Duncan v. Titlemax of Mo., Inc.

• Decision Date: 25 August 2020
• Docket Number: WD 83330
• Citation: 607 S.W.3d 243
• Parties: Glenn James DUNCAN, Jr., Respondent, v. TITLEMAX OF MISSOURI, INC., Appellant.
• Court: Missouri Court of Appeals

607 S.W.3d 243

Glenn James DUNCAN, Jr., Respondent,

v.TITLEMAX OF MISSOURI, INC., Appellant.

WD 83330

Missouri Court of Appeals, Western District.

Opinion filed: August 25, 2020

Jon M. Krebbs, Liberty, for Respondent.

Bruce B. Brown, Kearney, Co-counsel for Respondent.

Anthony J. Durone, Kansas City, for Appellant.

Division One: Thomas H. Newton, Presiding Judge, Mark D. Pfeiffer, Judge and Edward R. Ardini, Jr., Judge

EDWARD R. ARDINI, JR., JUDGE

Glenn Duncan ("Duncan") filed suit in the Circuit Court of Clay County against TitleMax of Missouri, Inc. ("TitleMax") alleging conversion of his vehicle. TitleMax filed a Motion to Compel Arbitration and Stay Litigation ("Motion to Compel Arbitration"), which was denied by the trial court. TitleMax appeals from that denial. We affirm.

I. Factual and Procedural Background

On December 12, 2018, Travis Eacret ("Eacret"), Duncan's grandson, obtained a consumer loan from TitleMax using the title to a 2004 Pontiac Bonneville as security. The vehicle was coowned by Eacret and Duncan. Eacret defaulted on the loan, and TitleMax repossessed the vehicle.

On May 10, 2019, Duncan filed a petition alleging conversion of the vehicle and seeking punitive damages. TitleMax filed a Motion to Compel Arbitration, alleging that Duncan had accompanied Eacret to TitleMax on December 12, 2018, and had signed a Co-Owner's Consent that included an arbitration provision stating, in relevant part:

Licensee has a policy of arbitrating all claims, demands, and disputes which cannot be resolved in a small claims tribunal, including the scope and validity of this Arbitration Agreement and any right Co-Owner may have to participate in an alleged class action (hereinafter, "dispute(s)"). Co-Owner agrees that The Federal Arbitration Act governs this arbitration provision.

The name Jim Duncan appears on the signature line with the date 12/12/18. In further support of its Motion to Compel Arbitration, TitleMax submitted an affidavit from the general manager of the Claycomo TitleMax store ("Manager"), which stated, in relevant part:

A person who had accompanied Mr. Eacret to the Store on December 12, 2018, electronically signed the Co-Owner's Consent as "Jim Duncan." In accordance with the Store's general practice, TitleMax employees, including myself, always verify the identification of persons who execute Co-Owner Consent and Grant of Security Interest forms before those forms are signed. Thus, the Jim Duncan who signed the Co-Owner Consent at the Store on December 12, 2018, had his identity verified before doing so.

In his pleadings, Duncan denied having ever been to the TitleMax store and asserted that he "never signed anything[.]" In opposition to the Motion to Compel Arbitration, Eacret supplied an affidavit stating that Duncan did not accompany him to TitleMax on December 12, 2018:

On or about December 12, 2018, I went to the TitleMax office in Claycomo, Missouri to obtain a loan on a 2004 Pontiac vehicle which I co-own with my grandfather, Glenn Duncan.... [Manager] told me that I had to have my grandfather come in and sign some papers. I told her that my grandfather would not sign. She went ahead and gave me the loan and told me to have my grandfather come in within the next few days and sign the paperwork or she would get into some real trouble. I went home and told my grandfather that I had gotten the loan money and he needed to go up and sign the papers. He told me he wasn't going to sign any papers.

... My grandfather was never at TitleMax on the day I got the loan and I did not nor did anybody with me have my grandfather's identification.

... Several days later [Manager] called me and asked to talk to my grandfather. She talked to him and I heard him tell her that he wasn't going to sign any papers.

The trial court denied TitleMax's Motion to Compel Arbitration, memorializing the denial in a docket entry. TitleMax appeals from that denial.¹

II. Standard of Review

Issues concerning the arbitrability of a dispute are reviewed de novo "because ‘[w]hether a dispute is covered by an arbitration provision is relegated to the courts as a question of law.’ " Theroff v. Dollar Tree Stores, Inc. , 591 S.W.3d 432, 436 (Mo. banc 2020) (quoting Dunn Indus. Grp., Inc. v. City of Sugar Creek , 112 S.W.3d 421, 428 (Mo. banc 2003) ). We also review de novo whether there exists an enforceable delegation clause within an arbitration agreement. Id.

If there is a factual dispute about whether an arbitration agreement exists, the trial court "shall proceed summarily to the determination of the issue so raised and shall order arbitration if found for the moving party; otherwise, the application shall be denied. § 435.355.1, RSMo.² " ‘[I]ssues relating to the existence of an arbitration agreement are factual and require our deference to the trial court's findings.’ " Baier v. Darden Restaurants , 420 S.W.3d 733, 736 (Mo. App. W.D. 2014) (quoting Katz v. Anheuser-Busch, Inc. , 347 S.W.3d 533, 539 (Mo. App. E.D. 2011) ). "As such, in an appeal from a circuit court's order overruling a motion to compel arbitration when there is a dispute as to whether the arbitration agreement exists, the circuit court's judgment will be affirmed 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." Theroff , 591 S.W.3d at 436. When no factual findings are made by the trial court, the facts "shall be considered as having been found in accordance with the result reached." Rule 73.01(c).³

III. Discussion

TitleMax raises three points on appeal, all asserting that the trial court erred in denying its Motion to Compel Arbitration. In its first point, TitleMax alleges that, because Duncan did not specifically challenge the delegation provision, "threshold questions of arbitrability should have been referred to the arbitrator[.]" In its second point, TitleMax claims that the trial court's order was not supported by substantial evidence, and in Point III, TitleMax asserts that the trial court's order was against the weight of the evidence. We address each point in turn.

Point I – Delegation Provision

In Point I, TitleMax claims that the trial court "erred by refusing to compel arbitration because the Arbitration Agreement contained a broad delegation provision, reserving all threshold disputes about the formation, existence, scope, and validity of the Arbitration Agreement for the arbitrator to decide, which Duncan never specifically challenged."

"Parties can agree to arbitrate ‘gateway’ questions of ‘arbitrability,’ including whether the parties have agreed to arbitrate a given controversy." Theroff , 591 S.W.3d at 439 (citing State ex rel. Newberry v. Jackson , 575 S.W.3d 471, 474 (Mo. banc 2019) ). "Contractual arrangements to arbitrate gateway questions of arbitrability occur when the parties include a ‘delegation provision’ in the arbitration agreement." Id. (citing Rent-A-Ctr, W., Inc. v. Jackson , 561 U.S. 63, 68-69, 130 S.Ct. 2772, 177 L.Ed.2d 403 (2010) ). " ‘[A] delegation provision is an additional, severable agreement to arbitrate threshold issues that is valid and enforceable unless a specific challenge is levied against the delegation provision.’ " Id. (quoting State ex rel. Pinkerton v. Fahnestock , 531 S.W.3d 36, 50 (Mo. banc 2017) (additional citation omitted)). When determining whether the parties have agreed to delegate threshold issues of arbitrability, " ‘[c]ourts should not assume that the parties agreed to arbitrate arbitrability unless there is clea[r] and unmistakabl[e] evidence that they did so.’ " Id. (quoting Fahnestock , 531 S.W.3d at 43 ; Rent-A-Ctr., W., Inc. , 561 U.S. at 69 n.1, 130 S.Ct. 2772 ).

TitleMax argues that Duncan was required to specifically challenge the validity of the delegation provision and his failure to do so necessitated the trial court, as a matter of law, to compel arbitration for resolution by the arbitrator of threshold issues of arbitrability. It is true that Duncan did not specifically challenge the delegation provision. Instead, the gravamen of Duncan's argument is that he did not execute the Co-Owner's Consent or the arbitration agreement contained therein. In other words, Duncan challenges the existence of the arbitration agreement between him and TitleMax. Thus, it was not necessary for Duncan to specifically challenge the delegation provision as a "challenge to the existence of the mutual agreement in its entirety because of a lack of assent necessarily challenges the existence of any delegation provision it contains." Theroff , 591 S.W.3d at 439.⁴ As a result, we reject TitleMax's premise that Duncan's failure to specifically challenge the delegation provision required the trial court to give effect to that provision by compelling arbitration and permitting threshold disputes to be addressed by the arbitrator.

Resolution by the trial court of Duncan's challenge to the existence of an agreement to arbitrate between himself and TitleMax was a prerequisite to compelling arbitration. See § 435.355.1, RSMo ; Theroff , 591 S.W.3d at 439 ("To the extent Newberry , Soars v. Easter Seals Midwest , 563 S.W.3d 111 (2018), and Pinkerton can be read to suggest one can be forced into arbitration by a contract to which one is a stranger, this interpretation is incorrect."). Thus, it was proper for the trial court to address Duncan's claim that no arbitration agreement existed between him and TitleMax as any delegation to the arbitrator was necessarily dependent on such an agreement. See Theroff , 591 S.W.3d at 437 ("Unlike the standard scenario in which there is no dispute about whether a party signed an arbitration agreement, when a party disputes signing, the court must first decide the existence of an agreement to arbitrate.").

Point I denied.

Points II and III – Existence of an agreement to arbitrate

In Point II, TitleMax challenges whether there was substantial evidence supporting the trial court's order denying...