Brown v. Quince Nursing and Rehabilitation Center, LLC

IN THE UNITED STATES DISTRICT COURT

FOR THE WESTERN DISTRICT OF TENNESSEE

WESTERN DIVISION

)

JAMARCUS BROWN, as next of kin )

of Rocky Darrin Brown, )

deceased, and on behalf of the )

wrongful death beneficiaries )

of Rocky Darrin Brown, )

)

Plaintiff, )

)

v. ) No. 2:18-cv-2740

)

QUINCE NURSING AND )

REHABILITATION CENTER, LLC, )

d/b/a QUINCE NURSING AND )

REHABILITATION CENTER; AURORA )

CARES, LLC; DTD HC, LLC; D&N, )

LLC; DONALD T. DENZ; and )

NORBERT A. BENNETT, )

)

Defendants, )

)

ORDER

Before the Court is the Magistrate Judge’s Report and

Recommendation (the “Report”), dated February 7, 2019. (ECF No.

31.) The Report recommends denying Defendant Quince Nursing and

Rehabilitation Center, LLC’s (“Quince”) November 2, 2018 Motion to

Compel Arbitration and Stay Proceedings, (ECF No. 8). (ECF No.

31.) Since the Report, Quince has objected, (ECF No. 32),

Plaintiff Jamarcus Brown has responded to Quince’s objections,

(ECF Nos. 33-34), Quince has filed supplemental objections, (ECF

No. 36), Jamarcus Brown has moved to strike the supplemental

objections, (ECF No. 37), Quince has responded to the motion to

strike, (ECF No. 39), Jamarcus Brown has moved for leave to file

a reply to the motion to strike (ECF No. 40), and Quince has

replied to Jamarcus Brown’s reply to motion to strike, (ECF No.

41) (collectively, the “Related Motions”). Jamarcus Brown has

filed supplemental authority. (ECF Nos. 47, 50.) Quince responded

to that supplemental authority. (ECF No. 57.) Jamarcus Brown

replied. (ECF No. 58.)

For the following reasons, Quince’s objections are OVERRULED.

The Report’s recommendations are ADOPTED. Quince’s Motion to

Compel Arbitration and Stay Proceedings is DENIED. The Related

Motions are DENIED.

I. Background

Rocky Brown was a resident of Quince Nursing and

Rehabilitation Center from about April 24, 2017, to November 28,

2017. (ECF No. 1-1 at 8 ¶ 2.) When Rocky Brown was admitted,

Gladys Pratchart, Rocky Brown’s mother, signed a Resident and

Facility Arbitration Agreement (the “Agreement”). (ECF No. 8-2;

ECF No. 10 at 2.) The Agreement provides, inter alia, that “[a]ny

and all disputes between the Resident and the Facility shall be

submitted to binding arbitration . . . .” (ECF No. 8-2 ¶ 3.) That

includes any disputes brought by Rocky Brown’s “successors,

assigns, agents, attorneys, third party beneficiaries, insurers,

2

heirs, trustees and representatives, including the personal

representative or executor of the estate, the spouse, children,

grandchildren, all decedents and next friends, and any person whose

claim is derived through the Resident.” (Id. ¶ 5.) Around

November 28, 2017, Rocky Brown was transferred from Quince Nursing

and Rehabilitation Center to Saint Francis Hospital. (ECF No. 1-

1 ¶ 2.) On March 31, 2018, Rocky Brown died at the hospital.

(Id.)

On August 22, 2018, Jamarcus Brown, Rocky Brown’s son, brought

this negligence and survival and wrongful death action against

Quince in Tennessee state court. (Id.) Jamarcus Brown alleges

that injuries Rocky Brown sustained at Quince Nursing and

Rehabilitation Center led to Rocky Brown’s death. (ECF No. 1-1

¶¶ 20-23.) On October 24, 2018, Quince removed this action to

federal court. (ECF No. 1.) On November 2, 2018, Quince filed

its Motion to Compel Arbitration and Stay Proceedings (“Motion to

Compel”), arguing that the Agreement Pratchart signed when Rocky

Brown was admitted binds the parties to arbitration.1 (ECF No. 8-

1 at 5-8.)

1 In addition to the nursing home as a facility defendant, Jamarcus Brown

names other defendants, including corporate defendants and individuals

(the “Non-Facility Defendants”). (See ECF No. 1-1.) Those Non-facility

Defendants have filed a concurrent Motion to Dismiss. (ECF No. 9.) The

Non-Facility Defendants argue that, if the Court has jurisdiction over

them, the Agreement also binds Jamarcus Brown to arbitration on claims

against them. (ECF No. 8-1 at 1 n.1.)

3

On February 7, 2019, after referral by the Court, the

Magistrate Judge issued a Report and Recommendation addressing

Quince’s Motion to Compel. (ECF No. 31.) The Report recommends

denying the Motion. (Id. at 8.) On February 21, 2019, Quince

objected to the Report’s recommendations (the “Objections”). (ECF

No. 32.) On March 1, 2019, Jamarcus Brown responded to Quince’s

Objections. (ECF No. 34.)

On May 23, 2019, Quince filed a supplemental memorandum

further objecting to the Report (“Supplemental Objections”). (ECF

No. 36.) On June 4, 2019, Jamarcus Brown filed a Motion to Strike

Quince’s Supplemental Objections (“Motion to Strike”). (ECF No.

37.) On June 18, 2019, Quince filed a response to Jamarcus Brown’s

Motion to Strike. (ECF No. 39.) On June 24, 2019, Jamarcus Brown

filed a motion for leave to file reply, and attached a proposed

reply to Quince’s response to the Motion to Strike. (ECF Nos. 40,

40-1.)

On August 27, 2019, Quince filed a Motion to Stay the case

pending resolution of its Motion to Compel. (ECF No. 42.) After

briefing, the Court granted Quince’s Motion to Stay and held the

case in abeyance pending resolution of Quince’s Motion to Compel.

(ECF No. 46.)

On December 31, 2019, Jamarcus Brown filed a Notice of

Supplemental Authority, arguing the applicability of the Tennessee

4

Court of Appeals December 16, 2019 decision in Jones v. Allenbrooke

Nursing & Rehab. Ctr., LLC, No. W201900448COAR3CV, 2019 WL 6842372

(Tenn. Ct. App. Dec. 16, 2019) to his Motion to Compel. (ECF No.

50.) On January 31, 2020, Quince responded to Jamarcus Brown’s

supplemental authority, arguing that Jones was inapposite. (ECF

No. 57.) On February 12, 2020, Jamarcus Brown replied. (ECF No.

58.)

II. Jurisdiction

The Court has diversity jurisdiction. 28 U.S.C. § 1332.

Although a specific amount has not been pled, the Court is

satisfied that the amount in controversy exceeds $75,000 because

Jamarcus Brown is seeking compensatory and punitive damages for

survival and wrongful death claims against multiple defendants.

(See ECF No. 1-1 ¶ 50; see also ECF No. 1 ¶ 5.)

The parties are completely diverse. Rocky Brown was a citizen

of Tennessee at the time of his death. (ECF No. 1-1 at 8 ¶ 2; see

also No. 1 ¶ 6). For diversity purposes, Jamarcus Brown is also

a citizen of Tennessee. See 28 U.S.C. § 1332(c)(2) (the legal

representative of the estate of a decedent is deemed to be a

citizen of the same state as the decedent). None of the defendants

is a citizen of Tennessee. Quince is a Tennessee limited liability

company. (ECF No. 1 ¶ 6.) Aurora Cares is a New York limited

liability company. (ECF No. 1-1 ¶ 5.) For purposes of diversity

5

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 are D&N, LLC and DTD HC, LLC,

who are also named defendants in this lawsuit. (See ECF No. 1

¶ 7; No. 1-1 ¶¶ 4-7.) D&N, LLC and DTD HC, LLC are New York

limited liability companies. (ECF No. 1 ¶ 7.) 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.) Norbert

Bennett, another named defendant, is a citizen of New York. (Id.)

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. 1 ¶ 7.) DTD HC, LLC’s members are Donald T.

Denz and the Donald T. Denz Irrevocable Trust. (ECF No. 1 ¶ 8.)

Donald T. Denz, another named defendant, is a citizen of New York.

(Id.) The trustee of the Donald T. Denz Irrevocable Trust is

Martin Clifford, who is also a citizen of New York. (Id.) The

Court has diversity jurisdiction because the parties are

6

completely diverse and the amount in controversy exceeds $75,000.

28 U.S.C. § 1332.

III. Standard of Review

A. Report and Recommendation

Congress enacted 28 U.S.C. § 636 to relieve the burden on the

federal judiciary by permitting the assignment of certain district

court duties to magistrate judges. See United States v. Curtis,

237 F.3d 598, 602 (6th Cir. 2001) (citing Gomez v. United States,

490 U.S. 858, 869-70 (1989)); see also Baker v. Peterson, 67 F.

App’x 308, 310 (6th Cir. 2003). This Circuit has not directly

addressed whether a motion to compel arbitration and stay

proceedings is a dispositive motion. The reasoning of the majority

of courts in this Circuit that have addressed this issue is

persuasive. See Curatola v. TitleMax of Tennessee, Inc., 2018 WL

2728037, at *3-4 (W.D. Tenn. June 6, 2018) (collecting cases). A

motion to compel arbitration and stay proceedings is a dispositive

motion. See id.

A district court may refer dispositive motions to the

magistrate judge for a report and recommendation. See 28 U.S.C.

§ 636(b)(1)(B); see also Vogel v. U.S. Office Prod. Co., 258 F.3d

509, 515 (6th Cir. 2001). For reports and recommendations on

dispositive motions, “[t]he district judge must determine de novo

any part of the magistrate judge’s disposition that has been

7

properly objected to.” See Fed. R. Civ. P. 72(b)(3); 28 U.S.C. §

636(b)(1). After reviewing the evidence, the court is free to

accept, reject, or modify the magistrate judge’s proposed findings

or recommendations. 28 U.S.C. § 636(b)(1). The district court is

not required to review -- under a de novo or any other standard -

- those aspects of the report and recommendation to which no

objection is made. Thomas v. Arn, 474 U.S. 140, 150 (1985). The

district court should adopt the magistrate judge’s findings and

rulings to which no specific objection is filed. See id. at 151.

B. Motion to Compel Arbitration

The Federal Arbitration Act (“FAA”) strongly favors

arbitration. See Albert M. Higley Co. v. N/S Corp., 445 F.3d 861,

863 (6th Cir. 2006); EEOC v. Waffle House, Inc., 534 U.S. 279, 289

(2002). “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 omitted) (quotation

marks omitted).

The showing necessary to compel arbitration absent trial is

the same as the showing necessary for summary judgment in a civil

8

suit. Great Earth Companies, Inc. v. Simons, 288 F.3d 878, 889

(6th Cir. 2002). 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). In particular, 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).

IV. Analysis

The “savings clause” of the FAA allows courts to refuse to

enforce arbitration agreements “upon such grounds as exist at law

or in equity for the revocation of any contract.” 9 U.S.C. § 2;

Gaffers v. Kelly Servs., Inc., 900 F.3d 293, 296 (6th Cir. 2018).

This clause allows courts to invalidate arbitration agreements

because of “generally applicable contract defenses,” but not

because of “defenses that apply only to arbitration or that derive

their meaning from the fact that an agreement to arbitrate is at

issue.” Epic Sys. Corp. v. Lewis, 138 S. Ct. 1612, 1622 (2018)

(citing AT&T Mobility LLC v. Concepcion, 563 U.S. 333, 339 (2011)).

State law of contract formation governs “generally applicable

contract defenses.” See GGNSC Louisville St. Matthews LLC v.

Badgett, 728 F. App’x 436, 440 (6th Cir. 2018) (citing First

9

Options of Chi., Inc. v. Kaplan, 514 U.S. 938, 944 (1995)).

Jamarcus Brown relies on one such ground under Tennessee law2: lack

of authority. (ECF No. 10 at 3-7.)

Under the Tennessee Health Care Decisions Act (“THCDA”), “[a]

surrogate may make a health care decision for a patient who is an

adult or emancipated minor, if, and only if: (1) [t]he patient has

been determined by the designated physician[3] to lack capacity;[4]

and (2) [n]o agent or guardian has been appointed or the agent or

guardian is not reasonably available.” Tenn. Code Ann. § 68-11-

1806(b)(1)-(2); see also Barbee v. Kindred Healthcare Operating,

Inc., 2008 WL 4615858, at *10-11 (Tenn. Ct. App. Oct. 20, 2008).

Under the THCDA, “a person is presumed to have the capacity to

make his or her own health care decisions.” McKey v. Nat’l

Healthcare Corp., 2008 WL 3833714, at *3 (Tenn. Ct. App. Aug. 15,

2008) (citing Tenn. Code Ann. 68-11-1812). “To overcome that

2 The Report recommends that Tennessee substantive law apply to the

parties’ dispute. (ECF No. 31 at 5-6.) Neither party objects to that

recommendation. (ECF No. 32 at 2.) The Court adopts it. See Arn, 474

U.S. at 151.

3 A “[d]esignated physician” is “a physician designated by an individual

or the individual’s agent, guardian, or surrogate, to have primary

responsibility for the individual’s health care or, in the absence of a

designation or if the designated physician is not reasonably available,

a physician who undertakes such responsibility[.]” Tenn. Code Ann. § 68-

11-1802(4).

4 “‘Capacity’ means an individual’s ability to understand the significant

benefits, risks, and alternatives to proposed health care and to make

and communicate a health care decision[.]” Tenn. Code Ann. § 68-11-

1802(3).

10

presumption, the statute requires a determination by a physician

that the patient lacks capacity.” Id. (citing Tenn. Code Ann.

§ 68-11-1806(b)). A party seeking to prove that it has overcome

the presumption must provide “clear, cogent, and convincing” proof

of the individual’s lack of capacity. Bockelman v. GGNSC Gallatin

Brandywood LLC, 2015 WL 5564885, at *4 (Tenn. Ct. App. Sept. 18,

2015) (citing Ralston v. Hobbs, 306 S.W.3d 213, 219 (Tenn. Ct.

App. 2009)). “Clear, cogent, and convincing proof” means that

there is “‘no serious or substantial doubt about the correctness

of the conclusions drawn from the evidence.’” Id. (citing Hodges

v. S.C. Toof & Co., 833 S.W.2d 896, 901 n.3 (Tenn. 1992)). The

burden of proving that one had authority to make health care

decisions for another under the THCDA lies with the party seeking

to establish that authority. See Barbee, 2008 WL 4615858, at *12;

cf. In re Jones, 585 B.R. 465, 512 (Bankr. E.D. Tenn. 2018) (under

Tennessee law, “[t]he party seeking to assert agency must prove

its existence . . .”).

A. Motion to Strike

On June 6, 2019, Jamarcus Brown filed his Motion to Strike

Quince’s Supplemental Objections. (ECF No. 37.) Jamarcus Brown

argues that Quince’s Supplemental Objections are untimely,

immaterial, and redundant. (ECF No. 37-1.) Jamarcus Brown argues

that the Federal Rules and Local Rules only allow objections to be

11

filed 14 days after a Report has been issued and that Quince’s

Supplemental Objections were filed 105 days after the Report was

issued. (See ECF No. 37-1 at 3-4); Fed. R. Civ. P. 72(b)(2); 28

U.S.C. § 636(b)(1); LR 72.1(g)(2). Jamarcus Brown contends that

Quince’s arguments that the Agreement is not a contract of

adhesion, not oppressive, and not unconscionable are immaterial

because the question before the Court is not the terms of the

Agreement, but the existence of a valid agreement. (See ECF No.

37-1 at 4-5.) He argues that Quince’s third-party beneficiary

argument fails because Tennessee state law has expressly rejected

that argument in a similar factual situation.5 (Id. at 4-6.)

All of Jamarcus Brown’s arguments have merit. It is well-

settled that parties have 14 days to file written objections after

a magistrate judge has issued a report and recommendation on a

dispositive motion, see Fed. R. Civ. P. 72(b)(2); 28 U.S.C.

§ 636(b)(1); LR 72.1(g)(2), and that a party may respond to another

party’s objections within 14 days after being served with a copy

of the objections, Fed. R. Civ. P. 72(b)(2); LR 72.1(g)(2). It

is also well-settled that parties are not allowed to raise -- and

the Court need not consider -- new arguments or issues that were

5 Jamarcus Brown also contends that Quince’s arguments on the

enforceability issue are redundant because Quince raised those arguments

in its initial Objections. (ECF No. 37-1 at 6.)

12

not presented in the first instance to the magistrate judge. See

Murr v. United States, 200 F.3d 895, 902 n.1 (6th Cir. 2000).

Here, the Magistrate Judge issued her Report on February 7,

2019. (ECF No. 31.) Quince objected to the Report on February

21, 2019. (ECF No. 32.) Jamarcus Brown responded to Quince’s

Objections on March 1, 2019. (ECF No. 34.) Those filings were

timely. See Fed. R. Civ. P. 72(b)(2). On May 23, 2019, however,

Quince filed Supplemental Objections, further objecting to the

Report and making new legal arguments. (See ECF No. 36.) The

Supplemental Objections were filed 105 days after the Report had

been issued. (See id.; ECF No. 31.) The filing was untimely.

See Fed. R. Civ. P. 72(b)(2). Normally, the Court would not

consider it. See Allen v. Comm’r of Soc. Sec., 2017 WL 3055516,

at *1 (W.D. Tenn. July 19, 2017), aff’d, 2018 WL 4042464 (6th Cir.

June 4, 2018). Any objections raised in it would be deemed

forfeited. Id.

This situation, however, is unusual. It its initial

Objections, Quince argues that the Report is “premature” because

the scheduling order for the case listed March 1, 2019, as the

deadline for the parties to fully brief the Motion to Compel. (ECF

No. 32 at 4-5.) Quince argues that it “ha[d] not had an opportunity

to fully brief the Motion” when the Magistrate Judge issued her

Report. (Id.) Quince filed its Motion to Compel on November 2,

13

2018. (ECF No. 8.) Jamarcus Brown responded on November 14, 2018.

(ECF No. 10.) Quince did not file a reply. On January 14, 2019,

the Court entered a Scheduling Order that set February 1, 2019, as

the deadline for the parties to conduct arbitration-related

discovery and March 1, 2019, as the deadline for briefing the

arbitration issue. (ECF No. 23.) The Magistrate Judge issued her

Report on February 7, 2019. (ECF No. 31.) The Report was issued

before the Scheduling Order deadline for further briefing the

arbitration question.

To “effectively discharge its judicial responsibilities[,]”

the Court will address Quince’s untimely Supplemental Objections.

See Vogel, 258 F.3d at 515 (“[W]here a party files objections after

[fourteen] days, a district court can still consider them.”)

(citing Patterson v. Mintzes, 717 F.2d 284, 286-87 (6th Cir. 1983)

(recognizing that a district court has authority to extend the

time limits of 28 U.S.C. § 636(b)(1) and that an extension may

allow a court to “preserve[] the opportunity to render a more fully

informed opinion and thereby effectively discharge its judicial

responsibilities”)); see also LR 1.1(e) (“ [T]he Court may deviate

from any provision of any Local Rules of this Court, when

appropriate for the needs of the case and the administration of

justice.”). There is no prejudice to Jamarcus Brown. Jamarcus

Brown’s Motion to Strike is DENIED.

14

B. The Report’s Recommended Findings and Quince’s Objections

The Report recommends denying Quince’s Motion to Compel. (ECF

No. 31 at 8.) The Report recommends finding that “there is no

evidence before the Court to demonstrate that [Rocky Brown’s]

designated physician properly determined that he lacked capacity.”

(Id. at 7-8.) Applying Tennessee law, the Report recommends

concluding that, because there was no evidence that Rocky Brown

lacked capacity, Pratchart could not make a health care decision

for him. (Id. at 8.) Because Pratchart did not have authority to

make health care decisions for Rocky Brown, she did not have the

authority to sign the Agreement on his behalf. (Id.); see Barbee,

2008 WL 4615858, at *11 (execution of documents admitting patient

to nursing home, including execution of an arbitration agreement,

is clearly a “health care decision” within the meaning of the

THCDA) (citing Owens v. Nat’l Health Corp., 263 S.W.3d 876, 884-

85 (Tenn. 2007)). The Report concludes that there is no valid

arbitration agreement binding Rocky Brown and recommends that

Quince’s Motion to Compel be denied. (Id.)

In its Objections, Quince argues that: (1) the Report errs in

determining the arbitrability question because the Agreement

delegates the decision about enforceability of the Agreement to an

arbitrator, (ECF No. 32 at 2-3); and (2) the Report errs in

concluding that there is no evidence that a designated physician

15

determined that Rocky Brown lacked capacity, (ECF No. 32 at 3-4).

In its Supplemental Objections, Quince argues that: (3) the

Agreement is not a contract of adhesion, (ECF No. 36 at 2-3); (4)

the Agreement’s terms are not oppressive or unconscionable, (id.

at 4-6); and (5) the Agreement is enforceable against Rocky Brown

because he is a third-party beneficiary of the Agreement,6 (id. at

6).

1. Authority to Decide Arbitrability

Quince argues that the magistrate judge should not have

decided whether the parties’ dispute should be subject to

arbitration. (ECF No. 32 at 2-3.) Quince argues that the

Agreement clearly states that any determination about the

enforceability of the Agreement is subject to arbitration and that

the Court has no authority to decide that question. (Id.) (citing

ECF No. 8-2 ¶ 3 (“[A]ny disputes arising out of or in any way

relating to this Agreement (its enforceability), the Admission

Agreement, or any of the Resident’s stays at the Facility [shall

be submitted to binding arbitration] . . . irrespective of the

legal theories upon which the claim is asserted.”)).

Quince’s argument fails. There is a substantive distinction

between questions of contractual enforceability and questions of

6 Quince again raises its argument that that the Agreement has a

delegation clause that delegates the question of enforceability to the

arbitrator. (ECF No. 36 at 6-7.)

16

contractual existence.7 See In re: Auto. Parts Antitrust Litig.,

951 F.3d 377, 385 (6th Cir. 2020). The former may be contracted

away, see Rent-A-Ctr., W., Inc. v. Jackson, 561 U.S. 63, 68-72

(2010); the latter is reserved to the courts, see Granite Rock Co.

v. Int’l Bhd. of Teamsters, 561 U.S. 287, 296-300 (2010).

A court is responsible under the FAA for determining whether

a valid agreement exists. 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 . . . .’”) (quoting Landis v. Pinnacle Eye Care, LLC, 537

F.3d 559, 561 (6th Cir. 2008)). Questions of contractual existence

are for courts to decide, not arbitrators. See Granite Rock Co.,

561 U.S. at 296 (stating that it is “well settled that where the

dispute at issue concerns contract formation, the dispute is

generally for courts to decide”) (collecting cases); Burden v.

Check Into Cash of Kentucky, LLC, 267 F.3d 483, 491 (6th Cir. 2001)

(“[I]ssues relating to the making of an arbitration

agreement, . . . are to be determined by the court, not the

7 “In the context of an arbitration agreement, an agreement to arbitrate

threshold issues concerning the arbitration agreement is known as a

delegation provision.” Edwards v. Allenbrooke Nursing & Rehab. Ctr.,

LLC, 2017 WL 4861658, at *3 (Tenn. Ct. App. Oct. 26, 2017). Here, Quince

argues that the Agreement properly delegated any questions of

enforceability to the arbitrator. (ECF No. 32 at 2-3) (citing ECF No.

8-2 ¶ 3.)

17

arbitrator.”) (citing Prima Paint Corp. v. Flood & Conklin Mfg.

Co., 388 U.S. 395, 404 (1967)); Owens, 263 S.W.3d at 883

(“[C]ontract formation questions are to be decided by the court,

not by an arbitrator.”) (citation omitted).

Here, any authority the Court has to compel arbitration

derives from the existence of a contract that binds Rocky Brown.

The parties dispute whether Pratchart had authority to bind Rocky

Brown to the Agreement. If Pratchart could not bind Rocky Brown,

there is no contract and Rocky Brown is not bound to arbitration.

See McKey, 2008 WL 3833714, at *2 (in order 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 Nav. 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.”). Questions of

signatory authorization are to be decided by the court. See, e.g.,

Sandvik AB v. Advent Int’l Corp., 220 F.3d 99, 108 (3d Cir. 2000)

(holding that a company was not entitled to arbitration under an

agreement with another company where one company disputed the

existence of a binding contract by alleging that the individual

who signed the agreement on its behalf lacked authority; under

FAA, court was required to decide whether there was agreement to

18

arbitrate before it could order arbitration); Sphere Drake Ins.

Ltd. v. All Am. Ins. Co., 256 F.3d 587, 591 (7th Cir. 2001) (holding

that whether one party had authority to bind the other, or whether

it had overstepped its authority, was to be decided in courts

rather than under the contract’s arbitration provision because the

issue went to existence of the contract). Sixth Circuit case law

“strongly suggests that [a] district court has the authority to

determine whether [a] signature on an arbitration agreement is

valid in advance of compelling arbitration in accordance with that

agreement.” Taylor v. Pilot Corp., 955 F.3d 572, 577 (6th Cir.

2020).

Because Jamarcus Brown challenges the existence of a valid,

binding arbitration agreement and not the Agreement’s

enforceability, the question is for the Court to decide. See

Jones, 2019 WL 6842372, at *2 (affirming trial court’s decision in

deciding the contract formation question where “the gravamen [wa]s

whether the arbitration agreement was properly formed, i.e.,

whether [the signatory] had authority to bind [the resident] to

the Agreement”); Edwards v. Allenbrooke Nursing & Rehab. Ctr.,

LLC, 2017 WL 4861658, at *1 (Tenn. Ct. App. Oct. 26, 2017)

(affirming a trial court’s conclusion that the enforceability

question was to be decided in arbitration, but the question of

existence (i.e., that “there was never any binding arbitration

19

agreement in the first place”) was a question for the court to

decide). ). The Court has authority to decide whether a contract

exists.

Quince relies on the recent decision in Henry Schein, Inc. v.

Archer & White Sales, Inc. to support its argument to the contrary.

139 S. Ct. 524, 528 (2019); (ECF No. 32 at 2-3). Henry Schein

held that if a party’s contract delegates the question of

enforceability of a dispute to arbitration, a court may not

override the contract and decide the enforceability question, even

if it thinks the argument that the arbitration agreement applies

to a dispute is “wholly groundless.” Id. at 529-31. That holding

is not applicable here. Henry Schein reconfirmed the rule that

whether a valid arbitration agreement exists is a decision to be

decided by the court before referring the dispute to an arbitrator.

Id. at 530 (“To be sure, before referring a dispute to an

arbitrator, the court determines whether a valid arbitration

agreement exists.”) (citing 9 U.S.C. § 2). Henry Schein

reconfirmed the distinction between whether an arbitration

agreement exists –- a matter to be decided by the court –- and

whether an arbitration agreement is enforceable on a specific claim

-- a decision left to the arbitrator (if properly delegated). See

139 S. Ct. at 528-530.

20

Quince also relies on two orders in this District in which

the Court granted motions to compel arbitration based on Henry

Schein as applied to facts similar to those here. See 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). The legal analysis in those orders is cursory. See

Foley, 2:18-cv-02741-JPM-cgc, ECF No. 52 at 1-2; Farwell, 2:18-

cv-02795-JPM-dkv, ECF No. 20 at 1-2. Foley and Farwell do not

discuss the extensive case law distinguishing contractual

enforceability and contractual existence. See Foley, 2:18-cv-

02741-JPM-cgc, ECF No. 52 at 1-2; Farwell, 2:18-cv-02795-JPM-dkv,

ECF No. 20 at 1-2. The Court in Foley and Farwell appears to

have found that valid arbitration agreements existed. See 2:18-

cv-02741-JPM-cgc, ECF No. 52 at 2; 2:18-cv-02795-JPM-dkv, ECF No.

20 at 2. Here, as discussed infra, the Court does not find that

there was a valid agreement between Pratchart and Quince. Foley

and Farwell are not apposite.

The question of Pratchart’s authority goes to contractual

existence. Because the Court has the authority to answer that

question, and because the Court delegated that authority to the

Magistrate Judge, the Magistrate Judge’s determination of that

question was proper. Quince’s first objection is OVERRULED.

21

2. Lack of Capacity

Under the THCDA, a surrogate has authority to make a health

care decision on behalf of a patient if a designated physician

determines that the patient lacks capacity. See Tenn. Code Ann.

§ 68-11-1806(b)(1). Quince objects to the Report’s conclusion

that there is no evidence a designated physician determined that

Rocky Brown lacked capacity. (ECF No. 32 at 3-4.) Quince argues

that an Appointment of Surrogate Form (“Surrogate Form” or “Form”),

(ECF No. 8-3), definitively proves that Rocky Brown lacked capacity

and properly designates Pratchart as Rocky Brown’s surrogate. (ECF

No. 32 at 4-5.) Quince argues that, because there was a

determination that Rocky Brown lacked capacity, and because

Pratchart was properly designated as his surrogate, Pratchart had

authority to enter into the Agreement on Rocky Brown’s behalf.

(Id.) The Court reviews this objection de novo.

The validly of Pratchart’s authority to sign the Agreement on

Rocky Brown’s behalf turns on the sufficiency of the Surrogate

Form to establish: (1) that a designated physician determined that

Rocky Brown lacked capacity; and (2) that Pratchart was properly

designated as Rocky Brown’s surrogate. See Tenn. Code Ann. § 68-

11-1806(b)(1). Quince does not establish the first.

Under an “APPOINTMENT OF SURROGATE” heading, the Surrogate

Form provides: “Complete Section 1 if Resident has capacity.” (ECF

22

No. 8-3 at 1.) Section 1 is not filled out. (Id.) At the bottom

of Section 1, it provides: “Complete Section 2 in addition to

Section 1 if unsure of Resident’s capacity. Complete only Section

2 if Resident clearly lacks capacity.” (Id.) Section 2 is filled

out in part. (Id.) It provides: “Gladys Pratchart [handwritten]

is designated as surrogate for Rocky Brown [handwritten].” (Id.)

There are checkmarks next to different “[r]easons for

[a]ppointment” and a checkmark indicating that the appointed

surrogate is “[t]he patient’s parent.” (Id.)

The following part of the Surrogate Form is titled “ACCEPTANCE

OF SURROGATE SELECTION.” (Id. at 2.) The “Surrogate Contact

Information” part is incomplete, but the following part is filled

out and provides: “I accept the appointment of surrogate for this

Resident and understand I have the authority to make all health

care related decisions for Rocky Brown [handwritten] including the

signing of an arbitration agreement.” (Id.) Pratchart appears to

have signed this statement, and it is dated April 17, 2017 (the

same day the Agreement was signed). (See id.)

The last part of the Surrogate Form is titled “PHYSICIAN

NOTIFICATION AND APPROVAL.” (Id.) It provides:

I, Mukesh Jain [handwritten], am the physician who has primary

responsibility for the health care of Rocky Brown

[handwritten]. I find that the Resident (please check one):

____ lacks capacity ____ has capacity

23

to understand the significant benefits, risks, and

alternatives to proposed health care and to make and

communicate a health care decision. I agree with the decision

to appoint this surrogate. It is my opinion that this is

true both on the day the surrogate accepted the appointment

and today. It is my intention that the designation of

surrogate is effective back to the date of acceptance by the

surrogate, so that healthcare decisions made by the surrogate

for the resident back to that day are valid.

(Id.) Neither the “lacks capacity” nor the “has capacity” box has

been checked. (Id.) Beneath this paragraph is a space for the

“Signature of Designated Physician,” which contains an illegible

signature, and a space for the date, which is blank. (See id.)

The Surrogate Form is the only evidence that Quince submits to

establish that a designated physician determined that Rocky Brown

lacked capacity before Pratchart signed the Agreement on Rocky

Brown’s behalf. It is not enough.

Quince argues that, although the “lacks capacity” box on the

Surrogate Form was not checked, because the Form instructed that

Section 2 be completed only if the Resident lacked capacity,

because only Section 2 was completed, and because Jain signed the

Form with only Section 2 completed, the logical inference is that

Rocky Brown lacked capacity. (See ECF No. 32 at 4.)

Following the Surrogate Form’s instructions, alone, does not

conclusively establish that Rocky Brown lacked capacity. It is

not “clear, cogent, and convincing” proof that a designated

24

physician determined that Brown lacked capacity.8 See Bockelman,

2015 WL 5564885, at *4. Because neither the “lacks capacity” nor

the “has capacity” box is checked, there is a “serious [and]

substantial doubt” about whether a capacity determination or

conclusion was reached. See id. One court has reasoned that, if

presented with the opportunity, a physician’s failure to

affirmatively make a capacity determination one way or the other

undermines the conclusion that an individual is incapacitated.

See Cabany v. Mayfield Rehab. & Special Care Ctr., 2007 WL 3445550,

at *5-6 (Tenn. Ct. App. Nov. 15, 2007). Other courts have also

declined to imply a determination of incapacity when there is

inadequate evidence that a physician made any capacity

determination. See, e.g., Hattiesburg Health & Rehab Ctr., LLC v.

Brown, 176 So. 3d 17, 22 (Miss. 2015).

Even if it were clear what determination Jain made, it is

unclear when he made that determination. In the ACCEPTANCE OF

SURROGATE SELECTION part of the Surrogate Form, Pratchart’s

signature is dated April 17, 2017. (See ECF No. 8-3 at 2.) In

the PHYSICIAN NOTIFICATION AND APPROVAL part of the Surrogate Form,

8 It is also unclear who completed the Surrogate Form – Pratchart or

Jain. If Pratchart filled out the Form and followed the instructions

on which Quince relies, the Form would be insufficient. Only a

designated physician can make a capacity determination. See Tenn. Code

Ann. § 68-11-1806(b)(1).

25

Jain’s signature is not dated.9 (See id.) One might infer that

any determination Jain made was on the same day that Pratchart

signed the Surrogate Form. (See id.) One could also conclude,

based on the language in the relevant paragraph, that any

determination Jain might have made, was made on a later date. (See

id.) (“It is my opinion that this is true both on the day the

surrogate accepted the appointment and today.”) (emphasis added).

It is unclear whether Rocky Brown was determined to be

incapacitated, but it is also unclear whether he was determined to

be incapacitated before the relevant health care decision was made

for him (i.e., Pratchart’s signing the Agreement). See Dykes v.

Cleveland Nursing & Rehab. Ctr., 2016 WL 426546, at *5-6 (N.D.

Miss. Feb. 3, 2016) (finding a similar “Resident and Facility

Arbitration Agreement” form invalid because the physician signed

the “Physician Notification and Approval” part stating that the

resident lacked capacity a month after the “Acceptance of Surrogate

Selection” part was signed).

At best, the way the Surrogate Form is filled out creates a

dispute about whether Rocky Brown lacked capacity. That is

insufficient for Quince to carry its burden.10 See Barbee, 2008

9 This relies on the assumption that the illegible signature is Jain’s.

10 This conclusion is supported by the traditional and statutory

presumptions that one has capacity, see In re Conservatorship of Groves,

109 S.W.3d 317, 329–30 (Tenn. Ct. App. 2003) (“[I]t is well-settled that

the law presumes that adult persons are . . . capable, rather than

26

WL 4615858, at *12; see also Bockelman, 2015 WL 5564885, at *4.

The Recommendation that there is insufficient evidence that a

designated physician determined that Rocky Brown lacked capacity

before a health care decision was made on his behalf is correct.

Quince’s second objection is OVERRULED.

3. Contract as one of Adhesion, as Oppressive, or as

Unconscionable

Quince argues that the Agreement is valid because it is not

a contract of adhesion and its terms are not oppressive or

unconscionable. (See ECF No. 36 at 2-6.) Those arguments are not

germane because the Report correctly concludes that the Agreement

is invalid on other grounds, specifically, that Pratchart did not

have the proper authority to enter into the Agreement on Rocky

Brown’s behalf. (ECF No. 31 at 8.) The third and fourth objections

in Quince’s Supplemental Objections are OVERRULED.

4. Third-Party Beneficiary

Quince argues that the Agreement is enforceable against Rocky

Brown because he is a third-party beneficiary. (ECF No. 36 at 6.)

incapable, to direct their personal affairs until satisfactory evidence

to the contrary is presented.”); Tenn. Code Ann. § 68-11-1812(b), and

by the strong rights and policy interests underlying the THCDA. See

McKey, 2008 WL 3833714, at *5 (“The [THCDA] affects a person’s

fundamental right to personal autonomy. In light of the important

interests at stake, we have concluded that it is essential that the

requirements of the [THCDA] be met before a person can be deprived of

the right to make his or her own health care decisions.”) (citation

omitted).

27

“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. Those “third-party

beneficiaries” “may enforce a contract 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 Independent Drivers Association, 59

S.W.3d at 70).

The Agreement provides, “The Resident will be considered to

be 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

28

services.” (ECF No. 8-2 ¶ 2.) Quince argues that this language

requires the Court to enforce the Agreement against Rocky Brown.

(ECF No. 36 at 6.) Quince cites Benton for the proposition that

“the Tennessee Supreme Court . . . has expressly found that a non-

signatory to an arbitration agreement may be bound under a third-

party beneficiary theory.” (ECF No. 57 at 3) (citing Benton, 137

S.W.3d at 614).

Quince’s reliance on Benton is misplaced. 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.” Benton, 137 S.W.3d at 618 (emphasis added).

Benton is distinguishable because Rocky Brown, 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 that contained the arbitration provision. See id. at

16. The court in Benton decided not 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 that

the plaintiff 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

29

that the third party not be permitted to interpret the contract in

a piecemeal fashion by avoiding unfavorable terms.”).

Here, Jamarcus Brown, on behalf of Rocky Brown, is not

bringing contract claims or “seeking to enforce the terms of the

contract,” but bringing tort claims of negligence and survival and

wrongful death that do not directly relate to the terms of the

Agreement. (See ECF No. 1-1 ¶¶ 24-47.) Benton 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.” Benton, 137 S.W.3d at 620 (emphasis

added) (citations omitted). Benton distinguished a case where a

third-party beneficiary argument was rejected on the basis that

that case alleged a tort claim. See id. (referencing Cocke Cty.

Bd. of Highway Comm’rs v. Newport Utilities Bd., 690 S.W.2d 231,

237 (Tenn. 1985)).

This Court and Tennessee courts have rejected the third-party

beneficiary argument that Quince makes here. See, e.g., Hardaway

v. Quince Nursing & Rehab. Ctr., LLC, No. 2:19-2464, 2020 WL

1918244, at *4-6 (W.D. Tenn. Apr. 20, 2020); Jones, 2019 WL

6842372, at *6; Ricketts v. Christian Care Ctr. of Cheatham Cty.,

30

Inc., 2008 WL 3833660, at *4 (Tenn. Ct. App. Aug. 15, 2008). In

Ricketts, the Court rejected the argument that a nursing home

contract signed by a family member who did not have authority to

act on behalf of the resident created a contract between the family

member and the nursing home because the resident was a third-party

beneficiary of the 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, 176 So. 3d at 22 (holding that, for a third-party

beneficiary to exist, there must first be a valid contract executed

by one who has authority); Licata v. GGNSC Malden Dexter LLC, 2

N.E.3d 840, 848 (Mass. 2014) (same). The fifth argument in

Quince’s Supplemental Objections is OVERRULED.

Because there is insufficient evidence that Rocky Brown

lacked capacity to make his own healthcare decisions, Pratchart

could not make health care decisions for him. See Tenn. Code

Ann. § 68-11-1806(b)(1). Because Pratchart did not have authority

31

to make health care decisions for Rocky Brown, she did not have

the authority to sign the Agreement on his behalf. See Barbee,

2008 WL 4615858, at *12. The Agreement does not bind Rocky Brown

to arbitration. Quince’s Motion to Compel is DENIED.

V. Conclusion

For the foregoing reasons, the Report is ADOPTED. Quince’s

Motion to Compel and Stay Proceedings is DENIED. The Related

Motions are DENIED.

So ordered this 12th day of August, 2020.

/s/__ Samuel H. Mays, Jr. ___

SAMUEL H. MAYS, JR.

UNITED STATES DISTRICT JUDGE

32