Nueterra Healthcare Management, LLC v. Parry
835 F. Supp. 2d 1156
D. Utah2011Background
- This matter concerns motions to stay and to dismiss by the Physician Defendants and Defendant Nielson.
- Plaintiffs are Nueterra entities (NHM, Nueterra Holdings, Nueterra Holdings Management) alleging management, accounting, and fiduciary breaches at Coral Desert Surgery Center.
- Physician Defendants are on Coral Desert’s Board of Managers and are Utah residents; Nielson is Coral Desert’s facility administrator and a Utah resident.
- DMA (Development and Management Agreement) governs NHM’s management services, 4.5% monthly fee with an annual cap, and requires accounting/control provisions.
- Plaintiffs allege the Physician Defendants and Nielson impaired NHM’s control over accounting, signing authority, and funds, and that NHM’s rights under the DMA were adversely affected; court grants stay for physicians and denies stay for Nielson, with dismissals remaining moot or denied without prejudice.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the FAA stay applies to nonsignatories under a broad arbitration clause | NHM says nonsignatories cannot be bound; clause is broad | DMA arbitral clause binds all related disputes | Yes; arbitration binding for nonsignatories under Utah law theories, stay granted for physicians |
| Whether Nueterra Holdings is bound by the DMA arbitration clause | Holding is inseparable from NHM’s DMA rights | Parent claims bound due to intertwined claims | Nueterra Holdings bound to arbitrate with NHM |
| Whether Nueterra Holdings Management is bound to arbitrate | Claims overlap with NHM’s DMA rights | Sister company should be bound where same misconduct and DMA reliance exist | Yes; claims tied to DMA, bound to arbitrate |
| Whether Nielson’s claims should be stayed or dismissed | Nielson not a signatory; stay not mandatory | Arbitration clause should bind Nielson due to employment context | Stay denied; dismissal without prejudice to be refiled with proper briefing |
| Whether the physician defendants’ motions to dismiss are moot | If stay granted, dismissal moot | Mootness depends on stay ruling | Moot; denied as to substantive dismissal due to stay ? |
Key Cases Cited
- Arthur Andersen LLP v. Carlisle, 556 U.S. 624 (2009) (arbitration enforcement of third-party beneficiaries under FAA)
- Howsam v. Dean Witter Reynolds, Inc., 537 U.S. 79 (2002) (gateway arbitrability questions for court decide)
- Ellsworth v. American Arbitration Association, 148 P.3d 983 (Utah 2006) (nonsignatory arbitration theories (agency, estoppel, etc.))
- International Paper Co. v. Schwabedissen Maschinen & Anlagen GMBH, 206 F.3d 411 (4th Cir. 2000) (nonsignatory arbitration when connected to contract)
- Newmont U.S.A. Ltd. v. Ins. Co. of N. Am., 615 F.3d 1268 (10th Cir. 2010) (arbitration relevance to related contract claims)
- Cade v. Zions First Nat'l Bank, 956 P.2d 1073 (Utah Ct. App. 1998) (Utah contract/arbitration principles cited)