Title: A-1 Premium Acceptance, Inc. v. Hunter

State: missouri

Issuer: Missouri Supreme Court

Document:

SUPREME COURT OF MISSOURI 
en banc 
A-1 PREMIUM ACCEPTANCE, INC.,
) 
) 
Appellant, 
) 
) 
v. 
) 
No. SC96672 
) 
MEEKA HUNTER, 
) 
) 
Respondent. 
) 
APPEAL FROM THE CIRCUIT COURT OF JACKSON COUNTY 
The Honorable Joel P. Fahnestock, Judge 
A-1 Premium Acceptance, Inc., d/b/a King of Kash, (“A-1”) appeals the circuit
court’s order denying A-1’s application to compel arbitration and to stay proceedings on 
the claims brought by borrower Meeka Hunter (“Hunter”).  See § 435.440, RSMo 2016 
(permitting an appeal of an order denying an application to compel arbitration).1  Because 
the plain language of the parties’ arbitration agreement shows they agreed to arbitrate 
before – but only before – the National Arbitration Forum (“NAF”), this Court affirms 
the circuit court’s order.   
1   Unless otherwise noted, all statutory references are to RSMo 2016. 
Opinion issued October 16, 2018
 
2 
Background 
 
 
In June and July 2006, Hunter applied for four loans from A-1 totaling $800.  
Hunter’s loans were approved, and A-1 and Hunter executed contracts regarding those 
loans.  Each of the contracts contained the same arbitration agreement (the “Agreement”), 
which states:  
You [the borrower] agree and understand that a claim or demand for 
recovery of the balance due lender resulting from your default in 
payment may be asserted by lender in any court of competent 
jurisdiction.  However, you agree that any claim or dispute including 
class action suits, other than that resulting from your default in 
payment, between you and the lender or against any agent, 
employee, successor, or assign of the other, whether related to this 
agreement or otherwise, and 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.  Any award of the 
arbitrator(s) may be entered as a judgment in any court of competent 
jurisdiction.  Information may be obtained and claims may be filed 
at any office of the National Arbitration Forum or at P.O. Box 
50191, Minneapolis, MN 55405.  This agreement shall be 
interpreted under the Federal Arbitration Act.  
 
 
[Emphasis added.]  
 
 
 
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, including claims such as Hunter’s for which A-1 seeks to 
compel arbitration.  See CompuCredit Corp. v. Greenwood, 565 U.S. 95, 112 n.2 (2012) 
 
3 
(Ginsburg, J., dissenting); In re Nat’l Arbitration Forum Trade Practices Litig., 704 F. 
Supp. 2d 832, 835-36 (D. Minn. 2010). 
 In 2015, Hunter defaulted on the loans, and A-1 filed suit in Jackson County 
Circuit Court seeking to recover the remaining principal of $275, interest in the amount 
of $6,957.62, and attorney fees plus costs.  In her answer, Hunter asserted a counterclaim 
alleging a violation of the Missouri Merchandising Practices Act and, in an amended 
answer, Hunter requested certification of a class of all similarly situated borrowers.  A-1 
filed an application to compel arbitration on Hunter’s counterclaim pursuant to the 
Agreement.  Acknowledging NAF could not play the role the parties envisioned for it in 
the Agreement, A-1 argued the circuit court must designate a new arbitrator under section 
5 of the Federal Arbitration Act (“FAA”), codified at 9 U.S.C. § 5 (2012).  The circuit 
court denied A-1’s application, and A-1 appeals.  This Court granted transfer and has 
jurisdiction pursuant to article V, section 10, of the Missouri Constitution. 
Analysis 
 
 
A-1’s appeal presents only one preserved and distinct claim,2 i.e., whether the 
circuit court erred in refusing to compel arbitration of Hunter’s claim against A-1 because 
                                              
2   A-1 initially attempted to raise this same claim in a separate point relied on by couching 
NAF’s unavailability in terms of a “latent ambiguity.”  In its reply brief, however, A-1 conceded 
this claim is indistinguishable from its first.  A-1 also attempted to raise a claim the circuit  
court erred by failing to appoint an arbitrator under section 435.360, a provision of the Missouri 
Uniform Arbitration Act (“MUAA”), to fill the role envisioned for NAF in the parties’ 
Agreement.  This point is not preserved, however, because it was not “presented to or decided by 
the trial court.”  State ex rel. Nixon v. Am. Tobacco Co., Inc., 34 S.W.3d 122, 129 (Mo. banc 
2000).  A-1 referenced the MUAA only once in its filings before the circuit court.  That 
reference came in the form of a footnote, which was appended to a sentence arguing the FAA 
governed the parties’ arbitration agreement and required arbitration.  This note reads: “Even if 
the [MUAA] were to be applied, the results would be the same – arbitration is required in this 
 
4 
the claim is covered by the Agreement and the unavailability of NAF must be remedied 
by the appointment of a substitute arbitrator under section 5 of the FAA. This “is a 
question of law decided de novo.”  Ellis v. JF Enters., LLC, 482 S.W.3d 417, 419 (Mo. 
banc 2016).  
According to the express terms of the Agreement, the FAA controls its 
interpretation and implementation.  Section 5 of the FAA, on which A-1 relies, provides 
in its entirety: 
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 (2012) (emphasis added).3   
                                              
case.”  This is insufficient to put the circuit court on notice A-1 was asserting section 435.360 as 
a separate and independent basis for its application to compel arbitration.  As a result, this 
solitary reference was insufficient to preserve the claim for appellate review. 
3   Section 5 is a default provision.  See Hall St. Assocs., L.L.C. v. Mattel, Inc., 552 U.S. 576, 587 
(2008) (describing section 5 as “an example of … a default provision”); Ins. Co. of N. Am. v. 
Pub. Serv. Mut. Ins. Co., 609 F.3d 122, 127-28 (2d Cir. 2010) (same); Eaton v. CMH Homes, 
Inc., 461 S.W.3d 426, 437 n.8 (Mo. banc 2015) (same).  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.  See, e.g., Wal-Mart 
Stores, Inc. Assocs’. Health & Welfare Plan v. Wells, 213 F.3d 398, 402 (7th Cir. 2000) (Posner, 
J.) (noting “default rules … govern in the absence of a clear expression of the parties’[contrary] 
intent”) (cited with approval in US Airways, Inc. v. McCutchen, 569 U.S. 88, 102 (2013)); Randy 
E. Barnett, The Sound of Silence: Default Rules and Contractual Consent, 78 Va. L. Rev. 821, 
825 (1992) (noting default rules govern “in the absence of manifested assent to the contrary”). 
 
5 
The FAA “reflects the overarching principle that arbitration is a matter of 
contract.”  Am. Express Co. v. Italian Colors Rest., 570 U.S. 228, 233 (2013).  “And 
consistent with that text, courts must rigorously enforce arbitration agreements according 
to their terms, including terms that specify with whom the parties choose to arbitrate their 
disputes and the rules under which that arbitration will be conducted.”  Id. (quotations, 
emphasis, and alterations removed).  Accordingly, for purposes of analyzing the issue 
presented in this case, there are 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.  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.  Employing this analysis, the Court holds A-1 and 
Hunter agreed to arbitrate before – but only before – NAF and, as a result, the circuit 
court did not err in refusing to compel Hunter to arbitrate before some other arbitrator 
under the auspices of section 5 of the FAA. 
Because NAF aggressively marketed its services to lenders such as A-1 (and other 
entities routinely entering into contracts of adhesion with consumers in which arbitration 
agreements might easily be inserted), it comes as no surprise NAF’s sudden and 
unforeseen departure from the consumer arbitration landscape has spawned a great deal 
of litigation over whether and how to enforce arbitration agreements identifying NAF as 
 
6 
the arbitrator.  And, because the language of the various arbitration agreements differ 
widely and materially, it comes as no surprise that the results in these cases are less than 
uniform.4   
                                              
4   Some cases grant applications to compel arbitration.  See, e.g., Green v. U.S. Cash Advance 
Ill., LLC, 724 F.3d 787, 788, 792-93 (7th Cir. 2013) (compelling arbitration and reasoning the 
parties selected private dispute resolution when the contract language stated disputes “shall be 
resolved by binding arbitration by one arbitrator by and under the [NAF Code of Procedure]”);  
Kahn v. Dell Inc., 669 F.3d 350, 355 (3d Cir. 2012) (finding the clause “shall be resolved 
exclusively and finally by binding arbitration administered by [NAF]” ambiguous because 
“exclusively” could modify both “binding arbitration” or “[NAF],” and resolving that ambiguity 
in favor of arbitration) (emphasis removed); Adler v. Dell Inc., 2009 WL 4580739 at *1-2, 5 
(E.D. Mich. Dec. 3, 2009) (compelling arbitration when agreement said in bold “any claim, 
dispute, or controversy ... shall be resolved exclusively and finally by binding arbitration 
administered by [NAF] under its Code of Procedure then in effect” and noting the “shall be 
resolved” clause could refer either to intent to arbitrate all disputes or to have NAF be the 
exclusive arbitrator) (emphasis removed); Courtyard Gardens Health & Rehab., LLC v. Arnold, 
485 S.W.3d 669, 674-79 (Ark. 2016) (holding trial court erred in denying motion to compel 
arbitration based on impossibility and finding reference to NAF could be severed when 
agreement referenced the NAF Code of Procedure in the main body of the text but referenced the 
NAF itself in a footnote; choice of NAF was ancillary logistical concern); Wright v. GGNSC 
Holdings LLC, 808 N.W.2d 114, 115-16, 122-23 (S.D. 2011) (finding choice to arbitrate 
predominated and choice of NAF was ancillary logistical concern when the agreement language 
stated in bold, “The parties understand and agree that this contract contains a binding arbitration 
provision which may be enforced by the parties, and that by entering into this arbitration 
agreement, the parties are giving up and waiving their constitutional right to have any claim 
decided in a court of law before a judge and a jury, as well as any appeal from a decision or 
award of damages”) (emphasis removed). 
Other cases deny applications to compel arbitration.  See, e.g., Moss v. First Premier 
Bank, 835 F.3d 260, 262-63, 265-67 (2d Cir. 2016) (finding when agreement stated claims “shall 
be resolved by binding ... arbitration by and under [NAF Code of Procedure],” NAF was 
exclusive arbitrator; therefore, there was no “lapse” and, instead, the parties contemplated 
arbitrating only before NAF); Flagg v. First Premier Bank, 644 F. App’x 893, 896-97 (11th Cir. 
2016) (per curiam) (finding use of the word “shall” and reference to NAF’s Code indicated the 
parties contemplated arbitrating only before NAF; choice of NAF was integral); Ranzy v. 
Tijerina, 393 F. App’x 174, 175-76 (5th Cir. 2010) (per curiam) (finding use of the word “shall” 
indicated “the parties explicitly agreed that the NAF shall be the exclusive forum”); Carideo v. 
Dell, Inc., 2009 WL 3485933, at *4-6 (W.D. Wash. Oct. 26, 2009) (finding the selection of NAF 
integral to arbitration agreement and declining to name a substitute arbitrator when agreement 
stated disputes “shall be resolved exclusively and finally by binding arbitration administered by 
[NAF] under its Code of Procedure then in effect”) (emphasis removed); Rivera v. Am. Gen. Fin. 
Servs., 259 P.3d 803, 814-15 (N.M. 2011) (finding that when agreement stated “[a]rbitration will 
be conducted under the rules and procedures of the [NAF] or successor organization that are in 
 
7 
In some of these cases, the courts have focused not on whether the parties have 
agreed to arbitrate before anyone other than NAF but on whether the reference to NAF 
was an “integral part of the agreement to arbitrate” or an “ancillary logistical concern.”  
See Brown v. ITT Consumer Fin. Corp., 211 F.3d 1217, 1222 (11th Cir. 2000) (quotation 
omitted); see also Daniel A. Sito, Comment, “Integral” Decisionmaking: Judicial 
Interpretation of Predispute Arbitration Agreements Naming the National Arbitration 
Forum, 81 U. Chi. L. Rev. 1991, 2003-15 (2014) (noting widespread adoption of the 
integral/ancillary test, but lack of consensus in its application).  It may be these are 
simply two descriptions of the same analysis.  Or it may be the integral/ancillary analysis 
would allow for a court to name a substitute arbitrator even though the parties had agreed 
to arbitrate before – but only before – the named arbitrator provided the agreement was 
not “integral” to the arbitration agreement as a whole.  The latter prospect is troubling, 
but this Court need not definitely resolve the matter here because it is clear in the present 
case both that A-1 and Hunter intended to arbitrate before – but only before – NAF and 
that this exclusivity was sufficiently integral to the parties’ arrangement that A-1 drafted 
the Agreement to ensure compliance with it. 
Courts “ascertain the intent of the parties by looking at the words of the contract 
and giving those words their plain, ordinary, and usual meaning.”  Ethridge v. TierOne 
Bank, 226 S.W.3d 127, 131 (Mo. banc 2007).  “If the contract terms are unequivocal, 
                                              
effect at the time arbitration is started and under the rules set forth in the Arbitration Provisions,” 
the choice of NAF was integral to the agreement and parties could not be compelled to arbitrate 
before a substitute) (alterations in original).  
 
8 
plain, and clear, the court is bound to enforce the contract as written.”  Malan Realty 
Inv’rs, Inc. v. Harris, 953 S.W.2d 624, 626-27 (Mo. banc 1997).   
Here, the plain and unambiguous language of the Agreement shows Hunter and  
A-1 agreed to arbitrate before – but only before – NAF.5  The Agreement provides 
Hunter’s claims “shall be resolved by binding arbitration by the National Arbitration 
Forum, under the Code of Procedure then in effect.”  [Emphasis added.]  The 
unequivocal, plain and clear terms of this Agreement establish that A-1 and Hunter 
agreed only to arbitrate before NAF.  A-1 drafted this provision and it freely chose to 
require such an agreement from Hunter (and other borrowers) as a condition of obtaining 
loans from A-1.  Having made the choice to insist upon NAF – and only NAF – as the 
arbitration forum, A-1 cannot now look to section 5 of the FAA to expand the arbitration 
promise it extracted from Hunter in the Agreement.6 
                                              
5   Several cases compelling arbitration notwithstanding NAF’s unavailability turned on the fact 
the arbitration agreement named NAF and others (often the American Arbitration Association) as 
potential arbitrators.  See, e.g., Robinson v. EOR-ARK, LLC, 841 F.3d 781, 783-84 (8th Cir. 
2016) (affirming decision to compel arbitration when agreement listed five possible fora for 
arbitration); Smith v. ComputerTraining.com, Inc., 531 F. App’x 713, 715-16 (6th Cir. 2013) 
(enforcing arbitration agreement when it listed both NAF and AAA as potential arbitrators); 
Mason v. Midland Funding LLC, 2018 WL 3702462, at *36-37 (N.D. Ga. May 25, 2018) 
(enforcing an arbitration provision naming both NAF and AAA as potential arbitrators because 
choice of a particular arbitrator was not central to the agreement); Credit Acceptance Corp. v. 
Front, 745 S.E.2d 556, 559, 570 (W. Va. 2013) (compelling arbitration and finding the choice of 
arbitrator ancillary when the agreement listed both the NAF and AAA as potential arbitrators).  
Here, however, the absence of such alternatives supports the conclusion that the parties intended 
to arbitrate before – but only before – NAF. 
6   Arbitration agreements that foresee and account for the possible unavailability of an identified 
arbitrator can easily be imagined and, in fact, are not rare.  See, e.g., In re Gateway LX6810 
Comput. Prods. Litig., 2011 WL 3099862, at *1-2, 4 (C.D. Cal. July 21, 2011) (enforcing 
arbitration agreement notwithstanding NAF’s unavailability when the agreement stated: “You 
and Gateway will agree on another arbitration forum if NAF ceases operations”). 
 
9 
Other considerations support this conclusion.  As noted above, the Agreement 
provides Hunter’s claims “shall be resolved by binding arbitration by the National 
Arbitration Forum, under the Code of Procedure then in effect.”  [Emphasis added.]  
The 2006 NAF Code of Procedure, submitted as evidence by A-1, provides that only 
NAF may administer the Code.  In other words, the parties agreed to arbitrate pursuant to 
NAF’s Code and, according to NAF, only NAF can apply and administer that Code.  This 
precludes any inference that the parties – despite having named NAF as the only 
arbitrator before which they would proceed – intended to arbitrate before some other 
arbitrator in the event NAF was unavailable.  Similarly, the requirement in the 
Agreement that arbitration claims must be filed at NAF’s home office in Minnesota or in 
one of its branches precludes the inference the parties’ Agreement extended to 
arbitrations before any arbitrator other than NAF.  Taken as a whole, therefore, the plain 
language of the Agreement shows Hunter and A-1 agreed to arbitrate before NAF and no 
other arbitrator. 
To 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.  Here, the plain language of the 
Agreement provides that basis. 
 
 
 
10 
Conclusion 
 
For the reasons set forth above, the circuit court’s denial of A-1’s application to 
compel arbitration and to stay the proceedings is affirmed. 
 
  
 
 
 
 
 
  
 
 
 
 
 
_____________________________    
 
Paul C. Wilson, Judge 
 
 
 
Draper, Russell, Powell, Breckenridge and Stith, JJ., and Page, Sp.J., concur.  
Fischer, C.J., not participating.