United States District Court, S.D. Texas, Houston Division
CASSANDRA JACKSON, Individually and on Behalf of the Estate of BETTY JACKSON, Deceased; BRIDGET JACKSON; and ANTHONY JACKSON, Plaintiffs,
DIVERSICARE HUMBLE, LLC d/b/a OAKMONT HEALTHCARE AND REHABILITATION CENTER OF HUMBLE; DIVERSICARE MANAGEMENT SERVICES CO.; and MEMORIAL HERMANN HEALTH SYSTEM d/b/a MEMORIAL HERMANN NORTHEAST HOSPITAL, Defendants.
MEMORANDUM OPINION AND ORDER
LAKE UNITED STATES DISTRICT JUDGE
before the court is Defendant Oakmont's Motion to Compel
Arbitration and Motion to Stay Proceedings Pending
Arbitration (Docket Entry No. 7). For the reasons stated
below, the motion will be granted.
Jackson ("Decedent") suffered a stroke on August
29, 2015, and was admitted to Memorial Hermann Hospital that
day.Decedent was later discharged from the
hospital to Oakmont Rehabilitation ("Oakmont") for
continuing physical rehabilitation. Decedent's daughter,
plaintiff Cassandra Jackson, completed admission paperwork on
Decedent's behalf. While at Oakmont, Decedent's
health deteriorated, and she died at ICON Hospital on
February 11, 2016, of complications caused by infected
pressure ulcers and sepsis.
Jackson signed, on Decedent's behalf, a document titled
"Arbitration Agreement." Section II.A. of the
Agreement states that:
The Parties agree that any claim arising out of or relating
to treatment and/or services received by Resident shall be
resolved exclusively by binding arbitration of all claims
including, but not limited to, any claim for payment,
nonpayment or refund for services rendered, violations of any
right guaranteed to Resident, violation of state and/or
federal law, breach of contract, fraud or misrepresentation,
negligence, gross negligence, wrongful death, survival
action, health care liability claim, malpractice, or any
other claim based on the departure from accepted standards of
medical or health care or safety whether sounding in tort or
contract . . . .
Section III, titled "Arbitration Process, " the
Agreement states that "[a]ny mediation or arbitration
that is conducted shall be administered by the National
Arbitration Forum under its Code of Procedure in effect at
the time this Agreement is entered." The Agreement
also contains a severance provision, which states:
The Parties agree that all of the provisions contained in
this Agreement are severable. In the event that any provision
of the Agreement, or portion thereof, is held to be invalid
by a court of competent jurisdiction, this Agreement shall be
interpreted as if the invalid provision or portion was not
contained herein, and the remaining provisions of the
Agreement will remain in full force and effect and shall
continue to be valid and enforceable and binding upon the
Parties. This Agreement will not fail because any part,
clause or provision hereof is held to be indefinite, invalid,
Jackson filed this action against Oakmont in the 164th
Judicial District Court of Harris County, Texas. Oakmont
removed the case to this court on the basis of the
court's diversity jurisdiction and moved to compel
arbitration. Another of Decedent's daughters, Bridget
Jackson, and Decedent's son, Anthony Jackson
(collectively, "Plaintiffs") have since joined
Cassandra Jackson as plaintiffs. Plaintiffs have sued
Diversicare Management Co. ("Diversicare
Management") and Memorial Hermann Health System d/b/a
Memorial Hermann Northeast Hospital ("Memorial
Hermann") as additional defendants.
the Federal Arbitration Act ("FAA") an arbitration
agreement in a contract evidencing a transaction involving
interstate commerce is "valid, irrevocable, and
enforceable, save upon such grounds as exist at law or in
equity for the revocation of any contract." 9 U.S.C.
§2; see also id. § 1. Underlying the FAA
is "the fundamental principle that arbitration is a
matter of contract." AT&T Mobility LLC v.
Concepcion, 131 S.Ct. 1740, 1745 (2011) (internal
quotation marks omitted); see Washington Mutual Finance
Group, LLC v. Bailey, 364 F.3d 260, 264 (5th Cir. 2004)
("The purpose of the FAA is to give arbitration
agreements the same force and effect as other contracts - no
more and no less.") . Thus, "courts must place
arbitration agreements on an equal footing with other
contracts, and enforce them according to their terms."
Concepcion, 131 S.Ct. at 1745 (internal citations
determine whether the parties entered into a binding
agreement to arbitrate the dispute requires the court to
consider two issues: (1) validity - i.e., "whether there
is a valid agreement to arbitrate between the parties" -
and (2) scope - i.e., "whether the dispute in question
falls within the scope of that arbitration agreement."
JP Morgan Chase & Co. v. Conegie, 492 F.3d 596,
598 (5th Cir. 2007). Although there is a strong federal
policy favoring arbitration, the "federal policy
favoring arbitration does not apply to the determination of
whether there is a valid agreement to arbitrate between the
parties." Gross v. GGNSC Southaven, L.L.C., 817
F.3d 169, 176 (5th Cir. 2016) (quoting American Heritage
Life Insurance Co. v. Lang, 321 F.3d 533, 537-38 (5th
Cir. 2003)). Instead, courts "apply ordinary state-law
principles that govern the formation of contracts."
Id. (quoting Webb v. Investacorp, Inc.. 89
F.3d 252, 258 (5th Cir. 1996)).
argue that the Agreement is invalid because the arbitrator it
names is no longer available. In support of their argument
Plaintiffs rely on two unpublished opinions from the same
case. See Ranzy v. Tiierina, 393 F.App'x 174
(5th Cir. 2010); Ranzy v. Extra Cash of Texas, Inc.,
Civil Action No. H-09-3334, 2011 WL 6719881 (S.D. Tex. Dec.
21, 2011). The parties in Ranzy agreed to arbitrate
and selected the National Arbitration Forum
("NAF"). Ranzv v. Extra Cash, 2011 WL
6719881 at *1. Because the NAF was no longer an available
forum, the plaintiff contended that the arbitration provision
was invalid. Id. at *3. Defendants responded that
the court should appoint a new arbitrator using the mechanism
provided by § 5 of the FAA. Id. at *4. The
district court concluded that it could not appoint another
arbitrator because "the NAF was clearly an integral part
of the arbitration provision." Id. at *5. The
Fifth Circuit agreed, reaffirming its earlier holding that
"where the parties' agreement specifies that the
laws and procedures of a particular forum shall govern any
arbitration between them, that forum-selection clause is an
' important' part of the arbitration agreement."
Ranzy v. Tiierina, 393 F.App'x at 176.
argue that the reasoning from Ranzy applies here.
Defendants argue that this case is distinguishable because
the Agreement contains a severance provision. Plaintiffs
respond that the agreement in Ranzy also contained a
similar provision. But this argument is unpersuasive because
neither of the Ranzy opinions addressed the
relevance of the severance provision. "[A]ccording to black
letter law, 'a question not raised by counsel or
discussed in the opinion of the court' has not 'been
decided merely because it existed in the record and might
have been raised and considered.'" De La Paz v.
Coy, 786 F.3d 367, 373 (5th Cir. 2015) ...