463 S.W.3d 457
Mo. Ct. App.2015Background
- Sellers (50 Plus Pharmacy and Kathy Browne) sold a pharmacy business to Buyers (Choice Pharmacy entities and Kathy Kopp) under an Asset Purchase Agreement (APA) for $6,150,000 plus a $500,000 escrow payable over three years depending on patient counts.
- The APA incorporated three subordinate agreements by reference: an Employment Consulting Agreement, a Restrictive Covenant Agreement, and an Indemnity Escrow Agreement (Escrow Agreement).
- The APA contains a broad forum-selection clause requiring litigation in Missouri state or federal courts for disputes "arising out of or relating to" the APA.
- The Escrow Agreement—narrow in scope and involving a New Jersey escrow agent—provides a process for Buyer Claim Notices, Seller Notices of Dispute, and, if unresolved within 90 days, final and binding arbitration under the AAA Commercial Arbitration Rules limited to matters set forth in a Notice of Dispute.
- Sellers sued Buyers in Missouri state court for breach of contract, tortious interference, and defamation; Buyers later moved to compel arbitration under the Escrow Agreement, although no Claim Notice, Buyer’s Certificate, or Notice of Dispute had been filed.
- The trial court denied the Motion to Compel Arbitration; Buyers appealed and the Missouri Court of Appeals affirmed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the arbitration clause delegated arbitrability to the arbitrator | Sellers argued courts should decide arbitrability because the APA’s forum-selection clause shows parties expected courts to resolve disputes | Buyers argued incorporation of AAA Rules in the Escrow Agreement delegated arbitrability to the arbitrator | Court held no clear and unmistakable delegation: APA’s litigation clause and the narrow scope of the Escrow Agreement preclude finding delegation to the arbitrator |
| Whether the Escrow Agreement’s arbitration clause compels arbitration of the parties’ current claims | Sellers argued the arbitration clause only covers disputes tied to Claim Notices/Notice of Dispute over escrowed funds and not the present litigation | Buyers argued the incorporated Escrow Agreement’s arbitration provision applies to all disputes between the parties | Court held the arbitration provision is narrow and relates only to matters in a Notice of Dispute; present claims (breach of APA, torts, defamation) are not covered and arbitration cannot be compelled |
Key Cases Cited
- Rent-A-Center, West, Inc. v. Jackson, 561 U.S. 63 (2010) (parties may delegate gateway arbitrability questions to an arbitrator, but delegation must be "clear and unmistakable")
- First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938 (1995) (distinguishes who decides arbitrability from whether a dispute is arbitrable; requires clear evidence to delegate who decides)
- Drake Bakeries, Inc. v. Local 50, Am. Bakery & Confectionary Workers Int’l, AFL-CIO, 370 U.S. 254 (1962) (arbitration is a matter of consent; parties cannot be compelled to arbitrate disputes they did not agree to submit)
- Triarch Indus., Inc. v. Crabtree, 158 S.W.3d 772 (Mo. banc 2005) (standard of review: de novo for order denying motion to compel arbitration)