United States: Don’t Forget To Sign On The Dotted Line: A Cautionary Tale

Last week, the Pennsylvania Superior Court issued an interesting decision involving the enforceability of an unsigned agreement to arbitrate.

In Bair v. Manor Care of Elizabethtown PA, LLC, plaintiff, Sylvia Bair, brought a wrongful death lawsuit against Manor Care in the Lancaster County Court of Common Pleas alleging institutional abuse and/or neglect resulting in the death of her elderly mother, Martha Edwards.  Manor Care filed preliminary objections to the complaint seeking to compel arbitration pursuant to a standalone "Voluntary Arbitration Agreement" signed by Ms. Bair on behalf of her mother at the time of admission pursuant to a power of attorney.

The agreement contained blanks on the first page for the insertion of the names of the contracting parties and the date – none of these blanks was completed.  Further, the agreement provided that, "arbitration is described in the voluntary arbitration program brochure," a copy of which was to be "attached and made part of th[e] agreement."  The brochure, however, was not attached.

The agreement also provided, in bold capital letters, that:  "THE PARTIES CONFIRM THAT EACH OF THEM UNDERSTANDS THAT EACH HAS WAIVED THE RIGHT TO TRIAL BEFORE A JUDGE OR JURY AND THAT EACH CONSENTS TO ALL OF THE TERMS OF THIS VOLUNTARY AGREEMENT."  Following this paragraph, there were signature lines for Ms. Edwards, Ms. Bair in both her representative capacity and in her individual capacity, and for a Manor Care representative.  Ms. Bair signed the agreement as Ms. Edwards's legal representative, but only in her representative capacity.  The signature line for a Manor Care representative was left blank.

The trial court determined that the arbitration agreement was unenforceable because, among other things, a representative of Manor Care failed to sign the agreement.  Manor Care filed an immediate appeal as of right to the Superior Court arguing that a signature is not required to enforce an agreement, and "certainly not [by] the party attempting to enforce it."

In affirming the trial court, the Superior Court recited long-standing precedent that, for an arbitration agreement to be enforceable, parties must demonstrate "in a clear and unmistakable manner [an agreement] to arbitrate their disputes." After reviewing the facts, the Superior Court determined that the arbitration agreement lacked essential terms such as "the names of the contracting parties, the date of the agreement, and the brochure describing the arbitration process, which was expressly made part of the agreement."  Further, the Superior Court determined that the agreement "expressly required the signatures of both parties."  Notwithstanding the fact that it was Manor Care and not Ms. Bair that sought to enforce the agreement, the Court held that Manor Care's failure to sign the agreement demonstrated an absence of a mutual agreement to arbitrate by Manor Care.

The lesson of this decision is that individuals and businesses seeking to enforce arbitration agreements should be careful to fill in the blanks and sign on the dotted line.

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