SSC Statesville Maple Leaf Operating Co. v. Morgan

• Decision Date: 31 July 2012
• Docket Number: CIVIL NO. 5:11CV184-RLV-DSC
• Parties: SSC STATESVILLE MAPLE LEAF OPERATING COMPANY LLC, Plaintiff, v. WILLIAM P. MORGAN, JR., Administrator of the Estate of DOROTHY MAE LAW MORGAN, deceased, Defendant.
• Court: U.S. District Court — Western District of North Carolina

SSC STATESVILLE MAPLE LEAF OPERATING COMPANY LLC, Plaintiff,

v. WILLIAM P. MORGAN, JR., Administrator of the Estate ofDOROTHY MAE LAW MORGAN, deceased, Defendant.

CIVIL NO. 5:11CV184-RLV-DSC

UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF NORTH CAROLINA STATESVILLE DIVISION

Signed: July 31, 2012

MEMORANDUM AND RECOMMENDATION

AND ORDER

THIS MATTER is before the Court on Plaintiff's "Motion to Compel Arbitration" (Doc. 5) and the parties' associated briefs and exhibits. (Docs. 5-1, 9 and 10).

This matter has been referred to the undersigned Magistrate Judge pursuant to 28 U.S.C. § 636(b)(1)(B), and the Motion is ripe for the Court's consideration.

Having fully considered the arguments, the record, and the applicable authority, the undersigned respectfully recommends that Plaintiff's Motion to Compel Arbitration and Stay Proceedings be GRANTED, as discussed below.

I. PROCEDURAL AND FACTUAL BACKGROUND

On January 5, 2011, Defendant William P. Morgan, Jr., pursuant to a general power of attorney, executed a "Resident Admission and Financial Agreement" ("Admission Contract") to obtain care for his mother, Dorothy Mae Law Morgan, at Plaintiff SSC Statesville Maple Leaf Operating Company, LLC ("Statesville facility"). Defendant also signed an optional "Agreementfor Dispute Resolution Program" ("DRP") pursuant to the power of attorney. The DRP contains an arbitration agreement ("Arbitration Agreement").

The DRP is a stand-alone document containing the caveat "PLEASE READ CAREFULLY" on the first page. Doc. 1-2. The DRP delineates a three-step process for resolving disputes between residents and the Facility, with the goal of "enhanc[ing] the quality of care that is provided to [Statesville's] residents, and to resolve any disagreements about care and other services that [the Facility] provide[s] and that may arise." Id. at 1. The DRP explains that it "is valuable to all parties because it offers a streamlined process to settle disagreements. DRP increases the likelihood that disagreements can be resolved more quickly and less expensively than by litigation and that residents themselves will actually benefit from faster resolution of disagreements. Participation in DRP also helps to reduce the costs of health care for everyone." Id.

The DRP expressly provides that:

YOU AGREE THAT YOUR PARTICIPATION IN THE DRP WILL BENEFIT AND BIND YOUR FAMILY, HEIRS, SUCCESSORS, ASSIGNS, INSURERS, TRUSTEES, AND/OR YOUR LEGAL REPRESENTATIVES, INCLUDING THE PERSONAL REPRESENTATIVE OR EXECUTOR OF YOUR ESTATE; AND HIS/HER SUCCESSORS, ASSIGNS, AGENTS[,] INSURERS, TRUSTEES AND REPRESENTATIVES. BY AGREEING TO PARTICIPATE ALL DISAGREEMENTS MUST BE RESOLVED THROUGH THE DISPUTE RESOLUTION PROGRAM. LIKEWISE, THE FACILITY AND ALL OF ITS PARENTS, AFFILIATE, SUBSIDIARY COMPANIES OWNERS, OFFICERS, DIRECTORS, EMPLOYEES, SUCCESSORS, ASSIGNS, AGENTS, INSURERS AND REPRESENTATIVES WILL BE REQUIRED TO RESOLVE DISAGREEMENTS PURSUANT TO THIS PROGRAM.

Id. at 2 (all-caps in original; bold and italics added). The DRP also provides:

THIS AGREEMENT IS SUBJECT TO ARBITRATION [OF] DISPUTES.

BY AGREEING TO HAVE ALL DISAGREEMENTS RESOLVED THROUGH THE DISPUTE RESOLUTION PROGRAM, THE PARTIES AGREE TO WAIVE THE RIGHT TO A JUDGE OR A JURY TRIAL AND

TO HAVE THE DISPUTE RESOLVED THROUGH VARIOUS STEPS, CULMINATING IN A DECISION BY AN ARBITRATOR.

Id. at 1 (all-caps and bold in original). The DRP also warns that "THE ARBITRATOR'S DECISION IS FINAL AND BINDING, AND CANNOT BE APPEALED TO ANY STATE OR FEDERAL COURT, UNLESS PROVIDED FOR [BY] STATE OR FEDERAL LAW." Id. at 6 (all-caps and bold in original).

Defendant filed a civil action in Iredell County Superior Court on September 9, 2011. In the state court action, Defendant alleges that Ms. Morgan resided at the Statesville facility from January 6, 2011 to January 26, 2011. Ms. Morgan died on January 27, 2011. Defendant asserts claims against Plaintiff for negligence and wrongful death (count IV) and negligence per se (count V). Both causes of action are directly related to the care and treatment Ms. Morgan received at the Statesville facility.

On December 22, 2011, Plaintiff filed a Complaint to Compel Arbitration here (Doc. 1). On June 1, 2012, Plaintiff filed the instant Motion to Compel Arbitration and Stay Proceedings (Doc. 5). Plaintiff argues that the claims brought by Defendant in the state court action are subject to the binding Arbitration Agreement. Defendant opposes Plaintiff's Motion on grounds that: (1) there is no valid contract between the parties; (2) the Arbitration Agreement does not apply to the claims of wrongful death beneficiaries; and (3) the DRP is unconscionable. Plaintiff's reply addresses those arguments and asserts that Defendant's claims are covered by the "Agreement for Dispute Resolution Program." Plaintiff's Motion has been fully briefed and is, therefore, ripe for determination.

II. DISCUSSION OF CLAIMS

The Federal Arbitration Act ("FAA") establishes a policy favoring the enforcement ofwritten agreements to arbitrate. The FAA provides that arbitration clauses "shall be 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. The FAA requires courts to stay proceedings and compel arbitration in the event of a refusal to comply with a valid agreement to arbitrate. 9 U.S.C. § 3. The court must compel arbitration even if the disputed claims are exempted from arbitration or otherwise considered non-arbitrable under state law. Perry v. Thomas, 482 U.S. 483, 489 (1987) (state statute that required litigants to be provided a judicial forum for resolving wage disputes "must give way" to Congress' intent to provide for enforcement of arbitration agreements); Am. Gen. Life & Accident Ins. Co. v. Wood, 429 F.3d 83, 90 (4th Cir. 2005) (FAA preempts state law barring arbitration of certain claims).

The Supreme Court has held that "questions of arbitrability must be addressed with a healthy regard for the federal policy favoring arbitration." Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20, 26 (1991) (quoting Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24 (1983)). "Pursuant to that liberal policy, any doubts concerning the scope of arbitrable issues should be resolved in favor of arbitration, whether the problem at hand is the construction of the contract language itself or an allegation of waiver, delay, or a like defense to arbitrability. " Moses H. Cone, 460 U.S. at 24-25; see also Choice Hotels Intern., Inc. v. BSR Tropicana Resort, Inc., 252 F.3d 707, 710 (4th Cir. 2001); Long v. Silver, 248 F.3d 309, 315-16 (4th Cir. 2001); O'Neil v. Hilton Head Hosp., 115 F.3d 272, 273-74 (4th Cir. 1997). The Fourth Circuit has stated that

[T]he heavy presumption of arbitrability requires that when the scope of the arbitration clause is open to question, a court must decide the question in favor of arbitration. Thus, we may not deny a party's request to arbitrate an issue unless it may be said with positive assurance that the arbitration clause is not susceptible of an interpretation that covers the asserted dispute.

Long, 248 F.3d at 315-16 (internal citations omitted).

On the other hand, "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 v. Warrior & Gulf Navigation Co., 363 U.S. 574, 582 (1960). See also AT & T Technologies, Inc. v. Communications Workers, 475 U.S. 643, 648 (1986); Johnson v. Circuit City Stores, Inc., 148 F.3d 373, 377 (4th Cir. 1998); Arrants v. Buck, 130 F.3d 636, 640 (4th Cir. 1997).

Therefore, prior to determining the scope of an arbitration agreement, the court must determine whether a valid agreement to arbitrate exists between the parties by applying "ordinary state-law principles that govern the formation of contracts." First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 944 (1995); see also Hill v. PeopleSoft USA, Inc., 412 F.3d 540, 543 (4th Cir. 2005). Specifically, "courts should remain attuned to well supported claims that the agreement to arbitrate resulted from the sort of fraud or overwhelming economic power that would provide grounds for the revocation of any contract." Gilmer, 500 U.S. at 33 (internal quotations and citations omitted). For instance, "generally applicable contract defenses, such as fraud, duress, or unconscionability, may be applied to invalidate arbitration agreements without contravening [9 U.S.C.] § 2." Doctor's Assocs., Inc. v. Casarotto, 517 U.S. 681, 687 (1996).

Arbitration is also favored by North Carolina courts. Tillman v. Commer. Credit Loans, Inc., 655 S.E.2d 362, 369 (N.C. 2008) (citing Cyclone Roofing Co. v. David M. LaFave Co., 321 S.E.2d 872, 876 (N.C. 1984). In North Carolina, "[a] two-part analysis must be employed by the court when determining whether a dispute is subject to arbitration: (1) whether the parties had a valid agreement to arbitrate, and also (2) whether the specific dispute falls within the substantive scope of that agreement." Munn v. Haymount Rehab & Nursing Ctr., Inc., 704 S.E.2d 290, 294 (N.C. Ct. App. 2010). Additionally, "[t]he law of contracts governs the issue of whether there exists an agreement to arbitrate"... and "the party seeking arbitration must show that the parties mutuallyagreed to arbitrate their disputes." Id. (citing Harbour Point v. DJF Enters., 688 S.E. 2d 47, 50 (citations and quotation marks omitted)).

Applying these legal principles to the case at hand, the Court concludes that Defendant William P. Morgan, Jr. clearly had the authority to sign the DRP pursuant the "Power of Attorney" executed by his mother. Defendant's act of signing the agreement is sufficient to establish that the DPR is a valid agreement to arbitrate. North Carolina law generally requires that a contract must be signed only by the party to be charged or by some other person lawfully authorized. Bergman v. SSC Monroe...