56 N.E.3d 1232
Ind. Ct. App.2016Background
- On July 18, 2011 Frank Cavazos executed an admission agreement and a separate alternative dispute resolution (ADR) / arbitration agreement when admitted to Golden Living; Golden Living retained copies of the signature pages but not the original arbitration form.
- The arbitration form stated it was voluntary, not a condition of admission, could be revoked within 30 days, and would become part of the admission agreement governed by the FAA.
- Cavazos later died (May 17, 2013). His personal representative, Maureen Maynard, sued Golden Living for negligence and breach of contract (filed Feb. 17, 2014).
- Golden Living moved to dismiss and to compel arbitration, relying on a blank form arbitration agreement plus signature pages; trial court held a hearing, allowed deposition of the facility marketing director (Lott), then granted the motion to compel arbitration.
- Maynard appealed interlocutorily, arguing the arbitration agreement was ambiguous/unenforceable (parties not identified), and that it was voidable by fraudulent inducement or lack of capacity. The Court of Appeals affirmed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Enforceability of arbitration agreement given blank form (parties not filled in) | Maynard: blank form is ambiguous; no enforceable agreement exists identifying the parties | Golden Living: signature pages, standard form labeled for Golden Living, and deposition testimony identify parties; extrinsic evidence admissible | Court: Agreement enforceable; extrinsic evidence resolves ambiguity and shows Cavazos and Golden Living were parties |
| Fraudulent inducement | Maynard: Lott induced Cavazos to sign without explaining legal effect; not an attorney; may have misled him | Golden Living: Lott told Cavazos he could take the agreement home and the form itself disclaimed condition of admission and allowed revocation | Court: No evidence of the requisite intent to deceive; fraudulent inducement not established |
| Lack of capacity to contract | Maynard (implied): Cavazos may not have understood what he signed | Golden Living: Lott testified Cavazos appeared alert, oriented, understood and could take document home; Maynard offered no evidence of incompetence | Court: Maynard did not plead or present evidence of incapacity; competence not contested and defense not preserved |
| Binding effect on personal representative | Maynard: As representative she should not be bound if she did not sign arbitration agreement | Golden Living: Maynard signed the admission agreement only as guarantor; her claim is derivative of Cavazos’s rights | Court: Maynard, as personal representative, is bound by Cavazos’s valid arbitration agreement; her derivative claim must arbitrate |
Key Cases Cited
- Citimortgage, Inc. v. Barabas, 975 N.E.2d 805 (Ind. 2012) (contract interpretation begins with plain language and four-corners rule)
- Brumley v. Commonwealth Bus. College Educ. Corp., 945 N.E.2d 770 (Ind. Ct. App. 2011) (standard of review for order compelling arbitration is de novo)
- Safety Nat. Cas. Co. v. Cinergy Corp., 829 N.E.2d 986 (Ind. Ct. App. 2005) (strong public policy favoring enforcement of arbitration agreements)
- Univ. of S. Ind. Found. v. Baker, 843 N.E.2d 528 (Ind. 2006) (extrinsic evidence may be considered to resolve ambiguous contracts)
- Tender Loving Care Mgmt., Inc. v. Sherls, 14 N.E.3d 67 (Ind. Ct. App. 2014) (extrinsic evidence can establish existence/terms of standard-form arbitration agreements)