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Rosenthal Law Group Attorneys Alex Rosenthal & Amanda Jones Obtain Major Appellate Ruling

In a case having wide-ranging ramifications, a three-judge panel of the Fourth District Court of Appeal held that a minor child is bound by an arbitration clause contained in a pre-incident Waiver and Release when the minor fraudulently signs the document. In Off the Wall & Gameroom, LLC v Gabbai, the Appellate court reversed an Order denying the facility’s motion to compel arbitration. Read the Opinion here.

The case stemmed from an injury claim filed in the 17th Judicial Circuit. The facility moved to compel arbitration based upon a mandatory arbitration clause in the ore-incident release. The plaintiff opposed the motion. During arbitration discovery, the facility learned that the thirteen-year-old child and two friends formed the intent to fraudulently submit the release and waiver at an on-site kiosk purportedly signed by his parent or legal guardian to gain access to the facility. The child completed an online Waiver and Release by entering his real name and date of birth for the child-participant, but entered a fictitious name of the “Signing Party,” representing that the signing party was the parent or legal guardian. After the child completed the release and waiver, the kiosk generated a receipt used to verify that the Waiver and Release is in the facility’s database. Using the receipt, the child purchased a wristband from the cashier and gained access to the facility. The child was injured while using the trampolines, and his father later sued the facility on his behalf.

The trial court denied the motion to compel arbitration finding (1) the facility’s reliance on the representations in the child’s release and waiver was not reasonable; (2) the facility did nothing to investigate or verify the information which the child provided; (3) the facility did not substantially change its position in reliance on the child’s representations; and (4) the entire release and waiver, including the arbitration provision, was unconscionable, void, and unenforceable.

The appellate court reversed the trial court’s order denying arbitration. In its lengthy opinion, the Fourth District Court of Appeal concluded that, while contracts entered into by minors are voidable, a minor may be estopped from avoiding a contract if he or she induced the other party to enter into the contract by fraud. The court held that “Infants are no more entitled than adults to gain benefits to themselves by fraud,” and that the minor was “estopped from taking advantage of his own wrong” in a court of equity because “the shield of infancy should not be turned into a sword with which to injure those dealing with them in good faith.”

At the same time, the court further held that the facility had no duty to investigate whether the parent or legal guardian signed the Waiver and Release stating Florida law imposes no duty to investigate fraudulent representations made by others. The court held that reliance on a fraudulent misrepresentation is a complete defense even though its falsity could have been ascertained had the recipient made an investigation, unless he knows the representation to be false or its falsity is obvious to him.

There are wide-ranging ramifications of this decision. Businesses who utilize Pre-incident Waivers and online contracts will be impacted by this decision. Businesses should still consult with legal counsel to ensure that their procedures are sufficient to protect their legal rights adequately.

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