Missouri Supreme Court Upholds Denial of Petition to Compel Arbitration Where Agreement Designated an Arbitration Forum that Later Became Defunct
After a loan company sued a customer in default and the customer asserted counterclaims on a class-wide basis, the company sought to compel arbitration. However, the particular arbitral forum designated in the arbitration agreement had stopped providing arbitration services after entering a consent decree following another state’s fraud and unfair practices investigation. The lower courts declined the company’s request to designate a new arbitrator and ultimately denied its request to compel arbitration.
On appeal, the Missouri high court found no error in the lower court’s refusal to compel arbitration. Channeling the principle that arbitration is a matter of contract, the court evaluated the arbitration agreement to determine whether the parties agreed to arbitrate regardless of the named arbitrator’s availability or whether they agreed to arbitrate “before – but only before” the named arbitrator. Based on the plain language of the agreement, the court concluded the latter – the parties agreed to arbitrate only before the defunct arbitrator. It noted that the company drafted the agreement, which specified a particular arbitrator, and could not now avoid that specific choice because the arbitrator is unavailable. Moreover, the court was unable to reconcile other parts of the agreement with the idea that the designated arbitrator was not exclusive. The agreement provided that arbitration was to proceed under the designated arbitrator’s procedures, and that arbitration claims must be filed at the designated arbitrator’s home office only. The court emphasized that an agreement’s designation of a specific arbitrator does not always demand this result when the arbitrator later becomes unavailable; rather, the language of this particular agreement required the conclusion that the agreement to arbitrate was limited to the defunct arbitrator only. Thus, the court affirmed. A-1 Premium Acceptance, Inc. v. Hunter, Case No. SC96672 (Mo. Oct. 16, 2018).