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Taos NM Senior Living, LLC v. Trujillo

United States District Court, D. New Mexico

March 18, 2019



         THIS MATTER comes before the Court upon Defendant's Motion to Dismiss Under Rule 12(b)(1), (6), (7) (Doc. 8) and Plaintiff's response (Doc. 14). Having reviewed the parties' pleadings and the applicable law, Defendant's Motion is not well-taken, and is, therefore, DENIED. As described herein, Defendant is ORDERED to file a response brief to Plaintiff's Motion to Compel Arbitration (Doc. 6) WITHIN FOURTEEN (14) DAYS of the filing of this Order, and Plaintiff is ORDERED to file a reply brief WITHIN FOURTEEN (14) DAYS of the filing of Defendant's response. Plaintiff's currently filed reply brief (Doc. 17) shall be stricken without prejudice so that Plaintiff may file a new reply brief accordingly.


         I. Factual Background

         This case stems from a wrongful death lawsuit in the First Judicial District Court, Santa Fe County, New Mexico, involving the death of R. Horacio Trujillo. See Doc. 5-6 (first amended state court complaint) (hereinafter referencing “State Court Action”). From approximately June 26, 2015 to July 10, 2015, Mr. R. Horacio Trujillo (“Mr. Trujillo”) resided at Taos Retirement Village, which is a nursing facility located in Taos, New Mexico. Mr. Trujillo passed away on October 17, 2016, allegedly due to injuries related to his care and treatment at Taos Retirement Village. Plaintiff Taos NM Senior Living, LLC (“Plaintiff”), who is also one of several defendants in the State Court Action, operated Taos Retirement Village.[1] Plaintiff is an Oregon limited liability company with its principal place of business in Salem, Oregon. Mr. Barry Green, Esq., was appointed as the personal representative to Mr. Trujillo's estate pursuant to the New Mexico Wrongful Death Act. Doc. 5-5.

         On July 3, 2018, Defendant filed the First Amended State Court Complaint (“State Court Action”) in the First Judicial District for claims of wrongful death, negligence, joint and several liability, and punitive damages, against several defendants, including Taos NM Senior Living, LLC. Doc. 5-6. On September 25, 2018, Taos Senior Living, LLC, filed in the District of New Mexico the federal Complaint to Compel Arbitration, pursuant to the Federal Arbitration Act (hereinafter “FAA”), against the estate of Mr. Trujillo. Doc. 1. On the same day in state court, Taos NM Senior Living, LLC, along with several other state court defendants, filed the Motion for Protective Order and Motion to Stay Proceedings Pending Resolution of Federal Action to Compel Arbitration or in the Alternative Motion to Compel Arbitration. Doc. 8-2. On October 10, 2018, Taos NM Senior Living, LLC, filed in federal court the Amended Complaint to Compel Arbitration. Doc. 5. On October 15, 2018, Plaintiff filed a motion to compel arbitration of all claims raised in the State Court Action pursuant to the FAA. Doc. 6, Plaintiff's Motion to Compel Arbitration. Of the several defendants named in the State Court Action, Plaintiff Taos NM Senior Living, LLC, is the only one named in this action in federal court. On October 19, 2018, Defendant filed its Answer to Plaintiff's Complaint to Compel Arbitration Subject to Motion to Dismiss (Doc. 7) and Defendant also filed a Motion to Dismiss Plaintiff's Complaint to Compel Arbitration under Federal Rule of Civil Procedure 12(b)(1), (6), and (7) (Doc. 8). Plaintiff filed its response brief to Defendant's Motion to Dismiss on November 2, 2018. Doc. 14. Defendant also filed the Motion to Strike Plaintiff's Motion to Compel Arbitration on February 25, 2019 (Doc. 21) and Plaintiff filed its response brief on March 11, 2019 (Doc. 23).

         II. The Medical Center Agreement

         On July 2, 2015, Mr. Trujillo signed the “Medical Center Agreement” (hereinafter “MCA”) which Plaintiff attached to its Amended Complaint to Compel Arbitration (Doc. 5-4). The first page of the MCA states:

This is a Nursing Facility Admission Agreement for the Taos Retirement Village. Please read the Agreement carefully before you sign it. If you do not understand any provision of this Agreement, you should not sign the Agreement until you obtain clarification. You are encouraged to have this Agreement reviewed by your legal representative or by any other advisor you may have before you sign this agreement.

Doc. 5-4 at 1. On page 12, under the section labeled “N. Alternative Dispute Resolution” is the following language, completely and verbatim:

The parties hereto agree to resolve any disputes or claims they may have arising out of or related to this Admission Agreement and or the care provided to the resident pursuant to this Admission Agreement first through Mediation and thereafter if needed through Binding Arbitration. The parties specifically agree to waive their rights to a jury trial and to pursue this method of resolving any claims or disputes they may have with the other. The mediation and arbitration agreement between the parties is set forth and attached hereto as Appendix L and is incorporated into this Admission Agreement by this reference.
Mediation is an informal method of resolving conflicts before a neutral individual who will hear the conflict and desired outcomes and make a recommendation as to a fair resolution. The Mediators recommendation is not binding and the parties may reject it.
Arbitration is a means to resolve disputes without a judge or jury and is binding on the parties. The parties specifically waive their right to trial before a jury. Arbitration is generally a quicker, more efficient, and less expensive means to resolve disputes. This agreement to Arbitrate includes claims for personal injury or property damage and applies to any and all disputes or legal claims for breach of contract, tort, breach of statutory duties, or based on any other legal theory, whether currently existing or arising in the future, other than any action to terminate this Agreement either by the resident or the community.

Doc. 5-4 at 12 (emphasis in bold, underline, italics, and enlarged font in original) (this provision hereinafter referenced as “ADR Provision”). Below the final line of the language above reads: “THE PARTIES HEREBY EXECUTE THIS RESIDENT ADMISSION AGREEMENT.” This is followed by the illegible signature of “Representative of Nursing Facility” dated 7/2/15, the signature of “Resident” dated 7/2/15, and the signature of “Resident's Legal Representative” dated 7/2/15. Doc. 5-4 at 13. Appendix L, referenced in the ADR Provision language above, is not attached to any of the pleadings submitted to this Court.

         On the final page of the MCA is the following language:

I acknowledge that I have been informed orally of my rights under Federal and New Mexico law as a nursing home Patient/Resident, and of all rules and regulations governing my conduct as a Patient/Resident of the Health Care Center and that I have received and read copies of the following documents:
Arbitration Information.

Doc. 5-4 at 14 (twelve bulleted items omitted and bold emphasis in original). “Arbitration Information” is the final item in the bulleted list, and it is the only item in bold. “Signature of Patient” is signed and dated 7/2/15 and the line labeled “Signature of Fiduciary Party (legal representative)” is blank.

         III. Issues

         Defendant now raises four grounds that he claims require dismissal of Plaintiff's Complaint to Compel Arbitration:

1. Dismissal is required under Rule 12(b)(6) because there is not an enforceable agreement to arbitrate between the parties, and there is therefore no claim to compel arbitration under the FAA.
2. Plaintiff has waived its ability to enforce any arbitration agreement based on waiver by bad faith conduct.
3. Dismissal is required under Fed.R.Civ.P. 12(b)(1) and (7) because Plaintiff failed to join necessary and indispensable parties to this federal action pursuant to Fed.R.Civ.P. 19(a) and (b), and joining such parties would ruin this Court's diversity jurisdiction.
4. The Court should abstain from exercising jurisdiction under the Colorado River doctrine.

         The Court addresses each in turn below to conclude that dismissal is not required.


         I. Plaintiff has Stated a Claim Under Rule 12(b)(6) to Survive Defendant's Motion to Dismiss for Failure to State a Claim

         A. Standard for Rule 12(b)(6) Motion to Dismiss

         Under Federal Rule of Civil Procedure 12(b)(6), a defendant may move for dismissal of a claim on the grounds that a Plaintiff has failed to state a claim upon which relief can be granted. Fed.R.Civ.P. 12(b)(6). A court must determine whether the plaintiff has pleaded facts that, when accepted as true, are sufficient to “state a claim to relief that is plausible on its face.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). “A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id. The court does not give any presumption to a plaintiff's legal conclusions but does accept the factual allegations as true at this stage. Id. The court must “view these allegations in the light most favorable to the plaintiff.” Smith v. United States, 561 F.3d 1090, 1098 (10th Cir. 2009).

         B. Standard to Compel Arbitration

         The Federal Arbitration Act (“FAA”) “provides a procedure for parties to compel arbitration . . . .” 9 U.S.C. § 4. Section 2 of the FAA places arbitration agreements on an equal footing with other contracts and requires courts to enforce them according to their terms. Rent-A-Ctr., W., Inc. v. Jackson, 561 U.S. 63 (2010). While the FAA favors arbitration agreements, a legally enforceable contract is still a prerequisite for arbitration, and without such a contract, parties will not be forced to arbitrate. See Howard v. Ferrellgas Partners, L.P., 748 F.3d 975, 977 (10th Cir. 2014). Once a court is satisfied that the parties entered an agreement to arbitrate, it must order the parties to proceed to arbitration in accordance with the agreement. 9 U.S.C. § 4.

         C. The “Alternative Dispute Resolution” Provision in the Medical Center Agreement is Sufficient to Survive a Motion to Dismiss Under Rule 12(b)(6)

         The parties agree that New Mexico state law on contract formation principles applies. See Doc. 8-1 at 4; Doc. 14 at 4. “Under New Mexico law, arbitration agreements are governed by well-established contract law principles.” Felts v. CLK Mgmt, 2011-NMCA-062, ¶ 22, 149 N.M. 681, 690. A binding contract requires that there “be a meeting of the minds of the parties, and mutuality, and in order for the contract to be valid the agreement must ordinarily be expressed plainly and explicitly enough to show what the parties agreed upon.” Trujillo v. Glen Falls Ins. Co., 1975-NMSC-046, ¶ 6, 88 N.M. 279, 281. Regarding the content of an enforceable contract, the Supreme Court of New Mexico has explained that “[a]lthough a written contract need not detail every term, essential terms must be expressly provided or necessarily implied by construction for a court to find the contract unambiguous on its face.” McNeill v. Rice Eng'g Operating, Inc., 2003-NMCA-078, ¶ 27, 133 N.M. 804, 812 (citing C.R. Anthony, 1991-NMSC-070, ¶ 10).

         Defendant and Plaintiff both put forward arguments about the enforceability of the ADR Provision as an agreement to arbitrate-at this stage, however, the Court examines whether Plaintiff has pleaded sufficient facts, that when taken as true, survive Defendant's motion to dismiss for failure to state a claim. Iqbal, 556 U.S. at 678.[2] The parties agree that Appendix L to the MCA is not before the Court in these pleadings, and defense counsel asserts that he has not been provided with a copy of Appendix L. In arguing that Plaintiff has not stated a claim for an enforceable agreement to arbitrate, Defendant relies on the fact that Appendix L is referenced by and incorporated into the ADR Provision. Defendant argues that in the absence of Appendix L, “there quite simply is no evidence that an agreement to arbitrate exists, no demonstrable proof that a ‘meeting of the minds' occurred as to the essential terms, and no manifestation of the parties' alleged intent to arbitrate their disputes.” Doc. 8-1 at 6. Plaintiff counters that “[c]ontrary to Defendant's contention that the arbitration agreement is ‘missing,' the agreement to arbitrate is clearly and unambiguously set forth in the Admission Agreement [MCA] itself at Page 12.” Doc. 14 at 3-4. Plaintiff notes that 1) the absence of Appendix L does not render unenforceable the agreement of the parties to arbitrate and 2) Plaintiff is not relying on any documents outside of the Medical Center Agreement to demand arbitration. Doc. 14 at 4-5.

         Construed under the proper pleading standards, the MCA contains adequate essential terms for the Court to conclude that Plaintiff has stated a claim that the parties had an agreement to arbitrate, to the extent that the lack of Appendix L is not fatal to Plaintiff's claim at this motion to dismiss stage. The parties to the MCA and ADR Provision are indicated by the signatures of a representative of Taos Retirement Village and Mr. Trujillo as the resident, which neither party disputes. The MCA also defines the parties on the first page of the MCA as being Taos Retirement Village and the person signing as the resident.[3] The first line of the ADR Provision states: “The parties hereto agree to resolve any disputes or claims they may have arising out of or related to this Admission Agreement and or the care provided to the resident pursuant to this Admission Agreement first through Mediation and thereafter if needed through Binding Arbitration.” Doc. 5-4 at 12 (emphasis added). The ADR Provision goes on to twice state, in enlarged font, that “[t]he parties specifically waive their rights to a jury trial[.]” (underline added here). The ADR Provision then gives colloquial definitions of mediation and arbitration and again distinguishes between the voluntary and mandatory aspects of the process. The final sentence states that this provision includes personal injury and tort actions presently or in the future, along with claims based on other legal theories.

         Even in the absence of Appendix L, the existing essential terms are not rendered meaningless to the extent that Plaintiff's claim should be dismissed for failure to state a claim. Most notably, neither party is seeking to enforce the terms in Appendix L, so the Court is not confronted with the distinguishable situation of enforcing contract terms without any written evidence. Defendant states that there is “no guidance or an expression of the arbitration scheme to explain precisely how the parties are supposed to proceed with any alternative dispute resolution methods[, ]” Doc. 8-1 at 6, but Defendant has neither argued nor cited case law about why an agreement to an arbitration scheme-and what he means by ...

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