The Missouri Court of Appeals, Western District, has sided with a construction company in a breach of contract case, ruling that the homeowner waived her right to arbitration. The case involved a dispute over a deck remodeling project. The court’s decision affirms the lower court’s judgment in favor of the construction company, CoMo Premium Construction LLC.
The Contract and the Dispute
The heart of the matter lies in a contract between CoMo Premium and Erin Pulster, where CoMo Premium agreed to remodel the outdoor deck of Pulster’s home in Columbia, Missouri, for $22,242.90. The contract included several key provisions, including clauses regarding interest, attorney’s fees, and arbitration. Specifically, the contract stated that “The ‘Contractor’ and the ‘Owner’ agree to settle all disputes through the American Arbitration Association and Owner waives any right to have any suit between the parties arising out of this Contract tried by a jury.”
CoMo Premium initiated legal action in February 2024, alleging that Pulster had not fully paid for the labor and materials provided. The company filed a breach of contract claim, along with alternative claims of quantum meruit and unjust enrichment.
Pulster, who initially represented herself in court, was served on April 12th. A hearing was held on May 17th, and a bench trial (a trial before a judge, not a jury) took place on June 21st. Both parties presented evidence. On June 24th, the trial court found in favor of CoMo Premium, awarding damages of $18,098.14, which included the cost of work and materials, interest, and attorney’s fees.
The Homeowner’s Argument for Arbitration
Thirty days after the judgment, Pulster, now represented by counsel, filed a motion to set aside the judgment. Her primary argument was that the trial court lacked the authority to enter the judgment because the contract mandated arbitration for all disputes. She claimed that the Federal Arbitration Act (FAA) applied, making arbitration mandatory. Pulster argued that, because the parties used email to communicate, which traveled within interstate commerce, the FAA applied.
The FAA governs arbitration agreements in contracts involving interstate commerce. The Missouri Uniform Arbitration Act (MUAA) applies to arbitration matters not preempted by the FAA.
In her affidavit, Pulster stated that although she read the arbitration clause in the contract, she “didn’t understand what arbitration was and assumed the term was a synonym of ‘trial’ since that paragraph seemed to allow for a trial so long as it wouldn’t be a jury trial.”
The Court’s Decision: Waiver of Arbitration
The appeals court, however, did not agree with Pulster’s argument. The court determined that even if the FAA applied, Pulster had waived her right to arbitration. The court found that she acted inconsistently with her right to arbitrate by participating in the trial on the merits and only raising the arbitration issue after the trial court had already issued its judgment.
The court cited the legal standard for waiver, stating that a party waives the right to arbitrate if they “had knowledge of the right to arbitrate” and “acts inconsistently with that right.” The court emphasized that Pulster’s participation in the trial, including presenting evidence, was a key factor in determining waiver.
The court reasoned that allowing arbitration after a trial on the merits would undermine the purposes of both arbitration and the waiver doctrine, which are to achieve a streamlined, expeditious resolution.
The court also dismissed Pulster’s claim that she didn’t knowingly waive her right because she thought arbitration meant “trial.” The court pointed out that Missouri law presumes that parties understand the contracts they sign. Since Pulster admitted to reading the contract and didn’t allege fraud, she was considered to have understood the meaning of “arbitration.”
Final Judgment and Attorney’s Fees
The appeals court affirmed the trial court’s judgment. The court also addressed the issue of attorney’s fees. The contract between CoMo Premium and Pulster included a provision for attorney’s fees in the event of a contract enforcement action. The appeals court granted CoMo Premium’s motion for attorney’s fees on appeal and remanded the case to the trial court to determine the specific amount of fees.
In essence, the court’s decision reinforces the importance of timely assertion of the right to arbitration and the significance of understanding contractual terms.