Court Opinion

ID: 2815537
Source: CourtListenerOpinion
Date Created: 2015-07-08 19:41:01.451897+00
Date Added: 2024-06-11T11:01:46.278151
License: Public Domain

J-S31002-15

NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37

GEORGE ELI ROBERTS, BY AND                      IN THE SUPERIOR COURT OF
THROUGH, HIS ATTORNEY-IN-FACT,                        PENNSYLVANIA
JOSEPH BUTLER,

                         Appellee

                    v.

GGNSC LANCASTER LP, D/B/A GOLDEN
LIVING CENTER – LANCASTER; GGNSC
LANCASTER GP, LLC; GGNSC
HOLDINGS, LLC; GOLDEN GATE
NATIONAL SENIOR CARE, LLC; GGNSC
EQUITY HOLDINGS, LLC; GGNSC
ADMINISTRATIVE SERVICES, LLC;
GGNSC CLINICAL SERVICES, LLC; AND
FARUK NGUYEN,

                         Appellants                  No. 1534 MDA 2014

               Appeal from the Order Entered August 14, 2014
              In the Court of Common Pleas of Lancaster County
                       Civil Division at No(s): 13-01633

BEFORE: BENDER, P.J.E., ALLEN, J., and WECHT, J.

MEMORANDUM BY BENDER, P.J.E.:                          FILED JULY 08, 2015

      Appellants, GGNSC Lancaster, LP, d/b/a Golden Living Center –

Lancaster, GGNSC Lancaster GP, LLC, GGNSC Holdings, LLC, Golden Gate

National   Senior   Care,   LLC,    GGNSC   Equity   Holdings,   LLC,   GGNSC

Administrative Services, LLC, GGNSC Clinical Services, LLC, and Faruk

Nguyen, appeal from the order entered on August 14, 2014, denying their

preliminary objection seeking to compel this matter to arbitration.       We

affirm.
J-S31002-15

      The relevant facts and procedural background of this case were set

forth by the trial court as follows:

            Plaintiff[,] George Eli Roberts [Roberts,] alleges that these
      [Appellants] owned, operated, licensed and/or managed Beverly
      Healthcare – Lancaster, now known as Golden Living Center –
      Lancaster (the Facility), and were engaged in the business of
      providing skilled nursing care and assisted living/personal care
      services to the general public.

             [Roberts] has been a resident at the Facility since April 1,
      2005. At the time of his admission, [Roberts] had a past
      medical history including paraplegia, peripheral vascular disease,
      anemia, esophageal reflux, Suprapubic catheter, and colostomy.
      He required assistance with care for all of his activities of daily
      living, including bed mobility, eating, and toileting.

            On admission, [Roberts] signed the necessary papers.
      Included in the series of documents presented to the resident
      patient for signature was a “Resident and Facility Arbitration
      Agreement.” This agreement provided that any disputes arising
      out of or in any way relating to the agreement or to [Roberts’]
      stay at the Facility, which could constitute a legally cognizable
      cause of action in a court of law, “shall be resolved exclusively
      by binding arbitration … and not by a lawsuit or resort to court
      process.”

             [Roberts] commenced this action on July 10, 2013,
      alleging that [Appellants’] professional negligence and reckless
      conduct caused [him] severe injuries during his admission at the
      Facility.1   Those injuries included the development and/or
      worsening of multiple pressure ulcers, MRSA, urinary tract
      infections, falls, poor hygiene, and severe pain. The negligent
      and     reckless    conduct    by    [Appellants]    consisted    of
      mismanagement, improper/under-budgeting, under-staffing of
      the Facility and lack of training of the Facility employees, failure
      to provide adequate and appropriate health care, engaging in
      incomplete, inconsistent and fraudulent documentation, failure to
      develop an appropriate therapeutic care plan, failure to provide
      proper medication, and failure to provide sufficient food and
      water to preclude the injuries noted above, and failure to ensure
      the attainment of the highest level of physical, mental and
      psychological functioning. Roberts further alleges negligence per

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     se for violations of the Neglect of a Care-Dependent Person
     statute, 18 Pa. C.S.A. § 2713, and the Older Adults Protective
     Services Act, 35 P.S. § 10225.101, et seq.
        1
          [Roberts] also filed a complaint against Faruk Nguyen,
        the former administrator of the Facility during the relevant
        time of Roberts’ residency, claiming that he was
        personally, jointly and vicariously liable, among other
        things, for the acts and omissions of himself and his
        agents, employees, servants, contractors, staff and/or
        partners and all other Defendants.        (See No. CI-13-
        08746.)     These two matters were consolidated on
        December 5, 2013.

Trial Court Opinion (TCO), dated 8/14/13, at 1-3.

     Appellants filed preliminary objections to the complaint in the above-

referenced matter, including a claim that Roberts should be compelled to

arbitrate the present dispute in accordance with the arbitration agreement

signed by Roberts.   On August 14, 2014, the court issued an order and

accompanying opinion denying Appellants’ preliminary objection in the

nature of a motion to compel arbitration. TCO, at 1-3. Appellants filed a

timely notice of appeal.   In response, the trial court issued a Pa.R.A.P.

1925(a) opinion, incorporating its August 14, 2013 opinion in which the

court had already addressed the arbitration issues raised on appeal.      Per

order of court dated October 29, 2014, the trial court proceedings were

stayed pending the outcome of this appeal.

     Appellants now present the following issues for our review:

     1. Did the trial court – and the Superior Court in [Stewart v.
        GGNSC-Canonsburg, L.P., 9 A.3d 215 (PA. Super. 2010)] –
        erroneously construe the arbitration agreement and misapply
        Section 5 of the Federal Arbitration Act, 9 U.S.C. § 5, to find
        the availability of NAF as arbitrator to be “integral” to the

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         agreement to arbitrate such that a substitute arbitrator could
         not be appointed?

      2. Did the trial court err in finding Stewart controlling despite
         the absence of any evidence that the parties to the arbitration
         agreement in this case considered the availability of NAF as
         arbitrator to be “integral” to the agreement to arbitrate?

      3. Is the Superior Court’s ruling in Stewart invalid for reading
         NAF’s availability to conduct the arbitration given the
         subsequent reversal of the federal district court decision on
         which it relied?

Appellant’s Brief, at 4.

      Before addressing the merits of the issues raised, we note our

standard of review:

             Our review of a claim that the trial court improperly denied
      the appellant’s preliminary objections in the nature of a petition
      to compel arbitration is limited to determining whether the trial
      court’s findings are supported by substantial evidence and
      whether the trial court abused its discretion in denying the
      petition. Midomo Company, Inc. v. Presbyterian Housing
      Development Company, 739 A.2d 180, 186 (Pa. Super. 1999).
      In the instant case, the issue presented – whether under the
      terms of the Agreement the parties are required to submit their
      dispute to arbitration – is strictly one of contract interpretation.
      No relevant facts are in dispute. Because contract interpretation
      is a question of law, our review of the trial court’s decision is de
      novo and our scope is plenary. Bucks Orthopaedic Surgery
      Associates, P.C. v. Ruth, 925 A.2d 868, 871 (Pa. Super.
      2007); Highmark v. Hospital Service Association of
      Northeastern Pennsylvania, 785 A.2d 93, 98 (Pa. Super.
      2001).

Gaffer Ins. Co., Ltd. v. Discover Reinsurance Co., 936 A.2d 1109, 1112-

13 (Pa. Super. 2007) (internal quotation marks and brackets omitted).

      First, we will address the issue of whether the trial court erred by

relying on Stewart in its overruling of Appellants’ preliminary objections.

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Similar to the case before us, the plaintiff in Stewart filed a civil action

against a nursing home facility for negligent care while she was admitted to

the facility. Stewart, 9 A.3d at 216. Also analagous to the present case,

the defendants/appellants in Stewart filed preliminary objections seeking to

compel the enforcement of an arbitration agreement, as the parties had

previously agreed that disputes would be submitted to arbitration for

resolution. Id. More specifically, the arbitration agreement executed by the

parties in Stewart expressly provided that a dispute, “shall be resolved

exclusively by binding arbitration … in accordance with the National

Arbitration Forum (NAF) Code of Procedure which is hereby incorporated into

this Agreement, and not by any lawsuit or resort to court process.” Id. The

Stewart Court noted that “[u]nder the NAF Code of Procedure, the ‘Code

shall be administered only by [the NAF] or by any entity or individual

providing administrative services by agreement with [the NAF].’”         Id. at

216-217   (citations   omitted;   emphasis   in   original).   The   arbitration

agreement in Stewart also contained a severability clause which stated: “In

the event a court having jurisdiction finds any portion of this agreement

unenforceable, that portion shall not be effective and the remainder of the

agreement shall remain effective.” Id. at 217.

     We agree with the trial court that the Stewart decision is exactly on

point, as the arbitration agreement at issue in the case before us contains

the exact NAF language and severability clause as in Stewart. See TCO, at

6. The issues raised in both Stewart and the present case stem from the

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fact that NAF, the designated arbitration forum set forth in the executed

arbitration agreement, can no longer accept such arbitration cases pursuant

to a consent decree it entered with the Attorney General of Minnesota.

Stewart, 9 A.3d at 217. See also TCO, at 4-5.

      Having concluded that the trial court properly relied on Stewart, we

will now address, together, the remaining issues raised by Appellants, as

these issues are interrelated. Essentially, Appellants argue that despite the

unavailability of the NAF, the arbitration agreement is still enforceable

because the identity of the arbitrator was not integral to the agreement, and

therefore, a substitute arbitrator should be appointed, “in order to honor the

parties’ core agreement to arbitrate.” Appellants’ Brief, at 10.   We disagree

with Appellants’ conclusions.

      Section 5 of the Federal Arbitration Act provides in pertinent part:

      If in the agreement provision be made for a method of naming
      or appointing an arbitrator … such method shall be followed; but
      if … any party thereto shall fail to avail himself of such method,
      or if for any other reason there shall be a lapse in the naming of
      an arbitrator … or in filling a vacancy, then upon the application
      of either party to the controversy the court shall designate and
      appoint an arbitrator … as the case may require, who shall act
      under the said agreement with the same force and effect as if he
      or they had been specifically named therein.

9 U.S.C. § 5. Under Section 5, an arbitration agreement will not fail because

of the unavailability of a chosen arbitrator unless the parties’ choice of forum

is an “integral part” of the agreement to arbitrate, rather than “an ancillary

logistical concern.”   Stewart, 9 A.3d at 218-219 (citations omitted).       We

held in Stewart that the arbitration agreement could not be enforced due to

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the unavailability of the NAF to act as arbitrators because the parties clearly

intended to arbitrate before the NAF. Id. at 217. We reiterate the following

portion of the trial court’s well-reasoned analysis in Stewart, which we

adopted as our own:

      Here, it was clearly the intent of Appellants to arbitrate before
      the NAF.      Appellants presented a pre-printed agreement to
      Plaintiff in which the selection of an arbitral forum was already
      made.       Moreover, the agreement states that this binding
      arbitration shall be conducted “in accordance with the NAF Code
      of Procedure, which is hereby incorporated into this agreement.”
      The Code consists of over 65 pages of rules and procedures
      governing parties and the adjudication of their disputes. An
      agreement to submit to a specific forum and its comprehensive
      set of rules evidences an explicit intention to arbitrate
      exclusively before that organization…. Accordingly, this Court
      finds that the arbitral forum selection clause is not an ancillary,
      logistical concern but, rather, a primary purpose of the
      agreement itself.        Therefore, the arbitration clause is
      unenforceable as an essential term of the agreement has
      failed[.]

Id.   (internal citations & brackets omitted).        Because the arbitration

agreement in the present case contains identical language, we are

persuaded by the foregoing reasoning in Stewart to conclude that the

agreement here is also unenforceable.

      The trial court further held in Stewart that, “the severability clause

could not save the Agreement’s arbitration clause because the trial court

would be forced to rewrite the arbitration clause and devise a new form and

mode of arbitration for the parties.”   Id. at 217.   The court further noted

that, “the replacement of an essential term is impermissible under general

contract principles.” Id. Agreeing with the trial court, we stated, “this Court

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will not rewrite an arbitration agreement and insert additional terms to

replace an unenforceable provision that was integral to the agreement.

Sanctioning this type of action would run contrary to the clear intent of the

parties as expressed by the plain language of the Agreement itself.” Id. at

221.

       Although the issue of whether an arbitration agreement is enforceable

in the absence of the NAF had not been addressed by Pennsylvania case law

prior to Stewart, we looked to other jurisdictions for guidance. Ultimately,

the Stewart Court followed the decisions of numerous cases where the

courts emphasized the plain language of the arbitration agreement as the

sole evidence of the parties’ intent,1 which we believed to be consistent with

well-established contract principles under Pennsylvania law. Id. at 219-221.

As we stated in Giant Food Stores, LLC v. THF Silver Spring

Development, L.P., 959 A.2d 438 (Pa. Super. 2008), “[i]t is firmly settled

that the intent of the parties to a written contract is contained in the writing
____________________________________________

1
  One of the decisions that we followed in Stewart was Khan v. Dell, Inc.,
2010 WL 3283529 (D.N.J. 2010), which was reversed on appeal. See Khan
v. Dell, Inc., 669 F.3d 350, 356-57 (3d Cir. 2012).        Appellants suggest
that our decision in Stewart is flawed because of our reliance on the district
court’s decision in Khan. Appellants’ Brief, at 14. However, Khan was just
one case in a line of cases that influenced our decision. Moreover, it is a
well-settled principle of Pennsylvania law that federal court decisions are not
binding on the Superior Court. Bochetto v. Piper Aircraft Co., 94 A.3d
1044, 1050 (Pa. Super. 2014) (citing Kieban v. National Union Fire Ins.
Co., 771 A.2d 39, 43 (Pa. Super. 2001)).

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itself…. [W]hen the words of a contract are clear and unambiguous, we are

to determine what the parties intended by looking only at the express

language of the agreement.” Id. at 448. (citations omitted). Accordingly, if

we look to the plain language of the arbitration agreement in the present

case, it is clear that the parties intended to choose the NAF as their arbitral

forum in the event of a dispute.

      Finally, we note that a petition for allowance of appeal was granted in

Wert v. Manorcare of Carlisle PA, LLC, 95 A.3d 268 (Pa. 2014), on June

24, 2014. One of the issues currently pending before our Supreme Court in

Wert is, “[w]hether the Superior Court’s decision in Stewart … holding that

the NAF Designation voided an identical Arbitration Agreement, was

incorrectly decided and should be reversed, where there is no evidence that

the NAF designation was integral to the Agreement?” Wert, 95 A.3d at 268-

269. The Supreme Court’s docket indicates that the Court heard argument

in Wert on April 7, 2015; however, no decision has been entered as of yet.

Therefore, Stewart remains binding precedent.       See Commonwealth v.

Reed, 107 A.3d 137, 143 (Pa. Super. 2014) (“This Court is bound by

existing precedent under the doctrine of stare decisis and continues to follow

controlling precedent as long as the decision has not been overturned by our

Supreme Court.”) (citation omitted). See also McClung v. Breneman, 700

A.2d 495, 497 n.3 (Pa. Super. 1997) (following the decision in Dodson v.

Elvey, 665 A.2d 1223 (Pa. Super. 1995), as binding precedent where the

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Pennsylvania Supreme Court had granted allocator in Dodson but had not

yet rendered a decision).

      In sum, the trial court found that the arbitration agreement between

Roberts and Appellants was not enforceable due to the unavailability of the

NAF to act as arbitrators.   Accordingly, the trial court denied Appellants’

preliminary objection in the nature of a motion to compel arbitration.   We

affirm.

      Order affirmed. Case remanded. Jurisdiction relinquished.

Judgment Entered.

Joseph D. Seletyn, Esq.
Prothonotary

Date: 7/8/2015

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