Court of Appeals of Missouri, Western District, Second Division
from the Circuit Court of Jackson County, Missouri The
Honorable Jack Richard Grate, Judge.
James Edward Welsh, Presiding Judge, Alok Ahuja, Judge,
Anthony Rex Gabbert, Judge.
Anthony Rex Gabbert, Judge.
Tarmac International, Inc. appeals a motion court's
denial of its motion to compel arbitration. At issue is the
arbitration provision in Tarmac's employment agreement
with respondent Stephen Latenser. Tarmac alleges three points
of error. First, it argues the court's invalidation of
the arbitration provision erroneously relied on the notice
requirements of Section 435.460, RSMo 2000, when the Federal
Arbitration Act (FAA) preempts Missouri law. Second, Tarmac
argues the court lacked authority to adjudicate the
arbitration provision's validity, because the
incorporated American Arbitration Association (AAA) rules
delegate that authority to an arbitrator; alternatively,
Tarmac contends the arbitration provision is a separate and
enforceable contract supported by consideration. Third,
Tarmac argues Latenser waived the right to challenge the
arbitration provision's enforceability by not filing a
reply to Tarmac's answer; alternatively, Tarmac contends
Latenser's challenge is meritless and a matter delegated
to the arbitrator. We reverse and remand with instructions to
stay the pending case and compel arbitration.
is a Missouri company doing business nationwide and
internationally. In January 2011, Tarmac hired Latenser as a
temporary salesperson, and the parties signed an employment
agreement containing the following arbitration provision:
Any controversy or claim arising out of or relating to this
Agreement shall be settled by arbitration in Kansas City,
Missouri in accordance with the Commercial Arbitration Rules
of the American Arbitration Association. This Agreement
contains a binding arbitration provision which may be
enforced by the parties.
(Emphasis omitted.) On July 15, 2014, Tarmac terminated
Latenser's employment. Latenser filed a petition for
damages in October 2016, alleging breach of contract and
unjust enrichment. Tarmac filed a motion to compel
arbitration in February 2017. On September 15, 2017, the
motion court denied the motion, finding the arbitration
provision was invalid, because it lacked consideration and
failed to satisfy Missouri's notice requirements. This
court will affirm the judgment of the motion court unless
there is no substantial evidence to support it, unless it is
against the weight of the evidence, or unless it erroneously
declares or applies the law." Wood ex rel. Estate of
Lisher v. Lisher, 187 S.W.3d 913, 915 (citing Murphy
v. Carron, 536 S.W.2d 30 (Mo. banc 1976)). "Whether
a motion to compel arbitration should have been granted is a
question of law, which we review de novo."
State v. American Tobacco Co., 534 S.W.3d 840, 862
(Mo. App. 2015). Our review of the trial court's
interpretation of an arbitration provision is also de
novo, as arbitration is contractual, and contract
interpretation is a question of law. NutraPet Sys., LLC
v. Proviera Biotech, LLC, No. WD 80416, 2017 WL 6559976,
at * (Mo. App. Dec. 26, 2017) (citations omitted).
instantly address Tarmac's second and third points, as
they are dispositive of the remaining issues. Points II and
III, in relevant part, address the arbitration
provision's arbitrability. "Arbitrability"
refers to whether the provision delegates threshold issues of
validity, enforcement, application, or formation to an
arbitrator. Dotson v. Dillard's, Inc., 472
S.W.3d 599, 606 (Mo. App. 2015) (citations omitted). Point II
addresses the arbitration provision's validity, while
Point III addresses its enforcement. Both points argue the
court lacked authority to adjudicate those issues, because
the incorporated AAA rules delegate that authority to an
arbitrator. We thus consider Points II and III together.
arbitrability "is undeniably an issue for judicial
determination, " AT & T Techs., Inc. v. Comms.
Works of Am., 475 U.S. 643, 649 (1986),
"[a]rbitrability becomes an issue for the arbitrator to
decide where the agreement provides clear and unmistakable
evidence that the parties intended to arbitrate those
issues." Springleaf Financial Services, Inc. v.
Shull, 500 S.W.3d 276, 282 (Mo. App. 2016) (citing
First Options of Chicago, Inc. Kaplan, 514 U.S. 938,
945 (1995)). Though the AAA delegation provision is not
explicitly written into the arbitration provision, Tarmac
asserts it is incorporated by specific reference to the
AAA's rules ("this Agreement shall be settled by
arbitration . . . in accordance with the Commercial
Arbitration Rules of the American Arbitration
Association"). In a recent decision, the Missouri Supreme
Court unequivocally agreed, holding "the incorporation
of the American Arbitration Association  rules into the
arbitration agreement provided clear and unmistakable
evidence the parties intended to delegate threshold issues of
arbitrability to the arbitrator." State ex rel.
Pinkerton v. Fahnestock, 531 S.W.3d 36, 39 (Mo. banc
this court is compelled to enforce the delegation provision
"unless the opposing party directly challenges" the
delegation provision's enforceability.
Springleaf at 282. A direct challenge is one that
specifically addresses the delegation provision.
Rent-A-Center, West, Inc. v. Jackson, 561 U.S. 63,
72 (2010). "Thus, a party's challenge to another
provision of the contract, or to the contract as a whole,
does not prevent a court from enforcing a specific agreement
to arbitrate." Id. at 69. Latenser does not
specifically challenge the delegation provision's
enforceability; instead, his arguments (concerning
unconscionability, lack of consideration, or illusoriness)
are challenges to the employment ...