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Evangelical Lutheran Good Samaritan Society v. Moreno

United States District Court, D. New Mexico

September 29, 2017

THE EVANGELICAL LUTHERAN GOOD SAMARITAN SOCIETY, A NORTH DAKOTA CORPORATION D/B/A GOOD SAMARITAN SOCIETY-BETTY DARE, Plaintiff,
v.
BEATRICE MORENO, DECEASED, BY THE PERSONAL REPRESENTATIVE OF THE WRONGFUL DEATH ESTATE, MONICA CRUZ HATTON Defendant.

          Martha G. Brown Deana M. Bennett Jeremy K. Harrison Zoe E. Lees Modrall, Sperling, Roehl, Harris & Sisk, PA Albuquerque New Mexico Attorneys for the Plaintiff

          Mary Ellen Spiece Melanie Bossie Wilkes & McHugh PA Phoenix, Arizona Attorneys for the Defendant

          MEMORANDUM OPINION AND ORDER

         THIS MATTER comes before the Court on Plaintiff Evangelical Lutheran Good Samaritan Society, a North Dakota Company D/B/A Good Samaritan Society-Betty Dare's (“Good Samaritan”) Motion to Compel Arbitration and Petition for Appointment of Arbitrator, filed December 13, 2016 (Doc. 3) and its incorporated Memorandum of Law in Support of Plaintiff's Motion to Compel Arbitration and Petition for Appointment of Arbitrator, filed December 13, 2016 (Doc. 4)(“Motion to Compel”). The Court held a hearing on May 2, 2017. The primary issues are: (i) whether, pursuant to the Federal Arbitration Act (“FAA”), 9 U.S.C. §§ 1-16, the Court should grant a motion to compel arbitration where a temporary legal guardian signed a nursing home admission agreement (“Admission Agreement”) on behalf of a potential nursing home resident -- Beatrice Moreno (“Moreno”) -- that contained a “Resolution of Legal Disputes'” (“Arbitration Agreement”) provision delegating to the arbitrator the “exclusive authority to resolve any disputes related to the existence and/or enforceability” of the Arbitration Agreement; (ii) whether the Court should compel discovery regarding the temporary legal guardian's authority to bind the Moreno to the Arbitration Agreement; and (iii) whether Defendant Monica Cruz Hatton, the personal representative of the wrongful death estate of Beatrice Moreno (“Hatton”) is bound to arbitrate her claims. The Court concludes that: (i) it will compel arbitration, because Defendant Monica Cruz Hatton, the personal representative of the wrongful death estate of Beatrice Moreno (“Hatton”) never specifically challenged the temporary legal guardian's authority to agree to the delegation clause or the delegation clause's unconscionability; (ii) it will, consequently, not compel discovery, because the temporary legal guardian's authority is an issue for the arbitrator; and (iii) if it could consider whether Hatton is bound to the entire Arbitration Agreement, it would determine that she is. Accordingly, the Court grants the Good Samaritan's Motion to Compel.

         FACTUAL BACKGROUND

         Good Samaritan owns and operates a nursing home in Alamogordo, New Mexico. See Complaint to Compel Arbitration and Petition for Appointment of Arbitrator ¶ 1 at 1, filed December 13, 2016 (Doc. 1)(“Complaint”). On February 27, 2014, Good Samaritan admitted Moreno into that nursing home, and she lived there until her death on August 26, 2015. See Complaint ¶¶ 8, 19, at 2, 5; Motion to Compel at 1. Also on February 27, 2014, the Twelfth Judicial District, County Court of Otero of the State of New Mexico, appointed SM Gantz OT Services, Inc. (“SM Gantz”) Moreno's temporary guardian. See Complaint ¶ 6, at 2. As temporary guardian, SM Gantz received a Letter of Temporary Guardianship that authorized SM Gantz to make decisions regarding Moreno's “medical and psychiatric care, residential placement, safety, and supervision.” See Complaint ¶ 7, at 2. When Moreno entered the nursing home, SM Gantz, acting as her legal temporary guardian, reviewed and signed the Good Samaritan Admission Agreement on Moreno's behalf. See Complaint ¶ 8, at 2-3; Good Samaritan Society Admission Agreement at 14-15 [at 22-23 on CM/ECF](dated February 27, 2014), filed December 13, 2016 (Doc. 1-1)(“Admission Agreement”). The Admission Agreement contains an Arbitration Agreement that gives the resident or his or her legal representative the option to agree to arbitrate disputes or to elect not to arbitrate disputes. See Admission Agreement at 13-14 [at 21-22 on CM/ECF]; Complaint ¶¶ 10-11, at 3. If a resident or legal representative elects to arbitrate, the Admission Agreement explains that the resident is electing to waive his or her right to sue in a court of law and to a trial by jury. See Complaint ¶ 15, at 4; Admission Agreement at 13 [at 21 on CM/ECF]. SM Gantz elected to arbitrate disputes on Moreno's behalf. See Complaint ¶ 18, at 5; Admission Agreement at 14 [at 22 on CM/ECF].

         The Arbitration Agreement contains several other relevant clauses. See Complaint ¶¶ 13-17, at 3-5. Paragraph A provides: “Any legal controversy, dispute, disagreement or claim arising between the Parties hereto . . . in which Resident, or a person acting on his or her behalf, alleges a violation of any right granted Resident under law or contract shall be settled exclusively by binding arbitration.” Admission Agreement at 13 [at 21 on CM/ECF]; Complaint ¶ 13, at 3. Paragraph B states:

Any legal controversy, dispute or claim of any kind arising out of or related to this Admission agreement, or the breach thereof, or, related to the care of stay at the Facility, shall be settled exclusively by binding arbitration . . . This arbitration clause is meant to apply to all controversies, disputes, disagreements or claims including, but not limited to, all breach of contract claims, all negligence and malpractice claims, all tort claims and all allegations of fraud concerning entering into or canceling this Admission Agreement. This arbitration provision binds all parties whose claims may arise out of or relate to treatment or service provided by the center including any spouse or heirs of the Resident.

         Admission Agreement at 13 [at 21 on CM/ECF]; Complaint ¶ 14, at 4. Paragraph C contains several clauses, but in relevant part it states:

The Parties shall work together in good faith to select a mutually agreeable individual arbitrator or a national recognized arbitration service provider. . . . The issue of whether a Party's claim(s) is subject to arbitration under this . . . provision shall be decided by the arbitrator. . . . [T]he Arbitrator shall have exclusive authority to resolve any disputes related to the existence and/or enforceability of this . . . provision, including but not limited to any claim that all or any part of this . . . provision is void or voidable.

         Admission Agreement at 13-14 [at 21-22 on CM/ECF]; Complaint ¶¶ 15-16, at 4-5 (emphasis omitted). The Arbitration Agreement further provides that the nursing home regularly engages in transactions involving interstate commerce, that the services provided to residents involve interstate commerce, and that the FAA governs the Arbitration Agreement. See Admission Agreement at 14 [at 22 on CM/ECF]; Complaint ¶ 17, at 5.

         After Moreno died on August 26, 2015, Moreno's daughter, Monica Cruz Hatton, was appointed personal representative of Moreno's estate. Hatton subsequently filed a lawsuit in the Twelfth Judicial District Court against Good Samaritan. See Complaint ¶ 20, at 5-6. On November 21, 2016, Hatton filed an amended complaint in state court against Good Samaritan, among other defendants, alleging causes of action for wrongful death, negligence, negligence per se, negligent or intentional misrepresentation, violation of the Unfair Practices Act, and punitive damages. See Complaint ¶ 20-21, at 5-6; First Amended Complaint for Wrongful Death, Negligence, Negligence Per Se, Misrepresentation, Violation of the Unfair Trade Practices Act, and Punitive Damages at 1-22, filed December 13, 2016 (Doc. 1-2)(“State Court Action”).

         PROCEDURAL BACKGROUND

         On December 13, 2016, Good Samaritan filed its Complaint requesting the Court to compel the parties to: (i) arbitrate pursuant to the Admission Agreement's terms; (ii) order Hatton to arbitrate all claims that she brought in the State Court Action against Good Samaritan; (iii) stay the State Court Action pending resolution of the arbitration process; (iv) stay further proceedings in this action pending the arbitration's conclusion or dismiss the matter without prejudice; and (v) order other proper relief. See Complaint, Prayer for Relief, ¶¶ A-E, at 12. Also on December 13, 2016, Good Samaritan filed its Motion to Compel.

         1. Good Samaritan's Motion to Compel Arbitration and Petition for Appointment of Arbitrator.

         Good Samaritan's Motion to Compel argues that Hatton's State Court claims must be arbitrated pursuant to the arbitration clauses in the Admission Agreement that SM Gantz signed on Moreno's behalf. See Motion to Compel at 6. First, it argues, the Court must either order the parties to select an arbitrator or to appoint an arbitrator. See Motion to Compel at 6. According to Good Samaritan, the Court's job then is concluded, because the arbitrator will then decide whether Hatton's claims are arbitrable and meritorious. See Motion to Compel at 6. Good Samaritan argues that, if, however, the Court concludes that it will not enforce the clauses delegating authority to the arbitrator to determine arbitrability (“Delegation Clauses”), the Court should, nonetheless, conclude that Hatton's claims fall within the Arbitration Agreement's scope and order the parties to select an arbitrator or appoint one. See Motion to Compel at 6.

         Good Samaritan contends that the FAA governs the Arbitration Agreement. See Motion to Compel at 7. It argues that the parties agreed within the Admission Agreement to arbitrate “[p]ursuant to the Federal Arbitration Act” and also agreed that the “Admission Agreement is a transaction involving interstate commerce.” Motion to Compel at 7. Good Samaritan, thus, argues under the FAA, this writing and agreement is sufficient to demonstrate the FAA controls the agreement, unless there are reasons in law or equity for revoking a contract. See Motion to Compel at 7. The FAA applies with equal force to wrongful death claims against nursing homes, or other personal injury claims, it argues, because, as the Supreme Court of the United States has concluded, the FAA's “text includes no exception for personal-injury or wrongful-death claims.” Motion to Compel at 8 (quoting Marmet Health Care Ctr., Inc. v. Brown, 565 U.S. 530, 532 (2012)).

         Because the FAA applies, Good Samaritan argues that the Court's first task is to compel the parties to select an arbitrator or to appoint one. See Motion to Compel at 8. The Arbitration Agreement specifies that “[t]he Parties shall work together in good faith to select a mutually agreeable individual arbitrator or a nationally recognized arbitration service provider, ” but, it argues, because Hatton has not responded to Good Samaritan's request to work together to select the arbitrator, the Court must intervene and “compel the parties to work together to select” one. Motion to Compel at 8. Good Samaritan further avers that the FAA requires the Court to appoint an arbitrator when either “1) the method for selecting an arbitrator has not been designated in the agreement, or 2) or [sic] there is a lapse in the naming of the arbitrator.” Motion to Compel at 9 (citing 9 U.S.C. § 5.). Good Samaritan argues that, because the FAA's language is mandatory, and because there has been a lapse in naming the arbitrator, the Court must now appoint an arbitrator for the parties. See Motion to Compel at 9.

         Regarding the Delegation Clauses, Good Samaritan asserts that it is settled law that “parties can agree to arbitrate ‘gateway' questions of ‘arbitrability, ' such as whether the parties have agreed to arbitrate or whether their agreement covers a particular controversy.” Motion to Compel at 9 (quoting Rent-A-Center, W., Inc. v. Jackson, 561 U.S. 63, 68-69 (2010)(“Rent-A-Center”). According to Good Samaritan, the Delegation Clauses that provide, “the Arbitrator shall have exclusive authority to resolve any disputes related to the existence and/or enforceability of this Resolution of Legal Disputes Provision” and “[t]he issue of whether a party's claim(s) is subject to arbitration . . . shall be decided by the arbitrator” are enforceable. Motion to Compel at 9-10 (emphasis omitted); Admission Agreement at 13-14 [at 21-22 on CM/ECF].

         If the Court, however, concludes that it will not enforce the Delegation Clauses, Good Samaritan argues that the remaining Arbitration Agreement is “valid and enforceable, ” and would bind Hatton for several reasons. See Motion to Compel at 10. First, Good Samaritan contends that Moreno's legal guardian's signature binds Hatton to the arbitration clause. See Motion to Compel at 11, 15-18. It argues that the Twelfth Judicial Circuit of New Mexico authorized Moreno's legal guardian -- SM Gantz -- to make medical and psychiatric care and residential placement decisions on Moreno's behalf, and, consistent with that authority, Gantz “was authorized to take all acts necessary to admit [Moreno] to [Good Samaritan]” and could “elect[] arbitration on Ms. Moreno's behalf.” See Motion to Compel at 11-12. Good Samaritan contends that if SM Gantz lacked authority to agree to arbitration, SM Gantz' “authority to enter into the Admission Agreement and all other admission forms is equally vulnerable.” Motion to Compel at 12. From that assertion Good Samaritan argues that if the entire agreement's validity is challenged, then, under “well-established law, ” the entire agreement's validity must be “decided by the arbitrator rather than a court.” Motion to Compel at 12 (citing Prima Paint Corp. v. Flood & Conklin Mfg. Co., 388 U.S. 395, 404 (1967)).

         Second, Good Samaritan argues that § 2 of the FAA compels the Court to enforce the Arbitration Agreement. See Motion to Compel at 13. Good Samaritan asserts that the FAA commands the Court to place the arbitration provision on equal footing with the Admission Agreement's remaining provisions and that, if SM Gantz had the authority to enter into the Admission Agreement, he also had “authority to bind Ms. Moreno” to the arbitration clause, and also Hatton as Moreno's estate. Motion to Compel at 13, 15-18 (citing THI of N.M. at Hobbs Ctr., LLC v. Spradlin, 532 F.App'x 813, 818 (10th Cir. 2013)(unpublished)(“[B]ecause [the resident] was bound by the arbitration clause as a third-party beneficiary, the non-signatory, wrongful-death beneficiaries are likewise bound.”)). Based on this conclusion, Good Samaritan stresses that the Court cannot require “Good Samaritan to make a special showing of proof” that SM Gantz had specific authority to consent to the arbitration provision; authority to enter into the contract should be sufficient. Motion to Compel at 13.

         Third, Good Samaritan argues that even if SM Gantz lacked authority to bind Moreno and Hatton, Hatton is still bound to arbitrate, because Moreno was the Admission Agreement's third-party beneficiary. See Motion to Compel at 14. Good Samaritan asserts that, based on the contract's face, Moreno was the contract's intended beneficiary “both generally by the services rendered . . . and more specifically by the Arbitration Provision itself.” Motion to Compel at 14-15. Because Moreno benefited from the Contract, Good Samaritan argues that she “would have been bound to arbitrate.” Motion to Compel at 15.

         Fourth, Good Samaritan argues that Hatton is equitably estopped “from denying [the arbitration provision's] validity.” Motion to Compel at 18. In support of this argument, Good Samaritan cites New Mexico law that equitable estoppel requires a party's detrimental reliance based on another's actions. See Motion to Compel at 18. Good Samaritan contends that it “reasonably relied on Mr. Gantz's court appointed authority to elect (or not) arbitration on Ms. Moreno's behalf, ” and, based on this reliance, “treated Moreno for a year and a half pursuant to the terms in the Admission Agreement.” Motion to Compel at 18. Good Samaritan avers that having, thus, “accepted the benefits afforded to Ms. Moreno, ” Hatton cannot now “deny the applicability of [the Admission Agreement's] Arbitration Provision.” Motion to Compel at 19.

         Fifth, Good Samaritan asserts that Hatton's claims all fall underneath the Arbitration Provision's scope. See Motion to Compel at 19. Good Samaritan contends that, because the arbitration provision states that “ [a]ny legal controversy, dispute, disagreement or claim of any kind arising out of or related to this Admission agreement, or the breach thereof, or, related to the care of stay at the Facility, shall be settled exclusively by binding arbitration, ” and because it also compels arbitration for “all controversies . . . including, but not limited to, . . . all negligence and malpractice claims, [and] all tort claims, ” the arbitration provision compels arbitration for Hatton's wrongful death, negligence, negligence per se, Unfair Practices Act violation, and punitive damages. Motion to Compel at 20. Hatton's claims, Good Samaritan argues, clearly constitute “[a]ny legal controversy, dispute, disagreement or claim of any kind . . . related to the care of stay at the Facility.” Motion to Compel at 20.

         Finally, Good Samaritan asserts that, if the Court compels arbitration it must stay this proceeding and the State Court Action. See Motion to Compel at 20. According to Good Samaritan, pursuant to the FAA, a court must, “upon being satisfied that the issue involved in such suit or proceeding is referable to arbitration . . . shall on application of one of the parties stay the trial of the action until such arbitration has been had.” Motion to Compel at 20 (quoting 9 U.S.C. § 3)(emphasis omitted). Good Samaritan argues, accordingly, that the Court must stay the action in federal court once it compels arbitration. See Motion to Compel at 20. Good Samaritan also argues that the All Writs Act, 28 U.S.C. §§ 1651-59, and the Anti-Injunction Act, 28 U.S.C. § 2283 permit the Court to enjoin the State Court action “to protect or effectuate its decision to compel arbitration.” Motion to Compel at 20.

         2. Hatton's Response to Good Samaritan's Motion to Compel.

         Hatton responded on January 9, 2017. See Defendant's Response to Plaintiff's Motion to Compel Arbitration and Petition for Appointment of Arbitrator, filed January 9, 2017 (Doc. 14)(“Response”). Hatton argues broadly that the Court, not the arbitrator, has the ability to determine arbitrability despite the Admission Agreement's Delegation Clauses and that, here, the Court should decide that Hatton's claims are not arbitrable, because SM Gantz lacked authority to enter into the Admission Agreement, SM Gantz failed to consult with Moreno before signing the agreement, and the Admission Agreement's arbitration clause is substantively and procedurally unconscionable. See Response at 1-2.

         As an initial matter, Hatton argues that, because she contends that “the Arbitration Agreement is unenforceable in its entirety, ” the Court, not the arbitrator, should decide arbitrability. Response at 6. Hatton explains that, “even though parties can contract to delegate such [arbitrability] decisions to the arbitrator, a delegation within an unenforceable agreement is of no effect.” Response at 6 (citing Rupelt v. Laurel Healthcare Providers, LLC, 2013-NMCA-014, ¶ 8, 293 P.3d 902, 906). Accordingly, Hatton argues that, for three reasons, the Arbitration Agreement is unenforceable. See Response at 6.

         First, Hatton argues that SM Gantz lacked authority to waive Moreno's constitutional right to a jury trial, so the Arbitration Agreement is unenforceable. See Response at 7. Hatton asserts that, under New Mexico law, the court order granting temporary guardianship limits the temporary guardian's power to what is expressly “specified in the court order.” Response at 7 (emphasis omitted)(citing N.M. Stat. Ann § 45-5-310(E); N.M Stat. Ann § 45-5-301.1). Hatton contends that, given this limit on a temporary guardian's power, SM Gantz' guardianship authorizing letter granting SM Gantz the power “to make only the decisions regarding . . . medical and psychiatric care, residential placement, safety, and supervision . . . as reasonably necessary to avoid immediate and irreparable harm” did not authorize SM Gantz to make decisions that would “waiv[e] Ms. Moreno's constitutional right to a jury trial.” Response at 8 (emphasis in original). According to Hatton, a decision to waive constitutional jury rights “did nothing to address immediate or irreparable harm threatening Ms. Moreno.” Response at 8. Hatton further contends that SM Gantz lacked authority, because he was obligated to act in Moreno's best interest, but there is no evidence “as to why this waiver was in Ms. Moreno's best interest.” Response at 8.

         Second, Hatton argues that the Arbitration Agreement is unenforceable because SM Gantz failed to follow proper procedures to waive Moreno's constitutional rights. See Response at 10. Hatton avers that, under several jurisdictions' caselaw, a guardian must “inquir[e] into the incapacitated person's preferences or, in the absence thereof, such actions must be clearly within the incapacitated person's best interests.” Response at 10. Hatton argues that, here, SM Gantz failed to follow proper procedures, because SM Gantz, as “a corporate guardian, routinely signs arbitration agreements . . . and perfunctorily did so here without any investigation into [Moreno's] individual desires or preferences . . . or without any examination [of] her best interests.” Response at 12. Hatton argues that, accordingly, even if SM Gantz had the authority to sign the Arbitration Agreement, his failure to inquire into her preference and his failure to investigate into Moreno's best interest “invalidates [SM Gantz'] February 27, 2014 signature on the Arbitration Agreement.” Response at 13.

         Third, Hatton argues that the Arbitration Agreement is procedurally and substantively unconscionable. See Response at 13. Hatton asserts that the Arbitration Agreement is substantively unconscionable, because it binds “all of [the] residents' most likely claims and reserves [Good Samaritan's] most likely claim for collection of past-due accounts” to the courts. Response at 14 (citing Cordova v. World Finance Corp. of NM, 2009-NMSC-021, ¶¶ 25-32, 208 P.3d 901, 908-10; Rivera v. American General Fin. Servs., Inc., 2011-NMSC-033, ¶¶ 50-53, 259 P.3d 803, 818-19). Hatton maintains that although the Admission Agreement does not reference collection claims, the Arbitration Agreement's scope does not cover collection claims and that the Admission Agreement's provision covering “late payment charges” references court costs, thus signaling that Good Samaritan “contemplates . . . going to court” to collect late payments. Response at 15. Hatton also argues that the Arbitration Agreement is substantively unconscionable, because it requires residents to pay for half of both the filing fee and the cost of an arbitrator -- a prohibitively high amount. See Response at 16 (citing Green Tree Fin. Corp.-Ala. V. Randolph, 531 U.S. 79, 90 (2000); Clark v. Renaissance West, LLC, 232 Ariz. 510. ¶ 9-19, 307 P.3d 77, 79-81 (Ct. App. 2013)). Hatton further contends that the Arbitration Agreement's confidentiality clause demonstrates substantive unconscionability, because confidentiality clauses allow Arbitration Agreement drafters to “accumulate ‘institutional knowledge of prior arbitrations, '” whereas potential plaintiffs “cannot obtain precedent or other prior information, ” to their detriment. Response at 17. Hatton adds that, as a policy matter, the state has an interest in a “transparent judicial process, ” so the Court should conclude that the confidentiality agreement is substantively unconscionable. See Response at 17.

         Hatton also avers that the Arbitration Agreement is procedurally unconscionable, because it lacks “the specific procedural rules by which an arbitration will be governed.” Response at 17. According to Hatton, the Arbitration Agreement's provision allowing the parties to agree upon “the rules of the arbitration service provider” if arbitration occurs, unless the parties cannot agree, in which case the plaintiff's rules will apply, demonstrates that there are no procedural rules, making Hatton “unable to determine if the Arbitration Agreement should be rejected for restricting a resident's ability to prove his or her case.” Response at 17-18. Hatton argues that, accordingly, the Agreement's “failure to disclose applicable procedural rules renders it procedurally unconscionable.” Response at 18.

         Regarding remedy, Hatton states that, if the Court finds the arbitration provision unconscionable, severing portions of the arbitration clause is inappropriate. See Response at 18. Hatton argues that the “one-sided arbitration provisions are central to the overall arbitration scheme” and, thus, cannot be severed to “save the parties' general agreement to arbitrate.” Response at 18 (citing Ruppelt v. Laurel Healthcare Providers, LLC, 2013-NMCA-014, ¶ 20, 293 P.3d 902, 909). Hatton insists that, accordingly, the Court “should strike the Arbitration Agreement in its entirety.” Response at 19. Hatton requests, alternatively, “the right to conduct discovery regarding the Arbitration Agreement's enforceability” and for the Court to “hold an evidentiary hearing on the issues presented.” Response at 2.

         Finally, Hatton refutes several of Good Samaritan's arguments that the Arbitration Agreement is enforceable. Hatton avers that Barron v. The Evangelical Lutheran Good Samaritan Society, 2011-NMCA-094, 265 P.3d 720, which Good Samaritan cites, is inapposite, because that case failed to consider “decisions made by court-appointed guardians for an incapacitated person.” Response at 8-9. Hatton argues that, even if the decision is applicable, the case nonetheless allows limitations to be placed on a guardian's authority, and because the guardianship letter did not expand SM Gantz' authority to afford waiver of constitutional rights, the Admission Agreement is still unenforceable. See Response at 9. Hatton further contends that the Arbitration Agreement could not have bound her as a third-party beneficiary, as Good Samaritan argues, because she was a party to the contract and, as a matter of law, parties to a contract cannot be third-party beneficiaries. See Response at 9-10 n.1. Hatton also avers that she is not equitably estopped from challenging the Arbitration Agreement, because she “received no benefits from the arbitration Agreement, ” Good Samaritan did not reasonably rely on SM Gantz' authority, because Good Samaritan was responsible for investigating the limits of SM Gantz' power, and Hatton's claims are not based on the Admission Agreement, but on negligence and on state and federal regulations governing nursing facilities. Response at 10 n.1.

         3. Good Samaritan's Reply.

         Good Samaritan argues in reply that Hatton failed to attack adequately the Admission Agreement's Delegation Clauses, which, under controlling Supreme Court precedent, means “that this Court ‘must treat [the Delegation Clauses] as valid.'” Reply in Support of Plaintiff's Motion to Compel Arbitration at 1, 3 filed on January 23, 2017 (Doc. 15)(“Reply”)(citing Rent-A-Center, 561 U.S. at 72). Good Samaritan insists that state precedent which Hatton cites, see Ruppelt v. Laurel Healthcare Providers, LLC, 2013-NMCA-014, 293 P.3d 902, “does not control the analysis, ” but rather Rent-A-Center, 561 U.S. at 72, controls, because federal law -- the FAA -- is at issue, Reply at 3. This federal case, according to Good Samaritan, should end the matter, because the clear-and-unmistakable language in the arbitration clause delegating the arbitrability issue to the arbitrator requires the Court to delegate this issue to an arbitrator. Reply at 2 (citing Rent-A-Center, W., Inc. v. Jackson, 561 U.S. at 69 n.1). Good Samaritan also argues that Ruppelt v. Laurel Healthcare Providers, LLC, 2013-NMCA-014, 293 P.3d 902, even if applicable, was about a different issue -- waiver of a delegation argument and that Ruppelt v. Laurel Healthcare Providers, LLC, stands for the proposition that “a district court is precluded from deciding a party's claim of unconscionability unless that claim is based on the alleged unconscionability of the delegation provision itself.” Reply at 3. Good Samaritan contends that Hatton's remaining arguments about SM Gantz' authority, SM Gantz' procedural oversights, and unconscionability, are irrelevant. See Reply at 1.

         Good Samaritan argues that, even if the Court concludes that it can decide whether SM Gantz had authority to sign the arbitration provision, SM Gantz had that authority. See Reply at 4. Good Samaritan insists that the Letter of Temporary Guardianship's statement that SM Gantz could make decisions regarding Moreno's medical and psychiatric care, residential placement, safety and supervision encompass “selecting a dispute resolution mechanism.” Reply at 4. Hatton's arguments to the contrary, Good Samaritan adds, are unavailing, because the state court's order appointing SM Gantz as guardian signaled that Moreno needed help “managing her property and financial affairs.” Reply at 4. Good Samaritan further asserts that the New Mexico guardianship statutes requiring the court order to specify what rights are divested supports Good Samaritan's position, because the “Letters of Temporary Guardianship authorized Mr. Gantz to admit Ms. Moreno to Betty Dare, ” so, “concomitantly, divested [Moreno] of those rights.” Reply at 5. Good Samaritan asserts that, contrary to Hatton's argument that Barron v. Evangelical Lutheran Good Samaritan Soc'y, 2011-NMCA-094, 265 P.3d 720, requires the Court to conclude that SM Gantz lacked authority to waive Moreno's right to a jury trial, “Barron's fundamental holding is that the authority to admit a resident includes the authority to agree to arbitration, even when the resident is unaware of the arbitration agreement.” Reply at 6.

         Good Samaritan also argues that SM Gantz was not required to observe certain “protocols” before waiving Moreno's right to a jury trial. Reply at 6. According to Good Samaritan, there is no strong presumption in New Mexico against waiving constitutional rights, especially “where, as here, election in favor of arbitration was optional.” Reply at 6 (citing Truong v. Allstate Ins. Co., 2008-NMCA-051, ¶¶ 21-25, 182 P.3d 814, rev'd on other grounds, 2010-NMSC-009, 227 P.3d 73). Good Samaritan adds that Hatton's protocol argument is contrary to Barron v. Evangelical Lutheran Good Samaritan Soc'y, 2011-NMCA-094, 265 P.3d 720, because, in that case, an agent “did not have to inquire about the principal's preferences before waiving a jury trial.” Reply at 7 (citing Barron v. Evangelical Lutheran Good Samaritan Soc'y, 2011-NMCA-094, 265 P.3d 720). Good Samaritan avers, moreover, that New Mexico guardianship statutes recognize that “a guardian may not be able to know an incapacitated person's ‘values, '” so the law does not require SM Gantz to “ascertain Ms. Moreno's preferences prior to electing arbitration.” Reply at 7 (citing NM Stat. Ann. § 45-5-312(B)(3)). Finally, it argues that the FAA precludes a requirement that SM Gantz follow certain procedures before waiving Moreno's jury right, because that ruling would “place the Arbitration Provision on an unequal footing from the other provisions of the Admission Agreement.” Reply at 8 (citing Allied-Bruce Terminix Cos. Inc. v. Dobson, 513 U.S. 265, 281 (1995)). Good Samaritan also argues that it is not required to demonstrate that “waiving a jury trial is in [Moreno's] best interest, ” because it is inconsistent with caselaw concluding that arbitration “generally costs less than litigation and leads to a quicker resolution.” Reply at 8-9 (citing Barron v. Evangelical Lutheran Good Samaritan Soc'y, 2011-NMCA-094, ¶ 41, 265 P.3d at 732).

         Good Samaritan finally argues that the arbitration provision is not unconscionable for four reasons. First, Good Samaritan asserts that the arbitration provision is not one-sided, because the provision covers, among other things, “all other disputes” and “any legal controversy, ” and, thus “requires both parties to submit all claims to the arbitrator.” Reply at 9-10. Good Samaritan adds that the reference to court costs in another portion of the agreement makes sense, because the arbitration provision is optional. See Reply at 9. Second, Good Samaritan argues that Hatton fails to meet her burden that the arbitration provision's cost sharing is prohibitive or “that she would be prevented from vindicating her rights, ” because Hatton produced no evidence on the matter. Reply at 10-11. In addition, Good Samaritan asserts that the arbitration provision “does not mandate payment of costs, ” but instead notes that a person might have to pay a fee, and that “any costs will be shared equally.” Reply at 11. Third, Good Samaritan argues that Hatton has cited no New Mexico caselaw concluding that a confidentiality agreement can be unconscionable, and stresses here that “[t]he fact specific nature of [Hatton's] claims make it unlikely that Good Samaritan would obtain an advantage or information that could benefit it.” Reply at 11. Good Samaritan adds that Hatton might benefit from the confidentiality agreement, because Hatton may be able to keep confidential any medical issues Moreno had and “the reasons for her placement with Adult Protective services.” Reply at 11. Good Samaritan avers that, if the Court is inclined to hold the cost-sharing or confidentiality provisions unconscionable, they could be severed, because “they are not so central ‘to the agreement that they are incapable of separation from the agreement to arbitrate.'” Reply at 11 n.6 (quoting Figueroa v. THI of New Mexico at Casa Arena Blanca, LLC, 2013-NMCA-077, ¶ 39, 306 P.3d 480, 494). Fourth, the arbitration provision is not procedurally unconscionable, according to Good Samaritan, because the parties are required “to agree to a set of rules” and, thus, the procedure “is reasonable and fair to both sides.” Reply at 12 (emphasis omitted). Good Samaritan adds that procedural unconscionability requires more than just “the absence of rules” but other “indicia of unconscionability, not present here.” Reply at 12 (citing e.g., Lucas v. Gund, Inc., 450 F.Supp.2d 1125, 1131 (C.D. Cal. 2006)(Rafeedie, J.).

         4. The Hearing.

         The Court held a hearing on May 2, 2017. See Draft Transcript of Motion Hearing (taken May 2, 2017)(“Tr.”).[1] Good Samaritan opened by noting that the state court had issued a stay in the State Court Action, and Good Samaritan requested that the Court to enter an order or another preliminary ruling before August 11, 2017 -- the date the stay expired. See Tr. at 3:12-16; 4:10- 11 (Bennett). Based on the state court already entering a stay, Good Samaritan admitted that the stay relief it requests in its Motion to Compel “has been rendered moot.” Tr. at 4:7-9 (Bennett). Good Samaritan requested that the Court should “compel the parties or order the parties to follow the language of the arbitration provision” and to take some time, “perhaps 10 to 14 days, to agree on a mutually acceptable arbitrator, ” and, if the parties cannot agree, the Court should appoint one. Tr. at 6:3-10 (Bennett). Good Samaritan maintained that the threshold issues are the Delegation Clauses in the Arbitration Agreement and that contract formation issues “can be delegated to an arbitrator.” Tr. at 7:20-23 (Bennett). Good Samaritan acknowledged “the [Supreme] Court has identified some tension between the case law construing delegation clauses, and case law construing the FAA generally, ” but it thought that a contract's existence and formation were “gateway issues that can be delegated to the arbitrator, ” and that Good Samaritan's arbitration provision “does delegate those [issues] to the arbitrator.” Tr. 8:3-6; 8:11-17 (Bennett). After the Court inquired whether there was also a tension between the “general rule that [the] Court has to first determine whether the contract and specifically the arbitration clause are valid, ” Good Samaritan responded that Rent-A-Center concluded that a court can “sever a delegation clause from an otherwise invalid arbitration provision, and . . . look to the validity [of the] the formation existence of a delegation clause apart from” the rest of the arbitration clause, and, in fact, the FAA requires a court to do that analysis. Tr. at 8:18-24; 9:4-12 (Bennett, Court).

         Regarding whether, as a non-signatory, Hatton is bound, Good Samaritan argued that SM Gantz' “letter of temporary guardianship” grants him “the ability to bind Ms. Moreno.” Tr. at 12:19-23 (Bennett). Hatton countered that SM Gantz lacked the authority to enter into a voluntary Arbitration Agreement on Moreno's behalf, and that “[t]he circumstances of a temporary guardian is very limited to the power and authority that he was given under the temporary letters.” Tr. at 14:20-23; 17:23-18:1 (Bossie). Reading from the order granting SM Gantz temporary guardianship, Hatton asserted that SM Gantz' “only” authority is to make “decisions regarding medical, psychiatric, residential placement, safety and supervision for Ms. Moreno, as reasonably necessary to avoid immediate and irreparable harm.” Tr. at 50:1-8 (Bossie). Hatton argued that, although SM Gantz had authority to make decisions regarding medical care, SM Gantz' authority excluded agreeing to arbitrate, because the Admission Agreement stated at the top: “Resident's agreement to arbitrate dispute is not a condition of admission or a continued stay.” Tr. at 15-20 (Bossie)(quoting Admission Agreement at 13 [at 21 on CM/ECF]. Hatton also asserted that caselaw from the Supreme Court of Washington and from California courts supports the contention that SM Gantz lacked authority, because those courts have concluded that a guardian ad litem cannot waive an individual's right to a jury trial without the patient's informed consent. See Tr. at 17:6-14; (Bossie). Hatton doubted that the guardian ever met or talked with Moreno and argued that “there [are] multiple disputed issues of fact that would have to be explored in this case” to determine SM Gantz' authority to enter an Arbitration Agreement, thus, requiring discovery. Tr. at 14:23-15:7 (Bossie). The “bottom-line” for Hatton was that “the Court needs to look at whether the guardian had authority” to sign on Moreno's behalf and that the Court did “not even [have] to get [to] the delegation clause . . . if this is a void null contract, ” and requested that the Court “deny[] the motion to compel arbitration” or issue an order allowing Hatton “to depose Mr. Gantz” to determine whether SM Gantz had authority to sign for Moreno. Tr. at 20:18-21:6 (Bossie). Hatton added that Barron v. The Evangelical Lutheran Good Samaritan Society, 2011-NMCA-094, 265 P.3d 720, upon which Good Samaritan relied, is inapposite, because the patient there gave “verbal actual and apparent authority” for her guardian “to sign the documents” so “[Barron v. The Evangelical Lutheran Good Samaritan Society, 2011-NMCA-094, 265 P.3d 720] is not controlling whatsoever to the facts of this case.” Tr. at 20:13-17 (Bossie). Whether SM Gantz had authority, Hatton posited, was a question of fact that “would be done by a jury” or that the Court could determine the issue if there is no undisputed facts. Tr. at 21:23-25; 22:3-9 (Bossie).

         Good Samaritan rejoined that “[t]here is no need for discovery here, ” because “Mr. Gantz should be presumed to have acted in Ms. Moreno's best interests” based on the state court's initial determination to appoint him guardian. Tr. 24:15-25:3 (Bennett, Court). Good Samaritan argued that, although there was a “temporary guardianship process” here that “doesn't allow for the same protections as the full guardianship process, ” the New Mexico statute governing the temporary guardianship process requires the district court to “find that appointing a temporary guardianship is necessary to [] protect the allegedly incapacitated person, ” which triggers a presumption. Tr. at 26:13-20 (Bennett). Good Samaritan admitted, however, that the FAA provides for a limited hearing when arbitration provisions are at issue, and that “Judge Vazquez . . . held a short sort of abbreviated bench trial” and that type of proceeding would be appropriate. Tr. at 36:10-14 (Bennett).

         Good Samaritan also contended that N.M. Stat. Ann. § 45-5-312 -- the statute which Hatton employed to argue that SM Gantz' authority is limited -- grants the guardian the same power “just as a parent [has], vis-à-vis a minor child.” Tr. at 27:12-21 (Bennett). According to Good Samaritan, that statute also bestows a guardian the power “to act as a decision maker on [a patient's] behalf” and to “institute proceedings to protect her financial affairs.” Tr. at 27:25-28:2 (Bennett). Good Samaritan added that the statute does not suggest that “a guardian has to inquire about an incapacitated person's wishes or desires.” Tr. at 30:17-18 (Bennett). Good Samaritan argued that N.M. Stat. Ann. § 45-5-312's language that “the decision to consent to or withhold treatment shall be made in accordance with the values of the incapacitated person, if known, ” did not compel a different answer, because the statute “presumes” the guardian's “preexisting knowledge by using the term if known.” Tr. at 30:2-10 (Bennett). Good Samaritan also countered Hatton's suggestion that Barron v. The Evangelical Lutheran Good Samaritan Society, 2011-NMCA-094, 265 P.3d 720, is factually inapposite, because the patient there “had no idea that the administration agreement contained an arbitration provision, ” so the case “holds that there is no requirement that a guardian or an agent [pursue] a [re]quest to determine the principal or the ward's desires.” Tr. at 33: 1-15 (Bennett).

         Concerning the Delegation Clauses, Hatton maintained her position that those clauses are not a threshold issue, instead asserting that “[the Court] do[es] not even [have] to reach the delegation clause if [the Arbitration Agreement] is a void unenforceable arbitration agreement.” Tr. at 18:19-25 (Bossie). Hatton subsequently argued that the Arbitration Agreement as a whole was null and void, so the Court did not have to reach the delegation issue. See Tr. at 22:23-23:1 (Bossie). Hatton conceded that, if she did not persuade the Court that SM Gantz lacked authority to sign on Moreno's behalf that “there is really no issue on the delegation side from [Hatton].” Tr. at 23:19-24:1 (Bossie, Court). Good Samaritan replied that a recent United States Court of Appeals for the Tenth Circuit decision, Belnap v. Iasis Healthcare, 844 F.3d 1272 (10th Cir. 2017), concludes that arbitrability, not the guardian's authority, “is the first question that this Court must address.” Tr. at 34:9-18 (Bennett).

         Turning to unconscionability, Good Samaritan argued that there is “nothing in the record that demonstrates that the arbitration provision is grossly unfair or grossly burdens the defendants' rights.” Tr. at 39:22-24 (Bennett). Good Samaritan maintained its position that the arbitration provision is not one-sided, because the agreement covers disputes that both the residents and the nursing home bring, and the collection agreement provision mentioning court costs does not suggest otherwise, because residents can opt out of arbitration at signing, so Good Samaritan must otherwise reasonably reserve its court rights. See Tr. at 40:12-41:2 (Bennett). Good Samaritan also retained its argument that the fee-sharing provision is not unconscionable, because “the party opposing arbitration has to show with individualized evidence that the cost sharing provision is cost prohibit[ive], ” and that Hatton has made no such showing. Tr. at 42:11-22 (Bennett). Good Samaritan also preserved its position that the confidentiality agreement is not unconscionable, because it “has benefit to both sides” -- Hatton may want to keep Moreno's medical information private. Tr. 44:1-7 (Bennett). Finally, Good Samaritan asserted that there is no procedural unconscionability, because the provision “allows the parties to select the rules” by which the arbitrator must abide and that provision “seems to me to be inherently fair.” Tr. at 44:23-25 (Bennett).

         Responding to the unconscionability arguments, Hatton argued that her three arguments “taking all of them together as building blocks . . . rises to the level, based on the law, to be substantively unconscionable.” Tr. at 48:24-49:2 (Bossie). First, Hatton argued, the Arbitration Agreement's one-sidedness indicates unconscionability, because Good Samaritan drafted its own agreement, and it drafted the collection cost provision mentioning “attorneys' fees and court costs.” Tr. at 46:14-20 (Bossie). Hatton added that the dispute section mentions specifically claims that will most often only be resident rights claims: negligence, malpractice, tort claims, and fraud. See Tr. at 47:4-12 (Bossie). Second, Hatton asserted that the arbitration provision is cost-prohibitive, because “[g]enerally an arbitrator can run from 250 to 350 to 450 per hour . . ., [and that] Moreno's estate . . . doesn't have any money to do that.” Tr. 47:15-20 (Bossie). Third, Hatton argued that the confidentiality agreement “benefits Good Sam[aritan], ” especially in the punitive damages inquiry, because it bars Hatton from obtaining information of widespread harm to other “vulnerable adults.” Tr. at 48:5-23 (Bossie). Hatton admitted, however, that the confidentiality clause by itself would not rise to the level of unconscionability. See Tr. at 48:5-7 (Bossie).

         Good Samaritan rejoined that the reference to court costs does not necessarily mean that the clause captured only judicial court costs, because “numerous courts . . . have held that arbitrators, just like a court of law, can award attorneys' fees and costs.” Tr. at 53:4-7 (Bennett). Good Samaritan argued that, although the arbitration provision mentions specifically some claims, such as breach of contract, negligence, and others, those claims equally applied to residents and the nursing facility, because breach of contract “would cover a collection claim.” Tr. at 53:14-19 (Bennett). Good Samaritan averred that, even if Hatton was right about those references to claims applying disproportionately to residents, the FAA preempts that argument, and the Supreme Court of New Mexico has concluded that, “even when there is a chance that another party is [the] most likely party to bring a certain claim, that in and of itself does not render that provision substantively unconscionable.” Tr. 54:1-10 (Bennett). Turning to cost-sharing, Good Samaritan contended that there is no evidence to suggest that Hatton could not pay for arbitration and what evidence exists does not support a cost-burden inference, because there is no record how much the Estate has and “we actually don't know how much the arbitration is going to cost.” Tr. at 54:11-55:3 (Bennett, Court). According to Good Samaritan, “the parties have control over how much” the arbitration will cost, because the parties select the arbitrator and the rules. Tr. at 55:3-9 (Bennett).

         Finally, turning back to SM Gantz' authority, Good Samaritan argued that the temporary guardian statute's language about avoiding irreparable and immediate harm does not limit the guardian's authority, because that language “is the judicial prerequisite to finding and appointing a temporary guardian, ” so “that [language] should [not] be read as any limit on [SM Gantz'] authority.” Tr. at 58:18-24 (Bennett). Good Samaritan asserted, again, that Barron v. The Evangelical Lutheran Good Samaritan Society, supports this conclusion, and that the Court should follow this Court of Appeals of New Mexico's decision, because it is “based on foundational principles of agency law, ” and that the Court should defer to a state court decision on state law. Tr. at 60:22-61:18 (Bennett).

         LAW REGARDING ARBITRATION AGREEMENTS

         1. Federal law.

         “The FAA reflects the fundamental principle that arbitration is a matter of contract.” Rent-A-Center 561 U.S. at 67. “[T]he basic purpose of the Federal Arbitration Act is to overcome courts' refusals to enforce agreements to arbitrate.” Allied-Bruce Terminix Cos., Inc. v. Dobson, 513 U.S. 265, 270 (1995). “The FAA thereby places arbitration agreements on an equal footing with other contracts, and requires courts to enforce them according to their terms.” Rent-A-Center, West, Inc. v. Jackson, 561 U.S. at 67-68.

         Under § 4 of the FAA, a party “aggrieved” by the another party's failure “to arbitrate under a written agreement for arbitration” may petition a federal court “for an order directing that such arbitration proceed in the manner provided for in such agreement.” 9 U.S.C. § 4. If a party is aggrieved by the refusal of another to arbitrate under a written agreement, the district court, upon petition, “shall hear the parties, and upon being satisfied that the making of the agreement for arbitration or the failure to comply therewith is not in issue, the court shall make an order directing the parties to proceed to arbitration in accordance with the terms of the agreement.” 9 U.S.C. § 4. Section 2, the “primary substantive provision of the Act, ” Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24 (1983), provides: “A written provision in . . . a contract evidencing a transaction involving commerce to settle by arbitration a controversy thereafter arising out of such contract . . . 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. “If a party challenges the validity under § 2 of the precise agreement to arbitrate at issue, the federal court must consider the challenge before ordering compliance with that agreement under § 4.” Rent-A-Center, 561 U.S. at 71. “[T]he basis of challenge [must] be directed specifically to the agreement to arbitrate before the court will intervene.” Rent-A-Center, 561 U.S. at 71.

         The FAA also indicates that, upon a finding that a matter is referable to arbitration, the district court “shall on application of one of the parties stay the trial of the action until such arbitration has been had in accordance with the terms of the agreement.” 9 U.S.C. § 3. Notwithstanding 9 U.S.C. § 3's terms, however, several Courts of Appeal have concluded that “dismissal is a proper remedy when all of the issues presented in a lawsuit are arbitrable.” Choice Hotels Int'l, Inc. v. BSR Tropicana Resort, Inc., 252 F.3d 707, 709-10 (4th Cir. 2001). See Green v. Ameritech Corp., 200 F.3d 967, 973 (6th Cir. 2000)(“The weight of authority clearly supports dismissal of the case when all of the issues raised in the district court must be submitted to arbitration.”); Bercovitch v. Baldwin Sch., Inc., 133 F.3d 141, 156 n.21 (1st Cir. 1998); Alford v. Dean Witter Reynolds, Inc., 975 F.2d 1161, 1164 (5th Cir. 1992); Sparling v. Hoffman Constr. Co., 864 F.2d 635, 638 (9th Cir. 1988).

         The Tenth Circuit has, correctly, cautioned that, when one of the parties petitions the court to stay an action pending compulsory arbitration, 9 U.S.C. § 3's mandatory language is binding and that it is error for the court to dismiss the action. See Adair Bus Sales, Inc. v. Blue Bird Corp., 25 F.3d 953, 955 (10th Cir. 1994). When, however, the party seeking to compel arbitration requests the court for dismissal, and there is no evidence in the record of any party requesting a stay, it is not error for the district court to dismiss the case. See Armijo v. Prudential Ins. Co. of Am., 72 F.3d 793, 797 (10th Cir. 1995); Cornoyer v. AT&T Mobility Servs., LLC, No. CIV 15-0474 JB/WPL, 2016 WL 6404853, at *7-8 (D.N.M. Oct. 5, 2016)(Browning, J.).

         2. Ne ...


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