Whitney v. Alltel Communications, Inc.

• Decision Date: 01 November 2005
• Docket Number: No. WD 64196.,WD 64196.
• Citation: 173 S.W.3d 300
• Court: Missouri Supreme Court
• Parties: Jerry WHITNEY, et al., Respondents, v. ALLTEL COMMUNICATIONS, INC., Appellant.

173 S.W.3d 300

Jerry WHITNEY, et al., Respondents, v. ALLTEL COMMUNICATIONS, INC., Appellant.

No. WD 64196.

Missouri Court of Appeals, Western District.

July 5, 2005.

Motion for Rehearing and/or Transfer to Supreme Court Denied August 30, 2005.

Application for Transfer Denied November 1, 2005.

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Brant M. Laue, Chadler E. Colgan, Co-Counsel, Kansas City, MO, James K. Lowry, Co-Counsel, St. Louis, MO, Matthew D. Turner, Co-Counsel, Jefferson City, MO, for appellants.

Matthew A. Clement, Timothy W. Van Ronzelen, Co-Counsel, Thomas G. Pirmantgen, Co-Counsel, Edward D. Robertson, Jr., Co-Counsel, Jefferson City, MO, Charles F. Speer, Co-Counsel, Overland Park, KS, for respondents.

Before ROBERT G. ULRICH, Presiding Judge, JAMES M. SMART, Jr., Judge and JOSEPH M. ELLIS, Judge.

JOSEPH M. ELLIS, Judge.

Alltel Communications, Inc. appeals from an order entered by the Circuit Court of Cole County denying its motion to compel arbitration and to dismiss or stay the proceedings in a civil action brought against it by Jerry L. Whitney. For the following reasons, we affirm the trial court's decision.

Whitney is a wireless telephone customer of Alltel and has been since 1995. On November 27, 2002, Whitney filed a petition in the Circuit Court of Cole County asserting that Alltel had violated Missouri's Merchandising Practices Act, §§ 407.010 et seq.,¹ by improperly including a line item charge of $0.88 per month for a "Regulatory Cost Recovery Fee" on its billing statements to him in a manner that deceptively implied that it was a governmentally-mandated tax or charge. Whitney also asserted a claim of unjust enrichment based upon the same alleged conduct and sought certification to pursue the matter as a class action.²

Subsequently, Alltel filed a motion to compel arbitration and to dismiss or stay the proceedings, asserting that the provisions of Whitney's contract with Alltel mandated that any such claims be addressed through arbitration. The arbitration provision relied upon by Alltel was contained within some "Terms and Conditions" mailed to Whitney with his bill from Alltel on August 4, 2000. Those Terms and Conditions altered the terms of the contract and stated that a customer's use of Alltel services subsequent to receipt of the new Terms and Conditions would be deemed to constitute acceptance of those terms. Specifically, the arbitration provision stated:

Any dispute arising out of this Agreement or relating to the Services and Equipment must be settled by arbitration by the American Arbitration Association. Each party will bear the cost of preparing and prosecuting its case. We will reimburse you for any filing or hearing fees to the extent they exceed what your court costs would have been if your claim had been resolved in a state court having jurisdiction. The arbitrator has no power or authority to alter or modify these Terms and Conditions, including the foregoing Limitations of Liability section.[³] All claims must be arbitrated individually, and there will be no consolidation or class treatment of any claims. This provision is subject to the United States Arbitration Act.

After the matter was briefed and argued by the parties, the trial court entered its order denying Alltel's motion to compel arbitration on May 14, 2004. In so doing, the trial court found that Whitney's claim under the Merchandising Practices Act and his unjust enrichment claim did not fall within the scope of the arbitration clause. The court stated that the actions challenged by Whitney related to Alltel's billing practices and did not involve a dispute "arising out of" the agreement and were not "related to" the services or equipment provided by Alltel. The court further concluded that, taken as a whole "the limitations contained within the arbitration provision make it unconscionable, and thus unenforceable, even if the claims were encompassed by the provision." Alltel brings five points on appeal from that order.

Prior to addressing Alltel's claims, we must examine Whitney's challenge to this Court's jurisdiction over this appeal. "The right to appeal is purely statutory, and where a statute does not give a right to appeal, no right exists." Dunn Indus. Group, Inc. v. City of Sugar Creek, 112 S.W.3d 421, 427 (Mo. banc 2003).

In its jurisdictional statement, Alltel asserts that this court has jurisdiction over this matter under the Federal Arbitration Act ("FAA"), 9 U.S.C. § 1 et seq. Specifically, Alltel relies upon 9 U.S.C. § 16(a)(1)(A) and § 16(a)(1)(B). Those statutory provisions allow for an appeal to be taken from an order "(A) refusing a stay of any action under section 3 of this title" or "(B) denying a petition under section 4 of this title to order arbitration to proceed". Section 3 of the FAA deals with the enforcement of arbitration agreements in pending lawsuits and requires that the "courts of the United States" grant a party's request for a stay of litigation pending completion of arbitration where the issue involved is subject to an arbitration provision.⁴ 9 U.S.C. § 3. Section 4 of the FAA requires "any United States district court" to entertain a petition for the enforcement of an arbitration agreement where a party has refused to arbitrate.⁵ 9 U.S.C. § 4.

Whitney contends that the provisions of the FAA allowing for appeals from the denial of a petition to order arbitration are not applicable to grant jurisdiction to this Court because the express language of Sections 3 and 4, from which Section 16 allows an appeal, only applies to federal courts. Whitney further claims that an appeal from the trial court's order is not proper under Missouri law because the order does not constitute a final judgment.

On the facts of this case, we need not determine whether Sections 3 and 4 are applicable to a circuit court in this State, an issue which has not yet been addressed by either the Missouri Supreme Court or the United States Supreme Court.⁶ See Dunn Indus. Group, 112 S.W.3d at 433; Volt Info. Scis., Inc. v. Board of Trustees of Leland Stanford Jr. Univ., 489 U.S. 468, 477, 109 S.Ct. 1248, 103 L.Ed.2d 488 (1989). An appeal from the denial of a motion to compel arbitration is specifically authorized under Missouri law. "Section 435.440.1, a part of the Missouri Uniform Arbitration Act, expressly grants the right to appeal orders denying an application to compel arbitration or granting an order to stay arbitration." Dunn Indus. Group, 112 S.W.3d at 427. This "`special statute' takes precedence over the general requirement in Rule 74.01 that a judgment is not final unless it disposes of all parties and issues in the case." Dunn v. Security Fin. Advisors, Inc., 151 S.W.3d 140, 142 (Mo.App. W.D.2004).

State procedural laws may be followed by a state court applying substantive federal law so long as the procedure does not defeat any of the rights contained in the federal act under consideration. Greenpoint Credit, L.L.C. v. Reynolds, 151 S.W.3d 868, 873 n. 3 (Mo.App. S.D.2004); see also Greenwood v. Sherfield, 895 S.W.2d 169, 172 (Mo.App. S.D.1995). Thus, where a Missouri court is addressing an arbitration provision falling within the FAA, the Missouri court must apply the substantive law of the FAA contained in 9 U.S.C. § 2, but may apply state procedural rules so long as they do not defeat any of the substantive rights granted by Congress in the act. Reynolds, 151 S.W.3d at 873 n. 3. Section 435.440.1 clearly does not serve to defeat any of the rights granted by Congress under the FAA and, in fact, is wholly consistent with the provisions of the FAA allowing for an appeal from the denial of a motion to compel arbitration.

While Alltel failed to assert § 435.440.1 as a basis for this Court's jurisdiction in the jurisdictional statement contained in its brief, even if the grounds asserted by Alltel were invalid, this Court is not required to dismiss an action for failure to properly assert the jurisdictional basis for an appeal in a jurisdictional statement where it is apparent from the briefs and the record that an appeal is proper under Missouri law. See Estate of Athon v. Conseco Fin. Servicing Corp., 88 S.W.3d 26, 29 (Mo.App. W.D.2002). Accordingly, Section 435.440.1 is controlling, and this Court has jurisdiction to review the trial court's denial of Alltel's motion to compel arbitration under Missouri statute. Dunn Indus. Group, 112 S.W.3d at 427.⁷

We now turn to Alltel's points on appeal. All of Alltel's points challenge the trial court's denial of its motion to compel arbitration.

In its first point, Alltel asserts that the trial court erred in refusing to compel arbitration because it failed to give sufficient deference to the strong policy in favor of arbitration set forth in 9 U.S.C. § 2 of the FAA. Alltel contends that the failure of the trial court to specifically refer to the federal policy favoring arbitration "in and of itself supports reversal."

Alltel does not cite any legal authority in support of this proposition, and we are aware of none. The trial court's failure to include language in its decision recognizing the general federal policy in favor of arbitration simply does not support, "in and of itself," reversal of the trial court's decision. "Standing alone, a public policy favoring arbitration is not enough to extend the application of an arbitration clause far beyond its intended scope." Greenwood, 895 S.W.2d at 174. Moreover, Alltel fails to identify anything in the record, aside from the result reached by the trial court, in support of its claim that the trial court disregarded this general policy in denying its motion to compel arbitration. In short, in this point, Alltel has failed to establish any substantive basis upon which we could find error with the trial court's decision. Point denied.

In its second point, Alltel contends that the trial court erroneously determined that Whitney's claim under the Merchandising...