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The Fifth Circuit Court of Appeals has held that a district court improperly granted summary judgment where there was conflicting testimony on whether an illiterate nursing home resident, the decedent, had signed an arbitration agreement and whether the nursing home employees read him the agreement.
In Beverly Enterprises-Mississippi Inc. v. Powell, No. 06-60468, 2007 WL 2228537 (5th Cir. Aug. 03, 2007), Charles McAlister allegedly signed an arbitration agreement when he became a resident of Beverly, though he was illiterate. Upon his death, his sister, Bertha Powell, filed suit for wrongful death, alleging various claims. Beverly moved to compel arbitration.
The district court denied Beverly's motion, holding that testimony suggested McAlister was not read the arbitration agreement and had not signed it. As Beverly was aware that McAlister was illiterate, the court also found fraud-in-the-inducement in Beverly asking him to sign the agreement without explaining it to him. The holding carried the effect of a summary judgment.
The court denied Beverly's motion to amend or reconsider the judgment. Beverly appealed, arguing that the arbitration agreement was valid and enforceable and in the alternative, that the conflicting testimony as to material facts made summary judgment improper.
Disregarding the parties' arguments for and against validity of the agreement, the Court agreed with Beverly's alternative argument.
The Court held that this case was "not easily resolved." First, Powell contended that the agreement was not valid because McAlister did not sign the agreement. She presented evidence of his signature on other documents, which was different from that on the arbitration agreement.
In contrast, Beverly provided deposition testimony of two employees, one of which witnessed McAlister sign the document. The other employee did not remember seeing him sign the agreement but testified that she would not have signed as a witness if she had not.
Second, Powell claimed that the agreement was procedurally unconscionable because it had only been paraphrased to McAlister. However, Beverly employee's testified that the agreement had been explained to him and that he understood what it entailed.
Accordingly, as conflicting issues of material fact existed, and "[t]he resolution of these fact issues will undoubtedly affect the disposition of this action[,]" the Court found that summary judgment was improper and remanded the case for trial.
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