Thi of New Mexico at Vida Encantada, LLC v. Lovato
848 F. Supp. 2d 1309
D.N.M.2012Background
- Guadalupe Duran executed a power of attorney on February 6, 2007 appointing Atencio and others as attorneys-in-fact; it authorized severally acting agents and included health care decisions.
- On May 8, 2007 Duran was admitted to Vida Encantada; Atencio, as her representative, executed an Admission Agreement requiring that the representative be bound by its terms and furnish power-of-attorney documentation.
- On the same day Atencio signed an arbitration agreement with Vida Encantada, binding successors and personal representatives and waiving the right to court for claims related to care, governed by the FAA, with a three-day revocation window.
- Duran’s family moved her from a behavioral health center to Vida Encantada; Plaintiff alleges substandard care and Duran’s death, leading to a state wrongful death action in 2010.
- In 2011, Plaintiffs filed a federal action under the FAA to compel arbitration of Duran’s claims and to stay the state action; Defendant moved to dismiss or abstain under Colorado River and opposed arbitration enforcement.
- The court ultimately holds that it has subject matter jurisdiction (diversity), refuses abstention, and grants arbitration for some claims while denying it for others, staying and dismissing accordingly.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Is there jurisdiction to compel arbitration? | Duran’s estate and related entities are diverse; FAA §4 provides federal question jurisdiction via diversity. | Diversity may be defective due to non-diverse parties (e.g., Chaltry) and improper application of corporate citizenship rules. | Yes; complete diversity exists and FAA jurisdiction is proper. |
| Is the Arbitration Agreement valid and enforceable against the non-signatories and third parties? | Arbitration clause is valid and within the scope; third-party beneficiaries and non-signatories can enforce under N.M. law and equitable estoppel where appropriate. | Arbitration agreement is unenforceable due to unavailability of designated provider, unconscionability, and lack of binding on Duran's estate and non-signatories. | Arbitration agreement is valid and enforceable against Duran’s estate and THI; FAS and FCC cannot compel arbitration; waiver not established. |
| Can non-signatories THI, FAS, and FCC compel arbitration? | THI is an affiliate/third-party beneficiary; FAS and FCC may rely on equitable estoppel. | No clear beneficiary status for FAS/FCC; equitable estoppel not satisfied because obligations arise from tort law not the contract. | THI may compel arbitration; FAS and FCC cannot compel arbitration against the estate. |
| Did Plaintiffs waive their right to arbitrate by delaying assertion of arbitration? | Delay was minimal litigation activity; policy favors arbitration and there was no prejudice. | Delay amounted to waiver by waiting until discovery and later stages. | No waiver; timely pursuit of arbitration given minimal state-court activity. |
Key Cases Cited
- Rivera v. Am. Gen. Fin. Servs., Inc., 259 P.3d 803 (N.M. 2011) (arbitration provider integral vs ancillary; third-party beneficiary doctrine applies)
- Barron v. Evangelical Lutheran Good Samaritan Soc., 265 P.3d 720 (N.M. Ct. App. 2011) (third-party beneficiary and arbitration advantages; adhesion contracts)
- Fox v. Maulding, 16 F.3d 1079 (10th Cir. 1994) (parallelism and balance in Colorado River abstention; factors framework)
- Moses H. Cone Mem. Hosp. v. Mercury Constr. Corp., 460 U.S. 1 (S. Ct. 1983) (abstention factors; arbitration must be enforced where appropriate)
- Colorado River Water Conversion Dist. v. United States, 424 U.S. 800 (S. Ct. 1976) (abstention doctrine -- exceptional circumstances and parallel proceedings)
- Stang v. Hertz Corp., 463 P.2d 45 (N.M. Ct. App. 1969) (wrongful death accrual and derivative rights—arbitration context relevance)
- Crow v. Capitol Bankers Life Ins. Co., 891 P.2d 1206 (N.M. 1995) (contract integrated writings; two or more writings in single contract)
- Johnson v. Columbia Props. Anchorage, LP, 437 F.3d 894 (9th Cir. 2006) (LLC citizenship based on members' citizenship)