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IO Moonwalkers, Inc. v. Banc of America Merchant Services, LLC

Court of Appeals of North Carolina

April 3, 2018

IO MOONWALKERS, INC., and AMERICAN COINS & GOLD, INC., Plaintiffs,
v.
BANC OF AMERICA MERCHANT SERVICES, LLC, BANK OF AMERICA CORPORATION, BANK OF AMERICA, N.A., and FIRST DATA MERCHANT SERVICES, LLC, Defendants.

          Heard in the Court of Appeals 28 November 2017.

          Appeal by plaintiffs from order entered 27 March 2017 by Judge Lisa C. Bell in Mecklenburg County No. 16-CVS-3696 Superior Court.

          Pinto Coates Kyre & Bowers, PLLC, by Jon Ward and Richard L. Pinto, for plaintiffs-appellants.

          Lord Law Firm, PLLC, by Harrison A. Lord, for defendants-appellees.

          DIETZ, Judge.

         This case is one of a growing number of contract cases requiring the courts to fit decades-old (sometimes centuries-old) contract principles to the realities of the digital age.

         Banc of America Merchant Services, LLC (BAMS) provided credit card processing services to IO Moonwalkers, Inc., a company that sells hoverboard scooters. BAMS uses a standard contract with its customers and sent that contract to Moonwalkers using an electronic document application called DocuSign. DocuSign transmits the contract in an email and the software records when the contract accompanying that email is viewed and when it is electronically signed.

         After a dispute concerning chargebacks for fraudulent purchases, Moonwalkers asserted that it never electronically signed the contract with BAMS and should not be bound by its terms. The company asserted that a salesperson for BAMS likely signed the contract on behalf of Moonwalkers without permission.

         At summary judgment, BAMS produced records showing the exact date and time that someone using the Moonwalkers company email viewed the proposed contract, electronically signed it, and later viewed the final, fully executed version. Moonwalkers does not dispute the accuracy of these DocuSign records, and does not claim that it never viewed the proposed contract, but insists that the contract was not signed by anyone at the company authorized to do so.

         BAMS also produced emails and letters sent in the following months in which BAMS referenced the contract and asked Moonwalkers to take action required by the contract, such as providing documentation. Moonwalkers complied with those requests without ever suggesting the parties had no written contract.

         As explained below, in light of this evidence, the trial court properly held that, even if Moonwalkers did not sign the contract, the company ratified the contract through its actions. We therefore affirm the trial court's grant of partial summary judgment based on the doctrine of ratification.

         Facts and Procedural History

         Plaintiffs IO Moonwalkers, Inc. and American Coins & Gold, Inc. are distinct corporations with shared ownership but unrelated businesses. Moonwalkers sells hoverboards and American Coins & Gold sells metals, gemstones, and jewelry. Third-Party Defendant Rilwan Hassan owns both companies.

         Defendant Banc of America Merchant Services, LLC processes credit card transactions for retail businesses.[1] The company uses an electronic signature service called DocuSign to enter into written contracts with its customers that BAMS calls "merchant services agreements." DocuSign gives each merchant services agreement an identifying number, which then appears on each page of the document. DocuSign sends an email with an electronic link to a copy of the agreement. Through DocuSign, the party viewing the contract can sign it using a digital signature. DocuSign tracks the date and time when the contract is sent, viewed, and signed by each party.

         Once a contract between BAMS and a customer is executed, DocuSign sends a "certificate of completion" to BAMS that includes the identifying number for that contract, the email address of the contract recipient, the IP address of the computer that viewed the email and contract, and details of relevant "events" that occurred such as the time and date when the contract was viewed and signed. BAMS maintains these certificates of completion as business records in the ordinary course of its business.

         Rilwan Hassan, the owner of Moonwalkers, is familiar with the DocuSign process because he used the service in 2014 to contract with BAMS for credit card processing services for American Coins & Gold, another business he owns. Hassan concedes that he used DocuSign to review and sign the BAMS contract with American Coins & Gold.

         In 2015, Hassan met with BAMS employee Robert Kanterman to contract for similar card-processing services for Moonwalkers. Moonwalkers concedes that BAMS sent proposed merchant services agreements to Moonwalkers at the company email address Hassan provided. Those contracts contain various terms concerning BAMS services ...


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