Bertocci v. Thoroughbred Ford, Inc.
Decision Date | 26 September 2017 |
Docket Number | WD 80151 |
Citation | 530 S.W.3d 543 |
Parties | Darlene BERTOCCI, Respondent, v. THOROUGHBRED FORD, INC., and Ryan Brehm, Appellants. |
Court | Missouri Court of Appeals |
Tiffannie M. Kennedy, for Respondent.
Arnold R. Day, Jr., Kansas City, for Appellants.
Before Division Four: Mark D. Pfeiffer, Presiding Judge, Victor C. Howard, Judge and Lisa White Hardwick, Judge
Thoroughbred Ford, Inc. and Ryan Brehm appeal from the trial court's order denying their motion to stay proceedings and compel arbitration. The order is reversed, and the case is remanded.
On December 15, 2014, Darlene Bertocci signed a Retail/Lease Buyer's Order to purchase a 2014 Ford Edge from Thoroughbred Ford. The Buyer's Order, a one-page, two-sided form contract, contained the following provision in bold print at the bottom of the front page next to Ms. Bertocci's signature, "THIS CONTRACT CONTAINS A BINDING ARBITRATION PROVISION WHICH MAY BE ENFORCED BY THE PARTIES." On the back of the agreement, the following provision was set out, in pertinent part:
On March 2, 2016, Ms. Bertocci filed a petition against Thoroughbred Ford and Ryan Brehm, an employee of the dealership, (collectively Defendants) asserting claims for fraud, negligence, negligent misrepresentation, and violations of the Missouri Merchandising Practices Act (MMPA) arising out of her purchase of the vehicle. She alleged that Defendants made several misrepresentations to her and on her credit application regarding her financing of the car for her daughter-in-law. Specifically, she alleged that Defendants misrepresented to her that she would never be financially responsible for the vehicle, her daughter-in-law would not be able to cease making monthly payments and would be the new owner in twelve months, and her credit profile was strong enough to afford the vehicle. She alleged that she reasonably relied on such misrepresentations in making the purchase and that, as a result of such misrepresentations, she suffered damages including the loss of use of the car, damage to her credit score and credit worthiness, an outstanding balance due on the repossessed vehicle, embarrassment, humiliation, frustration, destruction of family relations, and mental and emotional pain and suffering.
Defendants filed a motion to stay proceedings and compel arbitration. They asserted that Ms. Bertocci agreed to be bound by an arbitration provision contained in the Buyer's Order attached to their motion.
Ms. Bertocci filed suggestions and supplemental suggestions opposing Defendants' motion to compel asserting six different reasons why the arbitration clause in the Buyer's Order was unenforceable. She argued that (1) the arbitration clause lacked mutuality of consideration and the promise to arbitrate was illusory; (2) the arbitration provision was void because she was fraudulently induced into signing the Buyer's Order; (3) the arbitration provision was unconscionable; (4) her claims did not fall within the scope of the arbitration provision; (5) Defendants waived their right to arbitrate; and (6) she did not knowingly and voluntarily waive her right to a jury trial.
Following a hearing, the trial court denied Defendant's motion to stay proceedings and compel arbitration without explanation. This appeal by Defendants followed.
Defendants contend that the trial court erred in denying their motion to compel arbitration because the legal grounds asserted by Ms. Bertocci for finding the arbitration provision unenforceable did not apply. They assert that the arbitration agreement was valid and enforceable, all of her claims were within its scope, and they did not waive their right to arbitrate.
The judgment of the trial court will be affirmed on appeal unless there is no substantial evidence to support it, it is against the weight of the evidence, or it erroneously declares or applies the law. Eaton v. CMH Homes, Inc., 461 S.W.3d 426, 431 (Mo. banc 2015). Whether the trial court should have granted a motion to compel arbitration is a question of law that is reviewed de novo. Id. When faced with a motion to compel arbitration, the court determines whether a valid arbitration agreement exists and, if so, whether the specific dispute falls within the scope of the agreement. Ellis v. JF Enters., LLC, 482 S.W.3d 417, 419 (Mo. banc 2016). This opinion will address the defenses raised by Ms. Bertocci in the context of determining whether the arbitration agreement was valid and enforceable under applicable laws.
Ms. Bertocci raised several issues concerning the existence and validity of the arbitration agreement. The arbitration clause in the Buyer's Order stated that it is subject to the Federal Arbitration Act (FAA).1 "[T]he FAA ... governs what courts may consider in determining whether an agreement to arbitrate is enforceable." Id. Under the FAA, an arbitration agreement is severable and must be considered separate and apart from the rest of the contract. Id. An arbitration provision's validity is subject to initial court determination while the validity of the contract as a whole (if the arbitration provision is valid) is for the arbitrator to decide. Id. at 420-423 (citing Nitro-Lift Techs., L.L.C. v. Howard, 568 U.S. 17, 21, 133 S.Ct. 500, 184 L.Ed.2d 328 (2012) ; Rent-A-Ctr., W., Inc. v. Jackson, 561 U.S. 63, 70-71, 130 S.Ct. 2772, 177 L.Ed.2d 403 (2010) ; Buckeye Check Cashing, Inc. v. Cardegna, 546 U.S. 440, 445, 126 S.Ct. 1204, 163 L.Ed.2d 1038 (2006) ; Prima Paint Corp. v. Flood & Conklin Mfg. Co., 388 U.S. 395, 403-404, 87 S.Ct. 1801, 18 L.Ed.2d 1270 (1967) ).
Under the FAA, arbitration agreements are "valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract." 9 U.S.C. § 2 (2009). "[T]his provision allows arbitration agreements ‘to be invalidated by generally applicable contract defenses, such as fraud, duress, or unconscionability, but not by defenses that apply only to arbitration or that derive their meaning from the fact that an agreement to arbitrate is at issue.’ " Eaton, 461 S.W.3d at 432 (quoting AT&T Mobility LLC v. Concepcion, 563 U.S. 333, 131 S.Ct. 1740, 179 L.Ed.2d 742 (2011) ). " ‘As such, arbitration agreements are tested through a lens of ordinary state-law principles that govern contracts [.]’ " Id. (quoting Robinson v. Title Lenders, Inc., 364 S.W.3d 505, 515 (Mo. banc 2012) ). Thus, "a Missouri court can declare an arbitration agreement ‘unenforceable if a generally applicable contract defense, such as fraud, duress, or unconscionability, applie[s] to concerns raised about the agreement.’ " Id. (quoting Robinson, 364 S.W.3d at 515 ).
Ms. Bertocci first asserted that the arbitration agreement was void because it lacked mutuality of consideration and was illusory. She argued that under a Retail Installment Contract and Security Agreement executed at the time of the sale and construed with the Buyer's Order, Defendants could unilaterally divest themselves of their obligation to arbitrate and instead pursue judicial or self-help remedies while she was bound by the arbitration provision. In making such argument, Ms. Bertocci referenced the Retail Installment Contract and set out the applicable provision in her suggestions and supplemental suggestions in opposition to the motion to compel. The Buyer's Order and Ms. Bertocci's credit application were introduced into evidence at the hearing on the motion to compel. The Retail Installment...
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