GFS, II, LLC v. Janelle Carson

            IN THE MISSOURI COURT OF APPEALS
                    WESTERN DISTRICT
GFS, II, LLC,                             )
                                          )
             Appellant,                   )
                                          )
v.                                        )         WD86185
                                          )
JANELLE CARSON,                           )         Filed: December 12, 2023
                                          )
             Respondent.                  )

             Appeal from the Circuit Court of Jackson County
                  The Honorable Jerri J. Zhang, Judge

                Before Division Two: Gary D. Witt, C.J., and
                   Alok Ahuja and Mark D. Pfeiffer, JJ.
      GFS II, LLC, doing business as Gateway Financial Solutions (“Gateway”)

filed suit against Janelle Carson in the Circuit Court of Jackson County. Gateway

claimed that Carson had defaulted on a loan which financed her purchase of a
used car from a Gateway affiliate. Carson counterclaimed, alleging that Gateway

had violated both federal and state statutes by selling her a defective vehicle, and

by charging her $1,800.00 for an extended warranty. After two years of

litigation, Gateway moved to compel arbitration. The circuit court denied

Gateway’s motion, finding that it had waived its right to compel arbitration by

engaging in substantial litigation. Gateway appeals. We affirm.
                              Factual Background
        On June 17, 2019, Janelle Carson executed a “RETAIL INSTALLMENT

SALE CONTRACT – SIMPLE FINANCE CHARGE (WITH
ARBITRATION PROVISION)” (“the Agreement”). The Agreement

documented Carson’s purchase of a used 2010 Chevrolet Malibu motor vehicle

from Rightway Automotive Credit, and Rightway’s extension of credit to Carson
to finance the purchase. The Agreement listed the purchase price of the vehicle

as $11,201.00; with fees and an extended warranty costing $1,800.00, the total

amount financed was $13,295.00. The Agreement stated that Carson’s loan had
an annual percentage rate of 25.00%. The Agreement explained that Carson

would pay a total of $20,732.78, including finance charges of $7,437.78, over the

45-month term of the loan.
        The Agreement included an arbitration provision which states in relevant

part:

                          ARBITRATION PROVISION

             PLEASE REVIEW – IMPORTANT – AFFECTS YOUR
                          LEGAL RIGHTS
        1.    EITHER YOU OR WE MAY CHOOSE TO HAVE ANY
              DISPUTE BETWEEN US DECIDED BY ARBITRATION
              AND NOT IN COURT OR BY JURY TRIAL.
        2.    IF A DISPUTE IS ARBITRATED, YOU WILL GIVE UP
              YOUR RIGHT TO PARTICIPATE AS A CLASS
              REPRESENTATIVE OR CLASS MEMBER ON ANY
              CLASS CLAIM YOU MAY HAVE AGAINST US
              INCLUDING ANY RIGHT TO CLASS ARBITRATION
              OR ANY CONSOLIDATION OF INDIVIDUAL
              ARBITRATIONS.
        3.    DISCOVERY AND RIGHTS TO APPEAL IN
              ARBITRATION ARE GENERALLY MORE LIMITED


                                         2
             THAN IN A LAWSUIT, AND OTHER RIGHTS THAT
             YOU AND WE WOULD HAVE IN COURT MAY NOT
             BE AVAILABLE IN ARBITRATION.
      Any claim or dispute, whether in contract, tort, statute or otherwise
      (including the interpretation and scope of this Arbitration
      Provision, and the arbitrability of the claim or dispute), between
      you and us or our employees, agents, successors or assigns, which
      arises out of or relates to your credit application, purchase or
      condition of this vehicle, this contract or any resulting transaction or
      relationship (including any such relationship with third parties who
      do not sign this contract) shall, at your or our election, be resolved by
      neutral, binding arbitration and not by a court action. . . .

      You and we retain the right to seek remedies in small claims court
      for disputes or claims within that court’s jurisdiction, unless such
      action is transferred, removed or appealed to a different court.
      Neither you nor we waive the right to arbitrate by using self-help
      remedies, such as repossession, or by filing an action to recover the
      vehicle, to recover a deficiency balance, or for individual injunctive
      relief. . . . This Arbitration Provision shall survive any termination,
      payoff or transfer of this contract.
(Italics added).

      Rightway assigned the Agreement on the day it was executed to Gateway.

The two entities are affiliated.

      On November 26, 2019, Gateway sent Carson a notice that she was

delinquent on her loan, and that if she did not bring her account current by
December 16, Gateway would exercise its rights on default. Carson claims that,

shortly after purchasing the vehicle, she told “Rightway and/or [Gateway]” that

she had experienced mechanical problems with the vehicle, and was not offered
any coverage under the extended warranty. She alleged that she told “Rightway

and/or [Gateway]” to repossess the car as she “could not afford to make

payments for a defective vehicle.”



                                         3
        On December 23, Gateway sent Carson a notice stating that it had
repossessed the vehicle and intended to sell it at a private sale some time after

January 2, 2020. The notice informed Carson that the sale would reduce the

amount she owed, but that she would be liable for any shortfall. On January 29,
2020, Gateway sent Carson a notice of deficiency balance stating that, after sale

of the car for $3,100.00, Carson owed a remaining balance of $12,067.24 on her

loan.

        Carson submitted evidence to the circuit court indicating that Gateway’s

affiliate Rightway was the purchaser of the car after its repossession, and that

Rightway later resold the car to another purchaser in August 2020 for
$10,344.00, on similar financing terms.

        On August 18, 2020, Gateway filed a petition against Carson in the Circuit

Court of Jackson County, alleging that Carson was in default under the contract,

and that Carson owed a remaining balance of $8,950.65 on the loan as of the date

of the petition. Carson answered the petition on June 5, 2021. She asserted

several affirmative defenses, and two counterclaims. In her counterclaims,

Carson alleged that Gateway had violated the Missouri Motor Vehicle Time Sales

Act by requiring her to purchase a purported “extended warranty” as part of the

transaction; and that it had breached express and implied warranties under the
federal Magnuson-Moss Warranty Act by misrepresenting the vehicle’s condition.

        Gateway answered Carson’s counterclaims on August 12, 2021. Although

Gateway pleaded an affirmative defense, its answer did not suggest that Carson’s
counterclaims were subject to mandatory arbitration.




                                          4
      The parties engaged in substantial discovery. Carson served her first
requests for production on Gateway on June 5, 2021; she served interrogatories,

requests for admissions, and further document requests on December 3, 2021.

Gateway served its own interrogatories, requests for production, and requests for
admissions on Carson on January 11, 2022. The parties provided initial

responses to each other’s written discovery in early 2022.

      The circuit court issued at least two substantive rulings concerning

discovery-related disputes. Following the deposition of Gateway’s Vice President

of Legal Recovery, which suggested that Gateway had possession of additional

information responsive to Carson’s discovery requests, Carson filed a motion to
enforce discovery, which the circuit court granted. Gateway served supplemental,

court-ordered discovery responses in June 2022. Then, in September 2022, the

circuit court denied a motion for protective order filed by Gateway, which sought

to limit the topics on which Carson could examine a corporate representative

designated under Rule 57.03(b)(4). The circuit court’s discovery rulings had the

effect of permitting Carson to explore the relationship between Gateway and

Rightway. In particular, the court authorized discovery concerning other

instances where Gateway had sought to recover loan deficiencies from Rightway

customers, after Rightway had repurchased repossessed vehicles from Gateway,
and resold them.

      The circuit court held case management conferences in January, February,

and June 2022. During a fourth case management conference on July 14, 2022,
counsel for both parties informed the court that they were still conducting




                                        5
discovery. The parties jointly requested a jury trial, and the court set the case for
a five-day trial beginning on October 16, 2023.

      On September 23, 2022, new counsel entered their appearance on

Gateway’s behalf. In its appellate brief, Gateway claims that its new counsel then
“discovered the Arbitration Agreement” (even though the agreement to arbitrate

appears prominently on the second page of the Agreement, which Gateway had

attached to its original petition). Based on new counsel’s “discover[y]” of the

Agreement’s arbitration provision, Gateway filed a motion to compel arbitration

on October 31, 2022 – more than two years after the filing of its petition, and

more than sixteen months after Carson had asserted her counterclaims.
      After receiving briefing and hearing argument from counsel, the circuit

court issued an order denying Gateway’s motion to compel arbitration on March

27, 2023. The court stated that “it is uncontested that [Gateway] knew of the

existence of its right to arbitrate.” The court’s order also emphasized that, “after

initiating this lawsuit, [Gateway] continued to litigate this matter and

participated in extensive discovery for over two years before filing its Motion to

Compel Arbitration,” and that Carson “has expended time, money, and energy in

this lawsuit for over two years.” Accordingly, the court concluded that Gateway

had waived its right to compel arbitration.
      Gateway appeals.1


      1      An order denying a motion to stay litigation and compel arbitration is
immediately appealable under the Federal Arbitration Act, 

(a)(1)(A). See
Shelter Prods., Inc. v. OMNI Constr. Co., 

 (Mo. App. W.D.
2016). An order denying a motion to compel arbitration need not be denominated as a
“judgment” under Rule 74.01(a) in order to be appealed. See, e.g., Trunnel v. Mo.
Higher Educ. Loan Auth., 

, 197 n.2 (Mo. App. W.D. 2021).


                                          6
                              Standard of Review

             If there is no factual dispute about the existence of an
      arbitration agreement, the overruling of a motion to compel
      arbitration is reviewed de novo. “An appellate court's review of the
      arbitrability of a dispute is de novo” because “[w]hether a dispute is
      covered by an arbitration provision is relegated to the courts as a
      question of law.” Likewise, this “Court reviews de novo the legal
      issue of whether a valid, enforceable delegation clause exists within
      an arbitration agreement.” Because contract interpretation is a
      question of law, a de novo standard of review is appropriate for
      appellate review of a denial of a motion to compel arbitration when a
      court must analyze the terms of an arbitration agreement.
Theroff v. Dollar Tree Stores, Inc., 

, 436 (Mo. 2020) (citations

omitted). “We also review de novo whether the right to insist on arbitration, if
present, has been waived.” Frye v. Speedway Chevrolet Cadillac, 

 (Mo. App. W.D. 2010) (citing MFA, Inc. v. HLW Builders, Inc., 

 (Mo. App. W.D. 2010)).

                                   Discussion
      Gateway asserts two Points on appeal. First, it contends that an arbitrator,

not the circuit court, should have decided the waiver-by-litigation question,

because the parties’ arbitration agreement delegates questions of “arbitrability”

to the arbitrator. In its second Point, Gateway argues that even if it was proper

for the circuit court to address the waiver-by-litigation question, Gateway’s
conduct did not waive its right to compel arbitration.

                                         I.
      The Agreement provides that “[a]ny arbitration under this Arbitration
Provision shall be governed by the Federal Arbitration Act (

 et seq.)

and not by any state law concerning arbitration.” The parties do not dispute that

the Federal Arbitration Act, and the caselaw interpreting it, govern this appeal.


                                         7
      Under the Federal Arbitration Act, parties may agree to arbitrate not only
the merits of a dispute, but also questions concerning whether a particular

dispute is subject to arbitration in the first place. The Supreme Court of the

United States has explained:

             Under the Act, arbitration is a matter of contract, and courts
      must enforce arbitration contracts according to their terms.
      Applying the Act, we have held that parties may agree to have an
      arbitrator decide not only the merits of a particular dispute but also
      “‘gateway’ questions of ‘arbitrability,’ such as whether the parties
      have agreed to arbitrate or whether their agreement covers a
      particular controversy.” We have explained that an “agreement to
      arbitrate a gateway issue is simply an additional, antecedent
      agreement the party seeking arbitration asks the federal court to
      enforce, and the FAA operates on this additional arbitration
      agreement just as it does on any other.”
Henry Schein, Inc. v. Archer & White Sales, Inc., 

 (2019)

(citations omitted); see also, e.g., Rent–A–Center, W., Inc. v. Jackson, 

, 68–70 (2010); First Options of Chicago, Inc. v. Kaplan, 

, 943–

945 (1995). Provisions providing for arbitral – rather than judicial – resolution

of “gateway” issues are referred to as “delegation” clauses.

      The Missouri Supreme Court has likewise recognized that a delegation
clause can remit threshold issues of arbitrability, which would normally be

decided by the courts, to an arbitrator.

            “The delegation provision is an agreement to arbitrate
      threshold issues concerning the arbitration agreement.”
            . . . Questions of arbitrability include “whether the parties are
      bound by a given arbitration clause” and “[d]isputes over the
      formation of the parties’ arbitration agreement and its enforceability
      or applicability to the dispute at issue.”




                                           8
              . . . “A delegation provision giving an arbitrator the power to
       decide threshold issues of arbitrability ‘shall be valid, irrevocable,
       and enforceable, save upon such grounds as exist at law or in equity
       for the revocation of any contract.’”
              “Generally, any silence or ambiguity concerning the scope of
       arbitrable issues should be resolved in favor of arbitration.”
       However, there is a presumption against arbitrability “when
       considering whether a court or an arbitrator should decide threshold
       questions of arbitrability[.]” “‘[C]lear and unmistakable evidence’
       the parties manifestly intended to arbitrate questions of arbitrability
       is required to overcome this presumption.”
Car Credit, Inc. v. Pitts, 

, 371 (Mo. 2022) (citations omitted); see

also, e.g., Theroff v. Dollar Tree Stores, Inc., 

, 439 (Mo. 2020);

Soars v. Easter Seals Midwest, 

 (Mo. 2018); State ex rel.

Pinkerton v. Fahnestock, 

 (Mo. 2017).2
       A claim that a party has waived the right to compel arbitration, by

affirmatively litigating the dispute in court, is a “threshold issue of arbitrability”

that is presumptively for a court – not an arbitrator – to decide. See, e.g., Sitzer

v. Nat’l Ass’n of Realtors, 

, 855-56 & nn. 3 & 4 (8th Cir. 2021)

(collecting cases); Int’l Energy Ventures Mgmt., L.L.C. v. United Energy Grp.,

Ltd., 

 (5th Cir. 2021) (same). But even if litigation-waiver is
presumptively an issue for judicial resolution, Gateway contends that the

Agreement in this case contains “clear and unmistakable evidence” that the

parties intended to delegate the issue to an arbitrator.

       In two cases, this Court has held that claims of litigation-waiver must be

decided by an arbitrator, not by the court, if the parties’ agreement contains a

       2      Theroff overruled Soars and Pinkerton, to the extent those cases suggested
that a delegation provision applied to a party’s claim that it had not actually assented to
a purported arbitration agreement. 591 S.W.3d at 440.


                                            9
standard delegation clause stating generally that an arbitrator will decide the
“arbitrability of any issue.” Thus, in Ford Motor Credit Co. v. Jones, 

 (Mo. App. W.D. 2018), an arbitration agreement in a similar vehicle-purchase

contract provided that either party could elect to have an arbitrator decide a
dispute, including “[c]laims regarding the interpretation, scope, or validity of this

provision, or arbitrability of any issue.” 

. As here, the seller-creditor in

Jones repossessed the vehicle, and then filed suit to collect the deficiency

remaining after the vehicle was sold. When the purchaser-debtor asserted

counterclaims challenging the manner in which the vehicle had been repossessed

and sold, the creditor moved to compel arbitration. Like the court in this case,
the circuit court in Jones denied the motion to compel arbitration because the

creditor had “waived its right to arbitrate” by “act[ing] inconsistently with its

right to arbitrate” by affirmatively engaging in litigation. 

.

      This Court reversed the circuit court’s denial of the creditor’s motion to

compel arbitration. We held that the circuit court had erroneously decided the

merits of the litigation-waiver issue, which should instead have been submitted to

an arbitrator:

             Jones next argues that determining whether Ford Motor
      Credit waived arbitration by pursuing litigation is not encompassed
      by the delegation provision and was properly determined by the trial
      court. “[T]he presumption is that the arbitrator should decide
      allegation[s] of waiver, delay, or a like defense to arbitrability.”
      More than application of a presumption, however, the delegation
      provision in the contract in this case explicitly provides that the
      arbitrator determines issues of arbitrability. The presence of this
      delegation provision distinguishes the cases Jones cites in his brief.

 (citation omitted).



                                          10
      The Eastern District followed Jones, and similarly reversed a circuit court’s
resolution of a waiver-by-litigation argument, in TD Auto Finance, LLC v.

Bedrosian, 

 (Mo. App. E.D. 2020):

      When a dispute arises, the parties may disagree not only about the
      merits of the dispute but also about threshold questions such as
      validity, enforcement, and applicability. Arbitrability questions can
      include the claim raised here, that the arbitration agreement is
      unconscionable and thus not enforceable, as well as the issue of
      waiver by litigation. Like arbitration in general, the question of who
      decides these threshold arbitrability questions is a matter of
      contract. Parties may agree by contract that an arbitrator, rather
      than a court, will resolve threshold arbitrability questions as well as
      underlying disputes over the merits. When evaluating the intention
      of parties to delegate threshold arbitrability issues to the arbitrator,
      “courts should not assume that the parties agreed to arbitrate
      arbitrability unless there is clear and unmistakable evidence that
      they did so.”
             The arbitration contract between Ms. Bedrosian and TDAF
      provided that upon election of either party, “any dispute” between
      Ms. Bedrosian and TDAF, “including any dispute over the
      interpretation, scope, or validity” of the arbitration contract, “or the
      arbitrability of any issue,” would be decided by arbitration and not
      by a court action. We hold this is clear and unmistakable evidence of
      the parties’ intent to delegate threshold arbitrability issues to an
      arbitrator.
            ....
            Because Ms. Bedrosian did not direct any specific challenge to
      the delegation, the parties’ agreement to delegate threshold issues to
      the arbitrator is valid and enforceable. The Court must enforce that
      delegation. Ms. Bedrosian raised arbitrability issues of
      unconscionability, and waiver by litigation. Under the parties’
      agreement, those issues are reserved for the arbitrator. The circuit
      court should not have ruled on these matters. “When the parties’
      contract delegates the arbitrability question to an arbitrator, the
      courts must respect the parties’ decision as embodied in the
      contract.” A court may not override the contract.

                                         11


 (citations and footnote omitted).
      Under delegation clauses virtually identical to the one at issue here, Jones

and Bedrosian held that claims of waiver-by-litigation are questions of

“arbitrability” which must be submitted to an arbitrator. Both cases reverse
circuit court decisions which refused to compel arbitration based on findings of

waiver. If we were to follow them, Jones and Bedrosian would appear to require

reversal here.

      Importantly, however, Jones and Bedrosian were decided before the

Supreme Court of the United States addressed the waiver-by-litigation issue in

Morgan v. Sundance, Inc., 

 (2022). Like this case, Morgan involved
a claim that a contracting party had waived its right to compel arbitration by

litigating the underlying dispute in court. The precise issue in Morgan was

whether the person asserting waiver-by-litigation had to show that it had been

prejudiced by the litigation. The Supreme Court held that lower courts had

incorrectly imposed a prejudice requirement, where no showing of prejudice was

required to support other contractual waiver claims. The Court explained that

the policy underlying the Federal Arbitration Act “is to make ‘arbitration

agreements as enforceable as other contracts, but not more so.’ Accordingly, a

court must hold a party to its arbitration contract just as the court would to any
other kind. But a court may not devise novel rules to favor arbitration over

litigation.” 

 (citation omitted). The Court declared: “If an ordinary

procedural rule – whether of waiver or forfeiture or what-have-you – would
counsel against enforcement of an arbitration contract, then so be it.” 

(emphasis added).



                                         12
      Morgan characterizes waiver-by-litigation as “an ordinary procedural
rule.” 

 The Court’s opinion explains that, under § 6 of the Federal Arbitration

Act, 

, courts are required to apply such an “ordinary procedural rule”

in the same manner in which they would apply the rule to other, non-arbitration-
related claims.

      [T]he text of the FAA makes clear that courts are not to create
      arbitration-specific procedural rules like the one we address here.
      Section 6 of the FAA provides that any application under the statute
      – including an application to stay litigation or compel arbitration –
      “shall be made and heard in the manner provided by law for the
      making and hearing of motions” (unless the statute says otherwise).
      A directive to a federal court to treat arbitration applications “in the
      manner provided by law” for all other motions is simply a command
      to apply the usual federal procedural rules, including any rules
      relating to a motion's timeliness. Or put conversely, it is a bar on
      using custom-made rules, to tilt the playing field in favor of (or
      against) arbitration. As explained above, the usual federal rule of
      waiver does not include a prejudice requirement. So Section 6
      instructs that prejudice is not a condition of finding that a party, by
      litigating too long, waived its right to stay litigation or compel
      arbitration under the FAA.

             Stripped of its prejudice requirement, the Eighth Circuit's
      current waiver inquiry would focus on Sundance's conduct. Did
      Sundance, as the rest of the Eighth Circuit's test asks, knowingly
      relinquish the right to arbitrate by acting inconsistently with that
      right? On remand, the Court of Appeals may resolve that question,
      or (as indicated above) determine that a different procedural
      framework (such as forfeiture) is appropriate. Our sole holding today
      is that it may not make up a new procedural rule based on the FAA's
      “policy favoring arbitration.”

.

      Under Morgan, a court must decide a waiver-by-litigation argument,
raised in opposition to a motion to compel arbitration, just as the court would



                                         13
decide other waiver or procedural timeliness issues. In the wake of Morgan, the
Eastern District addressed the merits of a litigation-waiver argument in Lopez v.

GMT Auto Sales, Inc., 

 (Mo. App. E.D. 2022) – despite the

presence of a delegation clause identical to the one here. In Lopez, the Court
concluded, after an extended discussion, that an auto sales company had waived

the right to compel arbitration by engaging in discovery, litigating discovery

disputes, and filing a summary judgment motion. 

. The Court was

plainly aware that the arbitration agreement included a delegation clause,

because the Court addressed whether the delegation clause required that another

issue be referred to an arbitrator. 

. But, unlike Jones and Bedrosian,
Lopez decided the litigation-waiver issue itself, and did not apply the delegation

clause, despite the appellants’ argument that “the Arbitration Agreements

contained severable delegation provisions, which required compelling

arbitration.” 

.

      Relying on Morgan, Lopez explains that the waiver-by-litigation issue is a

question of civil procedure which implicates the court’s ability to manage the

litigation before it; a claim of litigation-waiver does not address the substantive

arbitrability of a particular dispute.

      [T]he doctrine of waiver by inconsistent acts is a judicially
      created doctrine designed to protect the integrity and resources of
      the court as well as promote fairness to both parties whose disputes
      were subject to the benefits of “efficient and low-cost resolution of
      disputes” [through arbitration] from the outset of the litigation. As
      made clear in Missouri jurisprudence and reiterated in Morgan, at
      issue on appeal is not whether GMT had a right to request
      arbitration of the dispute – it did. The issue we must resolve is
      whether GMT waived that contractual right by substantially
      participating in litigation to a point inconsistent with an intent to


                                         14
      arbitrate. “[J]udicially determined waiver of the right to arbitrate
      where a party knows of the right to arbitrate, and acts inconsistently
      with that right . . . is to be distinguished from whether an arbitration
      contract affords the right to compel arbitration in the first place.”

 (citations omitted). Although Lopez does not cite Jones or

Bedrosian, it refuses to follow the approach taken in those cases, since Lopez
decides the merits of a waiver-by-litigation argument despite a delegation clause

virtually identical to the ones in those earlier cases.

      Numerous courts in other jurisdictions have considered whether a

standard delegation clause in an arbitration agreement, like the one contained in

the Agreement, requires that issues of litigation-based waiver be referred to an

arbitrator. The Supreme Courts of Georgia and Alabama have reached results
consistent with Bedrosian and Jones: they held that claims of litigation-waiver

must be referred to an arbitrator, under arbitration agreements delegating

disputes about the “validity” or “enforceability” of the arbitration agreement, or

concerning the “arbitrability” of particular disputes.3 On the other hand, the

substantial majority of the out-of-state decisions have reached the opposite

result: they hold that the courts must decide litigation-waiver claims despite a

generically-worded delegation clause.4

      3     Key v. Warren Averett, LLC, No. 1210124, 

 at *6-*7 (Ala.
May 20, 2022); Brown v. RAC Acceptance E., LLC, 

, 804–05 (Ga. 2018).
      4        See Int’l Energy Ventures Mgmt., L.L.C. v. United Energy Grp., Ltd., 

 (5th Cir. 2021) (incorporation of American Arbitration Association
(“AAA”) rules into agreement, which specify that arbitrator “shall have the power to rule
on its own jurisdiction, including any objections with respect to the existence, scope, or
validity of the arbitration agreement[ ],” was not broad enough to comprehend a
litigation-waiver claim where “the rules do not expressly give arbitrators the power to
resolve questions of waiver through litigation.”); Martin v. Yasuda, 

(9th Cir. 2016) (agreement providing that issues concerning “the scope, enforceability
and effect of this arbitration agreement shall be decided by the arbitrator, and not by a
court,” does not cover litigation-waiver); Plaintiff's Shareholders Corp. v. S. Farm Bur.

                                            15
       The reasons for holding that a “generic” delegation clause does not require
arbitration of litigation-waiver issues are well-described in Marie v. Allied Home

Mortgage Corp., 

 (1st Cir. 2005). Marie noted that § 3 of the Federal

Arbitration Act, 

, specifies that a court may only stay litigation in
favor of arbitration where “the applicant for the stay is not in default in

proceeding with such arbitration.” 

. The Court explained that “[a]


Life Ins. Co., 486 F.App’x 786, 789-790 (11th Cir. 2012) (incorporation of AAA rules in
arbitration agreement did not “constitute clear and unmistakable evidence of an
agreement to arbitrate issues of conduct-based waiver”); Ehleiter v. Grapetree Shores,
Inc., 

 (3d Cir. 2007) (agreement providing for arbitration of “the issue
of arbitrability of any claim or dispute” not broad enough to comprehend litigation-
based waiver claim); Marie v. Allied Home Mortg. Corp., 

 (1st Cir.
2005) (provision delegating to arbitrator “disagreements concerning the interpretation
or application of this Agreement . . . including the arbitrability of any such controversy
or claim” did not take litigation-waiver argument from the court); Westlake Servs., LLC
v. Chandler, No. 112313, 

, at *10 (Ohio App. Oct. 12, 2023) (despite
incorporation of AAA rules into arbitration agreement, “[t]he argument that a party has
waived its right to arbitrate through its litigation conduct does not challenge the
arbitrability of any particular claim or counterclaim, [or] the ‘existence, scope or
validity’ of the arbitration agreement . . . .”); Jetall Companies, Inc. v. Sonder USA Inc.,
No. 01-21-00378-CV, 

 at *10, *11 n.4 (Tex. App. Dec. 15, 2022) (even
though “the language in the [arbitration] provision expressly incorporating the AAA's
Commercial Arbitration Rules clearly and unmistakably delegates gateway issues of
arbitrability to the arbitrator,” concluding that a litigation-waiver issue is for judicial
resolution because “neither the arbitration provision generally nor the delegation clause
specifically mentions who is to decide the issue of waiver by litigation conduct”); Kettle
Black of MA, LLC v. Commonwealth Pain Mgmt. Connection, LLC., 

,
1264–65 (Mass. App. 2022) (reference to AAA rules in arbitration agreement
insufficient to delegate waiver-by-litigation issue); Nelson v. Superior Court of San
Diego Cnty., No. D075542, 

, at *3–4 (Cal. App. Oct. 23, 2019)
(delegation of disputes over “enforcement” and “validity” of the agreement not broad
enough to delegate litigation-waiver claim); Principal Invs. v. Harrison, 

,
696 (Nev. 2016) (delegation to arbitrator of questions of agreement’s “enforceability”
does not comprehend litigation-waiver); Ford Motor Credit Co. v. Cornfield, 

 (Ill. App. 2009) (delegation provision provides for arbitration of
“[c]laims regarding the interpretation, scope, or validity of this clause, or arbitrability of
any issue”; holding that “this type of ‘catch-all’ provision does not include the question
of the effect of a party's prior litigation, which the trial court is better qualified to
determine than the arbitrator”).


                                             16
‘default’ has generally been viewed by courts as including a ‘waiver.’ . . . This
language would seem to place a statutory command on courts, in cases where a

stay is sought, to decide the waiver issue themselves.” Id. at 13 (citations

omitted). Marie also explained that a litigation-waiver issue implicates the
courts’ case-management authority: “Where the alleged waiver arises out of

conduct within the very same litigation in which the party attempts to compel

arbitration or stay proceedings, then the district court has power to control the

course of proceedings before it and to correct abuses of those proceedings.” Id.

      In Marie, the First Circuit noted that the judiciary has “comparative

expertise” to address litigation-waiver issues, since “[j]udges are well-trained to
recognize abusive forum shopping,” “the inquiry heavily implicates ‘judicial

procedures,’” and “the procedural waiver issue is not likely to be intertwined with

the merits of the dispute.” Id. (citations omitted). Marie also observed that

“allowing courts to decide waiver issues . . . furthers a key purpose of the FAA: to

permit speedy resolution of disputes,” since it avoids having a case shuttled back-

and-forth between a court and an arbitrator if the litigation-waiver claim has

merit. Id. at 14.

      Finally, Marie explained that it was unlikely that the parties, in agreeing to

a generic delegation clause, would have understood that claims of litigation
waiver were “arbitrability” issues which would be decided by an arbitrator and

not a court:

      “Arbitrability” itself encompasses a variety of possible meanings, but
      the most obvious meaning focuses on certain substantive issues, and
      particularly the question of whether a particular kind of dispute at
      issue falls within the scope of the arbitration clause. . . . The context
      of the agreement suggests that this sort of substantive meaning is


                                         17
      intended for the term “arbitrability” here; the reference to
      “arbitrability” is surrounded by references to which types of claims
      should be arbitrated and which should not be. We cannot say that
      the use of the term here evinces a clear and unmistakable intent to
      have waiver issues decided by the arbitrator. There are no references
      to waiver or similar terms anywhere in the arbitration agreement.
      Neither party should be forced to arbitrate the issue of waiver by
      conduct without a clearer indication in the agreement that they have
      agreed to do so. The issue of who would decide such a question is an
      “arcane” one that employees are unlikely to have considered unless
      clearly spelled out by the employer.
Id. at 15 (citations omitted).

      It makes sense to treat a litigation-waiver argument as a run-of-the-mill

procedural issue to be decided by the court before compelling arbitration. A
claim that a litigant has waived its right to compel arbitration, because it has

actively and extensively litigated the case in court before seeking arbitration, is

similar to many other procedural issues that routinely arise in civil litigation, and
which are resolved by courts every day. Missouri courts impose numerous

procedural requirements on civil litigants, which limit their ability to raise

particular issues. These procedural requirements may include timing and

pleading requirements, but also evidentiary rules such as the principle that a

motion to arbitrate must be supported by a properly-authenticated copy of the

arbitration agreement. See Ryan v. Raytown Dodge Co., 

(Mo. App. W.D. 2009) (motion to compel arbitration properly denied where the

motion failed to establish authenticity of purported arbitration agreement).

Courts may set additional deadlines or procedural requirements by order in a
particular case. Moreover, a trial court may foreclose a party from raising

particular issues because of its litigation misconduct – such as its failure to

provide discovery.


                                         18
       A circuit court could conceivably deny a motion to compel arbitration, like
the one filed by Gateway in this case, based on any number of procedural

problems: because the motion is not properly formatted, or supported by

sufficient factual allegations or legal authority; because the movant has failed to
provide the court with a properly authenticated copy of the Agreement; because

the movant has failed to provide opposing parties with discovery relevant to the

negotiation, existence, or terms of the arbitration agreement; or because the

movant has failed to heed motion-filing deadlines imposed by rule or by a

scheduling order. It seems inconceivable that a court faced with such procedural

defects would be required to refer them to an arbitrator; surely, such procedural
issues are for resolution by the court. Morgan teaches that, under § 6 of the

Federal Arbitration Act, claims of litigation-based waiver should be treated no

differently than these other, similar procedural defaults.

       The waiver-by-litigation doctrine relies on the fact that a party like

Gateway has acted inconsistently with a desire to arbitrate, by actively litigating

the dispute which they later claim is subject to resolution in a non-judicial forum.

To the extent the doctrine seeks to prevent parties from taking inconsistent

positions concerning where a dispute should be resolved, it is similar to the

doctrines of judicial estoppel and “invited error,” and to the principle that a party
waives venue, personal jurisdiction, and similar objections by voluntarily

submitting to the court’s authority.5 Courts routinely resolve such issues.

       5      See, e.g., Holmes v. Steelman, 

, 151 n. 8 (Mo. 2021) (“the
doctrine of judicial estoppel prevents a party from taking a position clearly inconsistent
with an earlier position”; citing Vacca v. Mo. Dep't of Lab. & Indus. Rels., 

 (Mo. 2019)); State v. Whirley, 

, 231 (Mo. App. W.D. 2023)
(“‘[U]nder the doctrine of self-invited error, [a] party cannot complain on appeal about
an alleged error in which that party joined or acquiesced . . . .’” (quoting Schaberg v.

                                            19
      Moreover, under Gateway’s argument, a court would seemingly be required
to refer a litigation-waiver argument to an arbitrator, and stay litigation pending

the arbitrator’s decision, no matter when a motion to compel arbitration was

filed – conceivably during trial, or even on appeal. As the Eastern District
recognized, without enforcement of a robust litigation-waiver doctrine, a party

could “delay a request for arbitration until jury deliberations had commenced

following a trial on the merits of arbitrable claims. To allow such a result would

offend established principles of fairness and utterly undermine notions of judicial

economy.” Lopez, 656 S.W.3d at 327. We note that in this case, the circuit court

was forced to stay further proceedings, and vacate a five-day jury trial setting
which had been in place for ten months, due to the litigation surrounding

Gateway’s belated motion to compel arbitration. This sort of dilatory conduct,

and consequent disruption of ongoing litigation, should not be rewarded by

automatically staying litigation, and referring the matter to an arbitrator,

whenever a purported right to arbitration is asserted.

      For all of the foregoing reasons, we conclude that our pre-Morgan

decisions in Ford Motor Credit Co. v. Jones, 

 (Mo. App. W.D.

2018), and TD Auto Finance, LLC v. Bedrosian, 

, 770-71 (Mo.

App. E.D. 2020), should no longer be followed, to the extent they hold that a
claim of waiver of the right to arbitration, based on active participation in

litigation, must be submitted to an arbitrator under a generic delegation clause.



Schaberg, 

, 518 (Mo. App. E.D. 2021)); Loew v. Heartland Trophy
Props., Inc., 

, 344 (Mo. App. W.D. 2023) (waiver of venue objections);
Int. of A.R.B., 

, 859 (Mo. App. W.D. 2019) (waiver of personal
jurisdiction and service-of-process issues).


                                         20
Consistent with this Court’s more recent decision in Lopez v. GMT Auto Sales,
Inc., 

, 327-28 (Mo. App. E.D. 2022), claims of waiver-by-litigation

are properly decided by the circuit court, despite the fact that an arbitration

agreement generally submits issues of “enforceability” or “arbitrability” to the
arbitrator. Point I is denied.6

                                           II.
      Turning to the merits, the circuit court’s conclusion that Gateway waived

its right to compel arbitration, by engaging in more than two years of litigation, is

amply justified.

             Missouri has long recognized that parties may waive the right
      to arbitration. “Waiver results from a party's substantial
      participation in litigation to a point inconsistent with an intent to
      arbitrate[.]”
Lopez, 656 S.W.3d at 327 (citations omitted).7

      Gateway’s initial filing of its debt-collection action did not waive its right to

later seek arbitration of Carson’s counterclaims. Although the Agreement

broadly authorizes the parties to arbitrate disputes arising out Carson’s car

purchase and the financing therefor, it also permits the parties to seek certain

non-arbitral remedies. Thus, the Agreement provides that the parties “retain the
right to seek remedies in small claims court for disputes or claims within that

      6      Because this opinion refuses to follow this Court’s prior opinions in Jones
and Bedrosian, the opinion has been reviewed and approved by order of the Court en
banc. See S. Ct. Operating Rule 22.01; W.D. Special Rule 31.
      7       Lopez recognized that, prior to the Supreme Court of the United States’
decision in Morgan, Missouri courts required the party asserting waiver-by-litigation to
demonstrate that it had been prejudiced by the litigation in which it was forced to
participate. 656 S.W.3d at 327. Lopez read Morgan as eliminating the prejudice
requirement from the waiver analysis. Id. Gateway does not challenge this conclusion,
and we do not further address it.


                                           21
court’s jurisdiction.” The Agreement also provides that a party would not waive
the right to seek arbitration “by using self-help remedies, such as repossession, or

by filing an action to recover the vehicle, to recover a deficiency balance, or for

individual injunctive relief.”
      “Our courts have recognized that valid anti-waiver provisions may serve to

insulate a party from waiver that results from specific actions contemplated by

the agreement, such as exercising self-help remedies, like vehicle repossession, or

filing an action in circuit court.” Lopez, 656 S.W.3d at 325. Under the parties’

Agreement, Gateway’s initial filing of its petition in the circuit court, which

sought to recovery a deficiency balance following Gateway’s repossession and sale
of Carson’s car, did not waive its right to later insist on arbitration.

      Carson’s counterclaims were not exempt from the arbitration clause,

however, and therefore Gateway’s right to compel arbitration accrued when

Carson filed her answer and counterclaims on June 5, 2021. Gateway did not file

its motion to compel arbitration until October 31, 2022, over sixteen months

later. In the interim, Gateway took numerous actions which were inconsistent

with its contractual right to arbitrate.

      First, Gateway’s answer to Carson’s counterclaims made no mention of the

Agreement’s arbitration provision. “[A] defendant's failure to raise arbitration as
an affirmative defense shows his intent to litigate rather than arbitrate. The filing

of an answer is, after all, the main opportunity for a defendant to give notice of

potentially dispositive issues to the plaintiff; and the intent to invoke an
arbitration provision is just such an issue.” Johnson Assocs. Corp. v. HL

Operating Corp., 

 (6th Cir. 2012); see Morgan, 

                                           22
(noting that the party which later moved to compel arbitration “answered [the
plaintiff’s] complaint, asserting 14 affirmative defenses – but none mentioning

the arbitration agreement”); Frye v. Speedway Chevrolet Cadillac, 

 (Mo. App. W.D. 2010) (in finding that defendants had waived its right to
compel arbitration, noting that “the Defendants each filed answers, none of

which asserted as a defense the obligation to arbitrate”).

      After answering Carson’s counterclaims, Gateway then engaged in

extensive litigation, including propounding and responding to substantial written

discovery, participating in depositions, engaging in substantial motions practice,

and participating in four separate case management conferences (during the last
of which the case was set for a jury trial). Gateway’s participation in over a year

of active litigation is sufficient to sustain the circuit court’s finding that it had

waived its right to compel arbitration. See Lopez, 656 S.W.3d at 329 (affirming

finding of litigation-waiver where the party seeking to compel arbitration

“committed to a course of litigation in the circuit court by engaging in over a year

of motion practice and hearings,” including active participation in discovery);

Millennium Anesthesiology Consultants, LLC v. Walsh, 

(Mo. App. E.D. 2018) (litigation-waiver established where “[t]he record

demonstrates that Millennium knew it had the right to arbitrate Walsh’s
counterclaims and that Millennium acted inconsistently with that right when it

failed to seek arbitration for ten months during which time it litigated in the

circuit court”); Gentry v. Orkin, LLC, 

 (Mo. App. W.D. 2016)
(affirming finding of litigation-waiver where party “proceeded to litigate the case

for over one year before moving to compel arbitration,” including “propound[ing]



                                           23
and respond[ing] to discovery and fil[ing] motions and briefs without ever
mentioning their purported right to arbitrate”); Reis v. Peabody Coal Co., 

 (Mo. App. E.D. 1996) (“Peabody’s delay for nearly two years

before requesting arbitration and its pretrial maneuvering were inconsistent with
its right to arbitrate.”).

       We find it particularly significant that on July 14, 2022, the circuit court set

the case for a five-day jury trial commencing on October 16, 2023, “upon the

request” of counsel for both parties. Gateway’s request for a jury trial – which

would fully and finally resolve the parties’ claims – is flatly inconsistent with its

later demand that those disputes instead by resolved through private arbitration.
       Gateway seeks to excuse its significant delay in moving to compel

arbitration by claiming that it was unaware of its right to compel arbitration until

it retained new counsel, who “discovered” the arbitration provision in September

or October 2022. Gateway’s claim of ignorance of the arbitration provision

strains credulity. Gateway attached the Agreement to its original petition. The

Agreement is titled: “RETAIL INSTALLMENT SALE CONTRACT –

SIMPLE FINANCE CHARGE (WITH ARBITRATION PROVISION).”

(Italics added.) The arbitration provision itself appears on page 2 of the

Agreement, in a black box, titled “ARBITRATION PROVISION” in bold-faced
and capitalized type. The existence of an arbitration provision in the Agreement

was hardly an obscure matter which only expert counsel could “discover.”

       To the extent that Gateway is suggesting that it is not bound by its initial
counsel’s failure to promptly move to compel arbitration of Carson’s

counterclaims, we disagree. “‘Generally, actions of a party's attorney, including



                                          24
procedural neglect that precludes a client's substantive rights, are imputed to the
client.’” Hooks v. MHS Hospitality Grp., LLC, 

 (Mo. App.

W.D. 2017) (quoting Cotleur v. Danziger, 

 (Mo. 1994)).

      Gateway claims in its briefing that, despite the length of time over which
litigation occurred, a finding of waiver is unwarranted because the parties and

the circuit court had not directly addressed the merits of Carson’s counterclaims.

It may be true that no dispositive motions had been filed, and no trial held. But

Gateway only moved to compel arbitration after losing discovery disputes which

permitted Carson to inquire into the relationship between Gateway and

Rightway, and concerning other instances where Gateway had claimed loan
deficiencies against Rightway customers after Rightway had repurchased the

vehicles from Gateway. In her briefing on the discovery issues in the circuit

court, Carson acknowledged that she was seeking this discovery to establish that

Gateway and Rightway were operating a “repo mill,” and to support a claim for

punitive damages. The circuit court’s discovery rulings presented a realistic

prospect that the litigation could broaden not only to include a claim for punitive

damages, but potentially a request for certification of the action as a class.

      The circuit court’s rulings, while addressing only discovery issues, were

hardly insignificant. In light of those rulings, the circuit court could rightfully
conclude that “[t]he timing of [Gateway’s] actions demonstrates that it ‘“wanted

to play heads I win, tails you lose,” which “is the worst possible reason” for failing

to move for arbitration sooner than it did.’” Messina v. North Cent. Distrib., Inc.,

 (8th Cir. 2016) (quoting Hooper v. Advance Am., Cash

Advance Ctrs. of Mo., Inc., 

 (8th Cir. 2009)); see also Gentry,



                                          25


 (“That Orkin and Biron waited so long to move to compel
arbitration strongly suggests that their move was purely a tactical one, as it came

directly on the heels of the court's denying their motion in limine,” which sought

to exclude evidence of an earlier charge of discrimination by plaintiffs against
defendant-employer).

       “The function of arbitration is to be a speedy, efficient and less expensive

alternative to court litigation.” Estate of Sandefur v. Greenway, 

 (Mo. App. W.D. 1995). Gateway’s conduct in this case – engaging in

extensive litigation of Carson’s counterclaims for more than a year – is the

antithesis of seeking a streamlined, expeditious arbitral resolution.
      Given Gateway’s extensive litigation of Carson’s counterclaims before

seeking to compel arbitration, the circuit court was fully justified in finding that

Gateway had waived its right to compel arbitration. Point II is denied.

                                    Conclusion
      The order of the circuit court denying Gateway’s motion to compel

arbitration is affirmed.

                                              _______________________
                                              Alok Ahuja, Judge

All concur.




                                         26