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GGNSC Greensburg, LLC v. Smith

United States District Court, W.D. Kentucky, Bowling Green Division

November 14, 2017



          Greg N. Stivers, Judge United States District Court.

         This matter is before the Court on Plaintiffs' Motion to Compel Arbitration (DN 5) and Defendant's Motion to Dismiss (DN 10). The motions have been fully briefed by the parties and are ripe for adjudication. For the reasons outlined below, the Motion to Compel Arbitration is GRANTED IN PART and DENIED IN PART, and the Motion to Dismiss is GRANTED IN PART and DENIED IN PART.


         On June 24, 2003, Geneva Janes (“Janes”) executed a general power of attorney instrument (“POA”). (Compl. Ex. C, DN 1-4). Under the terms of the POA, Janes designated Angela Marie Smith (“Smith”) as her attorney-in-fact.

         At or about the time of Janes' admission to Golden LivingCenter - Green Hill, which is a facility operated by Plaintiffs, Smith executed a document entitled “Alternative Dispute Resolution Agreement” (“Agreement”) on Janes' behalf. (Compl. Ex. A, at 1-4, DN 1-2). The Agreement provides that “[t]he Parties agree that any disputes covered by this Agreement (‘Covered Disputes') that may arise between them shall be resolved exclusively by an ADR process that shall include mediation and, where mediation is not successful, binding arbitration.” (Compl. Ex. A, at 1). The term “Covered Disputes” is defined as:

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 Admissions 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; gross negligence; malpractice; and any alleged departure from any applicable federal, state, or local medical, health care, consumer, or safety standards.

(Compl. Ex. A, at 2).

         On June 14, 2017, Smith, as Administratrix of Janes' estate, filed a lawsuit in Green Circuit Court entitled Smith v. GGNSC Greensburg, LLC et al., Civil Action No. 17-CI-00079 (the “State Court Action”). In the state court complaint, Smith asserted claims against Plaintiffs for, inter alia, negligence, medical negligence, and wrongful death. (Compl. Ex. B, ¶¶ 27-40, 63-66). Following the initiation of the State Court Action, Plaintiffs filed this action in federal court asserting jurisdiction under 28 U.S.C. § 1332(a) and Section 4 (9 U.S.C. § 4) of the Federal Arbitration Act (“FAA”), 9 U.S.C. §§ 1-16. (Compl. ¶ 15, DN 1). Plaintiffs seek to enforce the Agreement executed by Janes' attorney-in-fact, and Smith has moved to dismiss this case on various bases. (Compl. ¶¶ 28-31; Pl.'s Mem. Supp. Mot. Compel Arbitration 3-21, DN 5-1; Def.'s Mem. Supp. Mot. Dismiss & Resp. Pl.'s Mot. Compel Arbitration 3-36, DN 10-1).


         In support of her motion to dismiss, Smith asserts various bases pursuant to Fed.R.Civ.P. 12(b)(1), 12(b)(6), and 12(b)(7). In particular, she raises the following arguments: (i) the Court lacks subject matter jurisdiction; (ii) Plaintiffs failed to join indispensable parties-namely nursing home personnel who are defendants in the State Court Action-as parties to this action; (iii) the Court should abstain from exercising jurisdiction based upon the Colorado River abstention doctrine; (iv) the Agreement is invalid and unenforceable; (v) the Agreement is unconscionable; and (vi) Plaintiffs' request for injunctive relief would violate the Anti-Injunction Act, 28 U.S.C. § 2283. (Def.'s Mem. Supp. Mot. Dismiss & Resp. Pl.'s Mot. Compel Arbitration 3-36, DN 10-1). These same arguments have been unsuccessfully raised in numerous other recent cases before this Court challenging the enforcement of arbitration agreements between nursing homes and its residents or the residents' estates.[1] See GGNSC Louisville St. Matthews v. Grevious, No. 3:16-cv-829-DJH, 2017 WL 3623805 (W.D. Ky. Aug. 23, 2017); GGNSC Louisville St. Matthews, LLC v. Phillips, No. 3:17-CV-00406-JHM, 2017 WL 3446181 (W.D. Ky. Aug. 10, 2017); GGNSC Louisville Camelot, LLC v. Coppedge, No. 3:16-CV-00834-TBR, 2017 WL 3430579 (W.D. Ky. Aug. 9, 2017); GGNSC Louisville St. Matthews v. Madison, No. 3:16-CV-00830-TBR, 2017 WL 2312699 (W.D. Ky. May 26, 2017); GGNSC Louisville St. Matthews, LLC v. Saunders, No. 3:17-cv-00185-CRS-CHL, 2017 WL 2196752 (W.D. Ky. May 18, 2017); GGNSC Louisville Mt. Holly, LLC v. Turner, No. 3:16-CV-00149-TBR, 2017 WL 537200 (W.D. Ky. Feb. 9, 2017); GGNSC Louisville Mt. Holly LLC v. Stevenson, No. 3:16CV-00423-JMH, 2016 WL 5867427 (W.D. Ky. Oct. 6, 2016); Preferred Care of Del. Inc. v. Estate of Hopkins, No. 5:15-CV-00191-GNS-LLK, 2016 WL 3546407 (W.D. Ky. June 22, 2016); Diversicare Highland, LLC v. Lee, No. 3:15-CV-00836-GNS, 2016 WL 3512256 (W.D. Ky. June 21, 2016); Golden Gate Nat'l Senior Care, LLC v. Fleshman, No. 3:15-CV-00891-GNS, 2016 WL 3406159 (W.D. Ky. June 17, 2016); Owensboro Health Facilities, L.P. v. Henderson, No. 4:16CV-00002-JHM, 2016 WL 2853569 (W.D. Ky. May 12, 2016); Riney v. GGNSC Louisville St. Matthews, LLC, No. 3:16CV-00122-JHM, 2016 WL 2853568 (W.D. Ky. May 12, 2016); GGNSC Louisville Mt. Holly, LLC v. Mohamed-Vall, No. 3:16-cv-136-DJH, 2016 WL 9024811 (W.D. Ky. Apr. 6, 2016); Preferred Care of Del., Inc. v. Crocker, No. 5:15-CV-177-TBR, 2016 WL 1181786 (W.D. Ky. Mar. 24, 2016); GGNSC Louisville Hillcreek, LLC v. Watkins, No. 3:15-cv-902-DJH, 2016 WL 815295 (W.D. Ky. Feb. 29, 2016); Sun Healthcare Grp., Inc. v. Dowdy, No. 5:13-CV-00169-TBR, 2014 WL 790916 (W.D. Ky. Feb. 26, 2014); Life Care Ctrs. of Am., Inc. v. Estate of Neblett, No. 5:14-CV-00124-TBR, 2014 WL 5439623 (W.D. Ky. Oct. 22, 2014). See also Preferred Care, Inc. v. Howell, 187 F.Supp.3d 796 (E.D. Ky. 2016); GGNSC Frankfort, LLC v. Tracy, No. CIV. 14-30-GFVT, 2015 WL 1481149 (E.D. Ky. Mar. 31, 2015).

         After considering the arguments of the parties and the cases referenced above, the Court denies the motion to dismiss for the reasons set forth in Estate of Neblett and Crocker. In short, the Court finds that it has subject matter jurisdiction, and that the nursing home personnel are not indispensable parties to this action. See Estate of Neblett, 2014 WL 5439623, at *2-7; Crocker, 2016 WL 1181786, at *4-6. With regard to the specific circumstances here, the Court will address the issues of abstention, validity, unconscionability, and enforceability of the Agreement, as well as the inapplicability of the Anti-Injunction Act.

         A. Colorado River Abstention Doctrine

         Smith asserts that the Court should abstain from exercising jurisdiction based on Colorado River Water Conservation District v. United States, 424 U.S. 800 (1976). In that case, the Supreme Court recognized that federal courts should sometimes abstain from exercising jurisdiction over an action involving “substantially the same issues and substantially the same parties as a parallel case in state court.” Total Renal Care, Inc. v. Childers Oil Co., 743 F.Supp.2d 609, 612 (E.D. Ky. 2010) (citing Colorado River, 424 U.S. at 817-21). Such abstention, however, should occur “only in the exceptional circumstances where the order to the parties to repair to the state court would clearly serve an important countervailing interest.” Great Earth Cos. v. Simons, 288 F.3d 878, 886 (6th Cir. 2002) (quoting Colorado River, 424 U.S. at 813).

         In determining whether abstention is warranted, this Court must consider the following factors:

(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) avoidance of piecemeal litigation; . . . (4) the order in which jurisdiction was obtained[;] . . . (5) whether the source of governing law is state or federal; (6) the adequacy of the state-court action to protect the federal plaintiff's rights; (7) the relative progress of the state and federal proceedings; and (8) the presence or absence of concurrent jurisdiction.

Id. (quoting PaineWebber, Inc. v. Cohen, 276 F.3d 197, 206 (6th Cir. 2001)). In the case sub judice, there is no property at issue, which renders the first factor irrelevant. As to the second factor, the two courthouses are approximately 65 miles apart, which the Court does not perceive as a significant inconvenience to the parties. The Court also believes that there is no danger of piecemeal litigation because the Court will compel arbitration as to the estate's claims only and enjoin Smith from pursuing those claims in state court. Although the state court action was filed first, neither court has reached the merits of the claim, which results in neither the fourth or seventh factor weighing in favor of abstention. See Id. at 887 (citing Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp., 450 U.S. 1, 21-22 (1983)). As to the fifth factor, the governing law is the FAA, and, under the sixth factor, neither the state court nor this Court is more likely to adequately protect Plaintiffs' rights, which renders that factor neutral. Finally, concurrent jurisdiction exists. Accordingly, the factors do not weigh in favor of abstention.

         In arguing for abstention, Smith relies on the Sixth Circuit's decision in Preferred Care of Delaware, Inc. v. VanArsdale, 676 F. App'x 388 (6th Cir. 2017). (Def.'s Mem. Supp. Mot. Dismiss & Resp. Pls.' Mot Compel Arbitration 19). As counsel is well aware, however, this Court has previously distinguished VanArsdale because the trial court in that case had already held that the arbitration agreement was unenforceable. See GGNSC Louisville Camelot, LLC v. Coppedge, No. 3:16-CV-00834-TBR, 2017 WL 3430579, at *3 (W.D. Ky. Aug. 9, 2017). In the case sub judice, the parties have not made this Court aware of any such ruling by the Green Circuit Court, which distinguishes this case from VanArsdale. For these reasons, the Court will not abstain from exercising jurisdiction.

         B. Interstate Commerce

         Under the FAA, a written agreement to arbitrate concerning a dispute arising out of a contract involving interstate commerce “shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract.” Stout v. J.D. Byrider, 228 F.3d 709, 714 (6th Cir. 2000) (quoting 9 U.S.C. § 2). Smith asserts that the Agreement is invalid because it does not evidence a transaction involving interstate commerce. Specifically, Smith argues that “[t]he mere fact that the ADR Agreement asserts that it ...

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