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Diversicare Leasing Corp. v. Strother

United States District Court, E.D. Kentucky, Northern Division, Ashland

April 17, 2015



HENRY R. WILHOIT, Jr., District Judge.

This matter is before the Court upon Defendant's Motion to Dismiss [Docket No. 5] and Plaintiffs' Motion to Compel Arbitration and Enjoin Defendant [Docket No. 7]. The motions have been fully briefed [Docket Nos. Sci, 6, 7 and 8]. For the reasons set forth herein, this Court will overrule Defendant's motion and sustain that of the Plaintiffs.


Plaintiffs allege that "[o]n or about August 2, 2012, Miles Strother was admitted to Boyd Nursing & Rehabilitation Center, a nursing home located in Ashland, Kentucky and operated by Plaintiffs." [Complaint, Docket No. 1, ¶ 12]. As part of the admission process, his son, Larry Strother, in his capacity as Guardian of Miles Strother, signed an Arbitration Agreement on behalf of Miles Strother. Id., ¶ 13. The Arbitration Agreement is attached as Exhibit A to the Complaint and provides, in pertinent part:

[A]ny legal dispute, controversy, demand, or claim that arises out of or relates to the Resident Admission Agreement or is in any way connected to the Resident's stay at the Facility shall be resolved exclusively by binding Arbitration and not by a lawsuit or resort to other legal process.... This agreement to arbitrate shall include, but is not limited to, any claim for payments, non-payment, or refund for services rendered to the Resident by the Facility, claims arising out of State or Federal law, claims based upon breach of contract, breach of fiduciary duty, violation of rights, fraud or misrepresentation, common law or statutory negligence, gross negligence, malpractice or any other claim based on any departure from accepted standards of medical or nursing care, whether such claims be for statutory, compensatory, or punitive damages, and whether arising in the future or presently existing.

[Docket No. 1-1, p. 1](emphasis added).

The Arbitration Agreement further states:

This agreement shall inure to the benefit of and be binding upon the Patties and their successors and assigns, including the Facility's parents, agents, employees, servants, officers, directors, shareholders, medical directors, attorneys, insurers, or affiliated business entities, and any and all persons whose claim is derived from or on behalf of the Resident, including his or her agents, guardian, power of attorney, parent, spouse, child, executor, administrator, legal representative, heirs, trustees, or insurers."

Id., p.2 (emphasis added).

Miles Strother remained a resident at Boyd Nursing & Rehabilitation Center until December 3, 2013.

On July 22, 2014, Larry Strother, in his capacity as the Executor of the Estate of Miles Strother, filed in the Circuit Court of Boyd County, Kentucky, Case No. 14-CI-00599, a negligence, medical negligence, corporate negligence, violation of long term care resident's rights, and wrongful death action against Diversicare Leasing Corp. d/b/a Boyd Nursing & Rehabilitation Center; Omega Healthcare Investors, Inc.; Diversicare Healthcare Services, Inc. f/k/a Advocat, Inc.; Diversicare Management Services Company; Cindy Salyers, in her capacity as Administrator of Boyd Nursing & Rehabilitation Center;; and John Does 1 through 5. [Docket No. 1-2].

Subsequently, Diveriscare Leasing Corp. d/b/a Boyd Nursing & Rehabilitation Center filed a Complaint in this Court, as Plaintiffs, alleging federal subject matter jurisdiction by virtue of diversity and seeking substantially the same relief from this Court regarding arbitration as they had demanded in State court; to-wit, to find the ADR Clause to be valid and enforceable; to compel Defendants to arbitrate the State Court claims; and to enter an order enjoining the Defendants from pursuing their claims in the State Court Action.

Defendant seeks a dismissal of the instant lawsuit. He contends that this Court lacks subject-matter jurisdiction; that it should abstain from hearing this action in light of the pending state-court matter; that the arbitration agreement at issue is invalid and unenforceable; and that the Court should not exercise its power to enjoin him from continuing the prosecution of his state-court action.

Plaintiffs seek entry of an Order compelling Defendant to proceed to arbitration and, in addition, enjoining him from pursing his claims in state court.


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).


A. Subject matter ...

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