After a married couple that filed a complaint against their retirement investors for significant decreases in investment funds appealed a trial court order to compel arbitration, the Indiana Court of Appeals concluded arbitration agreements between the parties were enforceable and subject to the Federal Arbitration Act.
Between 1998 and 2014, David and Rhonda Earley opened several retirement fund accounts with the national corporation Edward D. Jones & Co., LP. Each time they signed account agreement forms acknowledging that they had received and reviewed all agreements within the document.
Every agreement contained relatively similar binding arbitration provisions. All of the agreements also provided that the agreement was to be governed by the laws of the State of Missouri, where Edward Jones is based.
In November 2016, the Earleys sued Edward Jones and two of its employees regarding a significant decrease in funds they had invested with Edward Jones. Their complaint alleged breach of contract, negligence, constructive fraud and conversion.
The defendants filed a motion to dismiss or to compel arbitration and stay the proceedings, alleging that the Earleys’ agreements with Edward Jones contained binding arbitration provisions, that the disputes fell within the scope of the arbitration provisions and that Missouri law governed. They also argued that the FAA applied because the contracts involve interstate commerce and that the Earleys acknowledged in writing that they received the agreements and that they contained arbitration provisions.
The couple argued that the provisions were not valid under Missouri law because it lacked language and format required by Missouri Revised Statutes Section 435.460, and contended they were never presented with arbitration provisions in question and their signatures were “obtained by misrepresentation as to the substance of the signed documents which contained the arbitration provisions.”
But the Court of Appeals found in David Earley and Rhonda Earley v. Edward Jones & Co., LP, Edward Jackson, and Adam Jackson, 36A04-1710-PL-2258, that that there was no evidence the Edward Jones employees misrepresented the contents of the documents signed by the Earleys.
“Rather, the Earleys signed the documents without reading them,” Senior Judge Michael Barnes wrote Monday. “‘Under Indiana law, a person is presumed to understand the documents which he signs and cannot be released from the terms of a contract due to his failure to read it.’”
The court also found that the Jackson Superior Court’s decision to stay the litigation pending arbitration and order that the parties arbitrate the claims in the Earleys’ complaint was appropriate.
“We further note that Missouri courts have repeatedly held that the notice of arbitration provisions of Missouri Revised Statutes Section 435.460 are preempted by the FAA in cases of interstate commerce,” Barnes concluded.