Present: All the Justices
SIDNEY E. PHILLIPS
v. Record No. 061183 OPINION BY JUSTICE CYNTHIA D. KINSER
April 20, 2007
SIMONA MAZYCK
FROM THE CIRCUIT COURT OF FAIRFAX COUNTY
R. Terrence Ney, Judge
This appeal arises out of the circuit court’s judgment
sustaining a plea in bar and ordering the parties to
arbitrate the plaintiff’s personal injury claim. Because
the record fails to establish that the parties mutually
assented to the terms of a purported arbitration agreement,
we will reverse the judgment of the circuit court and
remand the case for a trial on the merits.
Sidney E. Phillips filed a motion for judgment against
Simona Mazyck, seeking damages for personal injuries he
allegedly sustained in an automobile accident involving
Mazyck. In response, Mazyck filed a plea in bar,
requesting a dismissal of Phillips’ motion for judgment.
Mazyck asserted that Phillips, before filing his motion for
judgment, had entered into an agreement with Mazyck’s
automobile liability insurance carrier, United Services
Automobile Association (USAA), to arbitrate Phillips’
personal injury claim. Mazyck argued that this agreement
to arbitrate constituted an accord and satisfaction and/or
a settlement of Phillips’ claim that barred Phillips from
pursing the action he filed in the circuit court. Mazyck
further alleged that Phillips improperly and unilaterally
withdrew from the arbitration agreement. As an alternative
to the relief sought in her plea in bar, Mazyck
subsequently moved the circuit court to stay the
proceedings and compel the parties to proceed to
arbitration pursuant to Code § 8.01-581.02.
Prior to a hearing on Mazyck’s plea in bar, Mazyck
deposed Phillips’ attorney, Donald W. Marcari, regarding
the events leading up to the alleged formation of the
agreement to arbitrate Phillips’ personal injury claim.1
Marcari indicated that, because he had been unable to reach
an amicable settlement of Phillips’ claim with USAA’s
senior casualty examiner, Terry W. Wier, he sent Wier a
letter dated March 6, 2003, inquiring whether USAA would be
willing to enter into binding arbitration with a “high-low”
provision valuing Phillips’ damages between $12,000 and
$45,000.
According to Marcari, negotiations continued with
regard to the details of an arbitration agreement and the
“high-low” range. Wier then replied in a letter dated May
2
16, 2003, stating USAA would agree to binding arbitration
with a “high of $32,500 and a low of $7,500.” Wier
indicated in his letter, however, that arbitration would be
“subject to liability and damages [d]iscovery by [USAA’s]
attorney,” and he pointed out that the parties needed to
agree on a location where the arbitration would take place.
Marcari testified that, at the time, he was “agreeable” to
USAA deposing Phillips in conjunction with the proposed
arbitration.
Marcari subsequently received a letter from USAA’s
attorney, Terry H. Davis, Jr., in which Davis stated his
understanding that Marcari and Wier had agreed on a “high-
low” provision and asked Marcari to call him regarding
additional discovery. Marcari testified that, at the time
he received Davis’ letter, he had agreed with Wier that
they would employ the services of Arbitration Associates,
Inc., but that they had not resolved who would serve as the
arbitrator.
In a subsequent letter, Davis reminded Marcari that
the parties still needed to select an arbitrator and
enclosed USAA’s interrogatories and requests for
production. Davis also requested that Phillips undergo an
1
At the hearing on the plea in bar, the circuit court
considered Marcari’s deposition in addition to letters and
3
independent medical examination (IME). According to
Marcari, that request was the first time anyone had
mentioned an IME, but he had no objection to it. Marcari
did not recall any discussions suggesting the arbitration
would be contingent on the results of either the discovery
or the IME. The parties subsequently agreed on an
individual to serve as the arbitrator.
Marcari and Davis then received a letter dated June
23, 2003 from Debbie Dickerson-Nussbaum (Nussbaum),
president of Arbitration Associates, Inc., along with a
document titled “Arbitration Agreement.” The letter read:
Dear Gentlemen:
Enclosed you will find the arbitration
agreement for the above referenced case; all
parties will receive a copy by facsimile. The
original will be mailed to Don. Don, please sign
same and forward to Terry as soon as possible.
Arbitration Associates, Inc. must receive
the fully executed original no later than August
6, 2003.
According to his deposition testimony, Marcari changed the
date specified in the agreement for the submission of
evidence to the arbitrator and added the names of
witnesses. In a letter dated June 25, 2003, Davis advised
Marcari that he wanted to change certain terms of the
proposed arbitration agreement. Although Marcari signed
documents that were deposition exhibits.
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the arbitration agreement, he never forwarded it to either
Davis or Nussbaum. Marcari stated that he chose not to do
so because he first wanted to obtain the results of the
IME. Marcari admitted, however, that he never communicated
that fact to anyone else.
Marcari subsequently received a “Revised Arbitration
Agreement” dated August 8, 2003. As before, Marcari signed
the agreement, this time without making any changes in its
terms, but again, he did not send it to Davis because he
was still waiting to receive the results of Phillips’ IME.
Marcari acknowledged, however, that he never requested any
amendment to the Revised Arbitration Agreement to reflect
that arbitration would be contingent upon the results of
the IME. He also agreed that, other than the names of some
witnesses that were not listed, the Revised Arbitration
Agreement included the terms he had discussed with Davis
and Wier.
Sometime after receiving the Revised Arbitration
Agreement, Marcari learned that the doctor who performed
Phillips’ IME reported that Phillips would require surgery.
According to Marcari, he then communicated to Davis that,
because Phillips’ injuries were more severe than the
parties had originally understood, Phillips was unwilling
to proceed with the arbitration. By a letter dated October
5
14, 2003, Davis told Marcari, “Please be advised that we do
protest the unilateral cancellation of the arbitration
hearing on September 30th. It is our position that the
arbitration agreement is binding.”
At the hearing on Mazyck’s plea in bar, the circuit
court framed the issue as whether the absence of Davis’
signature on the arbitration agreement rendered it
unenforceable. Phillips, however, argued, among other
things, that there was never a meeting of the minds and
thus, the parties never reached an agreement. The circuit
court disagreed and ruled that the parties had an
enforceable agreement to arbitrate. Continuing, the court
found that the agreement was in writing as required by Code
§ 8.01-581.01,2 that it included all the essential terms,
and that, under Code § 8.01-581.01, the agreement did not
need to be signed by all the parties, especially since the
attorney for the party to be charged in this case had
signed it. The circuit court thus sustained Mazyck’s plea
in bar and stayed the proceeding pending the outcome of
2
In relevant part, Code § 8.01-581.01 provides:
A written agreement to submit any existing controversy
to arbitration or a provision in a written contract to
submit to arbitration any controversy thereafter arising
between the parties is valid, enforceable and irrevocable,
except upon such grounds as exist at law or in equity for
the revocation of any contract.
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arbitration. After the parties completed arbitration, the
circuit court entered a final order dismissing Phillips’
motion for judgment with prejudice. We awarded Phillips
this appeal.
Phillips assigns two errors to the circuit court’s
judgment. First, he challenges the court’s finding that
the Revised Arbitration Agreement satisfied the
requirements of “[a] written agreement” to arbitrate
pursuant to Code § 8.01-581.01 even though the document was
never signed by both parties. Second, Phillips asserts
that the circuit court erred in binding him to the terms of
the Revised Arbitration Agreement because the parties never
reached a meeting of the minds as to its material terms.
Mazyck, on the other hand, argues that the Revised
Arbitration Agreement reduced to writing all material terms
of the agreement between USAA and Phillips to arbitrate his
personal injury claim, and therefore, it satisfied the
requirements of Code § 8.01-581.01. She further asserts
that, while neither party’s signature was required in order
for the agreement to be enforceable, Marcari’s signing the
Revised Arbitration Agreement demonstrated that Phillips,
the party to be charged in this case, assented to its
terms.
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We have held, both before and after the General
Assembly’s enactment of the Uniform Arbitration Act, 1986
Acts ch. 614, that “ ‘the initial duty to arbitrate . . .
arises from contractual undertakings.’ ” Weitz v. Hudson,
262 Va. 224, 228, 546 S.E.2d 732, 734 (2001) (quoting Doyle
& Russell, Inc. v. Roanoke Hosp. Ass’n, 213 Va. 489, 494,
193 S.E.2d 662, 666 (1973)); see also Arrants v. Buck, 130
F.3d 636, 640 (4th Cir. 1997) (“Courts decide whether there
is an agreement to arbitrate according to common law
principles of contract law); Meshel v. Ohev Sholom Talmud
Torah, 869 A.2d 343, 354 (D.C. 2005) (“[W]hether the
parties have an enforceable agreement to arbitrate . . . is
governed by traditional principles of contract law.”);
Routh v. Snap-On Tools Corp., 423 S.E.2d 791, 794 (N.C. Ct.
App. 1992) (“The law of contracts governs the issue of
whether there exists an agreement to arbitrate.”).
Consequently, whether there existed between the parties an
enforceable agreement to arbitrate Phillips’ personal
injury claim depends on whether the Revised Arbitration
Agreement contained the essential elements of a valid
contract at common law.3
3
Since the Revised Arbitration Agreement was in
writing, it satisfied the statutory requirement of “[a]
written agreement.” Code § 8.01-581.01.
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The material facts concerning the formation of the
parties’ proposed arbitration agreement are not in dispute.
Thus, “the issue of contract vel non is a question of law.”
Valjar, Inc. v. Maritime Terminals, Inc., 220 Va. 1015,
1018, 265 S.E.2d 734, 736 (1980) (citing Mullins v. Mingo
Lime & Lumber Co., 176 Va. 44, 48, 10 S.E.2d 492, 493
(1940)). We decide questions of law de novo. Harrell v.
Harrell, 272 Va. 652, 656, 636 S.E.2d 391, 393 (2006)
(citing Westgate at Williamsburg Condo. Ass’n v. Philip
Richardson Co., 270 Va. 566, 574, 621 S.E.2d 114, 118
(2005)).
“ 'It is elementary that mutuality of assent – the
meeting of the minds of the parties – is an essential
element of all contracts.’ ” Lacey v. Cardwell, 216 Va.
212, 223, 217 S.E.2d 835, 843 (1975) (quoting Green’s Ex’rs
v. Smith, 146 Va. 442, 452, 131 S.E. 846, 848 (1926)).
“Until the parties have a distinct intention common to both
and without doubt or difference, there is a lack of mutual
assent and, therefore, no contract.” Persinger & Co. v.
Larrowe, 252 Va. 404, 408, 477 S.E.2d 506, 509 (1996)
(citing Progressive Constr. Co. v. Thumm, 209 Va. 24, 30,
161 S.E.2d 687, 691 (1968)); see also Valjar, 220 Va. at
1018, 265 S.E.2d at 736–37 (“A contract cannot exist if the
parties never mutually assented to terms proposed by
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either.”); Chittum v. Potter, 216 Va. 463, 467, 219 S.E.2d
859, 863 (1975) (“It is crucial to a determination that a
contract exists . . . that the minds of the parties have
met on every material phase of the alleged agreement.”);
Routh, 423 S.E.2d at 794 (to support a finding that a valid
contract to arbitrate exists, “the party seeking
arbitration must show that the parties mutually agreed to
arbitrate their disputes”). We ascertain whether a party
assented to the terms of a contract from that party’s words
or acts, not from his or her unexpressed state of mind.
Wells v. Weston, 229 Va. 72, 78, 326 S.E.2d 672, 676
(1985); see also Lucy v. Zehmer, 196 Va. 493, 503, 84
S.E.2d 516, 522 (1954) (“The law . . . judges of an
agreement between two persons exclusively from those
expressions of their intentions which are communicated
between them.”) (citation and internal quotation marks
omitted) (emphasis added).
Our decision in Brooks & Co. General Contractors, Inc.
v. Randy Robinson Contracting, Inc., 257 Va. 240, 513
S.E.2d 858 (1999), illustrates these principles. In that
case, a general contractor sent to a subcontractor an
unsigned form contract containing an arbitration provision
that the parties had not previously discussed and that was
not included in the subcontractor’s bid documents. Id. at
10
242, 244, 513 S.E.2d at 858, 860. The subcontractor
testified that he did not agree with the terms of the form
contract and that he purposefully refused to sign it,
although he never communicated his disagreement to the
contractor. Id. at 242−43, 513 S.E.2d at 859. The
subcontractor began work on the project that the general
contractor had awarded to it, but the subcontractor left
the work unfinished. Id. at 243, 513 S.E.2d at 859. The
general contractor completed the unfinished work and
demanded arbitration of its claim for damages against the
subcontractor. Id. at 243, 513 S.E.2d at 859. On the
subcontractor’s motion, the trial court entered an order
permanently staying arbitration. Id. The trial court
found that there was no meeting of the minds between the
parties as to the terms of the form contract, which neither
party signed. Id.
On appeal to this Court, the general contractor argued
that the subcontractor accepted the terms of the form
contract by virtue of its commencement of work on the
project. Id. The general contractor further asserted that
the subcontractor’s failure to objectively manifest any
disagreement on its part with the terms of the form
contract demonstrated the subcontractor’s assent to those
terms. Id. We rejected the general contractor’s argument
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and upheld the trial court’s finding that the parties did
not mutually assent to a modification of their original
oral contract. Id. at 245, 513 S.E.2d at 860. In doing
so, we noted the lack of any evidence that the general
contractor, i.e., the party seeking enforcement of the
purported contract, objectively manifested its intention to
be bound by the form contract. Id. at 244, 513 S.E.2d at
860. In fact, the evidence showed that the general
contractor did not sign the form contract before sending it
to the subcontractor precisely because it expected that the
subcontractor would make changes to the document. Id.
Our search of the record in this case reveals no words
or acts on the part of USAA objectively manifesting its
assent to the terms of the Revised Arbitration Agreement.
Before Nussbaum forwarded the original agreement to Marcari
and Davis, USAA’s senior casualty examiner, Wier, stated in
a letter to Marcari that the arbitration was “subject to
liability and damages [d]iscovery by [USAA’s] attorney.”
Neither the original nor the revised agreement included
this provision. Also absent from the record is any
indication whether USAA continued to insist on that
contingency. After Nussbaum sent the original agreement,
Davis advised Marcari that he could not agree to certain
provisions setting dates for disclosing new witnesses and
12
submitting evidence to the arbitrator. Although new
disclosure and submission deadlines appeared in the Revised
Arbitration Agreement, nothing in the record demonstrates
USAA’s assent to the new dates.
At oral argument before this Court, Mazyck suggested
that Davis’ silence after the transmission of the Revised
Arbitration Agreement indicated USAA’s assent to its terms.
A party’s silence, however, is insufficient to show its
intention to be bound by the terms of a contract. See
Wells, 229 Va. at 78, 326 S.E.2d at 676. While Davis
advised Marcari in a letter that USAA viewed the agreement
as binding, that letter was dated October 14, 2003, well
after Phillips’ alleged breach. Thus, we conclude that
USAA, like the general contractor in Brooks, did not
objectively manifest its intention to be bound by the
Revised Arbitration Agreement.
Furthermore, under the facts of this case, we conclude
that Marcari’s failure to comply with Nussbaum’s
instruction to forward the signed agreement to Davis
manifested Phillips’ lack of assent. It is true that
Marcari never communicated to either Davis or Wier his
desire to wait on the results of Phillips’ IME before
proceeding with arbitration. Nevertheless, Marcari’s
retention of both the original and the revised agreement,
13
even though he signed each document, is not inconsequential
in light of the specific instructions from Nussbaum
directing him to sign the document and send it to Davis.
Thus, we hold that, because the record does not
disclose the mutual assent of Phillips and USAA to the
terms of the Revised Arbitration Agreement, the parties did
not have an enforceable written agreement to arbitrate
Phillips’ personal injury claim. The circuit court erred
in finding otherwise and requiring Phillips to arbitrate
his claim in lieu of pursuing it in the circuit court.
Accordingly, we will reverse the judgment of the circuit
court and remand the case for a trial on the merits.
Reversed and remanded.
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