Preferred Care, Inc. v. Howell

187 F. Supp. 3d 796, 2016 U.S. Dist. LEXIS 63392, 2016 WL 2858523
CourtDistrict Court, E.D. Kentucky
DecidedMay 13, 2016
DocketCivil No. 16-13-ART
StatusPublished
Cited by6 cases

This text of 187 F. Supp. 3d 796 (Preferred Care, Inc. v. Howell) 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
Preferred Care, Inc. v. Howell, 187 F. Supp. 3d 796, 2016 U.S. Dist. LEXIS 63392, 2016 WL 2858523 (E.D. Ky. 2016).

Opinion

MEMORANDUM OPINION AND ORDER

Amul R. Thapar, United States District Judge

George Howell (“George”) was a resident of Salyersville Nursing and Rehabilitation Center (“Salyersville”) for eight years. George was of unsound mind throughout his stay at Salyersville. R. 1-2 ¶2. Because of this, defendant Randy Howell (“Randy”), George’s son, was appointed George’s guardian. R. 1-3 (order of appointment of guardian). While acting as George’s guardian, Randy allegedly signed an Alternative Dispute Resolution Agreement (the “arbitration agreement”) at Sal-yersville’s request. R. 1-1 (arbitration agreement). This agreement stated that any disputes arising out of George’s stay at Salyersville would be resolved by arbitration, rather than in the court system. Id, at 1-2. Randy asserts that he does not believe that Salyersville ever asked him to sign the arbitration agreement or ever gave him a copy of the agreement. R. 7-5 at 1. The agreement, however, does appear to bear Randy’s signature. R. 1-1 at 5.

Randy alleges that his father developed serious injuries while under the care of the plaintiffs, causing him to suffer pain and mental anguish. R. 1-2 ¶ 39., After his father’s death, Randy filed a state-court action on December 17, 2015, alleging negligence and several other claims against the plaintiffs in this action. See id. (passim). In that action, Randy also sued Sharon Welch, Glenn Cox, and Elaine Jones, all of whom were administrators at Salyersville. Id. Welch and Cox are Kentucky citizens. Id. ¶¶ 21-22.

Six weeks later, the defendants in the underlying state-court action filed this action against Randy—thus becoming the plaintiffs for the purposes of this lawsuit-^ asserting breach of the arbitration agreement and seeking the enforcement of that agreement under the Federal Arbitration Act (“FAA”). R. 1. But the three administrators that Randy sued in the underlying state-court action did not join the plaintiffs in this action. See id. Randy now moves to dismiss this action on three grounds: lack of subject-matter jurisdiction, Colorado River abstention, and failure to state a claim under Rule 12(b)(6). R. 7. Because the wrongful-death beneficiaries were not parties to the arbitration agreement, the agreement is not enforceable against them. So Randy’s motion to dismiss will ■ be granted with respect- to those claims. For the reasons discussed below, however, Randy’s remaining arguments fail. So the motion to dismiss will be denied with respect to those arguments.

I.

Randy first argues that’ the Court lacks subject-matter jurisdiction over this case because the plaintiffs brought it under the FAA. The FAA does not provide an independent basis of federal jurisdiction. Vaden v. Discover Bank, 556 U.S. 49, 53, 129 S.Ct. 1262, 173 L.Ed.2d 206 (2009) (“Section 4 of the Federal Arbitration Act, 9 U.S.C. § 4, authorizes a United States district court to entertain a petition to compel arbitration if the court would have jurisdiction, save for the arbitration agreement, over a suit arising out of the controversy between the parties.” (internal quotation marks omitted)); Sun Healthcare Grp., Inc. v. Dowdy, No. 5:13-CV-00169-TBR, 2014 WL 790916, at *5 (W.D.Ky. Feb. 26, 2014) (“The FAA bestows no federal jurisdiction but rather requires for access , to a federal forum an independent jurisdictional basis over the parties’, dispute.”-). Thus, courts have juris[804]*804diction over an FAA action only if there is another basis for jurisdiction. Here, the plaintiffs argue that the Court has jurisdiction on the basis of diversity. In their complaint,. the plaintiffs assert that they are all citizens of Texas, that Randy- is a citizen of Kentucky, and that the amount in controversy is more than 75,000 dollars. See R. 1 at 3-4. Thus, it seems that the plaintiffs have sufficiently pled diversity of citizenship. See 28 U.S.C. § 1332(a). .

Randy responds that the plaintiffs failed to join two administrators1 whom Randy named as defendants in his state-court complaint. R. 7-1 at 4. Because Randy sued these administrators below, he argues, they are indispensable parties to the plaintiffs’ federal-court action to compel arbitration. Thus, he asserts, the plaintiffs were required to join these administrators when the plaintiffs filed suit in federal court. And since the two non-joined administrators and Randy are all Kentucky citizens, Randy argues that there is not complete diversity.

The central premise of this argument is that the administrators are in fact indispensable parties. See Temple v. Synthes Corp., 498 U.S. 5, 7, 111 S.Ct. 315, 112 L.Ed.2d 263 (1990) (explaining that diversity jurisdiction can only be defeated by a non-joined, non-diverse joint tortfea-sor if that party is indispensable under Rule 19). But here, Randy sued the administrators as joint tortfeasors. See R. 1-2. And the Supreme Court has held that joint tortfeasors are simply permissive parties to an action against one of them. Temple, 498 U.S. at 8, 111 S.Ct. 315; see also Fed. R. Civ. P. 19 Advisory Comm. Notes (clarifying that “a tortfeasor with the usual ‘joint-and-several’ liability is merely a permissive party to an action against another with like liability”).

The Sixth Circuit agreed that joint tortfeasors are not indispensable parties to an action to compel arbitration in PaineWebber, Inc. v. Cohen, 276 F.3d 197, 206 (6th Cir.2001). There, the plaintiff sued .a brokerage firm in state court and joined the firm’s branch manager as a defendant. The firm then sued the plaintiff in federal court, seeking to compel arbitration under the Federal Arbitration Act. In response, the plaintiff moved to dismiss for lack of subject-matter jurisdiction, arguing that the branch manager was an indispensable party to the litigation. The circuit rejected that argument, holding that, when a company sues a plaintiff seeking to compel arbitration, it need not join any of its employees, even if the plaintiff joined them below. Id. at 205-06. As the circuit explained, “[a]ny ruling to the contrary would virtually eliminate the availability of federal courts to enforce arbitration clauses in diversity cases by the simple expedient of one of the parties filing a preemptive suit in state court with at least one non-diverse defendant.” Id. at 205 (citing Doctor’s Assocs., Inc. v. Distajo, 66 F.3d 438, 445 (2d Cir.1995)). Thus, the administrators here are not an indispensable party to the plaintiffs’ federal action to compel arbitration.

Randy seems to argue that Paine-Webber has been abrogated by the Supreme Court’s decision in Vaden v. Discover Bank, 556 U.S. 49, 129 S.Ct. 1262, 173 L.Ed.2d 206 (2009). In Vaden,

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187 F. Supp. 3d 796, 2016 U.S. Dist. LEXIS 63392, 2016 WL 2858523, Counsel Stack Legal Research, https://law.counselstack.com/opinion/preferred-care-inc-v-howell-kyed-2016.