Newsletter – December 2019

I’ve been troubled by the proliferation of “electronic signatures” used to purportedly sign contracts.  A recently published case  by the Fourth Appellate District makes it clear that “authenticity” of a “DocuSign” signature should not be assumed. In Fabian v. Renovate America, Inc., No. D075519 (Ct. App. Nov. 19, 2019), the Court of Appeal considered the issue of  what it takes to authenticate an electronic signature on an arbitration agreement. Rosa Fabian argued that she had not electronically signed a Renovate America contract. Agreeing with the trial court, the Court of Appeal said that Renovate had not met its burden to show that the signature was authentic.

Facts of the Case

Fabian had filed a complaint alleging Renovate had improperly installed solar panels for her home. In early 2017, as Fabian alleged in her lawsuit, a company called Renovate America made an unsolicited phone call to her about financing the solar panels that already had been installed on her home. Renovate then incorporated solar panel payments into her mortgage loan payments. It also produced a financial contract memorializing this arrangement that Fabian purportedly signed electronically. The contract had Fabian’s initials and printed electronic signature on it, along with the words “DocuSigned by:”, a 15-digit alphanumeric character, and the words “Identity Verification Code: ID Verification Complete”.

Fabian said, however, that Renovate never provided her with documents to sign, and she did not sign the contract and never authorized Renovate to affix her signature to the financing agreement through “DocuSign.” . She only talked about financing with Renovate on the phone. Fabian claimed that her electronic signature was placed on the contract by Renovate  without her consent or authorization.

As a result, Fabian sued Renovate for violations of (1) the Consumers Legal Remedies Act (Civ. Code § 1750 et seq.), (2) the Unfair Competition Law (Bus. & Prof. Code § 17200 et seq.), and (3) the California Contract Translation Act (Civ. Code § 1632). Since the contract contained an arbitration clause, Renovate filed a petition to compel arbitration of these claims. Both the contract and a declaration from a Renovate executive saying that Fabian “entered into” the contract were attached to the petition.

Renovate’s Failure to Authenticate the Electronic Signature Process

The trial court ordered discovery concerning Fabian’s purported electronic signature, and Fabian’s attorney took the deposition of the Renovate executive who made the declaration.  Renovate couldn’t produce a witness who had first hand knowledge that Fabian had signed the Agreement or expressly authorized Renovate to “DocuSign” her signature. After considering all the evidence, the trial court denied the petition to compel arbitration, concluding that Renovate failed to establish that Fabian had “electronically” signed it.

The Court of Appeal determined the standard of review was whether the finding was erroneous as a matter of law.  The Appellate Court affirmed the trial court’s ruling denying the petition to compel arbitration by  finding that Renovate had not shown by a preponderance of the evidence that the electronic signature was authentic. (Ruiz v. Moss Bros. Auto Group, Inc. (2014) 232 Cal.App.4th 836, 846.) Renovate could meet this burden by providing evidence of the contents of the contract in question and the circumstances surrounding the contract’s execution. (Ruiz at p. 844.)

However, Renovate failed to provide compelling evidence. It first claimed that the use of the DocuSign signature program rendered Fabian’s signature legally binding. Renovatefailed to show that it had used the process designed by DocuSign to authentic signatures electronically.   But Renovate did not give any explanation or evidence about the use of DocuSign in its petition – the word “DocuSign” does not even appear in it. It could have explained how the Docusign process works, who sent Fabian the contract, who received the  purportedly signed contract, how the purportedly signed contract was delivered to Renovate,  and how Fabian’s identification was verified as the person who actually signed the contract.  However, Renovate failed to do any of these important things and as such failed to meet its burden of proof.

Renovate also claimed that its executive’s declaration was evidence that Fabian’s signature was authentic. However, the declaration ”summarily asserted” that Fabian “entered into” the contract. Anderson’s declaration failed to affirmatively state that Fabian actually signed the contract.  Moreover, the declaration did not include any explanation of why the executive knew that Fabian had entered into it, how she had signed it, and how the signature could be attributed only to her. As a result, the Court said that the declaration was not compelling evidence supporting Renovate’s argument.

The Takeaway

Electronically “signed” transaction documents still need to be the “authentic” signature of the person purportedly bound by the contract.