Steven Pinkerton v. Technical Education Services, Inc.

In the
Missouri Court of Appeals
Western District
STEVEN PINKERTON, )
)
Respondent, ) WD83594
)
v. ) OPINION FILED:
) November 24, 2020
TECHNICAL EDUCATION )
SERVICES, INC., )
)
Appellant. )
Appeal from the Circuit Court of Jackson County, Missouri
The Honorable Patrick W. Campbell, Judge
Before Division Four: Cynthia L. Martin, Chief Judge, Presiding, Karen King Mitchell,
Judge and Anthony Rex Gabbert, Judge
Technical Education Services Inc., an affiliate of Aviation Institute of
Maintenance, et al., ("AIM"), appeals the trial court's order denying AIM's motion to
dismiss, or in the alternative, to compel arbitration.1 AIM asserts three points on appeal
challenging the trial court's determination that AIM is collaterally estopped from seeking
to compel arbitration. We affirm the trial court's order.
1
An order denying a motion to compel arbitration is appealable under section 435.440.
Factual and Procedural Background
AIM, a Virginia-based corporation, operates aviation maintenance trade schools
throughout the United States, one of which is located in Kansas City, Missouri. In 2009,
Steven Pinkerton ("Pinkerton") enrolled at AIM's Kansas City, Missouri trade school. In
doing so, he signed an enrollment agreement which included an arbitration provision that
provided as follows:
Arbitration Agreement: I agree that any controversy, claim or dispute of
any sort arising out of or relating to matters including, but not limited to:
student admission, enrollment, financial obligations and status as a student,
which cannot be first resolved by way of applicable internal dispute
resolution practices and procedures, shall be submitted for arbitration, to be
administered by the American Arbitration Association located within
Virginia Beach, Virginia, in accordance with its commercial arbitration
rules. All fees and expenses of arbitration shall be shared equally and any
award rendered in favor of a student will be limited to the total amount paid
to the School by the student. Any award or determination rendered by the
arbitrator(s) shall be final and entered as a judgment by a court of
competent jurisdiction.
Six months later, Pinkerton signed a new enrollment agreement when he switched to a
different program within AIM's school. The new enrollment agreement contained the
same arbitration provision.
In 2014, Pinkerton filed a lawsuit in the Circuit Court of Jackson County,
Missouri, against AIM; Adrian Rothrock, an admissions representative; and W. Gerald
Yagen, the school's owner, alleging the school engaged in deception, misrepresentation,
and fraud. AIM moved to dismiss the suit, or in the alternative, to compel arbitration and
stay the proceedings. AIM contended that the arbitration provision required delegation to
an arbitrator of all threshold arbitrability disputes, including whether the arbitration
2
clause is enforceable. The trial court granted AIM's motion to compel arbitration,
concluding that the arbitration provision required delegation of threshold arbitrability
disputes to an arbitrator, including Pinkerton's contention that the arbitration provision
was unenforceable because it was unconscionable.
Pinkerton sought a writ of prohibition from the Missouri Supreme Court to require
the trial court to overrule the motion to compel arbitration because he had raised issues
involving the validity and enforceability of the arbitration provision that could not be
delegated to an arbitrator for determination. State ex rel. Pinkerton v. Fahnestock, 531
S.W.3d 36, 39-40 (Mo. banc 2017). The Supreme Court found that "[t]he arbitration
agreement clearly and unmistakably evidence[d] the parties' intent to delegate threshold
issues of arbitrability to the arbitrator," and that the trial court properly sustained AIM's
motion to compel arbitration. Id. at 53. The Supreme Court thus ordered the parties to
proceed to arbitration. Id.
Pinkerton's lawsuit proceeded to arbitration. Pinkerton and AIM jointly selected
the Honorable Gary Oxenhandler to serve as the arbitrator. On November 15, 2018,
Judge Oxenhandler issued an arbitrator's decision denoted as a "judgment" which ruled
that:
Arbitration is supposed to be a fair process, a process that affords all parties
the process they are due. Such is not the case here. For the reasons stated
above, the Arbitrator finds the Arbitration Agreement unconscionable and
unenforceable. This case is remanded to the Courts for appropriate action.
Arbitration dismissed.
Pinkerton filed the arbitrator's decision with the trial court as an attachment to a motion to
lift the stay of proceedings imposed when arbitration had been compelled. AIM did not
3
oppose lifting the stay, and did not challenge the arbitration decision. The trial court
granted Pinkerton's motion, lifted its stay, and the parties resumed litigation of
Pinkerton's lawsuit in the trial court.
On July 23, 2019, Pinkerton voluntarily dismissed his lawsuit without prejudice
pursuant to Rule 67.02.2 Three days later, Pinkerton re-filed his lawsuit, naming the
same parties and asserting the same causes of action as had been asserted in his original
lawsuit filed in 2014.
AIM once again moved to dismiss, or alternatively, to compel arbitration and stay
the proceedings. AIM argued that the arbitration provision in the enrollment agreement
was enforceable and that any challenges to enforceability of the provision had been
delegated to the arbitrator for determination. Pinkerton argued that AIM was collaterally
estopped from seeking to compel arbitration because an arbitrator had already found the
arbitration provision to be unconscionable and unenforceable. AIM argued it was not
collaterally estopped from seeking to compel arbitration because the arbitrator's decision
was not a final judgment, and because Pinkerton's voluntary dismissal of the 2014 lawsuit
"wipe[d] the slate clean," negating any preclusive effect of the arbitrator's decision.
The trial court denied AIM's motion to compel arbitration. The trial judge found
that for purposes of collateral estoppel, the pertinent issue was whether the arbitration
provision was enforceable, and that "[t]he prior action resulted in a final, valid judgment
on that issue" when the arbitrator issued his decision. The trial court also found that
2
All Rule references are to Missouri Court Rules, Volume I -- State 2019 unless otherwise noted. Rule
67.02 permits the plaintiff in a lawsuit to voluntarily dismiss his or her lawsuit without prejudice, without order of
the court, prior to the swearing of a jury in a jury tried matter, or before the introduction of evidence at trial in a
court tried matter.
4
Pinkerton had established the remaining elements of collateral estoppel. Thus, the trial
court concluded that AIM was collaterally estopped from seeking to compel arbitration
because the arbitration provision had been determined to be unenforceable. The trial
court also concluded that Pinkerton's voluntary dismissal of the 2014 lawsuit did not
negate the preclusive effect of the "valid final judgment regarding the enforceability of
the arbitration provision."
AIM appeals.
Standard of Review
"We review the circuit court's denial of a motion to compel arbitration de novo."
Fogelsong v. Joe Machens Auto. Group Inc., 600 S.W.3d 288, 293 (Mo. App. W.D.
2020) (citing Soars v. Easter Seals Midwest, 563 S.W.3d 111, 113 (Mo. banc 2018).
"Upon such review, we must first determine whether a valid arbitration agreement
exists." Sniezek v. Kansas City Chiefs Football Club, 402 S.W.3d 580, 583 (Mo. App.
W.D. 2013) (citing Nitro Distributing, Inc. v. Dunn, 194 S.W.3d 339, 345 (Mo. banc
2006). If the trial court's ruling on the motion to compel arbitration includes "factual
findings that bear on the existence, scope, or revocability of the arbitration agreement,
then we will affirm the factual findings if they are supported by substantial evidence and
are not against the weight of the evidence." Id. (citing Whitworth v. McBride & Son
Homes, Inc., 344 S.W.3d 730, 736 (Mo. App. W.D. 2011). The party asserting the
existence of a valid and enforceable contract to arbitrate bears the burden of proving that
proposition. Id.
5
 Analysis
AIM raises three points on appeal challenging the trial court's conclusion that AIM
was collaterally estopped from seeking to compel arbitration. In its first point, AIM
argues that the trial court committed legal error because collateral estoppel is an issue of
arbitrability which had been delegated to the arbitrator for determination. AIM's second
point asserts that even if the trial court properly determined the issue of collateral
estoppel instead of referring that matter to arbitration, the trial court erred because the
arbitrator's decision was not a final judgment on the merits. In its third point, AIM
claims that the trial court erred in concluding that Pinkerton's voluntary dismissal of the
2014 lawsuit did not negate the preclusive effect, if any, of the arbitrator's decision. We
address the points in turn.
Point One: Because the arbitrator's decision controls whether an arbitration
agreement exists between Pinkerton and AIM, the trial court properly determined the
collateral estoppel effect of the arbitrator's decision
It is uncontested that the arbitration provision AIM now seeks to enforce was
determined by an arbitrator to be unenforceable in connection with Pinkerton's 2014
lawsuit. In other words, an arbitrator previously determined that no valid arbitration
agreement exists between the parties because the arbitration provision was
unconscionable. "Arbitration is a matter of contract under the Federal Arbitration Act
(FAA)." Soars v. Easter Seals Midwest, 563 S.W.3d 111, 114 (Mo. banc 2018) (citing
AT&T Mobility, LLC v. Concepcion, 563 U.S. 333, 339 (2011). "'[A] party cannot be
required to arbitrate a dispute that it has not agreed to arbitrate[,]' and arbitration will
only be compelled where ‘a valid arbitration agreement exists . . . .'" Hughes v.
6
Ancetry.com, 580 S.W.3d 42, 47 (Mo. App. W.D. 2019) (quoting NutraPet Sys., LLC v.
Proviera Biotech, LLC, 542 S.W.3d 410, 413-14 (Mo. App. W.D. 2017).
As such, the ultimate issue we must resolve is the preclusive effect of the
arbitrator's decision that no valid arbitration agreement exists between Pinkerton and
AIM. However, the initial issue we must resolve is who, as between an arbitrator and the
trial court, was required to determine the preclusive effect of the arbitrator's decision.
AIM views the preclusive effect of the arbitrator's decision as an issue of enforceability
of an arbitration agreement that must be determined by an arbitrator based on the
arbitration agreement's delegation language. See Pinkerton, 531 S.W.3d at 53. Pinkerton
contends that the trial court was required to determine the preclusive effect of the
arbitrator's decision because a trial court must first determine that an agreement to
arbitrate exists before it can delegate matters regarding enforceability of the agreement to
an arbitrator for determination. See Theroff v. Dollar Tree Stores, Inc., 591 S.W.3d 432,
440 (Mo. banc 2020) ("[T]he circuit court cannot delegate [a] matter to an arbitrator
whose very existence depends upon an agreement."). We conclude that Theroff controls
the resolution of this dispute, and that because the preclusive effect of the arbitrator's
decision will control whether an arbitration agreement exists, the trial court properly
determined whether AIM was collaterally estopped by the arbitrator's decision.
In Theroff, the Supreme Court held that in the absence of an agreement to
arbitrate, a delegation provision is not effective. Id. at 439-40. The Court was reviewing
a trial court's refusal to compel arbitration where the party opposing arbitration, who was
blind, denied affixing her digital signature to documents at the time she was hired, and
7
alleged that the employer's representative did so without her assent, as the nature of the
documents were not explained to her. Id. at 435. Though it was uncontested that the
documents included an arbitration provision, whether the employee assented to the
arbitration provision by affixing her digital signature was contested. Id. at 437. The
Court framed the issue before it as one of first impression, and noted that "[u]nlike the
standard scenario in which there is no dispute about whether a party signed an arbitration
agreement, when a party disputes signing, the court must first decide the existence of an
agreement to arbitrate." Id. (citing Chastain v. Robinson-Humphrey Co., 957 F.2d 851,
854 (11th Cir. 1992) (noting that the trial court must determine in first instance whether
an agreement to arbitrate exists where signature is contested) (abrogated on other grounds
by Larsen v. Citibank FSB, 871 F.3d 1295, 1303 n.1 (11th Cir. 2017)). Noting that
Theroff challenged the existence of any agreement to arbitrate, the Supreme Court
concluded that because the "existence of the agreement to arbitrate is a prerequisite to
compelling arbitration," the trial court properly determined this issue. Id. at 439.
The decision in Theroff was not unanimous. In one dissenting opinion, a minority
of the court held that a controversy over signature is a contract formation issue that must
be referred to the arbitrator in the presence of an unchallenged delegation provision in the
arbitration agreement. Id. at 442-46 (Powell, J., dissenting). In a separate dissent, a
minority of the court wrote separately to emphasize that assent to a contract, whether
challenged based on signature or otherwise, is always a contract formation issue, and that
the delegation provision in Theroff's arbitration agreement expressly delegated to an
arbitrator disputes involving contract formation. Id. at 446-48 (Fischer, J., dissenting).
8
We believe, however, that the circumstances in this case are even more compelling than
those in Theroff. Here, an arbitrator determined that the arbitration provision included in
the enrollment agreement Pinkerton signed was not enforceable, and thus that no valid
agreement to arbitrate existed. If the arbitrator's decision binds AIM, then there exists no
valid arbitration agreement to enforce, including the agreement's delegation provision.
Consistent with Theroff, where the very existence of an arbitration agreement is
challenged, it is for the trial court to make that determination and not an arbitrator. In
fact, this result is compelled by section 435.355.1 which provides that:
On application of a party showing an agreement described in section
435.350, and the opposing party's refusal to arbitrate, the court shall order
the parties to proceed with arbitration, but if the opposing party denies the
existence of the agreement to arbitrate, the court shall proceed summarily
to the determination of the issue so raised . . . .
(Emphasis added.)
AIM disregards Theroff, and insists that the preclusive effect of the arbitrator's
decision had to be determined by the arbitrator. AIM relies on Melnuk v. Hillman, a
recent opinion which held, as a matter of first impression, that an arbitrator, rather than
the trial court, was required to decide the collateral estoppel effect of a previous
arbitration award on a second arbitration demand. 593 S.W.3d 674, 681 (Mo. App. E.D.
2020). But AIM's reliance on Melnuk is misplaced. Melnuk did not hold that the
collateral estoppel effect of a prior arbitration decision must always be determined by an
arbitrator in the face of a second arbitration demand. More importantly, Melnuk did not
involve a scenario where the collateral estoppel effect of an earlier arbitration decision
was central to determining whether an arbitration agreement even exists.
9
In Melnuk, the owners of a limited liability company entered into a buy-sell
agreement where Hillman agreed to purchase Melnuk's 50% interest. Id. at 676. The
buy-sell agreement and the operating agreement for the limited liability company each
contained an arbitration provision. Id. at 677. The buy-sell agreement contemplated that
Hillman would give Melnuk a promissory note for a portion of the purchase price, and
that the note balance could be adjusted by subsequent contingent liabilities. Id. at 676.
One such liability involved amounts paid to key employees pursuant to a phantom option
plan in the event of any change of control of ownership. Id. The "change of control"
provision in the phantom option plan was modified after the buy-sell agreement was
entered into from "greater than fifty percent" to "fifty percent or more." Id. at 676-77.
As a result, nearly $300,000 was paid out by Hillman to key employees, and Hillman
notified Melnuk that the balance Hillman owed on the promissory note was being
correspondingly reduced. Id. at 677. Melnuk disagreed with the adjustment, and claimed
he had not signed the amendment to the phantom option plan modifying the definition of
"change of control." Id.
Hillman initiated an arbitration proceeding seeking a declaratory judgment that the
"change of control" contingent liability adjustments were valid under the buy sell
agreement. Id. at 677-78. Melnuk denied the validity of the change of control
adjustments, and also asserted counterclaims seeking upward adjustments of the
promissory note balance for reasons unrelated to the change of control payments. Id. at
678. The arbitrator entered an arbitration award which stated that the issues presented in
the arbitration were "ten potential adjustments" of the principal amount owed by Hillman
10
to Melnuk on the promissory note. Id. The arbitrator concluded that the moneys paid to
key employees "met the contractual definition of a contingent liability adjustment" in the
promissory note, resulting in a reduction of the amount due on the note. Id. However,
the arbitrator expressly noted in the award that no opinion was being expressed as to
whether Melnuk might have a claim for breach of fiduciary duty or some other cause of
action relating to improper modification of the "change of control provision," and noted
that such claims were "beyond the scope of this arbitration." Id.
The arbitrator's award was confirmed in early 2018. Id. Almost a year later,
Melnuk filed a lawsuit seeking damages from Hillman on theories of breach of fiduciary
duty, fraud, and conspiracy arising out of the alleged unauthorized amendment of the
"change of control" provision in the phantom option plan. Id. Hillman moved to compel
arbitration. Id. Melnuk argued the earlier arbitration award determined that his claims
were beyond the scope of the arbitration clauses in the parties' operating and buy/sell
agreements. Id. at 687-79. Neither party contested the existence of an arbitration
agreement. The only issue was whether the scope of the arbitration agreement had been
resolved by the earlier arbitrator's decision.
The trial court denied Hillman's motion to compel arbitration. Id. at 679. On
appeal, the Eastern District characterized the dispute between the parties as whether
Hillman was collaterally estopped by the arbitration award to compel a second
arbitration. Id. Specifically, the parties disputed whether the arbitrability of Melnuk's
damage claims had been decided by the first arbitration award, and whether an arbitrator
or the court should determine this issue. Id. at 680.
11
 The Eastern District noted that determining whether an arbitrator or a court should
"determine[] the collateral estoppel effect of a prior arbitration award . . . is an issue of
first impression." Id. After analyzing federal decisions relevant to the issue, the court
concluded that "[a]n arbitrator must decide whether Hillman is collaterally estopped by
the [earlier arbitration award] from compelling arbitration of Melnuk's claims for
damages not because the parties agreed to submit threshold questions of arbitrability to
an arbitrator but because evaluating Melnuk's collateral estoppel defense is a 'procedural
question[] which grow[s] out of the dispute and bear[s] on its final disposition.'" Id. at
682 (quoting Howsam v. Dean Witter Reynolds, Inc., 537 U.S. 79, 84-85 (2002))
(emphasis added).
Melnuk thus cannot be read as urged by AIM for the proposition that an
affirmative defense raising the collateral estoppel effect of an earlier arbitration award
must always be referred for determination by an arbitrator pursuant to a delegation
provision. In fact, Melnuk expressly dispels this conclusion. At best, Melnuk simply
holds that "the merits of an argument challenging the scope of the issues resolved in a
prior arbitration award 'must be presented to and resolved by [a] . . . second arbitration
proceeding.'" Id. at 681 (quoting W & T Travel Servs., LLC v. Priority One Servs., Inc.,
69 F. Supp. 3d 158, 171 (D.D.C. 2014)).
Here, there is no dispute regarding the scope of the issues resolved by the prior
arbitration award. The parties agree that the prior arbitration award determined the
enforceability of the arbitration provision in the enrollment agreement by concluding the
provision was unenforceable because it was unconscionable. The exact same issue is
12
now framed by Pinkerton's opposition to AIM's motion to compel arbitration in
Pinkerton's re-filed case.3 Melnuk is therefore of no assistance to AIM as it did not
address whether an arbitration agreement exists. Instead, because the trial court first had
to determine that an arbitration agreement existed before it could compel arbitration in
Pinkerton's refiled case, the trial court did not err in determining the collateral estoppel
effect of the arbitrator's decision on that very issue.
AIM's first point on appeal is denied.
Point Two: The arbitrator's decision was a judgment on the merits
AIM next argues that even if the trial court properly determined the preclusive
effect of the prior arbitration decision instead of referring that issue to an arbitrator, the
trial court erroneously found the arbitrator's decision collaterally estopped AIM because
the arbitrator's decision was not a judgment on the merits.
"'Collateral estoppel, or issue preclusion, is used to preclude the relitigation of an
issue that already has been decided in a different cause of action.'" Matter of Invenergy
Transmission LLC, 604 S.W.3d 634, 639 (Mo. App. W.D. 2020) (quoting Brown v.
Carnahan, 370 S.W.3d 637, 658 (Mo. banc 2012). Four elements must be shown in
order to give a prior adjudication preclusive effect:
(1) the issue decided in the prior action was identical to the issue presented
in the later action; (2) the prior action resulted in a judgment on the merits;4
(3) the party against whom estoppel is asserted was a party or was in privity
3
In its second point on appeal, AIM concedes that the issue is the enforceability of the arbitration
agreement.
4
Some Missouri cases add the word "final" before the word judgment in describing this element. See, e.g.,
Fischer ex rel. Scarborough v. Fischer, 34 S.W.3d 263, 265 (Mo. App. W.D. 2000). As we explain, however,
inclusion of the word "final" is immaterial. What matters is whether a determination that is binding on the parties
has been made on an issue--not whether the determination is "final" as in final for purposes of appeal.
13
with a party to the prior action; and (4) the party against whom collateral
estoppel is asserted had a full and fair opportunity to litigate the issue in the
prior action.
U-Haul Company of Missouri v. Carter, 567 S.W.3d 680, 684 (Mo. App. W.D. 2019)
(citing James v. Paul, 49 S.W.3d 678, 682 (Mo. banc 2001). AIM concedes that only the
second element, whether the prior adjudication resulted in a judgment on the merits, is at
issue in this case.5
"'For the purposes of collateral estoppel, an arbitration award may constitute a
final judgment on the merits.'" Melnuk, 593 S.W.3d at 680 (quoting Graybar Elec. Co.,
Inc. v. Federal Ins. Co., 567 F. Supp. 2d 1116, 1123 (E.D. Mo. 2008). AIM
acknowledges this point, but asserts that the arbitrator's decision was not a "merits"
decision, and thus cannot constitute a judgment on the merits for purposes of collateral
estoppel. AIM relies on State v. Purvis to contend that the arbitrator merely decided
where Pinkerton's dispute should be litigated, and was thus not a judgment on the merits
because it was a "judgment rendered upon some preliminary or merely technical point, or
by default, and without trial." 739 S.W.2d 589, 591 (Mo. App. S.D. 1987).
Purvis is readily distinguishable. In Purvis, the Southern District concluded that
the State was not collaterally estopped to prove probable cause in a driving while
intoxicated case even though an administrative hearing officer determined in a related
license suspension proceeding that there was "no evidence in [the] file on probable
5
We agree that the trial court correctly concluded that the remaining three elements for collateral estoppel
have been established. The issue decided in the arbitration proceeding was enforceability of the arbitration
agreement, and this is the identical issue presented to us. Further, the parties are identical, and AIM had a full and
fair opportunity to litigate the issue in arbitration. Therefore, we analyze whether the prior arbitration resulted in a
judgment on the merits.
14
cause." Id. at 590-91. The Southern District concluded that the administrative hearing
officer's decision was ambiguous, as it could not be determined whether the hearing
officer weighed evidence to find, on the merits, that probable cause was not established,
or instead concluded that probable cause was not demonstrated because a statutory
requirement relevant only to administrative suspension proceedings had not been
satisfied. Id. Because it was impossible to say that in making a probable cause finding,
the hearing officer relied on anything "other than the preliminary and technical basis of
deficiencies in the arresting officer's report," the court declined to treat the hearing
officer's decision as a judgment on the merits. Id. at 591.
In stark contrast, the arbitrator's decision entered in connection with Pinkerton's
2014 lawsuit was plainly a determination on the merits regarding the enforceability of the
parties' arbitration agreement. The arbitrator dismissed the arbitration proceeding after
finding there was no valid arbitration agreement to enforce because the agreement was
unconscionable. This was not a preliminary or technical determination, but a substantive
determination on an ultimate issue that AIM insisted be heard by an arbitrator. Purvis is
of no assistance to AIM.6
AIM next argues that even if the arbitrator's decision was on the merits, it was not
a judgment. AIM relies on State ex rel. Henderson v. Asel, where our Supreme Court
addressed what constitutes a judgment, and held that "a judgment is a legally enforceable
6
AIM also relies on Med. Shoppe Int'l, Inc. v. J-Pral Corp., 662 S.W.2d 263, 275 (Mo. App. E.D. 1983), as
additional support for the proposition attributed to Purvis. AIM's reliance is misplaced. Medicine Shoppe Int'l
simply concluded that J-Pral Corporation was not collaterally estopped from raising the issue of personal jurisdiction
because, when the trial court dismissed Medicine Shoppe's petition for want of personal jurisdiction, "no decision on
the merits" on the issue of personal jurisdiction had yet been entered by the arbitration tribunal. Id.
15
judicial order that fully resolves at least one claim in a lawsuit and establishes all the
rights and liabilities of the parties with respect to that claim." 566 S.W.3d 596, 598 (Mo.
banc 2019). AIM argues that the arbitrator's decision was not a judicial order, and
therefore cannot be a "judgment" on the merits. AIM's argument disregards authority for
the proposition that an arbitration award may constitute a judgment on the merits for
purposes of collateral estoppel. See Melnuk, 593 S.W.3d at 680. Moreover, while
Henderson refers to a judgment as a "judicial order," it did so in the context of addressing
when a judgment is appealable. 566 S.W.3d at 598-99. Henderson did not address what
constitutes a judgment for purposes of collateral estoppel, and cannot be read to limit
"judgments" for that purpose to judicial orders.7
Finally, AIM argues that other courts have ruled that "a decision on a motion to
compel arbitration is not a final judgment on the merits that gives rise to collateral
estoppel." Pearson v. P.F. Chang's Bistro, Inc., No. 13-cv-2009-JLS, 2015 WL
12910914, at *4 n.4 (S.D. Cal. Feb. 23, 2015); Lotsoff v. Wells Fargo Bank, No. 18-cv-
02033-AJB-JLB, 2019 WL 4747667, at *4 (S.D. Cal. Sept. 30, 2019). Neither case is
binding on this court. Fogelsong, 600 S.W.3d at 295 n.3 ("This Court is not bound by the
decisions of federal district courts.") (citing Godat v. Mercantile Bank of Nw. Cty., 884
S.W.2d 1, 4 n.1 (Mo. App. E.D. 1994)). In any event, both decisions are readily
distinguishable. Though Pearson noted in a footnote that a state court's order denying a
7
AIM also relies on our Supreme Court's conclusion that an order sustaining partial summary judgment on
only some issues in a case, including issues of arbitrability and consideration, "was not a final judgment" for
purposes of appeal. Sanford v. CenturyTel of Mo., LLC, 490 S.W.3d 717, 719 (Mo. banc 2016). However, as with
Henderson, a discussion of when judgments are appealable cannot be fairly read to either contemplate, or be
controlling on, the issue of what constitutes a judgment on the merits for purposes of collateral estoppel.
16
defendant's motion to compel arbitration was not a "final judgment on the merits"
supporting collateral estoppel in the same plaintiff's later filed federal court action, there
is no basis from this vague reference to determine the basis for the state court's order, and
more importantly, whether the order found there to be no valid arbitration agreement in
existence. 2015 WL 12910914, at *4 n.4. And though Lotsoff rejected a plaintiff's
argument that the defendant was collaterally estopped to compel arbitration where the
same arbitration provision had been declared unenforceable, it is plain that the
"enforceability" determination was not only made in another case involving different
parties, but as well that the determination was not yet final and was being appealed. 2019
WL 4747667, at *4.
We conclude that the arbitrator's decision finding the arbitration provision in the
enrollment agreement to be unenforceable was a judgment on the merits. This conclusion
is supported by Cooper v. Yellow Freight System, Inc., 589 S.W.2d 643, 645 (Mo. App.
E.D. 1979), and by Pratt v. Purcell Tire & Rubber Co., 846 S.W.2d 230, 233 (Mo. App.
E.D. 1993), both of which expressly addressed the preclusive effect of a previous
arbitrator's decision, and both of which concluded that "where there has been a final and
binding arbitration between the parties," the facts determined in the arbitration
proceeding may not be relitigated. Pratt, 846 S.W.2d at 233 (citing Cooper, 589 S.W.2d
at 645).
In Cooper, a trucking company terminated a driver for reckless driving resulting in
an accident, and an arbitration proceeding sustained the termination on the same grounds.
589 S.W.2d at 644. The driver then filed suit, alleging, inter alia, that the reason
17
provided for his termination was false because he did not drive recklessly resulting in an
accident. Id. The Eastern District affirmed the trial court's grant of summary judgment
for the defendant because the issue of whether or not the driver drove recklessly, was "the
identical issue litigated by the two parties" in arbitration, and collateral estopped
therefore barred the driver from relitigating the issue. Id. at 645 ("[i]f the procedure used
to settle the dispute is one of the party's own choosing, as it was here, and was a final and
binding arbitration between the parties, the courts may not relitigate facts determined in
the arbitration proceeding.")
Similarly, in Pratt, a mechanic alleged, in both an arbitration proceeding and in a
suit for damages, that his former employer denied his reinstatement in retaliation after he
filed a workers' compensation claim. 846 S.W.2d at 230. The issue presented to the
arbitrator was whether the employer had unjustly refused to allow the mechanic to return
to work. Id. at 232. The arbitrator found that the employer had not acted in a
discriminatory manner. Id. The Eastern District affirmed the trial court's subsequent
grant of summary judgment in the employer's favor on the grounds that collateral
estoppel precluded relitigating the reason for the employer's refusal to reinstate the
mechanic because the same issue had already been litigated by the parties in a final and
binding arbitration proceeding. Id. at 233 (citing Cooper, 589 S.W.2d at 645).
Cooper and Pratt thus hold that when a specific issue has been litigated in an
arbitration proceeding, and where the arbitrator's decision expressly resolves that issue,
the parties are collaterally estopped from relitigating the same issue in a subsequent
proceeding. Not surprisingly, the Eastern District in Melnuk acknowledged this
18
precedent, and differentiated the circumstances in Melnuk (where the scope of what was
determined in a prior arbitration was contested) from the circumstances in Cooper and
Pratt, thus reinforcing that "a party is barred from asserting a claim identically presented
and determined in a prior arbitration proceeding." 593 S.W.3d at 682 (citing Cooper, 589
S.W.2d at 645; Pratt, 846 S.W.2d at 233).
Here, AIM moved to compel arbitration in Pinkerton's 2014 lawsuit. In response,
Pinkerton generally challenged the validity of the arbitration agreement and specifically
challenged the validity of the delegation provision. Our Supreme Court found the
arbitration agreement to "clearly and unmistakably evidence the parties' intent to delegate
threshold issues of arbitrability to the arbitrator." Pinkerton, 531 S.W.3d at 53. The
Court thus ordered the parties to proceed to arbitration, after concluding that the
delegation provision was valid and enforceable under the FAA "'leaving any challenge to
the validity of the [a]greement as a whole,' or to the other provisions within the
arbitration agreement, 'for the arbitrator.'" Id. at 52-53 (quoting Rent-A-Center, West,
Inc. v. Jackson, 561 U.S. 63, 72 (2010)). The parties thereafter agreed upon an arbitrator,
and that arbitrator subsequently issued a written decision, denominated a judgment,
which finally concluded that the arbitration agreement was unconscionable and
unenforceable, requiring dismissal of the arbitration proceeding. AIM did not challenge
the arbitrator's determination, and did not oppose Pinkerton's filing of the arbitrator's
decision with the trial court in connection with a request to lift the stay of proceedings.
The arbitrator's decision finally resolved the issue of enforceability of the arbitration
agreement, and constitutes a judgment on the merits with respect to that issue. The trial
19
court properly concluded that AIM is collaterally estopped to relitigate that issue in
Pinkerton's re-filed lawsuit.
Point two on appeal is denied.
Point Three: Pinkerton's voluntary dismissal of his 2014 lawsuit without prejudice did
not vacate the arbitrator's decision
Finally, AIM contends that even if the trial court properly concluded that the
arbitrator's decision was a judgment on the merits, when Pinkerton voluntarily dismissed
the 2014 lawsuit, his action "wiped the slate clean" as if Pinkerton never brought the
2014 lawsuit, and thus vacated the arbitrator's decision.
AIM relies on Williams v. Southern Union Co., 364 S.W.3d 228, 235 (Mo. App.
W.D. 2011). In Williams, the trial court partially sustained a defendant's motion to
dismiss two of the plaintiff's claims. Id. at 230. The plaintiff subsequently dismissed the
lawsuit without prejudice pursuant to Rule 67.02, and then refiled the suit, reasserting the
previously dismissed claims. Id. at 230-31. We found that the plaintiff was not
collaterally estopped to reassert the previously dismissed claims because her voluntary
dismissal of the initial lawsuit "wiped the slate clean," as if the suit had never been filed.
Id. at 234-35. Central to this holding, however, is the fact that pursuant to Rule 74.01(b):
[A]ny order or other form of decision, however designated, that adjudicates
fewer than all the claims or the rights and liabilities of fewer than all the
parties shall not terminate the action as to any of the claims or parties, and
the order or other form or decision is subject to revision at any time before
the entry of judgment adjudicating all the claims and rights and liabilities of
all the parties.
Thus, our reference to "wiping the slate clean" in connection with the plaintiff's voluntary
dismissal of the initial lawsuit without prejudice pursuant to Rule 67.02 simply
20
acknowledged that interlocutory rulings by a trial court have no preclusive effect in a
refiled lawsuit because they did not yet have a preclusive effect in the initial lawsuit.8
In contrast, the arbitration compelled by AIM in Pinkerton's 2014 lawsuit was a
distinct and independent proceeding. It resulted in a final decision that resolved all issues
before the arbitrator by virtue of the arbitrator's conclusion that the arbitration agreement
was unenforceable. The arbitrator's decision was final, and was not subject to revision by
the trial court. See Cornerstone Propane, L.P. v. Precision Investments, L.L.C., 126
S.W.3d 419, 423-24 (Mo. App. S.D. 2004) (quoting R.L. Hulett & Co. v. Barth, 884
S.W.2d 309, 311 (Mo. App. E.D. 1994) ("[a]n arbitration award . . . finally concludes and
binds the parties on the merits of all matters properly within the scope of the award, both
as to law and facts, and the courts will have no inquiry as to whether the determination
thereon was right or wrong, for the purposes of interfering with the award."). Moreover,
AIM did not challenge the arbitrator's decision. Pinkerton's motion to lift the stay of
proceedings attached the arbitrator's decision. Though Pinkerton's motion was not
expressly titled as a motion to confirm the arbitrator's decision, the motion's success
depended on recognition of the arbitration award as final and binding, as the trial court
8
AIM similarly relies on Lewis v. Department of Social Services, 61 S.W.3d 248, 256 n.4 (Mo. App. W.D.
2001). In Lewis, our court evaluated potential error in the modification of a child support award, rather than
collateral estoppel; however, in a footnote, our court explained that:
[a]lthough the order of the probate judge is contained in the record and reference is made to the
order, this court notes that the findings contained therein are not binding on . . . this court. The
collateral estoppel doctrine prohibits relitigation of an issue only if, inter alia, there has been a
final judgment on the merits. Fischer ex rel. Scarborough v. Fischer, 34 S.W.3d 263, 264 (Mo.
App. 2000). Since Mr. Lewis voluntarily dismissed his motion for modification of visitation and
child support prior to final adjudication, the order of the probate judge does not constitute a final
judgment on the merits.
Id. As with Williams, the court's comments merely recognize that interlocutory rulings by a trial court do not have
preclusive effect because they remain subject to change.
21
could not otherwise have lifted the stay and proceeded with Pinkerton's lawsuit. See
Pinkerton, 531 S.W.3d at 53. (ordering the parties to arbitrate Pinkerton's lawsuit,
including Pinkerton's claims regarding enforceability of the arbitration agreement). AIM
could have challenged the arbitrator's decision by moving to vacate or modify the
decision as authorized by 9 U.S.C. section 9 pursuant to one of the limited grounds
described in 9 U.S.C. sections 10 and 11. AIM did not do so, leaving the trial court with
no authority but to abide by the arbitrator's decision. See, e.g., Lobel Fin. Inc. v. Bothel,
570 S.W.3d 87, 91 (Mo. App. W.D. 2018) (observing that a trial court has no authority
but to confirm an arbitration award unless the award is vacated or modified or corrected
as provided by 9 U.S.C. sections 10 and 11); Cargill v. Poeppelmeyer, 328 S.W.3d 774,
776 (Mo. App. S.D. 2010) (holding that a "court must confirm [an arbitration] award
unless the opposing party moves to vacate or modify the award," and that "the party
challenging an arbitration award has the burden of demonstrating that the award is not
valid.").
Pinkerton's subsequent decision to voluntarily dismiss his lawsuit without
prejudice did not operate to vacate the arbitrator's decision fully and finally resolving the
arbitration proceeding. AIM's argument to the contrary suggests a party has the power to
unilaterally vacate an arbitrator's final decision by voluntarily dismissing related
litigation. There is no authority for that proposition, which would frustrate the primary
purpose of arbitration to efficiently reach a final and binding decision. See Decker v.
Kamil, 100 S.W.3d 115, 117 (Mo. App. E.D. 2003).
22
The trial court did not err in concluding that Pinkerton's voluntary dismissal
without prejudice pursuant to Rule 67.02 did not "wipe the slate clean" of the arbitrator's
final decision regarding the enforceability of the arbitration agreement.
Point Three on appeal is denied.
Conclusion
The trial court's order refusing to compel arbitration is affirmed.
__________________________________
Cynthia L. Martin, Judge
All concur
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