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Salyersville Health Facilities, L.P. v. Blackburn

United States District Court, E.D. Kentucky, Southern Division, Pikeville

August 1, 2017

SALYERSVILLE HEALTH FACILITIES, L.P., d/b/a SALYERSVILLE NURSING & REHABILITATION CENTER, SALYERSVILLE HEALTH FACILITIES GP, LLC, KENTUCKY PARTNERS MANAGEMENT, LLC, PREFERRED CARE PARTNERS MANAGEMENT GROUP, LP, PCPMG, LLC, and PREFERRED CARE OF DELAWARE, INC., d/b/a PREFERRED CARE, INC., Petitioners,
v.
LENORA BLACKBURN, as Power of Attorney for, KATHERINE BARNETT, Respondent.

          OPINION & ORDER

          KAREN K. CALDWELL, CHIEF JUDGE

         Katherine Barnett is a former resident of the Salyersville Nursing and Rehabilitation Center. Lenora Blackburn, Barnett's power of attorney, brought suit in state court asserting a number of state law claims related to Barnett's stay at the nursing home. Salyersville Health Facilities, L.P. (“Salyersville”) then filed a petition in this Court seeking to enforce an arbitration agreement signed by the parties and to compel the parties arbitrate those claims pursuant to Section 4 of the Federal Arbitration Act (DE 1). While this Court considered Salyersville's motion to expedite consideration (DE 3) of its petition, Blackburn filed a motion for summary judgment and declaratory relief regarding the enforceability of the arbitration agreement at issue in Magoffin County Circuit Court (DE 9). On April 24, 2017, the same day that the petition to compel arbitration became ripe for consideration in this Court, the Magoffin County state court issued a one-page order granting Blackburn's motion for summary judgment, finding the arbitration agreement between the two parties to be unenforceable for a lack of mutuality of obligation (DE 18-1). Salyersville has since appealed the state court judgment (DE 22).

         Squarely now before this Court is a similar situation faced by another court in this district. In Preferred Care of Delaware, Inc. v. VanArsdale, a district court relied upon the abstention doctrine set forth in Colorado River Water Conservation Dist. v. United States, 424 U.S. 800 (1976), to decline its exercise of jurisdiction after a state court issued an interlocutory ruling on the enforceability of an arbitration agreement. 152 F.Supp.3d 929, 930-32 (E.D. Ky. 2016). That decision was subsequently affirmed by the Sixth Circuit Court of Appeals in Preferred Care of Delaware, Inc. v. VanArsdale, 676 F. App'x 388 (6th Cir. Jan 13, 2017). Despite the “virtually unflagging obligation of the federal courts to exercise the jurisdiction given them, considerations of judicial economy and federal-state comity may justify abstention in situations involving the contemporaneous exercise of jurisdiction by state and federal courts.” Romine v. Compuserve Corp., 160 F.3d 337, 339 (6th Cir. 1998). After careful consideration and in light of the Sixth Circuit's decision in VanArsdale, the Court concludes that Colorado River abstention is appropriate in this case and will decline to exercise jurisdiction.

         There 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, 160 F.3d at 339. It is not necessary that the proceedings be identical, nor is it necessary that the parties be identical. Id. Instead, 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.

         The 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 Blackburn arbitrate her claims brought against Salyersville. Accordingly, “the two actions are similar enough to satisfy the threshold requirement under Colorado River that they be parallel.” VanArsdale, 676 F. App'x at 394.

         Now to the propriety of abstention under Colorado River. To determine whether this case fits under the exceptional circumstances counseling in favor of abstention, the Court considers a list of factors. The 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 parties;
(3) whether the two cases would cause piecemeal litigation;
(4) the order in which the state and federal courts obtained jurisdiction;
(5) whether the source of governing law is state or federal;
(6) whether the state court will adequately protect the federal plaintiff's rights;
(7) how far the state and federal cases have proceeded; and
(8) whether or not the courts have concurrent jurisdiction ...

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