Owens v. SSC Seneca Operating Co.

Tammy Fowler as Personal Representative for the Estate ofRalph Owens, Plaintiff, v. SSC Seneca Operating Company, LLC, d/b/a Seneca Health and RehabilitationCenter, SavaSeniorCare, LLC; SSC Equity Holdings, LLC;SavaSeniorCare Administrative Services, LLC; and SavaSeniorCare Consulting,LLC, Defendants.

C.A. No. 8:21-0430-HMH

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF SOUTH CAROLINA ANDERSON DIVISION

April 16, 2021

OPINION & ORDER

Pending before the court are three motions. Defendant SSC Seneca Operating Company, LLC d/b/a Seneca Health and Rehabilitation Center (the "Facility") filed a motion to dismiss and to compel arbitration pursuant to Rules 12(b)(1) and (6) of the Federal Rules of Civil Procedure and 9 U.S.C. §§ 2, 4 of the Federal Arbitration Act ("FAA"). Defendants SavaSeniorCare Consulting, LLC ("Sava Consulting") and SavaSeniorCare Administrative Services, LLC ("Sava Administrative") both filed motions to stay pursuant to 9 U.S.C. § 3, of the FAA. For the reasons set forth below, the court denies the motions.

I. FACTUAL AND PROCEDURAL BACKGROUND

This case arises from Ralph Owens's ("Owens") care while residing at the Facility in Seneca, South Carolina. (Compl. ¶¶ 22-53, ECF No. 1-1.) Owens was first admitted to the Facility around January 31, 2019. (Id. at ¶ 22, ECF No. 1-1.) As part of the admissions process, Owens's wife, Judy Owens ("Wife"), signed a Resident Admission Agreement ("RAA") on behalf of Owens. (Mem. Supp. Mot. Compel 2, ECF No. 16-1); (Mot. Compel Ex. 2 (RAA), ECF No. 16-3.) Wife also signed a separate Dispute Resolution Program Agreement ("Arbitration Agreement" or "AA"). (Mem. Supp. Mot. Compel 2, ECF No. 16-1); (Mot. Compel Ex. 1 (AA), ECF No. 16-2.) Wife did not have power of attorney for Owens at the time she signed the agreements. (Mem. Supp. Mot. Compel 14, ECF No. 16-1); (Resp. 2, 10, 12, ECF No. 22.)

Plaintiff Tammy Fowler ("Fowler") contends that on or about February 1, 2019, Owens was injured in a fall caused by the Facility's neglect and negligence. (Compl. ¶¶ 23-27, 29, ECF No. 1-1.) Fowler asserts that Owens suffered head injuries including a subarachnoid hemorrhage as well as a fractured femur. (Id. ¶ 29, ECF No. 1-1.) Owens died on February 19, 2019, and Fowler alleges his death was caused by the Facility. (Id. ¶¶ 23, 27, 30-31, ECF No. 1-1.)

On November 16, 2020, Fowler brought a survival action and, acting as the personal representative of Owen's estate pursuant to S.C. Code Ann. § 62-3-203, a wrongful death action against the Facility, alleging various tort and contract claims in the Court of Common Pleas of Oconee County, South Carolina. (Compl., generally, ECF No. 1-1.) The Facility removed the case to this court based on diversity jurisdiction on February 10, 2021. (Not. Removal, ECF No. 1.) The Facility filed a motion to dismiss and compel arbitration on March 5, 2020. (Mot. Compel, ECF No. 16.) Sava Consulting filed a motion to stay on March 15, 2020. (Sava Consulting Mot. Stay, ECF No. 18.) On the same day, Sava Administrative also filed a motion to stay. (Sava Admin. Mot. Stay, ECF No. 19.) Fowler filed a response to the motion to dismissand compel and the motions to stay on April 1, 2020. (Resp., ECF No. 22.) On April 8, 2021 the Facility filed a reply. (Reply, ECF No. 24.) This matter is now ripe for review.

II. DISCUSSION OF LAW

A. Motion to Compel Arbitration

The Facility submits that this case is subject to arbitration pursuant to the Arbitration Agreement. (Mem. Supp. Mot. Compel, generally, ECF No. 16-1.) The FAA governs written contracts to arbitrate that "evidenc[e] a transaction involving commerce[.]" 9 U.S.C. § 2. Under the FAA, arbitration contracts are "valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract." Id. § 2. There is "a liberal federal policy favoring arbitration agreements." Adkins v. Labor Ready, Inc., 303 F.3d 496, 500 (4th Cir. 2002) (internal quotation marks and citation omitted). However, "[e]ven though arbitration has a favored place, there still must be an underlying agreement between the parties to arbitrate." Arrants v. Buck, 130 F.3d 636, 640 (4th Cir. 1997) (citations omitted). As such, "district courts are [not] to grant blindly all motions to compel arbitration." Rowland v. Sandy Morris Fin. & Est. Plan. Servs., LLC, No. 20-1187, 2021 WL 1287563, at *3 (4th Cir. Apr. 7, 2021). Under Section 4 of the FAA it is "the court's obligation to determine whether a contract was formed." Id.; see also Granite Rock Co. v. Int'l Bhd. of Teamsters, 561 U.S. 287, 296, (2010) ("[W]here the dispute at issue concerns contract formation, the dispute is generally for courts to decide.") (citations omitted).

The party "who seeks to compel arbitration under the [FAA] bears the burden of establishing the existence of a binding contract to arbitrate the dispute." Minnieland Priv. Day Sch., Inc. v. Applied Underwriters Captive Risk Assurance Co., Inc., 867 F.3d 449, 456 (4th Cir. 2017). To compel arbitration under the FAA, the moving party must show:

(1) the existence of a dispute between the parties, (2) a written agreement that includes an arbitration provision which purports to cover the dispute, (3) the relationship of the transaction, which is evidenced by the agreement, to interstate or foreign commerce, and (4) the failure, neglect, or refusal . . . to arbitrate the dispute.

Adkins, 303 F.3d at 501 (quoting Whiteside v. Teltech Corp., 940 F.2d 99, 102 (4th Cir. 1991). Upon satisfaction of these elements, district courts retain no discretion and must "direct the parties to proceed to arbitration on issues as to which an arbitration agreement has been signed." Dean Witter Reynolds, Inc. v. Byrd, 470 U.S. 213, 218 (1985) (citations omitted). In the instant case, the first, third, and fourth elements are satisfied: (1) there is a dispute between the parties regarding Owens's stay at the Facility, (3) the transaction involves interstate commerce,¹ and (4) Fowler has failed to arbitrate this dispute prior to bringing a lawsuit. Fowler contests the second element, and denies the existence of a binding contract to arbitrate this dispute. (Resp., generally, ECF No. 22.) Thus, this matter turns on whether the Arbitration Agreement is a binding contract between the Facility and Owens.

B. Existence of a Binding Contract to Arbitrate Disputes

The Facility asserts that the Arbitration Agreement is a valid and enforceable agreement and thereby requires arbitration. (Mem. Supp. Mot. Compel, generally, ECF No. 16-1.) Specifically, the Facility argues that Wife signed the Arbitration Agreement with proper authority. (Id., ECF No. 16-1.) In the alterative, the Facility asserts that if Wife lacked authorityto sign the Arbitration Agreement, that Fowler should be equitably estopped from denying its enforceability. (Id., ECF No. 16-1.) In response, Fowler argues that the Arbitration Agreement is unenforceable because Wife lacked authority to sign the Arbitration Agreement. (Resp., generally, ECF No. 22.) Fowler also argues that equitable estoppel should not apply. (Id., ECF No. 22.)

Because arbitration is a matter of contract law, it is permitted only when the parties "actually contract to arbitrate disputes between them." Rowland, 2021 WL 1287563, at *3. In deciding whether an arbitration agreement exists, the court employs the summary judgment standard. Id. (citations omitted). "In applying that standard, the burden is on the defendant to 'establish[ ] the existence of a binding contract to arbitrate the dispute.'" Id. (quoting Minnieland Priv. Day Sch., Inc., 867 F.3d at 456) (alteration in original). Section 4 of the FAA requires the court to conduct a trial on the motion to compel arbitration if there are "'sufficient facts' support[ing] a party's denial of an agreement to arbitrate." Berkeley Cty. Sch. Dist. v. Hub Int'l Ltd., 944 F.3d 225, 234 (4th Cir. 2019) (citations omitted). However, "a trial occurs only if there are 'genuine issues of material fact.'" Rowland, 2021 WL 1287563, at *3 (quoting Chorley Enterprises, Inc. v. Dickey's Barbecue Restaurants, Inc., 807 F.3d 553, 564 (4th Cir. 2015)). If there are no genuine issues of material fact, it is up to the court to determine, as a matter of law, whether an agreement to arbitrate was formed.² See Rowland, 2021 WL 1287563, at *3.

"Whether an agreement to arbitrate was formed is . . . a question of ordinary state contract law principles." Id. (citing Chorley Enters., 807 F.3d at 563. Thus, the court must examine SouthCarolina law to determine whether the Arbitration Agreement is a valid contract to which the Facility and Owens are bound. See id.; see also Wilson v. Willis, 827 S.E.2d 167, 173-74 (S.C. 2019).

1. South Carolina Contract Law

"Although the existence of a contract is ordinarily a question of fact for the jury, where the undisputed facts do not establish a contract, the question becomes one of law." Stevens & Wilkinson of S.C., Inc. v. City of Columbia, 762 S.E.2d 696, 701 (S.C. 2014) (citation omitted). "Under South Carolina law, a contract is formed between two parties when there is, inter alia, "'a mutual manifestation of assent to [its] terms.'" Hub Int'l, 944 F.3d at 236 (quoting Edens v. Laurel Hill, Inc., 247 S.E.2d 434, 436 (S.C. 1978); see also Stevens & Wilkinson of S.C., 762 S.E.2d at 701 ("A valid and enforceable contract requires a meeting of the minds between the parties with regard to all essential and material terms of the agreement.") (emphasis in original) (citation omitted). "The necessary elements of a contract are an offer, acceptance, and valuable consideration." Sauner v. Pub. Serv. Auth. of S.C., 581 S.E.2d 161, 166 (S.C. 2003).

It is undisputed that Wife signed the Arbitration Agreement on behalf of Owens. (Mot. Compel Ex. 1 (AA 10), ECF No. 16-2.) To enforce the Arbitration Agreement against Owens as a nonsignatory, there must be a basis for doing so under South Carolina law. See Wilson, 827...