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Ambulatory Services of Puerto Rico, LLC v. Sankar Nephrology Group LLC

United States District Court, N.D. Texas, Fort Worth Division

May 10, 2017




         Came on for consideration the motion of plaintiff, Ambulatory Services of Puerto Rico, LLC, to stay arbitration. Defendant, Sankar Nephrology Group, LLC, responded and moved to compel arbitration. Having considered the motions, defendant's response, the record, and applicable legal authorities, the court concludes that plaintiff's motion to stay arbitration should be denied and defendant's motion to compel arbitration should be granted subject to resolution of the issue of arbitrability, that this action should be stayed until the issue of arbitrability has been resolved, and that if it is resolved in favor of arbitration of the disputes between plaintiff and defendant, this action should be dismissed without prejudice to the outcome of the arbitration.



         Plaintiff and defendant formed SNG Naranjito, LLC ("Naranjito"), a Puerto Rico limited liability company, in 2014 for the purpose of operating a dialysis clinic in Puerto Rico. On August 1, 2014, the parties executed a Limited Liability Operating Agreement ("Operating Agreement") and a Membership Contribution Agreement ("MCA"), outlining the "terms and conditions governing the structure, operation and management of [Haranjito], " Doc.[1] 7 at 19, and providing for the contribution of assets to Maranjito, id. at 5. The Operating Agreement contains the following provision:

Section 12.12 Dispute Resolution. Except for alleged breaches of Article X [Covenants and Representations] above, in the event that a dispute arises between two or more Members under this Agreement, the parties will first negotiate in good faith to try to resolve the dispute. The respective Members, or chief executive officers (or officers holding such authority} of such Members, shall meet in a timely manner and attempt in good faith to negotiate a settlement of such dispute during which time such persons shall disclose to the others all relevant information relating to such dispute. In the event that the parties are unable amicably to resolve the matter or matters in dispute, and except where the exigency of the matter reasonably requires injunctive relief to preserve the status quo, the Members shall submit all matters still in dispute to conclusive and binding arbitration in Fort Worth, Tarrant County, Texas, before a panel of three arbitrators in accordance with the Commercial Arbitration Rules of The American Health Lawyers Association. Except as otherwise agreed by all parties to the arbitration, one arbitrator shall be chosen by the party demanding arbitration, one by the party responding to the demand for arbitration, and the third chosen by the first two named arbitrators, all from a;list of candidates provided by The American Health Lawyers'Association. The arbitrators may award to the prevailing party in their opinion its attorneys' fees and costs incurred in connection therewith. Venue for any action in court regarding arbitration, including without limitation the enforcement of its decision, shall be in Port Worth, Texas.

Id. at 58.

         According to plaintiff, defendant, without plaintiff's knowledge, bought into Maranjito by negotiating a secured loan with Branch Banking & Trust Company ("BB&T"), in which defendant borrowed against the contributed assets under the MCA and arranged for Naran'jito and plaintiff to become liable for the repayment of the loan. Doc. 1 at 5, % 23-24. In 2016, plaintiff and defendant sold Naranjito's assets to Bio-Medical Applications of Puerto Rico, Inc. ("Bio-Medical") for $7, 000, 000.00 and executed an agreement that allocated the sale proceeds according to each member's ownership interest (the "Member Sale Agreement") .[2]

         After the Maranjito asset sale, defendant filed a Demand for Arbitration with the American Health Lawyers Association. Defendant claimed that Carlos R. Rivera, the owner/president of plaintiff, breached his fiduciary duty to Naranjito by retaining Naranjito's income or gains for personal use in violation of the Operating Agreement. Additionally, defendant requested declaratory and injunctive relief to resolve issues surrounding Naranjito's asset sale and the distribution of the sale proceeds.

         Plaintiff countered defendant's Demand for Arbitration by filing a complaint and motion to stay arbitration in the above-captioned action on March 16, 2016, asserting two claims for breach of contract and seeking declaratory relief. Plaintiff claimed that defendant "breached Section 2 of the encumbering the Contributed Assets with liabilities and obligations personal to [defendant] with no benefit to and to the detriment of [plaintiff]." Doc. 1 at: 11, ¶ 50. Plaintiff also claimed that defendant breached the Member Sale Agreement by "(a) hindering and preventing the payment of [plaintiff's] share of the proceeds directly to it, (b) causing Bio-Medical, instead, to pay the proceeds to accounts at BB&T rendering the proceeds inaccessible to [plaintiff], and (c) failing to pay to [plaintiff] its 40% share of the $7 Million sale proceeds." Id. st 12, "J 58.


         Grounds of the Motions

         Plaintiff contended that the arbitration filed by defendant should be stayed pending resolution of the above-captioned action. In support, plaintiff argued that its claims, and by extension defendant's arbitration claims, are not subject to arbitration because they arise out of the MCA and the Member Sale Agreement, both of which do not contain arbitration provisions. Such claims are also not subject to arbitration pursuant to the Operating Agreement, plaintiff asserted, because the claims do not arise under such agreement and do not fall within the narrow scope of the Operating Agreement's arbitration provision. Plaintiff argued that the court should determine the question of arbitrability because the Operating Agreement's arbitration provision does not limit the court's authority to decide arbitrability or delegate such power to the arbitration panel. Doc. 6 at 5.

         In its motion to compel arbitration, defendant principally argued that the parties' agreed to delegate arbitrability to an arbitrator, and that the arbitrator, not the court, should determine whether the parties' dispute fell within the scope of the Operating Agreement's arbitration provision. Such arbitration provision, defendant claimed, clearly and unmistakably showed that the parties agreed to delegate arbitrability by expressly stating that arbitration would take place in accordance with the Commercial Arbitration Rules of The American Health Lawyers Association. Regardless of the outcome of the arbitrability issue, defendant argued that all claims pertinent to ...

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