Abdiana Props., Inc. v. Bengtson, WD 81817

CourtCourt of Appeal of Missouri (US)
Writing for the CourtThomas N. Chapman, Presiding Judge
Citation575 S.W.3d 754
Docket NumberWD 81817
Decision Date14 May 2019
Parties ABDIANA PROPERTIES, INC., et al., Respondents, v. Jerry BENGTSON, et al., Appellants.

575 S.W.3d 754

ABDIANA PROPERTIES, INC., et al., Respondents,
v.
Jerry BENGTSON, et al., Appellants.

WD 81817

Missouri Court of Appeals, Western District.

OPINION FILED: May 14, 2019


Patrick Miller, Kansas City, MO, Counsel for Appellant, Bengston.

Arthur Fillmore, II, Kansas City, MO, Co-Counsel for Appellant, Bengston.

Patrick Miller, Kansas City, MO, Counsel for Appellants, Snyder, Heartland, and Navigator Investments.

Arthur Fillmore, II, Kansas City, MO, Co-Counsel for Appellants, Snyder, Heartland, and Navigator Investments.

John Johnston, Kansas City, MO, Counsel for Respondents, Abdiana Properties and Abdiana Ice House.

Before Division Two: Thomas N. Chapman, P.J., Mark D. Pfeiffer, and Cynthia L. Martin, JJ.

Thomas N. Chapman, Presiding Judge

Jerry Bengtson (Bengtson), W. Gordon Snyder (Snyder), Heartland Financial Services, LLC (Heartland) and Navigator Investment Services, LLC (Navigator) (collectively "B.S.H.N. Defendants") appeal the order of the Circuit Court of Jackson County denying their motion to compel arbitration of a cause of action brought by Abdiana Properties, Inc. and Abdiana Ice House, Inc. (together "Abdiana"). In Points 1, 3, and 4 of their appeal, the B.S.H.N. Defendants assert that Abdiana entered into a Private Debt Financing Agreement with Stone Development Inc. ("Stone," a separate defendant that is not one of the appellants) and that because Abdiana’s claims against the B.S.H.N. Defendants are related to, rely upon, and are intertwined with the Private Debt Financing Agreement, the B.S.H.N. Defendants are entitled, though non-signatories, to enforce the arbitration clause in said agreement. In Point 2 of their appeal, B.S.H.N. Defendants contend that Abdiana and Defendant Navigator executed a written Consulting Fee Agreement that included an arbitration clause, and that this was enforceable not only by Navigator, but also by the remaining non-signatory B.S.H.N. Defendants (Bengtson, Snyder, and Heartland). We affirm.

Factual and Procedural Background

In April of 2014, Christina and Nicholas Abnos1 , the owners of Abdiana, reached

575 S.W.3d 758

out to Bengtson, the principal of Heartland, with whom they had worked in the past, to discuss obtaining a line of credit to use in property development. Bengtson undertook assisting the Abnoses in obtaining a source of private funding in the amount of $ 3,500,000. With the Abnoses' approval, Bengtson had Snyder assist him in this task.2 Through the B.S.H.N. Defendants, Abdiana began communicating with Stone, a secondary market lender based in California. The B.S.H.N. Defendants maintained that they had successfully closed loans with Stone in the past. Defendants then provided Abdiana a "Letter of Commitment" from Stone, which included the terms of the proposed loan, which required that Abdiana pay a $ 52,500 loan commitment fee, and which provided that Stone would refund the loan commitment fee if it did not fully fund the $ 3,500,000 credit facility within sixty days.

On May 27, 2014, prior to making any payments to Stone, Christina received an email from Bengtson which included a proposed (but unsigned) Consulting Fee Agreement to be executed by Abdiana (by Managing Member Nicholas Abnos) and Defendant Navigator (by Bengtson, as "Manager Consultant"). Bengtson also provided documentation purporting to show that Stone possessed enough funds to fulfill its role. After receiving this supporting information, Abdiana sent three wire transfers totaling the entire $ 52,500 loan commitment fee to Verlin Gradney (a separate defendant alleged to be a principal and trustee of Stone). These separate transfers began on May 30, 2014, with a transfer of $ 31,500; and were completed on June 4, 2014. The proposed Consulting Fee Agreement provided that Navigator would receive a 3% commission on any amounts loaned to Abdiana by any money lending sources introduced by Navigator; and also contained an arbitration provision governing any disputes.

On June 2, 2014, after sending the first wire transfer partly paying the loan commitment fee, Christina replied to Bengtson’s email with a proposed Consulting Fee Agreement attached, which had been revised and signed by Christina as Managing Member of Abdiana. Christina had crossed out an indemnification provision in the proposed Consulting Fee Agreement, and noted that this provision was intentionally deleted. Neither Bengtson, nor anyone else, signed the revised Consulting Fee Agreement on behalf of Navigator or the other B.S.H.N. Defendants.

Abdiana and Stone later executed a Private Debt Financing Agreement, which purportedly included an arbitration provision. The Private Debt Financing Agreement was not included with the motion to compel arbitration and does not appear to have been provided to the circuit court, and is not included in our legal file.

In September of 2015, after repeated requests to be provided the loan funding or have their loan commitment fee reimbursed, Abdiana was informed, during a conference call with Bengtson and representatives of Stone, that Stone was unable to fund the credit facility and was unable to refund the $ 52,500.

Abdiana filed the underlying action on May 6, 2016, and their First Amended Verified Petition for Damages on June 2, 2017. Abdiana brought claims for fraudulent misrepresentation, negligent misrepresentation, and civil conspiracy against

575 S.W.3d 759

the B.S.H.N. Defendants (the Appellants), and also against Stone, Gradney, and others. Abdiana also brought a count of professional negligence against Bengtson, Snyder, and Heartland; a breach of contract claim against Stone; and a claim for conversion against Gradney. The B.S.H.N. Defendants filed a motion to compel arbitration on January 22, 2018, which was denied by the trial court in its written order filed on May 29, 2018. This appeal followed.

Standard of Review

"The issue of whether arbitration should be compelled is a question of law subject to de novo review." State ex rel. Alst v. Harrell , 528 S.W.3d 442, 445 (Mo. App. W.D. 2017) (quoting Baker v. Bristol Care, Inc. , 450 S.W.3d 770, 774 (Mo. banc 2014) ). The parties do not dispute that the underlying case involves parties from separate states and that "[t]he Federal Arbitration Act (‘FAA’), 9 U.S.C. § 1 et seq. (2006), governs the applicability and enforceability of arbitration agreements in all contracts involving interstate commerce." Id. at 446 (quoting Eaton v. CMH Homes, Inc. , 461 S.W.3d 426, 431 (Mo. banc 2015) ). Although we defer to the FAA where it is in tension with Missouri law, "Missouri contract law applies to determine whether the parties have entered a valid agreement to arbitrate." State ex rel. Vincent v. Schneider , 194 S.W.3d 853, 856 (Mo. banc 2006). Our review of a court’s interpretation of an arbitration provision is a matter of law that we review de novo. Id. "The party asserting the existence of a valid and enforceable contract to arbitrate bears the burden of proving that proposition." Kohner Properties, Inc. v. SPCP Group VI, LLC , 408 S.W.3d 336, 342 (Mo. App. E.D. 2013).

Analysis

Before addressing the question of whether a valid agreement to arbitrate exists, we first examine whether the agreements at issue are properly before this Court. We note that "[e]xhibits attached to motions filed with the trial court are not evidence and are not self-proving." Bertocci v. Thoroughbred Ford, Inc. , 530 S.W.3d 543, 551 (Mo. App. W.D. 2017) (quoting Ryan v. Raytown Dodge Co. , 296 S.W.3d 471, 473 (Mo. App. W.D. 2009) ). Here the B.S.H.N. Defendants did not request oral argument or a hearing on their Motion to Compel Arbitration; and their Motion was not supported by affidavits.3 The circuit court did not hold a hearing on the Motion and thus neither of the purported agreements were offered into evidence. Observing that exhibits included in a motion to compel arbitration are not self-proving, the Ryan Court indicated:

Local Rule 33.5 of the Sixteenth Judicial Circuit provides that a party filing any motion shall serve and file at the same time suggestions and any affidavits to be considered in support of the motion.... [A]n appellate court cannot accept counsels' statements as a substitute for record proof even if there is no reason to doubt their accuracy.

296 S.W.3d at 473. In Ryan , the appellant’s failure to prove (through a hearing, affidavit, or other method) that the purported arbitration agreement attached to its motion was the actual contract between the two parties was fatal to its claims on appeal. Id.

575 S.W.3d 760

Here, the B.S.H.N. Defendants did provide a Request for Admissions which confirmed that the Consulting Fee Agreement is an accurate copy of the agreement that is being contested. A request for admissions may be used to establish the validity of an exhibit. AJM Packaging Corp. v. Crossland Const. Co. , 962 S.W.2d 906, 910 (Mo. App. S.D. 1998). Therefore, the record is sufficient to consider whether the B.S.H.N. Defendants are entitled to compel arbitration under the terms of the Consulting Fee Agreement.

However, the B.S.H.N. Defendants' Request for Admissions did...

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1 practice notes
  • EM Med., LLC v. Stimwave LLC, ED 108965
    • United States
    • Court of Appeal of Missouri (US)
    • June 15, 2021
    ...take effect as a contract until signed by all the parties named") (quotation omitted); see also Abdiana Properties, Inc. v. Bengtson , 575 S.W.3d 754, 760-61 (Mo. App. W.D. 2019) and Baier , 420 S.W.3d at 738-39 (both holding a trial court could have reasonably concluded the defendant's sig......
1 cases
  • EM Med., LLC v. Stimwave LLC, ED 108965
    • United States
    • Court of Appeal of Missouri (US)
    • June 15, 2021
    ...take effect as a contract until signed by all the parties named") (quotation omitted); see also Abdiana Properties, Inc. v. Bengtson , 575 S.W.3d 754, 760-61 (Mo. App. W.D. 2019) and Baier , 420 S.W.3d at 738-39 (both holding a trial court could have reasonably concluded the defendant's sig......

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