Court Opinion

ID: 6316670
Source: CourtListenerOpinion
Date Created: 2022-02-23 15:01:54.1631+00
Date Added: 2024-06-11T09:00:31.739457
License: Public Domain

Cite as 2022 Ark. App. 85
                   ARKANSAS COURT OF APPEALS
                                        DIVISION II
                                        No. CV-21-68

 ROBINSON NURSING AND
 REHABILITATION CENTER, LLC;                     OPINION DELIVERED FEBRUARY 23, 2022

 CENTRAL ARKANSAS NURSING
                                                 APPEAL FROM THE PULASKI
 CENTERS, INC.; NURSING
                                                 COUNTY CIRCUIT COURT, SIXTH
 CONSULTANTS, INC.; AND MICHAEL
                                                 DIVISION
 MORTON
                                                 [NO. 60CV-17-6616]
                   APPELLANTS

 V.                                              HONORABLE TIMOTHY D. FOX,
                                                 JUDGE
 JAMES BRILEY, AS SPECIAL
 ADMINISTRATOR OF THE ESTATE       REVERSED AND REMANDED
 OF ALICE ANN BRILEY AND ON
 BEHALF OF THE WRONGFUL DEATH
 BENEFICIARIES OF ALICE ANN
 BRILEY, DECEASED
                          APPELLEE

                              ROBERT J. GLADWIN, Judge

       Robinson Nursing and Rehabilitation Center, LLC; Central Arkansas Nursing

Centers, Inc.; Nursing Consultants, Inc.; and Michael Morton (collectively “Robinson”)

appeal the Pulaski County Circuit Court’s order denying Robinson’s motion to compel

arbitration on claims filed by appellee James Briley, as special administrator of the estate of

Alice Ann Briley, and on behalf of the wrongful death beneficiaries of Alice Ann Briley,

deceased (hereinafter referred to as “Briley”). On appeal, Robinson argues that the circuit

court erroneously denied its motion because res judicata bars reconsideration of the
arbitration agreement’s validity and enforceability. We reverse and remand for entry of an

order to compel arbitration.

                                      I. Procedural History

       This appeal is related to a separate class-action suit filed by nursing home residents or

their representatives against Robinson. Briley is a member of the certified class. The class-

action case has resulted in two Arkansas Supreme Court opinions. See Robinson Nursing &

Rehab. Ctr., LLC v. Phillips, 2019 Ark. 305, 586 S.W.3d 624 (Phillips II); Robinson Nursing &

Rehab. Ctr., LLC v. Phillips, 2017 Ark. 162, 519 S.W.3d 291 (Phillips I).

                                          A. Phillips I

       On September 4, 2015, Andrew Phillips, as personal representative of the estate of

Dorothy Phillips, and others (collectively “Phillips”) filed a first amended class-action

complaint alleging that Robinson’s business practice of chronic understaffing breached the

admission and provider agreements, violated the Arkansas Deceptive Trade Practices Act

(ADTPA), constituted negligence and civil conspiracy, and unjustly enriched Robinson. 1

Phillips I, 2017 Ark. 162, at 2, 519 S.W.3d at 294. The circuit court granted class certification

of all residents who resided at the Robinson Nursing and Rehabilitation Center from June

11, 2010, to March 4, 2016. Id. at 3, 519 S.W.3d at 295. Robinson filed an interlocutory

appeal, and the Arkansas Supreme Court affirmed the class certification for breach-of-

contract, ADTPA, and unjust-enrichment claims, reversed the class certification in regard to

       1
      Phillips’s case was filed in the Pulaski County Circuit Court, Sixth Division, Judge
Timothy D. Fox presiding.

                                               2
the negligence claims, and remanded with instructions to decertify the class as to Phillips’s

negligence claims. Id. at 14–16, 519 S.W.3d at 301–02.

       The class action continued in the circuit court as follows:

               On September 1, 2017, Robinson filed a motion to compel arbitration with
       regard to nine class members/residents with arbitration agreements that had been
       signed by the residents’ legal guardians. This motion was later supplemented to add
       one additional class member. Robinson also filed separate motions to compel
       arbitration as to 105 residents who had signed the agreements on their own behalf
       and as to 158 residents whose agreements had been signed by a person with power of
       attorney over that resident. On September 5, 2017, Robinson filed a fourth motion
       to compel arbitration as to 271 residents who had “responsible parties” execute
       arbitration agreements on their behalf. The individual arbitration agreements,
       admission agreements, and any other accompanying documents were attached to the
       motions to compel.

               On September 7, 2017, Phillips filed an unopposed motion for extension of
       time to respond to Robinson’s motions to compel arbitration. The motion was
       granted, and the circuit court extended the time for response until October 17, 2017.
       However, before Phillips filed a response, the circuit court summarily ruled at a
       September 22, 2017 hearing that all four of Robinson’s motions to compel
       arbitration were denied. Neither party presented argument in support of, or in
       opposition to, the motions or objected to the timing of the circuit court’s ruling at
       the hearing. The court also denied Robinson’s request for findings of fact and
       conclusions of law. A written order generally denying the motions to compel was
       entered on October 19, 2017, and Robinson filed a timely notice of appeal from the
       order.

Phillips II, 2019 Ark. 305, at 3–4, 586 S.W.3d at 628.

                              B. Briley’s Individual Litigation

       On November 14, 2017, during the pendency of the class-action appeal, Briley filed

a complaint against Robinson.2 Briley alleged negligence, medical malpractice, breach of the

       2
       Briley’s complaint was filed in the Pulaski County Circuit Court, Second Division,
Judge Christopher Charles Piazza presiding.

                                              3
admission agreement, breach of the provider agreement, and violations of the ADTPA. On

January 3, 2018, Robinson filed an answer alleging that an arbitration agreement prevented

jurisdiction in a court of law and denying the remainder of the complaint.

       On July 25, Briley moved to compel discovery, asking that Robinson produce the

applicable arbitration agreement. Briley argued that Robinson had not sought to compel

arbitration in the seven months since it was served. Robinson responded that Phillips II was

pending in the Arkansas Supreme Court, and at issue was the circuit court’s denial of

motions to enforce arbitration agreements, including Ms. Briley’s. Robinson claimed that if

the supreme court determined that Ms. Briley’s arbitration agreement is valid and

enforceable, it will be the province of the arbitrator to resolve any discovery disputes between

the parties.

       Briley replied that Robinson was delaying and argued that the motion to compel

discovery should be granted because the court had jurisdiction until Robinson compelled

arbitration. Briley claimed that Robinson’s lack of diligence in pursuing arbitration is not a

bar to Briley’s discovery but a waiver of its right to contest jurisdiction, citing Messina v. North

Central Distributing, Inc., 821 F.3d 1047 (8th Cir. 2016), and Diamante v. Dye, 2013 Ark. App.

630, 430 S.W.3d 196. Briley argued further,

               Moreover, [Robinson’s] contention that the Arkansas Supreme Court’s
       decision on the validity of arbitration agreements in [Phillips II] will summarily place
       [Briley’s] case in arbitration misses the mark. [Phillips II] involves [Robinson’s] waiver
       of the arbitration issue––accordingly, [Phillips II] could be decided on the waiver issue
       without ever addressing the merits of the validity of the arbitration agreement. Even
       if the Supreme Court decides the [Phillips II] arbitration agreements are valid, it will
       not negate [Briley’s] right to challenge the facts and circumstances surrounding the

                                                 4
       contract’s formation that [Briley] may raise in this case. Regardless of the Supreme
       Court’s decision in [Phillips II], [Robinson] will still have to move to compel
       arbitration or provide discovery.

       On October 4, 2018, Robinson moved to transfer Briley’s case to the Pulaski County

Circuit Court, Sixth Division. Robinson alleged that Briley is a member of the certified class

in Phillips II, which was pending before the Sixth Division Circuit Court, and that Briley did

not opt out of the class action by the deadline of January 2, 2018, as provided in the class-

certification order. Robinson argued that both Briley’s case and the class-action cases seek

damages for alleged understaffing at Robinson Nursing and Rehabilitation Center during

the class period and that both cases include the same causes of action. Robinson asserted

that it had filed a motion to compel arbitration in the class-action case, and the circuit court

denied the motion; therefore, Robinson appealed. Robinson argued that Ms. Briley’s

arbitration agreement is included in the appeal and that after the appellate court’s decision,

a mandate would issue in the class-action case directing the circuit court on how to proceed

as to the arbitration agreements.

       On October 12, Briley moved to voluntarily dismiss without prejudice all of his claims

except for negligence and medical negligence, and the court granted the motion. Thereafter,

Briley responded to Robinson’s transfer motion, arguing that the motion was moot because

of his voluntary dismissal of all claims except for those based on negligence. Briley argued

that Robinson wrongfully claimed that Ms. Briley is a member of the class in Phillips II

because the class was not certified as to negligence pursuant to Phillips I. He claimed that

                                               5
even though Ms. Briley did not opt out of the class in regard to those claims that were

certified, she cannot be a member of the class as to her negligence claims.

       Robinson replied, arguing that Briley’s response ignored a pending appeal involving

Ms. Briley’s arbitration agreement and that any mandate addressing the agreement’s validity

and enforceability would be delivered to the Sixth Division Circuit Court. Robinson argued

that the circuit court in Phillips II is in the best position to determine whether Ms. Briley is a

member of the class action and the extent to which her status as a class member affects her

attempt to bring individual claims.

       On January 30, 2019, the circuit court granted Robinson’s motion to transfer, and

on October 31, the Arkansas Supreme Court delivered its opinion in Phillips II.

                                          C. Phillips II

       On appeal of the circuit court’s denial of Robinson’s motion to enforce arbitration

agreements in the class-action case, Robinson argued that the 544 arbitration agreements

were valid and enforceable, that Phillips’s claims were within the scope of the agreements,

and that the circuit court’s ruling was contrary to the Arkansas Supreme Court’s strong

policy in favor of arbitration. Phillips II, 2019 Ark. 305, at 4, 586 S.W.3d at 628. The

supreme court noted Phillips’s preliminary argument in his response brief that the motions

to compel arbitration were barred by the law-of-the-case doctrine and that Robinson also

waived its right to arbitrate because, in part, Robinson waited for more than two years to

request arbitration. Id. at 5, 586 S.W.3d at 629. The supreme court held that Phillips’s

arguments were not preserved because Phillips did not file a response to the motions to

                                                6
compel nor did he raise these issues to the circuit court at the hearing. Id. Further, Phillips

failed to secure a ruling on either the law-of-the-case doctrine or waiver. Id. “We therefore

decline to address them and instead discuss only the issues raised by Robinson in its motions

to compel—namely, whether there was a valid agreement to arbitrate between the parties and

whether the claims fell within the scope of the agreements.” Id. at 6, 586 S.W.3d at 629.

       The supreme court affirmed the circuit court’s denial of Robinson’s motion to

compel with respect to 271 arbitration agreements that were not signed by the resident, a

legal guardian of the resident, or a person with a power of attorney over the resident. Id. at

6–13, 586 S.W.3d at 630–33. The court affirmed the denial of Robinson’s motion to

compel arbitration of those agreements containing a $30,000 threshold, id. at 13–17, 586

S.W.3d at 633–35, and of those agreements that were not signed by Robinson or were

incomplete. Id. at 18–19, 586 S.W.3d at 636. The supreme court also ruled that the

arbitration agreements as to residents Joyce Moring, Ruby McGrew, and Eldin Hodges are

not enforceable. Id. at 19–20, 586 S.W.3d at 636. Finally, the supreme court held that

Phillips failed to preserve his argument based on incapacity in relation to 105 arbitration

agreements. Id. at 20–21, 586 S.W.3d at 636–37.

       The supreme court concluded,

               Robinson has met its burden to prove the validity of the remainder of the
       arbitration agreements not already discussed. Thus, the next threshold issue that must
       be addressed is whether the claims asserted by Phillips fall within the scope of those
       remaining arbitration agreements. Depending on the version of the arbitration
       agreement, the language states that it applies broadly to “any and all claims, disputes,
       and controversies arising out of, or in connection with, or relating in any way to the
       Admission Agreement or any service or health care provided” or to “all disputes

                                              7
       arising from this or any future stays in this Facility.” Phillips does not contend that
       the claims brought in this class action do not fall within the scope of these arbitration
       agreements, and we conclude that this requirement is satisfied here. We therefore
       reverse and remand with respect to those arbitration agreements not otherwise held
       to be invalid by this opinion.

Id. at 21, 586 S.W.3d at 637.

                         D. Briley’s Individual Litigation, Continued

       On February 4, 2020, Robinson moved to compel arbitration. It claimed that Ms.

Briley was a resident of Robinson Nursing and Rehabilitation Center on November 18,

2015, and that her son, J.R. Briley, executed an admission agreement and an arbitration

agreement as Ms. Briley’s attorney-in-fact.         Robinson claimed that it had maintained

throughout the litigation that Briley’s claims are barred from being litigated in a court of law

by virtue of the arbitration agreement. Robinson asserted that the parties appeared on

September 3, 2019, before the circuit court and acknowledged that the arbitrability of Ms.

Briley’s arbitration agreement was pending in the Arkansas Supreme Court and that Phillips

II had since been decided. Robinson claimed that the supreme court held that Ms. Briley’s

arbitration agreement was “one of the subset of agreements that was valid and enforceable.”

Robinson argued that Briley’s claims are “clearly within the scope of the arbitration

agreement” and that all Briley’s claims must be submitted to arbitration.

       Briley responded that Phillips II does not control because the claims therein are not

the same claims that remained at issue in Briley’s complaint and that Phillips II fails to address

the insufficiencies of Ms. Briley’s arbitration agreement. Briley argued that the arbitration

agreement is not valid because it fails to name Ms. Briley and because the agreement is a

                                                8
condition of admission. Further, Briley claimed that even if the arbitration agreement is

valid, Robinson had waived any right to compel arbitration by voluntarily participating in

the litigation and subjecting itself to the court’s jurisdiction.

       Robinson replied that res judicata bars Briley from contesting the validity and

enforceability of the arbitration agreement. Robinson argued that the elements of collateral

estoppel have been met, see Hardy v. Hardy, 2011 Ark. 82, 380 S.W.3d 354, and that it is

irrelevant that Briley dismissed those claims that mirrored those in the class action. On

October 23, 2020, the circuit court denied Robinson’s motion to compel arbitration, and

this appeal timely followed.

                           II. Standard of Review and Applicable Law

       An order denying a motion to compel arbitration is immediately appealable pursuant

to Arkansas Rule of Appellate Procedure–Civil 2(a)(12) (2021). We review a circuit court’s

denial of a motion to compel arbitration de novo on the record. Phillips II, 2019 Ark. 305,

at 4, 586 S.W.3d at 628–29. When a circuit court denies a motion to compel arbitration

without expressly stating the basis for its ruling, as it did here, that ruling encompasses the

issues presented to the circuit court by the briefs and arguments of the parties. Id. The issues

on appeal are decided using the record developed in the circuit court without deference to

the circuit court’s ruling. Pine Hills Health & Rehab., LLC v. Talley, 2018 Ark. App. 131, at 4,

546 S.W.3d 492, 495. An appellate court is not bound by the ruling below, but in the

absence of a showing that the circuit court erred in its interpretation of the law, the decision

will be accepted as correct on appeal. Id. at 4–5, 546 S.W.3d at 495.

                                                9
       The concept of res judicata has two facets, one being claim preclusion and the other

issue preclusion. Sutherland v. Edge, 2021 Ark. App. 428, at 13 (citing Muccio v. Hunt, 2014

Ark. 35; Baptist Health v. Murphy, 2010 Ark. 358, 373 S.W.3d 269). Collateral estoppel, the

issue-preclusion facet of res judicata, bars relitigation of issues of law or fact previously

litigated, provided that the party against whom the earlier decision is being asserted had a

full and fair opportunity to litigate the issue in question and that the issue was essential to

the judgment. Duggar v. City of Springdale, 2020 Ark. App. 220, at 8, 599 S.W.3d 672, 681

(citing Deer/Mt. Judea Sch. Dist. v. Kimbrell, 2013 Ark. 393, at 11–12, 430 S.W.3d 29, 39).

       [C]ollateral estoppel “may bar a party from relitigating an issue decided against it in a
       later and different case.” 1 Carmody-Wait, Cyclopedia of New York Practice § 2:358 (2d
       ed.), available at CW2D § 2:358 (WL Feb. 2021 update). Indeed, the elements of
       collateral estoppel expressly concern issues adjudicated in separate proceedings,
       providing that the doctrine is established if (1) the issue sought to be precluded is the
       same as that involved in the prior litigation; (2) the issue was actually litigated in the
       prior proceeding; (3) the issue was determined by a final and valid judgment; and (4)
       the determination was essential to the judgment. Winrock Grass Farm, Inc. v. Affiliated
       Real Estate Appraisers of Ark., Inc., 2010 Ark. App. 279, at 10, 373 S.W.3d 907, 914.
       Collateral estoppel also “does not require mutuality of parties”; therefore, it is
       possible for a stranger to the first decree to assert collateral estoppel in a subsequent
       action. Id. at 10, 373 S.W.3d at 913–14.

Entergy Ark., Inc. v. Allen, 2021 Ark. App. 71, at 18, 618 S.W.3d 427, 438.

                                         III. Res Judicata

       Robinson argues that res judicata bars reconsideration of the validity and

enforceability of Ms. Briley’s arbitration agreement because the Arkansas Supreme Court

deemed the arbitration agreement valid and enforceable. Phillips II. Briley argues that he is

                                              10
not precluded from contesting the arbitration agreement because the elements of res judicata

have not been satisfied.

       Briley argues that the negligence claims in this case were not part of a prior case and

that his defenses to the arbitration agreement were not determined. Briley contends that he

never had an opportunity to present defenses to the arbitration agreement in the prior

proceeding and asserts that he and the other class members were not allowed to argue against

the arbitration agreements “at all” because the circuit court denied the motions to compel

arbitration before the class could respond. He complains that the supreme court refused to

consider contract defenses because the plaintiff class had not been able to raise them to the

circuit court before the ruling was made. Phillips II, 2019 Ark. 305, at 5, 586 S.W.3d at 629.

Therefore, Briley argues that the circuit court’s denial constituted a ruling only on the

arguments that were raised by Robinson. Id. He maintains that negligence claims were not

at issue in Phillips II and that the supreme court’s conclusion that Briley’s agreement was not

invalid for one of the five specific reasons set forth in Phillips II is not equivalent to Briley’s

agreement being enforceable.

       Briley contends that the supreme court did nothing more than determine the

threshold question of whether an arbitration agreement exists; “that is, whether there [had]

been mutual agreement, with notice as to the terms and subsequent assent.” Phillips II, 2019

Ark. 305, at 6, 586 S.W.3d at 629. “Even if a court finds that an arbitration agreement exists

and that the dispute falls within the scope of the arbitration agreement, the court may still

declare an arbitration agreement unenforceable upon such grounds as exist at law or in

                                                11
equity for the revocation of any contract.” Bank of the Ozarks, Inc. v. Walker, 2014 Ark. 223,

at 5, 434 S.W.3d 357, 360. Thus, Briley argues that collateral estoppel does not apply.

       Robinson argues that there is no dispute that the arbitration agreement, validated in

Phillips II, includes claims for negligence. Therefore, the fact that Briley’s claim in the present

matter is for negligence has no effect on the arbitration analysis. Robinson argues that Briley

attempts to confuse the issue by incorrectly arguing that claim preclusion applies only when

the same causes of action are involved.3 Robinson contends that the validity of the

arbitration agreement is the issue, not Briley’s cause of action for negligence.

       Collateral estoppel bars relitigation of issues of law or fact, provided that the party

against whom the earlier decision is being asserted had a full and fair opportunity to litigate

the issue in question and that the issue was essential to the judgment. Duggar, supra. Issue

preclusion is limited to those matters previously at issue that were directly and necessarily

adjudicated. John Cheeseman Trucking, Inc. v. Pinson, 313 Ark. 632, 855 S.W.2d 941 (1993).

       The matter must be actually litigated for estoppel to apply. State Off. of Child Support

Enf’t v. Willis, 347 Ark. 6, 59 S.W.3d 438 (2001). For an issue to be actually litigated, “the

parties must have had a full and fair opportunity to make adversary presentations on the

question, and the court must decide it.” David Newbern, John Watkins & D.P. Marshall Jr.,

       3
        The claim-preclusion aspect of res judicata bars relitigation when five factors are
present: (1) the first suit resulted in a final judgment on the merits; (2) the first suit was based
on proper jurisdiction; (3) the first suit was fully contested in good faith; (4) both suits involve
the same claim or cause of action; and (5) both suits involve the same parties or their privies.
Hardy, 2011 Ark. 82, at 6, 380 S.W.3d at 358.

                                                12
Arkansas Civil Practice & Procedure § 34:3 (5th ed. 2011); see also Duggar, supra; Beebe v. Fountain

Lake Sch. Dist., 365 Ark. 536, 231 S.W.3d 628 (2006). “Actually litigated” in the context of

collateral estoppel means that the issue was raised, that the defendant had a full and fair

opportunity to be heard, and that a decision was rendered on the issue. Powell v. Lane, 375

Ark. 178, 289 S.W.3d 440 (2008).

        The validity of the arbitration agreement was at issue in Phillips II. Briley had a full

and fair opportunity to raise any objections but failed to do so. Phillips II, 2019 Ark. 305, at

5, 586 S.W.3d at 629. It is undisputed that Ms. Briley’s arbitration agreement was signed by

J.R. Duke Briley as attorney-in-fact for Ms. Briley and was part of the appeal in Phillips II.

Ms. Briley was represented in that appeal by her current counsel, who litigated the issue on

her behalf. The validity and enforceability of the arbitration agreement was determined by

the supreme court, and the determination was essential to that decision. Briley’s claim for

negligence is within the scope of the arbitration agreement, which the supreme court

determined was valid and enforceable. Thus, all four elements of collateral estoppel have

been met. See Allen, supra.

        Because the supreme court has decided the validity of Ms. Briley’s arbitration

agreement, Briley is collaterally estopped from arguing that the agreement is invalid in this

case.

                                            IV. Waiver

        The three factors to consider when determining whether a party has waived its right

to arbitration are (1) the length of the litigation; (2) the party availing itself of the opportunity

                                                 13
to litigate; and (3) the prejudice to the opposing party. Dye, 2013 Ark. App. 630, at 8, 430

S.W.3d at 202 (citing Advocat, Inc. v. Heide, 2010 Ark. App. 825, 378 S.W.3d 779). A party

substantially invokes the litigation machinery when it files a lawsuit on arbitrable claims,

engages in extensive discovery, or fails to move to compel arbitration and stay litigation in a

timely manner. Messina, supra.

       Briley maintains that the circuit court’s order denying arbitration should be affirmed

because Robinson waived its right to arbitration when it waited for over two years to request

arbitration and intentionally invoked the court’s jurisdiction when it requested to transfer

the case to another division before seeking its enforcement. Briley claims that Robinson’s

“wait and see” approach to determining the validity of the arbitration agreement defeats a

quick and efficient resolution of cases and is prejudicial because of the time and expense

wasted. See Messina, supra; Dye, supra.

       To the extent that the circuit court’s order denying Robinson’s motion to compel is

based on Robinson’s waiver of its right to enforce arbitration, we hold that the circuit court

erred. Robinson initially asserted its right to compel arbitration in its answer to Briley’s

complaint and asserted the right again in its response to Briley’s motion to compel discovery,

arguing that the validity and enforceability of the arbitration agreement was on appeal in

Phillips II. Robinson then moved to transfer Briley’s case to the same division of circuit court

in which the class-action case was pending because that court would “be in a better position

to address the arbitration issue due to its jurisdiction over the class action.” The transfer was

granted, and the order contemplates that the arbitration issue would be impacted by the class

                                               14
action. A month after the supreme court issued its December 20, 2019 mandate in Phillips

II, Robinson filed its motion to compel arbitration. See Kelly v. Golden, 352 F.3d 344, 349

(8th Cir. 2003) (citing Stifel, Nicolaus & Co., Inc. v. Freeman, 924 F.2d 157 (8th Cir. 1991)

(prejudice results when parties use discovery not available in arbitration, when they litigate

substantial issues on the merits, or when compelling arbitration would require a duplication

of efforts)).

        Accordingly, we reverse and remand for entry of an order compelling arbitration.

        Reversed and remanded.

        HARRISON, C.J., and ABRAMSON, J., agree.

        Hardin, Jesson & Terry, PLC, by: Jeffrey W. Hatfield, Kynda Almefty, Carol Ricketts, and

Kirkman T. Dougherty, for appellants.

        Reddick Moss, PLLC, by: Matthew D. Swindle and Heather G. Zachary, for appellee.

                                               15