J-S31002-15
NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37
GEORGE ELI ROBERTS, BY AND IN THE SUPERIOR COURT OF
THROUGH, HIS ATTORNEY-IN-FACT, PENNSYLVANIA
JOSEPH BUTLER,
Appellee
v.
GGNSC LANCASTER LP, D/B/A GOLDEN
LIVING CENTER – LANCASTER; GGNSC
LANCASTER GP, LLC; GGNSC
HOLDINGS, LLC; GOLDEN GATE
NATIONAL SENIOR CARE, LLC; GGNSC
EQUITY HOLDINGS, LLC; GGNSC
ADMINISTRATIVE SERVICES, LLC;
GGNSC CLINICAL SERVICES, LLC; AND
FARUK NGUYEN,
Appellants No. 1534 MDA 2014
Appeal from the Order Entered August 14, 2014
In the Court of Common Pleas of Lancaster County
Civil Division at No(s): 13-01633
BEFORE: BENDER, P.J.E., ALLEN, J., and WECHT, J.
MEMORANDUM BY BENDER, P.J.E.: FILED JULY 08, 2015
Appellants, GGNSC Lancaster, LP, d/b/a Golden Living Center –
Lancaster, GGNSC Lancaster GP, LLC, GGNSC Holdings, LLC, Golden Gate
National Senior Care, LLC, GGNSC Equity Holdings, LLC, GGNSC
Administrative Services, LLC, GGNSC Clinical Services, LLC, and Faruk
Nguyen, appeal from the order entered on August 14, 2014, denying their
preliminary objection seeking to compel this matter to arbitration. We
affirm.
J-S31002-15
The relevant facts and procedural background of this case were set
forth by the trial court as follows:
Plaintiff[,] George Eli Roberts [Roberts,] alleges that these
[Appellants] owned, operated, licensed and/or managed Beverly
Healthcare – Lancaster, now known as Golden Living Center –
Lancaster (the Facility), and were engaged in the business of
providing skilled nursing care and assisted living/personal care
services to the general public.
[Roberts] has been a resident at the Facility since April 1,
2005. At the time of his admission, [Roberts] had a past
medical history including paraplegia, peripheral vascular disease,
anemia, esophageal reflux, Suprapubic catheter, and colostomy.
He required assistance with care for all of his activities of daily
living, including bed mobility, eating, and toileting.
On admission, [Roberts] signed the necessary papers.
Included in the series of documents presented to the resident
patient for signature was a “Resident and Facility Arbitration
Agreement.” This agreement provided that any disputes arising
out of or in any way relating to the agreement or to [Roberts’]
stay at the Facility, which could constitute a legally cognizable
cause of action in a court of law, “shall be resolved exclusively
by binding arbitration … and not by a lawsuit or resort to court
process.”
[Roberts] commenced this action on July 10, 2013,
alleging that [Appellants’] professional negligence and reckless
conduct caused [him] severe injuries during his admission at the
Facility.1 Those injuries included the development and/or
worsening of multiple pressure ulcers, MRSA, urinary tract
infections, falls, poor hygiene, and severe pain. The negligent
and reckless conduct by [Appellants] consisted of
mismanagement, improper/under-budgeting, under-staffing of
the Facility and lack of training of the Facility employees, failure
to provide adequate and appropriate health care, engaging in
incomplete, inconsistent and fraudulent documentation, failure to
develop an appropriate therapeutic care plan, failure to provide
proper medication, and failure to provide sufficient food and
water to preclude the injuries noted above, and failure to ensure
the attainment of the highest level of physical, mental and
psychological functioning. Roberts further alleges negligence per
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se for violations of the Neglect of a Care-Dependent Person
statute, 18 Pa. C.S.A. § 2713, and the Older Adults Protective
Services Act, 35 P.S. § 10225.101, et seq.
1
[Roberts] also filed a complaint against Faruk Nguyen,
the former administrator of the Facility during the relevant
time of Roberts’ residency, claiming that he was
personally, jointly and vicariously liable, among other
things, for the acts and omissions of himself and his
agents, employees, servants, contractors, staff and/or
partners and all other Defendants. (See No. CI-13-
08746.) These two matters were consolidated on
December 5, 2013.
Trial Court Opinion (TCO), dated 8/14/13, at 1-3.
Appellants filed preliminary objections to the complaint in the above-
referenced matter, including a claim that Roberts should be compelled to
arbitrate the present dispute in accordance with the arbitration agreement
signed by Roberts. On August 14, 2014, the court issued an order and
accompanying opinion denying Appellants’ preliminary objection in the
nature of a motion to compel arbitration. TCO, at 1-3. Appellants filed a
timely notice of appeal. In response, the trial court issued a Pa.R.A.P.
1925(a) opinion, incorporating its August 14, 2013 opinion in which the
court had already addressed the arbitration issues raised on appeal. Per
order of court dated October 29, 2014, the trial court proceedings were
stayed pending the outcome of this appeal.
Appellants now present the following issues for our review:
1. Did the trial court – and the Superior Court in [Stewart v.
GGNSC-Canonsburg, L.P., 9 A.3d 215 (PA. Super. 2010)] –
erroneously construe the arbitration agreement and misapply
Section 5 of the Federal Arbitration Act, 9 U.S.C. § 5, to find
the availability of NAF as arbitrator to be “integral” to the
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agreement to arbitrate such that a substitute arbitrator could
not be appointed?
2. Did the trial court err in finding Stewart controlling despite
the absence of any evidence that the parties to the arbitration
agreement in this case considered the availability of NAF as
arbitrator to be “integral” to the agreement to arbitrate?
3. Is the Superior Court’s ruling in Stewart invalid for reading
NAF’s availability to conduct the arbitration given the
subsequent reversal of the federal district court decision on
which it relied?
Appellant’s Brief, at 4.
Before addressing the merits of the issues raised, we note our
standard of review:
Our review of a claim that the trial court improperly denied
the appellant’s preliminary objections in the nature of a petition
to compel arbitration is limited to determining whether the trial
court’s findings are supported by substantial evidence and
whether the trial court abused its discretion in denying the
petition. Midomo Company, Inc. v. Presbyterian Housing
Development Company, 739 A.2d 180, 186 (Pa. Super. 1999).
In the instant case, the issue presented – whether under the
terms of the Agreement the parties are required to submit their
dispute to arbitration – is strictly one of contract interpretation.
No relevant facts are in dispute. Because contract interpretation
is a question of law, our review of the trial court’s decision is de
novo and our scope is plenary. Bucks Orthopaedic Surgery
Associates, P.C. v. Ruth, 925 A.2d 868, 871 (Pa. Super.
2007); Highmark v. Hospital Service Association of
Northeastern Pennsylvania, 785 A.2d 93, 98 (Pa. Super.
2001).
Gaffer Ins. Co., Ltd. v. Discover Reinsurance Co., 936 A.2d 1109, 1112-
13 (Pa. Super. 2007) (internal quotation marks and brackets omitted).
First, we will address the issue of whether the trial court erred by
relying on Stewart in its overruling of Appellants’ preliminary objections.
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Similar to the case before us, the plaintiff in Stewart filed a civil action
against a nursing home facility for negligent care while she was admitted to
the facility. Stewart, 9 A.3d at 216. Also analagous to the present case,
the defendants/appellants in Stewart filed preliminary objections seeking to
compel the enforcement of an arbitration agreement, as the parties had
previously agreed that disputes would be submitted to arbitration for
resolution. Id. More specifically, the arbitration agreement executed by the
parties in Stewart expressly provided that a dispute, “shall be resolved
exclusively by binding arbitration … in accordance with the National
Arbitration Forum (NAF) Code of Procedure which is hereby incorporated into
this Agreement, and not by any lawsuit or resort to court process.” Id. The
Stewart Court noted that “[u]nder the NAF Code of Procedure, the ‘Code
shall be administered only by [the NAF] or by any entity or individual
providing administrative services by agreement with [the NAF].’” Id. at
216-217 (citations omitted; emphasis in original). The arbitration
agreement in Stewart also contained a severability clause which stated: “In
the event a court having jurisdiction finds any portion of this agreement
unenforceable, that portion shall not be effective and the remainder of the
agreement shall remain effective.” Id. at 217.
We agree with the trial court that the Stewart decision is exactly on
point, as the arbitration agreement at issue in the case before us contains
the exact NAF language and severability clause as in Stewart. See TCO, at
6. The issues raised in both Stewart and the present case stem from the
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fact that NAF, the designated arbitration forum set forth in the executed
arbitration agreement, can no longer accept such arbitration cases pursuant
to a consent decree it entered with the Attorney General of Minnesota.
Stewart, 9 A.3d at 217. See also TCO, at 4-5.
Having concluded that the trial court properly relied on Stewart, we
will now address, together, the remaining issues raised by Appellants, as
these issues are interrelated. Essentially, Appellants argue that despite the
unavailability of the NAF, the arbitration agreement is still enforceable
because the identity of the arbitrator was not integral to the agreement, and
therefore, a substitute arbitrator should be appointed, “in order to honor the
parties’ core agreement to arbitrate.” Appellants’ Brief, at 10. We disagree
with Appellants’ conclusions.
Section 5 of the Federal Arbitration Act provides in pertinent part:
If in the agreement provision be made for a method of naming
or appointing an arbitrator … such method shall be followed; but
if … any party thereto shall fail to avail himself of such method,
or if for any other reason there shall be a lapse in the naming of
an arbitrator … or in filling a vacancy, then upon the application
of either party to the controversy the court shall designate and
appoint an arbitrator … as the case may require, who shall act
under the said agreement with the same force and effect as if he
or they had been specifically named therein.
9 U.S.C. § 5. Under Section 5, an arbitration agreement will not fail because
of the unavailability of a chosen arbitrator unless the parties’ choice of forum
is an “integral part” of the agreement to arbitrate, rather than “an ancillary
logistical concern.” Stewart, 9 A.3d at 218-219 (citations omitted). We
held in Stewart that the arbitration agreement could not be enforced due to
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the unavailability of the NAF to act as arbitrators because the parties clearly
intended to arbitrate before the NAF. Id. at 217. We reiterate the following
portion of the trial court’s well-reasoned analysis in Stewart, which we
adopted as our own:
Here, it was clearly the intent of Appellants to arbitrate before
the NAF. Appellants presented a pre-printed agreement to
Plaintiff in which the selection of an arbitral forum was already
made. Moreover, the agreement states that this binding
arbitration shall be conducted “in accordance with the NAF Code
of Procedure, which is hereby incorporated into this agreement.”
The Code consists of over 65 pages of rules and procedures
governing parties and the adjudication of their disputes. An
agreement to submit to a specific forum and its comprehensive
set of rules evidences an explicit intention to arbitrate
exclusively before that organization…. Accordingly, this Court
finds that the arbitral forum selection clause is not an ancillary,
logistical concern but, rather, a primary purpose of the
agreement itself. Therefore, the arbitration clause is
unenforceable as an essential term of the agreement has
failed[.]
Id. (internal citations & brackets omitted). Because the arbitration
agreement in the present case contains identical language, we are
persuaded by the foregoing reasoning in Stewart to conclude that the
agreement here is also unenforceable.
The trial court further held in Stewart that, “the severability clause
could not save the Agreement’s arbitration clause because the trial court
would be forced to rewrite the arbitration clause and devise a new form and
mode of arbitration for the parties.” Id. at 217. The court further noted
that, “the replacement of an essential term is impermissible under general
contract principles.” Id. Agreeing with the trial court, we stated, “this Court
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will not rewrite an arbitration agreement and insert additional terms to
replace an unenforceable provision that was integral to the agreement.
Sanctioning this type of action would run contrary to the clear intent of the
parties as expressed by the plain language of the Agreement itself.” Id. at
221.
Although the issue of whether an arbitration agreement is enforceable
in the absence of the NAF had not been addressed by Pennsylvania case law
prior to Stewart, we looked to other jurisdictions for guidance. Ultimately,
the Stewart Court followed the decisions of numerous cases where the
courts emphasized the plain language of the arbitration agreement as the
sole evidence of the parties’ intent,1 which we believed to be consistent with
well-established contract principles under Pennsylvania law. Id. at 219-221.
As we stated in Giant Food Stores, LLC v. THF Silver Spring
Development, L.P., 959 A.2d 438 (Pa. Super. 2008), “[i]t is firmly settled
that the intent of the parties to a written contract is contained in the writing
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1
One of the decisions that we followed in Stewart was Khan v. Dell, Inc.,
2010 WL 3283529 (D.N.J. 2010), which was reversed on appeal. See Khan
v. Dell, Inc., 669 F.3d 350, 356-57 (3d Cir. 2012). Appellants suggest
that our decision in Stewart is flawed because of our reliance on the district
court’s decision in Khan. Appellants’ Brief, at 14. However, Khan was just
one case in a line of cases that influenced our decision. Moreover, it is a
well-settled principle of Pennsylvania law that federal court decisions are not
binding on the Superior Court. Bochetto v. Piper Aircraft Co., 94 A.3d
1044, 1050 (Pa. Super. 2014) (citing Kieban v. National Union Fire Ins.
Co., 771 A.2d 39, 43 (Pa. Super. 2001)).
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itself…. [W]hen the words of a contract are clear and unambiguous, we are
to determine what the parties intended by looking only at the express
language of the agreement.” Id. at 448. (citations omitted). Accordingly, if
we look to the plain language of the arbitration agreement in the present
case, it is clear that the parties intended to choose the NAF as their arbitral
forum in the event of a dispute.
Finally, we note that a petition for allowance of appeal was granted in
Wert v. Manorcare of Carlisle PA, LLC, 95 A.3d 268 (Pa. 2014), on June
24, 2014. One of the issues currently pending before our Supreme Court in
Wert is, “[w]hether the Superior Court’s decision in Stewart … holding that
the NAF Designation voided an identical Arbitration Agreement, was
incorrectly decided and should be reversed, where there is no evidence that
the NAF designation was integral to the Agreement?” Wert, 95 A.3d at 268-
269. The Supreme Court’s docket indicates that the Court heard argument
in Wert on April 7, 2015; however, no decision has been entered as of yet.
Therefore, Stewart remains binding precedent. See Commonwealth v.
Reed, 107 A.3d 137, 143 (Pa. Super. 2014) (“This Court is bound by
existing precedent under the doctrine of stare decisis and continues to follow
controlling precedent as long as the decision has not been overturned by our
Supreme Court.”) (citation omitted). See also McClung v. Breneman, 700
A.2d 495, 497 n.3 (Pa. Super. 1997) (following the decision in Dodson v.
Elvey, 665 A.2d 1223 (Pa. Super. 1995), as binding precedent where the
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Pennsylvania Supreme Court had granted allocator in Dodson but had not
yet rendered a decision).
In sum, the trial court found that the arbitration agreement between
Roberts and Appellants was not enforceable due to the unavailability of the
NAF to act as arbitrators. Accordingly, the trial court denied Appellants’
preliminary objection in the nature of a motion to compel arbitration. We
affirm.
Order affirmed. Case remanded. Jurisdiction relinquished.
Judgment Entered.
Joseph D. Seletyn, Esq.
Prothonotary
Date: 7/8/2015
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