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Frankfort Medical Investors, LLC v. Thomas

Court of Appeals of Kentucky

June 14, 2019

FRANKFORT MEDICAL INVESTORS,LLC, d/b/a THE LANTERN ATMORNING POINTE OF FRANKFORT; ANDFRANKFORT SENIOR COMMUNITY,LP, d/b/a MORNING POINTE OFFRANKFORTAPPELLANTS
v.
JOHN THOMAS, SR., BY AND THROUGH JOHN THOMAS, JR., AS POWER OF ATTORNEY; and DEANN THOMASAPPELLEES

          APPEAL FROM FRANKLIN CIRCUIT COURT HONORABLE PHILLIP J. SHEPHERD, JUDGE ACTION NO. 17-CI-00410

          BRIEFS FOR APPELLANTS: Emily W. Newman Paul A. Dzenitis Christopher Piekarski Louisville, Kentucky

          BRIEF FOR APPELLEES: Corey Ann Finn S. Wade Yeoman Louisville, Kentucky

          BEFORE: DIXON, KRAMER, AND LAMBERT, JUDGES.

          OPINION

          LAMBERT, JUDGE.

         This appeal is from an order of the Franklin Circuit Court holding that the Appellants' (collectively, The Lantern's) arbitration agreement is invalid and denying their motion to dismiss or stay the Appellees' (the Thomas family's) claims. We affirm.

         John Thomas, Sr., 82 years old and in declining mental health, became a resident at The Lantern on January 25, 2017, and remained there until February 11 of that same year. During his brief stay, Thomas suffered several falls, the last of which resulted in severe injuries and required hospitalization. He did not return to the facility.

         On April 14, 2017, his family (his son, John Thomas, Jr., as power of attorney, and his wife, DeAnn Thomas) filed a complaint in Franklin Circuit Court seeking compensation for damages resulting from alleged negligence, medical negligence, corporate negligence, and gross negligence. The complaint also sought redress for loss of consortium as well as punitive damages and recoupment of attorney fees and costs.[1]

         The Lantern asserted that the parties were bound by an arbitration agreement contained within the numerous documents John Thomas, Jr., signed upon his father's admission to the personal care home. The Lantern requested that the matter be dismissed or, in the alternative, stayed until the arbitration process could be completed. The parties briefed the issues, and the circuit court held hearings on the matter. On December 1, 2017, the circuit court entered its order finding that the arbitration agreement was invalid and denying The Lantern's motion to stay or dismiss. The Lantern appeals.

         Our standard of review is set forth in Padgett v. Steinbrecher, 355 S.W.3d 457, 459 (Ky. App. 2011):

In reviewing an order denying enforcement of an arbitration clause or agreement, we apply a two-fold standard of review. See [Kentucky Revised Statute] KRS 417.220(2) ("The appeal shall be taken in the manner and to the same extent as from orders or judgments in a civil action."). First, we examine the trial court's findings of fact. Conseco Fin. Servicing Corp. v. Wilder, 47 S.W.3d 335, 340 (Ky. App. 2001). Those factual findings are reviewed under the clearly erroneous standard and are deemed conclusive if they are supported by substantial evidence. Id. Second, we review the circuit court's legal conclusions de novo to determine if the law was properly applied to the facts. Id.

See also Kindred Nursing Centers Ltd. Partnership v. Cox, 486 S.W.3d 892, 894 (Ky. App. 2015). Additionally, "a party seeking to compel arbitration has the initial burden of establishing the existence of a valid agreement to arbitrate." Ping v. Beverly Enterprises, Inc., 376 S.W.3d 581, 590 (Ky. 2012) (citation omitted).

         The Lantern first argues that the circuit court erred in its interpretation of the agreement's choice-of-law provision. The arbitration agreement specifically stated: "This Arbitration Agreement shall be governed by and interpreted in accordance with the laws of the State of Tennessee, including the Tennessee Uniform Arbitration Act." The Lantern avers that both Frankfort Medical Investors, LLC, and Frankfort Senior Community Limited Partnership are "foreign business entities formed under the laws of Tennessee with principal offices in Tennessee," which would provide the proper nexus to the laws of that state. Furthermore, The Lantern argues, the choice-of-law provision did not render the agreement unenforceable but rather it could have been enforced under applicable Kentucky law. Therefore, The Lantern continues, the circuit court incorrectly determined that the agreement was invalid because of its choice-of-law provision.

         The Thomas family counters that The Lantern is making this argument for the first time on appeal. Additionally, the Thomas family states that this was an integral rather than ancillary term of the agreement, and the circuit court correctly held that the choice-of-law ...


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