Robert S. Eaton v. CMH Homes, Inc., and Southern Energy Homes, Inc., and Henry Concrete, LLC
2015 Mo. LEXIS 72
| Mo. | 2015Background
- Eaton purchased a CMH manufactured home in 2009; contract included an arbitration clause governed by FAA; CMH sought to compel arbitration after Eaton sued for defects, fraud, and misrepresentation; Eaton argued lack of mutuality and unconscionability; trial court denied arbitration motion; Missouri Supreme Court granted transfer and reversed the decision, upholding modified arbitration clause after severing an unconscionable anti-waiver provision; Court held the contract overall valid and remanded for further proceedings.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Is the arbitration agreement valid under FAA/MUAA? | Eaton argues lack of mutuality and unconscionability. | CMH maintains contract as a whole is valid with adequate consideration. | Yes, valid overall; anti-waiver severable. |
| Does lack of mutuality alone render the arbitration clause unconscionable? | Mutuality is required; CMH may sue in court for collateral. | Whole-contract consideration suffices; lack of mutuality alone not dispositive. | No; mutuality alone does not invalidate arbitration. |
| Is the anti-waiver clause unconscionable and/or severable? | Anti-waiver enables CMH to litigate key issues while Eaton cannot. | Clause merely preserves CMH’s rights; severable if not essential. | Anti-waiver clause is unconscionable but severable. |
| Should the anti-waiver clause be severed and the rest enforced? | Severing required to enforce arbitration otherwise biased. | Severability not necessary; arbitration remains. | Yes, severance allowed; remainder enforceable. |
| Was CMH’s motion to compel arbitration premature due to Henry Concrete's involvement? | Case premature since all defendants must answer. | Henry Concrete already served; not a party to arbitration; not preclusive. | Not premature; order to arbitrate affirmed. |
Key Cases Cited
- Vincent v. Schneider, 194 S.W.3d 853 (Mo. banc 2006) (contract as a whole determines consideration; mutuality not sole test)
- Greene v. Alliance Automotive, Inc., 435 S.W.3d 646 (Mo. App. 2014) (anti-waiver-like provisions can render arbitration unconscionable but severable)
- Baker v. Bristol Care, Inc., 450 S.W.3d 770 (Mo. banc 2014) (unilateral change in arbitration terms can destroy consideration)
- Robinson v. Title Lenders, Inc., 364 S.W.3d 505 (Mo. banc 2012) (state-law defenses apply to formation of arbitration agreements)