Brookdale Senior Living Inc. v. Stacy

27 F. Supp. 3d 776, 88 Fed. R. Serv. 3d 1377, 2014 WL 2807524, 2014 U.S. Dist. LEXIS 84460
CourtDistrict Court, E.D. Kentucky
DecidedJune 20, 2014
DocketCivil Action No. 5:13-290-KKC
StatusPublished
Cited by23 cases

This text of 27 F. Supp. 3d 776 (Brookdale Senior Living Inc. v. Stacy) is published on Counsel Stack Legal Research, covering District Court, E.D. Kentucky primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Brookdale Senior Living Inc. v. Stacy, 27 F. Supp. 3d 776, 88 Fed. R. Serv. 3d 1377, 2014 WL 2807524, 2014 U.S. Dist. LEXIS 84460 (E.D. Ky. 2014).

Opinion

OPINION & ORDER

KAREN K. CALDWELL, Chief Judge.

This matter is before the Court on a motion by the three plaintiff corporations to compel arbitration and enjoin the defendant from pursuing her parallel suit in state court. (DE 7). Defendant Teresa Stacy, administratrix of the Estate of Anna Stacy, objects to the motion and has filed her own motion to dismiss. (DE 5). She contends that this Court lacks subject-matter jurisdiction; that it should abstain from hearing this action in light of the pending state-court matter; that the arbitration agreement at issue is invalid and unenforceable; and that the Court should not exercise its power to enjoin her from continuing the prosecution of her state-court action. For the following reasons, the Court will deny the defendant’s motion to dismiss, and grant the plaintiffs’ motion to compel arbitration and enjoin the defendant.

I.

On July 30, 2013, Defendant Teresa Stacy filed a negligence suit in Fayette Circuit Court in Fayette County, Kentucky regarding the care and treatment of Anna Stacy during her residency at Homewood Residence at Richmond Place. See Teresa Stacy, Administratrix of the Estate of Anna Stacy, deceased v. Brookdale Senior Living, Inc., et al., Civil Action File No. 13-CI-03145 (Circuit Court of Fayette County, Ky., Division 9). The plaintiffs subsequently filed the instant suit on September 4, 2013, alleging that Stacy’s claims in state court are subject to a binding arbitration agreement and she should be enjoined from proceeding any further with her state-court action. The plaintiffs invoke this Court’s diversity jurisdiction and seek relief under the § 4 of the Federal Arbitration Act (FAA). Stacy, on the other hand, contends that the arbitration agreement is invalid and unenforceable. But perhaps more importantly, she submits that this Court lacks subject-matter jurisdiction, or in the alternative, the Court should abstain from hearing the present action under the doctrine of Colorado River Water Conservation District v. United States, 424 U.S. 800, 96 S.Ct. 1236, 47 L.Ed.2d 483 (1976).

The arbitration agreement in this case was a mandatory component of Stacy’s Residency Agreement for her stay at Homewood Residence. Section V of the [780]*780Residency Agreement was titled “Arbitration and Limitation of Liability Provision,” which contained three subsections. On its face Section V purports to make severable any provisions the Court might deem unenforceable. It states that if “any of subsections A, B or C provided below, or any part thereof, be deemed invalid, the validity of the remaining sub-sections, or parts thereof, will not be affected.” (DE 1-1, at 7).

Subsection A outlines the provisions of the arbitration agreement. The first sentence of Subsection A states the follow:

Any and all claims or controversies arising out of, or in any way relating to, this Agreement or your stay at the Community, excluding any action for eviction, and including disputes regarding interpretation of this Agreement, whether arising out of State or Federal law, whether existing or arising in the future, whether for statutory, compensatory or punitive damages and whether sounding in breach of contract, tort or breach of statutory duties, irrespective of the basis for the duty or the legal theories upon which the claim is asserted, shall be submitted to binding arbitration, as provided below, and shall not be filed in a court of law.

(DE 1-1, at 7). The next sentence in Subsection A states in bold text that “[t]he parties to this Agreement further understand that a jury will not decide their case.” (DE 1-1, at 7).

Following Subsection A was the “Limitation of Liability Provision,” which purports to limit the amount of damages each party would have to pay in the event of future litigation. This provision, marked as Subsection B, is distinct from the prior provisions outlining the arbitration requirements.

Finally, Subsection C is titled, “Benefits of Arbitration and Limitation of Liability Provisions.” This subsection outlines what the parties agree are the benefits of the arbitration agreement and limitation of liability, It states that “[t]he parties’ decision to select arbitration is supported by the potential cost-effectiveness and time-savings offered by selecting arbitration, which may avoid the expense and delay of judicial resolution in the court system.” (DE 1-1, at 10). Significantly, at the end of Subsection C, and again in bold, emphasized text, the agreement states as follows:

The undersigned acknowledges that he or she has been encouraged to discuss this Agreement with an attorney. The parties to this Agreement further understand that a jury will not decide their case.

(DE 1-1, at 10).

II.

Stacy begins with several arguments as to why this Court must dismiss the case for lack of subject-matter jurisdiction. Although the plaintiffs seek to compel arbitration under § 4 of the FAA, this is not sufficient to create federal question jurisdiction. “The [FAA] is something of an anomaly in the field of federal-court jurisdiction. It creates a body of federal substantive law establishing and regulating the duty to honor an agreement to arbi: trate, yet it does not create any independent federal-question jurisdiction under 28 U.S.C. § 1381 ... or otherwise.” Moses H. Cone Memorial Hosp. v. Mercury Const Corp., 460 U.S. 1, 25, n. 32, 103 S.Ct. 927, 74 L.Ed.2d 765 (1983). Because of this, courts must have an independent jurisdictional basis for hearing a claim brought under § 4. Hall Street Assocs., L.L.C. v. Mattel, Inc., 552 U.S. 576, 581-82, 128 S.Ct. 1396, 170 L.Ed.2d 254 (2008). The plaintiffs pleaded that this Court has subject-matter jurisdiction on the basis of complete diversity, as the defendant is a [781]*781citizen of Kentucky and the three corporate plaintiffs are not.

A. Diversity Jurisdiction

Stacy challenges the plaintiffs’ claim of complete diversity on the grounds that at least one of the corporate entities is a limited liability corporation with a member who is a citizen of Kentucky. But her claim lacks even a scintilla of support: the complaint indicates that two of the plaintiffs are Delaware corporations and the third is a Tennessee corporation. All three of the plaintiffs .have a principal place of business in Tennessee. Stacy does not indicate which corporation has one or more members residing in Kentucky; she does not indicate who those members might be; and she offers no proof that the plaintiff corporations are LLCs and subject to the alternative test for determining citizenship. Moreover, her own state-court complaint alleges that the three plaintiffs are foreign corporations. (DE 1-2, at 2-4). Claiming otherwise in her motion to dismiss without offering any evidence as support borders on a frivolous waste of the Court’s and the plaintiffs’ time.

B. The Effect of Vaden v. Discover Bank

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Cite This Page — Counsel Stack

Bluebook (online)
27 F. Supp. 3d 776, 88 Fed. R. Serv. 3d 1377, 2014 WL 2807524, 2014 U.S. Dist. LEXIS 84460, Counsel Stack Legal Research, https://law.counselstack.com/opinion/brookdale-senior-living-inc-v-stacy-kyed-2014.