Raber v. Emeritus at Marietta , 2016 Ohio 1531 ( 2016 )

[Cite as Raber v. Emeritus at Marietta, 2016-Ohio-1531.]
IN THE COURT OF APPEALS OF OHIO
FOURTH APPELLATE DISTRICT
WASHINGTON COUNTY
DAVID E. RABER, : Case No. 15CA18
Individually and as Co-Personal
Representative of the Estate of :
Monna Ann Raber, ET AL.,
Plaintiffs-Appellees. :
v. : DECISION AND
JUDGMENT ENTRY
EMERITUS AT MARIETTA, :
ET AL.,
: RELEASED: 4/8/2016
Defendants-Appellants.
APPEARANCES:
Keith Hansbrough, Kenneth W. McCain, and Jason P. Ferrante, Marshall, Dennehy,
Warner, Coleman & Goggin, Cleveland, Ohio, for appellants.
Jeremy M. Burnside, Portsmouth, Ohio, for appellees.
Harsha, J.
{¶1} Emeritus at Marietta, Emeritus Corporation, and HCP EMOH, LLC
(“Emeritus et al.”) appeal from a judgment that partially denied their Motion to Stay
Proceedings and Compel Arbitration by permitting wrongful-death claims against them
to proceed. David E. Raber and Thomas E. Raber, individually and as co-executors of
the estate of their deceased mother, Monna Ann Raber, filed the wrongful-death claims,
along with several other claims, against Emeritus et al. The Rabers’ action stemmed
from the alleged maltreatment and death suffered by their mother at a residential-care
facility owned by Emeritus Corporation and operated by Emeritus at Marietta on
property owned by HCP EMOH, LLC.
Washington App. No. 15CA18 2
{¶2} Emeritus et al. initially assert that the trial court erred by denying their
motion to stay the wrongful-death proceedings and compel arbitration on their wrongful-
death claims because the Federal Arbitration Act (“FAA”) required that these claims be
arbitrated under an agreement Monna Ann Raber signed. Emeritus et al.’s contention is
meritless because a decedent cannot bind his or her beneficiaries to arbitrate their
wrongful-death claims. Peters v. Columbus Steel Castings Co., 115 Ohio St. 3d 134,
2007-Ohio-4787, 873 N.E.2d 1258, paragraph two of the syllabus. Appellants are
correct that the FAA preempts state law when state law prohibits the arbitration of a
particular type of claim. However, Ohio law that precludes application of an arbitration
agreement to third parties does not create a categorical rule prohibiting arbitration of
wrongful-death claims. And nothing in the FAA alters background principles of state
contract law regarding the scope of agreements, including the question of who is bound
by them. We reject appellants’ initial assertion.
{¶3} Appellants next contend that the trial court erred by not staying the entire
case, including the wrongful-death claims, pending the completion of arbitration of the
claims it determined were subject to the arbitration agreement. We agree. Under the
plain language of R.C. 2711.02(B), when a trial court determines that certain claims are
subject to arbitration, upon a request by a party the court must stay the entire
proceeding until those claims have been arbitrated, even though the action may include
both arbitrable and non-arbitrable claims.
{¶4} Therefore, we sustain appellants’ second assignment of error, reverse the
judgment of the trial court, and remand the cause to that court so that it can enter a new
Washington App. No. 15CA18 3
order staying the entire proceeding until the parties arbitrate the claims subject to
arbitration.
I. FACTS
{¶5} Monna Ann Raber was a resident of an assisted-living community known
as Emeritus at Marietta from August 2010 to May 2013. According to appellants,
Emeritus at Marietta is the Ohio registered trade name for Emeritus Corporation, which
operated and managed Emeritus at Marietta and provided care to Monna Ann Raber at
the facility. The care, services, and treatment of Monna Ann Raber were subject to a
resident agreement, prepared by Emeritus Corporation, that she signed. HCP EMOH,
LLC owns the real property on which the facility is located.
{¶6} Monna Ann Raber also executed an agreement with Emeritus at Marietta
to resolve disputes between them by binding arbitration:
The Parties agree that in the event that such disputes cannot be resolved
as contemplated in Paragraph 1, that unless expressly prohibited by
applicable law, any action, dispute, claim or controversy of any kind,
whether in contract or in tort, statutory or common law, personal injury,
property damage, legal or equitable or otherwise, arising out of the
provision of assisted living services, healthcare services, or any other
goods or services provided under the terms of any agreement between
the Parties, including disputes involving the scope of this Arbitration
Agreement, or any other dispute involving acts or omissions that cause
damage or injury to either Party, except for matters involving evictions,
shall be resolved exclusively by binding arbitration and not by lawsuit
or resort to the judicial process, except to the extent that applicable law
provides for judicial review of arbitration proceedings. To the fullest extent
permitted by law, this Arbitration Agreement shall apply to third parties not
signatories to this Agreement, including any spouse, heirs, or persons
claiming through the Resident. Any claims or grievances against the
Community’s corporate parent, subsidiaries, affiliates, employees, officers
or directors shall also be subject to and resolved in accordance with this
Arbitration Agreement.
(Emphasis sic.)
Washington App. No. 15CA18 4
{¶7} The arbitration agreement also provided that it “shall be governed and
interpreted under the Federal Arbitration Act, 9 U.S.C. Sections 1-16,” that admission to
the facility was not contingent upon signing the arbitration agreement, and that it could
be revoked by written notice delivered to Emeritus at Marietta by certified mail within 15
days of signature.
{¶8} After Monna Ann Raber died a West Virginia official appointed her sons,
David E. Raber and Thomas E. Raber (“the Rabers”), her only surviving children and
her beneficiaries under the Ohio wrongful-death statute, as co-executors of her estate.
The Rabers, individually and in their capacity as co-executors of their deceased
mother’s estate, filed a complaint in the Washington County Common Pleas Court
raising claims of wrongful death, negligence, violations of the R.C. 3721.13 nursing
home patients’ bill of rights, additional statutory and regulatory violations, survivorship,
and punitive damages relating to appellants’ care of the decedent during her residence
at the facility. The Rabers named Emeritus at Marietta, Emeritus Corporation, HCP
EMOH, LLC, and ten John Doe parties as defendants.
{¶9} Ultimately, Emeritus et al. filed a motion to stay proceedings and compel
arbitration, which the trial court granted in part and denied it in part. The trial court ruled
the Rabers’ wrongful-death claims were not subject to arbitration and it would not stay
proceedings on these claims. But the trial court stayed proceedings on all of the Rabers’
remaining claims and submitted them to arbitration. This appeal ensued.
II. ASSIGNMENTS OF ERROR
{¶10} Appellants assign the following errors for our review:
Washington App. No. 15CA18 5
1. THE TRIAL COURT ERRED BY FAILING TO DETERMINE THAT ALL
CLAIMS BROUGHT BY PLAINTIFFS, INCLUDING THE WRONGFUL
DEATH CLAIMS, ARE SUBJECT TO THE ARBITRATION
AGREEMENT.
2. IN THE ALTERNATIVE, THE TRIAL COURT ERRED BY NOT
STAYING THE ENTIRE MATTER PENDING COMPLETION OF
ARBITRATION OF THE CLAIMS IT DETERMINED WERE SUBJECT
TO THE ARBITRATION AGREEMENT, AS REQUIRED BY R.C.
2711.02 AND MARQUEZ V. KOCH, 4TH DIST. ROSS APP. 11CA3283,
2012-OHIO-5466.
III. STANDARD OF REVIEW
{¶11} In general “ ‘[a]n appellate court reviews a trial court's decision to grant or
deny a motion to compel arbitration or stay the proceedings under the abuse of
discretion standard.’ ” Primmer v. Healthcare Indus. Corp., 2015-Ohio-4104, 43 N.E.3d
788, ¶ 8 (4th Dist. 2015), quoting Fields v. Herrnstein Chrysler, Inc., 4th Dist. Pike No
12CA827, 2013-Ohio-693, ¶ 12; K.M.P., Inc. v. Ohio Historical Society, 4th Dist.
Jackson No. 03CA2, 2003-Ohio-4443, ¶ 14.
{¶12} Nevertheless, “ ‘[a] trial court's decision granting or denying a stay of
proceedings pending arbitration is * * * subject to de novo review *** on issues of law,
which will commonly predominate because such cases generally turn on issues of
contractual interpretation * * *.’ ” McFarren v. Emeritus at Canton, 2013-Ohio-3900, 997
N.E.2d 1254, ¶ 13 (5th Dist.), quoting Hudson v. John Hancock Fin. Servs., 10th Dist.
Franklin No. 06AP-1284, 2007-Ohio-6997, ¶ 8; see also Duncan v. Wheeler, 4th Dist.
Scioto No. 09CA3296, 2010-Ohio-4836, ¶ 5 (in appeal from denial of motion to stay
proceedings and to compel arbitration, we observed that “appellate courts employ a de
novo standard when reviewing a trial court's interpretation of contract provisions,
including arbitration provisions”); Taylor Bldg. Corp. of Am. v. Benfield, 117 Ohio St.3d
Washington App. No. 15CA18 6
352, 2008-Ohio-938, 884 N.E.2d 12, ¶ 37 (rejecting an abuse-of-discretion standard of
review and applying a de novo standard of review in reviewing decision granting motion
to stay litigation and compel arbitration when the underlying issue was whether the
arbitration provision was unenforceable because of alleged unconscionability).
{¶13} The issues raised here are legal ones: (1) whether the FAA requires that
the Rabers’ wrongful-death claims be arbitrated under the terms of the arbitration
agreement signed only by their deceased mother; and (2) whether a case that includes
arbitrable and non-arbitrable claims, upon request of one of the parties, requires staying
the entire case until the arbitration of the arbitrable claims has concluded. Therefore,
we review the trial court’s decision using a de novo standard of review.
IV. LAW AND ANALYSIS
A. Does the FAA Preempt Peters v. Columbus Steel Castings Co., 115 Ohio St. 3d
134, 2007-Ohio-4787, 873 N.E.2d 1258 ? No.
{¶14} The trial court determined that the Rabers’ wrongful-death claims against
appellants were not subject to arbitration under Monna Ann Raber’s arbitration
agreement with Emeritus at Marietta.
{¶15} In their opposition to the motion to compel arbitration, the Rabers cited
Peters v. Columbus Steel Castings Co., 115 Ohio St. 3d 134, 2007-Ohio-4787, 873
N.E.2d 1258, to support their contention that the arbitration agreement that their mother
signed did not apply to their wrongful-death claims. In Peters the court held that “[a]
decedent cannot bind his or her beneficiaries to arbitrate their wrongful-death claims.”
Id. at paragraph two of the syllabus. At ¶ 17-19 the court rejected a provision in a
dispute-resolution plan binding the beneficiaries of the employee agreeing to mediation,
Washington App. No. 15CA18 7
and if unsuccessful, arbitration of any legal claim or dispute the beneficiaries had
against the company:
Given the statutory language and our precedents, it is clear that survival
claims and wrongful-death claims are distinct claims that belong to
separate individuals, even though they are generally brought by the same
nominal party (the personal representative of the estate). While we have
allowed collateral estoppel to apply to such claims, given the deep
similarity between the two and the privity between a decedent and his or
her beneficiaries, there is no mistaking the independent nature of these
actions.
When Peters signed the arbitration agreement, he agreed to arbitrate his
claims against the company, whether brought during his life or after his
death. Thus, the provision in the agreement binding Peters's heirs,
beneficiaries, successors, and assigns applies to a survival action, which
is the vessel used to pursue his claims after his death.
However, Peters could not restrict his beneficiaries to arbitration of their
wrongful-death claims, because he held no right to those claims; they
accrued independently to his beneficiaries for the injuries they personally
suffered as a result of the death. See Thompson [v. Wing], 70 Ohio St.3d
[176] at 182–183, 637 N.E.2d 917[, 1994]. Thus, a decedent cannot bind
his or her beneficiaries to arbitrate their wrongful-death claims. Id. The
beneficiaries can agree to arbitrate these claims themselves, but they are
not required to do so. Because Peters's beneficiaries did not sign the plan
or any other dispute-resolution agreement, they cannot be forced into
arbitration.
{¶16} The parties agree that under Peters, the Rabers’ wrongful-death claims
against Emeritus et al. would not be subject to the arbitration agreement because they
did not sign it. Nevertheless, Emeritus et al. assert in their first assignment of error that
the FAA required arbitration of the wrongful-death claims, i.e. the FAA preempted the
Supreme Court of Ohio’s conflicting decision in Peters. Emeritus et al. rely upon Marmet
Health Care Center, Inc. v. Brown, __ U.S. __, 132 S. Ct. 1201, 182 L. Ed. 2d 42 (2012),
in support of that contention. In Marmet family members of patients who died while in a
nursing home brought separate suits against the nursing home alleging that its
negligence resulted in the patients’ deaths. In each case a family member of the patient
Washington App. No. 15CA18 8
had signed an agreement with the nursing home on behalf of the patient that included a
clause requiring the arbitration of all disputes. The Supreme Court of Appeals of West
Virginia held all predispute arbitration agreements that apply to claims alleging personal
injury or wrongful death against nursing homes were unenforceable because “ ‘as a
matter of public policy under West Virginia law, an arbitration clause in a nursing home
admission agreement adopted prior to an occurrence of negligence that results in a
personal injury or wrongful death, shall not be enforced to compel arbitration of a
dispute concerning the negligence.’ ” Marmet, __ U.S. at ___, 132 S.Ct. at 1203, 182
L. Ed. 2d 42, quoting Brown v. Genesis Healthcare Corp., 228 W.Va. 646, 724 S.E.2d
250, 292 (2011).
{¶17} But the Supreme Court of the United States held that the FAA preempted
the West Virginia court’s prohibition against predispute agreements to arbitrate
personal-injury or wrongful-death claims:
As this Court reaffirmed last Term, “[w]hen state law prohibits outright the
arbitration of a particular type of claim, the analysis is straightforward: The
conflicting rule is displaced by the FAA.” AT&T Mobility LLC v.
Concepcion, 563 U.S. __, __, 131 S. Ct. 1740, 179 L. Ed. 2d 742 (2011).
That rule resolves these cases. West Virginia’s prohibition against
predispute agreements to arbitrate personal-injury or wrongful-death
claims against nursing homes is a categorical rule prohibiting arbitration of
a particular type of claim, and that rule is contrary to the terms and
coverage of the FAA. Id. __ U.S. at ___, 132 S.Ct. at 1203-1204, 182
L. Ed. 2d 42.
{¶18} However, the FAA does not preempt the holding in the Peters syllabus
because unlike the holding in Brown, Peters does not establish a categorical rule
prohibiting the arbitration of wrongful-death claims. As the Supreme Court of Ohio
recognized, “[t]he beneficiaries can agree to arbitrate these claims themselves, but they
are not required to do so.” Peters at ¶ 19.
Washington App. No. 15CA18 9
{¶19} Recently our colleagues in the Fifth District Court of Appeals rejected a
similar contention by a nursing home that under Marmet, the FAA preempted Peters
and required the arbitration of wrongful-death claims even though the beneficiaries did
not sign the arbitration agreement in their individual capacities:
Unlike the ruling by the West Virginia Supreme Court in Brown ex rel.
Brown, the ruling by the Ohio Supreme Court in Peters did not create a
categorical rule that prohibited pre-dispute agreements to arbitrate
wrongful death claims against nursing homes. Rather, the holding in
Peters was based on common law principles governing contracts and
found that only signatories to an arbitration agreement are bound by its
terms. This holding comports with the general rule that “arbitration is a
matter of contract and a party cannot be required to submit to arbitration
any dispute which he has not agreed so to submit.” Council of Smaller
Ents. v. Gates, McDonald & Co., 80 Ohio St. 3d 661, 665, 687 N.E.2d
1352 (1998). The language used in the Peters opinion by the Supreme
Court of Ohio indicates their holding does not create a categorical rule
prohibiting arbitration agreements in wrongful death cases as the Court
specifically stated that while a decedent cannot bind his or her
beneficiaries to arbitrate their wrongful death claims, “the beneficiaries can
agree to arbitrate these claims themselves, but they are not required to do
so.” Peters, 115 Ohio St. 3d at 138, 873 N.E.2d 1258. The holding in
Peters requiring a real party in interest to sign an arbitration agreement for
such agreement to be enforceable is not in conflict with the FAA as the
FAA states arbitration agreements are enforceable except “upon such
grounds as exist at law or in equity for the revocation for any contract.” 9
U.S.C. § 2.
Accordingly, we find Peters to be controlling in that arbitration agreements
are not enforceable against non-signing beneficiaries to a wrongful death
claim. Here, the only one of Rinker's beneficiaries to sign the arbitration
agreement was Gerber. However, Gerber did not sign the arbitration
agreement in his individual capacity, but signed as the purported
“representative” of Rinker. Pursuant to Peters, the arbitration agreement in
the instant case, as it pertains to the wrongful death claim, is not
enforceable against Rinker's beneficiaries. Appellant's second assignment
of error is sustained. McFarren, 2013-Ohio-3900, 997 N.E.2d 1254, at ¶
29-30 (5th Dist.)
{¶20} We agree with the rationale in McFarren and similarly hold that the FAA
does not preempt the Supreme Court of Ohio’s holding in Peters. This result is
Washington App. No. 15CA18 10
supported by the plain language of the FAA, which in Section 2 makes written
arbitration agreements “valid, irrevocable, and enforceable, save upon such grounds as
exist at law or in equity for the revocation of contract,” and which in Section 3 allows
litigants already in federal court to invoke agreements made enforceable by Section 2.
See 9 U.S.C. 2 and 3. As the Supreme Court of the United States has emphasized,
“[n]either provision purports to alter background principles of state contract law
regarding the scope of agreements (including the question of who is bound by them).”
Arthur Anderson LLP v. Carlisle, 556 U.S. 624, 630, 129 S. Ct. 1896, 173 L. Ed. 2d 832
(2009). Peters applies traditional principles of state contract law to hold that arbitration
agreements do not bind nonparties who did not agree to arbitrate wrongful-death
claims. Thus it is not preempted by the FAA. Peters at ¶ 8 (arbitration is a matter of
contract and a party cannot be required to submit to arbitration any dispute which he
has not agreed to submit). There is no argument by appellants that traditional principles
of Ohio law, e.g., assumption, piercing the corporate veil, alter ego, incorporation by
reference, third-party beneficiary theories, waiver, and estoppel, allow the arbitration
agreement to be enforced against the Rabers as nonparties. See Boyd v. Archdiocese
of Cincinnati, 2d Dist. Montgomery No. 25950, 2015-Ohio-1394, ¶ 27, citing Arthur
Andersen.
{¶21} Therefore, the trial court correctly determined that the Rabers’ wrongful-
death claims were not arbitrable under their deceased mother’s arbitration agreement.
We overrule appellants’ first assignment of error.
B. Did The Trial Court Err by Not Staying the Entire Case Pending the Arbitration of
the Arbitrable Claims? Yes.
Washington App. No. 15CA18 11
{¶22} In their second assignment of error appellants argue that the trial court
erred by not staying the entire case, including the wrongful-death claims, pending
completion of the arbitration of the claims that were subject to the agreement. The trial
court stayed all of the Rabers’ claims, except their wrongful-death claims, based on the
arbitration agreement, but concluded that the wrongful-death claims could proceed.
{¶23} R.C. 2711.02(B) mandates that if an issue in an action is referable to
arbitration, upon application of one of the parties, the trial court must stay the trial of the
remaining issues until the completion of arbitration on the referable issue:
If any action is brought upon any issue referable to arbitration under an
agreement in writing for arbitration, the court in which the action is
pending, upon being satisfied that the issue involved in the action is
referable to arbitration under an agreement in writing for arbitration, shall
on application of one of the parties stay the trial of the action until the
arbitration of the issue has been had in accordance with the agreement,
provided the applicant for the stay is not in default in proceeding with
arbitration.
{¶24} “Where any claim in an action is subject to arbitration under R.C.
2711.02(B), a court must stay the entire proceeding, although nonarbitrable claims
exist.” Jarvis v. Lehr, 1st Dist. Hamilton No. C-130832, 2014-Ohio-3567, ¶ 11; Maclin v.
Greens Nursing and Assisted Living, L.L.C., 8th Dist. Cuyahoga No. 101085, 2014-
Ohio-2538, ¶ 9 (“when a trial court determines that certain claims are subject to
arbitration, it must stay the entire proceeding until those claims have been arbitrated,
even though the action may involve both arbitrable and non-arbitrable claims”); Villas Di
Tuscany Condominium Assoc., Inc. v. Villas Di Tuscany, 7th Dist. Mahoning No. 12 MA
165, 2014-Ohio-776, ¶ 20 (“when an action contains both arbitrable and nonarbitrable
claims, the court must stay the entire action until the arbitrable claims are resolved”).
Washington App. No. 15CA18 12
{¶25} As we held in Marquez v. Koch, 4th Dist. Ross No. 11CA3283, 2012-Ohio-
5466, at ¶ 11, “the presence of non-arbitrable claims and parties not subject to an
arbitration agreement does not justify the denial of [a] motion to stay.” See also
Harrison v. Winchester Place Nursing & Rehabilitation Center, 2013-Ohio-3163, 996
N.E.2d 1001, ¶ 24 (10th Dist.), citing Marquez at ¶ 11. Therefore, “[o]nce a court
determines an issue in the proceeding is covered by a written arbitration agreement,
even claims involving nonsignatories to the arbitration agreement will be stayed under
R.C. 2711.02(B).” Jarvis at ¶ 11, citing Murray v. David Moore Home Builders, 177
Ohio App. 3d 62, 2008–Ohio–2960, 893 N.E.2d 897, ¶ 11 (9th Dist.).
{¶26} The Rabers do not dispute this precedent, but instead argue that staying
their wrongful-death claims pending the arbitration of their remaining claims would
prevent them from engaging in meaningful discovery. In effect they request that we
adopt a policy-based exception to the mandate of R.C. 2711.02(B) in the interests of
justice. We reject this request because the General Assembly is the final arbiter of
public policy; it is not the role of courts to second-guess these legislative policy choices.
See State ex rel. Cydrus v. Ohio Pub. Employees Retirement Sys., 127 Ohio St. 3d 257,
2010-Ohio-5770, 938 N.E.2d 1028, ¶ 24.
{¶27} In light of the plain language of R.C. 2711.02(B) and the precedent
interpreting it, the trial court erred in failing to stay the Rabers’ nonarbitrable wrongful-
death claims pending the arbitration of the referable claims. We sustain appellants’
second assignment of error.
V. CONCLUSION
Washington App. No. 15CA18 13
{¶28} Having sustained appellants’ second assignment of error, we reverse the
judgment of the trial court insofar as it ordered the Rabers’ wrongful-death claims to
proceed. We remand the cause to the court to enter an order staying the entire
proceeding until completion of the arbitrable issues subject to referral.
JUDGMENT REVERSED IN PART
AND CAUSE REMANDED.
Washington App. No. 15CA18 14
JUDGMENT ENTRY
It is ordered that the JUDGMENT IS REVERSED IN PART and that the CAUSE
IS REMANDED. Appellees shall pay the costs.
The Court finds there were reasonable grounds for this appeal.
It is ordered that a special mandate issue out of this Court directing the
Washington County Court of Common Pleas to carry this judgment into execution.
Any stay previously granted by this Court is hereby terminated as of the date of
this entry.
A certified copy of this entry shall constitute the mandate pursuant to Rule 27 of
the Rules of Appellate Procedure.
McFarland, J. & Hoover, J.: Concur in Judgment and Opinion.
For the Court
BY: ________________________________
William H. Harsha, Judge
NOTICE TO COUNSEL
Pursuant to Local Rule No. 14, this document constitutes a final judgment
entry and the time period for further appeal commences from the date of filing
with the clerk.