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Diversicare Leasing Corp. v. Hamilton

United States District Court, E.D. Kentucky, Northern Division

July 2, 2018

DIVERSICARE LEASING CORP. d/b/a ELLIOT NURSING & REHABILITATION CENTER; OMEGA HEALTHCARE INVESTORS, INC.; DIVERSICARE HEALTHCARE SERVICES, INC.; and ADVOCAT FINANCE, INC., PLAINTIFFS,
v.
BARBARA HAMILTON, Administratrix of the Estate of VONNIE MARIE WAGONER, DEFENDANT.

          MEMORANDUM OPINION AND ORDER

          HENRY R. WILHOIT, JR. DISTRICT JUDGE.

         This matter is before the Court upon Defendant's Motion to Dismiss [Docket No. 8] and Plaintiffs' Motion to Enforce Arbitration Agreement and Enjoin Defendant [Docket No. 10]. The motions have been fully briefed by the parties and for the reasons set forth herein, the Court Finds that dismissal is not warranted and that the arbitration agreement which forms the basis of this lawsuit must be honored.

         I.

         On July 20, 2007, Vonnie Wagoner was admitted to the Elliot Nursing & Rehabilitation Center, a nursing home located in Greenup, Kentucky. [Docket No. 1, ¶ 14]. As part of the admissions process, her attorney-in-fact, Barbara Hamilton, signed an Arbitration Agreement, a copy of which is attached to the Complaint as "Exhibit A."

         The Arbitration Agreement, by its own terms, expressly provides, in pertinent part that it "shall include, but is not limited to, any claim for payment, non-payment, or refund for services rendered to the Resident by the Facility, breach of contract, breach of fiduciary duty, fraud or misrepresentation, common law or statutory negligence, gross negligence, malpractice or any other claim based on any departure from accepted standards of medical or nursing care (collectively "Disputes")." [Docket No. 1-1, p.1] Furthermore, the Agreement states that it "shall be binding upon, and shall include any claims brought by or against, the Parties' representatives, agents, heirs, assigns, employees, managers, directors, shareholders or related or affiliated business entities." Id.

         Ms. Hamilton executed the Arbitration Agreement pursuant to two Powers of Attorney separately executed in Ohio. [Docket No. 10-2], A Power of Attorney related to financial issues was executed on August 20, 1993, and gave to Barbara Hamilton the power to "convert into cash, or otherwise deal with all of my personal property, whether tangible or intangible..." Id. at p. 1. A subsequent "Durable Power of Attorney for Health Care," was executed by Vonnie Wagoner on June 21, 1999, while she was a resident in Ohio, and granted her agent the power to "select and contract with any medical or health care facility on [her] behalf, including, but not limited to hospitals, nursing homes, assisted residence facilities and the like." Id. at ¶ 3(g). This second power of attorney did not revoke the 1993 POA. Some marginal notes on the 1993 POA indicate that the 1999 POA changed or expanded the healthcare decision-making powers, but the other provisions remained unchanged. Id. Plaintiff Barbara Hamilton is listed as an alternate on the 1999 Power of Attorney (after her two sisters who then resided nearby to Ms. Wagoner in Ohio), and is granted the power to exercise the powers granted therein when the other agents listed are "not readily available or .. .unwilling or unable to serve or to continue to serve." Id. at p. 2. 15.

         Defendants allege that while she resided at the facility, Mrs. Wagoner suffered physical and emotional injuries due to inadequate care, and her health and physical condition deteriorated beyond that caused by the normal aging process resulting in death. On March 8, 2017, Defendant filed in the Circuit Court of Elliott County, Kentucky, No. 17-CI-0022, a negligence, medical negligence, corporate negligence, and wrongful death action against Diversicare Leasing Corp. d/b/a Elliott Nursing and Rehabilitation Center; Diversicare Healthcare Services, Inc. f/k/a Advocat, Inc.; Diversicare Management Services, Advocat Finance Inc.; Omega Healthcare Investors, Inc.; Benita Adkins, in her capacity as Administrator of Elliott Nursing and Rehabilitation Center; Eva Rachelle Stevens, in her capacity as Administrator of Elliott Nursing and Rehabilitation Center; Adam Wesley Rucker, in his capacity as Administrator of Elliott Nursing and Rehabilitation Center; and John Does 1 through 3.

         Thereafter, Diversicare Leasing Corp. d/b/a Elliot Nursing & Rehabilitation Center; Omega Healthcare Investors, Inc.; Diversicare Healthcare Services, Inc.; and Advocat Finance, Inc.. filed the instant action, as Plaintiffs, alleging federal subject matter jurisdiction by virtue of diversity and seeking a declaration that the Arbitration ADR Agreement to be valid and enforceable, to compel Defendant to arbitrate her claims and to enter an order enjoining the Defendant from pursuing her claims in the Elliot Circuit Court.

         Defendant seeks a dismissal of the instant lawsuit. She contends that this Court lacks subject-matter jurisdiction; that it should abstain from hearing this action in light of the pending state-court matter; that the arbitration agreement at issue is invalid and unenforceable; and that the Court should not exercise its power to enjoin her from continuing the prosecution of the state court action.

         Plaintiffs seek entry of an Order compelling Defendant to proceed to arbitration and, in addition, enjoining her from pursing her claims in state court.

         II.

         The purpose of a motion to dismiss pursuant to Fed. R, Civ. P 12(b)(6), is to allow a defendant to test whether, as a matter of law, the plaintiff is entitled to legal relief. See Mayer v. Mylod, 988 F.2d 635, 638 (6th Cir. 1993). This requires a consideration of and a ruling upon the merits of a claim. In determining whether dismissal is warranted under Rule 12(b)(6), the complaint must be construed in the light most favorable to the nonmoving party and its allegations taken as true. Miller v. Currie, 50 F.3d 373, 377 (6th Cir. 1995). If, in doing so, the Court determines that the case is legally insufficient, it will be dismissed.

         The procedure under a motion to dismiss for lack of subject matter jurisdiction pursuant to Fed. R. Civ. P 12(b)(1) is quite different. At issue in a Rule 12(b)(1) motion is the trial court's jurisdiction-its very power to hear the case. In this context, the trial court may proceed as it never could under 12(b)(6) - no presumptive truthfulness attaches to either party's allegations and the existence of disputed material facts will not preclude the trial court from evaluating for itself the merits of jurisdictional claims. Moreover the party claiming jurisdiction will have the burden of proof that jurisdiction does in fact exist. RMI Titanium Co. v. Westinghouse Electric Corp., 78 F.3d 1125, 1134 (6th Cor. l996)(internal citations omitted).

         III.

         A. Subject matter jurisdiction exists.

         "The requirement that jurisdiction be established as a threshold matter 'spring[s] from the nature and limits of the judicial power of the United States' and is inflexible and without exception.'" Mansfield, C. & L.M.R. Co. v. Swan, 111 U.S. 379');">111 U.S. 379, 382, 10');">4 S.Ct. 510, 28 L.Ed. 462 (1884). Federal courts are courts of limited jurisdiction, and subject matter jurisdiction may be obtained only with the existence of diverse parties or a federal question. Heartwood, Inc. v. Agpaoa, 628 F.3d26l, 266 (6th Cir.2010); 28 U.S.C. §§ 1331, 1332.

         Neither party asserts the existence of a federal question. Rather, the disputed question is that of diversity. 28 U.S.C. § 1332 provides that "district courts shall have original jurisdiction of all civil actions where the matter in controversy exceeds the sum or value of $75, 000, exclusive of interest and costs, and is between ... citizens of different States,"

         Defendant has not challenged the allegations in Plaintiffs' Complaint concerning the citizenship of the named Plaintiffs in this action. Nor has Defendant challenged that the amount in controversy fails to meet the jurisdictional requirements of 28 U.S.C. § 1332. Rather, she contends that complete diversity of citizenship among the parties cannot be established because Benita Adkins, Eva Rachelle Stevens and Adam Wesley Rucker, the nursing home administrators and employees named in her state court complaint, but not in the instant matter, are Kentucky citizens and indispensable parties under Fed.R.Civ.P. 19. She maintains that their joinder would destroy the complete diversity among parties required by 28 U.S.C. 1332(a)(1).

         Yet, this Court and other courts within this District have consistently held that the nursing home administrators are not indispensable per Rule 19. As the undersigned explained in GGNCS v. Hanley, 2014 WL 1333204 (E.D. Ky. 2014), Rule 19 deals with what were historically known as "necessary" and "indispensable" parties. The terms "necessary" and "indispensable" are terms of art in jurisprudence concerning Rule 19, and "necessary" refers to a party who should be joined if feasible, while "indispensable" refers to a party whose participation is so important to the resolution of the case that, if the joinder of the party is not feasible, the suit must be dismissed. If a necessary party cannot be joined without divesting the court of subject-matter jurisdiction, the Rule provides additional criteria for determining whether that party is indispensable, but if the court finds that the party is anything less than ...


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