SUPREME COURT OF MISSOURI
en banc
CAR CREDIT, INC., ) Opinion issued April 26, 2022
)
Respondent, )
)
v. ) No. SC99335
)
CATHY L. PITTS, )
)
Appellant. )
APPEAL FROM THE CIRCUIT COURT OF JACKSON COUNTY
The Honorable Jennifer M. Phillips, Judge
Cathy Pitts appeals a Jackson County circuit court's judgment confirming an
arbitration award in favor of Car Credit, Inc. Pitts argues the arbitration agreement was
invalid because the National Arbitration Forum was designated as the arbitrator and the
National Arbitration Forum was not available to arbitrate the claim. The circuit court’s
judgment is affirmed.
Facts and Procedural History
In July 2011, Cathy Pitts entered into a Retail Installment Contract and Security
Agreement ("the Obligation") with Car Credit to purchase and finance a vehicle. As part
of the transaction, Pitts and Car Credit entered into a written arbitration agreement ("the
Arbitration Agreement"), providing in part:
A "Dispute" is any controversy or claim (other than a claim relating to our
right to repossess the vehicle by self help, if permitted, or by judicial
process) arising from or relating to the vehicle lease, loan or financing
agreement (the "Obligation") you have entered into with us on the date
shown above. The term "Dispute" includes but is not limited to the
negotiation or breach of the Obligation, or the lease, sale, purchase or
financing of the vehicle . . . . The term "dispute" also includes but is not
limited to all tort claims arising from the transaction to which the
Obligation relates or arising from our enforcement of the Obligation, and
any question regarding whether a matter is subject to arbitration under this
Arbitration Agreement.
....
No class action arbitration may be ordered under this provision and there
shall be no joinder of parties, except joinder of parties to the same
Obligation.
The parties agree that transactions relating to the Obligation involve
interstate commerce and that this Arbitration Agreement shall be subject to
and governed by the Federal Arbitration Act, 9 U.S.C. Sections 1-6, as
amended.
The Arbitration Agreement also contained a delegation clause ("the Delegation Clause"):
You and we agree that if any Dispute arises, either you or we may choose
to have the Dispute resolved by binding arbitration under the rules then in
effect of the Arbitration Organization shown below (if no Arbitration
Organization is shown below, the Arbitration Organization shall be the
National Arbitration Forum). If such rules conflict with this Arbitration
Agreement, the terms of this Arbitration Agreement shall apply. The
election to arbitrate may be made even if an action has been filed in court,
so long as no judgment has been rendered. We agree that we will not
require you to arbitrate any individual claim (as opposed to a class claim)
that you may bring against us in court involving an amount in controversy
of $2,500 or less.
Finally, the bottom of the Arbitration Agreement provided a line to designate an
"Arbitration Organization (If none listed, the Arbitration Organization is the National
2
Arbitration Forum) See reverse side for addresses and phone numbers of arbitration
organizations." 1 The parties left the line blank.
Car Credit sent Pitts a notice of repossession and plan to sell property after Pitts
failed to make payments. Car Credit repossessed the vehicle and sued Pitts for the
remaining deficiency balance. Pitts filed an answer and counterclaim, asserting a
"consumer class action . . . seeking relief to redress an unlawful and deceptive pattern of
wrongdoing followed by Car Credit regarding collection, enforcement, repossession and
disposition of collateral, and collection of alleged deficiencies." Pitts also moved to
dismiss the claim, but Car Credit voluntarily dismissed its petition.
Pitts moved to amend her counterclaim and assert class action claims against Car
Credit. Car Credit moved to compel arbitration and stay court proceedings. The circuit
court sustained Pitts' motion to amend, and overruled Car Credit's motion to compel
arbitration. Pitts filed a motion for class certification, which the circuit court sustained.
Car Credit then renewed its motion to compel arbitration, which the circuit court
sustained. As relevant here, the circuit court found: (1) the Arbitration Agreement
contained an enforceable Delegation Clause that delegated threshold issues of
arbitrability to the arbitrator; (2) Pitts failed to challenge the Delegation Clause; (3) the
court was compelled to appoint a substitute arbitrator pursuant to the terms of the
Arbitration Agreement and the Federal Arbitration Act ("the FAA"); and (4) Pitts had to
1
The reverse side of the Arbitration Agreement was not included in the legal file, and the record
indicates it was never presented to the circuit court or arbitrator.
3
proceed in individual arbitration before the substitute arbitrator, the American Arbitration
Association ("the AAA"), as opposed to the National Arbitration Forum ("the NAF").
Pitts initiated arbitration before the AAA, but objected to the AAA arbitrator's
jurisdiction. The AAA arbitrator concluded he had authority to arbitrate Pitts' claims and
found the arbitration agreement was valid and enforceable. As relevant here, the AAA
arbitrator further found: (1) the class claims were not subject to arbitration; (2) Pitts'
claim was included in the term "Dispute" in the Arbitration Agreement; and (3) the AAA
could be substituted for the NAF as the arbitration organization.
Pitts filed motions in the circuit court to reconsider the order sustaining the
renewed motion to compel arbitration and to vacate the arbitration order regarding
jurisdiction, which were both overruled. Pitts then sought writs of mandamus in the court
of appeals and this Court, which were both denied.
The AAA arbitrator entered an award on the merits of Pitts' claim, in favor of Car
Credit. Pitts filed motions in the circuit court to reconsider the order compelling
arbitration and to vacate the arbitration award. Car Credit filed a motion to confirm the
arbitration award, enter judgment in accordance therewith, and to decertify the class. The
circuit court overruled Pitts' motions, and sustained Car Credit's motions. The circuit
court entered an order confirming the arbitration award and decertifying the class. The
circuit court entered judgment in Car Credit’s favor "on all issues, claims, counterclaims,
and/or causes of action in accordance with the January 21, 2020, arbitration award."
Pitts appealed, arguing the circuit court erred in entering judgment confirming the
arbitration award in Car Credit’s favor because the NAF was the exclusive agreed-upon
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arbitration forum and the AAA arbitrator exceeded his authority. The court of appeals
reversed the circuit court's order confirming the arbitration award. The court of appeals
concluded the circuit court erred in entering judgment confirming the arbitration award
because the arbitrator exceeded his authority in that the NAF was the only valid
arbitration forum under the Arbitration Agreement. This Court granted transfer.
Mo. Const. art. V, sec. 10.
Standard of Review
"Whether the trial court should have granted a motion to compel arbitration is a
question of law decided de novo." Ellis v. JF Enters., LLC, 482 S.W.3d 417, 419 (Mo.
banc 2016). "This Court reviews de novo the legal issue of whether a valid, enforceable
arbitration agreement exists." State ex rel. Pinkerton v. Fahnestock, 531 S.W.3d 36, 42
(Mo. banc 2017) (internal quotations and alteration omitted).
Analysis
Pitts argues the circuit court erred in sustaining Car Credit's renewed motion to
compel arbitration because the entire Arbitration Agreement must fail due to the NAF
being designated as the arbitrator, and the NAF being unavailable to serve as the
arbitrator. 2
2
The NAF no longer provides arbitration services for consumer claims nationwide.
In July 2009, the Minnesota Attorney General sued NAF, alleging consumer
fraud, deceptive trade practices, and false advertising. The complaint alleged
NAF worked with creditors behind the scenes to ensure positive outcomes for
creditors in intentionally and consistently one-sided arbitrations. Three days after
suit was filed, NAF entered into a consent decree requiring it immediately to stop
providing arbitration services for consumer claims nationwide[.]
A-1 Premium Acceptance, Inc. v. Hunter, 557 S.W.3d 923, 925 (Mo. banc 2018).
5
Arbitration is a matter of contract under the FAA. AT&T Mobility, LLC v.
Concepcion, 563 U.S. 333, 339 (2011); Soars v. Easter Seals Midwest, 563 S.W.3d 111,
114 (Mo. banc 2018). Section 5 of the FAA provides:
If in the agreement provision be made for a method of naming or
appointing an arbitrator or arbitrators or an umpire, such method shall be
followed; but if no method be provided therein, or if a method be provided
and any party thereto shall fail to avail himself of such method, or if for any
other reason there shall be a lapse in the naming of an arbitrator or
arbitrators or umpire, or in filling a vacancy, then upon the application of
either party to the controversy the court shall designate and appoint an
arbitrator or arbitrators or umpire, as the case may require, who shall act
under the said agreement with the same force and effect as if he or they had
been specifically named therein; and unless otherwise provided in the
agreement the arbitration shall be by a single arbitrator.
9 U.S.C. § 5. "Section 5 is a default provision." Hunter, 557 S.W.3d at 926 n.3. "This
means section 5 requires a court to appoint a substitute arbitrator unless it appears the
parties did not intend to arbitrate before a substitute arbitrator in the event their chosen
arbitrator became unavailable." Id.
"The delegation provision is an agreement to arbitrate threshold issues concerning
the arbitration agreement." Rent-A-Center, W., Inc. v. Jackson, 561 U.S. 63, 68 (2010).
"[P]arties can agree to arbitrate 'gateway' questions of 'arbitrability,' such as whether the
parties have agreed to arbitrate or whether their agreement covers a particular
controversy." Id. at 68-69. Questions of arbitrability include "whether the parties are
bound by a given arbitration clause" and "[d]isputes over the formation of the parties'
arbitration agreement and its enforceability or applicability to the dispute at issue."
Pinkerton, 531 S.W.3d at 43.
6
"An agreement to arbitrate a gateway issue is simply an additional, antecedent
agreement the party seeking arbitration asks the . . . court to enforce, and the FAA
operates on this additional arbitration agreement just as it does on any other."
Rent-A-Ctr., 561 U.S. at 70. "A delegation provision giving an arbitrator the power to
decide threshold issues of arbitrability 'shall be valid, irrevocable, and enforceable, save
upon such grounds as exist at law or in equity for the revocation of any contract.'" Soars,
563 S.W.3d at 114 (quoting 9 U.S.C. § 2).
"Generally, any silence or ambiguity concerning the scope of arbitrable issues
should be resolved in favor of arbitration." Pinkerton, 531 S.W.3d at 43 (internal
quotations omitted). However, there is a presumption against arbitrability "when
considering whether a court or an arbitrator should decide threshold questions of
arbitrability[.]" Soars, 563 S.W.3d at 114. "'[C]lear and unmistakable evidence' the
parties manifestly intended to arbitrate questions of arbitrability is required to overcome
this presumption." Id. (alteration in original) (quoting Rent-A-Ctr., 561 U.S. at 69 n.1).
"[A] party must specifically challenge a delegation provision to avoid its
application." Soars, 563 S.W.3d at 116. "Invalidation of an arbitration agreement
requires a specific challenge to the arbitration agreement, not to the contract as a whole."
Id. at 114. "Arbitration agreements are severable and 'are to be considered separate and
apart from any underlying or contemporaneously related agreement.'" Id. (quoting Ellis,
482 S.W.3d at 419). A delegation provision "should be treated as an additional 'written
provision . . . to settle by arbitration a controversy.'" Soars, 563 S.W.3d at 114 (quoting
Rent-A-Ctr., 561 U.S. at 71) (emphasis in original). Without a challenge to the specific
7
delegation provision, "it is treated as valid and enforced—'leaving any challenge to the
validity of the Agreement as a whole for the arbitrator.'" Soars, 563 S.W.3d at 114
(quoting Rent-A-Ctr., 561 U.S. at 72); see 9 U.S.C. §§ 2-4. "[T]he question of an
arbitration agreement's validity as a whole is not for this Court to decide when the
delegation provision is valid and enforceable." Soars, 562 S.W.3d at 115 n.3.
Therefore, contrary to Pitts' assertion, the issue here is the validity of the
Delegation Clause. The Delegation Clause clearly states the parties intended to delegate
to an arbitrator any disputes relating to or arising from the Obligation, except claims less
than $2,500 and any class claims. The Delegation Clause covers the entire definition of
"Dispute," including "any question regarding whether a matter is subject to arbitration
under this Arbitration Agreement" and claims "arising from [the] enforcement of the
Obligation."
Pitts' arguments fail to challenge the Delegation Clause specifically. Pitts argued
to the circuit court that the selection of the NAF was so integral to the Arbitration
Agreement that the entire Arbitration Agreement should be rendered invalid, and that
there was no agreement to arbitrate all disputes, including the threshold gateway issues.
On appeal, Pitts argued the "plain language of the Alleged Arbitration Agreement shows
the parties agreed to arbitrate any clearly and unmistakably delegated arbitrability issues
and issues on the merits before . . . the NAF." At no point did Pitts claim the Delegation
Clause giving the arbitrator the power to decide gateway issues is unenforceable. Rather,
Pitts claimed that the entire Arbitration Agreement is unenforceable.
8
Without a challenge to the Delegation Clause itself, Pitts cannot avoid its
application. Soars, 563 S.W.3d at 116. This is true regardless of the language chosen by
Pitts. See Pinkerton, 531 S.W.3d at 52 n.12 ("The dissenting opinion contends the record
clearly shows Mr. Pinkerton specifically challenged the delegation provision and points
to a motion he filed stating in capital letters that he 'disputes the existence and
enforceability of any agreement to delegate issues of arbitrability to an arbitrator.' What
the dissenting opinion ignores is that Mr. Pinkerton then proceeded to challenge the
arbitration agreement as a whole."). Pitts' additional arguments on appeal provide no
support for a challenge to the Delegation Clause, as both points challenge the merits of
the Arbitration Agreement itself. 3
3
Even if this Court considered Pitts' arguments on the merits, the arguments fail. Pitts contends
this Court's decision in Hunter requires the circuit court's order compelling arbitration to be
reversed because the parties agreed to arbitrate before—but only before—the NAF and the AAA
arbitrator had no power to arbitrate the dispute. 557 S.W.3d 923. In Hunter, this Court found
the NAF was the only arbitrator with authority to arbitrate claims under an arbitration agreement
providing, in part: "Any claim or dispute related to this agreement or the relationship or duties
contemplated under this contract, including the validity of this arbitration clause, shall be
resolved by binding arbitration by the National Arbitration Forum, under the Code of Procedure
then in effect . . . . [C]laims may be filed at any office of the National Arbitration Forum or at
P.O. Box 50191, Minneapolis, MN 55405." Id. at 924-25 (emphasis omitted). The parties
executed the arbitration agreement and underlying contracts three years before the NAF was
required to stop providing arbitration services for consumer claims nationwide. Id. at 925. The
circuit court overruled the motion to compel arbitration, and this Court affirmed. Id. at 925, 929.
This Court identified two types of arbitration agreements: "(1) agreements in which the parties
agree to arbitrate regardless of the availability of a named arbitrator, and (2) agreements in which
the parties agree to arbitrate before—but only before—a specified arbitrator." Id. at 926.
If the former, section 5 of the FAA authorizes and requires courts to name a
substitute arbitrator when the agreement fails to identify one or fails to provide a
means for naming a substitute. If the agreement is of the latter type, however,
nothing in the FAA authorizes (let alone requires) a court to compel a party to
arbitrate beyond the limits of the agreement it made.
Id. This Court found that what type of agreement is at issue is fact-dependent on the language of
the arbitration agreement: "Several cases compelling arbitration notwithstanding NAF's
unavailability turned on the fact the arbitration agreement named NAF and others (often the
9
The enforceability of the Arbitration Agreement due to the unavailability of the
NAF is a matter of threshold arbitrability that is properly subject to arbitration so long as
the Delegation Clause, standing alone, is valid. 4 Because Pitts failed to specifically
[AAA]) as potential arbitrators." Id. at 928 n.5. This Court found the parties in Hunter agreed to
arbitrate only before the NAF because: (1) the arbitration agreement specifically named the NAF
as the arbitrator, and (2) the arbitration agreement provided arbitration shall be resolved under
the NAF Code of Procedure, which only the NAF may administer. Id. at 928-29. This Court
concluded:
[T]o be clear, merely identifying an arbitrator in an arbitration agreement—
without more—cannot justify refusing to name a substitute under section 5 of the
FAA on the ground the parties' agreement was limited to arbitrating before—but
only before—the identified arbitrator. Instead, there must be a basis to conclude
the parties' arbitration agreement was limited to the specified arbitrator.
Id. at 929.
In this case, there is no basis to conclude the Arbitration Agreement was limited only to the
NAF. Several provisions of the Arbitration Agreement demand this result. First, the NAF was
only a default arbitration organization: "if no Arbitration Organization is shown below, the
Arbitration Organization shall be the [NAF]." The line allowing the parties to select an
arbitration organization was left blank, and stated that the reverse side of the Arbitration
Agreement provided "addresses and phone numbers of arbitration organizations." This is
distinguishable from Hunter because the Arbitration Agreement contemplated that the NAF and
other arbitration organizations may serve as the arbitrator and purported to give multiple
addresses for those organizations. Second, even if this Court assumes the provision appointing
the NAF as the default arbitrator is sufficient, the Arbitration Agreement provides no basis to
conclude the Arbitration Agreement was limited to only the NAF. The Arbitration Agreement
provides that, in the event of a conflict between the rules of the arbitration organization and the
Arbitration Agreement, the terms of the Arbitration Agreement apply. This is distinguishable
from Hunter because the Arbitration Agreement provides that the Arbitration Agreement, not the
rules of the NAF or any other arbitration organization, controls the arbitration. Finally, the
parties in Hunter executed the arbitration agreement three years prior to the NAF's unavailability
to serve as the arbitrator. Here, the parties executed the Arbitration Agreement two years after
the NAF became unavailable. This fact provides further support that the parties here did not
contemplate the NAF was the only organization that could serve as the arbitrator because, if that
were the case, the Arbitration Agreement would have had no force from the time of execution.
In light of the provisions of the Arbitration Agreement and the facts surrounding the execution of
the Arbitration Agreement, the circuit court could not justify refusing to name a substitute
arbitrator under § 5 of the FAA. Hunter, 557 S.W.3d at 929.
4
The FAA provides a court may vacate an arbitration award:
(1) where the award was procured by corruption, fraud, or undue means;
(2) where there was evident partiality or corruption in the arbitrators, or either of them;
10
challenge the Delegation Clause, this Court must treat it as valid under 9 U.S.C. § 2 "and
must enforce it under §§ 3 and 4, leaving any challenge to the validity of the Agreement
as a whole for the arbitrator." Rent-A-Ctr., 561 U.S. at 72.
Conclusion
The circuit court's order confirming the arbitration award in favor of Car Credit is
affirmed. 5
___________________________
Zel M. Fischer, Judge
Wilson, C.J., Russell, Breckenridge, Ransom
and Draper, JJ., and Broniec, Sp.J., concur.
Powell, J., not participating.
(3) where the arbitrators were guilty of misconduct in refusing to postpone the hearing,
upon sufficient cause shown, or in refusing to hear evidence pertinent and material to the
controversy; or of any other misbehavior by which the rights of any party have been
prejudiced; or
(4) where the arbitrators exceeded their powers, or so imperfectly executed them that a
mutual, final, and definite award upon the subject matter submitted was not made.
9 U.S.C. § 10(a)(1)-(4).
In the circuit court, Ms. Pitts argued the arbitration award should be vacated because the
arbitrator "(1) exceeded his authority by ignoring the plain language of the Arbitration
Agreement and (2) manifestly disregarded the law." An arbitrator's decision regarding properly
delegated issues is given great deference, and "courts may vacate an arbitrator's decision only in
very unusual circumstances." Oxford Health Plans LLC v. Sutter, 569 U.S. 564, 568 (2013)
(internal quotations omitted). In challenges brought under 9 U.S.C. section 10(a)(4), “[o]nly if
the arbitrator acts outside the scope of his contractually delegated authority—issuing an award
that simply reflects his own notions of economic justice rather than drawing its essence from the
contract—may a court overturn his determination." Id. at 569 (internal quotations and
alternations omitted). The arbitrator's award must stand because he acted within "the scope of
his contractually delegated authority" by interpreting the terms of the Arbitration Agreement and
issuing an award. Id.
5
Because this Court finds the Delegation Clause valid and affirms the circuit court's order
compelling arbitration, it is not necessary to address Pitts' remaining claims.
11