Court Opinion

ID: 4097942
Source: CourtListenerOpinion
Date Created: 2016-11-14 16:01:10.058168+00
Date Added: 2024-06-11T14:09:02.495164
License: Public Domain

United States Court of Appeals
                            For the Eighth Circuit
                        ___________________________

                                No. 15-3406
                        ___________________________

Eddie B. Robinson, as administrator for the Estate of Willie Robinson, Sr., deceased

                        lllllllllllllllllllll Plaintiff - Appellant

                                            v.

EOR-ARK, LLC; VAJ, LLC; Senior Living Communities of Arkansas, LLC; SLC
Operations Holdings, LLC; SLC Operations, LLC; Pine Hills Holdings, LLC; Pine
  Hills Health and Rehabilitation, LLC, doing business as Pine Hills Health and
Rehabilitation; SLC Operations Master Tenant, LLC; SLC Properties, LLC; SLC
Property Holdings, LLC; SLC Property Investors, LLC; Arkansas Nursing Home
    Acquisitions, LLC; CSCV Holdings, LLC; Capital Funding, LLC; Capital
 Funding Group, Inc.; Capital Finance, LLC; Capital Seniorcare Ventures, LLC;
    Addit, LLC; SLC Professionals of Arkansas, LLC, doing business as SLC
 Professionals, LLC; Senior Vantage Point, LLC; 900 Magnolia Road SW, LLC;
    Quality Review, LLC; Arkansas SNF Operations Acquisition, LLC; SLC
 Professionals Holdings, LLC; SLC Administrative Services of Arkansas, LLC;
                                   John Dwyer

                      lllllllllllllllllllll Defendants - Appellees
                                       ____________

                     Appeal from United States District Court
                 for the Western District of Arkansas - El Dorado
                                 ____________

                          Submitted: September 21, 2016
                            Filed: November 14, 2016
                                 ____________

Before RILEY, Chief Judge, MURPHY and SMITH, Circuit Judges.
                             ____________
MURPHY, Circuit Judge.

       Willie Robinson, Sr. entered into an arbitration agreement when he was
admitted to the Pine Hills Health and Rehabilitation nursing home. After Willie died,
his son and estate administrator Eddie Robinson (Robinson) brought this action
against Pine Hills and related entities. Defendants moved to dismiss and compel
arbitration. The district court1 granted defendants' motion and Robinson now appeals.
We affirm.

                                          I.

      When Willie was admitted to Pine Hills in 2010 he signed an arbitration
agreement. The arbitration agreement provides that it is governed by the Federal
Arbitration Act and includes a severability clause. The agreement also provides that
claims arising from Pine Hills services to Willie must be arbitrated "in accordance
with the National Arbitration Forum Code of Procedure, ('NAF') which is hereby
incorporated into th[e] agreement, and not by a lawsuit or resort to court process."
(footnote omitted). The code lists five possible fora for arbitration: NAF, the
International Arbitration Forum, the Arbitration Forum, arbitration-forum.com, and
adrforum.com.

       The year before the parties had entered into the arbitration agreement, NAF
entered into a consent judgment in which it agreed not to process, administer, or in
any way participate in any new consumer arbitration. The parties do not state
whether the four other arbitration fora listed in the code still perform consumer
arbitration. The code provides that if the code is canceled or the parties "are denied

      1
       The Honorable Susan O. Hickey, United States District Judge for the Western
District of Arkansas, adopting the report and recommendation of the Honorable Barry
A. Bryant, Chief Magistrate Judge, United States District Court for the Western
District of Arkansas.

                                         -2-
the opportunity to arbitrate a dispute, controversy or Claim before" a forum listed in
the code, then the parties "may seek legal and other remedies."

       After Willie died, Robinson filed a complaint in Arkansas state court for
alleged injuries and wrongful death Willie suffered at Pine Hills. Defendants are Pine
Hills; entities that owned, operated, managed, controlled, and provided services to
Pine Hills; and a person who was the corporate manager, officer, owner, and director
of the defendant entities. Defendants moved to dismiss the complaint and compel
arbitration and then removed the case to federal court. The district court granted the
motion to dismiss and compel arbitration. Robinson appeals the district court's order.

                                          II.

       We review the district court's decision to compel arbitration de novo and its
factual findings for clear error. Schultz v. Verizon Wireless Servs., LLC, 833 F.3d
975, 980 (8th Cir. 2016). In reviewing an arbitration agreement, "we ask only (1)
whether there is a valid arbitration agreement and (2) whether the particular dispute
falls within the terms of that agreement." Faber v. Menard, Inc., 367 F.3d 1048, 1052
(8th Cir. 2004). If the parties have a valid arbitration agreement that encompasses the
dispute, a motion to compel arbitration must be granted. 3M Co. v. Amtex Sec., Inc.,
542 F.3d 1193, 1198 (8th Cir. 2008).

       State contract law governs whether the parties have entered into a valid
arbitration agreement. Donaldson Co. v. Burroughs Diesel, Inc., 581 F.3d 726, 731
(8th Cir. 2009). Robinson does not argue that the agreement is unenforceable, and
under Arkansas law the agreement is enforceable even though NAF is unavailable to
serve as the arbitrator. Courtyard Gardens Health & Rehab., LLC v. Arnold, 485
S.W.3d 669, 674–77 (Ark. 2016).

                                         -3-
        Because the arbitration agreement is enforceable, we must determine whether
the present dispute falls within its scope given that NAF no longer conducts consumer
arbitration. In determining whether a dispute falls within the scope of an arbitration
clause, we "construe[] the clause liberally, resolving any doubts in favor of arbitration
. . . 'unless it may be said with positive assurance that the arbitration clause is not
susceptible of an interpretation that covers the asserted dispute.'" 3M Co., 542 F.3d
at 1199 (quoting MedCam, Inc. v. MCNC, 414 F.3d 972, 975 (8th Cir. 2005)).

        Robinson argues that the terms of the arbitration agreement allow him to
litigate his claims because NAF's unavailability denies him "the opportunity to
arbitrate a dispute, controversy or Claim before" the fora listed in the code. As an
initial matter, it is not clear whether all possible arbitration fora listed in the code are
actually unavailable. NAF has stopped participating in consumer arbitration but
paragraph 2(S) of the code lists four other possible arbitration fora. If any of these
fora is available, then there is no lapse in naming an arbitrator and the parties are
bound to arbitrate. The parties appear to accept, though, that all fora listed in
paragraph 2(S) are unavailable.

        Even assuming that all listed arbitration fora are unavailable, the arbitration
agreement still requires the parties to arbitrate this dispute. The code provides that
if a party is denied the opportunity to arbitrate before a listed forum, then it "may seek
legal and other remedies in accord with applicable law." The applicable law here is
Section 5 of the Federal Arbitration Act. That statute provides that when there is a
lapse in naming an arbitrator, the court must appoint a substitute arbitrator so that the
parties may still arbitrate the dispute. 9 U.S.C. § 5.

       Many courts have recognized an exception to Section 5 when the choice of
arbitrator is integral to the arbitration agreement. Inetianbor v. CashCall, Inc., 768
F.3d 1346, 1350 & n.1 (11th Cir. 2014) (collecting cases). But see Green v. U.S.
Cash Advance Ill., LLC, 724 F.3d 787 (7th Cir. 2013). Robinson argues that we

                                            -4-
should recognize this exception and conclude that the selection of NAF was integral
to the arbitration agreement. We need not decide whether to adopt such exception
because it would not apply in this case as the choice of arbitrator was not integral to
the arbitration agreement. The arbitration agreement does not say that the parties
must either arbitrate before one of the five fora listed in the code or else litigate.
Instead, the agreement allows the parties to "seek legal and other remedies" which
leaves open the possibility of arbitration before a different arbitrator. Moreover, the
parties may well have considered the choice of arbitrator unimportant enough that
they did not check whether NAF was still available to perform consumer arbitration
before they entered into the agreement. If they had checked, they would have learned
that NAF had stopped performing such arbitrations nearly a year earlier.

       Robinson also argues that he is not required to arbitrate his claims because the
code has been canceled, and the code itself allows parties to seek "legal and other
remedies" in this situation. He has not shown, however, that NAF has canceled the
code. The meaning of the term "cancel" in this context is a matter of contract
interpretation, and the code does not define the term. Because the Federal Arbitration
Act does not address this issue, state law controls. See DIRECTV, Inc. v. Imburgia,
136 S. Ct. 463, 468 (2015). Interpreting the same contract language, the Arkansas
Supreme Court recently ruled that NAF's cessation of consumer arbitration does not
by itself establish that NAF has canceled the code. See Courtyard Gardens, 485
S.W.3d at 676. The fact that NAF has stopped performing consumer arbitration does
not prove that the code has been canceled, and Robinson has not provided additional
persuasive evidence to show cancellation.

      Robinson finally argues that defendants who did not sign the arbitration
agreement may not force his claims to arbitration. State contract law governs the
power of nonsignatories to enforce an arbitration agreement. Donaldson, 581 F.3d
at 732. Under Arkansas law, "a nonsignatory may compel a signatory to arbitrate
claims in limited circumstances." PRM Energy Sys., Inc. v. Primenergy, L.L.C., 592

                                         -5-
F.3d 830, 834 & n.3 (8th Cir. 2010). One such circumstance "relies on agency and
related principles to allow a nonsignatory to compel arbitration when, as a result of
the nonsignatory's close relationship with a signatory, a failure to do so would
eviscerate the arbitration agreement." Id. at 834.

       According to Robinson's complaint, his claims arise from most defendants'
participation "in the ownership, operation, management, control and/or services
provided to Pine Hills." The complaint also alleges that all defendants "through a
joint venture owned, operated, managed and controlled Pine Hills." The arbitration
agreement says "that it shall inure to the benefit of and bind the parties, their
successors, and assigns, including without limitation the agents, employees and
servants of the Facility."

       Under Arkansas law, these allegations are enough for a court to conclude that
the parties are closely related and that arbitration is appropriate. See Searcy
Healthcare Ctr., LLC v. Murphy, 2013 Ark. 463 at *6 (2013) (unpublished). To the
extent that nonsignatory defendants provided services to Pine Hills, they may compel
arbitration because the parties specifically agreed that the arbitration agreement ran
to their benefit. To the extent that the nonsignatory defendants owned, operated, and
managed Pine Hills, they may compel arbitration because they are closely related to
Pine Hills and Robinson's claims arise from their relationship with Pine Hills. If
Robinson were allowed to sue its owners, operators, and managers for Pine Hills'
alleged misconduct, then he would be able to evade the arbitration agreement and
thus eviscerate it. In order to honor the arbitration agreement, we should enforce it
against the nonsignatory defendants.

      For these reasons we affirm the order of the district court.
                      ______________________________

                                         -6-