Core Fin. Team Affiliates, LLCv.Me. Hosp. Ass'n, Inc.

Superior Court of MaineMar 5, 2019
BUSINESS & CONSUMER DOCKET DOCKET NO. BCD-CV-19-02 (Me. Super. Mar. 5, 2019)





Plaintiff Core Finance Team Affiliates, LLC ("CFT") has filed a Complaint alleging that Defendants Maine Hospital Association, Inc. ("MHA"), Maine Medical Center, Southern Maine Health Care and Franklin Memorial Hospital have committed a breach of contract (Count 1) and unjust enrichment (Count 2). MHA filed a Motion to Compel Arbitration and For Stay of Proceedings, and that Motion is now pending before the Court. The Court heard oral argument on the motion on February 27, 2019 in Portland, Maine. MHA was represented by Rachel Wertheimer, Esq.; Maine Medical Center, Southern Maine Health Care and Franklin Memorial Hospital by Eric Wycoff, Esq.; and CFT was represented by Lee Bals, Esq. For the reasons below, the Court grants the Motion to Compel Arbitration and For Stay of Proceedings.


MHA is a signatory to an Agreement with CFT that contains Dispute Resolution Procedures, including both mediation and arbitration clauses. The mediation clause states in part that:

A party shall submit a dispute to mediation by written notice to the other party or parties.

. . .

If the parties have not resolved a dispute within 90 days after written notice beginning mediation (or a longer period, if the parties agree to extend the mediation), the mediation shall terminate and the dispute shall be settled by arbitration. In addition, if a party initiates litigation, arbitration, or other binding dispute resolution process without initiating mediation, or before the mediation process has terminated, an opposing party may deem the mediation requirement to have been waived and may proceed with arbitration.

(Compl. Ex. A, Ex. D of the Agreement, at 1.) The arbitration clause selects arbitration by the Institute for Conflict Resolution and Prevention ("CRP"), and states in part that:
The arbitration will be conducted in accordance with the procedures in this document and the CRP Rules for Non-Administered Arbitration ("Rules") as in effect on the date of the Agreement, or such other rules and procedures as the parties may agree. In the event of a conflict, the provisions of this document will control.

(Compl. Ex. A, Ex. D of the Agreement, at 1.)

On August 1, 2018, counsel for CFT sent a letter to MHA stating there was a dispute with the Occupation Mix Survey services provided and that the letter was serving "as written notice that this dispute is being submitted to mediation, and constitutes the beginning of the mediation process." (Compl. Ex. B.) In response, MHA sent a response on August 15, 2018, acknowledging the receipt of CFT's notice of mediation and stating that MHA was "unaware of any allegation by CFT that MHA has not fully met its contract deliverables or that MHA owes CFT any money." (MHA's Resp. Ex. A.) MHA's letter also stated that it "is not subject to mediation proceedings with CFT regarding any provider's participation in the Occupational Mix Survey Review or any billing disputes related to those services," and cannot respond to the request on who should be the mediator. MHA does not dispute that it is bound by the terms of the arbitration agreement.


The Law Court reviews a trial court's decision to deny a motion to compel arbitration "for errors of law and for facts not supported by substantial evidence in the record." Saga Communs. of New England, Inc. v. Voornas, 2000 ME 156, ¶ 7, 756 A.2d 954.


In Saga Communs. of New England, Inc., the Law Court explained that when the facts "upon which waiver is based are not in dispute, the determination of whether a party has waived its contractual right to arbitration is a question of law" for the Court to decide. Id. ¶ 7. However, after Voornas was decided, the U.S. Supreme Court decided Howsam v. Dean Witter Reynolds, 537 U.S. 79 (2002]. In Howsam, the Supreme Court was called upon to determine whether it was for a court or arbitrator to determine arbitrability based upon the time-limit arbitration rule of the National Association of Securities Dealers. Id. at 81. The Court found that the applicability of the time limit rule was a matter "presumptively for the arbitrator, not for the judge." Id. at 85. The Court clarified that while "a gateway dispute about whether the parties are bound by a given arbitration clause raises a 'question of arbitrability' for a court to decide," procedural questions "'which grow out of the dispute and bear on its final disposition' are presumptively not for the judge, but for an arbitrator, to decide." Id. (quoting John Wiley & Sons, Inc. v. Livingston, 376 U.S. 543, 557 (1964)). The Court specifically noted that waiver, delay or a like defense are procedural questions presumptively for the arbitrator to decide. Id. The Court reasoned that "in the absence of any statement to the contrary in the arbitration agreement, it is reasonable to infer that the parties intended the agreement to reflect that understanding." Id.

Based on Howsam, the First Circuit in Dialysis Access Ctr., LLC v. RMS Lifeline, Inc., 638 F.3d 367 (1st Cir. 2011), applied the presumptive approach to procedural issues outlined by the Supreme Court. In that matter there was an arbitration clause which the parties agreed was subject to the provisions of the Federal Arbitration Act, but which arguably required the parties to first "use good faith negotiations." Id. at 371. The First Circuit found that it need not determine whether the arbitration clause established a condition precedent since, "assuming arguendo that the Arbitration Clause establishes such a pre-condition to arbitration, Appellants have not rebutted the presumption that the arbitrator should decide whether the parties complied with such a procedural pre-requisite to arbitration." Id. at 383. The Court thus treated the matter of whether the parties complied with a pre-requisite to arbitration as an issue for the arbitrator to decide. Id.

The Law Court generally follows federal arbitration cases decided under the Federal Arbitration Act. See Voornas, 2000 ME 156, ¶ 11, 756 A.2d 954 (quoting Moses B. Cone Mem'l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24-25 (1983]). In this matter, the arbitration clause at issue states in relevant part that: "Any issue concerning the extent to which any dispute is subject to arbitration, or concerning the applicability, interpretation, or enforceability of any of these procedures, shall be governed by the Federal Arbitration Act and resolved by the arbitrators." (Compl. Ex. A, Ex. D of the Agreement, at 1.) At oral argument CFT made a compelling argument that by refusing to engage in mediation MHA had waived its contract right to compel arbitration. Nevertheless, given the Howsam decision and the express language of the arbitration clause agreed to by CFT, CFT has not rebutted the presumption that the waiver issue is for the arbitration panel to decide.

For all the foregoing reasons, MHA's motion to compel arbitration and stay the proceedings (only as to MHA) is granted. If the arbitration panel concludes MHA has waived its contract right to compel arbitration, CFT can file a motion with the Court to lift the stay.

Pursuant to M.R. Civ. P. 79(a), the Clerk is instructed to incorporate this Order by reference on the docket for this case.

So Ordered. Dated: 3-5-2019


Michael A. Duddy

Judge, Business and Consumer Docket

Entered on the Docket: 3-6-19

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