Thi of New Mexico at Hobbs Ctr., LLC v. Spradlin
| Decision Date | 25 September 2012 |
| Docket Number | Civ. No. 11–792 MV/LAM. |
| Citation | 893 F.Supp.2d 1172 |
| Parties | THI OF NEW MEXICO AT HOBBS CENTER, LLC, and Thi of New Mexico, LLC, Plaintiffs, v. Jason SPRADLIN, as Personal Representative of the Wrongful Death Estate of Douglas A. Spradlin, Jr., Deceased, Defendant. |
| Court | U.S. District Court — District of New Mexico |
OPINION TEXT STARTS HERE
Lori D. Proctor, Proctor & Associates, PC, Houston, TX, for Plaintiffs.
Mary Ellen Spiece, Isaac Ruiz–Carus, William P. Murray, Wilkes & McHugh PA, Phoenix, AZ, for Defendant.
THIS MATTER comes before the Court on Plaintiffs' Motion to Compel Arbitration [Doc. 3], Defendant's Motion to Dismiss [Doc. 9], and Plaintiffs' Motion to Strike Defendant's Supplement with Respect to His Motion to Dismiss [Doc. 32]. The Court, having considered the motions, briefs, relevant law and being otherwise fully informed, finds that Plaintiffs' Motion to Compel is well taken in part and will be GRANTED IN PART and DENIED IN PART; Defendant's Motion to Dismiss is not well taken and will be DENIED; and Plaintiff's Motion to Strike will be DENIED AS MOOT.
On August 31, 2006, Douglas A. Spradlin, Jr. was admitted to THI of New Mexico at Hobbs Center, LLC (“Hobbs Center”) to obtain care and treatment services. In connection with his admission, Mr. Spradlin's daughter, Melissa Hardy, as Mr. Spradlin's “Fiduciary Party,” executed a Hobbs Center admission contract (the “Admission Contract”). Doc. 1–1. The Admission Contract provides that, as Mr. Spradlin's fiduciary party, Ms. Hardy “shall be bound by the applicable terms and conditions of this Contract.” Id. at 1. By checking one out of several boxes provided, Ms. Hardy indicated that she was executing the Contract in the capacity of “Immediate Family Member.” Id. at 6.
The Admission Contract contains a Section entitled, “Arbitration,” which provides:
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 other goods or services by [Hobbs Center] or other transactions, contracts, or agreements of any kind whatsoever, any 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”).
Id. at 5. Directly below this provision and above the signature line is the following language, in bolded, capital letters: “The undersigned acknowledge that each of them has read and understood this contract, and that each of them voluntarily consents to all of its terms.” Id. That same day, Mr. Spradlin executed a Durable Power of Attorney for Financial and Healthcare Decision Making (the “Power of Attorney”), appointing Ms. Hardy, along with Mr. Spradlin's son, Jay Spradlin, to serve as his attorney-in-fact. Doc. 1–2, at 1.
Ms. Hardy explained in an affidavit that Mr. Spradlin applied for admission to Hobbs Center on his doctor's recommendation, because he was suffering from dementia. Doc. 9–1, at ¶ 3. Ms. Hardy accompanied her father to Hobbs Center. Id. at ¶ 4. Ms. Hardy, who has an eleventh-grade education, states that did not know what the term “arbitration meant,” and that no one at Hobbs Center explained that term to her. Id. at ¶¶ 7–8. Ms. Hardy further states that she felt rushed when she was filling out the admission documents for her father. Id. at ¶ 8.
Mr. Spradlin was a resident at Hobbs Center until March 6, 2009. Doc. 9–1 at ¶ 27. He died five days later on March 11, 2009. Id. at ¶ 1. On June 29, 2011, Defendant Jason Spradlin, Mr. Spradlin's son, in his capacity as personal representative of Mr. Spradlin's wrongful death beneficiaries, filed an action in the First Judicial District Court of the State of New Mexico (the “State Court Action”), against, inter alia, Plaintiffs herein, alleging wrongful death, negligence, negligence per se, misrepresentation, violation of the New Mexico Unfair Trade Practices Act, and punitive damages. See Doc. 9–1. Defendant alleges that, while a resident of Hobbs Center, Mr. Spradlin suffered physical and emotional injuries due to inadequate care, and his health and physical condition deteriorated beyond that caused by the normal aging process. See Doc 9 at 1–2. Defendant further alleges that Mr. Spradlin developed infections and resulting injuries, suffered from nutritional issues, and fell on multiple occasions, causing him to suffer injuries, including a right hip fracture. Id.
On September 6, 2011, Plaintiffs Hobbs Center and THI of New Mexico, LLC (“THI”), commenced the instant action under Section 4 of the Federal Arbitration Act (“FAA”), basing federal jurisdiction on the diversity of citizenship between Plaintiffs, both Delaware limited liability companies, and Defendant, alleged to be a New Mexico citizen. See Doc. 1. In their Complaint and in their Motion to Compel Arbitration, filed on September 7, 2011, Plaintiffs seek an order compelling Defendant to arbitrate the claims he asserted against Plaintiffs in the State Court Action, and staying this case and the State Court Action pending arbitration. See Docs. 1 and 3. On December 16, 2011, Defendant filed a Motion to Dismiss. See Doc. 9. Thereafter, on June 12, 2012, Defendant filed a Supplement with Respect to His Motion to Dismiss and Reply Thereto, adding facts and argument based on recently received medical records. Doc. 27. On June 21, 2012, Plaintiffs filed a Motion to Strike Defendant's Supplement. Doc. 32.
The FAA provides that a written agreement requiring arbitration of controversies arising out of “a contract evidencing a transaction involving commerce ... 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. Section 2 of the FAA creates “a substantive rule applicable in state as well as federal courts.” Southland Corp. v. Keating, 465 U.S. 1, 16, 104 S.Ct. 852, 79 L.Ed.2d 1 (1984). Under Section 4 of the FAA, a “party aggrieved by the alleged failure, neglect, or refusal of another to arbitrate under a written agreement for arbitration may petition any United States district court ... for an order directing that such arbitration proceed in the manner provided for in such agreement.” 9 U.S.C. § 4. In enacting the FAA, “Congress intended to foreclose state legislative attempts to undercut the enforceability of arbitration agreements.” Perry v. Thomas, 482 U.S. 483, 492 n. 9, 107 S.Ct. 2520, 96 L.Ed.2d 426 (1987). There is a “clear federal policy of requiring arbitration unless the agreement to arbitrate is not part of a contract evidencing interstate commerce or is revocable ‘upon such grounds as exist at law or in equity for the revocation of any contract.’ ” Id. (quoting 9 U.S.C. § 2). Further, the Supreme Court has emphasized “the fundamental principle that arbitration is a matter of contract,” and that “courts must place arbitration agreements on an equal footing with other contracts ... and enforce them according to their terms.” AT & T Mobility LLC v. Concepcion, ––– U.S. ––––, 131 S.Ct. 1740, 1745, 179 L.Ed.2d 742 (2011).
The FAA, however, “was not enacted to force parties to arbitrate in the absence of an agreement.” Avedon Engg., Inc. v. Seatex, 126 F.3d 1279, 1286 (10th Cir.1997). Congress' concern, rather, “was to enforce private agreements into which parties had entered.” Id. Accordingly, “[t]he existence of an agreement to arbitrate is a threshold matter which must be established before the FAA can be invoked.” Id. at 1287. The Court “look[s] to state law principles of contract formation to tell us whether an agreement to arbitrate has been reached.” Id. It is the party seeking judicial enforcement of an arbitration agreement who “bears the burden of persuasion.” THI of New Mexico at Hobbs Center, LLC v. Patton (Patton II), Civ. No. 11–537 (LH/CG), 2012 WL 112216, *6 (D.N.M. Jan. 3, 2012) (citation omitted).
Under Section 4 of the FAA, Plaintiffs move to compel Defendant to arbitrate his claims against them. In support of their motion, Plaintiffs argue that the arbitration provision in the Admission Contract is valid and enforceable, and that Defendant's claims fall within the substantive scope of that provision. Plaintiffs further request that the Court stay this action and the State Court Action, pending arbitration. Plaintiffs also move to strike the supplemental pleading filed by Defendant in support of his motion to dismiss.
Defendant moves to dismiss Plaintiffs' Complaint on several bases. First, Defendant argues that the Court lacks federal diversity jurisdiction over this matter. In its reply, Defendant argues, in the alternative, that the Court should abstain from exercising jurisdiction over this case. Additionally, Defendant argues that no valid agreement to arbitrate exists. Specifically, Defendant argues that the arbitration provision in the Admission Contract is unenforceable because: (1) it does not satisfy the FAA's interstate commerce requirements; (2) it is unconscionable; (3) it does not bind Defendant, as the representative of Mr. Spradlin's estate; (4) Hobbs Center breached its fiduciary duty to Mr. Spradlin; and (5) the arbitrator designated by the parties is unavailable.
I. Defendant's Motion to DismissA. Diversity
Section 4 of the FAA contains only a limited grant of federal court jurisdiction, permitting a party to seek an order compelling arbitration...
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