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Diversicare Leasing Corp. v. Johnston

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

April 17, 2015

DIVERSICARE LEASING CORP. d/b/a ELLIOT NURSING & REHABILITATION CENTER; OMEGA HEALTHCARE INVESTORS, INC.; DIVERSICARE HEALTHCARE SERVICES, INC.; ADVOCAT ANCILLARY SERVICES, INC.; ADVOCAT FINANCE, INC; and DIVERSICARE MANAGEMENT SERVICES, CO,
v.
REBEKAH JOHNSTON, Executor of the Estate of Lucien Reed, Defendant.

PLAINTIFFS MEMORANDUM OPINION AND ORDER

HENRY R. WILHOIT, Jr., District Judge.

This matter is before the Court upon Defendant's Motion to Dismiss [Docket No. 6] and Plaintiffs' Motion to Enforce Arbitration Agreement and Enjoin Defendant [Docket No. 10]. The motions have been fully briefed by the parties and for the reasons set forth herein, the Court finds that dismissal is not warranted and that the arbitration agreement which forms the basis of this lawsuit must be honored.

I.

In their Complaint, Plaintiffs allege that in September 2012, Lucien Reed was admitted to the Elliot Nursing & Rehabilitation Center, a nursing home located in Sandy Hook, Kentucky. [Docket No. 1, ΒΆ 14]. They further allege that as part of the admissions process, Mr. Reed signed an Arbitration Agreement, a copy of which is attached to the Complaint as "Exhibit A."

The Arbitration Agreement, conspicuously titled in bold print, 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. 1-2](emphasis added).

The Arbitration Agreement further provides that: "This agreement shall inure to the benefit of and be binding upon the Parties 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.

Lucien Reed remained a resident of the Elliot Nursing & Rehabilitation Center until his death on August 16, 2013.

On September 14, 2014, Rebekah Johnston, in her capacity as the Executor of the Estate of Lucien Reed, filed in the Circuit Court of Elliott County, Kentucky, Case No. 14-CI-00058, 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 Elliott Nursing & Rehabilitation Center; Omega Healthcare Investors, Inc.; Diversicare Healthcare Services, Inc. f/k/a Advocat, Inc.; Advocat Ancillary Services, Inc.; Advocat Finance, Inc.; Diversicare Management Services Company; and Rachelle Stevens, in her capacity as Administrator of Elliott Nursing & Rehabilitation Center. A copy of the Complaint is attached to the Complaint as "Exhibit B."

Thereafter, Diversicare Leasing Corp. d/b/a Elliott Nursing & Rehabilitation Center; Omega Healthcare Investors, Inc.; Diversicare Healthcare Services, Inc.; Advocat Ancillary Services, Inc.; Advocat Finance, Inc.; and Diversicare Management Services Co. filed the instant action, as Plaintiffs, alleging federal subject matter jurisdiction by virtue of diversity and seeking a declaration that the Arbitration ADR Agreement to be valid and enforceable, to compel Defendant to arbitrate her claims and to enter an order enjoining the Defendant from pursuing her claims in the Elliot Circuit Court.

Defendant seeks a dismissal of the instant lawsuit. She 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 her from continuing the prosecution of the 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.

II.

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)(l) is quite different. At issue in a Rule 12(b)(l) 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).

III.

A. Subject matter ...


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