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Evangelical Lutheran Good Samaritan Society v. Telles

United States District Court, D. New Mexico

September 30, 2017



          M. CHRISTINA ARMIJO Chief United States District Judge

         THIS MATTER is before the Court on Defendant's Complaint to Compel Arbitration and Petition for Appointment of Arbitrator [Doc. 1] and Motion and Memorandum of Law to Compel Arbitration and Petition for Appointment of Arbitrator [Doc. 3] Having considered the submissions and the relevant law, and being otherwise fully informed in the premises, the Court GRANTS the Complaint and Motion, COMPELS arbitration, and DISMISSES this action.

         I. BACKGROUND

         The present matter arises from a complaint filed by Barbara Telles in the Twelfth Judicial District Court of the State of New Mexico, in which she alleged wrongful death, negligence, negligence per se, misrepresentation, and violation of the New Mexico Unfair Trade Practices Act. [Doc. 1-2 (State First Amended Complaint)] In the State First Amended Complaint, Defendant alleged that the actions of Evangelical Lutheran Good Samaritan Society (Evangelical Lutheran), doing business as Good Samaritan Society - Betty Dare (Betty Dare), a nursing home, as well as named and unnamed individuals, “were wrongful and negligent and were the proximate cause of Gregorio Telles's death.” [Doc. 1-2, pg. 8] Gregorio Telles was Defendant's husband. [Doc. 1-2, pg. 1]

         Evangelical Lutheran sought to initiate arbitration by letter in February 2017. [Doc. 1-3] When Defendant did not respond to the letter, Evangelical Lutheran filed a Complaint to Compel Arbitration and Petition for Appointment of Arbitrator (Complaint) in this Court on February 13, 2017. [Doc. 1] On the same day, it filed a Motion and Memorandum of Law to Compel Arbitration and Petition for Appointment of Arbitrator. [Doc. 2] Evangelical Lutheran will hereinafter be referred to as “Plaintiff.” Plaintiff argues that Defendant's state court claims must be submitted to an arbitrator because the parties agreed to arbitration when Mr. Telles was admitted to Betty Dare. [Doc. 1, 2] Defendant argues that any agreement to arbitrate is unenforceable because it is contrary to New Mexico law or is substantively and procedurally unconscionable. [Doc. 12]

         The following facts are undisputed except as noted. Mr. Telles was a resident of Betty Dare. [Doc. 3, ¶ 9; Tilman Affidavit, ¶ 4; Doc. 1-2 (State First Amended Complaint, ¶ 23); Doc. 12, pg. 2] Defendant, who had been designated as Mr. Telles's attorney-in-fact through a durable power of attorney in 2007, signed Betty Dare's admission paperwork at least two times, in 2011 and 2013. [Doc. 3, pg. 2; Tilman Affidavit, ¶ 4; Doc. 12, pg. 3] In both instances, Defendant signed an “Admission Agreement.”[1] [Doc. 1, ¶ 9; Doc. 12, pg. 14; Doc. 12-6 (Telles Affidavit)] Defendant alleges that when she signed the Admission Agreements, she was “very emotional and distraught, ” and that she was “under the impression that [she] was required to sign papers for [Mr. Telles's] admission to . . . Betty Dare, and [she does] not remember being told what arbitration was.” [Doc. 12-6 (Telles Affidavit, ¶¶ 4, 6)] She maintains that “at the time [she] signed the [admission] agreements, no one explained that [she] was giving up the right to a jury trial or the costs associated with arbitration.” [Doc. 12-6 (Telles Affidavit, ¶ 7)] Plaintiff alleges to the contrary that the Betty Dare Admissions Coordinator reviewed the Admission Agreement, including the section on resolution of legal disputes, with Defendant, and explained to her that “agreeing to arbitrate meant that in the event any disputes were to arise between Mr. Telles and Betty Dare, they would be arbitrated rather than heard in a court of law.” [Doc. 1-1 (Tilman Affidavit, ¶¶ 9, 16)] It also contends that the Admissions Coordinator explained that agreeing to arbitration was not a condition of admission. [Id.]

         The Admission Agreement includes seven numbered sections addressing 1) the parties to the agreement, 2) the rights and responsibilities of the parties, 3) conditions of discharge or transfer, 4) information received by the signer, 5) authorization for medical care and acknowledgements, 6) notice, and 7) “additional provisions.” [Doc. 1-1, pg. 12] After these sections, the Admission Agreement includes four unnumbered sections, including a list of state advocacy organizations, a form on which the resident or responsible party is to acknowledge receipt of various materials, two pages titled “Resolution of Legal Disputes, ” which include a signature line, and a signatures page.[Doc. 1-1, pgs. 23-27] Throughout the Admission Agreement, including these unnumbered sections, there is a header with the title “Admission Agreement” and all of the pages are numbered consecutively. [Id.]

         The “Resolution of Legal Disputes” section includes the following clauses. At the top of the first page, beneath the header and the title “Resolution of Legal Disputes, ” is the resident's name and the date of admission. [Doc. 1-1, pg. 25] Next, in bold type, is the statement, “Please note that the Resident's agreement to the Resolution of Legal Disputes is not a condition of admission or of continued stay.” [Doc. 1-1, pg. 25] Beneath this statement is a paragraph stating that any claim relating to a violation of a resident's rights would be subject to arbitration.

A. Resident's Rights. Any legal controversy, dispute, disagreement or claim arising between the Parties hereto after the execution of this Admission Agreement 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 as set forth in Section C. below. This provision shall not limit in any way the Resident's right to file formal or informal grievances with the Facility or the State or Federal government.

         Next, the Admission Agreement addresses other disputes, including negligence and malpractice claims and all tort claims. [Doc. 1-3]

All Other Disputes. Any 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 as set forth in section C. below. 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.

         The Admission Agreement then sets out how the arbitration of disputes will proceed.

         [Doc. 1-3]

Conduct of Arbitration. The Resident understands that agreeing to arbitrate legal disputes means that he/she is waiving his/her right to sue in a court of law and to a trial by jury and that arbitration is not a limitation of liability but merely shifts the Parties' dispute(s) to an alternate forum. The Resident shall indicate his/her willingness to arbitrate by informing the Facility by marking the YES or NO box below and signing and dating where indicated. This Resolution of Disputes provision is part of the Admission Agreement. Arbitration is conducted as follows: The Parties shall work together in good faith to select a mutually agreeable individual arbitrator or a nationally recognized arbitration service provider. The arbitration shall be conducted in accordance with the rules of the arbitration service provider agreed upon by the Parties. In the event rules of an arbitration service provider are not available for use or the Parties have not agreed to a different set of procedures to govern the arbitration, the Parties agree to use the neutral code of procedure available from The Evangelical Lutheran Good Samaritan Society. Any arbitration conducted pursuant to this Resolution of Legal Disputes shall be conducted within the county wherein this Facility is located. The award rendered by the arbitrator(s) shall be final, and judgment on the award shall be entered in accordance with applicable law in any court having jurisdiction thereof. The Parties understand that arbitration proceedings are not free and that any person requesting arbitration may be required to pay a fee to the agreed upon arbitration service provider or arbitrator and may pay other expenses relating to the arbitration; however, the Parties agree to divide any filing fee and the costs of the arbitrator equally. The issue of whether a Party's claims [are] subject to arbitration under this Resolution of Legal Disputes provision shall be decided by the arbitrator. Any documents or evidence produced during an arbitration proceeding including the arbitrator's written decision shall be confidential except to the extent needed to enforce any judgment rendered by the arbitrator. Parties hereby expressly agree that the Arbitrator shall have exclusive authority to resolve any disputes related to the existence and/or enforceability of this Resolution of Legal Disputes provision, including but not limited to any claim that all or any part of this Resolution of Legal Disputes provision is void or voidable. If you would like information regarding neutral code of procedure for arbitration or would like to file a claim for arbitration, you may contact the Society's Center for Solutions at 1-877-447-7237.

         The final two paragraphs address “governing law” and survival. The survival clause appeared twice in the 2013 form signed by Defendant. [Doc. 1-3]

Governing Law. The Parties acknowledge that the Facility regularly conducts transactions involving interstate commerce and that the services provided by the Facility to the Resident involve interstate commerce. The Parties therefore agree that this Admission Agreement is a transaction involving interstate commerce. The Parties agree that this Resolution of Legal Disputes provision and all proceedings relating to the arbitration of any claim shall be governed by and interpreted under the Federal Arbitration Act, 9 U.S.C. Sections 1-16 (or as amended or superseded). The Parties agree that in the event they are unable to agree upon selection of a mutually agreeable individual arbitrator or nationally recognized arbitration service provider, section 5 of the FAA shall control.
Survival. This Resolution of Legal Disputes provision survives the termination, cancellation or otherwise expiration of the Admission Agreement.

         Finally, the Resolution of Legal Disputes section includes two check boxes in which the signer is to indicate affirmatively whether he or she agrees or declines to arbitrate. [Doc. 1-3]

         [] YES I DO wish to arbitrate disputes and I received a copy of this Resolution of Legal Disputes

         [] NO I DO NOT wish to arbitrate disputes

         In both 2011 and 2013, Defendant checked the box indicating that she wished to arbitrate disputes and signed ...

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