United States District Court, E.D. Kentucky, Northern Division, Ashland
GGNSC VANCEBURG, LLC d/b/a GOLDEN LIVING CENTER-VANCEBURG, et al., Plaintiffs,
JULIA HANLEY, Defendant.
MEMORANDUM OPINION AND ORDER
HENRY R. WILHOIT, Jr., District Judge.
This matter is before the Court upon Defendant's Motion to Dismiss [Docket No. 4] and Plaintiffs' Motion to Compel Arbitration and to Enjoin Defendant [Docket No. 5]. The motions have been fully briefed by the parties [Docket Nos. 6, 7 and 8]. For the reasons set forth below, the Motion to Dismiss will be overruled and the Motion to Compel and Enjoin will be sustained.
I. FACTUAL AND PROCEDURAL BACKGROUND
Defendant Julia Hanley was admitted as a resident to the Golden Living Center - Vanceburg on May 7, 2009 and, save for intermittent terms of hospitalization, currently resides there [State Court Complaint, Docket No. 1-2, ¶ 2]. The facility is owned and operated by the Plaintiffs.
On the day she was admitted to the facility, Ms. Hanley signed the arbitration agreement by making her mark upon the document. The Resident and Facility Arbitration Agreement ("arbitration agreement") is attached to the Complaint as an Exhibit [Docket No. 1-1]. The arbitration agreement is a separate document, conspicuously titled "RESIDENT AND FACILITY ARBITRATION AGREEMENT (NOTA CONDITION OF ADMISSION-READ CAREFULLY)." Under the plain terms of the arbitration agreement, the parties agreed that any disputes arising out of Julia Hanley's residency at Golden Living Center- Vanceburg must be submitted to binding arbitration. The agreement states, among other provisions, that the signatory "has the right to seek legal counsel concerning this Arbitration Agreement", that execution of the agreement is not a precondition to admission or to the furnishing of services to the Resident by the Facility, and that the signatory may revoke the agreement by providing written notice to the facility within thirty (30) days of signature. [ Id., p. 2]. No such notice was provided.
The arbitration agreement provides, in pertinent part:
It is understood and agreed by the Facility and Resident that any and all claims disputes and controversies (hereafter collectively referred to as a "claim" or collectively as "claims") arising out of, or in connection with, or relating in any way to the Admissions Agreement or any services or health care provided by the Facility to the Resident shall be resolved exclusively by binding arbitration...
THE PARTIES UNDERSTAND AND AGREE THAT THIS CONTRACT CONTAINS A BINDING ARBITRATION PROVISION WHICH MAY BE ENFORCED BY THE PARTIES, AND THAT BY ENTERING INTO THIS ARBITRATION AGREEMENT, THE PARTIES ARE GIVING UP AND WAIVING THEIR CONSTITUTIONAL RIGHT TO HAVE ANY CLAIM DECIDED IN A COURT OF LAW BEFORE A JUDGE AND A JURY, AS WELL AS ANY APPEAL FROM A DECISION OR AWARD OF DAMAGES.
[ Id., emphasis in original]. Further, the title of the agreement contains a parenthetical that notes that it is NOT A CONDITION OF ADMISSION - READ CAREFULLY [ Id., emphasis in original].
On May 31, 2013, Ms. Hanley filed in the Circuit Court of Lewis County, Kentucky, Case No. 13-CI-00124, a negligence, medical negligence, corporate negligence and violation of long term care resident's rights action, against GGNSC Vanceburg, LLC d/b/a Golden Living Center - Vanceburg; GGNSC Administrative Services, LLC d/b/a Golden Ventures; GGNSC Holdings, LLC d/b/a Golden Horizons; GGNSC Equity Holdings, LLC; GGNSC Equity Holdings II, LLC; Golden Gate National Senior Care, LLC d/b/a Golden Living; Golden Gate Ancillary, LLC d/b/a Golden Innovations; GGNSC Clinical Services, LLC d/b/a Golden Clinical Services; GPH Vanceburg, LLC; Golden Living Center Administrator Judy Caudill; Golden Living Center Administrator Melissa Bentley; and Golden Living Center Administrator Joy Dingress. [State Court Complaint, Docket No. 1-2]
In their Answer, the Defendants asserted that Ms. Hanley's claims are subject to a binding arbitration agreement between the parties and requested that the matter be referred to binding arbitration and the Complaint be dismissed with prejudice.
Subsequently, the corporate defendants from the Lewis County Circuit Court Case filed the instant Complaint with this Court, as Plaintiffs, alleging federal subject matter jurisdiction by virtue of diversity. They seek a declaration that the arbitration agreement is valid and enforceable and an order compelled to honor the agreement and proceed to arbitration.
Defendant seeks dismissal of this action pursuant to Federal Rules of Civil Procedure 12(b)(1) and 12(b)(6). Plaintiffs seek entry of an Order compelling Defendant to arbitrate the claims alleged in her state court complaint and enjoining her from pursuing her claims Lewis Circuit Court.
II. STANDARD OF REVIEW
Defendant seeks dismissal of this case upon two theories: first that dismissal is warranted under Fed. R. Civ. P 12(b)(1) and, in the alternative, that dismissal is proper pursuant to Fed. R. Civ. P 12(b)(6). The various Rule 12 motions to dismiss on the pleadings and the standards applicable to such motions are often confused with each other and bear repeating.
The purpose of a motion to dismiss pursuant to Fed. R. Civ. P 12(b)(6), is to allow a defendant to test whether, as a matter of law, the plaintiff is entitled to legal relief. See Mayer v. Mylod, 988 F.2d 635, 638 (6th Cir. 1993). This requires a consideration of and a ruling upon the merits of a claim. In determining whether dismissal is warranted under Rule 12(b)(6), the complaint must be construed in the light most favorable to the nonmoving party and its allegations taken as true. Miller v. Currie, 50 F.3d 373, 377 (6th Cir. 1995). If, in doing so, the Court determines that the case is legally insufficient, it will be dismissed.
The procedure under a motion to dismiss for lack of subject matter jurisdiction pursuant to Fed. R. Civ. P 12(b)(1) is quite different. At issue in a Rule 12(b)(1) motion is the trial court's jurisdiction - its very power to hear the case. In this context, the trial court may proceed as it never could under 12(b)(6) - no presumptive truthfulness attaches to either party's allegations and the existence of disputed material facts will not preclude the trial court from evaluating for itself the merits of jurisdictional claims. Moreover the party claiming jurisdiction will have the burden of proof that jurisdiction does in fact exist. RMI Titanium Co. v. Westinghouse Electric Corp., 78 F.3d 1125, 1134 (6th Cor. 1996)(internal citations omitted).
Defendant makes three arguments in support of her dispositive motion: first, that this Court lacks subject matter jurisdiction; second, that this Court should abstain from exercising jurisdiction over this case; and, third, that the arbitration agreement is invalid.
A. Subject matter jurisdiction exists.
"The requirement that jurisdiction be established as a threshold matter spring[s] from the nature and limits of the judicial power of the United States' and is inflexible and without exception.'" Mansfield, C. & L.M.R. Co. v. Swan, 111 U.S. 379, 382, 4 S.Ct. 510, 28 L.Ed. 462 (1884). Federal courts are courts of limited jurisdiction, and subject matter jurisdiction may be obtained only with the existence of diverse parties or a federal question. Heartwood, Inc. v. Agpaoa, 628 F.3d 261, 266 (6th Cir.2010); 28 U.S.C. §§ 1331, 1332.
Neither party asserts the existence of a federal question. Rather, the disputed question is that of diversity. 28 U.S.C. § 1332 provides that "district courts shall have original jurisdiction of all civil actions where the matter in controversy exceeds the sum or value of $75, 000, exclusive of interest and costs, and is between... citizens of different States."
Defendant has not challenged the allegations in Plaintiffs' Complaint concerning the citizenship of the named plaintiffs in this action. Indeed Defendant has already pled in the appurtenant state court action that each of the named Plaintiffs in this action are citizens of another state. Neither has Defendant challenged that the amount in controversy fails to meet the jurisdictional requirements of 28 U.S.C. § 1332. Rather, she contends that complete diversity of citizenship among the parties cannot be established because Melissa Bentley and Joy Dingress, the nursing home administrators named in her state complaint both Kentucky citizens who were not named as plaintiffs in this action, are an indispensable party under Fed.R.Civ.P. 19 and their joinder would destroy the complete diversity among parties required by 28 U.S.C. 1332(a)(1).
Rule 19 deals with what were historically known as "necessary" and "indispensable" parties. The terms "necessary" and "indispensable" are terms of art in jurisprudence concerning Rule 19, and "necessary" refers to a party who should be joined if feasible, while "indispensable" refers to a party whose participation is so important to the resolution of the case that, if the joinder of the party is not feasible, the suit must be dismissed. If a necessary party cannot be joined without divesting the court of subject-matter jurisdiction, the Rule Provides additional criteria for determining whether that party is indispensable, but if the court finds that the party is anything less than ...