Simmons v. Avant Garde Senior Living

 

 

 

 

 

 

 

 

 

Filed 10/17/13  Simmons v. Avant Garde Senior
Living CA2/5

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>NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

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California Rules of Court, rule 8.1115(a), prohibits courts
and parties from citing or relying on opinions not certified for publication or
ordered published, except as specified by rule 8.1115(b).  This opinion has not been certified for
publication or ordered published for purposes of rule 8.1115>.

 

 

 

 

 

IN
THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

 

SECOND
APPELLATE DISTRICT

 

DIVISION
FIVE

 

 
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TOBI SIMMONS et al.,               Plaintiffs and Respondents,               v.   AVANT GARDE SENIOR LIVING,               Defendant and Appellant.

B246967         (Los Angeles County       Super. Ct. No. BC493106)

 

 

            APPEAL from
an order of the Superior Court
of href="http://www.adrservices.org/neutrals/frederick-mandabach.php">Los Angeles
County, William F. Fahey, Judge.  Reversed with directions.

            Bonne,
Bridges, Mueller, O’Keefe & Nichols, David J. O’Keefe, William R. Johnson and
Vangi M. Johnson for Defendant and Appellant.

            Law Offices
of Maryann P. Gallagher and Maryann P. Gallagher for Plaintiffs and
Respondents.

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            Defendant, Avant Garde Senior
Living, appeals from an order denying its petition to compel arbitration.  There were two grounds upon which the trial
court relied in denying the petition to
compel arbitration.  The first was
the danger of conflicting rulings with the results of proceedings pending
against codefendants in the judicial forum. 
The second ground was the trial court’s express statement that
arbitration is not an efficient means of dispute resolution.   We conclude these grounds were not a proper
basis for denying the petition to compel arbitration.  Thus, we reverse the order denying the
petition to compel arbitration.  There
were other grounds for denying the petition that the trial court never ruled
upon.  Upon remittitur issuance, the
parties remain free to litigate those questions.

            The following are the pertinent
provisions of the arbitration agreement: 
“10.  Arbitration.  By entering into this Agreement, you agree
that any and all claims and disputes arising from or related to this Agreement
or to your residency, care or services at the Community shall be resolved by
submission to neutral, binding arbitration, except that any claim or dispute
involving evictions or which is brought in small claims court shall not be
subject to arbitration unless both parties agree to arbitrate such proceedings.  Both parties give up their href="http://www.fearnotlaw.com/">constitutional right to have any such
dispute decided in a court of law before a jury, and instead accept the use of
arbitration.  The arbitration shall be
conducted in Orange County, California, by a single neutral
arbitrator selected in accordance with the California Code of Civil Procedure,
unless otherwise mutually agreed.  In
reaching a decision, the arbitrator shall prepare findings of fact and conclusions
of law.  Each party shall bear its own
costs and fees in connection with the arbitration.  The arbitrator shall not have jurisdiction to
consider evidence regarding or award punitive damages.  This arbitration clause binds all parties to
this Agreement and their spouse, heirs, representatives, executors,
administrators, successors, and assigns, as applicable.  After termination of this Agreement, this
arbitration clause shall remain in full effect for the resolution of all claims
and disputes that are unresolved as of that date.  [¶] 
11.  Actions Not Subject to
Arbitration.  Any action arising out of
or related to this Agreement that is brought by or against the Community for
which arbitration is not allowed by law or that is excluded from arbitration
under Section II.I.10 above, shall be brought in the appropriate court before a
judge.”   

            There are three codefendants in this
case:  Adleman Tarzana Investments LLC;
Tarzana Royale LLC; and Country Villa East L.P., doing business as a Country Villa Sheraton Nursing & Rehab Center.  Two of those defendants are currently subject
to litigation in the trial court.  At the
hearing on the petition to compel arbitration, the trial court began by
announcing its tentative ruling:  “Start
with the petition to compel arbitration brought by Avant Garde.  I’m sure the parties are aware of the court’s
prior ruling on November 29th, where I declined a similar petition.  I don’t think the facts are different here.  [¶]  In
particular, there is a substantial likelihood of conflicting factual
determinations should a piece of this case go into arbitration and the balance
remain in this court.  So I’ve considered
the papers.  That’s my tentative.  I’ll hear from counsel.”  After hearing from all counsel, the trial
court ruled:  “The court:  I think Ms. Gallagher’s got a right,
Mr. Miletic.  I’m not going to
change my tentative.  I think this case,
more than many than as I’ve seen, in fact – perhaps this is as much as in any
case, I’ve seen really cries out for having the resolution of this continuum of
facts resolved in one forum.  And I think
that it would be a recipe for the disaster, and certainly, for conflicting
rulings to have something go into arbitration, which by the way, in my
experience, is now taking a couple of years. 
[¶]  Arbitration at one time, it was
supposed to be a prompt and expeditious way of dissolving disputes.  As it turns out, that’s not the case.  The cases that, on occasion, I have sent to
arbitration seem to percolate along on a three-year plan.  We get cases to trial much quicker here in
this – in this courthouse, so I appreciate your arguments, but I’m going to
stick with the tentatives and the motion and/or petition to compel arbitration
will be denied.”  There were other
grounds asserted for invalidating the duty to arbitrate but the trial court did
not rule upon them. 

            The first stated reason for denying
the petition to compel arbitration is the risk of conflicting rulings and the
need for litigation to be conducted in a single forum.  This ground may not be relied upon by a state
court to deny a request to arbitrate.  In
KPMG LLP v. Cocchi (2011) 565 U.S.
___, ___-___ [132 S.Ct. 23, 24-26], a complaint contained both arbitrable and
nonarbitrable claims.  The Florida trial
court denied the petition to compel arbitration.  The Florida appellate court affirmed finding
that only two of the four claims in the complaint were arbitrable. 

            The United States Supreme Court
vacated the Florida appellate court decision and held:  “In Dean Witter [Reynolds Inc. v Bird (1985)
470 U.S. 213], the Court noted that the [Federal
Arbitration] Act ‘provides that written agreements to arbitrate controversies
arising out of an existing contract “shall be valid, irrevocable, and
enforceable, save upon such grounds as exist at law or in equity for the revocation
of any contract.”  470 U.S., at 218
(quoting 9 U.S.C. § 2).  The Court found
that by its terms, ‘the Act leaves no place for the exercise of discretion by a
district court, but instead mandates that district courtsname="SDU_26"> shall direct
the parties to proceed to arbitration on issues as to which an arbitration
agreement has been signed.’  470 U.S., at
218, 105 S.Ct. 1238 (emphasis in original).  Thus, when a complaint contains both
arbitrable and nonarbitrable claims, the Act requires courts to ‘compel arbitration
of pendent arbitrable claims when one of the parties files a motion to compel,
even where the result would be the possibly inefficient maintenance of separate
proceedings in different forums.’  Id.,
at 217.”  (>KPMG LLP v. Cocchi, supra, 565
U.S. at p. ___ [132 S.Ct. at pp. 25-26]; accord Moses H. Cone Memorial Hosp. v. Mercury Constr. Corp. (1983) 460
U.S. 1, 20 [“the relevant federal law requires
piecemeal resolution when necessary to give effect to an arbitration
agreement”]; Allstate Ins. Co. v. Elzanaty (E.D.N.Y. 2013) ___
F.Supp.2d ___, ___ [2013 U.S. Dist. Lexis 33309, *31-32]; >Askenazy v. KMPG LLP (Mass.App. 2013)
988 N.E.2d 463, 469; KPMG LLP v. Cocchi
(Fla.App. 2012) 88 So.3d 327, 330; Perdido
Key Island Resort Development v. Regions Bank (Fla.App. 2012) 102 So.3d 1,
6-7.)  Earlier in its opinion, the high
court stated, “The Act has been interpreted to require that if a dispute
presents multiple claims, some arbitrable and some not, the former must be sent
to arbitration even if this will lead to piecemeal
litigation.”  (KPMG LLP v. Cocchi,
supra, 565 U.S. at p. ___ [132 S.Ct. at p. 24]; >Simmons v. Morgan Stanley Smith Barney,
LLC (S.D.N.Y. 2012) 872 F.Supp.2d 1002, 1020; Waskevich v. Herold Law, P.A. (N.J.Super. 2013) 69 A.3d 127,
130-131; State ex rel. Johnson Controls,
Inc. v. Tucker (W.Va. 2012) 729 S.E.2d 808, 819.)

            The second
stated reason for denying the motion was the trial court’s express finding that
arbitration may not be a “prompt and
expeditious” way to resolve disputes. 
A trial court may not exercise discretion and, as part of its analysis,
base its decision on arbitration as an inefficient means of resolving
disputes.  (Dean Witter Reynolds Inc. v Bird, >supra, 470 U.S. at p. 218; >State ex rel. Johnson Controls, Inc. v.
Tucker, supra, 729 S.E.2d at
p. 819 [“[T]he FAA requires a court to enforce the bargain of the parties to
arbitrate and ‘not substitute [its] own views of economy and efficiency’ for
those of Congress.”].)  Accordingly, the
appropriate course is to reverse the order denying the petition to compel
arbitration.  Thus, the provisions of
Code of Civil Procedure section 1281.2, subdivision (c), which permit a court
to deny a petition to compel
arbitration, are preempted by the Federal Arbitration Act. 

            Further,
this case is subject to the limited preemptive effect of the Federal
Arbitration Act.  (9 U.S.C. § 2
[“transaction involving commerce”]; Allied-Bruce
Terminix Companies, Inc. v. Dobson (1995) 513
U.S. 265, 277 [“word ‘involving,’ like ‘affecting,’ signals an intent to
exercise Congress’ commerce power to the full”].)  The United States Supreme Court has expressly
held a wrongful death suit against a nursing home was subject to the limited
preemptive effect of the Federal Arbitration Act.  (Marmet
Health Care Center, Inc. v. Brown (2012) 565 U.S. __, __ [132 S.Ct. 1201,
1203-1204.)  Further, the complaint
alleges defendant breached its obligations under title 42 United States Code sections
1396r(b)(2) and 1396r(d)(1)(A) as well as title 42 Code of Federal Regulations
section 483.25.  In order to be subject
to these provisions, a facility such as defendant must receive Medicare or
Medicaid funds.  (42 C.F.R. § 483.1
(a)(2), (b).)  Payments of Medicare or
Medicaid funds are transactions involving commerce.  (Summit
Health, Ltd. v. Pinhas (1991) 500 U.S. 322, 327 [“The provision of
ophthalmological services affects interstate commerce because both physicians
and hospitals serve nonresident patients and receive reimbursement through
Medicare payments.”]; United
States v. Girod (2011) 646 F.3d 304, 315
[“Medicaid, which is a federally funded program that indisputably affects
interstate commerce.”]; Thi of New
Mexico at Hobbs Center, LLC v. Spradlin (D.N.M. 2012) 893 F.Supp.2d
1172, 1184 [receipt of Medicare funding sufficient to create jurisdiction
under Federal Arbitration Act]; Trevino
v. Pechero (S.D.Tex. 2008) 592 F.Supp.2d 939, 946  [“Plaintiffs
plead a nexus with interstate commerce
through their and their patients’ participation in Medicare and name="SR;4624">Medicaid.”]; Miller v.
Cotter (Mass. 2007) 863 N.E.2d 537, 544 [“[A]ccepting payment from
Medicare, a Federal program . . . constitutes an act of name=SearchTerm>interstate
commerce.”].) 
Thus, KMPG LLP and its progeny
and the federal preference for arbitration require the order denying the
arbitration petition be reversed. 

            But that
does not end matters.  Plaintiffs argue
that:  non-signatories to an arbitration
agreement may not be compelled to arbitrate; the elder abuse claim is not
subject to arbitration; and defendants waived the right to arbitrate.  The trial court never addressed any of these
contentions.  Upon remittitur issuance,
the parties may litigate these contentions. 
In addition, the parties may address whether the arbitration may be >stayed; an order which would not, at
present, be subject to federal preemption. 
(Code Civ. Proc., § 1281.2, subd. (c); Cronus Investments, Inc. v. Concierge Services (2005) 35 Cal.4th
376, 385-390, 394; Gravillis v. Coldwell
Banker Residential Brokerage Co. (2006) 143 Cal.App.4th 761, 784.)

            The order
under review is reversed.  Defendant,
Avant Garde Senior Living, shall recover its cost incurred on appeal from
plaintiffs, Tobi Simmons, Annette Ginsburg and Elsie Ginsburg individually and
as successors in interest to Harold Ginsburg.

                                                NOT
TO BE PUBLISHED IN THE OFFICIAL REPORTS

 

                                                TURNER,
P. J.

 

We concur:

 

 

            MOSK, J.                                                                   KRIEGLER,
J.