Abram v. Titlemax of Mo., Inc.

684 S.W.3d 74

Kimberly ABRAM, et al., Respondents,

v.TITLEMAX OF MISSOURI, INC., Appellant.

No. ED 110631

Missouri Court of Appeals, Eastern District, DIVISION ONE.

Filed: November 21, 2023

Application for Transfer to Supreme Court Denied December 26, 2023

Appeal from the Circuit Court of Jefferson County,, Cause No. 19JE-CC00803, Honorable Troy A. Cardona, Judge •

FOR APPELLANT: Stacy R. Gilman, Anthony J. Durone, Berkowitz Oliver LLP, 2600 Grand Boulevard, Suite 1200, Jefferson City, Missouri 64108.

FOR RESPONDENTS: James G. Onder, Jesse B. Rochman, Martin L. Daesch, Onder Law, LLC, 110 East Lockwood Avenue, Second Floor, St. Louis, Missouri 63119.

Philip M. Hess, Judge

Introduction

TitleMax of Missouri, Inc. ("TitleMax") appeals the circuit court’s judgment overruling its motion to compel arbitration against Kimberly Abram, John Adams, Camille Adkins, Kendra Akers, Marian Alexander, Tracy Allen, Varnice Allen, Melvin Allman, Stephanie Alyadumi, and Lemont Amos, Jr.¹ TitleMax raises two points on appeal. In Point I, TitleMax alleges the circuit court erred in overruling its motion to compel arbitration because the parties entered into valid and enforceable loan agreements which contained valid arbitration agreements TitleMax is entitled to enforce.² In Point II, TitleMax argues the circuit court erred in overruling its motion to compel arbitration because several, but not all, of Plaintiffs’ loan agreements contained delegation clauses requiring the arbitrator to resolve threshold issues of arbitrability.

This Court holds the circuit court did not err in overruling TitleMax’s motion to compel arbitration under our standard of review directing us to affirm the circuit court’s judgment on any ground supported by the record. Here, nine of the named Plaintiffs, save Abram, availed themselves of the arbitration process through the American Arbitration Association ("the AAA"), which advised those other nine Plaintiffs they could pursue their claims in court after the AAA administratively closed their arbitration proceedings because TitleMax failed to comply with the AAA’s consumer rules.³ This Court likewise finds Abram was entitled to file her claim in the circuit court because the AAA declined to administer any other claims between TitleMax and its consumers at that time due to TitleMax’s failure to comply with the AAA’s consumer rules. Because AAA Consumer Rule R-1(d) authorized Plaintiffs to submit their disputes to the circuit court after the AAA declined to administer their arbitrations, the circuit court did not err in failing to order the parties to engage in further arbitration proceedings. The circuit court’s judgment is affirmed.

Factual and Procedural Background

The Loan Agreements

The parties have been engaged in protracted litigation over loan agreements Plaintiffs purportedly entered into with TitleMax secured by liens on the borrowers’ vehicles. Although the standardized form TitleMax requires its borrowers to sign has been revised over time, each of the seven loan agreement versions submitted to the circuit court contains arbitration agreements and invoke governance of the Federal Arbitration Act, 9 U.S.C. § 1 et seq. Each loan agreement version contains arbitration provisions addressing delegation. The April 2007, February 2010, and June 2010 arbitration agreements define "dispute" to include, "all claims, disputes, or controversies arising from or relating directly or indirectly to the signing of this Arbitration Provision, the validity and scope of the Arbitration Provision and any claim or attempt to set aside this Arbitration Provision" as a dispute to be submitted to the arbitrator. In contrast, the November 2015, January 2016, September 2017, and March 2019 arbitration agreements state, "dispute" "does not include disputes about the validity, coverage, or scope of this [arbitration] Clause or any part of this [arbitration] Clause. These are for the court and not the [arbitrator] to decide." All versions provide a chosen arbitration organization’s rules apply to the extent they do not conflict with the arbitration agreement’s language. All versions require consumer disputes to be resolved individually and bar class arbitration.

Plaintiffs’ Pre-Suit Demands for Arbitration

In January 2019, Plaintiffs’ counsel sent a letter to TitleMax’s legal department with the subject line, "Re: Intent to Arbitrate." The letter explained Plaintiffs’ counsel represented 834 TitleMax consumers (collectively, "consumers") and attached a list of purported consumers. The letter further stated, "Please let this letter serve as written notice of each client’s intent to arbitrate individually with TitleMax." The letter continued, "As a preliminary matter, each client seeks a determination from an arbitrator whether the respective Arbitration Provisions are valid or otherwise enforceable, and if so, whether each client’s dispute with TitleMax is within the scope of the respective Arbitration Provisions." The letter contained eight claims for relief to be determined by either the arbitrator or the circuit court. The letter concluded:

Each client selects the [AAA] to administer the arbitration. The filing fee for each client to initiate arbitration with the AAA is $200. TitleMax has agreed to advance each of our client’s expenses associated with the arbitration under the respective Arbitration Provisions for each client.⁴ Therefore, we demand $166,800, so we may initiate 834 individual arbitrations against TitleMax.

TitleMax’s legal department rejected Plaintiffs’ counsel’s demand to advance the filing fees, stating the consumer list provided was inadequate to identify specific TitleMax consumer accounts. TitleMax’s legal department requested Plaintiffs’ counsel provide additional identifying information within thirty days or it would "not respond further and [would] consider this demand closed"⁵ TitleMax’s legal department stated, "[I]f these alleged claims are properly filed with the [AAA], TitleMax will tender its arbitration fees, if any, directly to the AAA upon its request." TitleMax’s legal department did not object to these consumers choosing the AAA as its arbitral tribunal.⁶

Plaintiffs’ counsel responded by removing duplicate clients from its list, which reduced the number of purported TitleMax consumers from 834 to 803 borrowers. Plaintiffs’ counsel reiterated, "Under the respective Arbitration Provisions for each client," TitleMax agreed to "advance" their expenses associated with the arbitration and stated failure to comply with the arbitration provisions resulted in default "in proceeding with these individual arbitrations." Plaintiffs’ counsel disavowed haying an obligation to provide additional identifying information under the arbitration provisions, but agreed to provide additional identifying information for consumers who shared the same name. Plaintiffs’ counsel also offered to investigate any name TitleMax maintained was never a consumer. Otherwise, Plaintiffs’ counsel indicated they would "pursue arbitration upon being advanced the filing fee as requested by the Arbitration Provision."

In response, TitleMax’s legal department restated its reasoning for rejecting Plaintiffs’ counsel’s demand to advance the arbitration filing fees to Plaintiffs’ counsel directly. TitleMax’s legal department, stated it had no obligation to provide a cross-referenced consumer list. TitleMax’s legal department requested a signed authorization for each individual on the list. TitleMax disavowed violating the arbitration provisions and alleged these consumers had yet to comply with TitleMax’s "Notice and Cure" requirements.⁷ TitleMax’s legal department repeated, it had no contractual obligation to tender arbitration filing fees directly to Plaintiffs’ counsel; instead, TitleMax maintained it was obligated to advance those fees to the arbitrator as defined by the arbitration agreement. TitleMax’s legal department repeated, if the additional information requested was not provided within thirty days, it would consider the demand closed.

On October 11, 2019, TitleMax’s counsel reminded Plaintiffs’ counsel of their clients’ obligation to "honor their agreement to submit their disputes to individual arbitration with [the AAA]." TitleMax’s counsel reiterated it stood "ready and willing to advance its consumers’ arbitration fees to AAA if and when any individual claims are filed in full accord with the terms of its consumers’ respective agreements." This letter explained how the AAA would provide TitleMax with an invoice to remit payment for the clients’ filing fees once their individual arbitration claims were submitted. TitleMax did not threaten to close Plaintiffs’ demand for not providing additional identifying information as it had in prior correspondence nor did TitleMax object to the AAA as Plaintiffs’ chosen arbitral tribunal.

Four days later, on October 15, 2019, a number of Plaintiffs filed their demand for arbitration with the AAA.⁸ The AAA demand form contained a brief explanation of the dispute:

Each consumer disputes the title loan agreement with TitleMax and the repossession and disposition of each consumer’s property. TitleMax breached its title loan agreements (if valid) and also failed to give the requisite right to cure, presale, and post-sale notices. TitleMax also breached its arbitration agreement (if valid) and each consumer disputes whether the claims are within the scope of the arbitration agreement, and whether the arbitration agreement is valid, enforceable, or otherwise subject to arbitration.

Emphasis added.

On November 4, 2019, the AAA issued a letter ("AAA Letter") to Plaintiffs’ counsel and TitleMax’s counsel regarding the other nine Plaintiffs, listed under a single case number, stating, "Claimant has filed with us a demand for arbitration." The AAA Letter noted "the arbitration clause provides for arbitration by the AAA," but "[p]rior to the filing of this arbitration, TitleMax … failed to...