Manhattan Nursing & Rehabilitation Center, LLC v. Louise Williams
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IN THE COURT OF APPEALS OF THE STATE OF MISSISSIPPI
NO. 2008-CA-00925-COA
MANHATTAN NURSING & REHABILITATION
CENTER, LLC, BOBBIE BLACKARD AND
LAURA CLARK
APPELLANTS
v.
LOUISE WILLIAMS
APPELLEE
DATE OF JUDGMENT:
TRIAL JUDGE:
COURT FROM WHICH APPEALED:
ATTORNEYS FOR APPELLANTS:
ATTORNEYS FOR APPELLEE:
NATURE OF THE CASE:
TRIAL COURT DISPOSITION:
DISPOSITION:
MOTION FOR REHEARING FILED:
MANDATE ISSUED:
08/28/2007
HON. WINSTON L. KIDD
HINDS COUNTY CIRCUIT COURT
REBECCA ADELMAN
HARDIN CHASE PITTMAN
JOHN F. HAWKINS
WALTER ANDREW NEELY
CIVIL - PERSONAL INJURY
MOTION TO COMPEL ARBITRATION OR,
IN THE ALTERNATIVE, MOTION TO
DISMISS DENIED
REVERSED AND REMANDED - 08/04/2009
BEFORE LEE, P.J., ISHEE AND ROBERTS, JJ.
LEE, P.J., FOR THE COURT:
PROCEDURAL HISTORY
¶1.
On January 31, 2007, Louise Williams filed suit on behalf of her mother, Willie Mae
Henderson, in the Circuit Court of Hinds County, alleging negligence and breach of contract
against Manhattan Nursing and Rehabilitation Center (Manhattan). On March 30, 2007,
Manhattan filed a motion to compel arbitration or, in the alternative, motion to dismiss. In
this motion, Manhattan also moved to dismiss Williams’s complaint and certain parties.
Manhattan also requested permission to conduct discovery related to arbitration.
¶2.
Williams noticed a hearing on the motion to compel arbitration, but counsel for
Manhattan was not available due to a previously scheduled matter. Manhattan filed a notice
cancelling the hearing and stated that it would work with Williams to “reschedule to the
earliest mutually agreeable date.” On August 22, 2007, without holding a hearing, the trial
court entered an order finding that Manhattan had waived its right to compel arbitration.
¶3.
Manhattan now appeals, asserting the following issues: (1) the trial court erred in
denying its motion to compel arbitration, and (2) in the alternative, Williams is estopped from
challenging the arbitration agreement because it is part of the contract under which she is
suing for breach. Finding that the trial court erred in holding that Manhattan waived its right
to compel arbitration, we reverse and remand this case for further proceedings consistent
with this opinion.
FACTS
¶4.
Mary Still, Henderson’s daughter, signed a healthcare services contract to admit
Henderson to Manhattan. Henderson had Alzheimer’s disease and was incapable of making
decisions on her own. While in Manhattan’s care, Henderson suffered a broken arm, which
went untreated, and decubitus ulcers, one of which resulted in the amputation of her leg.
STANDARD OF REVIEW
¶5.
The standard of review for a denial of a motion to compel arbitration is de novo.
United Credit Corp. v. Hubbard, 905 So. 2d 1176, 1177 (¶7) (Miss. 2004).
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DISCUSSION
I. MOTION TO COMPEL ARBITRATION
¶6.
In its order denying Manhattan’s motion to compel arbitration, the trial court relied
on the then-recently-decided case of Century 21 Maselle and Associates, Inc. v. Smith, 965
So. 2d 1031 (Miss. 2007). In Century 21, Century 21 and Cindy Smith (collectively, Century
21) filed an answer to Tony and Linda Smith’s (the Smiths) complaint and requested a jury
trial. Id. at 1034 (¶4). As its first affirmative defense in its answer, Century 21 asserted that
the complaint should be dismissed and that the arbitration clause in the contract between the
parties should be enforced. Id. That same day, Century 21 propounded interrogatories and
requests for production of documents, for which responses were never received. Id. The
motion to compel arbitration was noticed for a hearing sixty-one days after the suit was filed
and twenty days after the answer was filed. Id. The trial court found that the defendants had
waived their right to compel arbitration by requesting a jury trial and propounding discovery.
Id. at (¶5). On appeal, the supreme court reversed, finding that although Century 21’s acts
in initiating discovery were “precipitously close to satisfying the waiver exception,” the
waiver exception was not met because the Smiths “offered no evidentiary basis for the lower
court to find detriment or prejudice either by incurred legal expense or procedural delay . .
. .” Id. at 1038 (¶12).
¶7.
The supreme court has held that the right to compel arbitration is waived “when the
party seeking arbitration substantially invokes the judicial process to the detriment or
prejudice of the other party.” Univ. Nursing Assocs., PLLC v. Phillips, 842 So. 2d 1270, 1278
(¶28) (Miss. 2003) (quoting Subway Equip. Leasing Corp. v. Forte, 169 F.3d 324, 326 (5th
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Cir. 1999)). A “waiver of arbitration is not a favored finding, and there is a presumption
against it.” MS Credit Ctr., Inc. v. Horton, 926 So. 2d 167, 179 (¶39) (Miss. 2006) (quoting
Russell v. Performance Toyota, Inc., 826 So. 2d 719, 724 (¶16) (Miss. 2002)). Waiver is
defined as the “active participation or substantial invocation of the litigation process which
results in detriment or prejudice to the other party, or engaging in conduct inconsistent with
timely enforcing the arbitration agreement . . . .” Century 21, 965 So. 2d at 1036 (¶8).
“However, parties claiming waiver must offer sufficient evidence at a hearing to overcome
the presumption in favor of arbitration.” Id. at 1036-37 (¶8). In Century 21, the supreme
court reiterated that “[p]arties seeking to enforce arbitration are to file a ‘Motion to Compel
Arbitration and to Stay Proceedings Pending Arbitration’ immediately upon discovery that
the controversy or suit is subject to an arbitration agreement.” Id. at 1038 (¶10).
¶8.
The first document filed by Manhattan was the motion to compel arbitration or, in the
alternative, motion to dismiss. Williams responded to Manhattan’s motion and attached the
affidavits of Williams and Still. Approximately a month later, Williams set the motion for
a hearing. After learning that the hearing had been set, Manhattan filed a notice cancelling
the hearing and requested to take the depositions of Williams and Still concerning their
affidavit testimony. No hearing was held on the arbitration issue. Before learning that the
trial court had entered an order holding that Manhattan had waived its right to compel
arbitration, Manhattan filed a motion for permission to take discovery that would be limited
to the enforceability of the arbitration agreement. The trial court entered a second order,
again finding that Manhattan had waived its right to compel arbitration.
¶9.
Although Manhattan failed to file a motion to stay the proceedings pending
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arbitration, we cannot find that it waived its right to compel arbitration. Manhattan did not
delay in pursuing its right to compel arbitration, and it did not actively participate in litigation
by serving discovery, moving for summary judgment, or entering into a scheduling order.
Manhattan sought to depose Williams and Still, but the purpose of the depositions was
limited to matters related to the arbitration agreement. Regardless, the depositions were
never scheduled or taken. In addition, Williams has failed to offer any evidence of detriment
or prejudice caused by any delay Manhattan may have caused. See Univ. Nursing Assocs.,
842 So. 2d at 1278 (¶28) (quoting Subway Equip., 169 F.3d at 326) (“Waiver will be found
when the party seeking arbitration substantially invokes the judicial process to the detriment
or prejudice of the other party.”).
¶10.
In its order denying the motion to compel arbitration, the trial court found as follows:
[A]lthough the defendants filed the herein Motion to Compel Arbitration, they
have failed to promptly schedule and notice a hearing on the motion. The
Court further finds that [the] plaintiff duly noticed the [d]efendants’ motion so
this matter could move forward. The defendants indicated they were not
available for the hearing. Therefore, the Court chose to rule on this matter
without a hearing. After a review of this matter, the Court finds that the
defendants’ conduct is inconsistent with timely enforcing the arbitration
agreement.
The trial court made no findings regarding whether Manhattan’s failure to schedule a hearing
caused detriment or prejudice to Williams. On appeal, Williams argues that she suffered
prejudice because she was forced to take “potentially binding positions on numerous matters
not relating to arbitration, creating the potential for inconsistent rulings between a court of
law and an arbitral forum.”
¶11.
According to the United States Fifth Circuit Court of Appeals, “[p]rejudice . . . refers
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to the inherent unfairness - in terms of delay, expense, or damage to a party’s legal position
- that occurs when the party’s opponent forces it to litigate an issue and later seeks to
arbitrate that same issue.” Id. at 1278 (¶30) (quoting Subway Equip., 169 F.3d at 327). The
burden was on Williams, the party claiming waiver, to “offer sufficient evidence at a hearing
to overcome the presumption in favor of arbitration.” Century 21, 965 So. 2d at 1036-37
(¶8). No evidence of any delay or expense was shown by Williams. Williams also does not
show any damage to her legal position as the only action taken by Williams after Manhattan
filed its notice to compel arbitration was her filing of the notice of hearing.
¶12.
We find that Manhattan did not substantially participate in litigation of the case and
did not cause an undue delay or prejudice to Williams. Therefore, the decision of the trial
court finding that Manhattan waived its right to compel arbitration is reversed, and the case
is remanded with directions for the court to hold a hearing on the motion to compel
arbitration. We direct the trial court to hold the hearing in an expeditious manner as to
prevent any further delay in these proceedings.
II. ESTOPPEL
¶13.
Manhattan argues that because Williams alleged breach of contract in her complaint,
she should be equitably estopped from challenging the arbitration clause as it is a part of the
contract that she disputes. The trial court did not address the issue of estoppel; therefore, we
find that this issue is not properly before this Court. Glover v. Jackson State Univ., 968 So.
2d 1267, 1272 (¶11) (Miss. 2007). Regardless, in her brief to this Court, Williams withdraws
the breach of contract claim and states that she only intends to pursue the negligence claim
against Manhattan. Therefore, we find no need to address this argument.
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¶14. THE JUDGMENT OF THE HINDS COUNTY CIRCUIT COURT IS
REVERSED AND REMANDED FOR FURTHER PROCEEDINGS CONSISTENT
WITH THIS OPINION. ALL COSTS OF THIS APPEAL ARE ASSESSED TO THE
APPELLEE.
KING, C.J., MYERS, P.J., IRVING, GRIFFIS, BARNES, ISHEE, ROBERTS,
CARLTON AND MAXWELL, JJ., CONCUR.
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