# Hardaway v. Quince Nursing and Rehabilitation Center, LLC

> District Court, W.D. Tennessee · April 20, 2020

URL: https://www.frixlaw.com/law-library/cases/10439827

## Case

- **Court:** District Court, W.D. Tennessee
- **Decided:** April 20, 2020
- **Opinion:** 100trialcourt
- **Cited by:** 0 later opinions in the Frix Law Library

## Citator (automated)

- No negative treatment found by the automated citator. That is not the same as a confirmation that the case is good law; read the citing cases.
- Full citator and citing cases: https://www.frixlaw.com/law-library/cases/10439827

## How later opinions describe it (automated extraction)

- holding that for a third-party beneficiary to exist, there must first be a valid contract executed by one who had authority

## Opinion text

IN THE UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF TENNESSEE
WESTERN DIVISION

)
KEVIN HARDAWAY, as next of kin )
of Doris Albright, deceased, )
and on behalf of the wrongful )
death beneficiaries of Doris )
Albright, )
)
Plaintiff, )
)
v. ) No. 2:19-2464
)
QUINCE NURSING AND )
REHABILITATION CENTER, LLC, )
d/b/a QUINCE NURSING AND )
REHABILITATION CENTER; AURORA )
CARES, LLC; DTD HC; D&N, LLC; )
DONALD T. DENZ; and NORBERT A. )
BENNETT, )
)
Defendants. )
)

ORDER

Before the Court is Defendant Quince Nursing and
Rehabilitation Center, LLC’s (“Quince”) September 26, 2019
Motion to Compel Arbitration and Stay Proceedings (“Motion to
Compel”). (ECF No. 16.) Plaintiff Kevin Hardaway, as next of
kin of Doris Albright, deceased, and on behalf of the wrongful
death beneficiaries of Doris Albright (“Hardaway”), responded on
October 9, 2019. (ECF No. 20.) Quince replied on October 25,
2019. (ECF No. 29.)
For the following reasons, Quince’s Motion to Compel is
DENIED.
I. Background

This is a health care liability suit alleging a wrongful
death. Doris Albright was a resident of Quince Nursing and
Rehabilitation Center from about August 21, 2018, until her
death on August 29, 2019. (Compl., ECF No. 1 ¶¶ 20, 42.) On
admission to the nursing home, Doris Albright’s sister, Charitee
Albright, signed an arbitration agreement (the “Agreement”),
which stated that the parties, Doris Albright and Quince, agreed
to submit “[a]ny and all disputes” “arising out of or in any way
relating to . . . the Resident’s stay[] at the facility . . .”
to arbitration. (ECF No. 16-2 at 1 ¶ 3; id. at 3.) The
Agreement further stated that “[t]he term ‘Resident’ shall refer
collectively to those signing with or for the Resident” and that

“[a] person signing who routinely makes decisions for the
Resident, if not the Power of Attorney or Guardian/Conservator,
will be considered a health care surrogate/proxy and/or Legal
Representative.” (Id. ¶ 2.) The Agreement stated that the
arbitrator should apply the law of the state where the facility
is located, except that the Federal Arbitration Act should
exclusively govern the enforcement of the Agreement. (Id. ¶ 3.)
Doris Albright did not sign the Agreement. (See id. at 3.)

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There is no evidence in the record that Charitee Albright had
authorization to sign the Agreement on Doris Albright’s behalf.
On July 19, 2019, Kevin Hardaway instituted the present

action as son and next of kin of Doris Albright and on behalf of
all wrongful death beneficiaries. (ECF No. 1.) Hardaway brings
claims for statutory negligence under the Tennessee Health Care
Liability Act, Tenn. Code Ann. §§ 29-26-101, et seq. (“THCLA”),
negligence under Tennessee common law, and survival and wrongful
death, all arising from Doris Albright’s stay at Quince Nursing
and Rehabilitation Center. (Id. ¶¶ 47-70.)
On September 26, 2019, Quince filed the Motion to Compel.
(ECF No. 16.) Quince argues that the Agreement binds Doris
Albright and that all claims brought by Hardaway are subject to
arbitration. (ECF No. 16-1.) Quince asks the Court to compel
arbitration and stay all proceedings pending resolution of
arbitration.1 (ECF No. 16.)

On November 4, 2019, the Court held a scheduling conference
in which the Motion to Compel was discussed. (ECF No. 34.) The
Court granted the parties’ request to conduct discovery

1 In addition to the nursing home as a facility defendant, Hardaway
names other defendants, including corporate defendants and individuals
(the “Non-facility Defendants”). The Non-facility Defendants have
filed a concurrent motion to dismiss for lack of jurisdiction. (ECF
No. 17.) They argue that, if the Court finds them subject to personal
jurisdiction, the Agreement also binds Hardaway to arbitration of the
claims against them. (ECF No. 16-1 at 1 n.1.)

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addressing authorization to sign the Agreement. (See id.) A
subsequent Scheduling Order established January 31, 2020, as the
deadline for the parties to complete arbitration-related

discovery; March 2, 2020, as the deadline to file any
arbitration-related memoranda; and March 16, 2020, as the
deadline for the parties to respond to any arbitration-related
memoranda. (ECF No. 36.)
On March 2, 2020, both parties filed briefs addressing the
applicability of a recent Tennessee Court of Appeals decision
and reiterating arguments made in their October filings. The
parties produced no new evidence. (See ECF Nos. 46, 47.) On
March 16, 2020, Hardaway filed a response to Quince’s March 2,
2020 memorandum. (ECF No. 48.)
II. Jurisdiction and Choice of Law
The Court has diversity jurisdiction. 28 U.S.C. § 1332.

The amount in controversy exceeds $75,000. Hardaway is seeking
compensatory and punitive damages for, inter alia, survival and
wrongful death claims against multiple defendants. (ECF No. 1
¶¶ 53, 64, 70, 73; id. at 22 ¶¶ 1, 4.)
The parties are completely diverse. At the time of her
death, Doris Albright was a citizen of Tennessee. (ECF No. 50
¶ 1.) Kevin Hardaway is also a citizen of Tennessee. (Id.
¶¶ 2, 4-5.) None of the defendants is a citizen of Tennessee.

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Quince is a Tennessee limited liability company. (Id. ¶ 6.)
Aurora Cares, LLC is a New York limited liability company. (Id.
¶ 8.) For purposes of diversity jurisdiction, limited liability

companies have the citizenship of each of their members.
Americold Realty Tr. v. Conagra Foods, Inc., 136 S. Ct. 1012,
1015 (2016) (citing Carden v. Arkoma Associates, 494 U.S. 185,
195-96 (1990)); accord Delay v. Rosenthal Collins Grp., LLC, 585
F.3d 1003, 1005 (6th Cir. 2009). The members of Quince and
Aurora Cares, LLC are D&N, LLC and DTD HC, LLC, which are also
named defendants. (ECF No. 50 ¶¶ 7, 9.) D&N, LLC and DTD HC,
LLC are New York limited liability companies. (Id. ¶¶ 10, 13.)
D&N, LLC’s members are Norbert A. Bennett, the Norbert A.
Bennett Children’s Trust, and the Norbert A. Bennett Grand-
Children’s Trust. (Id. ¶ 11.) Bennett is a citizen of New
York. (Id. ¶ 17.) The citizenship of a traditional trust is

that of its trustee. See GBForefront, L.P. v. Forefront Mgmt.
Grp., LLC, 888 F.3d 29, 38-40 (3d Cir. 2018) (citations
omitted). The trustee of the Norbert A. Bennett Children’s
Trust and the Norbert A. Bennett Grand-Children’s Trust is
Ronald Bennett, who is also a citizen of New York. (ECF No. 50
¶ 12.) DTD HC, LLC’s members are Donald T. Denz and the Donald
T. Denz Irrevocable Trust. (Id. ¶ 14.) Denz is a citizen of
New York. (Id. ¶ 17.) The trustee of the Donald T. Denz

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Irrevocable Trust is Martin Clifford, who is also a citizen of
New York. (Id. ¶ 15.)
The Court has diversity jurisdiction because the parties

are completely diverse and the amount in controversy exceeds
$75,000. 28 U.S.C. § 1332.
Federal courts sitting in diversity apply state law to
issues of substantive law and federal law to procedural issues.
Erie R.R. Co. v. Tompkins, 304 U.S. 64, 78-80 (1938); see also
Gasperini v. Ctr. for Humanities, Inc., 518 U.S. 415, 427
(1996). Under the Federal Arbitration Act (“FAA”), 9 U.S.C. §§
1, et seq., arbitration agreements may be invalid on the grounds
that “exist at law” for the revocation of contracts. See 9
U.S.C. § 2. “In other words, whether an arbitration clause is
enforceable is governed by state law.” Stutler v. T.K.
Constructors, Inc., 448 F.3d 343, 345 (6th Cir. 2006). State

law determines the applicability of contract defenses such as
fraud, duress, or unconscionability. Doctor’s Assocs., Inc. v.
Casarotto, 517 U.S. 681, 686–87 (1996); see Floss v. Ryan’s Fam.
Steak House, Inc., 211 F.3d 306, 314–15 (6th Cir. 2000). When
there is no dispute that a certain state’s substantive law
applies, the court need not conduct a choice-of-law analysis sua
sponte. See GBJ Corp. v. E. Ohio Paving Co., 139 F.3d 1080,
1085 (6th Cir. 1998). The parties assume in their respective

6
briefing that Tennessee substantive law governs Hardaway’s
claims. The Court applies Tennessee substantive law to
Hardaway’s claims.

III. Standard of Review
“When a suit is brought in federal court on issues that by
written agreement are subject to arbitration, the Federal
Arbitration Act requires that the court in which the suit is
pending, upon being satisfied that the issue involved in such
suit or proceeding is referable to arbitration[,] shall stay the
trial of the action.” O.J. Distrib., Inc. v. Hornell Brewing
Co., 340 F.3d 345, 355 (6th Cir. 2003) (alterations, quotation
marks, and citations omitted).
The FAA strongly favors arbitration. Albert M. Higley Co.
v. N/S Corp., 445 F.3d 861, 863 (6th Cir. 2006); see also EEOC
v. Waffle House, Inc., 534 U.S. 279, 289 (2002). One of a

court’s primary responsibilities under the FAA is to determine
whether there is a valid agreement to arbitrate. See 9 U.S.C.
§ 3; Mazera v. Varsity Ford Mgmt. Servs., LLC, 565 F.3d 997,
1001 (6th Cir. 2009) (“The court ‘must determine whether the
dispute is arbitrable, meaning that a valid agreement to
arbitrate exists between the parties and that the specific
dispute falls within the substantive scope of the agreement.’”)
(quoting Landis v. Pinnacle Eye Care, LLC, 537 F.3d 559, 561

7
(6th Cir. 2008). “Any doubts about whether an [arbitration]
agreement is enforceable, including defenses to arbitrability,
should be resolved in favor of arbitration.” Johnson v. Long

John Silver’s Rests., Inc., 320 F. Supp. 2d 656, 663 (M.D. Tenn.
2004) (citation omitted). “[A]bsent a showing of fraud, duress,
mistake, or some other ground upon which a contract may be
voided, a court must enforce a contractual agreement to
arbitrate.” Haskins v. Prudential Ins. Co. of Am., 230 F.3d
231, 239 (6th Cir. 2000), overruled on other grounds by Morrison
v. Circuit City Stores, Inc., 317 F.3d 646 (6th Cir. 2003) (en
banc).
The showing necessary to compel arbitration absent trial is
the same as the showing necessary for summary judgment in a
civil suit. Great Earth Cos. v. Simons, 288 F.3d 878, 889 (6th
Cir. 2002) (citing Doctor’s Assocs., Inc. v. Distajo, 107 F.3d

126, 129–30 (2d Cir. 1997)). The moving party must “clearly and
convincingly establish[] the nonexistence of any genuine issue
of material fact, and the evidence . . . must be read in a light
most favorable to the party opposing the motion.” Kochins v.
Linden-Alimak, Inc., 799 F.2d 1128, 1133 (6th Cir. 1986). The
moving party must show the existence of “a binding agreement to
arbitrate.” In re First Thermal Sys., Inc., 182 B.R. 510, 513
(Bankr. E.D. Tenn. 1995).

8
If that showing is made, the burden shifts to the non-
moving party to demonstrate that the validity of the agreement
is “in issue.” Great Earth Cos., 288 F.3d at 889. That

requires evidence beyond mere allegations and denials. See id.
(citation omitted) (“In order to show that the validity of the
agreement is ‘in issue,’ the party opposing arbitration must
show a genuine issue of material fact as to the validity of the
agreement to arbitrate.”).
IV. Analysis
Hardaway argues that the Agreement does not bind Doris
Albright or subject his claims to arbitration because Charitee
Albright did not have legal authority to enter into and execute
the Agreement on Doris Albright’s behalf. (See ECF No. 20 at 7-
9.) Quince does not contest the lack of authority, but argues
that Doris Albright is bound to arbitration under a third-party

beneficiary theory. (ECF No. 29 at 2-5; ECF No. 47 at 2-4.)
Quince’s argument is not well taken.
Any authority to compel arbitration would be derived from
the existence of a contract binding Doris Albright. Hardaway
argues that Charitee Albright did not have the authority to bind
Doris Albright. If Charitee Albright’s signature does not bind
Doris Albright, there is no contract that would bind Doris
Albright to arbitration. See McKey v. Nat’l Healthcare Corp.,

9
2008 WL 3833714, at *2 (Tenn. Ct. App. Aug. 15, 2008) (to bind
resident of nursing home to an arbitration agreement, the mother
or sister who signed the agreement had to have authority to act

as resident’s agent or surrogate); cf. United Steelworkers of
Am. v. Warrior & Gulf Navigation Co., 363 U.S. 574, 582 (1960)
(“[A]rbitration 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.”). There is no evidence in the record that
Charitee Albright had authority to sign the Agreement on Doris
Albright’s behalf. No valid contract binds Doris Albright to
arbitration. Quince argues that, under a third-party
beneficiary theory, the parties should be required to arbitrate
their dispute regardless of whether Charitee Albright had
authorization to enter into the Agreement. (ECF No. 29 at 2-5;
ECF No. 47 at 2-4.)

“Generally, contracts are presumed to be ‘executed for the
benefit of the parties thereto and not third persons.’” Owner-
Operator Indep. Drivers Ass’n, Inc. v. Concord EFS, Inc., 59
S.W.3d 63, 68 (Tenn. 2001) (quoting Oman Constr. Co. v. Tenn.
Cent. Ry. Co., 370 S.W.2d 563, 572 (Tenn. 1963)). There is an
exception to that rule when “the contracting parties express an
intent that the benefits of the contract flow to a third party.”
Id. These “third-party beneficiaries” “may enforce a contract

10
if they are intended beneficiaries of the contract.” Id.
(citations omitted). In Tennessee, “a third party is an
intended third-party beneficiary of a contract, and thus

entitled to enforce the terms of a contract, where (1) the
parties to the contract have not otherwise agreed,
(2) recognition of the third-party’s right to performance is
appropriate to effectuate the parties’ intent, and (3) terms or
circumstances indicate that performance of the promise is
intended or will satisfy an obligation owed by the promisee to
the third party.” Benton v. Vanderbilt Univ., 137 S.W.3d 614,
618 (Tenn. 2004) (citing Owner–Operator, 59 S.W.3d at 70).
Quince relies primarily on Benton, arguing that, as Quince
construes its holding, “[u]nder Tennessee law, a non-signatory
to an arbitration agreement may be compelled to arbitrate if

that non-signatory is a third-party beneficiary of that
arbitration agreement.” (ECF No. 29 at 2-5) (citing Benton, 137
S.W.3d at 618); (see also No. 47 at 2-3.) Quince cites language
in the Agreement providing that it is intended to be a part of a
broader “Admissions Agreement” and that “Resident [Doris
Albright] will be considered a third party beneficiary of this
Agreement and is intended to benefit directly from the execution
of this Agreement in conjunction with the corresponding
admission(s) and receipt of services.” (ECF No. 29 at 4)

11
(citing No. 16-2 at 1 ¶ 2.) Quince argues that this language
requires the Court to enforce the Agreement against Doris
Albright.

Quince’s reliance on Benton is misplaced. Contrary to
Quince’s broader characterization, Benton held that “an
arbitration provision in a contract is binding against a third-
party beneficiary who brings an action seeking to enforce the
terms of that contract.” 137 S.W.3d at 618 (emphasis added).
Benton is distinguishable because Doris Albright, as the alleged
third-party beneficiary, is not “bring[ing] an action seeking to
enforce the terms of th[e] contract.” Id. The claims brought
by the plaintiff in Benton – abuse of process, breach of
contract, and a violation of the Tennessee Consumer Protection
Act – derived from the contract containing the arbitration
provision. See id. at 616. Benton declined to allow a

plaintiff to “have his cake and eat it too” by allowing him to
enforce certain favorable provisions of a contract while
avoiding provisions he viewed as unfavorable. See id. at 619–20
(“Thus, where a third-party beneficiary seeks to enforce rights
under a contract, an interpretation of the contract as a whole
requires that the third party not be permitted to interpret the
contract in a piecemeal fashion by avoiding unfavorable
terms.”).

12
Here, Hardaway, on behalf of Doris Albright, is not
bringing contract claims or “seeking to enforce the terms of the
contract.” He is bringing claims for statutory and common law

negligence and for survival and wrongful death that do not arise
under the terms of the Agreement. (See ECF No. 1 ¶¶ 47-70.)
The Benton court specifically said that its analysis “is
applicable only to actions brought by a third-party beneficiary
seeking to enforce rights under that contract” and that “[a]n
arbitration provision may not be applicable in cases where
claims are raised under other legal theories and are not
intertwined with rights being enforced under the terms of the
contract.” 137 S.W.3d at 620 (emphasis added) (citations
omitted).
Quince’s argument also fails because the existence of a
valid contract is a threshold requirement for any third-party

beneficiary argument. Post-Benton, Tennessee courts have
rejected similar third-party beneficiary arguments on that
ground. See, e.g., Jones v. Allenbrooke Nursing & Rehab. Ctr.,
LLC, 2019 WL 6842372, at *6 (Tenn. Ct. App. Dec. 16, 2019);
Ricketts v. Christian Care Ctr. of Cheatham Cty., Inc., 2008 WL
3833660, at *4 (Tenn. Ct. App. Aug. 15, 2008). In Ricketts, the
Tennessee Court of Appeals decided that a nursing home contract
signed by a family member who did not have authority to act on

13
behalf of the resident did not create a contract and, therefore,
that there could be no third-party beneficiary of a contract.
2008 WL 3833660, at *4. Ricketts reasoned:

Third party beneficiary concepts should not be used to
circumvent the threshold requirement that there be a valid
arbitration agreement. [The family member] signed the
admission agreement as [the resident’s] ‘representative.’
She was not entering into a contract on her own behalf, but
as her mother’s representative. The issue in this case is
whether [the family member] had authority to act as her
mother’s agent and to enter into a contract on her behalf.
If she did not have authority, there is no valid contract.
Without a valid contract, there can be no third party
beneficiary.
Id. Other courts are in accord. See, e.g., Hattiesburg Health
& Rehab Ctr., LLC v. Brown, 176 So. 3d 17, 22 (Miss. 2015)
(holding that for a third-party beneficiary to exist, there must
first be a valid contract executed by one who had authority);
Licata v. GGNSC Malden Dexter LLC, 2 N.E.3d 840, 848 (Mass.
2014) (same).
Quince relies on two orders in this District in which the
court granted motions to compel arbitration. (ECF No. 47 at 4
n.1) (citing Foley v. Allenbrooke Nursing and Rehab. Ctr., LLC,
2:18-cv-02741-JPM-cgc, ECF No. 52 (W.D. Tenn. May 2, 2019);
Farwell v. Quince Nursing and Rehab. Ctr., LLC, 2:18-cv-02795-
JPM-dkv, ECF No. 20 (W.D. Tenn. May 2, 2019)). In Foley and
Farwell, the court found that the arbitration agreements were
valid and did not reach the third-party beneficiary issue. See
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2:18-cv-02741-JPM-cgc, ECF No. 52 at 2 (“The Court, therefore,
may not decide the arbitrability issue which includes the extent
of rights conferred to Donna Foley as the third-party

beneficiary.”) (citation omitted); 2:18-cv-02795-JPM-dkv, ECF
No. 20 at 2 (same). Here, Charitee Albright lacked authority to
sign the Agreement. A valid contract does not exist.
Therefore, Foley and Farwell are not apposite.
Because there is no evidence that Charitee Albright had the
authority to act on behalf of Doris Albright, Doris Albright was
not bound by the Agreement. Doris Albright was not a third-
party beneficiary of the Agreement who would be precluded from
bringing this action. The Agreement does not bind Hardaway to
arbitration. Quince’s Motion to Compel is DENIED.
V. Conclusion
Quince’s Motion to Compel Arbitration and Stay Proceedings

is DENIED.
So ordered this 20th day of April, 2020.

/s/ Samuel H. Mays, Jr.
SAMUEL H. MAYS, JR.
UNITED STATES DISTRICT JUDGE

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Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/10439827. Public record. Not legal advice.