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In its second case in less than a month addressing the validity of arbitration agreements located on the backside of a faxed agreement, the North Carolina Court of Appeals again held that the party seeking to compel arbitration failed to prove the existence of a valid arbitration agreement.
In Britt v. May Davis Group, Inc., No. COA06-782, 2007 WL 656279 (N.C. Ct. App. Mar. 6, 2007), Britt signed an account application when he opened a back account with May Davis. When Britt later sued for fraud, May Davis moved to compel arbitration pursuant to an arbitration clause in the customer agreement. The trial court denied the motion.
On appeal, the Court affirmed the trial court's ruling because May Davis faxed the account application to Britt, and there was no proof that the fax transmission included the backside of the application where the customer agreement and arbitration clause were located. Moreover, Britt denied ever seeing the customer agreement.
The Court reached the same conclusion under similar facts in Evangelistic Outreach Center v. General Steel Corp., No. COA06-558, 2007 WL 505776 (N.C. Ct. App. Feb. 20, 2007).
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