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BLC Lexington SNF, LLC v. Skipworth

United States District Court, E.D. Kentucky, Central Division, Lexington

December 27, 2018



          Danny C. Reeves United States District Judge

         This case arises out of the defendant9');">9;s claim of nursing home neglect. Defendant Donald Skipworth (“Donald”) along with his wife, Lillie Skipworth (“Lillie”), filed suit on January 29');">9, 201');">1');">1');">16, against BLC Lexington SNF, LLC and others in state court, alleging various forms of negligence, violations of long-term care resident9');">9;s rights, and loss of spousal consortium. [Record No. 1');">1');">1');">1] BLC Lexington SNF, LLC and other state court defendants filed suit in federal court, asserting that a valid and enforceable arbitration agreement exists between the parties. [Id.] The federal court Complaint contends that the claims asserted by Donald in Fayette Circuit Court should be arbitrated and Donald should be enjoined from further pursuing the state court action. [Id.]

         Donald filed a motion to dismiss the plaintiffs9');">9; Complaint on October 1');">1');">1');">18, 201');">1');">1');">18. [Record No. 8] He argues that the Court lacks subject matter jurisdiction, that the plaintiffs failed to join a necessary party, and that they failed to state a claim for relief pursuant to Rules 1');">1');">1');">12(b)(1');">1');">1');">1), 1');">1');">1');">12(b)(7), and 1');">1');">1');">12(b)(6) of the Federal Rules of Civil Procedure. [Id.] Donald9');">9;s motion to dismiss will be denied because the Court has subject matter jurisdiction, the absent party is not necessary, and the plaintiffs have sufficiently stated claims for relief.


         Donald was admitted as a resident of Richmond Place Rehabilitation and Health Center on June 26, 201');">1');">1');">15. [Record No. 8] Terry Skipworth (“Terry”), Donald9');">9;s son, signed the Admission Agreement (“Agreement”) for Donald to be admitted. [Record No. 1');">1');">1');">1] The Agreement included an agreement to arbitrate. [Record No. 1');">1');">1');">1-1');">1');">1');">1, p. 21');">1');">1');">1-23] Terry allegedly did not have power of attorney, guardianship, or any other legal instrument authorizing him to sign on Donald9');">9;s behalf. [Record No. 8-1');">1');">1');">1]

         The plaintiffs conducted limited alternative dispute resolution discovery to determine Terry9');">9;s authority to sign the agreement on Donald9');">9;s behalf. [Record No. 9');">9, p. 2] Terry testified that he signed the documents at Donald9');">9;s request and the reason Donald did not sign was because he was right-handed and had right-sided weakness. [Id.]

         The Agreement requires arbitration of any claim or controversy arising out of or related to the agreement or a resident9');">9;s stay at the rehabilitation/skilled nursing facility. [Record No. 1');">1');">1');">1-1');">1');">1');">1, p. 1');">1');">1');">12] The arbitration clause includes disputes “regarding interpretation, scope, enforceability, unconscionability, waiver, preemption and/or violability… whether sounding in breach of contract, tort or breach of statutory duties.” [Id.] The Agreement also states that the Federal Arbitration Act (“FAA”) shall exclusively apply to the interpretation and enforcement of the document. [Id. at 1');">1');">1');">13]


         Donald moved to dismiss this action pursuant to Rule 1');">1');">1');">12(b)(1');">1');">1');">1) of the Federal Rules of Civil Procedure, alleging that the Court lacks subject matter jurisdiction. [Record No. 8] Determining whether subject matter jurisdiction exists is a threshold matter that the Court must consider before addressing other issues. See Steel Co. v. Citizens for a Better Env9');">9;t., 523 U.S. 83, 9');">94-9');">95 (1');">1');">1');">19');">99');">98); United Liberty Life Ins. Co. v. Ryan, 9');">985 F.2d 1');">1');">1');">1320');">9');">985 F.2d 1');">1');">1');">1320, 1');">1');">1');">1325 (6th Cir. 1');">1');">1');">19');">99');">93). The FAA does not provide an independent basis for federal jurisdiction. 9');">9 U.S.C. § 4; see Vaden v. Discover Bank, 9');">9');">556 U.S. 49');">9, 59');">9 (2009');">9). Instead, a petitioner seeking to compel arbitration under the FAA has the burden of proving an independent source of subject matter jurisdiction. Vaden, 556 U.S. at 59');">9; Ford v. Hamilton Invs. Inc., 9');">9 F.3d 255');">29');">9 F.3d 255, 257-58 (6th Cir. 1');">1');">1');">19');">99');">94); see also Moir v. Greater Cleveland Reg. Auth., 9');">95 F.2d 266');">89');">95 F.2d 266, 269');">9 (6th Cir. 1');">1');">1');">19');">99');">90) (citing Rogers v. Stratton Indus., Inc., 9');">98 F.2d 9');">91');">1');">1');">13');">79');">98 F.2d 9');">91');">1');">1');">13, 9');">91');">1');">1');">15 (6th Cir. 1');">1');">1');">19');">986)). The plaintiffs in the present case contend that diversity jurisdiction exists under 28 U.S.C. § 1');">1');">1');">1332(a). [Record No. 1');">1');">1');">1]

         A. The Look-Through Approach

         The defendant argues that complete diversity does not actually exist in this case because a named defendant in the state court action is a citizen of Kentucky. [Record No. 8-1');">1');">1');">1, p. 3] He further contends that the Court should look to the underlying controversy in the state court action to resolve questions of subject matter jurisdiction. [Id.] This argument is based on a strained interpretation of the Supreme Court9');">9;s decision in Vaden, which this Court and others have rejected previously. See e.g., GGNSC Stanford, LLC v. Gilliam, 205 F.Supp.3d 884, 888 (E.D. Ky. Sept. 7, 201');">1');">1');">16); Brookdale Senior Living, Inc. v. Caudill, No. 5:1');">1');">1');">14-cv-09');">98, 201');">1');">1');">14 WL 3420783, at *3 (E.D. Ky. July 1');">1');">1');">10, 201');">1');">1');">14) (citing Northport Health Servs. Of Arkansas, LLC v. Rutherford, 605 F.3d 483, 49');">90-9');">91');">1');">1');">1 (8th Cir. 201');">1');">1');">10)). Because Vaden explicitly limited its holding, the Court remains persuaded that the look-through approach only applies in cases involving federal question jurisdiction. 556 U.S. at 62, 66; Northport Health Servs. of Arkansas, 605 F.3d at 488; see also GGNSC Stanford, 205 F.Supp.3d. at 888. Therefore, the Court will determine diversity by examining the parties named in the federal Complaint in addition to any indispensable parties who must be joined under Rule 1');">1');">1');">19');">9 of the Federal Rules of Civil Procedure. See GGNSC Frankfort, LLC v. Tracy, No. 1');">1');">1');">14-30-GFVT, 201');">1');">1');">15 WL 1');">1');">1');">1481');">1');">1');">11');">1');">1');">149');">9, at *3 (E.D. Ky. March 31');">1');">1');">1, 201');">1');">1');">15) (quoting Northport Health Servs. of Arkansas, 605 F.3d at 49');">90-9');">91');">1');">1');">1).

         B. Failure to Join an Indispensable Party

         Next, the defendant argues that the Court lacks jurisdiction because the plaintiffs failed to join an indispensable party who would destroy diversity. [Record 8-1');">1');">1');">1, p. 4] He asserts that Benita Boggs Dickenson, an administrator at the nursing home, is a citizen of Kentucky and “is indispensable to any arbitration that occurs in this case and any order ruling on the validity and enforceability of the arbitration clause.” [Id.] “Rule 1');">1');">1');">19');">9 of the Federal Rules of Civil Procedure establishes a three-step analysis for determining whether a case should proceed in the absence of a particular party.” PaineWebber, Inc. v. Cohen, 1');">1');">1');">19');">97');">276 F.3d 1');">1');">1');">19');">97, 200 (6th Cir. 2001');">1');">1');">1). First, the Court must determine whether the party is necessary. Id. A party is deemed necessary if:

(A) in that person9');">9;s absence, the court cannot accord complete relief among existing parties; or
(B) that person claims an interest relating to the subject of the action and is so situated that disposing of the action in the person9');">9;s absence may:
(i) as a practical matter impair or impede the person9');">9;s ability to protect the interest; or
(ii) leave an existing party subject to a substantial risk of incurring double, multiple, or otherwise inconsistent obligations because of the interest.

Fed. R. Civ. P. 1');">1');">1');">19');">9(a).

         The defendant contends that Dickenson is a joint tortfeasor and is bound by the arbitration agreement which might be subject to inconsistent interpretations in state and federal court. Dickenson&#39');">9;s status as a joint tortfeasor alone does not make her a necessary party. See Temple v. Synthes Corp., LTD, 9');">98 U.S. 5');">49');">98 U.S. 5, 8 (1');">1');">1');">19');">99');">90). However, Dickenson is bound by the arbitration agreement. If this Court and the state court reached different conclusions concerning the enforceability of the arbitration agreement, Dickenson would ...

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