in the care of Shady Lawn. (Docket No. 15–2 at 2.)

On July 7, 2015, Ms. Crocker filed an action in Trigg County Circuit Court against Shady Lawn Nursing and Rehabilitation Center, its administrator, and corporate owners and affiliates for injuries allegedly suffered by Ms. Tyler as a result of their alleged negligence. (Docket No. 16 at 1-2.) On August 7, 2015, the Plaintiffs filed this action in federal court to compel arbitration of Ms. Crocker's state law claims and to enjoin the state court proceedings. (Docket No. 1 at 1.) The Plaintiffs base their cause of action on the Alternative Dispute Resolution Agreement (“Arbitration Agreement”) signed by Ms. Crocker as Attorney-In-Fact for Frances Tyler upon Ms. Tyler's admission to Shady Lawn. (Docket No. 1 at 3-8.) The Arbitration Agreement explicitly states that execution of the Agreement “is not a condition of admission to or continued residence” at Shady Lawn. (Docket No. 15–1 at 1.) The Arbitration Agreement also states that it “applies to any and all disputes arising out of or in any way relating to this Agreement or to the Resident's stay at the Center that would constitute a legally cognizable cause of action in a court of law.” (Docket No. 15–1 at 2.) The Arbitration Agreement commands that [a]ll claims based in whole or in part on the same incident, transaction, or related course of care or service provided by the Center to the Resident shall be addressed in a single ADR process.” (Docket No. 15–1 at 2.)

In response to the Plaintiffs' Complaint, Ms. Crocker filed an Answer and a Counterclaim. (Docket No. 5.) Ms. Crocker's counterclaim includes two claims: conspiracy and fraud. (Docket No. 5 at 14-18.) In her counterclaim, Ms. Crocker joined the following additional parties: “Preferred Care Health Facilities, Inc.; Preferred Care Management Services, Inc.; Dawn Tedder, in her capacity as Administrator of Shady Lawn Nursing and Rehabilitation Center; and Darla Joiner, in her capacity as Admissions Coordinator of Shady Lawn Nursing and Rehabilitation Center.” (Docket No. 5 at 7.) With the exception of Darla Joiner, each of the additional parties Ms. Crocker seeks to join were named as defendants in the underlying state-court action. (Docket No. 16 at 8.)

Discussion
I. Joinder of Additional Counter Defendants

The Plaintiffs and several counter-defendants argue that Ms. Crocker's assertion of counterclaims against four parties not named in the Complaint is procedurally improper. (Docket Nos. 10 at 4; 18-1 at 3-4; 19-1 at 7-8; 28-1 at 4-5.) As a result, they seek to have this Court strike Ms. Crocker's counterclaims against these parties or simply dismiss her counterclaims. (Docket Nos. 10 at 4; 18-1 at 4; 19-1 at 7-8; 28-1 at 4.) In response, Ms. Crocker contends that “the Plaintiffs could not simply remove the pending state court case to this Court because the facility's administrator and Ms. Crocker are both Kentucky citizens,” and therefore, this Court would not have had subject matter jurisdiction. (Docket No. 16 at 2.) Ms. Crocker argues that she correctly joined the four additional parties in this action. (Docket No. 16 at 6.) Furthermore, Ms. Crocker argues that both Dawn Tedder and Darla Joiner are necessary and indispensable parties. (Docket No. 16 at 9-15.) Consequently, she requests that this Court dismiss this action as she believes the joinder of Dawn Tedder and Darla Joiner will deprive this Court of subject matter jurisdiction because their joinder will destroy complete diversity. Id.

In their Motion to Strike, the Plaintiffs argue that Ms. Crocker's compulsory counterclaims against four nonparties are improper under Rule 13(a) of the Federal Rules of Civil Procedure

because they were not originally part of the Federal Court complaint. (Docket No. 10 at 3-4.) Furthermore, Plaintiffs and several newly added counter-defendants argue that Ms. Crocker did not bring in the nonparties in accordance with Rule 14 of the Federal Rules of Civil Procedure which allows a defendant to bring in a third party “who is or may be liable to it for all or part of the claim against it.” Fed. R. Civ. P. 14(a) ; (see also Docket No. 10 at 4-5; 18-1 at 3-4; 19-1 at 7-8; 28-1 at 3-4.)

In her Response, Ms. Crocker argues that Rule 14

“has no application to [her] counterclaims against the existing and additional parties.” (Docket No. 16 at 4.)1 Furthermore, Ms. Crocker contends that she properly joined the additional nonparties under Rule 13(h) and Rule 19. Rule 13(h) of the Federal Rules of Civil Procedure states that Rules 19 and 20 govern the addition of a person as a party to a counterclaim or crossclaim.” Fed. R. Civ. P. 13(h). Ms. Crocker argues that under Rule 13(a)(1)(A), she “must assert her counterclaims that arise out of the same transaction or occurrence, otherwise those claims are lost.” (Docket No. 16 at 7.) According to Ms. Crocker, the additional nonparties are necessary parties, and they were added in accordance with Rules 13(h) and 19. (Docket No. 16 at 7.) However, the inclusion of counterclaims against two of the nonparties, Dawn Tedder and Darla Joiner, destroys complete diversity as they and Ms. Crocker are citizens of Kentucky. (Docket No. 16 at 9.) It is because of their destruction of diversity that Ms. Crocker seeks to dismiss this action under Rule 12(b)(7) of the Federal Rules of Civil Procedure. (Docket No. 16 at 9-15.)

Plaintiffs acknowledge that Ms. Crocker's joinder of Dawn Tedder and Darla Joiner destroys complete diversity, but they respond that if this Court is to allow the joinder of these nonparties under Rules 13(h)

and 19, their joinder will not divest this Court of subject matter jurisdiction because this Court has supplemental jurisdiction over Ms. Crocker's counterclaims. (Docket No. 26 at 10-12.)

The parties do not dispute that the Plaintiff's original complaint falls within this Court's jurisdiction. (See Docket Nos. 26 at 10; 31 at 6.) Under 28 U.S.C. § 1332

, district courts shall have original jurisdiction of all civil actions where the matter in controversy exceeds the sum or value of $75,000 ... and is between citizens of different States.” The Supreme Court has stated that [a] case falls within the federal district court's ‘original’ diversity ‘jurisdiction’ only if diversity of citizenship among the parties is complete, i.e., only if there is no plaintiff and no defendant who are citizens of the same State.” Wisconsin Dep't of Corr. v. Schacht , 524 U.S. 381, 388, 118 S.Ct. 2047, 141 L.Ed.2d 364 (1998). The parties in the original complaint are completely diverse as the Plaintiffs are citizens of Delaware and Texas, and Ms. Crocker is a citizen of Kentucky. (Docket No. 1 at 2.)

Furthermore, the amount in controversy exceeds $75,000. (Docket No. 1 at 2-3.) Yet, diversity jurisdiction cannot sustain Ms. Crocker's counterclaims against the four additional nonparties because the Defendant Ms. Crocker and the counter-defendants Dawn Tedder and Darla Joiner are all citizens of Kentucky.

Federal Rule of Civil Procedure 13(a)

requires defendants to “state as a counterclaim any claim that ... [they have] against an opposing party if the claim ... arises out of the transaction or occurrence that is the subject matter of the opposing party's claim and does not require adding another party over whom the court cannot acquire jurisdiction.” Fed. R. Civ. P. 13(a) ; see also

Bluegrass Hosiery, Inc. v. Speizman Indus., Inc. , 214 F.3d 770, 772 (6th Cir.2000). According to the Sixth Circuit Court of Appeals, “this rule serves the desirable goal of bringing all claims arising out of the same transaction or occurrence before the court in a single action.” Bluegrass Hosiery , 214 F.3d at 772 (citing United States v. Snider , 779 F.2d 1151, 1157 (6th Cir.1985) ). Rule 13(h) provides for the joinder of additional parties to a party's counterclaim. Fed. R. Civ. P. 13(h). Federal Rule of Civil Procedure 13(h) states that Rules 19 and 20 govern the addition of a person as a party to a counterclaim or crossclaim.” Fed. R. Civ. P. 13(h). Generally, persons joined under Rule 13(h) as parties to a...

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