Contract Law

Brian Daniel Rogers, Esquire

Petition for writ of mandamus or writ of prohibition is denied. A provision in an arbitration agreement in employment contract was unconscionable and unenforceable although the rest of the arbitration agreement was enforceable. State ex rel. Hewitt v. Hon. Kristine Kerr, No. 100479 (Mo. App. E.D., October 22, 2013), Odenwald, J.

Todd Hewitt was an employee of the St. Louis Rams. He entered into an employment agreement with the Rams, which included a binding arbitration agreement. The arbitration agreement provided that any dispute between Hewitt and the Rams would be decided by the Commissioner of the National Football League, whose decision was to be final and unappealable.

Hewitt filed a petition against the Rams alleging age discrimination. The Rams filed a motion to compel arbitration, and the motion was granted by the trial court. Hewitt brought a petition for writ of mandamus or writ of prohibition. The appeals court issued a preliminary order in mandamus.

Held: Petition for writ denied.
The appeals court held that the portion of the arbitration clause that provided that any dispute would be decided by the Commissioner, whose decision would be final and unappealable, was unconscionable and thus unenforceable, although the rest of the arbitration agreement was enforceable. The court stated that “an arbitration provision that allows the selection of the arbitrator, who must be unbiased, to be made solely by an individual who is in a position of bias, [is] unconscionable and unenforceable.” The court ordered the arbitration proceeding to proceed upon the selection of an impartial arbitrator by the trial court and quashed the preliminary order in mandamus.

Judgment of the trial court is reversed. Evidence of how parties to a contract understood the document when they signed it is irrelevant when the agreement is not ambiguous. Woods of Somerset, LLC v. Developers Surety and Indemnity Co., No. 75533 (Mo. App. W.D., September 24, 2013), Kanatzar, J.

Plaintiff Haines & Associates Construction Co., Inc. (“Haines”) made a claim against a payment bond issued by Developers Surety and Indemnity Co. (“DSI”) in connection with the development of a subdivision. DSI made counterclaims and third-party claims against Woods of Somerset, LLC, affiliated entities, and their owners Barney Ashner and Daniel Waldberg, together with their spouses, Marlene Ashner and Brenda Waldberg (the “Somerset Defendants”), based on an indemnity agreement contained in the application for the bond. At trial, the Somerset Defendants filed a stipulation in which Woods of Somerset, LLC consented to a judgment in exchange for the dismissal by Haines of its claims against the individual Somerset Defendants.

The trial court entered judgment in favor of the individual Somerset Defendants on DSI’s claims on the basis that the indemnity agreement was unenforceable because it was not properly executed and there was no meeting of the minds.

Held: Reversed.
The appeals court reversed the trial court’s judgment, holding that the indemnity agreement was not ambiguous, although blanks remained on the agreement when the parties signed it, because the document’s language clearly indicated that the individuals were to be personally liable under the agreement. The court stated, “The signature area is clearly labeled, indicating where each person should sign and print his or her name and the capacity in which each signature was to be made, on behalf of the company or firm (‘Name/Title’) or personally (‘Indemnitor’).” Because the indemnity agreement was not ambiguous, evidence of how the Somerset Defendants understood the contract was irrelevant.