Are “After the Fact” Arbitration Agreements Enforceable?
A New Jersey appellate court recently addressed the issue of whether or not an arbitration agreement entered into AFTER the original contract has been executed is enforceable.
The case, Kay v. SCI New Jersey Funeral Services, LLC d/b/a Bloomfield-Cooper Jewish Chapels, involved the mishandling of a dead body by the funeral home. When it came time for the burial service to begin, the funeral home admitted that it had lost the body. The service went forward (without the body) as friends & family had gathered to pay their last respects. Later that same day, the body was located, having been buried in a different cemetery – a presumed case of mistaken identity. The body was recovered and properly buried 2 days later.
Once the body was correctly buried, the funeral home presented the Plaintiff (the surviving spouse) with the (presumably standard) written contract to sign, covering the services that had been provided. The contract included an arbitration clause.
When the Plaintiff filed his lawsuit over what had transpired with his late wife’s body, the funeral home sought to enforce the arbitration agreement. The trial court refused to enforce the arbitration agreement, determining the contract to be unconscionable. The appellate court reversed and remanded that decision, holding that limited discovery was necessary to determine whether or not the arbitration agreement (as opposed to the whole contract) was unconscionable.
“[Q]uestions remain regarding [Plaintiff’s] level of sophistication, his capacity to review and understand the agreement, and whether he was unduly influenced by other factors. In reaching our conclusion, we recognize that generally, defendants do not dispute the circumstances leading to the agreement's execution, including the fact that the agreement was presented as an invoice for services already performed as well as the horrendous series of events leading to Janet's final funeral service at Mount Sinai Cemetery. Nevertheless, we remain convinced that discovery limited to the issues of arbitrability and unconscionability is necessary and appropriate as critical unresolved facts relevant to unconscionability are within Plaintiff's knowledge and control.”
The key takeaway from this is the separation, despite the presence of an integration clause, of the arbitration agreement from the contract itself.
To read the opinion, click here.
