Lack of Agreement to Arbitrate Dooms Bid to Compel Arbitration

For many companies and businesses, arbitration is a preferred option to resolve disputes instead of litigation. As a result, arbitration clauses and provisions are often included in contracts, and there are a variety of rules that govern whether and to what extent those clauses can be enforced against a plaintiff seeking to file a claim in court instead of proceeding with an arbitration.

It may seem obvious, but a recent case from New Jersey reminds us of the importance of an agreement to arbitrate in the first place. In an unpublished decision handed down on May 20, 2021, the New Jersey Appellate Division addressed the issue of whether a claim on behalf of a nursing home resident was subject to arbitration. Essentially, the resident entered the nursing home in 2017 for a brief stay, was discharged, and then entered the nursing home again in 2018 for a longer stay that ended when she passed away.

Before she died, the resident filed a personal injury lawsuit against a number of medical providers, and after her death, her estate added claims against the nursing home for negligence related to events that occurred during the resident’s second 2018 admission.

The nursing home sought to compel arbitration of the claims against it, citing an agreement to arbitrate that the resident signed in connection with her 2017 admission. The trial court, although finding that the agreement to arbitrate signed in 2017 was otherwise clear, determined that it was inapplicable because the resident did not sign any agreement to arbitrate in connection with her subsequent admission in 2018.

The Appellate Division upheld this common-sense finding and determined that because the 2018 admission papers did not include an agreement to arbitrate, there was no basis for the nursing home to compel the arbitration of the claims that arose out of the 2018 admission. While the nursing home also sought to challenge the court’s ability to make that ruling, arguing that the resident had agreed in the 2017 agreement to arbitrate that questions of whether a claim could be arbitrated were to be decided by an arbitrator and not by a court, the Appellate Division determined that it held the threshold power to determine if there was, in the first instance, an enforceable arbitration agreement. And because the 2018 admission did not include such an agreement, the nursing home’s claims were rejected.

This case is a simple—but good—reminder that companies and businesses that wish to avail themselves of the protection of an arbitration agreement should ensure that there is such an arbitration agreement in all their contracts.


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