Keeling v. Preferred Poultry Supply, LLC

621 S.W.3d 672

Brandon KEELING, Respondent,

v.PREFERRED POULTRY SUPPLY, LLC, Appellant.

No. SD 36713

Missouri Court of Appeals, Southern District, Division One.

Filed: March 26, 2021

Appellant's attorneys: James M. Paul, David L. Gershner, Pro Hac Vice, Jordan Paul, Neosho.

Respondent's attorney: Russ Schenewerk.

JACK A. L. GOODMAN, J.

Preferred Poultry Supply, LLC, ("PPS") appeals the trial court's denial of its motion to compel arbitration. We reverse and remand because the disputes raised in Brandon Keeling's suit all arise out of or are related to the parties’ construction contract, the Federal Arbitration Act ("FAA") applies as the parties had agreed, and the arbitration agreement contained in the construction contract is valid and enforceable.

Background

Keeling is a poultry farmer in Newton County, Missouri. PPS is a Missouri company. The parties agreed Keeling would pay over $2 million for PPS to construct six broiler chicken buildings on Keeling's land. The agreement was reduced to writing (the "Contract"). In one provision, the Contract provided it would be "governed by Arkansas law, without giving effect to principles of conflict of laws." Another paragraph, conspicuously titled "BINDING ARBITRATION ," provided, in part:

All claims, disputes and matters in question arising out of or relating to this Contract or any claimed breach of this Contract shall be decided by binding arbitration in accordance with the Uniform Arbitration Act in force in Arkansas.... This agreement to arbitrate shall be specifically enforceable under the Federal Arbitration Act since this Contract involves interstate commerce.... The location of the arbitration proceedings shall be in Fayetteville, Arkansas.... Any award of arbitration may be entered in the Circuit Court for Washington County, Arkansas and will have the force of a judgment from that court.

This was the only paragraph that included its own space for Keeling to acknowledge with his signature.

Keeling was not satisfied with the buildings PPS constructed. He sued in the Circuit Court of Newton County, Missouri, for breach of contract, fraudulent misrepresentation, and negligent misrepresentation. PPS moved to dismiss or to stay the court proceedings and compel arbitration (the "Motion"). Keeling opposed arbitration, arguing the arbitration agreement was invalid and therefore unenforceable.

Appellate Authority

Keeling questions PPS's standing to bring this appeal and this court's authority to consider it. Before considering the substantive issues of an appeal, we must determine whether we have authority to decide the appeal, R.M.A. v. Blue Springs R-IV Sch. Dist. , 477 S.W.3d 185, 187 (Mo. App. 2015), and whether the parties have standing, T.V.N. v. Missouri State Highway Patrol Criminal Justice Info. Services , 592 S.W.3d 74, 77 (Mo. App. 2019). This court applies Missouri law to all procedural matters. Ameristar Jet Charter, Inc. v. Dodson Int'l Parts, Inc. , 155 S.W.3d 50, 58 (Mo. banc 2005). We look to Missouri procedural law to determine whether a litigant may appeal a trial court's order on an arbitration issue as long as the procedure does not defeat any of the rights granted in the applicable substantive law. Whitney v. Alltel Communications, Inc. , 173 S.W.3d 300, 306 (Mo. App. 2005) ; Greenpoint Credit, L.L.C. v. Reynolds , 151 S.W.3d 868, 873 n.3 (Mo. App. 2004).

Keeling argues the order is interlocutory and not a final judgment, it is not denominated "decree" or "judgment," and it does not dispose of all issues in the case. All of those assertions are correct, yet it is well-established that "an interlocutory order denying arbitration is immediately appealable upon entry under section 435.440." Sanford v. CenturyTel of Missouri, LLC , 490 S.W.3d 717, 718 (Mo. banc 2016). Accord Springleaf Fin. Services, Inc. v. Shull , 500 S.W.3d 276, 278 n.1 (Mo. App. 2016) ; Nicholson v. Surrey Vacation Resorts, Inc. , 463 S.W.3d 358, 366-67 (Mo. App. 2015) ; Frye v. Speedway Chevrolet Cadillac , 321 S.W.3d 429, 434 n.9 (Mo. App. 2010). The order need not be denominated as a judgment or decree, because § 435.440.1(1) RSMo.¹ permits an appeal from "an order denying an application to compel arbitration." Nicholson , 463 S.W.3d at 367. This is not a peculiarity of Missouri law. The FAA permits an appeal from an order denying an application to compel arbitration, 9 U.S.C.A. § 16(a)(1)(C)² , as does Arkansas law, Ark. Code Ann. § 16-108-228(a)(1) (West 2011).

Keeling also argues PPS is not aggrieved by the order because the court implicitly granted PPS's request "to stay litigation and compel litigation. " (emphasis added). " ‘[A]ggrieved’ means ‘suffering from an infringement or denial of legal rights,’ " T.V.N. , 592 S.W.3d at 77, and in order to have standing to appeal under § 512.020, the appealing party must be aggrieved by the judicial act to be reviewed on appeal. Id. This interlocutory appeal was brought under § 435.440.1(1) RSMo., which addresses a specific type of aggrievement: denial of an application to compel arbitration. Keeling's argument focuses exclusively on one sentence in the Motion and ignores the Motion's substance, Keeling's suggestions in opposition, and the court's description of the Motion as "seeking binding arbitration," all of which indicate the court and the parties understood the Motion was PPS's request to stay proceedings and compel arbitration. The Motion sufficiently raised the arbitration issue and the circuit court ruled adversely to PPS. PPS is aggrieved by the court's denial of the Motion.

PPS has standing to bring this appeal, which is authorized by § 435.440.1(1) RSMo.

Principles of Review

We review de novo whether there is an agreement to arbitrate, Springleaf , 500 S.W.3d at 280, and whether arbitration should be compelled, Baker v. Bristol Care, Inc. , 450 S.W.3d 770, 774 (Mo. banc 2014). "Before a party may be compelled to arbitrate under the FAA, a court must determine whether a valid agreement to arbitrate exists between the parties and whether the specific dispute falls within the substantive scope of that agreement. A court must compel arbitration if it determines that the parties agreed to arbitrate the dispute." Dunn Indus. Group, Inc. v. City of Sugar Creek , 112 S.W.3d 421, 427–28 (Mo. banc 2003) (internal citation omitted).

A motion to compel arbitration is a separate but ancillary proceeding, seeking an equitable remedy: specific performance of a term in a contract. Nitro Distrib., Inc. v. Dunn , 194 S.W.3d 339, 351 (Mo. banc 2006). "An arbitration clause is simply a particular type of forum selection clause." Dunn , 112 S.W.3d at 432. "[P]arties may agree to limit the issues subject to arbitration, to arbitrate according to specific rules, and to limit with whom a party will arbitrate its disputes." AT&T Mobility LLC v. Concepcion , 563 U.S. 333, 344, 131 S.Ct. 1740, 179 L.Ed.2d 742 (2011) (internal citations omitted).

"Arbitration is solely a creature of contract and, thus, a party cannot be required to submit to arbitration any dispute which he or she has not agreed so to submit." Salsman v. Leonard , 568 S.W.3d 434, 441 (Mo. App. 2019) (internal quotation omitted). "[A]rbitration agreements are tested through a lens of ordinary state-law principles that govern contracts, and consideration is given to whether the arbitration agreement is improper in light of generally applicable contract defenses." Robinson v. Title Lenders, Inc. , 364 S.W.3d 505, 515 (Mo. banc 2012). Thus, "[a]n arbitration agreement could be declared unenforceable if a generally applicable contract defense, such as fraud, duress, or unconscionability, applied to concerns raised about the agreement." Id.

Discussion

Appellant argues that the FAA applies and that the circuit court erred in denying its motion to compel arbitration as required by the FAA. We agree.

"The [FAA], 9 U.S.C. § 1 et seq. (2006) , governs the applicability and enforceability of arbitration agreements in all contracts involving interstate commerce." Eaton v. CMH Homes, Inc. , 461 S.W.3d 426, 431 (Mo. banc 2015). "[A]n agreement in writing to submit to arbitration an existing controversy arising out of such a contract, transaction, or refusal, shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract." 9 U.S.C.A. § 2.

[T]he court in which such suit is pending, upon being satisfied that the issue involved in such suit or proceeding is referable to arbitration under such an agreement, shall on application of one of the parties stay the trial of the action until such arbitration has been had in accordance with the terms of the agreement...."

9 U.S.C.A. § 3.

PPS made a prima facie showing that the FAA applies and compels arbitration. Keeling acknowledges existence of the Contract, both in his petition below and on appeal. That Contract includes a written arbitration agreement expressly stating such agreement "shall be specifically enforceable under the Federal Arbitration Act since this Contract involves interstate commerce." (Emphasis added.)

All of Keeling's claims against PPS arise out of or relate to the Contract and are subject to arbitration. Breach of contract obviously is covered, and he does not argue otherwise. His other two claims are styled as torts, but his characterization of those claims is not controlling: "[A] party cannot avoid the language of an arbitration provision by casting its complaint in tort." Riley v. Lucas Lofts Investors, LLC , 412 S.W.3d 285, 291 (Mo. App. 2013). See also Lehman Properties, Ltd. P'ship v. BB & B Const. Co., Inc. , 81 Ark. App. 104, 98 S.W.3d 470, 474 (2003) (matter is not non-arbitrable under Arkansas law merely because a party characterizes its action as a tort; instead, the claim must legitimately sound in tort). To the extent Keeling claims he was fraudulently induced to enter into the Contract as a whole, the FAA requires "a challenge to the validity of the contract...