Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

Weirton Medical Center, Inc. v. Community Health Systems, Inc.

United States District Court, N.D. West Virginia

December 12, 2017

WEIRTON MEDICAL CENTER, INC., Plaintiff,
v.
COMMUNITY HEALTH SYSTEMS, INC., QUORUM HEALTH RESOURCES, LLC, STEPHEN MILLER, MICHAEL ROLPH, ROBERT LOVELL, ROBERT VENTO, DANIEL HAMMAN and JOHN WALTKO, Defendants.

         MEMORANDUM OPINION AND ORDER DENYING PLAINTIFF'S MOTION TO VACATE ARBITRATION AWARD, GRANTING DEFENDANTS' MOTION TO CONFIRM ARBITRATION AWARD AND FOR ENTRY OF FINAL JUDGMENT, CONFIRMING ARBITRATION AWARD, DENYING PLAINTIFF'S MOTION TO EXPEDITE RULING ON PENDING MOTION TO VACATE ARBITRATION AWARD AS MOOT AND DISMISSING DEFENDANTS' MOTION TO DISMISS AS MOOT

          FREDERICK P. STAMP, JR. UNITED STATES DISTRICT JUDGE.

         The plaintiff, Weirton Medical Center, Inc. (“Weirton”), asks this Court to vacate an arbitration award under § 10 of the Federal Arbitration Act (“FAA”), 9 U.S.C. §§ 1-16. Previously, this Court granted the defendants' motion to compel arbitration and stayed this civil action pending the arbitration. The arbitrator issued an award dismissing all of Weirton's claims. Weirton then filed this motion to vacate the arbitration award on the grounds that the arbitrator exceeded his powers and manifestly disregarded applicable law. For the following reasons, Weirton's motion to vacate is denied and the arbitration award is confirmed. Plaintiff's motion to expedite ruling on pending motion to vacate arbitration award (ECF No. 81) is denied as moot. Defendants' motion to dismiss for failure to state a claim (ECF No. 13) is dismissed as moot.

         I. Background

         Weirton Medical Center is a hospital in Weirton, West Virginia. It entered into two related contracts for administrative services intended to assist Weirton in a financial turnaround. First, in November 2009, Weirton entered into an Interim Support Services Agreement (“the Interim CFO Agreement”) with Quorum Health Resources, LLC (“Quorum”) in which Quorum provided Weirton with an Interim Chief Financial Officer (“CFO”), Stephen Miller. Then in May 2010, Weirton entered into an Agreement for Hospital Administrative Services (“the Turnaround Agreement”) with Quorum Intensive Resources, LLC (“QIR”). The Turnaround Agreement provided that QIR would provide an Interim Chief Financial Officer (“CFO”) and an Interim Chief Operating Officer (“COO”) and would provide Weirton various administrative services.

         Before the engagement term was to end, Weirton terminated the agreement and refused to pay QIR's invoices. QIR forced arbitration in accordance with the Turnaround Agreement, arguing that Weirton breached the Turnaround Agreement by failing to pay the invoices (“the First Arbitration”). Weirton then asserted counterclaims for breach of various provisions of the agreement, negligence, breach of fiduciary duties, and corporate waste. After three years of discovery and a full evidentiary hearing, the arbitrator entered an award in favor of QIR on all claims (“the First Award”). Weirton then filed suit in this Court along with a motion to vacate the First Award. QIR filed a motion to confirm the award. This Court denied Weirton's motion to vacate and granted QIR's motion to confirm the First Award. Weirton appealed to the United States Court of Appeals for the Fourth Circuit, and on March 29, 2017, the Fourth Circuit affirmed this Court's ruling by per curiam opinion.

         In October 2015, two days after filing its motion to vacate the First Award, Weirton filed this civil action against Community Health Systems, Inc. (“CHSI”), Quorum, Stephen Miller, Michael Rolph, Robert Lovell, Robert Vento, Daniel Hamman, and John Waltko. Each of the individual defendants were either employees of Quorum or QIR or served as interim employees of Weirton under the Interim CFO Agreement or the Turnaround Agreement. Weirton alleged claims for fraud and misrepresentation, promissory estoppel, breach of fiduciary duties, aiding and abetting the breach of fiduciary duties, the tort of outrage, negligence, negligent misrepresentation, and civil conspiracy. Quorum and the individual defendants filed a joint motion to compel arbitration under the arbitration agreements contained in the Interim CFO Agreement and the Turnaround Agreement. This Court granted that motion and stayed this civil action pending the arbitration.

         In March 2016, Weirton filed its arbitration demand with the American Arbitration Association (“AAA”) stating its claims against CHSI, Quorum, and the individual defendants (“the Second Arbitration”). Weirton filed a detailed statement of its claims in July 2016. The defendants then filed motions for summary disposition. The arbitrator issued an award granting summary disposition in favor of CHSI, Quorum, and the individual defendants (“the Second Award”). The arbitrator concluded: (1) that CHSI was not a proper respondent to the action and that Weirton failed to state claims against CHSI; (2) that all of Weirton's claims, except for the breach-of-contract claim against Quorum, were barred by res judicata or collateral estoppel; (3) that Weirton's breach-of-contract claim against Quorum was time-barred under the applicable Tennessee statute of limitations; (4) that Weirton's tort claims were alternatively barred by the gist-of-the-action doctrine; and (5) that Weirton's unjust enrichment claim is barred because of the parties' contracts.

         Weirton then filed in this civil action its motion to vacate the Second Award. It argues that the arbitrator exceeded his powers in granting summary disposition and that the arbitrator manifestly disregarded applicable law. Quorum and the individual defendants filed a joint response. CHSI filed a response in which it purported to enter a special appearance to challenge whether this Court may exercise personal jurisdiction over CHSI. This Court entered a separate memorandum opinion and order dismissing CHSI from this civil action for lack of personal jurisdiction. Further, on May 15, 2017, the parties appeared before this Court for oral argument on the motion to vacate. Additionally, Weirton filed a motion to expedite ruling on the pending motion to vacate arbitration award (ECF No. 81), and the QHR defendants filed a motion to confirm arbitration award and for entry of final judgment (ECF No. 87), asserting entitlement to the costs incurred during arbitration. These motions have been fully briefed.

         II. Applicable Law

         Under the Federal Arbitration Act (“FAA”), 9 U.S.C. §§ 1-16, an arbitration award may be vacated on four grounds: “(1) when the award was procured by corruption, fraud, or undue means; (2) when there was evident partiality or corruption on the part of an arbitrator; (3) when an arbitrator was guilty of misconduct in refusing to postpone the hearing, upon sufficient cause shown, or in refusing to hear evidence pertinent and material to the controversy; or any other misbehavior causing prejudice to the rights of any party; or (4) when an arbitrator exceeded his or her powers, or so imperfectly executed them that a mutual, final, and definite award upon the subject matter submitted was not made.” Jones v. Dancel, 792 F.3d 395, 401 (4th Cir. 2015); see also 9 U.S.C. § 10.

         Generally, “judicial review of an arbitration award in federal court is severely circumscribed and among the narrowest known at law.” Jones, 792 F.3d at 401 (internal quotation marks omitted). A court “may not overturn an arbitration award ‘just because it believes, however strongly, that the arbitrator[] misinterpreted the applicable law.'” Id. Further, “a court must confirm an arbitration award unless a party to the arbitration demonstrates that the award should be vacated under one of the above . . . enumerated grounds.” Id. (internal quotation marks omitted) (citing Hall St. Assocs., LLC v. Mattel, Inc., 552 U.S. 576, 582 (2008)); see also 9 U.S.C. § 9.

         III. Discussion

         Weirton argues that the award should be vacated because the arbitrator exceeded his powers and because the award is in manifest disregard of the law. This Court finds no grounds for vacatur.

         A. Whether the Arbitrator Exceeded His Powers

         “By its terms, [§] 10(a)(4) allows courts to vacate arbitration awards only when arbitrators ‘exceeded their powers, or so imperfectly executed them that a mutual, final, and definite award upon the subject matter submitted was not made.'” Jones, 792 F.3d at 405 (quoting 9 U.S.C. § 10(a)(4)). “[A] plaintiff seeking relief under this provision bears the ‘heavy burden' of showing that the arbitrator acted outside the scope of the authority granted by the parties in their contract, by ‘issuing an award that simply reflects his own notions of economic justice.'” Id. (quoting Oxford Health Plans LLC v. Sutter, 133 S.Ct. 2064, 2068 (2013)).

         Weirton argues that the arbitrator exceeded his powers by granting summary disposition rather than permitting discovery and holding a hearing. It argues that the arbitration agreements, the AAA Rules, and West Virginia and Tennessee's Rules of Civil Procedure did not permit summary disposition. Further, Weirton argues that summary disposition was premature because no discovery had been conducted and factual disputes were evident.

         Weirton made these same arguments before the arbitrator, and he rejected them. The arbitrator expressly concluded that the 2009 AAA rules provided him “discretion to hear and grant motions for summary disposition.” ECF No. 33-1 at 2. He concluded that summary disposition was not premature and that Weirton was not entitled to discovery because “the asserted claims fail as a matter of law.” Id. The arbitrator also implicitly ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.