|
The Utah Supreme Court held that a man whose name was added to a contract for repairs on his wife’s house was not required to participate in arbitration proceedings initiated by the contractor because the inclusion of his name, standing alone, was not sufficient to prove that he agreed to arbitrate.
In Ellsworth v. American Arbitration Ass'n, No. 20050371, 2006 WL 3488912 (Utah Dec. 05, 2006), Carol Naylor contracted with Lowell Construction (Lowell) to repair damage to her home. The contract’s cover page listed Naylor and her husband, Stanford Ellsworth, as owners of the home. However, the signature page contained only one signature labeled “Owner,” and only Naylor signed the contract. Moreover, Naylor owned the home prior to marriage, and she remained the sole owner during the marriage.
When a billing dispute arose, Lowell filed a demand for arbitration against Naylor and Ellsworth pursuant to an arbitration clause in the contract. In response, Ellsworth filed suit, seeking a declaration that he was not required to arbitrate. The trial court ordered Ellsworth to arbitrate.
On appeal, the Court held that Ellsworth was not required to arbitrate because the inclusion of his name in the contract, standing alone, was not sufficient to prove that he assented to the arbitration agreement. Apart from the cover page listing Ellsworth as an owner, there were no further references to Ellsworth, and there was only room for one owner’s signature. Citing those facts, the Court concluded that even if Lowell was unaware that Ellsworth was not an owner, any ambiguities would be construed against Lowell as the party drafting the agreement.
The Court further determined that the principles of estoppel did not require Ellsworth to arbitrate because he received no direct benefit from the contract, and he was not attempting to sue Lowell under the contract.
As the Court pointed out, “no signature is required for a person to become party to a contract.” Even though the Federal Arbitration Act applies only to written arbitration agreements, it is well-established that a signature is ordinarily not required for an arbitration agreement to be enforceable. See, e.g., Berkley v. Dillard’s Inc., 450 F.3d 775 (8th 2006); Tickanen v. Harris & Harris, Ltd., No. 05-CV-935, 2006 WL 3365788 (E.D. Wis. Oct. 20, 2006); Bar-Ayal v. Time Warner Cable Inc., No. 03 CV 9905(KMW), 2006 WL 2990032 (S.D.N.Y. Oct. 16, 2006).
The Court's decision represents an uncommon exception to the general rule. The Court relied on much more than the absence of an optional signature. The facts that the transaction did not otherwise refer to the husband and did not otherwise involve him are factors that distinguish this case from other enforceable written arbitration agreements without signatures.
Subscribe to a free weekly update on ADR case law and
legislation
|