HCR Manorcare, Inc. v. Carr ex rel. Carr

HCR MANORCARE, INC.; HEARTLAND OF MARTINSBURG WV, LLC;HCR MANORCARE, LLC; MANOR CARE, INC.; HCR MANOR CARE SERVICES, LLC;HCR IV HEALTHCARE, LLC; and HEARTLAND EMPLOYMENT SERVICES, LLC, Plaintiffs, v. TAMMY CARR, on behalf of the Estate of Helen Carr, Defendant.

CIVIL ACTION NO.: 3:16-CV-68

UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF WEST VIRGINIA MARTINSBURG

January 20, 2017

(GROH)

MEMORANDUM OPINION AND ORDER DENYING DEFENDANT'S MOTION TO DISMISS OR, IN THE ALTERNATIVE, MOTION TO ABSTAIN AND GRANTING PLAINTIFFS' MOTION TO COMPEL ARBITRATION

Currently pending before the Court is the Defendant Estate's Motion to Dismiss or, in the Alternative, Motion to Abstain [ECF No. 5] and the Plaintiffs' Motion to Compel Arbitration [ECF No. 13]. For the reasons set forth below, the Court DENIES the Defendant's Motion to Dismiss or, in the Alternative, Motion to Abstain and GRANTS the Plaintiffs' Motion to Compel Arbitration.

I. Background

Helen Carr ("the decedent") was a nursing home resident at Heartland of Martinsburg WV, LLC ("Heartland")—a subsidiary of HCR ManorCare, Inc. ("ManorCare")—from April 1, 2014 through October 24, 2014. On April 2, 2014, and May 16, 2014, the decedent signed voluntary arbitration agreements with Heartland. The arbitration agreements provide, in pertinent part:

All claims arising out of or relating to this Agreement, the Admission Agreement or any and all past or future admissions of the Patient at this Center, or any sister Center operated by any subsidiary of HCR ManorCare, Inc. ("Sister Center"), including claims for malpractice, shall be submitted to arbitration.

ECF No. 3-1 at 1, 3. As a result of alleged medical negligence during her residency at Heartland, the decedent suffered physical and emotional injury and subsequently died on November 2, 2014.

On November 18, 2015, the Estate of Helen Carr served a notice of claim and certificate of merit upon ManorCare; HCR ManorCare, LLC; HCRMC Operations, LLC; Manor Care, Inc.; HCR Manor Care Services, LLC; HCR IV Healthcare, LLC; Heartland Employment Services, LLC; Heartland; and Nancy Mason. The notice of claim stated the Estate's intent to file a medical malpractice suit related to the decedent's care and treatment while at Heartland. Following their receipt of the notice of claim, on December 16, 2015, and again on January 19, 2016, the Plaintiffs in the above-styled action sent the Estate letters demanding that arbitration be initiated, pursuant to the April 2, 2014, and May 16, 2014 arbitration agreements. The Estate did not reply to the Plaintiffs' arbitration demand and instead filed a wrongful death action against them in the Circuit Court of Kanawha County, West Virginia, on April 4, 2016. The following month, on May 20, 2016, the Plaintiffs filed a complaint with this Court to compel arbitration against the Estate and stay the state court action.

On July 18, 2016, the Estate filed its motion to dismiss or abstain in this case, raising several arguments. First, the Estate argues that the arbitration agreements signedby the decedent do not apply to it as a nonsignatory. Next, the Estate contends that the Plaintiffs' complaint should be dismissed because it failed to join Nancy Mason, the licensed nursing home administrator of Heartland during the decedent's residency, who the Estate avers is a necessary and indispensable party. As an alternative to dismissal, the Estate argues that the Court should abstain from exercising jurisdiction pursuant to Colorado River Water Conservation Dist. v. United States, 424 U.S. 800 (1976). Finally, the Estate requests that in the event this Court proceeds on the merits of the arbitration issue, a period of discovery is necessary. On July 29, 2016, the Plaintiffs filed their motion to compel arbitration, arguing that the Federal Arbitration Act ("FAA"), 9 U.S.C. §§ 1-16, is applicable to the Estate's claims presented in the state court wrongful death action and requesting that this Court compel the Estate to arbitrate pursuant to the terms of the arbitration agreements.

II. Standards of Review

A. Rule 12(b)(6) Motion to Dismiss

Rule 12(b)(6) of the Federal Rules of Civil Procedure allows a defendant to challenge the sufficiency of a complaint by moving to dismiss it for failing "to state a claim upon which relief can be granted." When reviewing a 12(b)(6) motion, the Court must assume all of the allegations contained within the complaint to be true, resolve all doubts and inferences in favor of the plaintiff and view the allegations in a light most favorable to the plaintiff. Edwards v. City of Goldsboro, 178 F.3d 231, 243-44 (4th Cir. 1999). If a complaint fails to allege "enough facts to state a claim to relief that is plausible on its face," it must be dismissed. Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). Even though "detailed factual allegations" are not required, a complaint must offer "more than anunadorned, the-defendant-unlawfully-harmed-me accusation." Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (internal quotations and citation omitted). For example, a complaint that provides "labels and conclusions or a formulaic recitation of the elements of a cause of action will not do." Id. (internal quotations and citation omitted). Likewise, a complaint that tenders only "naked assertion[s] devoid of further factual enhancement" does not suffice. Id. (alteration in original) (internal quotations and citation omitted). A plaintiff is required to articulate facts that, when accepted as true, "show" he is plausibly entitled to relief. Francis v. Giacomelli, 588 F.3d 186, 193 (4th Cir. 2009) (citing Iqbal, 556 U.S. at 678). In reviewing a Rule 12(b)(6) motion, courts may consider facts derived from sources beyond the four corners of the complaint, including documents attached to the complaint and the motion to dismiss, "so long as they are integral to the complaint and authentic." Philips v. Pitt Cty. Mem'l Hosp., 572 F.3d 176, 180 (4th Cir. 2009).

B. Rule 12(b)(7) Motion to Dismiss

Rule 12(b)(7) of the Federal Rules of Civil Procedure allows for dismissal of an action when a necessary and indispensable party has not been joined as required by Rule 19. In considering a 12(b)(7) motion, the court must first determine, pursuant to Rule 19(a), whether the absent party "is necessary to a proceeding because of its relationship to the matter under consideration." Owens-Illinois, Inc. v. Meade, 186 F.3d 435, 440 (4th Cir. 1999) (internal quotations omitted) (quoting Teamsters Local Union No. 171 v. Keal Driveaway Co., 173 F.3d 915, 917-18 (4th Cir. 1999)). If the absent party is necessary, then the court will order its joinder. Id. However, if joinder will destroy diversity, then the court must determine, pursuant to Rule 19(b), whether the case can continue in the party's absence. Id. If not, then "the party is indispensable and the action should be dismissed."Teamsters, 173 F.3d at 918. Dismissal for nonjoinder is disfavored, see Meade, 186 F.3d at 441, and the moving party bears the burden of demonstrating that joinder is required, see Am. Gen. Life and Accident Ins. Co. v. Wood, 429 F.3d 83, 92 (4th Cir. 2005).

III. Discussion

A. Joinder of Nancy Mason

Because it raises questions of jurisdiction, the Court will first consider the Estate's argument regarding the joinder of Nancy Mason. In its motion to dismiss, the Estate argues that dismissal of this action is required because the Plaintiffs failed to join Nancy Mason, a resident of West Virginia who the Estate claims is a necessary and indispensable party. The Estate avers that Nancy Mason is a necessary and indispensable party in light of her status as the licensed nursing home administrator of Heartland during the decedent's residency. However, "in the case of nursing home administrators . . . courts have held that those administrators are not necessary parties under Rule 19 when another alleged joint tortfeasor seeks to enforce arbitration." Canyon Sudar Partners, LLC v. Cole, Civil Action No. 3:10-1001, 2011 WL 1233320, at *3 (S.D. W. Va. Mar. 29, 2011); see also Northport Health Servs. of Ark., LLC v. Rutherford, 605 F.3d 483, 491 (8th Cir. 2010) (collecting cases) ("In the arbitration context, to our knowledge every circuit to consider the issue has concluded that a party joined in a parallel state court contract or tort action who would destroy diversity jurisdiction is not an indispensable party under Rule 19 in a federal action to compel arbitration.") Here, alleged tortfeasors other than Nancy Mason are seeking to enforce arbitration. Accordingly, she is not a necessary party and therefore is not required to be joined as a plaintiff. Thus, complete diversity remains between the parties.

B. The Arbitration Agreements

The principal argument set forth by the Estate is that the arbitration agreements entered into between Heartland and the decedent do not apply to it as a nonsignatory. In response, the Plaintiffs aver that, based upon the derivative nature of wrongful death actions, the Estate, as a wrongful death beneficiary, is bound by the arbitration agreements.

It is well settled that "the interpretation of an arbitration agreement is generally a matter of state law." Stolt-Nielsen S.A. v. AnimalFeeds Int'l Corp., 559 U.S. 662, 681 (2010) (citation omitted). Therefore, a federal court sitting in diversity interprets the language and meaning of an arbitration agreement according to state law. See Adkins v. Labor Ready, Inc., 303 F.3d 496, 501 (4th Cir. 2002). Specifically, "[w]hether a party agreed to arbitrate a particular dispute is a question of state law governing contract formation." Id. (citing First Options of Chi., Inc. v. Kaplan, 514 U.S. 938, 944 (1995)). In addition, federal courts must pay heed to the law set forth in the FAA. See 9 U.S.C. §§ 1-16. The FAA applies to "[a] written provision in any . . . contract evidencing a transaction involving commerce to settle by arbitration a controversy thereafter arising...