Electronic Signatures, Consent, and Capacity: How West v. Solar Mosaic LLC Protects Vulnerable Seniors

By David B. Shea, Certified Specialist in Estate Planning, Trust & Probate Law

In an era where digital agreements are as common as a click, West v. Solar Mosaic LLC  (Oct. 16, 2024, B334178, ___ Cal.App. 5th ____, WL 4499313) highlights the serious responsibilities businesses face when contracting with elderly or impaired individuals. The court’s decision underscores that electronic signatures alone may not be enough, especially when parties to a contract have cognitive limitations impacting their understanding. Companies must now consider the full weight of proving not only that a signature exists but that it represents clear, intentional consent. This ruling signals a shift toward higher standards of verification, prompting businesses to adopt enhanced protocols like third-party confirmation or follow-up calls when working with vulnerable clients. For seniors and their families, this decision offers critical protections against unintended commitments, while for businesses, it adds a new layer of accountability in ensuring every contract truly reflects informed consent.

In West, elderly homeowners Lucy and Harold West, both in their 90s and suffering from dementia, along with their daughter Deon, filed a lawsuit against a remodeling company and Solar Mosaic LLC, the lender that financed the project. They alleged that neither Harold nor Lucy had signed or authorized the construction contract or loan agreement and brought claims of fraudulent misrepresentation, concealment, negligence, and violations of the Consumers Legal Remedies Act and the Elder Abuse and Dependent Adult Civil Protection Act. When Solar Mosaic petitioned to compel arbitration based on a clause in the loan agreement, the Los Angeles Superior Court denied the request, prompting Solar Mosaic to appeal.

Ilai Mitmiger, a sales representative for Elite Home Remodeling, Inc. (Elite), visited the West household to discuss solar installations and bathroom renovations. Mitmiger claimed he outlined the potential benefits of solar energy, including lower electric bills and possible tax credits, and suggested financing options through Solar Mosaic. According to Mitmiger, all three family members were engaged in the conversation, with Harold and Lucy appearing “excited” about the projects. In contrast, Deon asserted that Mitmiger misrepresented himself as being affiliated with a government program similar to Habitat for Humanity and failed to disclose the financial obligations involved.

During the meeting, Mitmiger obtained Deon’s email address to send over the necessary documents. Solar Mosaic then emailed the loan agreement to Deon’s email, and within seconds, the 33-page agreement was electronically signed via DocuSign in Harold’s name in multiple places on a mobile device. Given the Wests’ cognitive impairments and lack of familiarity with digital technology—they did not use computers, mobile phones, or email—this raised serious questions about the authenticity of Harold’s signature and whether he had the capacity to understand and consent to the contract.

On appeal, the central question was whether a binding arbitration agreement existed, with the court examining the validity of Harold’s alleged electronic signature. Under California Code of Civil Procedure section 1281.2, the burden was on Solar Mosaic to prove that a valid arbitration agreement existed, requiring more than just the presence of an electronic signature. The court found no evidence that Harold had signed or authorized the contract, rejecting Solar Mosaic’s argument for compelling arbitration. The company also claimed that Deon acted as her father’s agent, with authority to bind him to the contract. However, relying on established California agency law, the court emphasized that agency requires clear, actual authority granted by the principal. (See, Civ. Code §§ 2315, 2316.)  With no proof that Harold knowingly authorized Deon to act on his behalf, the court ruled that Deon’s actions could not bind her father to the agreement.

The court further rejected Solar Mosaic’s argument of ratification, which would have allowed the agreement to stand if Harold’s actions after signing implied consent. Referencing Civil Code section 2307, the court explained that ratification requires a principal’s full knowledge and understanding of the circumstances. Given Harold’s dementia and limited cognitive capacity, the court found that he could not have knowingly ratified the agreement. This portion of the decision adds a layer of protection for elderly or vulnerable individuals, establishing that cognitive limitations are a legitimate consideration when assessing contract validity.

For legal practitioners, West emphasizes the importance of advising clients to meticulously document the obligor’s authorization, consent, and understanding. Attorneys should counsel their clients to gather clear evidence of actual authority, especially in cases involving vulnerable parties, and to avoid assumptions based on familial relationships. Where cognitive impairments may be a concern, practitioners should encourage a thorough assessment and documentation of the obligor’s capacity to understand contractual terms, as courts are increasingly scrutinizing these factors. This ruling reflects a shift toward a more protective approach for vulnerable individuals in contractual agreements, underscoring the need for clients to substantiate every element of consent and authorization, particularly for arbitration clauses.

West serves as a critical reminder that electronic signatures are binding only when supported by clear, authentic consent, a demonstrated understanding of the terms, and valid authorization if an agent is involved. For businesses, it signals the need for more rigorous verification practices when contracting with customers who may face challenges with digital platforms or comprehension. As courts increasingly prioritize the protection of vulnerable parties, West stands as a benchmark case that underscores the essential values of precision, transparency, and respect in handling legal transactions with these individuals.

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