Lopez v. GMT Auto Sales, Inc.

Decision Date06 December 2022
Docket NumberED 110059
Citation656 S.W.3d 315
Parties Bertha LOPEZ, et al., Respondents, v. GMT AUTO SALES, INC., and Prestige Financial Services, Inc., Appellants.
CourtMissouri Court of Appeals

For Appellant, GMT Auto Sales, Inc.: Donald H. Sanders, Dillon C. Sanders, 8011 Clayton Rd., Ste. 300, St. Louis, MO 63117.

For Appellant, Prestige Financial Services, Inc.: Michael J. Tolles, 190 Carondelet Plaza, Ste. 600, St. Louis, MO 65105.

For Respondents: Matthew P. O'Grady, 110 E. Lockwood Ave., St. Louis, MO 65119, Joseph F. Yeckel, 8909 Ladue Rd., St. Louis, MO 63124.

KURT S. ODENWALD, Presiding Judge

Introduction

GMT Auto Sales, Inc. ("GMT") and Prestige Financial Services, Inc. ("Prestige") (collectively, "Appellants") appeal from the circuit court's judgment denying their motion to stay proceedings and compel arbitration following an evidentiary hearing in which Bertha Lopez ("Lopez") contested the existence of an agreement to arbitrate. Appellants raise four points on appeal in which they assert the circuit court either misapplied the law in denying the motion to compel arbitration or entered a judgment that was against the weight of the evidence. We hold that the circuit court misapplied the law in determining that Lopez did not assent to arbitration because the facts adduced at the evidentiary hearing demonstrate that Lopez signed the arbitration agreement. The record further lacks evidence that Lopez was fraudulently induced to sign the arbitration agreement. However, because we find GMT waived its right to compel arbitration by acting inconsistently with that right through substantially litigating various claims for seventeen months prior to seeking to compel arbitration under the terms of its anti-waiver provisions, we affirm the circuit court's denial of GMT's motion.

Factual and Procedural History

In May 2019, Lopez and her husband and third-party defendant, Anastacio Humberto Ramos ("Ramos"), attempted to purchase a vehicle from GMT. Lopez and Ramos signed a Retail Installment Contract containing an arbitration provision and also signed a separate Agreement to Arbitrate containing an anti-waiver provision (collectively, the "Arbitration Agreements"). Lopez and Ramos traded in their car, which GMT later resold, and drove the new vehicle from the lot believing they had purchased it. GMT later repossessed the vehicle and informed Lopez and Ramos that their car loan, intended to be financed through Prestige, did not get finalized.

Lopez filed her original petition in June 2019, alleging multiple counts against GMT and Prestige, specifically for fraud, violations of the Missouri Merchandising Practices Act (the "MMPA"), and conversion arising out of a vehicle transaction. Lopez maintained that GMT and Prestige engaged in an unlawful "yo-yo" or "spot-delivery" sale.1 In August 2019, GMT answered the petition and raised affirmative defenses, including the Agreement to Arbitrate. GMT also filed a petition against Ramos, alleging two counts for breach of contract for Ramos's failure to indemnify and hold GMT harmless under the terms of the signed Employment and Income Verification Agreement ("Verification Agreement") and Conditional Delivery Agreement. In its answer to Lopez's petition, Prestige denied receiving assignment of the loan.

The parties engaged in discovery, litigated discovery disputes, and filed summary judgment motions. Lopez voluntarily dismissed her MMPA claim against Prestige due to an alleged MMPA exemption, but later sought leave to amend her pleadings and file the First Amended Petition to reinstate the MMPA count against Prestige. The First Amended Petition is identical to the original petition. Concurrently, Ramos sought leave to file Counterclaims and Crossclaims against GMT and Prestige, alleging the same three claims as Lopez. Over opposition, and with some motions for partial summary judgment pending, the circuit court in December 2020 permitted Lopez to file the First Amended Petition and permitted Ramos to file his Counterclaims and Crossclaims.

The following month, GMT filed its answers to the First Amended Petition and Ramos's Counterclaims. At that time, GMT also moved to stay proceedings and compel arbitration. Prestige joined in GMT's motion. The circuit court conducted an evidentiary hearing on whether a valid agreement to arbitrate existed. During the evidentiary hearing, Lopez testified that she and Ramos signed the Arbitration Agreements. Lopez testified that GMT's salesperson, Dennis Schwartz ("Schwartz"), held the documents throughout the transaction, did not give her or Ramos the documents, but instead folded back the pages and directed them where to sign on each page. Lopez testified that Schwartz rushed them through the sales process, did not explain the contents of the Arbitration Agreements, ignored her questions, and made sexist comments about her to Ramos. Schwartz also provided testimony, which the circuit court did not find credible.

The circuit court subsequently entered its order and judgment denying GMT's motion to stay proceedings and compel arbitration (the "Judgment"). In its written findings of fact and conclusions of law, the circuit court found that Lopez and Ramos signed the Arbitration Agreements. However, the circuit court determined that no agreement to arbitrate was reached because Lopez was not allowed to read the documents, no one from GMT explained the documents to Lopez or Ramos, and Lopez's questions during the sales process were ignored. GMT appealed from the Judgment, and Prestige joined in the appeal. This Court stayed the appeal pending the decision of the Supreme Court of Missouri in Bridgecrest Acceptance Corp. v. Donaldson, 648 S.W.3d 745 (Mo. banc 2022).

Points on Appeal

Appellants raise four points on appeal. Point One argues the circuit court erred in issuing the Judgment by misapplying the law in that Missouri presumes parties have knowledge of contracts they sign and may not avoid the consequences of the agreement because they did not know or understand what they were signing. Point Two maintains the circuit court erred in issuing the Judgment because the Arbitration Agreements contained severable delegation provisions, which required compelling arbitration in that (a) the Federal Arbitration Act ("FAA") requires enforcement of delegation provisions, (b) Lopez and Ramos did not specifically challenge the arbitration provision requiring the contract's validity to be determined by an arbitrator, and (c) the Agreement to Arbitrate requires all disputes between the parties to be submitted to binding arbitration. Point Three asserts the Judgment was against the weight of the evidence because Lopez affirmatively testified that an agreement to arbitrate existed between herself and GMT. Point Four claims the Judgment was against the weight of the evidence in that evidence established the essential elements of an agreement to arbitrate, specifically that (a) the Agreement to Arbitrate was valid and the parties’ claims fell within its scope, (b) there was offer and acceptance, and (c) the Agreement to Arbitrate contained mutual promises supplying the necessary consideration.

Standard of Review

Lopez contested the existence of an agreement to arbitrate, and the circuit court conducted an evidentiary hearing pursuant to Section 435.3552 before issuing its Judgment. See Bridgecrest, 648 S.W.3d at 751.

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.

Duncan v. TitleMax of Missouri, Inc., 607 S.W.3d 243, 247 (Mo. App. W.D. 2020) (quoting Theroff v. Dollar Tree Stores, Inc., 591 S.W.3d 432, 436 (Mo. banc 2020) ). "[I]ssues relating to the existence of an arbitration agreement are factual and require our deference to the [circuit] court's findings." Id. (quoting Baier v. Darden Rests., 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) ). Additionally, we will affirm the circuit court's ruling "if it is cognizable under any theory, regardless of whether the reasons advanced by the trial court are wrong or insufficient." EM Med., LLC v. Stimwave LLC, 626 S.W.3d 899, 908 (Mo. App. E.D. 2021) (internal quotation omitted). However, we review de novo questions of law, including the interpretation of contracts. Bridgecrest, 648 S.W.3d at 751 (citing Theroff, 591 S.W.3d at 436 ).

Discussion
I. Point One—Misapplication of Law3

"Missouri has long recognized that a person signing an agreement has a duty to read it." Farmland Indus., Inc. v. Bittner, 920 S.W.2d 581, 584 (Mo. App. W.D. 1996) (citing Sanger v. Yellow Cab Co., Inc., 486 S.W.2d 477, 481 (Mo. banc 1972) ). "Missouri law presumes that a party had knowledge of the contract he or she signed; and those who sign a contract have a duty to read it and may not avoid the consequences of the agreement on the basis that they did not know what they were signing." Bertocci v. Thoroughbred Ford, Inc., 530 S.W.3d 543, 553 (Mo. App. W.D. 2017) (quoting Grossman v. Thoroughbred Ford, Inc., 297 S.W.3d 918, 922 (Mo. App. W.D. 2009) ).

Here, the parties on appeal acknowledge that "[a] signer's failure to read and understand a contract is not, without fraud or the signer's lack of capacity to contract, a defense to the contract." Chochorowski v. Home Depot U.S.A., 404 S.W.3d 220, 228 (Mo. banc 2013) (citing Robinson v. Title Lenders, Inc., 364 S.W.3d 505, 509 n.4 (Mo. banc 2012) ) (additional citations omitted); Repair Masters Constr., Inc. v. Gary, 277 S.W.3d 854, 858 (Mo. App. E.D. 2009) (internal citation omitted) ("The failure to read a document prior to signing it is not a defense, and does not make a contract voidable,...

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