ABDIANA PROPERTIES, INC., ET AL.,
Respondents,
v.
JERRY BENGSTON, ET AL.,
Appellants.
WD81817
OPINION FILED:
May 14, 2019
Appeal from the Circuit Court of Jackson County, Missouri The Honorable David Michael Byrn, Judge
Before Division Two: Thomas N. Chapman, P.J., Mark D. Pfeiffer, and Cynthia L. Martin, JJ.
Jerry Bengtson (Bengtson), W. Gordon Snyder (Snyder), Heartland Financial Services, LLC (Heartland) and Navigator Investment Services, LLC (Navigator) (collectively "B.S.H.N. Defendants") appeal the order of the Circuit Court of Jackson County denying their motion to compel arbitration of a cause of action brought by Abdiana Properties, Inc. and Abdiana Ice House, Inc. (together "Abdiana"). In Points 1, 3, and 4 of their appeal, the B.S.H.N. Defendants assert that Abdiana entered into a Private Debt Financing Agreement with Stone Development Inc. ("Stone," a separate defendant that is not one of the appellants) and that because Abdiana's claims against the B.S.H.N. Defendants are related to, rely upon, and are intertwined with the
2 Private Debt Financing Agreement, the B.S.H.N. Defendants are entitled, though non- signatories, to enforce the arbitration clause in said agreement. In Point 2 of their appeal, B.S.H.N. Defendants contend that Abdiana and Defendant Navigator executed a written Consulting Fee Agreement that included an arbitration clause, and that this was enforceable not only by Navigator, but also by the remaining non-signatory B.S.H.N. Defendants (Bengtson, Snyder, and Heartland). We affirm. OPINION Factual and Procedural Background In April of 2014, Christina and Nicholas Abnos 1 , the owners of Abdiana, reached out to Bengtson, the principal of Heartland, with whom they had worked in the past, to discuss obtaining a line of credit to use in property development. Bengtson undertook assisting the Abnoses in obtaining a source of private funding in the amount of $3,500,000. With the Abnoses' approval, Bengtson had Snyder assist him in this task. 2 Through the B.S.H.N. Defendants, Abdiana began communicating with Stone, a secondary market lender based in California. The B.S.H.N. Defendants maintained that they had successfully closed loans with Stone in the past. Defendants then provided Abdiana a "Letter of Commitment" from Stone, which included the terms of the proposed loan, which required that Abdiana pay a $52,500 loan commitment fee, and which provided that Stone would refund the loan commitment fee if it did not fully fund the $3,500,000 credit facility within sixty days.
1 Because both Christina and Nicholas have the same last name we will refer to them individually as Christina and Nicholas. This is solely for clarity; no disrespect is intended.
2 Bengtson was the principal of both Heartland and Navigator. Snyder, not formally a member of those entities, was participating as a partner of Bengtson for the purpose of facilitating the funding of this transaction.
3 On May 27, 2014, prior to making any payments to Stone, Christina received an email from Bengtson which included a proposed (but unsigned) Consulting Fee Agreement to be executed by Abdiana (by Managing Member Nicholas Abnos) and Defendant Navigator (by Bengtson, as "Manager Consultant"). Bengtson also provided documentation purporting to show that Stone possessed enough funds to fulfill its role. After receiving this supporting information, Abdiana sent three wire transfers totaling the entire $52,500 loan commitment fee to Verlin Gradney (a separate defendant alleged to be a principal and trustee of Stone). These separate transfers began on May 30, 2014, with a transfer of $31,500; and were completed on June 4, 2014. The proposed Consulting Fee Agreement provided that Navigator would receive a 3% commission on any amounts loaned to Abdiana by any money lending sources introduced by Navigator; and also contained an arbitration provision governing any disputes. On June 2, 2014, after sending the first wire transfer partly paying the loan commitment fee, Christina replied to Bengtson's email with a proposed Consulting Fee Agreement attached, which had been revised and signed by Christina as Managing Member of Abdiana. Christina had crossed out an indemnification provision in the proposed Consulting Fee Agreement, and noted that this provision was intentionally deleted. Neither Bengtson, nor anyone else, signed the revised Consulting Fee Agreement on behalf of Navigator or the other B.S.H.N. Defendants. Abdiana and Stone later executed a Private Debt Financing Agreement, which purportedly included an arbitration provision. The Private Debt Financing Agreement was not included with the motion to compel arbitration and does not appear to have been provided to the circuit court, and is not included in our legal file.
4 In September of 2015, after repeated requests to be provided the loan funding or have their loan commitment fee reimbursed, Abdiana was informed, during a conference call with Bengtson and representatives of Stone, that Stone was unable to fund the credit facility and was unable to refund the $52,500. Abdiana filed the underlying action on May 6, 2016, and their First Amended Verified Petition for Damages on June 2, 2017. Abdiana brought claims for fraudulent misrepresentation, negligent misrepresentation, and civil conspiracy against the B.S.H.N. Defendants (the Appellants), and also against Stone, Gradney, and others. Abdiana also brought a count of professional negligence against Bengtson, Snyder, and Heartland; a breach of contract claim against Stone; and a claim for conversion against Gradney. The B.S.H.N. Defendants filed a motion to compel arbitration on January 22, 2018, which was denied by the trial court in its written order filed on May 29, 2018. This appeal followed. Standard of Review "The issue of whether arbitration should be compelled is a question of law subject to de novo review." State ex rel. Alst v. Harrell, 528 S.W.3d 442, 445 (Mo. App. W.D. 2017) (quoting Baker v. Bristol Care, Inc., 450 S.W.3d 770, 774 (Mo. banc 2014)). The parties do not dispute that the underlying case involves parties from separate states and that "[t]he Federal Arbitration Act ('FAA'), 9 U.S.C. § 1 et seq. (2006), governs the applicability and enforceability of arbitration agreements in all contracts involving interstate commerce." Id. at 446 (quoting Eaton v. CMH Homes, Inc., 461 S.W.3d 426, 431 (Mo. banc 2015)). Although we defer to the FAA where it is in tension with Missouri law, "Missouri contract law applies to determine whether the parties have entered a valid agreement to arbitrate." State ex rel. Vincent v. Schneider, 194 S.W.3d 853, 856 (Mo. banc 2006). Our review of a court's interpretation of an arbitration
5 provision is a matter of law that we review de novo. Id. "The party asserting the existence of a valid and enforceable contract to arbitrate bears the burden of proving that proposition." Kohner Properties, Inc. v. SPCP Group VI, LLC, 408 S.W.3d 336, 342 (Mo. App. E.D. 2013). Analysis Before addressing the question of whether a valid agreement to arbitrate exists, we first examine whether the agreements at issue are properly before this Court. We note that "[e]xhibits attached to motions filed with the trial court are not evidence and are not self-proving." Bertocci v. Thoroughbred Ford, Inc., 530 S.W.3d 543, 551 (Mo. App. W.D. 2017) (quoting Ryan v. Raytown Dodge Co., 296 S.W.3d 471, 473 (Mo. App. W.D. 2009)). Here the B.S.H.N. Defendants did not request oral argument or a hearing on their Motion to Compel Arbitration; and their Motion was not supported by affidavits. 3 The circuit court did not hold a hearing on the Motion and thus neither of the purported agreements were offered into evidence. Observing that exhibits included in a motion to compel arbitration are not self-proving, the Ryan Court indicated: Local Rule 33.5 of the Sixteenth Judicial Circuit provides that a party filing any motion shall serve and file at the same time suggestions and any affidavits to be considered in support of the motion.... [A]n appellate court cannot accept counsels' statements as a substitute for record proof even if there is no reason to doubt their accuracy.
296 S.W.3d at 473. In Ryan, the appellant's failure to prove (through a hearing, affidavit, or other method) that the purported arbitration agreement attached to its motion was the actual
3 We do note that the B.S.H.N. Defendants in their Reply to Abdiana's Suggestions in Opposition to Their Motion to Compel do state that "Should this Court question whether an enforceable agreement exists between teh [sic] parties mandating arbitration, Defendants seek leave of Court to present additional evidence at hearing to this Court demonstrating mutual assent and the existence of a binding contract. Defendants respectfully request an evidentiary hearing."
6 contract between the two parties was fatal to its claims on appeal. Id. Here, the B.S.H.N. Defendants did provide a Request for Admissions which confirmed that the Consulting Fee Agreement is an accurate copy of the agreement that is being contested. A request for admissions may be used to establish the validity of an exhibit. AJM Packaging Corp. v. Crossland Const. Co., 962 S.W.2d 906, 910 (Mo. App. S.D. 1998). Therefore, the record is sufficient to consider whether the B.S.H.N. Defendants are entitled to compel arbitration under the terms of the Consulting Fee Agreement. However, the B.S.H.N. Defendants' Request for Admissions did not establish the authenticity of the Private Debt Financing Agreement and they did not attach a copy of that agreement (verified or otherwise) to their Motion to Compel Arbitration. Consequently, it would be appropriate to decline to review Appellants' claim that they are entitled to rely upon the Private Debt Financing Agreement to compel arbitration. Because Appellants did include a request for a hearing in their reply suggestions, and because they also offered to provide the contract for in camera review by the trial court, we will, in the interest of judicial economy, consider enforcement of the purported arbitration clause included in the Private Debt Financing Agreement. "Absent a contract to arbitrate, no party has a unilateral right to impose on another party a requirement of arbitration as the sole procedure for dispute resolution." Morrow v. Hallmark Cards, Inc., 273 S.W.3d 15, 21 (Mo. App. W.D. 2008). We must determine whether there is a valid agreement to arbitrate Abdiana's claims against the B.S.H.N. Defendants. As noted above, when determining whether the parties in this case are bound by such an agreement our analysis is governed by Missouri law. Id. ("Missouri substantive law governs the issues of the existence,
7 validity, and enforceability of any purported arbitration contract. '[I]n determining whether the parties have entered into a valid agreement to arbitrate, the usual rules of state contract law and canons of contract interpretation apply.'") (internal citations omitted) (quoting Triarch Indus., Inc. v. Crabtree, 158 S.W.3d 772, 776 (Mo. banc 2005)). "A mutual agreement is reached when 'the minds of the contracting parties [ ] meet upon and assent to the same thing in the same sense at the same time.' A meeting of the minds occurs when there is a definite offer and an unequivocal acceptance." Grant v. Sears, 379 S.W. 3d 905, 916 (Mo. App. W.D. 2012) (internal citation and quotation marks omitted) (quoting Kunzie v. Jack–in–the–Box, Inc., 330 S.W.3d 476, 483-84 (Mo. App. E.D. 2010)). Furthermore, "[i]t is