Full Opinion

Cite as 2026 Ark. App. 452 ARKANSAS COURT OF APPEALS DIVISION IV No. CV-25-409 Opinion Delivered September 30, 2026 MAGNOLIA HEALTHCARE LLC APPEAL FROM THE COLUMBIA D/B/A THE SPRINGS MAGNOLIA COUNTY CIRCUIT COURT APPELLANT [NO. 14CV-24-131] V. HONORABLE DAVID C. GRAHAM, JUDGE JAMES DENMAN PETERSON, AS PERSONAL REPRESENTATIVE OF REVERSED AND REMANDED FOR THE ESTATE OF HILARY PETERSON, ADDITIONAL FINDINGS AND ON BEHALF OF THE WRONGFUL DEATH BENEFICIARIES OF HILARY PETERSON APPELLEE CINDY GRACE THYER, Judge This appeal arises from a wrongful-death action filed by James Denman Peterson1 for the death of his daughter Hilary Peterson against Magnolia Healthcare LLC d/b/a The Springs Magnolia (Magnolia) in the Circuit Court of Columbia County. Magnolia has appealed the circuit court’s order in this case denying its motion to compel arbitration. On appeal, it argues that the circuit court erred in finding the parties had not executed a valid arbitration agreement, asserting that Hilary’s electronic signature was sufficient to establish 1 Peterson filed suit as personal representative of Hilary’s estate and on behalf of her wrongful death beneficiaries. her knowing assent to arbitrate; and that Peterson failed to overcome the presumption that Hilary had the capacity to contract. Magnolia also argues that the circuit court erred in finding that the arbitration agreement was unconscionable. Because the circuit court did not clearly rule on the threshold question of whether there was a valid agreement to arbitrate, we reverse and remand for further findings. On June 17, 2024, Peterson filed suit against Magnolia for the wrongful death of his thirty-eight-year-old daughter, Hilary, who had suffered a stroke and had been left with physical and cognitive impairments.2 However, the complaint also stated that when Hilary was admitted into Magnolia for care, she was “alert, oriented, and able to make her needs known.” Upon her admission, Hilary electronically signed and initialed the admission documents, including an arbitration agreement. The time stamp on the arbitration- agreement portion of the admission packet indicated it had been signed just eighteen seconds after the preceding portion of the thirty-five-page admission agreement. While Peterson was not present when Hilary signed the documents, he believed that Hilary was aware of the arbitration provisions because she told him that “if a problem arose – the main thing is they won’t have to go to court.” He also stated that she would have needed assistance in signing anything electronically. Hilary died in December 2022 of acute septic shock and pneumonia. 2 Hilary suffered a spinal stroke in May or June 2022. She was admitted into the nursing facility in September 2022. 2 Magnolia answered the complaint and filed a motion to compel arbitration. Magnolia claimed that Hilary was mentally competent upon admission and had signed the arbitration agreement. Peterson responded to the motion to compel, questioning the validity of the electronic signatures and claiming that the arbitration agreement was unconscionable. Magnolia replied that Peterson had failed to present proof that Hilary had not signed the documents and denied that the arbitration agreement was unconscionable. A hearing was held on the motion to compel arbitration on March 27, 2025. Peterson was the sole witness. He testified that he was with Hilary when she was admitted to the nursing facility, although he was not present with her when she signed the admission documents. He stated that Hilary was tired from the three-and-a-half-hour car ride from Tyler, Texas, to the facility and was not in her “best frame of mind.” When they arrived, someone helped him get her out of the car and into her room, and then he proceeded to unload her belongings from the car. Concerning Hilary’s condition, Peterson stated that, at first, she was almost fully paralyzed after the stroke but that at the time of her admission, she had probably 85–90 percent use of her right side and only 10–20 percent use of her left side. She was right- handed. He stated that she would have been unable to use an iPad without assistance. As for her cognitive abilities, he stated that she could “read just fine” but that she was a slow reader and especially had difficulty understanding what she read. He opined that it would have taken her forty-five minutes to read the admissions packet and that she probably would not have understood all of it. He did not hear the staff discuss any admission- or insurance- 3 related issues with Hilary, but he believed they must have discussed arbitration because Hilary told him that they would not have to go to court if any problem arose. The admission documents were admitted into evidence. The time stamp for the electronic initials and signatures indicated that the two-page arbitration agreement was signed just eighteen seconds after the document preceding it. Magnolia did not present any evidence. After hearing the evidence, the circuit court took the matter under advisement. Less than a week later, the court entered an order denying Magnolia’s motion to compel arbitration. The court held, in part: The Court recognizes that the arbitration agreement explicitly stated that signing was not a condition of admission. However, the totality of the circumstances does not establish that Ms. Peterson knowingly and voluntarily entered into the agreement. Ms. Peterson had physical and cognitive limitations. She had suffered a stroke, leaving her physically and cognitively impaired. She was unable to operate an iPad, yet she was asked to electronically initial and sign a 35-page document. The Court also considered the timing of the signatures. The time stamps indicate that she signed the arbitration agreement in less than 20 seconds after signing the prior document. The Court finds it highly improbable that Ms. Peterson could have meaningfully read and comprehended a multi-page, fine-print arbitration agreement in such a short period. Another factor considered by the Court was the unequal bargaining power between the parties. Ms. Peterson was in a vulnerable position, needing immediate nursing care. The facility, with significantly greater legal and procedural knowledge, drafted the agreement and pre-signed it two days before she even saw it. For the arbitration agreement to be enforceable there must be a mutual agreement between the parties, and each party must knowingly and voluntarily agree. . . . Given Ms. Peterson’s physical limitations, the short time frame, and the complexity of the agreement, the Court cannot find that she voluntarily waived her right to a jury trial. 4 Based on the totality of the circumstances, the Court finds that the arbitration agreement and the methods that were undertaken to acquire Ms. Peterson’s signature were procedurally unconscionable and therefore unenforceable. Magnolia timely appealed the circuit court’s order denying its motion to compel arbitration. It argues that the circuit court erred in finding the parties had not executed a valid arbitration agreement, claiming that Hilary’s electronic signature was sufficient to establish her knowing assent to arbitrate and that Peterson failed to overcome the presumption that Hilary had the capacity to contract. Magnolia also argues that the circuit court erred in finding that the arbitration agreement was unconscionable. An order denying a motion to compel arbitration is an immediately appealable order. Pest Mgmt., Inc. v. Langer, 369 Ark. 52, 250 S.W.3d 550 (2007). We review denials of motions to compel arbitration de novo on the record. Id. Arbitration is simply a matter of contract between parties. Hickory Heights Health & Rehab, LLC v. Cook, 2018 Ark. App. 409, 557 S.W.3d 286. Whether a dispute should be submitted to arbitration is a matter of contract construction, and we look to the language of the contract that contains the agreement to arbitrate and apply state-law principles. Id. The same rules of construction and interpretation apply to arbitration agreements as apply to agreements generally; thus, we will seek to give effect to the intent of the parties as evidenced by the arbitration agreement itself. Id. The construction and legal effect of an agreement to arbitrate are to be determined by this court as a matter of law. Id. When asked to compel arbitration, a circuit court is limited to deciding two threshold questions: (1) whether there is a valid agreement to arbitrate between the parties; and (2) if 5 such an agreement exists, whether the dispute falls within its scope. GGNSC Holdings, LLC v. Chappel, 2014 Ark. 545, 453 S.W.3d 645. The supreme court has made clear that a circuit court cannot skip this analysis. Bank of the Ozarks, Inc. v. Walker, 2014 Ark. 223, 434 S.W.3d 367; Belvedere Nursing & Rehab. Ctr., LLC v. Ward, 2023 Ark. App. 208, 665 S.W.3d 265. In Bank of the Ozarks, the circuit court denied the motion to compel solely on the basis of the unconscionability defense without addressing the two threshold questions. Bank of the Ozarks, 2014 Ark. 223, 434 S.W.3d 357. Our supreme court reversed and remanded to the circuit court to first resolve whether there was a valid agreement to arbitrate between the parties. Id. The supreme court additionally instructed that if the circuit court found there was a valid agreement to arbitrate, then it must determine whether the dispute falls within the scope of the agreement. Id. Only then could the circuit court consider whether a defense invalidates the agreement. Id. As in Bank of the Ozarks, the circuit court here failed to squarely address the threshold question in this case. When the court’s ruling is read as a whole, it appears that the court’s analysis was focused primarily on procedural unconscionability, not validity. While the court did state that there was insufficient evidence that Hilary knowingly and voluntarily waived her right to a jury trial, it then proceeded to discuss the effect of the lack of a waiver on its enforceability; it made no such direct pronouncement as to its effect on the validity of the agreement itself. For example, while the court found that Hilary suffered from physical and cognitive impairments, it did not hold that she lacked the capacity to contract; rather, it simply found 6 it improbable that she could have meaningfully read and understood the terms of the agreement. However, our law provides that if a person signs a document, he or she is bound to know the contents of that document. Banks v. Evans, 347 Ark. 383, 64 S.W.3d 746 (2002). The fact that a person signed a contract is evidence of his or her knowledge of the contract. Carmichael v. Nationwide Life Ins. Co., 305 Ark. 549, 552, 810 S.W.2d 39, 41 (1991). Additionally, the court expressly found that Hilary electronically signed the document. The findings of the circuit court in this case demonstrate the importance of the threshold questions because it is impossible to determine here—without resorting to speculation—if the court’s decision went to the issue of validity or enforceability or both. According to our supreme court’s decisions in Bank of the Ozarks and Chappel, we are not allowed to presume the court’s intentions in this regard. Thus, we reverse and remand to the circuit court to make the requisite findings. Reversed and remanded for additional findings. GLADWIN and MURPHY, JJ., agree. Mitchell, Williams, Selig, Gates & Woodyard, PLLC, by: Benjamin D. Jackson and Sarah Gold, for appellant. Reddick Law, PLLC, by: Matthew D. Swindle, Heather G. Zachary, and Emily K. Towe, for appellee. 7