In Greene v. Alliance Automotive, Inc., — S.W.3d —-, 2014 WL 928859 (Mo.App. W.D. 2014), the Missouri Court of Appeal affirmed in an unpublished decision a trial court’s striking down of an arbitration clause in an automobile retail installment sales contract. The court reviewed a videotape of the closing of the sale by the dealer, and found that the Customer did not agree to the sale – not because the arbitration agreement was concealed or not discussed; it was. The Court of Appeal found, instead, that the arbitration agreement was “trivialized” and its meaning and impact was not discussed.
Alliance Automotive videotaped Greene’s closing. The court had the benefit of viewing this video which depicts Alliance Automotive presenting and Greene signing the documents that are now in contest. In the video, Greene can be observed signing a paper when the video begins. With the camera running, the closing agent advises Greene that all loan closings are videotaped to protect both parties, and Greene is then asked to sign an authorization for the videotaping. While holding a stack of papers that include the Purchase Agreement, the closing agent individually presents each paper within the stack to Greene. With each presentation, the closing agent identifies the document and its contents, asks for Greene’s signature, and then sets aside each signed paper. At approximately four minutes into the video, the closing agent advises Greene that she will ultimately receive a copy of all the signed papers. At approximately fifteen minutes into the video, after Green had already signed numerous papers, the closing agent asks, “Did you have any questions about the arbitration agreement?” Greene responds, “Um, no.” The closing agent then presents the part of the Purchase Agreement containing the arbitration provision and states: “Ok. Here it is in legal terms. If you can’t sleep one night I suggest this for reading. It will help you get there. Just need your initials there. I don’t think I’ve ever got through the whole thing without passing out.” Greene signed the paper and it was set aside by the closing agent. The aforementioned discussion and signing of the arbitration agreement took approximately thirteen seconds. ¶ We find the closing video evidence from which the circuit court could have concluded that true acceptance with regard to the arbitration agreement was questionable. While Alliance contends that Greene should be bound by her signature and is presumed to have read and understood the agreement she signed, Alliance Automotive’s own closing video portrays a matter of fact, cursory closing process where the closing agent trivialized the arbitration clause. The video shows Green being presented the arbitration agreement with no discussion as to its meaning or ramifications. Although Alliance Automotive’s pre-closing video encouraged Greene to read the provisions of the arbitration transaction carefully, that instruction was not amplified in any way and was intermingled with topics ranging from odometer statements to checking tire tread. Significantly, Greene did not have the arbitration agreement in her possession at the time she watched the pre-closing video so as to even follow those instructions at the time they were given. Alliance does not dispute Greene’s contention that she was given no opportunity to read the arbitration agreement prior to the closing. Hence, the closing video could support a conclusion that the rapidity of Alliance Automotive’s closing process, and the overall manner in which the closing was conducted, foreclosed Greene’s opportunity to fully read and comprehend the arbitration clause such that the agreement to arbitrate was not accepted by Greene.
The Court of Appeals found that even if an arbitration agreement was agreed to, it was invalid due to the Dealer’s retention of self-help remedies.
The arbitration agreement purports to cover “any dispute” between the parties … and apply to all matters arising out of or relating to the Contract or is “in any way connected with the purchase and sale or financing of the Vehicle, or any resulting transaction or relationship.” The agreement defines “dispute” as including “any action, dispute, claim or controversy of any kind arising out of …. the Contract, the sale of the Vehicle, financing, contracts, origination … or any other aspect whatsoever of the past, present, or future relationship or conduct of the Parties.” Thus, if Greene defaulted on the contract as Alliance alleges, this would have been a matter arising out of the contract and a matter that Alliance should have arbitrated under the agreement. Yet, the agreement simultaneously allows for self-help and states that self-help will not waive a party’s right to elect arbitration. Under the “Default” portion of the Purchase Agreement it provides that “[i]f you default, you agree to pay court costs, attorneys’ fees, and reasonable expenses incurred in realizing on the Property securing this Contract.” Under the “Remedies” portion of the Purchase Agreement it states that “[i]f you are in default on this Contract, we will have all of the remedies provided by law and this Contract,” including repossession by “legal process or self-help.” ¶ Our Supreme Court in Brewer v. Missouri Title Loans, 364 S.W.3d 486, 493 (Mo. banc 2012), found an arbitration agreement between Beverly Brewer and Missouri Title loans unenforceable. The agreement was part of a transaction whereby Brewer borrowed $2,215 from Missouri Title Loans and secured the loan with the title to Brewer’s automobile. Id. at 487. The Brewer court found especially onerous that Brewer was required to obtain her only meaningful remedy to a dispute vi a arbitration, while the lender retained its primary remedies judicial or self-help repossession. Id. at 494–95. “A contract that purports to exchange mutual promises will be construed to lack legal consideration if one party retains the unilateral right to modify or alter the contract as to permit the party to unilaterally divest itself of an obligation to perform the promise initially made.” Frye, 321 S.W.3d at 442. Here, if the anti-waiver provision means that Alliance can exercise its primary remedy of self-help repossession without waiving arbitration of other disputes, then the agreement itself allows Alliance to unilaterally divest itself of the promise to arbitrate. Alliance apparently interprets the agreement in this manner as it solved its own dispute with Greene by repossessing her vehicle, but now relies on the express language of the arbitration agreement to compel Greene to arbitrate her claims. There is no mutual promise to arbitrate in an agreement such as this and, therefore, Alliance has failed to prove the existence of a valid, enforceable arbitration agreement