Opinion ID: 2543212
Heading Depth: 3
Heading Rank: 3

Heading: The Majority's Reasons for Finding the Contract Unenforceable Fail

Text: The majority points to numerous facts to avoid the holding of Concepcion and Missouri law. First, it claims that procedural issues existed with the contract, in that the entire contract was non-negotiable; the contract was difficult to understand; and the contract was a product of Missouri Title Loan's (the title company's) superior bargaining position. Next, the majority finds the contract was substantively unconscionable in that the terms were one-sided and favored the title company because it did not waive the right to seek attorneys' fees; the title company retained the right to use the judicial process to repossess the automobiles that secured their loans; and the contract provided for a high interest rate. Finally, the majority attempts to bolster its holding by stating that the class arbitration waiver shields the title company from liability and removes any remedy for consumers, as attorneys are unlikely to take a single arbitration case that has small damages and results in small attorneys' fees. Upon even the most cursory examination, the majority's procedural and formational arguments fall away.

When evaluating possible procedural unconscionability in the formation of a contract, courts look to the plaintiff's actual experiences with the business defendant. See Funding Sys. Leasing Corp., 597 S.W.2d at 635. For example, testimony that an arbitration provision never has been negotiated by consumers does not prove the negative or thereby prove that the contract was non-negotiable as to one specific consumer. Vincent, 194 S.W.3d at 857. Brewer does not claim that she, personally, tried to negotiate the contract and failed. Neither has Brewer provided evidence that she could not go to some other lender and obtain a different contract. See discussion in III.C.1(c). Although the majority claims that no customer has negotiated a contract with the title company, this does not prove that Brewer's contract was non-negotiable. Finally, there is no evidence that the title company used tactics designed to coerce Brewer into agreeing to the contract without negotiating the terms. Without some evidence of coercion, or a failed attempt to negotiate, Brewer does not show that the contract was non-negotiable in a way that makes the agreement procedurally unconscionable.
A simple misunderstanding of a contract does not create an unfair issue in the contract formation process that establishes procedural unconscionability. See Repair Masters Const., Inc., 277 S.W.3d at 857. In addition, [t]he failure to read a document prior to signing it is not a defense, and does not make a contract voidable, absent fraud. Id. [7] Even if a consumer does not read a contract he signs with a business, he may expect that it contains an arbitration agreement. [A]n average person would reasonably expect that disputes arising out of an agreement [between an individual and a business] might have to be resolved in arbitration. Swain v. Auto Services, Inc., 128 S.W.3d 103, 107-08 (Mo. App.2003). The majority speculates that it is unlikely that the contract could be comprehended by the average consumer or that it comport[s] with the reasonable expectations of an average member of the public. However, this statement is totally unrelated to the present case because we have specific facts on which we can rely. Brewer did not claim she misunderstood the contract. In fact, Brewer admits that she did not even read the contract. If Brewer had read the contract, she would have seen the class arbitration waiver in the loan agreement was in bold, capital letters, and that bold, capital letters immediately above the signature line stated that the agreement contains a binding arbitration provision. Cf. Whitney v. Alltell Commc'ns, Inc., 173 S.W.3d 300, 308 (Mo. App.2005) (finding an agreement to arbitrate unconscionable when it was in fine print on the back side of the sheet sent to plaintiff because this was insufficient to call its customers' attention to the provision).
An unconscionable contract of adhesion is one that is created by a stronger party with greater bargaining power and imposed on a weaker party. Vincent, 194 S.W.3d at 857. The weaker party is unable to look elsewhere for a more attractive contract, and the terms in the contract unexpectedly or unconscionably limit the obligations of the stronger party. Id. ; see also Swain, 128 S.W.3d at 108 ([t]he service plan was presented as the only warranty available on the car in a mostlypreprinted form ... (emphasis added)). This is a matter of fact that must be proven to the trial court; one cannot simply allege that a pre-printed contract is a contract of adhesion and offer no other proof on the matter. Vincent, 194 S.W.3d at 857. The majority mentions that the parties here had a disparity in bargaining positions and that the title company was in a superior bargaining position. However, neither the trial court nor the majority state how this bargaining position affected the process of forming the contract. Brewer stated she could have looked elsewhere for a loan agreement with different terms; in fact, she compiled a list of 20 competing companies offering the same service. Brewer never claimed that all of these companies used the same contract or included the same terms, leaving her with no possible alternative. Finally, an unequal balance of power between the parties, alone, does not support a finding of unconscionability post-Concepcion. See Robinson, 364 S.W.3d at 517, fn. 14.

Courts should not interfere with a party's right to contract so long as the contract is not otherwise void. Malan Realty Investors, Inc. v. Harris, 953 S.W.2d 624, 627 (Mo. banc 1997). When the terms of a contract are clear, the court is bound to enforce the terms as written. Id. at 626-27. There is no requirement in Missouri that contract terms be an exchange of reciprocal promises. See Vincent, 194 S.W.3d at 859, quoting Harris v. Green Tree Financial Corp., 183 F.3d 173, 181 (3d Cir.1999). The majority attacks many of the contract terms, calling them unconscionable and one-sided. Of those terms, though, it is disingenuous to fault the title company for the need to use the judicial process to repossess vehicles that secure loans. [8] This is not evidence of a contract containing one-sided terms to benefit the title company; arbitration simply cannot provide for a secured creditors' replevin right. [9] See also Marmet, 565 U.S. ___, 132 S.Ct. at 1202-03 (noting that the nursing home arbitration agreement required parties to arbitrate all disputes except claims by the defendant to collect late payments owed by the patient). The majority also concludes that the provisions retaining the title company's right to seek attorneys' fees and establishing the high interest rate are substantively unconscionable. However, this ignores the fact that Brewer could have gone to at least 20 different companieswhich she had researched and listedto find better terms. The majority compares these provisions with ones from the contract the Supreme Court enforced in Concepcion, noting that in that case, AT & T agreed to waive the right to attorneys' fees and to shoulder the costs of arbitration. However, the Supreme Court did not state that these consumer-favorable provisions are required for an agreement to arbitrate to be found conscionable. Furthermore, the parties are not required to make promises equal in consideration as long as the contract is supported by consideration.
The core purpose of the FAA is to ensure that private arbitration agreements are enforced according to their terms. Stolt-Nielsen S.A. v. AnimalFeeds Int'l Corp., ___ U.S. ___, ___, 130 S.Ct. 1758, 1763, 176 L.Ed.2d 605 (2010). A contract defense may not be used to strike down an arbitration clause if that defense would apply only to arbitration or that derive[s] meaning from the fact that an agreement to arbitrate is at issue. Concepcion, 131 S.Ct. at 1746. The generally applicable contract defenses that may invalidate agreements to arbitrate cannot in reason be construed as allowing a common law right, the continued existence of which would be absolutely inconsistent with the provisions of the act. In other words, the act cannot be held to destroy itself. Id. at 1748. [A]fter Concepcion and Cruz [v. Cingular Wireless, 648 F.3d 1205 (11th Cir.2011)], courts may not invalidate arbitration agreements ... even if, as a practical matter, the class action waiver has a claim-suppressing effect. In re Checking Account Overdraft Litig., 813 F.Supp.2d 1365 (S.D.Fla.2011) (internal quotations omitted). The majority alleges that the class arbitration provision shields the title company from liability and provides Brewer no remedy because it is unlikely that a consumer could retain counsel to pursue individual claims. Op. at 494 (emphasis added). The majority is attempting to give effect to the public policy it established in Brewer I that class arbitration procedures are more desirable than individual arbitration. But in doing so, the majority creates a state law contract defense that attacks only arbitration clauses and inhibits their enforcement. Creating a new common law right to an attorney; extending it to a right to class arbitration proceedings; and then using those two new rights as a contract defense just to strike agreements to arbitrate is absolutely inconsistent with the FAA and its goal of providing individual arbitration when parties contract for that remedy. Courts simply may not apply state public policy concerns to invalidate an arbitration agreement, even if the public policy at issue aims to prevent undesirable results to consumers. Concepcion, 131 S.Ct. at 1753 (rejecting the argument that small-dollar claims require class proceedings because states cannot require a procedure that is inconsistent with the FAA.). The Supreme Court has made it clear that a state public policy against enforcing arbitration agreements shall not influence a state court's unconscionability finding. Marmet, 565 U.S. ___, 132 S.Ct. at 1204 (It is unclear, however, to what degree the state court's alternative holding [of unconscionability] was influenced by the invalid, categorical rule discussed above, the rule against predispute arbitration agreements.) The majority tries to distinguish this case from Concepcion and come to a different conclusion by saying the contract at issue here is different than the agreement enforced in Concepcion. Under the contract in that case, the company defendant would pay costs of arbitration, pay double the plaintiffs attorneys' fees if the consumer recovered more than the last company offer in arbitration, and could not seek attorneys' fees incurred in defending the claim. The rewards and attorneys' fees in the Concepcion contract, however, were never stated as requirements for finding the contract conscionable. Moreover, Missouri law already provides effective alternative remedies. The Missouri merchandising practices act allows a court to award a consumer attorneys' fees and punitive damages if appropriate. [10] While it may be generous for a company to contract as the company did in Concepcion, such a contract would create duplicate remedies in Missouri. No evidence was presented showing that Brewer could not get an attorney to handle her case. In fact, the suit itself, with Brewer's counsel of record, proves the contrary. More importantly, such provisions in a contract provide no evidence as to the procedural conscionability of the contract at formation.