Kindred Nursing Centers Ltd. Partnership v. Cox

486 S.W.3d 892, 2015 Ky. App. LEXIS 85, 2015 WL 3525113
CourtCourt of Appeals of Kentucky
DecidedJune 5, 2015
DocketNO. 2014-CA-000196-MR
StatusPublished
Cited by5 cases

This text of 486 S.W.3d 892 (Kindred Nursing Centers Ltd. Partnership v. Cox) is published on Counsel Stack Legal Research, covering Court of Appeals of Kentucky primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Kindred Nursing Centers Ltd. Partnership v. Cox, 486 S.W.3d 892, 2015 Ky. App. LEXIS 85, 2015 WL 3525113 (Ky. Ct. App. 2015).

Opinion

OPINION

VANMETER, JUDGE:

Under Kentucky precedent, wrongful death claims are not subject to arbitration. The issue we must resolve in this case is whether the Clark Circuit Court correctly applied that rule of law, or whether recent federal decisions interpreting the Federal Arbitration Act compel arbitration. We [894]*894hold the trial court did* not err and therefore affirm.

In 2010, John R. Cox, III, on behalf of his mother, Elizabeth Cox,' signed an agreement to admit her to Kindred Nursing Centers’1 facility in Winchester. The agreement included provisions authorizing arbitration of claims. ' Following Mrs. Cox’s death, Cox, as her executor, brought an action asserting a number of claims, including wrongful death. Kindred moved to compel arbitration of all claims. The trial court granted the motion with respect to all claims, except the wrongful death claim, which it ruled was not subject to arbitration under Ping v. Beverly Enterprises, Inc., 376 S.W.3d 581 (Ky.2012). Kindred now appeals.2

I. Standard of Review.

“In reviewing an order denying enforcement of an arbitration agreement, the trial court’s legal conclusions are reviewed de novo ‘to determine if the law was properly applied to the facts[;]’ however, factual findings of the trial court ‘are reviewed under the clearly erroneous standard and are. deemed conclusive if they are supported by substantial evidence.’ ” Energy Home, Div. of S. Energy Homes, Inc. v. Peay, 406 S.W.3d 828, 833 (Ky.2013) (quoting Padgett v. Steinbrecher, 355 S.W.3d 457, 459 (Ky.App.2011)).

The enforcement and effect of an arbitration agreement is governed by the Kentucky Uniform Arbitration Act (KUAA), KRS 417.045 et seq., and the Federal Arbitration Act (FAA), 9 U.S.C.3 §§ 1 et seq. “Both Acts evince a legislative policy favoring arbitration agreements, or at least shielding them from disfavor.” Ping, 376 S.W.3d at 588. But under both Acts,'a party seeking to compel arbitration has the initial burden of establishing the existence of a valid agreement to arbitrate. Id. at 590. That question is controlled by-state law rules of contract formation. Id. The FAA does not preempt state contract law principles, including matters concerning the authority of an agent to enter into a contract and which parties may be bound by that contract. Arthur Andersen LLP v. Carlisle, 556 U.S. 624, 630-31, 129 S.Ct. 1896, 1902, 173 L.Ed.2d 832 (2009). Since this matter is entirely an issue .of law, as noted above, our standard of review is de novo. Conseco Fin. Servicing Corp. v. Wilder, 47 S.W.3d 335, 340 (Ky.App.2001).

II. Analysis.

Kindred makes four arguments on appeal. First, that the Supremacy Clause of the United States’ Constitution preempts Kentucky’s refusal to enforce arbitration against wrongful death beneficiaries. Second, that Kentucky enforces other contracts against non-party wrongful death beneficiaries resulting in disparate treatment for arbitration contracts. Third, Kindred argues the holding in Ping necessitates splitting of causes of action which is prohibited under Kentucky common law, KRS 411.133 and the FAA. And fourth, Kindred' claims the holding in Ping is -a departure from long-standing Kentucky wrongful death law and altered the parties’ contractual rights.

A. Supremacy Clause Preemption.

Kindred’s claim with- respect' to FAA preemption appears to boil down to [895]*895the argument that a state may not single out arbitration agreements for disparate treatment, refusing to enforce them. Indeed, Kindred cites the recent Supreme Court decision, Marmet Health Care Ctr., Inc. v. Brown, — U.S. —, 132 S.Ct. 1201, 1203, 182 L.Ed.2d 42 (2012) (per curiam), for the proposition that the FAA “includes no exception for personal-injury or wrongful-death claims,” A more complete quotation from the Court is the following:

The FAA provides that a “written provision in ... a contract evidencing a transaction involving commerce to settle by arbitration a controversy thereafter arising out of such contract or transaction ... 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 statute’s text includes no exception for personal-injury or wrongful-death claims. It “requires courts to enforce the bargain of the parties to arbitrate.” Dean Witter Reynolds Inc. v. Byrd, 470 U.S. 213, 217,105 S.Ct. 1238, 84 L.Ed.2d 158 (1985). It “reflects an emphatic federal policy in favor of arbitral disputé resolution.” KPMG LLP v. Cocchi, 565 U.S. —, -, 132 S.Ct. 23, 25, 181 L.Ed.2d 323 (2011) (per curiam) (quoting Mitsubishi Motors Corp. v. Soler Chrysler-Ply mouth, Inc., 473 U.S. 614, 631, 105 S.Ct. 3346, 87 L.Ed.2d 444 (1985); internal quotation marks omitted).
As this Court reaffirmed last Term; “[w]hen state law prohibits outright the arbitration of a particular type of claim, the analysis is straightforward: The conflicting rule is displaced by the FAA.” AT & T Mobility LLC v. Concepcion, 563 U.S. 333, -, 131 S.Ct. 1740, 1747, 179 L.Ed.2d 742 (2011). That rule resolves these cases. West Virginia’s prohibition against predispute agreements to arbitrate personal-injury or wrongful-death claims against nursing homes is & categorical rule prohibiting arbitration of" a particular type of claim, and that rule is contrary to the terms and coverage of the FAA. See ibid. See also, e.g., Preston v. Ferrer, 552 U.S. 346, 356, 128 S.Ct. 978, 169 L.Ed.2d 917 (2008) (FAA pre-empts state law granting state commissioner exclusive jurisdiction to decide issue the parties agreed to arbitrate); Mastrobuono v. Shearson Lehman Hutton, Inc., 514 U.S. 52, 56, 115 S.Ct. 1212, 131 L.Ed.2d 76 (1995) (FAA pre-empts state law requiring judicial resolution of claims involving punitive damages); Perry v. Thomas, 482 U.S. 483, 491, 107 S.Ct. 2520, 96 L.Ed.2d 426 (1987) (FAA pre-empts state-law requirement that litigants be provided a judicial forum for wage disputes); Southland Corp. v. Keating,

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486 S.W.3d 892, 2015 Ky. App. LEXIS 85, 2015 WL 3525113, Counsel Stack Legal Research, https://law.counselstack.com/opinion/kindred-nursing-centers-ltd-partnership-v-cox-kyctapp-2015.