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Preferred Care, Inc. v. Barnett

United States District Court, E.D. Kentucky, Central Division, Lexington

February 16, 2017

PREFERRED CARE, INC., et al. Plaintiffs,
v.
JUDY BARNETT, as administrator of Donald Shelton's estate, Defendant.

OPINION AND ORDER

          KAREN K. CALDWELL, CHIEF JUDGE.

         This matter is before the Court on the plaintiffs' motion to compel arbitration (DE 9) and the defendant's motion to dismiss (DE 6). For the following reasons, the Court will grant the motion to dismiss and deny the motion to compel.

         I. Background

         Donald Shelton died after residing at the Stanton Nursing and Rehabilitation Center located in Stanton, Kentucky. The administrator of his estate, Judy Barnett (the “Estate”), filed suit in Powell Circuit Court against the nursing center and multiple other companies that the Estate alleged owned or operated the center. The Estate also named the center administrator and the director of nursing at the center as defendants in the state-court action. (DE 1-2, State Court Action.)

         The center and three of the companies named as defendants in the state-court action (collectively, the “Center”) then filed this action, asking this Court to order the Estate to arbitrate the claims filed in the state court action and to enjoin the Estate from pursuing the state-court action. The Estate moves to dismiss this federal action.

         II. Analysis

         A. Jurisdictional issues

         The Court must, of course, first address any challenges to its jurisdiction. The Estate concedes that this Court has diversity jurisdiction over this action but argues that the Court should abstain from exercising it under the Colorado River doctrine. Under that doctrine, “[i]n certain ‘exceptional' circumstances, [ ] a federal district court may abstain from exercising its subject matter jurisdiction due to the existence of a concurrent state court proceeding, based on ‘considerations of wise judicial administration, giving regard to conservation of judicial resources and comprehensive disposition of litigation.'” Paine Webber, Inc. v. Cohen, 276 F.3d 197, 200 (6th Cir.2001) (quoting Colorado River Water Conservation District v. United States, 424 U.S. 800 (1976)). But “[a]bstention from the exercise of federal jurisdiction is the exception, not the rule, ” and this “extraordinary and narrow exception” is only justified when it “would clearly serve an important countervailing interest.” Colorado River, 424 U.S. at 813.

         Neither party addresses it but the first issue on the abstention analysis is whether there is, in fact, a parallel state court proceeding. While for purposes of Colorado River abstention, the state and federal proceedings need only be “substantially similar, ” Romine v. Compuserve Corp., 160 F.3d 337, 340 (6th Cir. 1998), the two actions cannot be said to be parallel if the claims presented in this Court are not presented in the state court action at all. There is no evidence in the record before this Court that either party has moved to compel arbitration in the state-court action. Nor is there any evidence indicating that either party has actually asked the state court to determine whether the arbitration agreement is valid and, if so, whether the agreement requires that the Estate's state-court claims be arbitrated. Nothing in the record before this Court indicates that any of the parties to this action have requested the state court to make any determinations regarding the arbitration agreement or the arbitrability of the Estate's state-law claims. Accordingly, the Court cannot find that this action and the state-court action are parallel.

         Furthermore, even if a party had moved the state court to compel arbitration, the Court could not find abstention warranted. “[T]he decision to dismiss a federal action because of a parallel state-court action rests ‘on a careful balancing of the important factors as they apply in a given case, with the balance heavily weighted in favor of the exercise of jurisdiction.'” Great Earth Cos., Inc. v. Simons, 288 F.3d 878, 886 (6th Cir.2002) (quoting Moses H. Cone Memorial Hosp. v. Mercury Const. Corp., 460 U.S. 1, 16 (1983)).

         Courts consider roughly eight factors when determining whether abstention under Colorado River is necessary. PaineWebber, 276 F.3d at 206 (citing Romine, 160 F.3d at 340-41). These factors are:

(1) whether the state court has assumed jurisdiction over any res or property;
(2) whether the federal forum is less convenient to the ...

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