Linde Health Care Staffing, Inc. v. Claiborne County Hospital

IN THE SUPREME COURT OF MISSISSIPPI
NO. 2015-CA-00041-SCT
LINDE HEALTH CARE STAFFING, INC.
v.
CLAIBORNE COUNTY HOSPITAL
DATE OF JUDGMENT: 12/02/2014
TRIAL JUDGE: HON. LAMAR PICKARD
TRIAL COURT ATTORNEYS: DANIEL E. RUHL
TIMOTHY JAMES ANZENBERGER
EDWARD BLACKMON, JR.
BARBARA BLACKMON
COURT FROM WHICH APPEALED: CLAIBORNE COUNTY CIRCUIT COURT
ATTORNEYS FOR APPELLANT: TIMOTHY JAMES ANZENBERGER
WILLIAM H. LEECH
SARAH ELIZABETH WILSON
CHRISTOPHER HANSER MEREDITH
ATTORNEYS FOR APPELLEE: EDWARD BLACKMON, JR.
BARBARA BLACKMON
JANESSA EMONTAN BLACKMON
NATURE OF THE CASE: CIVIL - CONTRACT
DISPOSITION: AFFIRMED - 08/11/2016
MOTION FOR REHEARING FILED:
MANDATE ISSUED:
CONSOLIDATED WITH
NO. 2015-CA-00881-SCT
LINDE HEALTH CARE STAFFING, INC.
v.
CLAIBORNE COUNTY HOSPITAL
DATE OF JUDGMENT: 05/11/2015
TRIAL JUDGE: JOHN HUEY EMFINGER
COURT FROM WHICH APPEALED: MADISON COUNTY CIRCUIT COURT
ATTORNEYS FOR APPELLANT: TIMOTHY JAMES ANZENBERGER
WILLIAM H. LEECH
SARAH ELIZABETH WILSON
CHRISTOPHER HANSER MEREDITH
ATTORNEYS FOR APPELLEE: EDWARD BLACKMON, JR.
BARBARA BLACKMON
JANESSA EMONTAN BLACKMON
NATURE OF THE CASE: CONTRACT
DISPOSITION: AFFIRMED - 08/11/2016
MOTION FOR REHEARING FILED:
MANDATE ISSUED:
BEFORE DICKINSON, P.J., COLEMAN AND MAXWELL, JJ.
MAXWELL, JUSTICE, FOR THE COURT:
¶1. Linde Health Care Staffing, Inc., received a favorable arbitration award in Missouri
against the Claiborne County Hospital. Linde reduced the award to a Missouri judgment,
then enrolled the foreign judgment in two Mississippi counties. The Hospital successfully
moved to set aside the foreign judgment in both Mississippi counties, since it never
contracted with Linde and, thus, was not bound by the contract’s arbitration agreement.
¶2. On appeal, Linde argues the Hospital’s motions to set aside the foreign judgment were
filed too late and were time-barred by the Federal Arbitration Act’s procedural rules. We
disagree and find the FAA cannot bind an entity that neither agreed to arbitrate nor
contracted with the arbitration claimant. We affirm the two Mississippi judgments setting
aside the enrollment of the foreign judgment.
Background Facts and Procedural History
2
¶3. This is a consolidated appeal from two orders—one from Claiborne County Circuit
Court and one from Madison County Circuit Court. Both orders granted the Hospital’s
motions to set aside a foreign judgment.
¶4. Linde enrolled a Missouri judgment in both Mississippi counties. The Missouri
judgment confirmed an arbitration award in favor of Linde for $182,849.73, plus interest and
arbitration costs.1 But according to the Hospital, the contract containing the arbitration
provision was not between Linde and the Hospital. Instead, the contract was between Linde
and a private entity—Patient’s Choice Medical Center.
I. First Demand for Arbitration: Patient’s Choice
¶5. In 2008, the Claiborne County Board of Supervisors leased the county’s hospital
facility to Patient’s Choice for a term of twenty-five years. Patient’s Choice was led by its
chief executive officer Tim Cockrell. On September 12, 2011, Cockrell contracted with
Linde for temporary emergency physicians. The contract Linde submitted to Cockrell listed
“Claiborne County Hospital” as the client. But Cockrell—who signed the contract in his
capacity as Patient’s Choice CEO—handwrote Patient’s Choice as the client when signing
it. The contract contained an arbitration clause, in which the parties agreed to submit to
binding arbitration in Missouri should any dispute arise from the agreement.
¶6. The last invoice Linde sent Cockrell was dated February 19, 2012. According to
Linde, it was never paid for any services it provided. On June 12, 2012, Linde sent a demand
letter to Cockrell, requesting Cockrell’s “company” pay the outstanding $182,849.73 within
1
The Missouri court calculated the accrued interest at $25,654.07 and arbitration
costs as $5,050, bringing the total amount of the judgment to $213.553.80.
3
the week. If not, Linde threatened to “file a complaint in arbitration against you pursuant to
your contract.”
¶7. Six weeks later, the Claiborne County Board of Supervisors terminated the lease with
Patient’s Choice. The Board retook possession of the hospital by court order on July 26,
2012—more than five months after Linde last provided temporary physicians to Patient’s
Choice.
II. Second Demand for Arbitration: Claiborne County
¶8. On October 4, 2012, Linde sent a second demand letter. But this time, instead of
sending the letter to Patient’s Choice’s CEO Cockrell at the address listed in the contract,
Linde mailed its demand to the Claiborne County Administrator, James Johnson, at his
official address. As Linde put it, “the Hospital’s administration recently changed,” so it was
sending its demand, along with the unpaid invoices, to Johnson.
¶9. Five months later, on February 4, 2014, Linde served a demand for arbitration on the
Claiborne County Hospital. On February 20, 2014, the attorney for the County Board of
Supervisors contacted Linde’s counsel by mail. In this letter, the Board’s attorney directed
Linde to Page 7 of the contract. This is the page where Linde had acknowledged Patient’s
Choice was its client. The Board’s attorney advised Linde to send future arbitration-related
correspondence to Patient’s Choice, not Claiborne County.
¶10. In response, Linde’s counsel, relying on Page 1 of the contract, claimed the contract
was with Claiborne County Hospital. And “[t]he fact someone handwrote a different name
on [the last page] is immaterial.” The Board’s attorney strongly disagreed in writing,
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pointing out this notation was proof Linde’s client was Patient’s Choice. And the fact the
contract was executed by Patient’s Choice’s CEO Cockrell was material, since Cockrell
obviously had no authority to bind the County Board of Supervisors.2 This was the last
correspondence in the record between Linde and Claiborne County.
III. Arbitration Award
¶11. On May 31, 2013, Linde appeared through counsel at a telephonic arbitration hearing
in Missouri. According to the arbitrator, “Respondent Claiborne County Hospital . . . failed
to appear after due notice by mail . . . .” The arbitrator found the Hospital owed Linde
$182,849.73, plus interest and costs. And on June 18, 2013, the arbitrator ordered the
“Respondent” to pay Linde that amount.
IV. Enrollment of the Foreign Judgment
¶12. On January 2, 2014, Linde obtained a judgment confirming the arbitration award from
the Circuit Court of St. Louis County, Missouri.
A. Claiborne County
¶13. Linde enrolled this foreign judgment in the Claiborne County Circuit Court on March
21, 2014. On May 22, 2014, the Claiborne County Hospital moved to set aside the foreign
2
The Board’s attorney informed Linde’s counsel:
In the State of Mississippi, the only way a public entity speaks, is through its
minutes. The Board of Supervisors of Claiborne County did not authorize a
contract with Linde Health Care Staffing, Inc. I would presume the Director
of Linde Health Care Staffing, Inc., knew who had the authority to execute the
contract. Claiborne County leased its hospital to Patient’s Choice on
October 1, 2008. You can obtain a copy of this Lease Agreement through the
Public Records Request.
5
judgment. The Hospital attached to its motion a copy of the lease between Claiborne County
and Patient’s Choice. It also attached the correspondence between Linde’s counsel and the
Board’s attorney.
¶14. The circuit court heard the Hospital’s motion to set aside on September 2, 2014. The
Hospital argued the arbitration award was based on a contract to which Claiborne County
Hospital was never party. The Hospital also asserted Linde knew the contract was with
Patient’s Choice, not the County. Yet Linde still chose to materially misrepresent to the
arbitrator that its client had been the Claiborne County Hospital, not even mentioning
Patient’s Choice. For these reasons, the Hospital argued the arbitration-based foreign
judgment was void and should be set aside.
¶15. In response, Linde claimed too much time had passed for the Hospital to challenge
the arbitration award. Citing the Federal Arbitration Act (FAA), Linde insisted that once
the Hospital had notice of the award, it had only ninety days to vacate it. So as Linde pitched
it, the Hospital could not circumvent the FAA by waiting to challenge the underlying
arbitration award until after Linde obtained the Missouri judgment, then enrolled it in
Mississippi.
¶16. The Claiborne County Circuit Court disagreed. It found the Missouri judgment was
not entitled to full faith and credit because the judgment was obtained by misrepresentation,
fraud, or other undue means. It also found the Missouri court lacked jurisdiction over the
Hospital, which never entered a contract with Linde nor availed itself of Missouri’s
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jurisdiction. The court entered an order setting aside the foreign judgment on December 2,
2014. Linde timely appealed.
B. Madison County
¶17. Before the Claiborne County enrollment was set aside, Linde also enrolled its foreign
judgment in Madison County. The Hospital similarly moved to set aside the foreign
judgment, which the Madison County circuit judge granted on May 11, 2015. Like the
Claiborne County court, the Madison County Circuit Court found Linde’s contract was with
Patient’s Choice. Because the Hospital was not a party, the Missouri court lacked
jurisdiction over it. Linde timely appealed this order too. And we consolidated the two
appeals.
Discussion
I. The Hospital’s Rule 60(b) motion was not time-barred.
¶18. This Court has deemed Mississippi Rule of Civil Procedure 60(b) an appropriate
avenue to challenge enrollment of foreign judgments not entitled to full faith and credit.
E.g., Reeves Royalty Co. v. ANB Pump Truck Serv., 513 So. 2d 595 (Miss. 1987) (affirming
the trial court’s grant of a Rule 60(b) motion to set aside a foreign judgment). But Linde
argues the Hospital’s use of Rule 60(b) was improper here. Because the foreign judgment
was based on an arbitration award, Linde suggests the FAA—and not our own civil
procedure rules—controls.
¶19. Under the FAA, motions to vacate arbitration awards must be filed in the federal court
where the award was made within ninety days of notice of the arbitration award. 9 U.S.C.
7
§§ 10, 12 (2012). And Linde suggests that, because the Hospital did not move to vacate
within ninety days of notice,3 the Hospital’s Rule 60(b) motion to set aside the foreign
judgment is time-barred.
¶20. Linde’s time-bar argument is based entirely on its belief the FAA controls. But the
looming question Linde fails to answer is—How can the Hospital be bound by the FAA’s
procedural rules if it never entered a contract with an arbitration clause? The simple answer
is it cannot.
¶21. In asking us to choose the FAA’s time limit over our own procedural rules, Linde
appeals to the policy favoring arbitration and the goal of finally resolving disputes as early
as possible. But the United States Supreme Court has emphasized that this policy is based
on certain principles. And the first notion is that “arbitration 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.” AT&T Techs., Inc. v. Commc’ns Workers of Am., 475 U.S. 643, 648, 106 S. Ct.
1415, 1418, 89 L. Ed. 2d 648 (1986) (quoting Steelworkers v. Warrior & Gulf Navigation
Co., 363 U.S. 574, 582, 80 S. Ct. 1347, 1353, 4 L. Ed. 2d 1409 (1960)). Moreover, whether
the parties agreed to arbitrate is a question for the court, not the arbitrator. AT&T Techs.,
Inc, 475 U.S. at 648-49; see also Sheet Metal Workers Int’l Ass’n, Local No. 359,
AFL-CIO v. Ariz. Mech. & Stainless, Inc., 863 F.2d 647, 653 (9th Cir. 1988) (holding that
the fact an arbitration award had already been entered and not vacated within ninety days did
not preclude the court from determining “‘arbitrability’ in the first instance”).
3
It is not clear from the record when the Hospital was notified about the arbitration
award. But the Hospital does not contend it lacked notice.
8
¶22. Here, the Hospital never agreed to submit any grievance with Linde to arbitration
because it never entered into any agreement with Linde.4 During the contractual time period,
Claiborne County had leased its hospital facility to Patient’s Choice. And as the contract
clearly shows, it was Cockrell, in his capacity as CEO of the private entity Patient’s Choice,
who entered the contract with Linde. Because the Hospital was not a party to the contract,
it was neither obligated to participate in the arbitration nor bound by the FAA’s procedural
rules. See Int’l Union of Operating Eng’rs, Local 150, AFL-CIO v. Rabine, 161 F.3d 427,
4
We find this to be the key distinction between this case and the cases Linde cites.
Linde contends “most jurisdictions” have held that challenges to the validity of an arbitration
award—“including where a party claims that they were not a signatory to the underlying
contract or arbitration clause”—are waived if not brought in a timely motion to vacate. But
after reading Linde’s cases, we discovered none of them support the position it takes
here—that a party claiming no contractual relationship whatsoever with the arbitration
claimant is time-barred from arguing it is not bound by the arbitration award. Instead, in all
the cases Linde cites, the party lodging the untimely attack against the arbitration award
unquestionably was in a contractual relationship with the party who obtained the award.
See, e.g., Int’l Union of Operating Engineers, Local 150, AFL-CIO v. Rabine, 161 F.3d
427, 428 (7th Cir. 1998) (imposing ninety-day time limit to challenge a federal labor
arbitration award on a business owner who undisputedly entered a collective bargaining
agreement (CBA) with an arbitration clause); Sullivan v. Gilchrist, 87 F.3d 867 (7th Cir.
1996) (involving successor plumbing business that continued to deal with the union under
its predecessor’s CBA); Taylor v. Nelson, 788 F.2d 220 (4th Cir. 1986) (also involving
court-ordered arbitration); MCI Telecomms., Corp. v. Happy the Glass Man, Inc., 974 F.
Supp. 1016, 1021-22 (E.D. Ky. 1997) (finding “it [was] clear that Happy entered into an
agreement which provided for arbitration”); Real Color Displays, Inc. v. Universal Applied
Techs. Corp., 950 F. Supp. 714, 719 (E.D.N.C. 1997) (finding a vendee had accepted the
sales agreement, which contained an arbitration clause, when it accepted vendor’s goods and
sent back an invoice); Portfolio Recovery Assocs., LLC v. Freeman, 717 S.E.2d 43 (N.C.
Ct. App. 2011) (involving a credit-card holder who admittedly had entered an agreement to
arbitrate and actually participated in arbitration); Advantage Assets, Inc. II v. Howell, 663
S.E.2d 8 (N.C. Ct. App. 2008) (involving a credit-card holder who did not claim he never
entered into a contract with the creditor, just that he did not sign the latest version of the
credit agreement); James Valley Grain, LLC v. David, 802 N.W.2d 158 (N.D. 2011)
(imposing ninety-day time limit after court-ordered arbitration).
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428, 433 (7th Cir. 1998) (holding—after the ninety-day time limit had passed—that a union
could not enforce an arbitration award against a related company because that company “was
not a party to the [agreement] in any sense of the word”); Carpenters 46 N. Cal. Counties
Conference Bd. v. Zcon Builders, 96 F.3d 410 (9th Cir. 1996) (finding “failure to move to
vacate the arbitrator’s decision d[id] not bar” a challenge in subsequent enforcement
proceedings based on the argument the entity against whom the arbitration award was entered
was not the entity that entered the arbitration agreement); Int’l Union of Operating Eng’rs,
Local 150, AFL-CIO v. Triad Constr. Servs., Inc., No. 97 C 6218, 1999 WL 759516, at *3
(N.D. Ill. Sept. 1, 1999) (unreported) (holding a company, which had waited until the
enforcement proceeding to argue it was not a party to the arbitration agreement, could not
“be bound by arbitrations it never agreed to submit to, under a contract it never signed”).
Instead, the Hospital was not barred from waiting to challenge the arbitrator’s and Missouri
court’s lack of jurisdiction when Linde attempted to enforce the Missouri judgment in
Mississippi.
II. The Hospital supported its motion with affirmative proof.
A. The Contract and Lease
¶23. Alternatively, Linde argues the Hospital failed in its burden to demonstrate the
arbitrator and the Missouri court lacked personal jurisdiction over the Hospital.
¶24. Under the United States Constitution, Mississippi courts “must give full faith and
credit to the final judgments of all other states” when “the court of state had lawful authority
to enter the judgment.” Reeves Royalty, 513 So. 2d at 598 (citing U.S. Const. art. 4, § 1).
10
But when “the court rendering the judgment was without jurisdiction or [the] judgment was
obtained by extrinsic fraud,” a Mississippi court “is not required to recognize the judgment
of a court of another state[.]” Id. (quoting Britton v. Gannon, 285 P.2d 407, 409 (Okla.
1955)). Here, neither the Claiborne County Circuit Court nor Madison County Circuit Court
recognized the Missouri judgment. Rather, both Mississippi courts found Missouri lacked
personal jurisdiction because the Hospital never agreed to arbitrate in Missouri.5 See
Frances Hosiery Mills, Inc. v. Burlington Indus., Inc., 204 S.E.2d 834, 842-43 (N.C. 1974)
(finding New York judgment, confirming an arbitration award rendered in New York, was
not entitled to full faith and credit in North Carolina because the North Carolina company
against which the judgment was entered never agreed to arbitrate in New York, never
appeared before the New York arbitrator or New York court, and never conducted business
in New York).
¶25. Linde challenges this finding, claiming the Hospital failed to sufficiently show
Linde’s foreign judgment was invalid. Linde is correct that we are to presume “a judgment
rendered by a court of competent jurisdiction in a sister state is . . . valid[] as to that court’s
assumption of jurisdiction.” Galbraith & Dickens Aviation Ins. Agency v. Gulf Coast
Aircraft Sales, Inc., 396 So. 2d 19, 21 (Miss. 1981). So “the burden is on the party attacking
the judgment to affirmatively show its invalidity.”6 Id.
5
The Claiborne County Circuit Court also refused to give full faith and credit based
on extrinsic fraud.
6
Linde relies on authority from other jurisdictions to advocate that the Hospital must
show by “clear and convincing” evidence that the foreign judgment should not be accorded
full faith and credit. See, e.g., Winston v. Millaud, 930 So. 2d 144, 153 (La. Ct. App.
11
¶26. But our review shows the Hospital met this burden. “[E]xtrinsic evidence is
admissible in a collateral attack upon a foreign judgment to show that it is void[.]” Galbraith
& Dickens Aviation, 396 So. 2d at 21. And the contract and lease affirmatively show the
Hospital was not the entity that contracted with Linde. Indeed, the lease establishes that
during the contract period, the Claiborne County Board of Supervisors had leased the
hospital facility to Patient’s Choice and had ceased operating it.
¶27. Linde counters that the lease was never properly admitted or authenticated and is
hearsay. But as a public document under seal, duly recorded in the Board minutes and
registered in the chancery court, the lease is both self-authenticated under Rule 902(1) and
nonexcluded hearsay under Rule 803(8). M.R.E. 902(1); M.R.E. 803(8). Further, the
Hospital submitted the lease to both circuit courts in its Rule 60(b) motions to set aside. And
Linde never moved to strike the lease.
B. Claimed Ambiguity
¶28. Linde also claims the contract is ambiguous as to its client—the Hospital or Patient’s
Choice. What Linde appears to be arguing is that, if the contract is ambiguous, then the
Hospital cannot meet its burden to affirmatively show it was not the contracting party. But
we fail to follow this logic. When a contract is ambiguous, we employ canons of
construction—which include looking to extrinsic evidence, if necessary. See, e.g., Dalton
v. Cellular South, Inc., 20 So. 3d 1227, 1232-33 (Miss. 2009). And here, the extrinsic
2006); Ward v. Hawkins, 418 S.W.3d 815, 822 (Tex. Ct. App. 2013). But even if we were
to follow those jurisdictions who impose a clear-and-convincing standard, our conclusion
would be the same—the Hospital met its burden to affirmatively show the invalidity of the
arbitration award and resulting judgment.
12
evidence—namely the lease—supports the interpretation that the contract was with Patient’s
Choice, not the Hospital. So Linde’s ambiguity argument actually strengthens the Hospital’s
position.
¶29. But having reviewed all of Linde’s assertions, the fact remains the contract coupled
with the lease affirmatively show it was Patient’s Choice, not the Hospital, that entered the
contract containing the arbitration award. We thus affirm both trial courts’ orders setting
aside the Missouri judgment for lack of personal jurisdiction.
Conclusion
¶30. While courts favor arbitration as a matter of policy, at times this policy “run[s] up
against the more fundamental underlying policy that parties . . . should be held to their
contractual commitments to arbitrate, but not forced to submit to contracts to which they are
not parties[.]” Rabine, 161 F.3d at 432. This is indeed one of those times. Linde cannot
invoke the FAA to argue the Hospital is time-barred when the Hospital has affirmatively
shown it was not the party that contracted with Linde. That is why the Hospital could not be
forced to arbitrate or be bound to an arbitration award. See Ariz. Mech., 863 F.2d at 651.
Nor did the Missouri court obtain jurisdiction over the Hospital when it confirmed the
arbitration award. See Frances Hosiery Mills, 204 S.E.2d at 841-43. For these reasons, we
affirm the circuit courts’ orders setting aside the Missouri judgment, which Linde enrolled
in both Claiborne and Madison Counties.
¶31. AFFIRMED.
WALLER, C.J., DICKINSON AND RANDOLPH, P.JJ., LAMAR, KITCHENS,
KING, COLEMAN AND BEAM, JJ., CONCUR.
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