The Continuing Care Risk Retention Group (CCRRG) has won a court dispute in the US District Court of Arizona, after a plaintiff sought a writ of garnishment against the RRG in December 2017.
The victory is against Jacob Benson, his parents, and his son (the plaintiffs), who filed a suit in Maricopa County Superior Court against Casa De Capri Enterprises, a skilled nursing facility.
Casa De Capri had purchased a number of successive annual claims-paid insurance policies from CCRRG, of which 2012 to 2013 and 2013 to 2014 periods contained arbitration provisions.
In addition, Casa De Capri and CCRRG had entered into a subscription agreement in September 2009 containing an arbitration provision, which was incorporated into the policies.
The arbitration policies provided that arbitration would take place in Sonoma County California.
Casa De Capri cancelled its policy with CCRRG at the beginning of August 2013 and then filed bankruptcy later that month.
After Casa De Capri cancelled its policy, CCRRG withdrew from defending Casa De Capri in plaintiffs' lawsuit.
In November 2017, the plaintiffs obtained a $1.5 million judgment against Casa De Capri. The following month, the plaintiffs sought a writ of garnishment against CCRRG.
In January 2018, the garnishment action was removed to this court. A week later, CCRRG’s motion was premised on three main contentions which included the arbitration agreements were valid; plaintiffs' "claims [were] fully encompassed within the scope of the agreement[s]"; and plaintiffs "are claiming rights that Casa de Capri had under the CCRRG Policy as assignees of Casa de Capri, thus they stand in the shoes of Casa de Capri and are subject to the arbitration agreement[s] between CCRRG and Casa de Capri”.
The plaintiffs responded in late January 2018, stating that they were strangers to the arbitration clauses and therefore could not be bound and the clauses were contrary to Casa De Capri's reasonable expectations.
In August 2018, Judge Logan issued an order denying CCRRG's motion. After the order was issued plaintiffs moved to amend their complaint to add claims for a declaratory judgment regarding coverage for the underlying judgment and insurance bad faith.
In April this year, CCRRG filed a renewed motion to compel arbitration. CCRRG argued that, although plaintiffs asserted in their response to the initial motion to compel arbitration that they weren't seeking to collect from CCRRG as an assignee of Casa De Capri's contract, plaintiffs have since made clear their "intent to pursue claims as assignees".
Although CCRRG's motion requested an order "dismissing this action and compelling arbitration" or, alternatively, an order "staying this action pending arbitration", CCRRG clarified during oral argument that it is seeking a dismissal without compelled arbitration.
The district judge, Dominic Lanza, granted the motion to the extent CCRRG requests dismissal without prejudice.
