United States District Court, M.D. Pennsylvania
GOLDEN GATE NATIONAL SENIOR CARE, LLC; GGNSC EQUITY HOLDINGS, LLC; GGNSC CAMP HILL III GP, LLC; GGNSC CAMP HILL III, LP d/b/a GOLDEN LIVING CENTER-CAMP HILL; GGNSC ADMINISTRATIVE SERVICES, LLC; GGNSC CLINICAL SERVICES, LLC; and GGNSC HOLDINGS, LLC, Petitioners,
BEVERLY E. ADDISON and CLAUDETTE L. BROOKS, as Co-Administraces for the Estate of LOUISE E. McCAULEY, deceased, Judge Sylvia H. Rambo, Respondents.
SYLVIA H. RAMBO, District Judge.
This civil case involves a petition to compel arbitration between a nursing home and the administratrices of the estate of a decedent resident, who are suing the nursing home in state court. Presently before the court is a petition to compel arbitration under the Federal Arbitration Act, citing an arbitration agreement between the nursing home and one of the administratrices by way of a durable power of attorney, filed by the defendants in the state court action. For the following reasons, the court will grant the petition to compel arbitration.
The petitioners, related healthcare business entities, are citizens of Delaware and California (collectively "Petitioners"). ( See generally Doc. 1, ¶¶ 2-9.) Louise E. McCauley ("Decedent") was a resident of Golden Living Center - Camp Hill until her death on March 15, 2014. ( Id. at ¶ 10.) Respondents Beverly E. Addison ("Respondent Addison") and Claudette L. Brooks ("Respondent Brooks"), both of whom are daughters of Louise E. McCauley and co-administratrices of her estate, are Pennsylvania residents and reside within the Middle District of Pennsylvania (collectively "Respondents"). ( Id. at ¶¶ 11-12.)
On May 25, 2012, the Decedent was admitted into the Golden Living Center - Camp Hill, a nursing home located in Camp Hill, Cumberland County, Pennsylvania. ( Id. at ¶ 19.) Upon her admission, Respondent Brooks, acting with express authority to do so on her mother's behalf by virtue of a durable power of attorney (Doc. 3-5), signed an Alternative Dispute Resolution Agreement ("ADR Agreement"), which provided that any dispute, including "any and all disputes arising out of or in any way relating to this Agreement or to the [Decedent]'s stay at the Facility or the Admissions Agreement between the Parties that would constitute a legally cognizable cause of action, " must first be submitted to mediation and, if unsuccessful, to arbitration. ( See Doc. 1, ¶ 20; see also Doc. 1-1, pp. 64-67 of 81.) Emphasized in the agreement is the following paragraph:
THE PARTIES UNDERSTAND, ACKNOWLEDGE, AND AGREE THAT THEY ARE SELECTING A METHOD OF RESOLVING DISPUTES WITHOUT RESORTING TO LAWSUITS OR THE COURTS, AND THAT BY ENTERING INTO THIS AGREEMENT, THEY ARE GIVING UP THEIR CONSTITUTIONAL RIGHT TO HAVE THEIR DISPUTES DECIDED IN A COURT OF LAW BY A JUDGE OR JURY, THE OPPORTUNITY TO PRESENT THEIR CLAIMS AS A CLASS ACTION AND/OR TO APPEAL ANY DECISION OR AWARD OF DAMAGES RESULTING FROM THE ADR PROCESS EXCEPT AS PROVIDED HEREIN.
(Doc. 1-1, p. 64 of 81 (emphasis in original).) Also contained in the ADR Agreement and relevant to the instant dispute is the following portion of the paragraph discussing the enforcement of the agreement:
This agreement shall be binding upon the Facility when signed by or on behalf of the Resident, regardless of whether this Agreement has been signed by a Facility representative.
( Id. at p. 66 of 81 (emphasis supplied).) The agreement bears Respondent Brooks's signature, albeit on the line designated as a space to specify the capacity of the legal representative. ( Id. at p. 67 of 81.)
On November 4, 2013, Respondents filed a Praecipe for Writ of Summons in the Cumberland County Court of Common Pleas naming Petitioners and Denise Curry, Petitioner's regional vice president who managed and controlled the operations of, inter alia, Golden Living Center - Camp Hill during the Decedent's residency, as defendants. ( See Doc. 1, ¶ 28.) On July 7, 2014, Respondents filed a complaint, raising claims of negligence and wrongful death and asserting a survival action, seeking an unspecified amount of compensatory and punitive damages. See Addison v. Golden Gate Nat'l Senior Care, Civ. No. 2013-6462, Compl. (Pa. Com. Pl. Cumb. Cnty. July 7, 2014). On July 23, 2014, Petitioners filed the following preliminary objections to the complaint: (1) pursuant to Pa. R.C.P. 1028(a)(6) in the nature of a motion to compel mediation and/or arbitration; (2) pursuant to Pa. R.C.P. 1028(a)(4) in the nature of a demurrer for legal insufficiency of a pleading regarding the request for punitive damages; and (3) pursuant to Pa. R.C.P. 1028(a)(3) for insufficient specificity of pleading. See id. at Prelim. Objs. (Pa. Com. Pl. Cumb. Cnty. July 23, 2014). Respondents filed a response on July 25, 2014, arguing that: (1) the county court should retain jurisdiction because Petitioners had not presented an agreement signed by either party; (2) the complaint pleaded facts sufficient to justify a claim for punitive damages; and (3) the paragraphs in the complaint are pleaded with sufficient specificity. See id. at Opp'n to Prelim. Objs. (Pa. Com. Pl. Cumb. Cnty. July 25, 2014). Respondents' counsel listed the matter for oral argument to be held on August 15, 2014. To date, no oral argument has been set with regard to the preliminary objections and the Cumberland County court has not issued a ruling.
On July 22, 2014, Petitioners filed a petition seeking to compel arbitration, stay the improperly commenced state court proceedings, and grant declaratory relief. (Doc. 1.) On July 28, 2014, Petitioners filed the instant motion to compel arbitration, requesting that the court compel Respondents to proceed consistent with the arbitration agreement and stay the state court action. (Doc. 3; see also Doc. 4.) On August 21, 2014, Respondents filed a brief in opposition (Doc. 10), and, on September 4, 2014, Petitioners filed their reply (Doc. 11). Thus, this matter has been fully briefed and is appropriate for consideration.
II. Legal Standard
Initially, the parties dispute the legal standard applicable to the instant motion. Petitioners argue that the court should evaluate the motion under Federal Rule of Civil Procedure 12(b)(6). (Doc. 4, p. 10 of 18.) Respondents argue that such motions are governed under the summary judgment standard set forth at Federal Rule of Civil Procedure 56(a). (Doc. 10-2, p. 11 of 32.) Based on the facts of this case, the court determines that the motion will be assessed under the familiar motion to dismiss standard.
When deciding a motion to compel arbitration, a district court may rely upon either the standards governing motions to dismiss under Rule 12(b)(6) or the standards governing motions for summary judgment under Rule 56. See Guidotti v. Legal Helpers Debt Resolution LLC, 716 F.3d 764, 771-76 (3d Cir. 2013). In this regard, the Third Circuit has provided some guidance as to which standard may be appropriate under the given circumstances of a particular case:
[W]hen it is apparent, based on the face of the complaint, and documents relied upon in the complaint, that certain of a party's claims are subject to an enforceable arbitration clause, a motion to compel arbitration should be considered under a Rule 12(b)(6) standard without discovery's delay. But if the complaint and its supporting documents are unclear regarding the agreement to arbitrate, or if the plaintiff has responded to a motion to compel arbitration with additional facts sufficient to place the agreement to arbitrate in issue, then the parties should be entitled to discovery on the question of arbitrability before a court entertains further briefing on the question.
Id. at 776 (internal citations and quotation marks omitted). When a court finds that it must make findings in order to determine arbitrability, pre-arbitration discovery may be warranted. Id. at 774 n.5. If a court elects to deny a motion to compel arbitration under Rule 12(b)(6) in order to allow discovery on the question of arbitrability, "[a]fter limited discovery, the court may entertain a renewed motion to compel arbitration, this time judging the motion under a summary judgment standard." Id. at 776.
In this case, as discussed in greater detail below, the issue regarding whether Respondents' claims asserted in the state court action are subject to arbitration may be readily ascertained from the undisputed documents that both parties address in their moving papers. Respondents' claims that the agreement is unenforceable due to technicalities in the agreement's execution can be resolved simply by looking to the terms of the agreement and the manner in which it was executed. Accordingly, Respondents have not shown that discovery into this matter is necessary, and, therefore, the court will consider this motion under the Rule 12(b)(6) standard.
Rule 12(b)(6) provides for the dismissal of a complaint, in whole or in part, if the plaintiff fails to state a claim upon which relief can be granted. When examining a motion to dismiss under Rule 12(b)(6), the court generally relies on the complaint, attached exhibits, and matters of public record. Sands v. McCormick, 502 F.3d 263, 268 (3d Cir. 2007). Moreover, "documents whose contents are alleged in the complaint and whose authenticity no party questions, but which are not physically attached to the pleading, may be considered." Pryor v. National Coll. Athletic. Ass'n, 288 F.3d 548, 560 (3d Cir. 2002). In considering a motion to compel arbitration, the court must consider all of the non-moving party's evidence and construe all reasonable inferences in the light most favorable to the non-moving party. Eisenberger v. Chesapeake Appalachia LLC, Civ. No. 09-cv-1415, 2010 WL 457139, *2 (M.D. Pa. Feb. 4, 2010).
Petitioners argue that the ADR Agreement is valid and enforceable and that the court should accordingly enjoin Respondents from pursuing the state court action. Respondents argue that the ADR Agreement is not enforceable because it is not properly executed, that the court lacks subject matter jurisdiction, and that the court should otherwise abstain from adjudicating the motion due to the pending motion in the state court.
A. The scope of the Federal Arbitration Act
Initially, the court takes note of the broad scope of the FAA, which provides in part as follows:
A written provision in any... contract evidencing a transaction involving commerce to settle by arbitration a controversy thereafter arising out of such contract or transaction, or the refusal to perform the whole or any part thereof... shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract.
9 U.S.C. § 2. The FAA "creates a body of federal substantive law establishing and governing the duty to honor agreements to arbitrate disputes." Century Indem. Co. v. Certain Underwriters at Lloyd's, London, 584 F.3d 513, 522 (3d Cir. 2009). Because arbitration is a contractual matter, prior to compelling arbitration pursuant to the FAA, a court must first determine that: (1) an enforceable agreement to arbitrate exists; and (2) the particular dispute falls within the scope of the agreement. Kirleis v. Dickie, McCamey & Chilcote, 560 F.3d 156, 160 (3d Cir. 2009). Arbitration should not be denied "unless it may be said with positive assurance that the arbitration clause is not susceptible of an interpretation that covers the asserted dispute. Century Indem., 584 F.3d at 524 (citing AT&T Techs. v. Communications Workers of Am., 475 U.S. 643, 650 (1986)). "Doubts should be resolved in favor of coverage." First Liberty Inv. Grp. v. Nicholsberg, 145 F.3d 647, 653 (3d Cir. 1998) (quoting Bristol Farmers Mkt & Auction Co. v. Arlen Realty & Dev. Corp., 589 F.2d 1214, 1219 (3d Cir. 1978)).
B. Subject matter jurisdiction and Section 4
The threshold question in deciding a petition to compel arbitration is to determine whether this court has jurisdiction. Under the FAA, a district court has jurisdiction over a petition to compel arbitration only if the court would have jurisdiction over "a suit arising out of the controversy between the parties" without the arbitration agreement. 9 U.S.C. § 4. That is, the FAA "bestows no federal jurisdiction but rather requires for access to a federal forum an independent jurisdictional basis over the parties' dispute." Vaden v. Discover Bank, 556 U.S. 49, 59 (2009) (quoting Hall Street Assocs. v. Mattel, 552 U.S. 576, 581-82 (2008) (internal quotation marks omitted)); see also Moses H. Cone Mem'l Hosp. v. Mercury Const. Corp., 460 U.S. 1, 25 n.32 (1983). Thus, a petitioner proceeding under Section 4 must assert an independent source of subject matter jurisdiction. Here, Petitioners assert that the court has diversity jurisdiction pursuant to 18 U.S.C. § 1332. (Doc. 1, ¶ 14.)
Respondents argue that the court lacks subject matter jurisdiction because complete diversity is lacking. (Doc. 10-2, p. 15 of 32.) Yet, diversity exists on the face of the federal petition. Petitioners are citizens of Delaware and California, and, conversely, both Respondents and Decedent are citizens of Pennsylvania. Regarding the amount in controversy, the claims Petitioners seek to arbitrate are for actual and punitive damages related to allegedly substandard medical care provided to Decedent while she resided at the ...