                                                                United States Court of Appeals
                                                                         Fifth Circuit
                                                                      F I L E D
                       UNITED STATES COURT OF APPEALS                  August 3, 2007
                            FOR THE FIFTH CIRCUIT
                                                                  Charles R. Fulbruge III
                                                                          Clerk
                                  No. 06-60468


 BEVERLY ENTERPRISES-MISSISSIPPI INC., doing business as Beverly
                        Healthcare-Eason,

                                                       Plaintiff-Appellant,

                                     versus

 BERTHA POWELL, Wrongful Death Beneficiary of Charles McAlister,
Deceased; JENNIFER PRUITT, Wrongful Death Beneficiary of Charles
 McAlister, Deceased; KATHY BRUNSON; BRIDGET JONES; DARRYL KIRK;
 CHARLES LAMONT MCALISTER; JUDY MCALISTER; LARRY MCALISTER; RUBY
 MCALISTER; STEVE MCALISTER; ANTHONY GORDON; STEVAN (or Stephen)
                            MCALISTER,

                                                       Defendants-Appellees.


             Appeal from the United States District Court
               for the Northern District of Mississippi
                             (1:04-CV-276)


Before KING, DAVIS, and BARKSDALE, Circuit Judges.

PER CURIAM:*

     Beverly Enterprises-Mississippi, Inc. challenges an adverse

summary     judgment    against    its   action   to   compel    arbitration.

Material fact issues, however, preclude that judgment. VACATED AND

REMANDED.




     *
      Pursuant to 5TH CIR. R. 47.5, the Court has determined that
this opinion should not be published and is not precedent except
under the limited circumstances set forth in 5TH CIR. R. 47.5.4.
                                       I.

     In January 2003, Charles McAlister (decedent) was admitted to

Beverly    Healthcare-Eason,     a    nursing-home    facility,     owned    and

operated by Beverly Enterprises-Mississippi, Inc.               On the date of

admission, decedent, who was illiterate, purportedly executed an

arbitration agreement, which contained, inter alia, a provision

requiring all claims or disputes raised in connection with his

nursing-home care to be submitted to binding arbitration.

     Decedent died at the Beverly facility in May 2003.              In August

2004,   Bertha    Powell,   decedent’s      sister   and   a    wrongful   death

beneficiary, filed a state-court action, charging Beverly with,

inter alia, negligence, medical malpractice, fraud, breach of

fiduciary duty, and wrongful death.

     In September 2004, Beverly filed this action against Powell

and others (defendants) to compel arbitration and enjoin the state-

court action.     In response, defendants denied that the arbitration

agreement was valid and enforceable.           Following discovery, Beverly

moved in August 2005 to compel arbitration.           In February 2006, the

district court denied Beverly’s motion and closed its action,

holding:    testimony from Beverly’s own witnesses suggest decedent

was not read the arbitration document and did not sign it; and, due

to   decedent’s    illiteracy,       Beverly    engaged    in    fraud-in-the-

inducement by having him sign the agreement without properly




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explaining it to him.       Beverly’s motion to alter or amend the

judgment and for reconsideration was denied that April.

                                    II.

     In essence, summary judgment was awarded defendants.             Beverly

challenges that judgment, contending:          the arbitration agreement

was valid and enforceable; and, accordingly, decedent’s claims

should be submitted to arbitration.       In the alternative, Beverly

contends:     if   questions   of   material    fact    exist    as   to   the

arbitration   agreement’s   enforceability,      this   action    should    be

remanded for trial.

     A summary judgment is reviewed de novo, e.g., Celotex Corp. v.

Catrett, 477 U.S. 317, 330 (1986), and is appropriate “if ... there

is no genuine issue as to any material fact and ... the mov[ant]

... is entitled to a judgment as a matter of law”,          FED. R. CIV. P.

56(c).   “An issue is ‘genuine’ if the evidence is sufficient for a

reasonable jury to return a verdict for the nonmoving party.”

Hamilton v. Segue Software Inc., 232 F.3d 473, 477 (5th Cir. 2000)

(citation omitted). “A fact issue is material if its resolution

could affect the outcome of the action.” Cooper Tire & Rubber Co.

v. Farese, 423 F.3d 446, 454 (5th Cir. 2005) (quoting Thompson v.

Goetzmann, 337 F.3d 489, 502 (5th Cir. 2003)).                  Finally, all

reasonable inferences are made in the light most favorable to the

non-movant.   Calbillo v. Cavender Oldsmobile, Inc., 288 F.3d 721,

725 (5th Cir. 2002).


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     In    determining      whether     parties    should    be    compelled    to

arbitrate, courts perform a bifurcated inquiry.              “First, the court

must determine whether the parties agreed to arbitrate the dispute.

Once the court finds that the parties agreed to arbitrate, it must

consider whether any federal statute or policy renders the claims

nonarbitrable.”      Wash. Mut. Fin. Group, LLC v. Bailey, 364 F.3d

260, 263 (5th Cir. 2004).         In this regard, a party seeking to avoid

arbitration must prove the arbitration provision was a product of

fraud or coercion or other “such grounds [that] ... exist at law or

in equity for the revocation of any contract”.              Sam Reisfeld & Son

Imp. Co. v. S.A. Eteco, 530 F.2d 679, 681 (5th Cir. 1976) (quoting

the Federal Arbitration Act, 9 U.S.C. § 2); see also Nat’l Iranian

Oil Co. v. Ashland Oil, Inc., 817 F.2d 326, 332 (5th Cir. 1987).

In contending that no valid arbitration agreement exists, and,

therefore, in support of the summary judgment, defendants make two

contentions.

     First, they assert decedent did not agree to arbitrate any

disputes   because     he   did   not   sign    the   arbitration       agreement.

Decedent’s family, although not present at his admission to the

Beverly    facility,     testified      the    signature    on    the    agreement

(characterized by an “X” mark) is not his; the family produced

other documentation which they claimed was signed by decedent and

which purported to show a wholly different signature. In response,

Beverly offers deposition testimony from two employees:                   one, who


                                         4
witnessed decedent sign the agreement; and a second, who signed the

agreement as a witness.            (Although the latter did not remember

decedent’s signing the agreement, she testified she would not have

signed as witness had decedent not signed the agreement.)

      In the alternative, defendants contend: even if the agreement

was   signed,     it     is    unconscionable,         both   procedurally      and

substantively. Under Mississippi law, unconscionability can either

be substantive or procedural.            West v. West, 891 So.2d 203, 213

(Miss. 2004).      For procedural unconscionability, parties invoking

it point to the “formation of the contract”, id.; unconscionability

generally     requires        showing    lack     of    either     knowledge     or

voluntariness.      Vicksburg Partners, L.P. v. Stephens, 911 So.2d

507, 517 (Miss. 2005) (citation omitted).

      Defendants        assert     the   circumstances        surrounding       the

agreement’s formation rendered it procedurally unconscionable:

decedent was illiterate and totally dependent on Beverly employees;

and the employees did not read or explain the agreement to him, but

simply paraphrased it. As a related claim, defendants contend, and

the district court found, that these actions amounted to fraud-in-

the-inducement,     by    which    Beverly      took   advantage    of   both   its

relationship with decedent and his illiteracy by failing to inform

him   that   he   was    signing    an   arbitration      agreement.      Beverly

employees, however, present at decedent’s admission, testified by

deposition that the agreement was explained to him; and that he


                                         5
understood the contents of the agreement when he executed it.

Further, Beverly notes:   under Mississippi law, “illiteracy alone

is not a sufficient basis for the invalidation of an arbitration

agreement”.   Am. Heritage Life Ins. Co. v. Lang, 321 F.3d 533, 537

(5th Cir. 2003).

     Needless to say, the contentions by both sides demonstrate

this matter is not easily resolved.    Indeed, the district court

noted as much, stating:     “there is conflicting testimony, from

[each party’s witnesses], as to whether [decedent] was read the

Agreement and whether he placed an X on it”.     The resolution of

these fact issues will undoubtably affect the disposition of this

action.   (Because material fact issues exist, we need not address

defendant’s claims for substantive unconscionability and breach of

fiduciary duty.)   Therefore, summary judgment was improper.

                               III.

     For the foregoing reasons, the denial of arbitration is

VACATED and the matter is REMANDED for trial.

                                            VACATED AND REMANDED




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