THI of N.M. at Las Cruces, LLC v. Fox, CIV 10-0364 JB/KBM

• Court: United States District Courts. 10th Circuit. District of New Mexico
• Writing for the Court: JAMES O. BROWNING
• Citation: 727 F.Supp.2d 1195
• Parties: THI OF NEW MEXICO AT LAS CRUCES, LLC d/b/a Las Cruces Nursing Center, Plaintiff, v. Steve FOX, individually, and Zia Trust, Inc., as Personal Representative of the Estate of Elaine Fox, deceased, Defendant.
• Docket Number: No. CIV 10-0364 JB/KBM,CIV 10-0364 JB/KBM
• Decision Date: 31 May 2010

727 F.Supp.2d 1195

THI OF NEW MEXICO AT LAS CRUCES, LLC d/b/a Las Cruces Nursing Center, Plaintiff,
v.
Steve FOX, individually, and Zia Trust, Inc., as Personal Representative of the Estate of Elaine Fox, deceased, Defendant.

No. CIV 10-0364 JB/KBM.

United States District Court,
D. New Mexico.

May 31, 2010.

727 F.Supp.2d 1197

John A. Bannerman, Bannerman & Johnson, P.A., Albuquerque, NM, for the Plaintiff.

Dusti D. Harvey, Feliz A. Rael, Harvey Law Firm, LLC, Albuquerque, NM for the Defendants.

MEMORANDUM OPINION AND ORDER

JAMES O. BROWNING, District Judge.

THIS MATTER comes before the Court on Plaintiff THI of New Mexico at Las Cruces, LLC's Motion to Compel Arbitration,

727 F.Supp.2d 1198

filed April 15, 2010 (Doc. 2). The primary issue is whether the Court should compel Defendants Steve Fox and Zia Trust, Inc. to arbitrate their claims asserted against Plaintiff THI of New Mexico at Las Cruces, LLC d/b/a Las Cruces Nursing Center ("THI of Las Cruces") in a civil action filed in the Second Judicial District Court of New Mexico. See Fox v. THI of New Mexico at Las Cruces, LLC, CV-2007-05094. Because the Court finds that exceptional circumstances exist, based on the presence of a concurrent state proceeding, and for reasons of wise judicial administration, the Court will abstain from adjudicating this case and will dismiss the Complaint to Compel Arbitration without prejudice.

FACTUAL AND PROCEDURAL BACKGROUND

On December 6, 2006, S. Fox, who held a power of attorney authorizing him to act on behalf of his mother, Elaine Fox, executed an Admissions Contract to obtain care for her at THI of Las Cruces' nursing facility. See Memorandum of Law in Support of Plaintiff THI of New Mexico at Las Cruces, LLC's Motion to Compel Arbitration Exhibit A, filed April 15, 2010 (Doc. 3-2). The Admissions Contract contains an arbitration clause ("Arbitration Agreement"):

VI. ARBITRATION

Pursuant to the Federal Arbitration Act, any action, dispute, claim or controversy of any kind ( e.g. whether in contract or in tort, statutory or common law, legal or equitable or otherwise) now existing or hereafter arising between the parties in any way arising out of, pertaining to or in connection with the provision of healthcare services, any agreement between the parties, the provision of any goods or services by [THI of Las Cruces] or other transactions, contracts or agreements of any kind whatsoever, in past, present or future incidents, omissions, acts, errors, practices or occurrence causing injury to either party whereby the other party or its agents, employees or representatives may be liable, in whole or in part, or any other aspect of the past, present or future relationships between the parties shall be resolved by binding arbitration administered by the National Health Lawyers Association (the "NHLA").¹

Memorandum Exhibit A, Admissions Contract at 6. On June 8, 2007, the Defendants filed a civil action against THI of Las Cruces in the Second Judicial District Court, New Mexico. See Fox v. THI of New Mexico at Las Cruces, LLC, CV-2007-05094 ("State Court Action"); Memorandum Exhibit B, filed April 15, 2010 (Doc. 3-3). The complaint in the State Court Action alleges multiple claims against THI of Las Cruces relating to its care of E. Fox at the Las Cruces Nursing Center, including negligence and respondeat superior (Count I), res ipsa loquitur (Count II), wrongful death (Count III), negligence per se (Count IV), breach of contract (Count V), and negligent misrepresentation (Count VI). See Memorandum Exhibit B. On July 26, 2007, THI of Las Cruces filed a motion to compel arbitration in the State Court Action, which the state court district judge denied. See Memorandum at 3. THI of Las Cruces appealed the decision to the New Mexico Court of Appeals, which reversed and remanded the case, instructing the state district court to apply state-contract law, make any necessary findings regarding whether the Arbitration Agreement is an unfair contract of adhesion or is procedurally or substantively unconscionable, and determine whether a hearing is necessary. See Memorandum Exhibit C,

727 F.Supp.2d 1199

Fox v. THI of New Mexico at Las Cruces, CV-2007-05094, Memorandum Opinion and Order at 1 (filed April 30, 2008), filed April 15, 2010 (Doc. 3-4). On remand, THI of Las Cruces renewed its motion to compel arbitration, to which the Defendants did not respond. See id. Because THI of Las Cruces' arguments were uncontradicted, the Honorable Geraldine Rivera, Second Judicial District Court Judge, concluded that the Arbitration Agreement is enforceable under New Mexico law and compelled the parties to arbitrate. See id. at 2.

THI of Las Cruces contends that the Defendants waited until September 2, 2009 to invoke the arbitration protocols. See Complaint to Compel Arbitration ¶ 12, at 3, filed April 15, 2010 (Doc. 1); Memorandum at 3. The Defendants contend that THI of Las Cruces did not file an application for arbitration until October 28, 2009. See Defendants' Response to Plaintiff's Motion to Compel Arbitration, filed May 3, 2010 (Doc. 9). On November 16, 2009, the AHLA sent the parties a list of ten candidates from which they could select an arbitrator. See Memorandum at 3. On December 1, 2009, the Defendants notified AHLA and THI of Las Cruces that they had retained new lawyers and intended to abandon arbitration. See Memorandum at 3. In a letter to the AHLA, the Defendants' new counsel stated that the Defendants would not be submitting their dispute resolver list and instead would be petitioning the state court to relieve the Defendants of their obligation to arbitrate, because the AHLA list of arbitrators consisted of lawyers "that ha[ve] been deeply committed to the defense of doctors, nursing homes or hospitals." Memorandum Exhibit F, Letter from Dusti Harvey to Carine Brice (dated Dec. 1, 2009), filed April 15, 2010 (Doc. 3-7). On February 9, 2010, the Defendants moved to reinstate the State Court Action, claiming that the Arbitration Agreement is unconscionable. See Memorandum Exhibit G, Fox v. THI of New Mexico at Las Cruces, LLC, CV-2007-05094, Plaintiffs' Motion to Reinstate Lawsuit and for Relief from Order Referring Claims to Arbitration (filed Feb. 9, 2010), filed April 15, 2010 (Doc. 3-8). According to THI of Las Cruces, briefing on the motion concluded on March 16, 2010, but no hearing has been scheduled, and the judge originally assigned to the State Court Action recently retired and no replacement has been named. See Memorandum at 4 n. 5.

THI of Las Cruces filed a Complaint to Compel Arbitration in this Court on April 15, 2010. See Doc. 1. Concurrent with its Complaint, THI of Las Cruces also filed its Motion to Compel Arbitration (Doc. 2) and its Memorandum of Law in Support of Plaintiff THI of New Mexico at Las Cruces, LLC's Motion to Compel Arbitration (Doc. 3). THI of Las Cruces argues that, given the Defendants' refusal to arbitrate, "it appears that nothing short of a Federal court order will compel their compliance with the parties' arbitration agreement and FAA." Memorandum at 1. THI of Las Cruces moves the Court to grant its motion to compel and asks for a stay of proceedings both in this action and in the State Court Action. See Memorandum at 1. THI of Las Cruces contends that the Defendants' motion to reinstate in the State Court Action is a breach of the Arbitration Agreement. See Memorandum at 2. THI of Las Cruces argues that the Federal Arbitration Act, 9 U.S.C. § § 1-16 ("FAA"), governs the Arbitration Agreement, and the FAA provides that an arbitration clause in a written contract that affects interstate commerce "shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of a contract." Memorandum at 4 (quoting 9 U.S.C. § 2). THI of Las Cruces argues that the Arbitration Agreement is valid and enforceable and that the Defendants are barred from challenging

727 F.Supp.2d 1200

the Arbitration Agreement because they asserted a breach of contract claim in the State Court Action and because res judicata should bar them from moving to reinstate the litigation in the State Court Action.² THI of Las Cruces also argues that this Court has previously found an arbitration clause identical to the language in the Arbitration Agreement valid and enforceable, and it contends that the same outcome is warranted here. See Memorandum at 9-10 (citing Thompson v. THI of New Mexico at Casa Arena Blanca, LLC, No. CIV 05-1331, 2006 WL 4061187, 2006 U.S. Dist. LEXIS 95188 (D.N.M. Sept. 12, 2006)(Browning, J.)). THI of Las Cruces further argues that, upon a determination by the Court to compel arbitration, the Court should stay all federal and state court proceedings, including the motion to reinstate the State Court Action, pursuant to the All Writs Act, 28 U.S.C. § 1651, and the Anti-Injunction Act, 28 U.S.C. § 2283, which permit the Court to enjoin the State Court Action to protect or effectuate its determination to compel arbitration pursuant to the Arbitration Agreement. See Memorandum at 13.

In response, the Defendants argue the Court should deny THI of Las Cruces' "attempt at forum shopping, and decline jurisdiction." Defendants' Response at 1. The Defendants argue that the motion to reinstate in the State Court Action is fully briefed and centers on the same issues as THI of Las Cruces has raised here. See Defendants' Response at 2. The rest of the Defendants' brief focuses on the reasons why they contend the Arbitration Agreement is unconscionable. In their Answer the Defendants also assert that "[t]he doctrines of comity, abstention and judicial efficiency are applicable on the grounds that the very same issues that [THI of Las Cruces] complains of here have been fully briefed and are awaiting a hearing and decision in the Second Judicial District Court at this time." Defendants' Answer to Plaintiff's Motion to Compel Arbitration at 3, filed May 14, 2010 (Doc. 10).

THI of...