2019 Ohio 635
Ohio Ct. App.2019Background
- John, adjudicated incompetent in 2010, has multiple disabilities; his mother Jane became his guardian in October 2015.
- John began working for Contemporary Services Corporation (CSC) in October 2015 and signed an arbitration agreement then; CSC updated its arbitration agreement in May 2017.
- On July 1, 2017, at a meeting with CSC managers, both John and Jane reviewed and signed CSC’s updated arbitration agreement; Jane also signed an identical arbitration agreement in her own capacity for her employment with CSC.
- Appellants sued CSC in March 2018 alleging disability discrimination, hostile work environment, retaliation, aiding and abetting, and lost wages; CSC moved to stay proceedings and compel arbitration.
- The trial court granted CSC’s motion, finding Jane — as guardian — ratified the July 1, 2017 arbitration agreement that John signed; appellants appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether John had contractual capacity to enter the 2015 or 2017 arbitration agreements | John lacked capacity due to adjudicated incompetence, so the agreements are void | Capacity is not dispositive because a guardian may ratify a ward’s contract | Court limited review to 2017 agreement and did not decide capacity issue; affirmed on ratification grounds |
| Whether Jane ratified the July 1, 2017 arbitration agreement | Jane’s mere presence and silence did not constitute ratification; she did not sign John’s agreement and could not ratify a void contract | Jane reviewed and signed an identical agreement for herself, was present when John signed, and had full knowledge of material facts — her silence/inaction amounted to ratification | Court held Jane, with knowledge of the terms and by signing her own agreement, ratified John’s 2017 arbitration agreement; arbitration compelled |
| Whether silence/inaction can constitute ratification where guardian is aware of material facts | Silence alone insufficient without knowledge of material facts | If fully informed, silence/inaction can evidence assent/ratification | Court applied precedent allowing ratification by silence where principal (guardian) knew material facts and thus found ratification |
| Whether the In re Allen exception (guardian may ratify ward’s contract) is dicta or binding | The dissent argued a guardian cannot ratify a non-existent contract; appellants urged Allen’s language was dicta | CSC relied on Allen and subsequent cases recognizing guardian ratification | Court followed In re Allen majority and related appellate decisions: guardian ratification is a recognized exception; appellants’ dicta argument rejected |
Key Cases Cited
- In re Allen, 50 Ohio St.3d 142, 552 N.E.2d 934 (Ohio 1990) (a guardian may ratify a ward’s contract, allowing the ward to bind the guardianship estate when ratified)
- Sovak v. Spivey, 155 Ohio App.3d 479, 801 N.E.2d 896 (8th Dist. 2003) (appointment of a guardian creates a presumption of the ward’s contractual incapacity)
- Bailey v. Midwestern Enters., 103 Ohio App.3d 181, 658 N.E.2d 1120 (10th Dist. 1995) (whether a contract was ratified is a factual question for the trial court)
- Taylor Bldg. Corp. of Am. v. Benfield, 117 Ohio St.3d 352, 884 N.E.2d 12 (Ohio 2008) (Ohio statutory framework governing stays to compel arbitration)
- Council of Smaller Enters. v. Gates, McDonald & Co., 80 Ohio St.3d 661, 687 N.E.2d 1352 (Ohio 1997) (arbitration is a matter of contract; parties cannot be compelled to arbitrate absent assent)
- AT&T Techs. v. Commc’ns Workers, 475 U.S. 643 (U.S. 1986) (arbitration is a matter of contract and courts should enforce arbitration agreements according to their terms)
- Preston v. Ferrer, 552 U.S. 346 (U.S. 2008) (federal policy favors enforcement of arbitration agreements)