Angela Martin v. HW Automotive, LLC d/b/a HW KIA of West County, KIA America, Inc.; and Hyundai Motor America

• Court: Missouri Court of Appeals
• Decided: August 6, 2024
• Docket: ED112165
• Status: Published

Opinion

In the Missouri Court of Appeals Eastern District DIVISION FOUR

ANGELA MARTIN, et al., ) No. ED112165 ) Respondents, ) Appeal from the Circuit Court of ) St. Louis County v. ) Cause No. 23SL-CC02311 ) HW AUTOMOTIVE, LLC d/b/a HW KIA ) OF WEST COUNTY; KIA ) AMERICA, INC.; and HYUNDAI ) MOTOR AMERICA, ) Honorable Richard M. Stewart ) Appellants. ) Filed: August 6, 2024

HW Automotive, LLC d/b/a HW Kia of West County, Kia America, Inc. a/k/a Kia

Motors America, Inc., and Hyundai Motor America Corp. (collectively, “Dealers”) appeal the

circuit court’s order overruling, in part, its motion to compel arbitration of multiple consumer

disputes. Dealers alleged there were valid, binding arbitration agreements requiring arbitration

rather than resolution by the circuit court.

Because the consumers’ arbitration agreements are enforceable and each agreement

delegated the determination of arbitrability to an arbitrator, the circuit court’s order overruling

Dealers’ motion to compel arbitration is vacated. This case is remanded to the circuit court with

instructions to issue an order compelling arbitration. Background

Angela Martin, Danielle Davenport, Keshonti Rimmer, Terriona Slayton, Lisa Johnson,

Patrice Brown, Sabrina Shed, and TaNarrah Mosby (collectively, “Consumers”) each purchased

a Hyundai or Kia vehicle from an authorized Kia dealership in St. Louis County. Subsequent to

their purchases, Consumers’ vehicles were either stolen or damaged during an attempted theft.

Consumers filed suit in June 2023, claiming Dealers violated the Missouri Merchandising

Practices Act, section 407.010 et seq., RSMo 2016, 1 because Dealers failed to install the

appropriate anti-theft protection devices in their vehicles. Dealers timely moved to compel

arbitration because all Consumers signed arbitration agreements requiring arbitration of all

disputes. On September 15, 2023, Consumers conceded their claims were subject to the

arbitration agreements they signed. Consumers agreed to stay the proceedings in circuit court and

initiate arbitration.

Thereafter, Consumers initiated individual arbitration proceedings with the American

Arbitration Association (“AAA”). On September 25 2023, Consumers received a letter from

AAA stating that AAA was declining to administer the claims at that time. According to the

letter, Rule R-1(d) of AAA’s Consumer Arbitration Rules required Dealers to register their

arbitration clause with AAA before the effective date of the clause, which Dealers had failed to

do. The letter also stated, “According to R-1(d) of the Consumer Rules, should the AAA decline

to administer an arbitration, either party may choose to submit its dispute to the appropriate court

for resolution.” The letter further stated, “The AAA’s review is administrative; it is not an

opinion on whether the arbitration agreement, the contract, or any part of the contract is legally

enforceable, nor is it a determination regarding the arbitrability of the dispute.”

1 All statutory references are to RSMo 2016. 2 The next day, Consumers filed a supplemental response in the circuit court to Dealers’

motion to compel arbitration. Consumers informed the circuit court that they had attempted to

file an arbitration proceeding, but that AAA declined to administer their claims.

Dealers responded, re-affirming that arbitration remained the appropriate means to

resolve their disputes. Dealers noted Consumers did not challenge any part of the arbitration

agreements, including the delegation provisions. Dealers stated all threshold issues, including the

appropriateness of arbitration, were delegated to a neutral arbitrator. Dealers submitted

documentation from AAA acknowledging Dealers’ payment of the registry fee and submission

of its arbitration clause. Dealers also identified Rule R-12 of the AAA Consumer Rules, which

allows for expedited review of an arbitration clause that had not been previously submitted.

In October 2023, the circuit court held a hearing on the motion to compel. The circuit

court entered an order overruling, in part, and sustaining, in part Dealers’ motion. The circuit

court compelled arbitration for Shed and Mosby, while allowing all other Consumers to continue

their proceedings in the circuit court. Dealers bring this interlocutory appeal pursuant to

§ 435.440.1(1).

Standard of Review

Section 435.355 governs the procedure for resolving a motion to compel arbitration. If

the party seeking to compel arbitration demonstrates there is a valid arbitration agreement and

the party opposing the motion refuses to arbitrate, “the court shall order the parties to proceed

with arbitration ….” Section 435.355.1. However, if the party opposing the motion denies the

existence of an arbitration agreement, then “the court shall proceed summarily to the

determination of the issue so raised and shall order arbitration if found for the moving party ….”

Id. In “an appeal from a circuit court’s order overruling a motion to compel arbitration when

3 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.” Theroff v. Dollar Tree Stores, Inc., 591

S.W.3d 432, 436 (Mo. banc 2020).

However, when there is no dispute about the existence of an arbitration agreement, this

Court conducts de novo review of whether a motion to compel arbitration should be sustained.

Bridgecrest Acceptance Corp. v. Donaldson, 648 S.W.3d 745, 751 (Mo. banc 2022). When a

reviewing court engages in de novo review, it “exercises independent judgment to correct

erroneous interpretations.” Missouri Pub. Serv. Comm’n v. Union Elec. Co., 552 S.W.3d 532,

539 (Mo. banc 2018) (internal quotation omitted). The circuit court’s decision is not granted any

deference in de novo review. Chastain v. United Fire & Cas. Co., 653 S.W.3d 616, 620 (Mo.

App. 2022). Because consumers concede their claims are subject to valid, enforceable arbitration

agreements, this Court’s review is de novo.

Analysis

“[A]rbitration is a matter of contract.” Rent-A-Ctr., W., Inc. v. Jackson, 561 U.S. 63, 67,

130 S. Ct. 2772, 177 L.Ed.2d 403 (2010). “The usual rules and canons of contract interpretation

govern the subsistence and validity of an arbitration clause.” Dunn Indus. Grp., Inc. v. City of

Sugar Creek, 112 S.W.3d 421, 428 (Mo. banc 2003); see also Am. Exp. Co. v. Italian Colors

Rest., 570 U.S. 228, 233, 133 S. Ct. 2304, 2309, 186 L. Ed. 2d 417 (2013); Bridgecrest, 648

S.W.3d at 752 (applying contract principles to an arbitration dispute).

Consumers do not dispute that their claims are subject to a binding arbitration agreement.

Instead, Consumers assert they fully complied with their obligation to arbitrate when they

submitted their claims to arbitration and the AAA declined to accept their claim. In support of

4 their argument, Consumers rely on the statement in the AAA letter that, because Dealers failed to

properly register the relevant arbitration clauses, AAA would not arbitrate the claims “at this

time.” Consumers also note that the AAA letter cites to AAA Rule R-1(d), which permits a party

to file a claim in the appropriate court if AAA declines a requested arbitration.

A complete reading of the AAA letter undercuts Consumers’ argument. Although the

letters stated that AAA would not arbitrate the claims “at this time,” the AAA letter also stated

AAA’s “review [was] administrative” and “is not an opinion on whether the arbitration

agreement, the contract, or any part of the contract is legally enforceable, nor is it a

determination regarding the arbitrability of the dispute.” And although the AAA letter suggests

that Consumers may submit their claim to the circuit court, the AAA letter also states that, once

Dealers comply with the AAA’s registration and payment requirements, Dealers may notify

Consumers that they may re-file their claim with the AAA.

Moreover, AAA’s Consumer Rules do not support Consumers’ assertion that they

fulfilled their arbitration obligation. The AAA letter cites to Rule R-1(d) which states that the

AAA will arbitrate consumer disputes “that meet the due process standards contained in the

Consumer Due Process Protocol and the Consumer Arbitration Rules.” Accordingly, the AAA

will decline to administer an arbitration when the arbitration clause at issue fails to meet these

standards. If the AAA declines an arbitration, then according to Rule R-1(d), “either party may

submit its dispute to the appropriate court for resolution.”

The AAA Rules expressly consider and resolve the situation when a consumer attempts

to initiate arbitration of an unregistered clause. Rule R-12 states, “[i]f a business does not submit

its arbitration agreement for review and a consumer arbitration then is filed with the AAA, the

5 AAA will conduct an expedited review at that time.” The AAA Rules do not contemplate that

any unregistered arbitration clause presumptively is not arbitrable.

The record in this case demonstrates that Consumers attempted to arbitrate claims that

they each agreed were subject to a binding arbitration clause. Due to Dealers’ failure to pre-

register their arbitration clauses, the AAA declined to arbitrate their cases at that time. At that

point, Consumers took the position that they fully complied with their agreement to arbitrate and

could now seek relief in the circuit court. In the meantime, Dealers filed their arbitration clauses

with the AAA for review. Before the AAA completed its review of those arbitration clauses, the

circuit court heard and denied Dealers’ motion to compel arbitration.

Under this set of circumstances, the circuit court erred in failing to order the parties to

continue with the arbitration process. At the time the circuit court ruled on the motion, the AAA

had not yet fully declined to administer arbitration nor had it determined that the claims were not

arbitrable. Rather, the AAA’s letter stated that the AAA had made no determination as to the

arbitrability of the claims and allowed the claims to be refiled once the arbitration clause had

been reviewed and approved. More importantly, Rule R-12 2 specifically provides for an

expedited review of an arbitration clause in a situation such as this. To hold that the AAA

declined the arbitration of this case would be contrary to the facts, law, and the AAA rules that

govern this situation. 3

2 Rule R-12 helps explain the differences between the disposition in this case and the disposition in Abram v. TitleMax of Missouri, Inc., 684 S.W.3d 74 (Mo. App. 2023), and its companion cases. Those cases involved a similar fact pattern with slight differences. Notably, this Court in Abram noted significant issues with the record and with preservation of issues. Those issues do not exist here. Abram also lacked any indication that the business had sought a review of their arbitration clause, as exists in this case. But, most important, R-12 was not addressed in Abram, perhaps as a result of the parties’ failure to raise it or to properly preserve the issue. 3 We note Consumers’ concern regarding the seeming snail’s pace at which Dealers moved in filing their arbitration provision. The pacing does not change the fact that the AAA has not 6 The AAA letter declining arbitration until Dealers’ arbitration clauses had been reviewed

was the only basis on which Consumers sought to avoid arbitration. This basis is without merit.

If the AAA declines the arbitration after having reviewed the arbitration clauses, the circuit court

should evaluate the next steps in accordance with the language of the contracts.

Conclusion

The circuit court’s order overruling Dealers’ motion to compel arbitration is vacated. The

case is remanded to the circuit court with instructions to enter an order compelling arbitration.

John P. Torbitzky, P.J.

James M. Dowd, J., and Michael S. Wright, J., concur.

declined to arbitrate Consumers’ claims. A significant delay might blossom into a waiver argument, but no such argument was raised here. 7