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Robinson Nursing and Rehabilitation Center, LLC v. Phillips

Supreme Court of Arkansas

October 31, 2019

ROBINSON NURSING AND REHABILITATION CENTER, LLC, d/b/a Robinson Nursing and Rehabilitation Center; Central Arkansas Nursing Centers, Inc.; Nursing Consultants, Inc.; and Michael Morton, Appellants
v.
Andrew PHILLIPS, as Personal Representative of the Estate of Dorothy Phillips, and on Behalf of the Wrongful Death Beneficiaries of Dorothy Phillips; and on Behalf of Themselves and All Others Similarly Situated, Appellees

          Rehearing Denied December 19, 2019

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          APPEAL FROM THE PULASKI COUNTY CIRCUIT COURT [NO. 60CV-14-4568], HONORABLE TIMOTHY DAVIS FOX, JUDGE

         Hardin, Jesson & Terry, PLC (Little Rock), by: Jeffrey W. Hatfield, Kynda Almefty, and Carol Ricketts; and Hardin, Jesson & Terry, PLC (Fort Smith), by: Kirkman T. Dougherty and Stephanie I. Randall, for appellants.

         Campbell Law Firm, P.A., by: H. Gregory Campbell, Little Rock; and Reddick Moss, PLLC, by: Brian D. Reddick, for appellees.

         OPINION

         COURTNEY RAE HUDSON, Associate Justice

          In this interlocutory appeal, appellants Robinson Nursing and Rehabilitation Center, LLC, d/b/a Robinson Nursing and Rehabilitation Center; Central Arkansas Nursing Centers, Inc.; Nursing Consultants, Inc.; and Michael Morton (collectively "Robinson") appeal from the Pulaski County Circuit Court’s order denying motions to compel arbitration of a class-action complaint filed by appellees Andrew Phillips, as personal representative of the estate of Dorothy Phillips, and others (collectively "Phillips"). For reversal, Robinson argues that the circuit court erred in refusing to enforce valid arbitration agreements. We affirm in part and reverse and remand in part.

          On September 4, 2015, Phillips filed a first amended class-action complaint against Robinson alleging claims that Robinson had breached its admissions and provider agreements, violated the Arkansas Deceptive Trade Practices Act ("ADTPA"), committed negligence and civil conspiracy,

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and been unjustly enriched. He sought compensatory, economic, and punitive damages, as well as attorney’s fees, interest, and costs. Phillips filed an amended motion for class certification on September 10, 2015, requesting that a class be certified of all residents and estates of residents who resided at Robinson from June 11, 2010, to the present.

          On September 24, 2015, Robinson filed an answer to the complaint in which it denied the allegations and asserted, among other defenses, that the claims of putative class members were barred from being litigated in a court of law by virtue of arbitration agreements. Robinson also filed a response to the motion for class certification.

         The circuit court entered an order granting class certification on March 4, 2016, and Robinson appealed to this court. We affirmed the grant of class certification with respect to Phillips’s breach-of-contract, ADTPA, and unjust-enrichment claims, but reversed with respect to the negligence claim. Robinson Nursing & Rehab. Ctr., LLC v. Phillips, 2017 Ark. 162, 519 S.W.3d 291.

          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.[1]

          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.

          On appeal, Robinson argues that the circuit court erred in denying its motions to compel arbitration. Robinson contends that the 544 arbitration agreements at issue were valid and enforceable, that the claims asserted by Phillips were within the scope of the agreements, and that the circuit court’s ruling was contrary to this court’s strong policy in favor of arbitration.

          An order denying a motion to compel arbitration is immediately appealable pursuant to Arkansas Rule of Appellate Procedure-Civil 2(a)(12) (2018). We review a circuit court’s denial of a motion

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to compel arbitration de novo on the record. Courtyard Gardens Health & Rehab., LLC v. Arnold, 2016 Ark. 62, 485 S.W.3d 669. 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. Reg’l Care of Jacksonville, LLC v. Henry, 2014 Ark. 361, 444 S.W.3d 356; Asset Acceptance, LLC v. Newby, 2014 Ark. 280, 437 S.W.3d 119.

          The parties do not dispute that the Federal Arbitration Act ("FAA"), 9 U.S.C. § § 1-16, governs the agreements at issue. The FAA establishes a national policy favoring arbitration when the parties contract for that mode of dispute resolution. Henry, supra. Likewise, in Arkansas, arbitration is strongly favored as a matter of public policy and is looked upon with approval as a less expensive and more expeditious means of settling litigation and relieving docket congestion. Arnold, supra ; Henry, supra.

          Despite an arbitration provision being subject to the FAA, we look to state contract law to decide whether the parties’ agreement to arbitrate is valid. Henry, supra. The same rules of construction and interpretation apply to arbitration agreements as apply to agreements in general. Newby, supra. In deciding whether to grant a motion to compel arbitration, two threshold questions must be answered: (1) Is there a valid agreement to arbitrate between the parties? and (2) If such an agreement exists, does the dispute fall within its scope? Id.

         Phillips preliminarily argues 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. Phillips claims that Robinson’s failure to attempt to exclude residents who were subject to arbitration agreements from the proposed class in its prior appeal from class certification now bars it from seeking to compel those class members to participate in arbitration. He further contends that Robinson waived its right to arbitrate by waiting for more than two years to request it. As Robinson asserts, however, these arguments are not properly preserved for our review. Phillips did not file a response to the motions to compel, nor did he raise these issues to the circuit court at the hearing. Further, because the circuit court’s general denial constituted a ruling only on the arguments that were raised by the parties, Phillips has failed to secure a ruling on either the law-of-the-case doctrine or waiver.[2] Newby, supra. 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.

          I. Whether There Is a Valid Agreement to Arbitrate Between the Parties

          We must first determine the threshold inquiry of "whether a valid agreement to arbitrate exists; that is, whether there has been mutual agreement, with notice as to the terms and subsequent assent." Henry, 2014 Ark. 361, at 6, 444 S.W.3d at 360. We have held that, as with other types of contracts, the essential elements

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for an enforceable arbitration agreement are (1) competent parties, (2) subject matter, (3) legal consideration, (4) mutual agreement, and (5) mutual obligations. Id. at 6-7, 444 S.W.3d at 360. As the proponent of the arbitration agreements, Robinson has the burden of proving these essential elements. DaimlerChrysler Corp. v. Smelser, 375 Ark. 216, 289 S.W.3d 466 (2008).

          A. Validity of the 271 Arbitration Agreements Executed by "Responsible Parties"

         Phillips first challenges the validity of Robinson’s motion to compel with respect to the 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. These agreements were instead signed by the resident’s "responsible party" or "legal representative." Phillips contends that these agreements are invalid because the signors did ...


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