On August 10, 2023, the Appellate Division, First Department, reversed a lower court’s grant of a defendant nursing home’s motion to change venue based on a contractual venue selection clause. In Knight v. The New York Presbyterian Hospital, et al., plaintiff’s decedent was admitted to the defendant’s rehabilitation and nursing facility following a hip fracture. The admission agreement contained electronic signatures of both the resident and the facility. After the resident’s death, the resident’s family filed suit against the facility in New York County, asserting claims for personal injuries.
The defendant moved to change venue, relying on the decedent’s electronic execution of the admission agreement with the facility that designated Nassau County as the place of trial for such claims. Plaintiff contested the authenticity of the decedent’s signature and provided what they claimed were exemplary signature samples, arguing that the facility failed to prove that the decedent actually signed the agreement. The trial court granted the facility’s motion, and plaintiff appealed.
The First Department’s majority concluded that the movant’s failure to authenticate the decedent’s signature required denial of the motion to change venue. The majority reasoned that in the absence of a certificate of acknowledgment that the e-signature was indeed that of the decedent’s, the lack of admissible evidence by the person with actual knowledge of the circumstances of the e-signing of this agreement and the facility’s e-signing practices, coupled with the failure to satisfy the requirements for admissibility of business records, the facility had no valid contract with the decedent, and as such, the forum selection clause was unenforceable.
According to the dissent, the majority’s ruling departs from the First Department’s prior decisions. The dissent cited the long line of cases which held that, in order to invalidate a forum selection clause, it is the plaintiff’s burden to show that enforcement would be unreasonable, unjust, or contrary to public policy, or that the clause is invalid due to fraud or overreaching. The dissent criticized the majority’s apparent shifting of the evidentiary burden from the plaintiff to the moving defendant to provide an affidavit from a witness with personal recollection of the document signing in order to authenticate the agreement. In essence, per the dissent, the nature of the signature should not have been a dispositive factor. The dissent posited that no other contract has such a burden. As this was a split decision, the defendant may seek further review in the New York Court of Appeals.
TAKEAWAYS:
As access to technology and ease of use grows, tools like electronic signatures are now commonly used in the place of traditional “wet signatures” where parties are required to physically make a mark on a paper contract with pen. Instead, e-signatures are created on desktops, tablets and of course, our ubiquitous mobile phones. New York’s Electronic Signatures and Records Act explicitly recognizes that electronic signatures are equal to paper signatures (with some notable exceptions, like wills). However, under ERSA, the e-signature must still comply with evidentiary requirements, a burden, which in Knight, defendant did not sustain.
However, Knight should not be read as standing for the proposition that an admission agreement may be defeated by simply raising doubts as to the authenticity of the e-signatures. Instead, the decision suggests that the movant could have satisfied its burden by properly certifying the admission agreement as a business record. Moreover, an affidavit of a person with knowledge of the specific e-signing protocols would have been helpful to clarify the when, where and how the agreement was signed – factors which the First Department found lacking in this case.
A benefit of platforms such as that used by the defendant in Knight is that they are useful in preventing the manipulation of the contract after execution. These platforms also generate Certificates of Completion (which authenticate the document), provide information about user IPO addresses, and potentially contain other useful information that could be used when the validity of the e-signature is challenged. Many contracts include language indicating that it will be signed electronically and the manner of signature, and that all parties agree that such methods shall have the same legal and evidentiary effect as a handwritten signature.
The growth of telemedicine and the need for social distancing during the pandemic as well as the work-from-home phenomenon are some of the trends that have increased the need for patient intake and other transactions to be completed remotely and signed electronically. E-signatures though, are about more than convenience. They reduce the paper footprint, leading to sustainability. They promote efficiency and equitability as signatories can read and sign documents when and in the format of their choosing. While these factors were not addressed in Knight, they are compelling reasons why the use of e-signatures will continue to grow and surely find their way back in courtrooms across New York.
Should you have any questions or comments concerning this article or e-signature practices, as always, please feel free to contact:
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