Court of Appeals Ignores Supreme Court Precedent, And Abandons Its Own

The recent Missouri case of Wind v. McClure is literally spectacular. The issue in the case was the enforceability of an arbitration provision in an Asset Purchase Agreement. The lower court held that the provision was unenforceable because it failed to comply with the notice provision in the Missouri Uniform Arbitration Act. The Court of Appeals affirmed this ruling. In doing so, it had to abandon its own precedent and ignore the direct findings of the Supreme Court in other cases.

Arbitration agreements have become ubiquitous, residing in contracts such as noncompete agreements and financial advisory agreements. Courts across the country have gone out of their way to enforce these agreements to arbitrate. The Missouri Supreme Court is no different. And to be specific, courts have held invalid any state statutory provision that contradicts the Federal Arbitration Act.

The Court of Appeals had previously held that the notice requirement of the Missouri statute did not apply if the parties had actual knowledge of the provision at the time that they entered the contract that housed the provision. The Court of Appeals failed to follow Supreme Court precedent regarding the Federal Arbitration Act because “the parties to the dispute do not argue that the FAA applies.”

I believe this ruling will be reversed if appealed.

If you are wrangling with the enforceability of an arbitration provision in a contract, such as a non-compete agreement or investment account agreement, please call us.