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GGNSC Louisville St. Matthews LLC v. Saunders

United States District Court, W.D. Kentucky, Louisville

May 18, 2017

GGNSC LOUISVILLE ST. MATTHEWS, LLC d/b/a GOLDEN LIVINGCENTER - ST. MATTHEWS; GGNSC ADMINISTRATIVE SERVICES, LLC; GGNSC HOLDINGS, LLC; GGNSC EQUITY HOLDINGS, LLC; GGNSC EQUITY HOLDINGS II, LLC; GOLDEN GATE NATIONAL SENIOR CARE, LLC; GOLDEN GATE ANCILLARY, LLC; GGNSC CLINICAL SERVICES, LLC; and GPH LOUISVILLE ST. MATTHEWS, LLC PLAINTIFFS
v.
ROBERT SAUNDERS, as Administrator of the Estate of Emma Saunders, Deceased DEFENDANT

          MEMORANDUM OPINION

          Charles R. Simpson III, Senior Judge.

         I. Introduction

         This matter is before the Court on the motion of Defendant Robert Saunders, as Administrator of the Estate of Emma Saunders, deceased, to dismiss the petition for arbitration under Federal Rules of Civil Procedure 12(b)(1), 12(b)(7), and 12(b)(6), ECF No. 8. Plaintiffs GGNSC Louisville St. Matthews, LLC d/b/a Golden LivingCenter - St. Matthews, GGNSC Administrative Services, LLC, GGNSC Holdings, LLC, GGNSC Equity Holdings, LLC, GGNSC Equity Holdings II, LLC, Golden Gate National Senior Care, LLC, Golden Gate Ancillary, LLC, GGNSC Clinical Services, LLC, and GPH Louisville St. Matthews, LLC (collectively, “Plaintiffs”) responded, ECF No. 11. Saunders replied, ECF No. 13.

         Plaintiffs also moved to compel Saunders to submit claims that are currently pending in a related case, Case No. 17-CI-001189, from the Jefferson County, Kentucky Circuit Court (“the state court case”) into arbitration, ECF No. 2. Saunders responded, ECF No. 9. Plaintiffs replied, ECF No. 10.

         Because these motions involve similar facts and related issues, the Court will address them in a single memorandum opinion and order. For the reasons explained below, the Court will deny Saunders' motion to dismiss Plaintiffs' petition to compel arbitration. The Court will grant in part and deny in part Plaintiffs' petition to compel arbitration of the claims that are currently pending in the state court case.

         II. Background

         Emma Saunders was a resident at the Golden LivingCenter - St. Matthews, Kentucky. See Agreement 8, ECF No. 1-3; St. Ct. Compl. ¶ 3, ECF No. 1-2. She lived at the Golden LivingCenter - St. Matthews between May 11, 2014 and May 17, 2016, excluding periods of hospitalization. Id. Before she began to reside at the facility, Emma Saunders and the Golden LivingCenter - St. Matthews entered into an agreement entitled the “Alternative Dispute Resolution Agreement” (“the Agreement”) on March 12, 2014. Agreement 2, ECF No. 1-3. In relevant part, the Agreement required arbitration of:

any and all disputes arising out of or in any way relating to this Agreement or to the Resident's stay at the Facility or the Admission Agreement between the Parties that would constitute a legally cognizable cause of action in a court of law sitting in the state where Facility is located. Covered Disputes include but are not limited to all claims in law or equity arising from one Party's failure to satisfy a financial obligation to the other Party; a violation of a right claimed to exist under federal, state, or local law or contractual agreement between the Parties; tort; breach of contract; consumer protection; fraud; misrepresentation; negligence; malpractice; and any alleged departure from any applicable federal, state, or local medical, healthcare, consumer, or safety standards.

Id. at 4. The Agreement also stated that “[a]ll claims based in whole or in part on the same incident, transaction, or related course of care or services provided by the Facility to the Resident shall be addressed in a single ADR process, which shall adjudicate solely the claims of the Parties named in this Agreement, and no others.” Id. The Agreement noted that it would be governed by and interpreted under the Federal Arbitration Act (FAA), 9 U.S.C. § 1, et. seq. Id. at 6.

         Emma Saunders signed the Agreement, thereby acknowledging that she had read the terms, understood the nature of the document, and accepted the Agreement's terms. Id. at 8. Although the Agreement stated that it could be revoked by sending written notice to the Golden LivingCenter - St. Matthews within thirty days of its being signed, Agreement 6, ECF No. 1-3, Emma Saunders never acted upon her right to do so.

         In March 2017, after Emma Saunders' death, Robert Saunders, as administrator of Emma Saunders' estate, filed the state court case against GGNSC Louisville St. Matthews, LLC d/b/a Golden LivingCenter - St. Matthews, GGNSC Administrative Services, LLC, GGNSC Holdings, LLC, GGNSC Equity Holdings, LLC, GGNSC Equity Holdings II, LLC, Golden Gate National Senior Care, LLC, Golden Gate Ancillary, LLC, GGNSC Clinical Services, LLC, GPH Louisville St. Matthews, LLC, Allyson Skaggs, in her capacity as Administrator of the Golden Living Center - St. Matthews, Lisa Davis, in her capacity as Administrator of the Golden Living Center - St. Matthews, and Joshua Lee Schindler, in his capacity as Administrator of the Golden Living Center - St. Matthews. St. Ct. Compl. ¶¶ 4-20, ECF No. 1-2. Saunders asserts that Plaintiffs breached their duty of care towards Emma Saunders, which led to the deterioration of her health and physical condition beyond that caused by the normal aging process (Count I). Id. ¶¶ 30-66. Saunders also asserts a wrongful death claim against Plaintiffs and seeks damages, including those for the grief suffered by statutory beneficiaries of the estate (Count II). Id. ¶¶ 67- 70. He seeks to recover punitive and compensatory damages, and attorney fees and costs. Id. ¶ 73.

         Plaintiffs, all of whom are defendants in the state court case, filed a petition with this Court to (1) compel arbitration of the claims asserted by Saunders in the state court case under § 4 of the FAA, citing in support the arbitration clause from the Agreement, and (2) to stay the state court case pending arbitration under the All Writs Act, 28 U.S.C. § 1651. Pet. Compel Arbitration 1, ECF No. 1. Plaintiffs assert in their petition to compel arbitration that this Court has jurisdiction over the petition to compel arbitration under the federal diversity jurisdiction statute, 28 U.S.C. § 1332(a)(1), and the FAA. Id. ¶ 14.

         III. Saunders' Motion to Dismiss

         Saunders now moves to dismiss Plaintiffs' petition to compel arbitration of the state court claims for lack of subject matter jurisdiction under Rule 12(b)(1), for failure to join indispensable parties under Rule 12(b)(7), and/or for failure to state a claim for which relief can be granted under Rule 12(b)(6). Mot. Dismiss 1, ECF No. 8. The Court will deny Saunders' motion to dismiss the petition to compel arbitration based on all three grounds.

         A. Whether the Court Should Grant Saunders' Motion to Dismiss for Lack of Subject Matter Jurisdiction

         Motions to dismiss for lack of subject matter jurisdiction made under Rule 12(b)(1) generally come in two varieties, a facial attack and a factual attack. Ohio Nat'l Life Ins. Co. v. United States, 922 F.2d 320, 325 (6th Cir. 1990). A facial attack challenges the sufficiency of the pleadings. Id. In reviewing a facial attack, the court must accept as true all factual allegations in the complaint. Id. In contrast, the court need not accept as true all factual allegations in the complaint when reviewing a factual attack on the pleading. Id. When reviewing a factual attack, the court “weigh[s] the conflicting evidence to arrive at the factual predicate that subject matter jurisdiction exists or does not exist.” Id. The court has the discretion to review “affidavits, documents and even a limited evidentiary hearing to resolve disputed jurisdictional facts.” Id.

         Saunders argues that the Court should dismiss Plaintiffs' petition to compel arbitration for lack of subject matter jurisdiction because the “parties are not diverse, nor is there a federal question present.” Mem. Supp. Mot. Dismiss 3-7, ECF No. 8-1. Citing Vaden v. Discover Bank, 556 U.S. 49 (2009), Saunders explains that “in questions involving arbitration questions, th[e] Court must look to the underlying controversy to determine questions of subject matter jurisdiction.” Id. at 5. And in this case, the individual parties in the underlying controversy are not diverse because Allyson Skaggs, Lisa Davis, and Joshua Lee Schindler (“the Administrators”) are, like Saunders, citizens of Kentucky. Id. at 8. Thus, according to Saunders, the jurisdictional requirements of the FAA are not satisfied.

         Plaintiffs assert in opposition that Vaden is inapplicable to this case because Vaden only applies to federal cases in which the jurisdictional basis underlying the arbitration petition involves federal question jurisdiction. Resp. Opp. Mot. Dismiss 5, ECF No. 11. Because the jurisdictional basis in this case is diversity jurisdiction, Plaintiffs contend that the Court need not look to the underlying controversy to determine questions of subject matter jurisdiction. Id. And because the parties in this case are completely diverse, the jurisdictional requirements of the FAA are satisfied. Id.

         Plaintiffs' petition to compel arbitration is brought under § 4 of the FAA. Pet. Compel Arbitration 1, ECF No. 1. Section 4 of the FAA provides:

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. . . . The court shall hear the parties, and upon being satisfied that the making of the agreement for arbitration or the failure to comply therewith is not in issue, the court ...

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