Killian, L. v. Skyline Health Care ( 2020 )

J-A27021-19
NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37
LINDA L. KILLIAN, ADMINISTRATOR : IN THE SUPERIOR COURT OF
FOR THE ESTATE OF ADRIENNE : PENNSYLVANIA
MARIE KILLIAN-MOSELEY, :
DECEASED :
:
:
v. :
:
: No. 3584 EDA 2018
SKYLINE HEALTH CARE, LLC, JS :
PENNSYLVANIA HEALTHCARE :
HOLDINGS, LLC, JOSEPH :
SCHWARTZ, FILLMORE CAPITAL :
PARTNERS, LLC, FILLMORE :
STRATEGIC INVESTORS, LLC; :
FILLMORE STRATEGIC :
MANAGEMENT, LLC; DRUMM :
MERGER CO., SUB, LLC, GGNSC :
HOLDINGS, LLC, GGNSC EQUITY :
HOLDINGS, LLC, GGNSC :
ADMINISTRATIVE SERVICES, LLC :
GGNSC CLINICAL SERVICES, LLC, :
GEARY PROPERTY HOLDINGS, LLC, :
GPH LANSDALE, L.P., GPH LANSDALE :
GP, LLC, GGNSC LANSDALE L.P., :
D/B/A GOLDEN LIVING CENTER- :
LANSDALE, GGNSC LANSDALE GP, :
LLC, LANSDALE CARE AND :
REHABILITATION CENTER, LLC, LILY :
SAHADY, NHA, AND JASON BARRY :
CUMELLO, NHA :
:
:
APPEAL OF: SKYLINE HEALTH CARE :
LLC, JS PENNSYLVANIA HEALTHCARE :
HOLDINGS, LLC, JOSEPH SCHWARTZ :
AND LANSDALE CARE AND :
REHABILITATION CENTER, LLC
Appeal from the Order Entered November 16, 2018
In the Court of Common Pleas of Montgomery County Civil Division at
No(s): 2017-21847
J-A27021-19
BEFORE: BOWES, J., SHOGAN, J., and STRASSBURGER, J.*
MEMORANDUM BY SHOGAN, J.: Filed: April 15, 2020
Appellants, Skyline Health Care LLC, et al., appeal from the order
overruling their preliminary objections in the nature of a petition to compel
arbitration in this nursing home neglect and abuse action brought by Appellee,
Linda L. Killian (“Administrator”), the administrator for the estate of Adrienne
Marie Killian-Moseley (“Decedent”). Upon careful review, we reverse and
remand for further proceedings.
The trial court summarized the extensive factual and procedural history
of this matter as follows:
[D]ecedent lived at the facility, Golden Living Center —
Lansdale, later called Lansdale Care and Rehabilitation Center
[(“the Facility”)], from May 2015 to July 1, 2017. (Second Am
Compl. para. 1.) She died on July 4, 2017. (Second Am Compl.
para. 2.) During [Decedent’s] residency at the facility, it changed
hands among various Defendants, consequently the change in
names, on or about February 1, 2017. (Second Am Compl. para.
1.)
[Administrator], sister of [D]ecedent and appointed
administratrix of [D]ecedent’s estate, claims that due to
Defendants’ negligence and derelictions during the course of
[Decedent’s] residency, [Decedent] “suffered preventable
injuries, including falls, a head injury and concussion, right foot
osteomyelitis, right foot MRSA infections, MRSA wound infections,
several urinary tract infections, poor hygiene, severe pain, and
ultimately death.” (Mem. Law Opp’n Prelim. Objs. Pl.’s Second
Am Compl. Defs. Skyline Healthcare 2.) [Administrator] holds
many parties and entities, Defendants in this case, responsible for
these alleged wrongs.
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* Retired Senior Judge assigned to the Superior Court.
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Defendants, grouped according to their representation by
different counsel in this litigation, are as follows: (1) GGNSC
Holdings, LLC, GGNSC Equity Holdings, LLC, GGNSC
Administrative Services, LLC, GGNSC Clinical Services, LLC, GPH
Lansdale, L.P., GPH Lansdale GP, LLC, GGNSC Lansdale L.P., doing
business as Golden Living Center — Lansdale, GGNSC Lansdale
GP, LLC, Jason Barry Cumello, NHA, and Lilly Sahady, NHA
(collectively, the “Golden Living” Defendants); (2) Fillmore Capital
Partners, LLC, Fillmore Strategic Investors, LLC, Fillmore Strategic
Management, LLC, Drumm Merger Co. Sub, LLC, and Geary
Property Holdings, LLC (collectively, the “Fillmore” Defendants);
and (3) Skyline Health Care, LLC, JS Pennsylvania Healthcare
Holdings, LLC, Joseph Schwartz, and Lansdale Care and
Rehabilitation Center, LLC ([collectively, “Appellants”]). The
“Golden Living” Defendants are the former owners/operators of
the [Facility] as of the time [D]ecedent first entered it. The
“Fillmore” Defendants are companies headquartered outside [of]
Pennsylvania that are alleged by [Administrator] to have had
some role in owning and/or operating the [F]acility and/or the
corporate Golden Living Defendants while they controlled it
locally. [Appellants] are corporations and an individual alleged to
have taken over ownership and operation of the [F]acility in or
around February 2017 when the prior owners transferred their
interests to [Appellants]. [Appellants] are the ones currently
before the honorable Superior Court seeking to compel
[Administrator’s] claims against them to arbitration.
[Administrator] instituted this suit in September 2017 by
writ of summons, attempted and/or achieved service on all
Defendants, and filed an initial complaint in December of that
year. The three separately-represented groups of Defendants
each preliminarily objected to the complaint, and [Administrator]
filed an amended complaint pursuant to Pa.R.C.P. 1028(c)(1) (“A
party may file an amended pleading as of course within twenty
days after service of a copy of preliminary objections. If a party
has filed an amended pleading as of course, the preliminary
objections to the original pleading shall be deemed moot.”), as
well as certificates of merit under Pa.R.C.P. 1042.3 for each
Defendant. Each group of Defendants again preliminarily
objected, and [Administrator] filed a second amended complaint.
At this point, the Golden Living Defendants stipulated with
[Administrator] to arbitrate their disputes pursuant to an
arbitration agreement [(“the Agreement”)] between the decedent
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and “Golden Living Center” (Golden Living Defs.’ Prelim. Objs. Pl.’s
Am. Compl. Ex. B) dating from at or near the time [D]ecedent
entered the [F]acility in May 2015; this stipulation was approved
and filed as an order of the [c]ourt. In accordance with
Pennsylvania’s Uniform Arbitration Act (UAA), 42 Pa.C.S. §
7304(d), the stipulation and order stayed [Administrator’s] claims
in [c]ourt against the Golden Living Defendants pending
completion of the arbitration.
The other two groups of Defendants again preliminarily
objected to the second amended complaint. [Administrator] filed
timely responses opposing each set of preliminary objections.
This [c]ourt overruled each set of preliminary objections in orders
entered November 16, 2018.
The Fillmore Defendants’ preliminary objections had sought
to dismiss [Appellee’s] claims, as against the Fillmore Defendants,
all out-of-state parties, based on “lack of jurisdiction over ...
the[ir] person[s],” Pa.R.C.P. 1028(a)(1). For the next few months
after the filing of these objections and the response, the Fillmore
Defendants and [Administrator] went back and forth filing replies,
sur-replies, and notices of supplemental authority on the
jurisdictional issue. After the [c]ourt overruled the jurisdictional
objections, the Fillmore Defendants filed a motion asking the
[c]ourt to amend its order to state, under Pa.R.A.P. 311(b)(2),
“that a substantial issue of ... jurisdiction is presented,” to allow
for an interlocutory appeal as of right to the Superior Court under
that rule. This [c]ourt denied the motion, and the Fillmore
Defendants filed a petition for review in the Superior Court, which
that Court also denied. Killian v. Skyline Health Care, LLC, No.
143 EDM 2018 (Pa. Super. Ct. Feb. 25, 2019).
[Appellants] whose objections had raised, as stated, [the
Agreement], but also had pursued several other attacks on the
second amended complaint in the nature of demurrers, filed this
appeal directly to the Superior Court from the order overruling the
objections, invoking the jurisdictional authority of 42 Pa.C.S. §
7320(a)(1) (“An appeal maybe taken from: (1) A court order
denying an application to compel arbitration made under section
7304 (relating to proceedings to compel or stay arbitration).”),
and Pa.R.A.P. 311(a)(8) (“An appeal may be taken as of right and
without reference to Pa.R.A.P. 341(c) from: ... [a]n order that is
made final or appealable by statute or general rule, even though
the order does not dispose of all claims and of all parties.”). ...
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In this interlocutory appeal, only the question of whether this
[c]ourt properly denied the preliminary objection going to
arbitration is at issue; any other issues the preliminary objections
raised are not. ...
[Appellants’] notice of appeal also cited Pa.R.A.P. 1701(a),
“Except as otherwise prescribed by these rules, after an appeal is
taken ... the trial court ... may no longer proceed further in the
matter.” However, under an explicit exception to this rule,
Where only a particular item, claim[,] or assessment
adjudged in the matter is involved in an appeal ... the
appeal ... shall operate to prevent the trial court ...
from proceeding further with only such item, claim[,]
or assessment, unless otherwise ordered by the trial
court ... or by the appellate court or a judge thereof
as necessary to preserve the rights of the appellant.
Pa.R.A.P. 1701(c); cf. 42 Pa.C.S. § 7304(d) (“An action or
proceeding, allegedly involving an issue subject to arbitration,
shall be stayed if a court order to proceed with arbitration has
been made or an application for such an order has been made
under this section. If the issue allegedly subject to arbitration is
severable, the stay of the court action or proceeding may be made
with respect to the severable issue only.” (emphasis added)).
Thus[, Appellants’] appeal did not itself stay this action from
proceeding among other parties. Indeed, the Fillmore Defendants
proceeded to comply with this [c]ourt’s order overruling their
preliminary objections by filing an answer to the second amended
complaint. However, [Appellants] also filed a motion for a stay as
to all claims and parties, and this [c]ourt granted that motion as
unopposed on January 14, 2019. This stay presumably would not
apply to the Golden Living Defendants’ arbitration [which
Administrator] stipulated to earlier, though the order adopting the
stipulation had already stayed proceedings in this [c]ourt with
regard to those Defendants, pending completion of the arbitration.
Trial Court Opinion, 6/7/19, at 1-6 (emphasis in original). The trial court did
not direct Appellants to file a Pa.R.A.P. 1925(b) statement. The trial court
complied with Pa.R.A.P. 1925(a).
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Appellants present the following issues for our review:
1. Whether the trial court erred by overruling [Appellants’]
preliminary objections and failing to order binding arbitration of
the claims brought on behalf of the Estate in accordance with the
terms of [the Agreement], as there is a valid agreement to
arbitrate executed by the Resident, and the [Administrator’s]
claims arise fall squarely within the Agreement’s scope?
2. Whether the trial court erred by finding that [Appellants]
presented insufficient factual or legal justification to enforce [the
Agreement], as the evidence established the direct transfer of
ownership to successor owners [Appellants], who were the
Facility’s “affiliates,” “successors” and/or “assigns,” the
Agreement applied to any and all disputes relating to the
Resident’s stay at this facility, the parties intended that the
Agreement remained in effect unless revoked, and there was a
[sic] “obvious and close nexus” between [Appellants] and both the
parties and the Agreement?
3. Whether, although not reached by the trial court,
[Administrator] failed to sustain her burden of establishing
meritorious contractual defenses to the validity or enforceability
of [the Agreement], and [the Agreement] is valid and enforceable
on the part of [Appellants]?
Appellants’ Brief at 5-6.
Before addressing Appellants’ claims, we first must determine whether
their appeal is properly before this Court. Generally, only final orders are
appealable. Pa.R.A.P. 341. Final orders are defined as orders that dispose of
all claims and all parties. Id. Ordinarily, an order of the trial court overruling
a party’s preliminary objections is interlocutory and not appealable as of right.
Callan v. Oxford Land Development Inc., 858 A.2d 1229, 1232 (Pa. Super.
2004). There is, however, a narrow exception to this rule for cases in which
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the appeal is taken from an order denying a petition to compel arbitration.1
Id.; Pa.R.A.P. 311(a)(8); 42 Pa.C.S. § 7320(a). Here, the trial court’s order
denied Appellants’ request to compel arbitration. As such, we conclude that
the order is immediately appealable, and we will proceed to address
Appellants’ claims.
In their first and second issues, Appellants argue that the trial court
erred in overruling their preliminary objections and failing to order arbitration.
Appellants’ Brief at 22-52. Appellants contend that there was a valid
arbitration agreement and that Administrator’s claims fall within the scope of
the Agreement. Id. at 22-28. Appellants allege that they presented sufficient
justification to enforce the Agreement. Id. at 28-52. Specifically, Appellants
claim that the parties intended for the Agreement to apply to the facility and
its affiliates, and successors and assigns, and the evidence established
Appellants were successor owners. Id. at 30-40. Appellants assert that the
intention for the Agreement to remain in effect through any transfer in
ownership is manifested in the language that it governs all claims for
negligence or malpractice arising out of Decedent’s residence at the Facility.
Id. at 40-43. Further, Appellants claim that, although they are non-
signatories to the Agreement, they may enforce the Agreement because there
____________________________________________
1 A party may appeal directly from the order denying a preliminary objection
invoking an arbitration agreement; a separate petition to compel arbitration
is not required. Stewart v. GGNSC-Canonsburg, L.P., 9 A.3d 215, 218 (Pa.
Super. 2010).
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is an obvious and close nexus between Appellants and the parties. Id. at 43-
51.
Our review of a claim that the trial court improperly denied an
appellants’ preliminary objection 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. Walton v. Johnson, 66 A.3d 782, 787
(Pa. Super. 2013). “Where a party to a civil action seeks to compel arbitration,
a two-part test is employed.” Callan 858 A.2d at 1233.
First, the trial court must establish if a valid agreement to arbitrate
exists between the parties. Second, if the trial court determines
such an agreement exists, it must then ascertain if the dispute
involved is within the scope of the arbitration provision. If a valid
arbitration agreement exists between the parties, and the
plaintiff’s claim is within the scope of the agreement, the
controversy must be submitted to arbitration.
Id. (citations omitted). The existence of an agreement and whether a dispute
is within the scope of the agreement are questions of law, and an appellate
court’s review is plenary. Keystone Tech. Group, Inc. v. Kerr Group, Inc.,
824 A.2d 1223, 1227 (Pa. Super. 2003).
In interpreting an arbitration agreement, we are mindful that arbitration
agreements must be strictly construed. Callan, 858 A.2d at 1233. In
addition, “arbitration is a matter of contract and, as such, it is for the court to
determine whether an express agreement between the parties to arbitrate
exists.” Levy v. Lenenberg, 795 A.2d 419, 422-423 (Pa. Super. 2002)
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(quoting Midomo Co., Inc. v. Presbyterian House. Dev. Co., 739 A.2d
180, 187 (Pa. Super. 1999)). If the opposing party denies the existence of
an agreement to arbitrate, the court shall proceed summarily to determine
the issue and shall order the parties to proceed with arbitration if it finds for
the moving party. 42 Pa.C.S. § 7304(a). Otherwise, the application for
arbitration shall be denied. Id.
In determining whether parties have agreed to arbitrate, we consider
the following:
(1) arbitration agreements are to be strictly construed and not
extended by implication; and (2) when parties have agreed to
arbitrate in a clear and unmistakable manner, every reasonable
effort should be made to favor the agreement unless it may be
said with positive assurance that the arbitration clause involved is
not susceptible to an interpretation that covers the asserted
dispute.
Highmark Inc., 785 A.2d at 98 (quoting Midomo Co. v. Presbyterian
Housing Development Co., 739 A.2d 180, 190 (Pa. Super. 1999)). “When
construing agreements involving clear and unambiguous terms, this Court
need only examine the writing itself to give effect to the parties’
understanding. This Court must construe the contract only as written and
may not modify the plain meaning under the guise of interpretation.”
Humberston v. Chevron U.S.A., Inc., 75 A.3d 504, 509-510 (Pa. Super.
2013). There exists a well-established rule of construction and interpretation
stating that words and phrases not defined in the contract “be given their plain
and ordinary meaning whenever possible.” Toombs NJ Inc. v. The Aetna
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Casualty & Surety Company, 591 A.2d 304, 307 (Pa. Super. 1991). As we
have stated, “[W]ords of common usage ... are to be construed in their
natural, plain and ordinary sense ... and we may inform our understanding of
these terms by considering their dictionary definitions.” Municipality of Mt.
Lebanon v. Reliance Ins. Co., 778 A.2d 1228, 1232 (Pa. Super. 2001)
(quoting Madison Const. Co. K Harleysville Mut. Ins. Co., 735 A.2d 100,
106 (Pa. 1999)).
In addressing whether Appellants were entitled to compel arbitration,
the trial court concluded the following:
In attempting to carry their burden to establish an
entitlement to compel arbitration, [Appellants] relied exclusively
on the arbitration agreement [D]ecedent made with “Golden
Living Center” when she entered the facility in May 2015.
([Appellants’] Prelim. Objs. Pl.’s Second Am. Compl. para. 3 & Ex.
B.) But [Appellants], who had no interests or rights pertaining to
the [F]acility until February 2017, when it changed hands under
circumstances not explained or disclosed to the [c]ourt in
[Appellants’] preliminary objections, presented insufficient factual
or legal justification to require the [c]ourt to enforce [the
Agreement] against [Administrator] on [Appellants’] behalf.
Trial Court Opinion, 6/7/19, at 8.
In reaching this determination, the trial court offered the following
discussion:
[Appellants’] preliminary objections cite no specific
provision of [the Agreement], or any contract [Appellants] had
with the Golden Living Defendants or any other party, giving
[Appellants] a right to compel arbitration under [the Agreement].
Though the preliminary objections fail to cite the provision, [the
Agreement], a preprinted form with the parties’ names (Golden
Living Center’s and [D]ecedent’s) handwritten in on blank spaces
as “Facility” ... and “Resident” … respectively, states that, “The
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term ‘Facility’ as used in this Agreement shall refer to the living
center, its employees, agents, officers, directors, affiliates[,] and
any parent or subsidiary of Facility[,] and its medical director
acting in his or her capacity as medical director.” … The
[A]greement is silent as to corporate successors to ownership or
operation of the “Facility.”
***
In seeking to compel [Administrator] to arbitration with
them[, Appellants] rely entirely on their purported status as
successors to the Golden Living Defendants as operators of the
nursing facility--though without commenting on how [Appellants]
might under this theory be liable for any alleged derelictions the
Golden Living Defendants committed before [Appellants] became
involved with the [Facility]. More importantly, [Appellants]
presented no competent evidence of their status as successors to
the rights and liabilities of the “Golden Living Center.”
[Appellants’] preliminary objections advancing the argument
[Appellants] were entitled to enforce the arbitration contract
presented no contract with the Golden Living parties to show
what, if any, the rights and liabilities transmitted with the change
over in the facility might have been. Only [Administrator’s]
response offered proof of the change in ownership among
[Appellants] and Golden Living Defendants, consisting merely of
letters back and forth between the Department of Health and the
old and new owners … without of course demonstrating any basis
in these documents for [Appellants] to enforce [the Agreement]
against [Administrator].
Trial Court Opinion, 6/7/19, at 8-9, 10-11 (citations omitted). We are
constrained to disagree. Particularly, we cannot agree with the trial court’s
statement that “[t]he [A]greement is silent as to corporate successors to
ownership or operation of the ‘Facility.’” Id. at 8-9.
We note that the Agreement does not define the term “successor.”
However, as previously stated, "words of common usage … are to be construed
in their natural, plain, and ordinary sense, and [a reviewing court] may inform
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[its] understanding of these terms by considering their dictionary definitions.”
Municipality of Mt. Lebanon, 778 A.2d at 1232. Accordingly, because
“successor” is a word of common usage, consideration of its dictionary
definitions is appropriate.
Particular to our review of the Agreement, we observe that Merriam-
Webster defines the term “successor” as “one that follows.” Merriam-Webster,
http://www.merriamwebster.com/dictionary/successor. In addition, Black’s
Law Dictionary defines “successor” as “1. A person who succeeds to the office,
rights, responsibilities, or place of another; one who replaces or follows a
predecessor. 2. A corporation that, through amalgamation, consolidation, or
other assumption of interests, is vested with the rights and duties of an earlier
corporation.” Black’s Law Dictionary, 1569 (9th ed. 2009). Applying these
definitions of the term “successor” to the evidence of record, this Court is left
to conclude Appellants are the successors to Golden Living Defendants,
thereby qualifying as parties to the Agreement.
Moreover, our review of the record reflects that on May 24, 2015,
Decedent entered into the Agreement with Golden Living Defendants.
Appellants’ Preliminary Objections, Exhibit B, Agreement. Section I of the
Agreement possesses the heading, “The Parties to This Agreement,” and
contains the following sentence: “It is the intent of the Parties that this
Agreement shall inure to the benefit of, bind, and survive them, their
successors, and assigns.” Id. at 1 (emphasis added). The record further
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establishes that Golden Living Defendants were the owners of the Facility from
the time Decedent was admitted on May 25, 2015, through February 1, 2017.
Amended Complaint, 2/26/18, at 4 ¶ 1. The record also reveals that a change
in ownership occurred at the Facility on February 1, 2017, at which point
Appellants assumed ownership. Id. Additional evidence of this undisputed
fact, in the form of a letter from the Pennsylvania Department of Health dated
January 25, 2017, indicates that there was a change of ownership. The letter
provides as follows:
We have reviewed the Change of Ownership forms for [Golden
Living Defendants] and have found them to be acceptable. The
Department hereby acknowledges the change in ownership from
[Golden Living Defendants] to [Appellants]. In conjunction we will
acknowledge the facility’s name changes upon notification of the
completed transaction followed by the issuance of a new license
to the facility.
At the completion of the transaction, please notify the Department
in writing with a letter of Confirmation of Sale from the buyer to
the seller. This correspondence must be signed by the Chief
Executive Officer of both [Golden Living Defendants] and
[Appellants], and indicate the date of the transaction so that the
facility’s new license can be issued to reflect the change.
Response to Preliminary Objections, 3/28/18, Exhibit C, at 1. This fact is
supported and confirmed by additional letters to the Pennsylvania Department
of Health from Golden Living Defendants and from Appellants. Response to
Preliminary Objections, 3/28/18, Exhibit C, at 2-3.
This evidence of record establishes that Golden Living Defendants, the
signatory of the Agreement, were the owners of the Facility at the time the
Agreement was executed. The record further establishes that on February 1,
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2017, Appellants succeeded Golden Living Defendants as owners of the
Facility. Hence, Appellants are successors under the Agreement.
By virtue of the language in the Agreement specifying that the
Agreement “shall inure to the benefit of the parties’ successors,” we conclude
that the trial court erred in determining that there was insufficient evidence
to show Appellants were entitled to seek enforcement of the Agreement.
Furthermore, having concluded that the trial court erred in its review in this
matter, we are constrained to reverse the trial court’s order overruling
Appellants’ preliminary objections. Consequently, having determined that
Appellants qualify as successors, we must remand this matter to the trial court
for completion of its review of the two-part test set forth in Callan, 858 A.2d
at 1233. Accordingly, Administrator is entitled to review of contractual
defenses to the validity of the Agreement. Further, if the trial court
determines the Agreement is valid, it must ascertain if Administrator’s dispute
with Appellants falls within the scope of the Agreement.
Order reversed. Case remanded for further proceedings consistent with
this Memorandum. Jurisdiction relinquished.
Judgment Entered.
Joseph D. Seletyn, Esq.
Prothonotary
Date: 4/15/20
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