Court Opinion

ID: 4111735
Source: CourtListenerOpinion
Date Created: 2016-12-28 17:15:45.609218+00
Date Added: 2024-06-11T14:20:28.413296
License: Public Domain

IN THE COURT OF APPEALS OF TENNESSEE
                                AT KNOXVILLE
                                  October 19, 2016 Session

                BILLY COFFEY, ET AL. V. HAMBLEN COUNTY, ET AL.

                      Appeal from the Circuit Court for Hamblen County
                       No. 15CV139     Douglas T. Jenkins, Chancellor1

                No. E2016-01116-COA-R3-CV-FILED-DECEMBER 28, 2016

This is a breach of contract action in which the plaintiffs filed suit on behalf of the
decedent, who died as a result of suicide in the county jail. The plaintiffs sought damages
from the designated emergency medical services provider pursuant to a contract between
the provider and the county. The provider filed a motion to stay and compel arbitration
pursuant to the terms of the contract. The plaintiffs argued that the arbitration provision
in the contract was invalid because it did not contain the required notice advising the
parties of the waiver of trial by jury and appeal. The trial court agreed and denied the
motion. We reverse and remand for arbitration.

           Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Circuit Court
                               Reversed; Case Remanded

JOHN W. MCCLARTY, J., delivered the opinion of the Court, in which ANDY D. BENNETT,
J., joined, D. MICHAEL SWINEY, C.J., filed separate concurring and dissenting opinion.

Russell W. Adkins and Robert L. Arrington, Kingsport, Tennessee, for the appellant,
Morristown Emergency & Rescue Squad, Inc. d/b/a Morristown-Hamblen Emergency
Medical Services.

Jeffrey R. Thompson and Gina C. Sarli, Knoxville, Tennessee, for the appellee, Hamblen
County.

Troy L. Bowlin, II, Morristown, Tennessee, for the appellees, Billy Coffey, Melissa
Coffey, and Melinda Wolfe.

1
    Sitting by interchange.
                                               OPINION

                                   I.      BACKGROUND

      On July 1, 2015, Thomas Coffey (“Decedent”) was arrested and transported to the
Hamblen County Jail. Decedent, who was under the influence of alcohol and “other
drugs” at the time of his arrest, was placed in the general population in a regular housing
unit with other inmates. Jail personnel later discovered Decedent unconscious and
hanging in his cell as a result of an apparent suicide attempt on July 4, 2015. Jail
personnel called the Morristown Emergency Rescue Squad, Inc. d/b/a Morristown-
Hamblen Emergency Medical Services (“EMS”) for service and transport of Decedent to
the hospital. When no ambulance arrived, jail personnel called EMS a second time.
EMS advised them that transport was unavailable at the moment because EMS was “out
on other calls.” Deputy sheriffs then transported Decedent by patrol car to the
Morristown Hamblen Hospital. Decedent succumbed to his injuries on July 11, 2015.

       A number of Decedent’s relatives, Billy Coffey, Melissa Coffey, and Melinda
Wolfe (collectively “Plaintiffs”), filed suit against numerous persons and entities,
including Hamblen County, Tennessee (“the County”) and EMS.2 At issue in this appeal
is Plaintiffs’ allegation that EMS breached its service agreement with the County by
failing to timely respond after receiving notification that Decedent attempted suicide by
hanging.

       EMS moved to stay the proceeding and to compel arbitration, arguing that
Plaintiffs were bound by an arbitration provision in the service agreement because they
filed suit as third-party beneficiaries to the contract between EMS and the County. The
provision at issue provides as follows:

          ARBITRATION. Any dispute or controversy arising under, out of or in
          connection with, or in relation to this Agreement, or any amendment
          hereof, or the breach hereof shall be determined and settled by arbitration in
          Hamblen County, Tennessee, in accordance with the American Health
          Lawyers Association Alternative Dispute Resolution Services Rules of
          Procedures for Arbitration and applying the laws of the State. Any award
          rendered by the arbitrator shall be final and binding upon each of the
          parties, and judgment thereon may be entered in any court having
          jurisdiction thereof. The costs shall be borne equally by both parties.
          During the pendency of any such arbitration and until final judgment
          thereon has been entered, this Agreement shall remain in full force and

2
    All parties were later dismissed except for Hamblen County and EMS.
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       effect unless otherwise terminated as provided hereunder. The provision of
       this Paragraph shall survive expiration or other termination of this
       Agreement regardless of cause of such termination.

Plaintiffs and Hamblen County opposed the motion to stay, arguing that the claims set
forth in the complaint fall under the category of a “Consumer Case” as defined by the
American Health Lawyers Association Alternative Dispute Resolution Services Rules of
Procedure for Arbitration (“AHLA”). They claim that in consumer cases, the AHLA
requires the use of a separate document conspicuously identified as an agreement to
arbitrate with the following notice or a notice with substantially similar language:

       Voluntary Agreement to Arbitrate
       THIS AGREEMENT GOVERNS IMPORTANT LEGAL RIGHTS.
       PLEASE READ IT CAREFULLY BEFORE SIGNING.

       This is a voluntary agreement to resolve any dispute that may arise in
       the future between the parties under the American Health Lawyers
       Association’s Rules of Procedure for Arbitration. In arbitration, a
       neutral third party chosen by the parties issues a final, binding
       decision. When parties agree to arbitrate, they waive their right to a
       trial by jury and the possibility of an appeal.

Plaintiffs and Hamblen County claimed that the arbitration provision was invalid because
it did not contain the required notice. The trial court agreed and denied the motion to stay
and to compel arbitration. This timely appeal followed.

                                      II.     ISSUES

   We consolidate and restate the issues on appeal as follows:

       A.     Whether the arbitrator, rather than the trial court, held the authority
       to determine whether the claim is subject to arbitration.

       B.    Whether the trial court erred in denying the motion to stay the
       proceedings and to compel arbitration.

                             III.    STANDARD OF REVIEW

      When ruling on the appeal of a denial of a motion to compel arbitration, we must
follow the standard of review that applies to bench trials. Spann v. American Express
Travel Related Servs. Co., 224 S.W.3d 698, 706-07 (Tenn. Ct. App. 2006). Under that
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standard, review of the trial court’s findings of fact are “de novo upon the record of the
trial court, accompanied by a presumption of the correctness of the finding unless the
preponderance of the evidence is otherwise.” Tenn. R. App. P. 13(d). Questions of law
are reviewed de novo without a presumption of correctness. Johnson v. Johnson, 37
S.W.3d 892, 894 (Tenn. 2001).

                                  IV.    DISCUSSION

                                            A.

      EMS argues that the AHLA provides the arbitrator with the authority to decide
whether issues are subject to arbitration pursuant to the following provision:

      POWERS AND DUTIES. An arbitrator has the power to: (1) determine his
      or her powers and duties under an arbitration clause; [and] (2) interpret the
      Rules to the extent that they relate to his or her powers or duties[.]

EMS claims that the court should have allowed the arbitrator to determine whether the
claim is subject to arbitration.

        While the AHLA bestows authority upon the arbitrator to determine whether an
issue is not subject to arbitration, neither the AHLA nor the service agreement at issue
provides the arbitrator with the sole authority to determine such issues. “Generally,
whether a valid agreement to arbitrate exists between the parties is to be determined by
the courts.” Taylor v. Butler, 142 S.W.3d 277, 283-84 (Tenn. 2004) (citations omitted);
see also Green Tree Fin. Corp. v. Bazzle, 539 U.S. 444, 452 (2003) (citations omitted)
(providing that in the absence of “clear and unmistakable evidence” to the contrary, the
trial court assumes the responsibility to determine whether an arbitration agreement is
valid). Accordingly, we conclude that the court did not err in refusing to submit the issue
of whether the arbitration provision was valid to the arbitrator.

                                            B.

        EMS provides that the preference for arbitration in accordance with public policy
is compelling here as evidenced by the numerous claims filed of which EMS holds no
knowledge. EMS further argues that Plaintiffs are bound by the arbitration provision as
third-party beneficiaries to the contract. Plaintiffs and Hamblen County respond that the
court did not err in classifying the claim as a consumer claim, thereby rendering the
arbitration provision unenforceable for failure to include proper notice. Hamblen County
further responds that compelling arbitration could produce inconsistent results.

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       The AHLA provides, in pertinent part, as follows:

       “Health Care Entity” includes any provider of health care services,
       including individuals; any health care or other benefit plan; and any
       manufacturer, distributor, supplier, or seller of a medical product,
       including, but not limited to, drugs, devices and/or equipment.

       “Consumer” means a current or former patient, resident, or subscriber of a
       Health Care Entity; a beneficiary of a health plan; the user of a medical
       product, including, but not limited to, drugs, devices [and/or] equipment;
       the personal representative of a current or former patient, resident,
       subscriber, beneficiary, or product user; or any parent spouse, child,
       executor, administrator, heir, or survivor entitled to bring a survival or
       wrongful death claim on behalf of a former patient, resident, subscriber,
       beneficiary, or product user.

       “Consumer Case” means a dispute between a Health Care Entity and a
       Consumer concerning: (a) the delivery of care or treatment by the Health
       Care Entity; (b) the use of a medical product including, but not limited to,
       drugs and equipment, and/or (c) payment for such care, treatment, or
       product.

       These definitions shall be construed liberally with any doubts as to whether
       a case is a Consumer Case to be resolved in favor of providing the
       protections contained in these rules to the Consumer.

Using the most liberal construction of the definitions provided by the AHLA, we simply
cannot agree with the trial court’s classification of the claim at issue as a consumer claim
when Plaintiffs filed suit pursuant to a contract between the County and EMS for the
failure to provide services as promised in the service agreement.

        Accordingly, Plaintiffs’ claim is dependent upon Decedent’s status as a third-party
beneficiary to the service agreement. The service agreement explicitly provides that
“[a]ny dispute or controversy arising under, out of or in connection with, or in relation to
this Agreement, or any amendment hereof, or the breach hereof shall be determined and
settled by arbitration.” As third-party beneficiaries, Plaintiffs are bound by the arbitration
provision contained in the service agreement between the County and EMS. See
generally Benton v. The Vanderbilt Univ., 137 S.W.3d 614, 620 (Tenn. 2004) (holding
that a third-party beneficiary to a contract cannot enforce favorable terms in a contract
while simultaneously avoiding unfavorable ones, e.g., an arbitration provision). We
acknowledge that the enforcement of the arbitration provision will result in bifurcated
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proceedings and possibly yield an inconsistent result. This argument is of no avail when
the proceedings at issue involve separate claims. Diggs v. Lingo, No. W2014-00525-
COA-R3-CV, 2014 WL 7431466, at *4 (Tenn. Ct. App. Dec. 30, 2014 (upholding the
denial of a motion to compel arbitration “where a single claim must be resolved as to two
defendants, only one of which is subject to arbitration”). Additionally, the United States
Supreme Court has held that agreements to arbitrate are valid “even where the result
would be the possibly inefficient maintenance of separate proceedings in different
forums.” Dean Witter Reynolds, Inc. v. Byrd, 470 U.S. 213, 217 (1985). See also
Chapman v. H & R Block Mortg. Corp., No. E2005-00083-COA-R3-CV, 2005 WL
3159774, at *9 (Tenn. Ct. App. Nov. 28, 2005) (citing Byrd for the same holding);

                                 V.     CONCLUSION

       The order of the trial court denying the motion to stay and to compel arbitration is
reversed. The case is remanded for such further proceedings as may be necessary. Costs
of the appeal are taxed one-half to the appellee, Hamblen County, and one-half to the
appellees, Billy Coffey, Melissa Coffey, and Melinda Coffey.

                                                 _________________________________
                                                 JOHN W. McCLARTY, JUDGE

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