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Williamson v. Grano

United States District Court, D. New Mexico

December 11, 2018

JERRY WILLIAMSON and HORACE WINCHESTER, Plaintiffs,
v.
MARC GRANO, as personal representative of the Estate of CAROL CANTRELL; and JACK CANTRELL, Defendants.

          MEMORANDUM OPINION AND ORDER DENYING DEFENDANTS' MOTION TO DISMISS PLAINTIFFS' AMENDED COMPLAINT TO COMPEL ARBITRATION PURSUANT TO RULE 12

         THIS MATTER comes before the Court upon Defendants' Motion to Dismiss Plaintiffs' Amended Complaint to Compel Arbitration Pursuant to Rule 12 of the Federal Rules of Civil Procedure, filed on September 6, 2018 by Defendants Marc Grano and Jack Cantrell (Doc. 24). Having reviewed the parties' pleadings and the applicable law, the Court finds that Defendants' motion is not well-taken and, therefore, is denied.

         BACKGROUND

         This case stems from a wrongful death lawsuit in state court, filed in the County of San Miguel, Fourth Judicial District Court, involving the death of Carol Cantrell. See Doc. 21-1 (state court complaint). In that lawsuit, Marc Grano as personal representative of Carol Cantrell's estate and Jack Cantrell, Carol's brother, are suing Plaintiff Jerry Williamson for Ms. Cantrell's allegedly wrongful death from a fatal complication of untreated diabetes.[1] Mr. Williamson is member/owner of WW Healthcare, L.L.C. which does business as Princeton Place, a skilled nursing facility located in Albuquerque, New Mexico. On May 9, 2018, Plaintiff Williamson (who is the defendant in the state court action) filed this independent and separate federal action to compel arbitration of all matters related to the care and treatment that Ms. Cantrell received at Princeton Place.

         Defendants seek dismissal of Plaintiffs' Amended Complaint to Compel Arbitration on three grounds:

(1) Plaintiffs are not the real parties in interest;
(2) Plaintiffs have failed to join Princeton Place as a necessary and indispensable party; and
(3) lack of subject matter jurisdiction over this case.

         Plaintiffs contend that both the Federal Arbitration Act (“FAA”), 9 U.S.C. §§1-14, and the New Mexico Uniform Arbitration Act, NMSA 1978 §44-7A-1, favor arbitration, and that Defendants' motion is an attempt to avoid the agreement entered into by Ms. Cantrell's power of attorney to arbitrate disputes.

         DISCUSSION

         Rule 12(b)(6) permits the Court to dismiss a complaint for “failure to state a claim upon which relief can be granted.” Fed.R.Civ.P. 12(b)(6). To survive a motion to dismiss, the complaint must have sufficient factual matter that if true, states a claim to relief that is plausible on its face. Ashcroft v. Iqbal, 556 U.S. 662, 677 (2009) (“Iqbal”). As such, a plaintiff's “[f]actual allegations must be enough to raise a right to relief above the speculative level.” Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007) (“Twombly”). All well-pleaded factual allegations are “viewed in the light most favorable to the nonmoving party.” Brokers' Choice of Am., Inc. v. NBC Universal, Inc., 757 F.3d 1125, 1136 (10th Cir. 2014). In ruling on a motion to dismiss, “a court should disregard all conclusory statements of law and consider whether the remaining specific factual allegations, if assumed to be true, plausibly suggest the defendant is liable.” Kan. Penn Gaming, LLC v. Collins, 656 F.3d 1210, 1214 (10th Cir. 2011). Mere “labels and conclusions” or “formulaic recitation[s] of the elements of a cause of action” will not suffice. Twombly, 550 U.S. at 555.

         I. Whether Plaintiffs Are Real Parties in Interest

         Defendants contend that Plaintiffs are not the real parties in interest in this lawsuit. According to the amended complaint, Carol Cantrell's attorney executed a Mutual Agreement to Arbitrate Disputes (“Arbitration Agreement”) on March 5, 2016, the day after Ms. Cantrell was admitted to the facility. Doc. 22, ¶11.

         The First paragraph of the Arbitration Agreement states:

It is understood and agreed by Princeton Place (the “Facility”) and Cantrell, Carol (“Resident” or “Resident's Authorized Representative”), hereinafter collectively the “Resident” that any legal dispute, controversy, demand or claim (hereinafter collectively referred to as “claim” or “claims”) that arises out of or relates to the Resident Admission Agreement or any service or healthcare provided by the Facility to the Resident, shall be resolved exclusively by binding Arbitration . . . .

Doc. 1-3 (Arbitration Agreement) (emphasis added). Defendants argue that this language establishes that the only two parties to the Arbitration Agreement Princeton Place and Ms. Carroll, and that Plaintiffs are not the real parties in interest because they are not the intended beneficiaries of the agreement under New Mexico law.[2]

         A. Relevant Law

         Fed. R. Civ. Pro. 17(a) requires that an action be prosecuted in the name of the real party in interest. A “real party in interest” is a party that has a substantive right that is enforceable under applicable substantive law. Scheufler v. General Host Corp., 895 F.Supp. 1416, 1418 (D. Kan. 1995), aff'd, 126 F.3d 1261 (10th Cir. 1997).

         Generally, a contract cannot be enforced by a person who is not a party to the contract or not in privity with a party to the contract. Tarin's Inc. v. Tinley, 2000-NMCA-048, 129 N.M. 185; Fleet Mortgage Corp. v. Schuster, 1991-NMSC-046, ¶ 4, 112 N.M. 48, (one who is not a party to a contract cannot sue to enforce it). A third-party beneficiary, however, may have an enforceable right against a party to a contract “if the parties to the contract intended to benefit the third party.” Id., ¶4, 112 N.M. 48. “Whether a party is a third-party beneficiary depends on if the parties to the contract intended to benefit the third party.” Id. “Such intent must appear either from the contract itself or from some evidence that the [third party] is an intended beneficiary.” Id. Further, a person claiming to be a third-party beneficiary has the burden of showing that the parties to a contract intended to benefit the third party, individually or as a member of a class of beneficiaries. Casias v. Cont'l Cas. Co., 125 N.M. 297, 300 (citing Jaramillo v. Providence Wash. Ins. Co., 117 N.M. 337, 343 (1994)). Intent to benefit a third party “must appear either from the contract itself or from some evidence that the person claiming to be a third-party beneficiary is an intended beneficiary.” Valdez v. Cillessen & Son, Inc., 105 N.M. 575, 581, 734 P.2d 1258, 1264 (1987).[3]

         A third party beneficiary doctrine applies also to arbitration contracts. See Rivera v. American Gen. Fin. Servs., Inc., 2010-NMCA-046, ¶¶ 20-22, 148 N.M. 784, 242 P.3d 351, rev'd on other grounds by 2011-NMSC-033, 150 N.M. 398, 259 P.3d 803; Gibson v. Wal-Mart Stores, Inc., 181 F.3d 1163, 1170 n.3 (10th Cir.1999) (a nonsignatory may enforce an arbitration agreement if the nonsignatory “was, at the very least, a third party beneficiary of the Agreement”); THI of New Mexico at Hobbs Center v. Patton, No. 11-537, 2012 WL 112216, at *8 (D.N.M. Jan. 3, 2012) (Patton II) (concluding that the New Mexico Supreme Court would likely follow the reasoning of numerous cases cited therein extending third-party beneficiary doctrine to arbitration agreements).

         The question here is where Plaintiffs have shown that under New Mexico law, ...


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