Bridgecrest Acceptance Corp. v. Donaldson

648 S.W.3d 745

BRIDGECREST ACCEPTANCE CORPORATION, Appellant,

v.Kelly DONALDSON and Robert Haulcy, Respondents.

Bridgecrest Acceptance Corporation, Appellant,

v.Christopher Jones, Respondent.

No. SC 99269

No. SC 99270

Supreme Court of Missouri, en banc.

Opinion issued July 12, 2022 Opinion Modified on Court's Own Motion August 30, 2022

Bridgecrest was represented by Juliet A. Cox and Meredith A. Webster of Kutak Rock LLP in Kansas City, (816) 960-0090; and David B. Helms of GM Law PC in St. Louis, (314) 474-5145.

The consumers were represented by Martin L. Daesch, Jesse B. Rochman and Craig W. Richards of OnderLaw LLC in St. Louis, (314) 963-9000; Joseph F. Yeckel of Yeckel Law Firm LLC in St. Louis, (314) 727-2430; and Michael Gross of Michael Gross Law Office in St. Louis, (314) 863-5887.

W. Brent Powell, Judge In two separate cases, Bridgecrest Acceptance Corporation sought a deficiency judgment in circuit court against consumers who had defaulted on car payments. In both cases, the consumers brought counterclaims against Bridgecrest, alleging unlawful and deceptive business practices. Bridgecrest moved to dismiss or stay the consumers’ counterclaims and compel the matters to arbitration pursuant to an arbitration agreement the consumers signed. The circuit court overruled Bridgecrest's motions. On appeal, this Court reverses the circuit court's rulings and finds the arbitration agreement legally valid, conscionable, and not precluded by collateral estoppel. These cases are remanded for further proceedings consistent with this opinion.

Factual and Procedural Background

The facts of both cases are virtually identical. In 2017, Kelly Donaldson and Robert Haulcy together and Christopher Jones individually (collectively, "Consumers") entered into an installment contract with DriveTime Car Sales Company, LLC, to finance and buy a vehicle. Each also signed an accompanying arbitration agreement with DriveTime.¹ The installment contract referenced the arbitration agreement, stating the arbitration agreement was "incorporated by reference into and is a part of this Contract." The arbitration agreement also referenced the installment contract, stating the arbitration agreement was "part of, and is hereby incorporated into" the installment contract. Thereafter, DriveTime assigned its interests as to both installment contracts—including the attached arbitration agreements—and vehicles to Bridgecrest Acceptance Corporation.²

The arbitration agreement identified various claims subject to arbitration, including any dispute or controversy related to:

(a) The Contract.

(b) The vehicle or the sale of the vehicle.

(c) The provision or sale of any goods and services like warranties, insurance and extended service contracts covered by the Contract or related to the vehicle.

(d) The relationships resulting from the Contract.

(e) Advertisements, promotions or oral or written statements related to the Contract.

(f) The financing terms.

(g) Your credit application.

(h) The origination and servicing of the Contract.

(i) The collection of amounts you owe us.

(j) Any repossession, or replevin, of the vehicle.

(k) Your personal information[.]

(l) The rescission or termination of the Contract.

In explaining its scope, the arbitration agreement provided:

"Claim" has the broadest reasonable meaning. It includes claims of every kind and nature. This includes initial claims, counterclaims, cross-claims, third-party claims, statutory claims, contract claims, negligence and tort claims (including claims of fraud and other intentional torts). However, notwithstanding any language in this Agreement to the contrary, a "Claim" does not include a dispute about the validity, enforceability, coverage or scope of this Agreement.^[3]

....

However, notwithstanding any language in this Agreement to the contrary, the term "Claim" does not include (i) any self-help remedy, such as repossession or sale of any collateral given by you to us as security for repayment of amounts owed by you under the Contract; or (ii) any individual action in court by one party that is limited to preventing the other party from using such self-help remedy and that does not involve a request for damages or monetary relief of any kind.

Finally, the arbitration agreement contained an anti-waiver provision stating:

Even if you and we elect to litigate a Claim in court, you or we may elect to arbitrate any other Claim, including a new Claim in that lawsuit or any other lawsuit. Nothing in that litigation waives any rights in this Agreement.

After Consumers failed to make the required payments for the vehicles, Bridgecrest repossessed and sold the vehicles. Following the sale of both vehicles, Bridgecrest sought to recover the debt remaining on both installment contracts.

Bridgecrest filed suits in circuit court seeking to collect the outstanding sums. Consumers asserted counterclaims, raising putative class claims against Bridgecrest for unlawful and deceptive business practices in violation of the Uniform Commercial Code. Bridgecrest moved to dismiss or stay Consumers’ counterclaims and compel arbitration pursuant to the arbitration agreements. The circuit court overruled Bridgecrest's motions in both cases. Bridgecrest appealed the circuit court's rulings; the court of appeals affirmed. This Court transferred these cases pursuant to article V, section 10 of the Missouri Constitution and disposes of both in this opinion.

Analysis

On appeal, Bridgecrest challenges the overrulings of its motions to compel arbitration, arguing the arbitration agreement is a legally valid and enforceable contract. In addition to responding to Bridgecrest's legal arguments, Consumers contend Bridgecrest failed to prove the existence of an arbitration agreement between Bridgecrest and Consumers. Although Bridgecrest attached the signed arbitration agreements to its motions to compel arbitration, Bridgecrest did not authenticate or introduce the agreements at an evidentiary hearing; therefore, Consumers allege Bridgecrest did not factually prove the existence of the arbitration agreement.

Consumers’ argument is unavailing because Consumers never contested the existence of the arbitration agreement in circuit court. Section 435.355 governs the procedure applicable when a party files a motion to compel arbitration.⁴ That provision instructs that, if the party opposing the motion to compel arbitration "denies the existence of the agreement to arbitrate, the 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. In such a case, the circuit court must conduct an evidentiary hearing to determine whether an arbitration agreement exists. § 435.355.1-3; see also Nitro Distrib., Inc. v. Dunn , 194 S.W.3d 339, 351-52 (Mo. banc 2006). Consumers, however, conceded the existence of an arbitration agreement in circuit court and opposed the motions to compel for "purely legal" reasons, rather than factual ones. In fact, in both cases, Consumers represented to the circuit court, "The only relevant facts are the contents within the purported Arbitration Agreement." Consumers never denied the existence of the arbitration agreements and argued they were invalid, unconscionable, and Bridgecrest was legally estopped from enforcing them. Accordingly, this Court reviews those purely legal issues raised in connection with Bridgecrest's motions to compel. Ingram v. Brook Chateau , 586 S.W.3d 772, 774 (Mo. banc 2019).

When the parties have not contested the factual existence of an arbitration agreement, the overruling of a motion to compel arbitration is reviewed de novo. Soars v. Easter Seals Midwest , 563 S.W.3d 111, 113 (Mo. banc 2018). " ‘An appellate court's review of the arbitrability of a dispute is 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) (alteration in original) (quoting Dunn Indus. Grp., Inc. v. City of Sugar Creek , 112 S.W.3d 421, 428 (Mo. banc 2003) ).

Turning to the purely legal challenges Consumers raised in circuit court, Bridgecrest posits the circuit court erred in overruling its motions to compel arbitration because (1) the arbitration agreement contained adequate consideration and (2) was conscionable, and (3) Bridgecrest was not collaterally estopped from enforcing the arbitration agreement. This Court addresses each argument in turn.

Missouri contract law governs whether an arbitration agreement is valid and enforceable. Eaton v. CMH Homes, Inc. , 461 S.W.3d 426, 431 (Mo. banc 2015) ; Baker v. Bristol Care, Inc. , 450 S.W.3d 770, 774 (Mo. banc 2014) ; State ex rel. Vincent v. Schneider , 194 S.W.3d 853, 856 (Mo. banc 2006). Generally applicable contract defenses, such as unconscionability and lack of consideration, apply to arbitration agreements. Baker , 450 S.W.3d at 774 ; Robinson v. Title Lenders, Inc. , 364 S.W.3d 505, 513 (Mo. banc 2012). In response to Bridgecrest's motions to compel arbitration, Consumers claimed either no valid agreement to arbitrate exists due to a lack of consideration, or, if an agreement exists, it is unconscionable.

I. The Arbitration Agreement Contained Adequate Consideration

Bridgecrest claims the circuit court erred in overruling its motions to compel arbitration to the extent it relied on Consumers’ arguments that the agreement lacked adequate consideration. Bridgecrest maintains the consideration supporting the installment contract provided the consideration for the arbitration agreement. In the alternative, Bridgecrest argues the arbitration agreement, standing alone, contained sufficient consideration. Bridgecrest's first argument is dispositive.

As a preliminary matter, this Court observes the retail installment contract and the arbitration agreement were part of a singular contract. "In Missouri,...