Motormax Financial Services Corporation v. Arnold Knight, Defendant/Respondent.
2015 Mo. App. LEXIS 815
| Mo. Ct. App. | 2015Background
- On June 28, 2012 Arnold Knight took a high‑APR (93.5%) title loan from Motormax secured by his Ford F‑150; closing was videotaped.
- Knight signed an arbitration agreement stating all disputes "shall be settled by binding arbitration," but the agreement carved out lender actions to collect debt, repossess, or enforce security and allowed lender to pursue court remedies without waiving arbitration while requiring consumer counterclaims to be arbitrated.
- Motormax repossessed the vehicle in April 2013 and sued Knight in September 2013 for the alleged balance; Knight filed an answer and a class‑action counterclaim asserting statutory notice violations and MPA claims.
- Motormax moved to compel arbitration of the counterclaim in April 2014; the trial court denied the motion on October 10, 2014. Motormax dismissed its collection action shortly thereafter and appealed.
- The appellate court held Motormax’s appeal was timely (notice filed within applicable rules) and reviewed de novo whether the arbitration agreement was enforceable.
Issues
| Issue | Plaintiff's Argument (Motormax) | Defendant's Argument (Knight) | Held |
|---|---|---|---|
| Whether the arbitration agreement is supported by mutual consideration | Agreement is supported by consideration and is enforceable | Agreement is illusory/unenforceable because it allows Motormax to keep court remedies while forcing consumer to arbitrate | Agreement is unenforceable for lack of mutuality/consideration; promise to arbitrate was illusory |
| Whether the agreement is unconscionable (procedural or substantive) | Terms are not unconscionable | Agreement is unconscionable and impacts formation | Court avoided deciding unconscionability because lack of consideration alone makes agreement void |
| Whether Motormax waived arbitration (by litigation conduct) | Motormax preserved arbitration or did not waive it | Motormax waived arbitration by pursuing court remedies | Court did not reach waiver because agreement was void for lack of consideration |
| Timeliness/jurisdiction of appeal from denial of motion to compel arbitration | Notice of appeal timely filed within civil rules timeline | Appeal untimely because 10‑day clock began on entry of order | Appeal was timely: judgment became final 30 days after entry and notice was filed within 10 days after finality |
Key Cases Cited
- Dunn Indus. Group, Inc. v. City of Sugar Creek, 112 S.W.3d 421 (Mo. banc 2003) (appeal from denial of motion to compel arbitration authorized under statutory arbitration act)
- Spiece v. Garland, 197 S.W.3d 594 (Mo. banc 2006) (trial court must denominate appealable orders as "judgment" for Rule 74.01(a) purposes)
- Greene v. Alliance Automotive, Inc., 435 S.W.3d 646 (Mo. App. W.D. 2014) (arbitration agreement lacking consideration where dealer could repossess and pursue court remedies while buyer was forced to arbitrate)
- Baker v. Bristol Care, Inc., 450 S.W.3d 770 (Mo. banc 2014) (Missouri contract law governs validity of arbitration agreements; mutual promises must be binding)
- Vincent v. Schneider, 194 S.W.3d 853 (Mo. banc 2006) (lack of mutuality alone does not always render arbitration agreement unenforceable)
- Brewer v. Missouri Title Loans, 364 S.W.3d 486 (Mo. banc 2012) (courts should assess unconscionability in the context of contract formation and consider the agreement as a whole)