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Dolly v. Concorde Career Colleges, Inc.

Court of Appeals of Missouri, Western District, Second Division

October 3, 2017

KATHERINE DOLLY, ET AL., Respondents,
v.
CONCORDE CAREER COLLEGES, INC., Appellant.

         APPEAL FROM THE CIRCUIT COURT OF JACKSON COUNTY, MISSOURI THE HONORABLE JOHN M. TORRENCE, JUDGE

          Before: Edward R. Ardini, Jr., Presiding Judge, Karen King Mitchell, Judge and Anthony Rex Gabbert, Judge

          EDWARD R. ARDINI, JR., JUDGE

         Concorde Career Colleges, Inc., ("the College") appeals the Order of the Circuit Court of Jackson County denying the College's Application to Compel Arbitration in a case filed by Katherine Dolly ("Dolly") and Kiley Elliot ("Elliot") (collectively referred to as "the Students") against the College. We reverse and remand for further proceedings.

         FACTUAL AND PROCEDURAL BACKGROUND

         In the summer of 2012, the Students, as part of their enrollment at the College, signed Enrollment Agreements containing an arbitration provision that is the focus of this appeal. The provision provided:

Any dispute arising from enrollment at [the] College, no matter how described, pleaded[, ] or styled, shall be resolved by binding arbitration under the Federal Arbitration Act conducted before a single arbitrator by the American Arbitration Association ("AAA") at Kansas City, Missouri, under its Commercial Rules. The award rendered by the arbitrator may be entered in any court having jurisdiction.

         In October 2015, Dolly and Elliot filed this action against the College alleging violation of the Missouri Merchandising Practices Act ("MMPA") (§ 407.010, et. seq), [1] fraudulent misrepresentation, and negligent misrepresentation. Two months later, the College filed an Application to Compel Arbitration pursuant to the Federal Arbitration Act ("FAA"), 9 U.S.C. § 1, et seq. Discovery was conducted and an evidentiary hearing was held.

         At the evidentiary hearing, the Students, the admissions representatives who handled their enrollments, and a business office manager from the College testified. The trial court also received evidence of other legal actions initiated by the College in Missouri circuit courts against multiple other students who had signed enrollment agreements containing the same arbitration provision as well as a copy of the stand-alone Arbitration Agreement later developed and used by the College.

         Following the evidentiary hearing, the court issued its Order denying the College's application, stating that there were "dozens of instances where the [College] chose to not abide by their own arbitration agreement and filed suit against a student in the Circuit Courts of Missouri" and that the College "waived its right to invoke the arbitration clauses which it chose to ignore when it perceived it strategically advantageous to do so in the past." The College appeals.

         Additional facts are set forth throughout this opinion as necessary.

         STANDARD OF REVIEW

         "An appeal may be taken from . . . [a]n order denying an application to compel arbitration made under section 435.355[.]" § 435.440.1. "The issue of whether arbitration should be compelled is a question of law subject to [de novo] review." Dotson v. Dillard's, Inc., 472 S.W.3d 599, 602 (Mo. App. W.D. 2015) (citation omitted). We defer to the trial court's factual findings, and "all fact issues upon which no specific findings are made shall be considered as having been found in accordance with the result reached." Bowers v. Asbury St. Louis Lex, LLC, 478 S.W.3d 423, 426 (Mo. App. E.D. 2015) (quoting Rule 73.01(c)).

Our analysis of whether arbitration should be compelled is as follows:
First, we must "determine whether a valid arbitration agreement exists." Second, if a valid arbitration agreement exists, we must determine "whether the specific dispute falls within the scope of the arbitration agreement." Third, if a valid arbitration contract exists, and if the subject dispute is within the scope of the arbitration provision, then we must determine whether the arbitration agreement is subject to revocation under applicable contract principles.

Frye v. Speedway Chevrolet Cadillac, 321 S.W.3d 429, 434-35 (Mo. App. W.D. 2010) (citations omitted). "The elements required to form a valid contract in Missouri[, ]" including an agreement to arbitrate, "are offer, acceptance, and bargained for consideration." Id. at 436 (citation and internal quotation marks omitted). If a valid arbitration agreement has been formed, a party may avoid arbitration if "grounds [ ] exist at law or in equity for the revocation of [the contract]." State ex rel. Hewitt v. Kerr, 461 S.W.3d 798, 806 (Mo. banc 2015) (citing 9 U.S.C. § 2); see also § 435.350. Such defenses include "fraud, duress, or unconscionability." Hewitt, 461 S.W.3d at 807 (citation omitted). Whether such grounds exist are "determined using the general principles governing contract law in Missouri." Id. at 806 (citation omitted). If the court's analysis concludes that an agreement to arbitrate has not been formed or that the agreement is otherwise revocable, then "the case may proceed in civil court." Id. (citation omitted).

         DISCUSSION

         I.Delegation ...


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