United States District Court, E.D. Kentucky, Central Division, Lexington
RICHMOND HEALTH FACILITIES- MADISON, L.P., d/b/a MADISON HEALTH & REHABILITATION CENTER,, Petitioners,
TAMRA SHEARER, AS ADMINISTRATRIX OF THE ESTATE OF BETTY REED, DECEASED, Respondent.
OPINION AND ORDER
K. CALDWELL, CHIEF JUDGE
been here before. The facts are familiar: Tamra Shearer, as
Administratrix of the Estate of Betty Reed and emergency
guardian, signed an arbitration agreement with Madison Health
& Rehabilitation Center when Reed was admitted
there. After Reed's death, Shearer, on behalf
of Reed, sued Madison Health-in state court-alleging various
claims against Madison Health related to the care Reed
received at the nursing facility. (DE 1-1). The claim is
familiar: Madison Health wants to enforce the arbitration
agreement under the Kentucky Uniform Arbitration Act, KRS
§ 417.045 et seq. and the Federal Arbitration
Act, 9 U.S.C. § 2 (FAA), so it filed a motion to compel
arbitration in this Court (DE 1, 3). Also familiar is the
response: Shearer wants out of the agreement and moves to
dismiss Madison Health's action on several grounds: lack
of subject-matter jurisdiction, failure to join indispensable
parties, Colorado River abstention, and failure to
state a claim (DE 9, 10). Given that virtually every federal
district court in Kentucky, in some form or fashion, has
considered all of the arguments offered by both parties, the
result too should be expected: Only Shearer's wrongful
death claims will be allowed to proceed in state court. The
remainder of her motion to dismiss will be denied. Madison
Health's motion to compel arbitration will be enforced in
part, and the concurrent state proceedings will be enjoined
as the claims that must be arbitrated.
on May 6, 2016, and lasting until March 24, 2017, Betty Reed
was a resident of Madison Health, a nursing home facility in
Madison County, Kentucky. Shearer, Reed's daughter, was
appointed Reed's emergency guardian at the time Reed
entered Madison Health by an “Emergency Guardian
Order” entered by the Estill District Court two days
earlier on May 4, 2016 (DE 1-3, May 4, 2016, Court Order).
Reed was of unsound mind before she entered Madison Health.
Shearer, as Administratrix of the Estate of Betty and
emergency guardian, signed an “Alternative Dispute
Resolution Agreement” on May 6, 2016. (DE 1-2). The
arbitration agreement stated that “[a]ny and all
disputes arising out of or in any way relating to”
Reed's stay at Madison Health would be resolved by
arbitration. (DE 1-2, at 41, § 5). Though the
arbitration agreement contained a revocation clause allowing
Shearer to back out of the agreement “by providing
notice . . . within thirty (30) days of signing it, ”
(DE 1-2, at 43, § 13), the arbitration agreement was
to Shearer, Reed's stay at Madison Health was anything
but good, and Shearer believes that Madison Health was the
cause. On May 22, 2017, she filed suit against Madison Health
in Madison County Circuit Court alleging claims of
negligence, medical negligence, corporate negligence, a
violation of long-term care rights, and wrongful death. (DE
1-1). In response, Madison Health sued Shearer in this Court.
Madison Health alleged that Shearer violated the arbitration
agreement when she filed her state court suit and seeks to
compel the parties into arbitration and enjoin Shearer's
state court proceeding. Shearer filed a motion to dismiss.
The claims are now ripe for review.
discussion begins with some context. Nothing about this case
is novel. Shearer is not the first guardian of a nursing home
resident who, after signing an arbitration agreement, decided
to take her case to the courts instead of to an arbitrator.
Nor is she the first to move to dismiss an action to compel
arbitration using the arguments she puts forth here. Without
doubt, Shearer's motion looks up at mountain of precedent
that has uniformly considered and rejected, in one way or
another, the main thrust of her claims. See GGNSC
Louisville Mt. Holly, LLC v. Turner, No.
3:16-CV-00149-TBR, 2017 WL 537200, at *3 (W.D. Ky. Feb. 9,
2017) (listing cases by eleven out of thirteen federal who
have addressed and rejected similar arguments). There is no
reason to depart from what is well-settled. Accordingly, a
walkthrough analysis will suffice to address these claims.
motion to dismiss, Shearer attacks this Court's
subject-matter jurisdiction to adjudicate this case. The
Court therefore must address those arguments first. See
Douglas v. E.G. Baldwin & Associates, 150 F.3d 604,
607 (6th Cir. 1998) (“The first and fundamental
question presented by every case brought to the federal court
is whether it has jurisdiction to hear the case.”).
is “something of an anomaly” in that it
“‘bestow[s] no federal jurisdiction but rather
require[s] an independent jurisdictional basis' [for
access to a federal forum] over the parties'
dispute.” Vaden v. Discover Bank, 556 U.S. 49,
56 (2009) (quoting Hall Street Assoc., LLC v.
Mattel, Inc., 552 U.S. 576, 581-82 (2008)). Thus, a
petitioner proceeding under § 4 must assert an
independent source of subject matter jurisdiction. Here,
Madison Health has alleged that the amount in controversy
exceeds $75, 000 exclusive of interest and costs and that
complete diversity exists between Madison Health, who are all
citizens of Texas, and Shearer, who is a citizen of Kentucky.
This is enough to establish diversity jurisdiction under 28
U.S.C. § 1332.
argues that this finding is not so simple because Thomas
Tackett, a citizen of Kentucky, is a named party defendant in
the state court action. Unlike the state court action,
Tackett is not included in the federal claim. She alleges
that “the corporate defendants strategically plucked
themselves out” of the state court so as to manufacture
diversity jurisdiction in federal court. (DE 9-1, at 4).
Shearer asks this Court to apply Vaden to
“look through” the underlying controversy, the
state court action, and take the citizenship of Tackett into
account when evaluating subject-matter jurisdiction. Courts
have found, however, that Vaden does not apply to
cases involving diversity jurisdiction. Indeed, Shearer's
arguments to the contrary have been roundly rejected by
multiple other courts within this District alone. See
e.g., GGNSC Frankfort, LLC, v. Moore, 3:17-45-GFVT, 2017
WL 2805147, at *2 (E.D. Ky. June 28, 2017); Brookdale Sr.
Living Inc. v. Walker, No. 5:15-206-KKC, 2016 WL
1255722, *2-*3 (E.D. Ky. Mar. 29, 2016) (collecting
cases). Accordingly, this Court will not apply
Vaden. Jurisdiction in this case is based on
Failure to Join Indispensable Parties
Shearer argues, notwithstanding Vaden, things are
not as they seem. Even if the Court will not “look
through” the complaint, Shearer protests that Tackett,
a non-corporate entity, is “in fact a necessary and
indispensable party to the § 4 petition, ” which
requires the petition to be dismissed under Federal Rule of
Civil Procedure 19(a) because Tackett's inclusion would
destroy complete diversity. (DE 9-1, at 4).
is just one problem with this argument. Nursing home
administrators, like Tackett, are not indispensable parties
in this action because joint tortfeasors-of which Tackett is
alleged to be in the state court action-are permissive, not
indispensable parties in actions to compel arbitration.
See e.g., PaineWebber, Inc. v. Cohen, 276 F.3d 197,
206 (6th Cir. 2001) (holding that a company seeking to compel
arbitration need not join any of its own employees, even
though plaintiff joined them in state court); Preferred
Care, Inc. v. Howell, 187 F.Supp.3d 796, 804 (E.D. Ky.
2016) (applying PaineWebber to identical argument).
As PaineWebber explained, “[a]ny ruling to the
contrary would virtually eliminate the availability of
federal courts to enforce arbitration clauses in diversity
cases by the simple expedient of one of the parties filing a
preemptive suit in state court with at least one non-diverse
defendant.” 276 F.3d at 205. Thus, Tackett need not be
named here, as Madison Health's exclusion of a
non-diverse nursing administrator does not destroy the
Court's diversity jurisdiction.
contends that even if this Court has subject-matter
jurisdiction, it should abstain from hearing the merits on
the basis that there is a parallel suit pending in state
court. “In 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.'”
PaineWebber, 276 F.3d at 206 (quoting Colorado
River Water Conservation District v. United States, 424
U.S. 800, 817 (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.
is a two-step process for determining whether abstention is
appropriate under Colorado River. The Court must
first decide whether the federal and state suits are similar
enough to be parallel. Romine v. Compuserve Corp.,
160 F.3d 337, 339 (6th Cir. 1998). It is not necessary that
the proceedings be identical, nor is it necessary that the
parties be identical. Id.
as long as the claims raised “are predicated on the
same allegations as to the same material facts” and the
parties are “substantially similar, ” the dual
actions are similar enough to qualify as parallel under
Colorado River. Id. at 340.
parties are parallel in this case. Save for one nursing
administrator, the parties overlap in the federal and state
court action, and both cases turn on the same ultimate legal
question-whether the arbitration agreement is enforceable and
requires that Shearer arbitrate her claims brought against
Madison Health. Accordingly, the two actions are ...