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Salsman v. Leonard

Court of Appeals of Missouri, Western District, Third Division

February 19, 2019

ROBBY and KIM SALSMAN, Respondents,

          APPEAL FROM THE CIRCUIT COURT OF JACKSON COUNTY The Honorable Marco Roldan, Judge

          Before Mark D. Pfeiffer, Presiding Judge, Lisa White Hardwick and Anthony Rex Gabbert, Judges

          Lisa White Hardwick, Judge

         First Class Property Inspections, LLC ("First Class") appeals the circuit court's denial of its motion to compel arbitration of claims brought by Robby and Kim Salsman (collectively, "the Salsmans"). First Class contends the court erred in denying the motion to compel because the plain language of the arbitration agreement required the parties to arbitrate their disputes. First Class also argues that the court, which had originally granted the motion to compel arbitration but later denied it upon reconsideration, lacked the authority to reconsider its order because the proceedings had been stayed until completion of the arbitration process. For reasons explained herein, we affirm the denial of the motion to compel arbitration.

         Factual and Procedural History

         The Salsmans agreed to purchase the home of Vincent and Shauna Leonard (collectively, "the Leonards") in Grain Valley. The Salsmans allege that, during the course of negotiations, the Leonards represented that they had built the home approximately twelve years earlier and that there were no problems or flaws concerning the home's walls or exterior brick. Prior to closing on the home, the Salsmans retained First Class to perform a pre-purchase inspection of the home. The inspection and subsequent report given to the Salsmans did not identify any mold or water damage on the property. After the purchase occurred, however, the Salsmans discovered mold and water damage in the home's basement.

         The Salsmans filed a petition for damages against the Leonards and First Class alleging breach of contract, fraudulent misrepresentation, negligent misrepresentation, and negligence. First Class filed a motion to compel arbitration asserting that its inspection agreement with the Salsmans contained a valid arbitration clause, which required that this dispute be submitted to final and binding arbitration. The clause stated:

Any dispute, controversy, interpretation, or claim including claims for, but not limited to, breach of contract, any form of negligence, fraud, misinterpretation, or any other theory of liability arising out of, from, or related to this contract or arising out of, from, or related to the Inspection performed or The Inspection Report shall be submitted to final and binding arbitration under the Rules and Procedures of the Expedited Arbitration of Home Inspection Disputes of Construction arbitration [sic] Services, Inc. The arbitrator appointed must be knowledgeable in and familiar with the professional home industry. The decision of the arbitrator appointed shall be final and binding, and judgment of the award may be entered in any court of competent jurisdiction.

         (Emphasis in original). The circuit court initially determined that the arbitration agreement was valid and ordered First Class and the Salsmans to arbitration. The order also stated that a jury trial would proceed to dispose of the Salsmans' allegations against the Leonards.

         Several months later, the Salsmans filed a motion for reconsideration asserting that the arbitration agreement was impossible to perform as written because Construction Arbitration Services, Inc., ("CAS"), the arbitration entity named as the arbitral body for the parties' disputes, had stopped providing arbitration services approximately six years prior to the formation of the inspection contract between the Salsmans and First Class. The Salsmans requested that the court reconsider its prior ruling and either deny the motion to compel arbitration or specify which language in the arbitration agreement the court had reformed to make their compliance with the order possible. The circuit court granted the Salsmans' motion to reconsider, vacated its previous order, and denied First Class's motion to compel arbitration. This interlocutory appeal followed. Both parties agree that this appeal is properly before this court pursuant to Section 435.440.1(1), RSMo 2016. [1]

         Standard of Review

         Whether the circuit court properly granted or denied a motion to compel arbitration is a question of law that we review de novo. Ellis v. JF Enters., LLC, 482 S.W.3d 417, 419 (Mo. banc 2016). Prior to compelling the parties to enter arbitration, the circuit court must "determine whether a valid arbitration agreement exists and, if so, whether the specific dispute falls within the scope of the arbitration agreement." Nitro Distrib., Inc. v. Dunn, 194 S.W.3d 339, 345 (Mo. banc 2006). If the court determines that the agreement to arbitrate is valid and the dispute alleged is within the scope of the agreement, it must then assess "whether the arbitration agreement is subject to revocation under applicable contract principles." Gentry v. Orkin, LLC, 490 S.W.3d 784, 788 (Mo. App. 2016) (internal citation and quotations omitted).


         First Class brings four points on appeal, which we will address out of order. Point III, relating to the propriety of this appeal, is no longer at issue given the parties' acknowledgment that an interlocutory appeal can be taken from the denial of motion to compel arbitration. The remaining points challenge the circuit court's procedural authority to reconsider the arbitration motion ...

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