Holm v. Menard, Inc.

• Decision Date: 16 February 2021
• Docket Number: WD 83862
• Citation: 618 S.W.3d 669
• Parties: David HOLM, Respondent, v. MENARD, INC., Appellant.
• Court: Missouri Court of Appeals

618 S.W.3d 669

David HOLM, Respondent,

v.MENARD, INC., Appellant.

WD 83862

Missouri Court of Appeals, Western District.

Opinion filed: February 16, 2021

Andrea M. Knernschield, for Respondent.

Alex R. Meyers, for Appellant.

Division Two: W. Douglas Thomson, Presiding Judge, Lisa White Hardwick, Judge and Edward R. Ardini, Jr., Judge

W. DOUGLAS THOMSON, JUDGE

Menard, Inc. ("Menards") appeals the denial of its motion to compel arbitration and stay the trial court proceedings ("Motion to Compel") brought against it by David Holm ("Holm"). On appeal, Menards claims that the trial court erred in denying its Motion to Compel because: (1) the notice provision in Missouri's Uniform Arbitration Act ("MUAA") is inapplicable and cannot invalidate an arbitration agreement that is covered by the Federal Arbitration Act ("FAA"); (2) the parties have a valid and binding arbitration agreement which Holm agreed to when he purchased cabinets from Menards; (3) the arbitration agreement is not unconscionable as it is authorized by Missouri law; (4) Holm waived his right to a jury trial per the arbitration agreement; and (5) Holm admitted to the existence and validity of the contract containing the arbitration agreement in his petition and is bound by his admissions made therein. We reverse and remand with instructions to stay the pending case and compel arbitration.

Factual and Procedural History

The material facts are not in dispute. On November 23, 2018, Holm entered into a contract ("Contract") to purchase kitchen cabinets with Menards. The two-page Contract contains an arbitration agreement ("Arbitration Agreement") located on the bottom of each page. The Arbitration Agreement is at the end of a paragraph which begins, "READ THIS CONTRACT CAREFULLY," and provides:

Purchaser agrees that any and all controversies or claims arising out of or relating to this contract, or the breach thereof shall be settled by binding arbitration administered by the American Arbitration Association under its applicable Consumer or Commercial Arbitration Rules. Purchaser agrees that all arbitrators selected shall be attorneys. This provision shall supersede any contrary rule or provision of the forum state.

The Arbitration Agreement is followed by the following language, "YOUR PURCHASE OF THE PRODUCT ON THIS CONTRACT CONSTITUTES YOUR AGREEMENT TO ALL TERMS AND CONDITIONS STATED ABOVE."

On October 25, 2019, Holm filed a petition for breach of contract, violations of the Missouri Merchandising Practices Act ("MMPA"), and Negligence against Menards alleging it has not performed its obligations under the Contract by failing to deliver the correct cabinets to Holm. In response, Menards filed its Motion to Compel alleging that Holm's claims fall within the scope of the Arbitration Agreement contained in the Contract. Holm's filed an opposition to the Motion to Compel in which he claimed the Arbitration Agreement is unenforceable as it does not comply with the MUAA's notice requirement, that he did not consent to it, that it is unconscionable, and that the Contract does not contain a provision whereby Holm waived his right to a jury trial. In its reply suggestions in support of its Motion to Compel, Menards asserted that no notice provision is required as the MUAA is preempted by the FAA; that Holm agreed to the Arbitration Agreement when he purchased the cabinets; the Arbitration Agreement is not unconscionable as the provisions challenged by Holm are expressly permitted by law; and that the parties waived their right to a jury trial by operation of the Arbitration Agreement.

On May 14, 2020, the trial court held a hearing on Menards' Motion to Compel. The following day, the trial court denied Menards' Motion to Compel, by docket entry, stating only, "Based upon the pleadings, proof adduced, and the arguments of counsel Defendant's Motion to Compel Arbitration is denied." Menards appeals.¹

Standard of Review

Where a party disputes the existence of the contract of arbitration, the trial court must determine that issue based on the evidence before it. Greene v. Alliance Automotive, Inc. , 435 S.W.3d 646, 648-49 (Mo. App. W.D. 2014). Our review of the trial court's determination on the existence of an arbitration agreement is analogous to a court-tried case which requires that we defer to the trial court's assessment of evidence on contested issues of fact. Id. at 649. " ‘This court will affirm the judgment of the motion court unless there is no substantial evidence to support it, unless it is against the weight of the evidence, or unless it erroneously declares or applies the law.’ " Latenser v. Tarmac Int'l, Inc. , 549 S.W.3d 461, 463 (Mo. App. W.D. 2018) (citing Murphy v. Carron , 536 S.W.2d 30, 32 (Mo. banc 1976) ).

" ‘Whether a motion to compel arbitration should have been granted is a question of law, which we review de novo. ’ " Id. (citation omitted). "Our review of the trial court's interpretation of an arbitration provision is also de novo , as arbitration is contractual, and contract interpretation is a question of law." Id.

Here, Holm frames his challenges to the Arbitration Agreement as factual disputes of its existence and, therefore, subject to review pursuant to Murphy. 536 S.W.2d at 32. However, our analysis of the issues presented by all of Holm's arguments, reveal that they raise questions of law and not factual disputes. Accordingly, a de novo standard of review is appropriate. TD Auto Finance, LLC v. Bedrosian , 609 S.W.3d 763, 767-68 (Mo. App. E.D. 2020).

Analysis

As the trial court did not specify its reasons for denying Menards' Motion to Compel, Menards addresses each argument set forth by Holm in the trial court. On appeal, Menards claims that the trial court erred in denying its Motion to Compel because: (1) the notice provision in the MUAA is inapplicable and cannot invalidate the Arbitration Agreement as it is covered by the FAA; (2) the parties have a valid and binding Arbitration Agreement which Holm agreed to when he purchased kitchen cabinets from Menards; (3) the Arbitration Agreement is not unconscionable as it is authorized by Missouri law; (4) Holm waived his right to a jury trial per the Arbitration Agreement; and (5) Holm admitted to the existence and validity of the Contract containing the Arbitration Agreement and is bound by his admissions made therein. For ease of addressing the points, they are taken out of order.

Points II and V

In Point II, Menards argues that the trial court erred in denying its Motion to Compel because the parties have a valid and binding Arbitration Agreement. Menards claims that Holm agreed to the Contract's terms, including the Arbitration Agreement, when he purchased the cabinets. In Point V, Menards claims that the trial court erred in denying its Motion to Compel because Holm admitted the existence and validity of the Contract and is bound to the admissions stated in his petition. We agree with both points.

"Arbitration is a matter of contract. Parties can agree to arbitrate, but there must be a contract in the first instance." Id. at 768. Accordingly, we must first address "whether the parties formed a valid contract that binds them to arbitrate." Id. " ‘The essential elements of any contract, including one for arbitration are offer, acceptance, and bargained for consideration.’ " Id. (citation omitted). In determining whether the essential elements are satisfied, we look to the whole contract. Id. at 769 ; see also Eaton v. CMH Homes, Inc. , 461 S.W.3d 426, 429 (Mo. banc 2015) ("[C]ourts will look to a contract ... as a whole to determine whether consideration is adequate rather than looking solely at the consideration given for the agreement to arbitrate."). Our inquiry is not limited to the arbitration agreement. Id. " ‘As long as the contract as a whole [establishes the essential elements of a contract], an arbitration clause in the contract will not be invalidated for a lack of [an essential element.]’ " Id. (emphasis added) (citation omitted).

Here, it is clear the parties have a valid, enforceable contract. There is no dispute that Holm was offered the Contract containing the Arbitration Agreement, which is found on both pages of the Contract. With regard to the second requisite element for a valid contract, Menards claims that Holm accepted the Contract and the included Arbitration Agreement when he purchased the cabinets. Holm's assent to the whole Contract is further evidenced by his own testimony that he read the Contract before he paid the amount due.

Holm contends that he did not purchase or accept the model of cabinetry that is referenced in the Contract and, therefore, the Contract is invalid, including the Arbitration Agreement. Holm claims that Menards did not perform its obligations under the Contract by delivering the correct cabinetry. Holm's argument as to whether the Contract is invalid due to an alleged mistake in its terms or the lack of performance of a party are not proper issues for determining whether the parties formed a valid contract that binds them to arbitrate. Here, the inquiry is limited to whether the essential elements of a contract are satisfied. The issues raised by Holm are reserved for arbitration.

The express terms of the Arbitration Agreement leave all questions of the breach of the Contract to the arbitrator. Therefore, whether Menards' alleged lack of performance amounted to a breach of the contract is a matter the agreement of the parties leaves to the arbitration forum. Notably, the same allegations of Menards' non-performance are set forth in Holm's petition in support of his count for breach of contract.

As to the third element, Holm does not challenge that there was bargained for consideration. Accordingly, the essential elements of offer, acceptance and consideration were satisfied rendering the Contract, including the Arbitration Agreement, valid and enforceable.

With regard to Point V, because we find that the Contract is valid and enforceable as a...