               SUPREME COURT OF MISSOURI
                                           en banc



LASHIYA D. ELLIS,                                 )
                                                  )
                                Respondent,       )
                                                  )
v.                                                )   No. SC95066
                                                  )
JF ENTERPRISES, LLC D/B/A                         )
JEREMY FRANKLIN’S SUZUKI OF                       )
KANSAS CITY,                                      )
                                                  )
                                Appellant.        )


           APPEAL FROM THE CIRCUIT COURT OF JACKSON COUNTY
                     The Honorable Jack Richard Grate, Judge

                                Opinion issued January 12, 2016

         JF Enterprises, LLC, appeals the circuit court’s judgment denying JF Enterprises’

application to compel arbitration and stay proceedings in a contract dispute concerning a

car sale to Lashiya Ellis. The trial court refused to compel arbitration because the

contract between Ms. Ellis and JF Enterprises was void under section 301.210. 1 Time

and again, however, the United States Supreme Court has held that section 2 of the

Federal Arbitration Act (“FAA”) prohibits state courts from refusing to enforce an

arbitration agreement on the ground that the underlying contract was void under state

law. Because the FAA makes agreements to arbitrate severable from the other

1
     Unless otherwise noted, all statutory references are to RSMo 2000.
                                                 1
agreements of the parties, courts may only refuse to enforce an arbitration agreement if

the party opposing arbitration brings a discrete challenge to the arbitration agreement –

and not merely to the underlying or other contemporaneous contract – and shows that the

arbitration agreement is invalid under generally applicable state law principles. Ms. Ellis

has raised no discrete challenge to the arbitration provision distinct from her challenge to

the underlying contract. Even though the sale between JF Enterprises and Ms. Ellis may

well be void under section 301.210, that question (and the question of her remedies) is for

the arbitrator to determine, not the courts. Accordingly, the trial court’s judgment is

vacated, and the case is remanded with instructions for the trial court to grant JF

Enterprise’s motion and compel arbitration.

                                        Background

       On November 4, 2013, Ellis purchased a new car from JF Enterprises. Upon

purchase, Ellis signed a retail buyers order and executed a retail installment contract.

That same day, Ellis also signed an arbitration agreement that provided, in pertinent part:

       Any claim or dispute, whether in contract, tort, statute or otherwise
       (including the interpretation and scope of this Arbitration Agreement, and
       the arbitrability of the claim or dispute), between [buyer] and [dealer] or
       [dealer’s] employees, agents, successors or assigns, which arises out of or
       relates to [buyer’s] credit application, purchase or condition of this vehicle,
       [buyer’s] purchase or financing contract or any resulting transaction or
       relationship … shall, at [buyer] or [dealer’s] election, be resolved by
       neutral, binding arbitration and not by a court action. If federal law
       provides that a claim or dispute is not subject to binding arbitration, this
       Arbitration Agreement shall not apply to such claim or dispute.

                                        ***




                                              2
       Any arbitration under this Arbitration Agreement shall be governed by the
       Federal Arbitration Act (9 U.S.C. § 1 et seq.) and not by state law
       concerning arbitration.

       On July 11, 2014, Ellis filed the underlying petition for damages. She alleged JF

Enterprises violated the Missouri Merchandising Practices Act by failing to pass title for

her new vehicle in violation of section 301.210. Ellis requested the trial court declare the

retail buyers order, retail installment contract, and arbitration agreement void and rescind

the transaction under section 301.210. 2

       In its answer and motion to stay proceedings and compel arbitration, JF

Enterprises asked the trial court to enforce the arbitration agreement between the parties.

JF Enterprises argued Ellis’ allegations arise out of or relate to her purchase of the car as

contemplated by the arbitration agreement. Ellis maintained the contract documents,

including the arbitration agreement, should be construed together and, when so construed,

are void and unenforceable under section 301.210. JF Enterprises replied that the FAA

governs the arbitration agreement and that, under applicable United States Supreme Court

precedent, it is severable from the underlying sales contract and related agreements and

must stand or fall without reference to them. The trial court overruled the motion to

compel arbitration, finding:

       [N]o title to the 2012 Hyundai Sonata was provided to Plaintiff Lashiya D.
       Ellis at the time of the sale or since, and therefore, pursuant to Section
       301.210 RSMo., the contract is fraudulent and void, and ... the arbitration
       provision which is to be construed with the other contract documents is


2
  Ellis also filed a separate suit against the financing company, Condor Capital Corporation, but
Condor Capital did not file a brief, participate in this appeal, or make any claim that it was a
party to the arbitration agreement.
                                                3
       subject to [Ellis’] contract defenses of fraud and lack of consideration and
       is void, and therefore, not enforceable.

Thereafter, JF Enterprises filed an appeal under section 435.440. 3

                                           Analysis

       Whether the trial court should have granted a motion to compel arbitration is a

question of law decided de novo. Johnson ex rel. Johnson v. JF Enterprises, LLC, 400

S.W.3d 763, 766 (Mo. banc 2013). “When faced with a motion to compel arbitration, the

motion court must determine whether a valid arbitration agreement exists and, if so,

whether the specific dispute falls within the scope of the arbitration agreement.” Nitro

Distributing, Inc. v. Dunn, 194 S.W.3d 339, 345 (Mo. banc 2006). Here, there is no

question that the FAA applies – both under the Supremacy Clause and as a matter of the

parties’ express agreement. Nor is there any dispute that the parties’ arbitration

agreement, if valid, covers the claims Ms. Ellis has asserted. Accordingly, the only issue

before this Court is whether the arbitration agreement is valid.

       Ms. Ellis contends that the arbitration agreement is not enforceable because it was

signed as part of, and must be construed together with, the sales agreement, which section

301.210 would render “fraudulent and void” if no title was passed. She raises no

challenge to the arbitration agreement distinct from the challenge she raises to the

underlying contract. Instead, she argues that – if the latter falls – the former falls with it.




3
   Section 435.440.1(1) provides that “[a]n appeal may be taken from … [a]n order denying an
application to compel arbitration.” This Court has jurisdiction of the appeal under article V,
section 10, of the Missouri Constitution.
                                               4
        Under Missouri law, Ms. Ellis may be right. But the FAA, not Missouri law,

governs what courts may consider in determining whether an agreement to arbitrate is

enforceable. Under the FAA, such agreements are “severable.” This means that they are

to be considered separate and apart from any underlying or contemporaneous related

agreements. Of course, the FAA does not say that all purported arbitration agreements

necessarily are enforceable. It does provide, however, that such agreements are

enforceable unless the arbitration agreement itself – in isolation – is invalid under

generally applicable state law principles. So sayeth the Supreme Court on three separate

occasions, and it does not behoove this Court to parse its clear language in search of a

way to achieve what the Supreme Court so clearly has held Congress and the FAA

prevent.

        The long pole of the tent in the Supreme Court’s treatment of this issue is Buckeye

Check Cashing, Inc. v. Cardegna, 546 U.S. 440 (2006), in which the Court overturned

the Florida Supreme Court for adopting the very argument urged by Ms. Ellis. To

illustrate the breadth and depth of the Supreme Court’s unwillingness to indulge the

argument that an arbitration agreement cannot be enforced if it is contained within a

contract that is void under state law, the Supreme Court’s rationale is set forth here in

full:

        To overcome judicial resistance to arbitration, Congress enacted the Federal
        Arbitration Act (FAA), 9 U.S.C. §§ 1–16. Section 2 embodies the national
        policy favoring arbitration and places arbitration agreements on equal
        footing with all other contracts:
              “A written provision in ... a contract ... to settle by arbitration a
              controversy thereafter arising out of such contract ... or an agreement

                                              5
       in writing to submit to arbitration an existing controversy arising out
       of such a contract ... shall be valid, irrevocable, and enforceable,
       save upon such grounds as exist at law or in equity for the revocation
       of any contract.”
Challenges to the validity of arbitration agreements “upon such grounds as
exist at law or in equity for the revocation of any contract” can be divided
into two types. One type challenges specifically the validity of the
agreement to arbitrate. See, e.g., Southland Corp. v. Keating, 465 U.S. 1,
4–5, 104 S.Ct. 852, 79 L.Ed.2d 1 (1984) (challenging the agreement to
arbitrate as void under California law insofar as it purported to cover claims
brought under the state Franchise Investment Law). The other challenges
the contract as a whole, either on a ground that directly affects the entire
agreement (e.g., the agreement was fraudulently induced), or on the ground
that the illegality of one of the contract’s provisions renders the whole
contract invalid. Respondents’ claim is of this second type. The crux of the
complaint is that the contract as a whole (including its arbitration provision)
is rendered invalid by the usurious finance charge.

In Prima Paint Corp. v. Flood & Conklin Mfg. Co., 388 U.S. 395, 87 S.Ct.
1801, 18 L.Ed.2d 1270 (1967), we addressed the question of who––court or
arbitrator––decides these two types of challenges. The issue in the case
was “whether a claim of fraud in the inducement of the entire contract is to
be resolved by the federal court, or whether the matter is to be referred to
the arbitrators.” Id., at 402, 87 S.Ct. 1801. Guided by § 4 of the FAA, we
held that “if the claim is fraud in the inducement of the arbitration clause
itself—an issue which goes to the making of the agreement to arbitrate––
the federal court may proceed to adjudicate it. But the statutory language
does not permit the federal court to consider claims of fraud in the
inducement of the contract generally.” Id., at 403–404, 87 S.Ct. 1801
(internal quotation marks and footnote omitted). We rejected the view that
the question of “severability” was one of state law, so that if state law held
the arbitration provision not to be severable a challenge to the contract as a
whole would be decided by the court. See id., at 400, 402–403, 87 S.Ct.
1801.

Subsequently, in Southland Corp., we held that the FAA “create[d] a body
of federal substantive law,” which was “applicable in state and federal
courts.” 465 U.S., at 12, 104 S.Ct. 852 (internal quotation marks omitted).
We rejected the view that state law could bar enforcement of § 2, even in
the context of state-law claims brought in state court. See id., at 10–14, 104
S.Ct. 852; see also Allied–Bruce Terminix Cos. v. Dobson, 513 U.S. 265,
270–273, 115 S.Ct. 834, 130 L.Ed.2d 753 (1995).

                                      6
Prima Paint and Southland answer the question presented here by
establishing three propositions. First, as a matter of substantive federal
arbitration law, an arbitration provision is severable from the remainder of
the contract. Second, unless the challenge is to the arbitration clause
itself, the issue of the contract’s validity is considered by the arbitrator in
the first instance. Third, this arbitration law applies in state as well as
federal courts. The parties have not requested, and we do not undertake,
reconsideration of those holdings. Applying them to this case, we conclude
that because respondents challenge the Agreement, but not specifically its
arbitration provisions, those provisions are enforceable apart from the
remainder of the contract. The challenge should therefore be considered by
an arbitrator, not a court.

In declining to apply Prima Paint’s rule of severability, the Florida
Supreme Court relied on the distinction between void and voidable
contracts. “Florida public policy and contract law,” it concluded, permit
“no severable, or salvageable, parts of a contract found illegal and void
under Florida law.” 894 So.2d, at 864. Prima Paint makes this
conclusion irrelevant. That case rejected application of state severability
rules to the arbitration agreement without discussing whether the challenge
at issue would have rendered the contract void or voidable. See 388 U.S.,
at 400–404, 87 S.Ct. 1801. Indeed, the opinion expressly disclaimed any
need to decide what state-law remedy was available, id., at 400, n. 3, 87
S.Ct. 1801 (though Justice Black’s dissent asserted that state law rendered
the contract void, id., at 407, 87 S.Ct. 1801). Likewise in Southland, which
arose in state court, we did not ask whether the several challenges made
there––fraud, misrepresentation, breach of contract, breach of fiduciary
duty, and violation of the California Franchise Investment Law––would
render the contract void or voidable. We simply rejected the proposition
that the enforceability of the arbitration agreement turned on the state
legislature’s judgment concerning the forum for enforcement of the state-
law cause of action. See 465 U.S., at 10, 104 S.Ct. 852. So also here, we
cannot accept the Florida Supreme Court’s conclusion that enforceability of
the arbitration agreement should turn on “Florida public policy and contract
law,” 894 So.2d, at 864.

                                      ***

Respondents point to the language of § 2, which renders “valid, irrevocable,
and enforceable” “a written provision in” or “an agreement in writing to
submit to arbitration an existing controversy arising out of” a “contract.”
Since, respondents argue, the only arbitration agreements to which § 2

                                       7
       applies are those involving a “contract,” and since an agreement void ab
       initio under state law is not a “contract,” there is no “written provision” in
       or “controversy arising out of” a “contract,” to which § 2 can apply. This
       argument echoes Justice Black’s dissent in Prima Paint: “Sections 2 and 3
       of the Act assume the existence of a valid contract. They merely provide
       for enforcement where such a valid contract exists.” 388 U.S., at 412–413,
       87 S.Ct. 1801. We do not read “contract” so narrowly. The word appears
       four times in § 2. Its last appearance is in the final clause, which allows a
       challenge to an arbitration provision “upon such grounds as exist at law or
       in equity for the revocation of any contract.” (Emphasis added.) There
       can be no doubt that “contract” as used this last time must include
       contracts that later prove to be void. Otherwise, the grounds for revocation
       would be limited to those that rendered a contract voidable—which would
       mean (implausibly) that an arbitration agreement could be challenged as
       voidable but not as void. Because the sentence’s final use of “contract”
       so obviously includes putative contracts, we will not read the same word
       earlier in the same sentence to have a more narrow meaning. We note
       that neither Prima Paint nor Southland lends support to respondents’
       reading; as we have discussed, neither case turned on whether the challenge
       at issue would render the contract voidable or void.

Buckeye, 546 U.S. at 443–48 (emphasis added) (footnotes omitted). 4

       This unambiguous interpretation of section 2 of the FAA continues to be the law

of the land. In 2010, the Supreme Court again stated the general rule explained in

Buckeye:

       There are two types of validity challenges under § 2: “One type challenges
       specifically the validity of the agreement to arbitrate,” and “[t]he other
       challenges the contract as a whole, either on a ground that directly affects
       the entire agreement (e.g., the agreement was fraudulently induced), or on
       the ground that the illegality of one of the contract's provisions renders the
       whole contract invalid.” In a line of cases neither party has asked us to
       overrule, we held that only the first type of challenge is relevant to a



4
   In reaching this conclusion, Buckeye squarely rejects the dissenting justice’s contention
(echoed by Ms. Ellis here) that “the FAA cannot be the basis for displacing a state law that
prohibits enforcement of an arbitration clause contained in a contract that is unenforceable under
state law.” Id. at 449 (Thomas, J., dissenting).
                                                8
       court’s determination whether the arbitration agreement at issue is
       enforceable.

                                              ***

       In some cases the claimed basis of invalidity for the contract as a whole
       will be much easier to establish than the same basis as applied only to the
       severable agreement to arbitrate. Thus, in an employment contract many
       elements of alleged unconscionability applicable to the entire contract
       (outrageously low wages, for example) would not affect the agreement to
       arbitrate alone. But even where that is not the case––as in Prima Paint
       itself, where the alleged fraud that induced the whole contract equally
       induced the agreement to arbitrate which was part of that contract––we
       nonetheless require the basis of challenge to be directed specifically to the
       agreement to arbitrate before the court will intervene.

Rent-A-Ctr., W., Inc. v. Jackson, 561 U.S. 63, 70–71 (2010) (emphasis added) (quotations

and citations omitted). 5 In so holding, the Court accepted without quibble the dissenting

justice’s succinct characterization that “Prima Paint and its progeny allow a court to

pluck from a potentially invalid contract a potentially valid arbitration agreement.” Id.

at 84–85 (Stevens, J., dissenting) (emphasis in original).

       More recently, the Supreme Court took the Oklahoma Supreme Court to task for

accepting precisely the argument that Ms. Ellis would have this Court accept in this case.

       The Oklahoma Supreme Court’s decision disregards this Court’s precedents
       on the FAA. That Act, which “declare[s] a national policy favoring
       arbitration,” Southland Corp. v. Keating, 465 U.S. 1, 10, 104 S.Ct. 852, 79
       L.Ed.2d 1 (1984), provides that a “written provision in ... a contract
       evidencing a transaction involving commerce to settle by arbitration a

5
   Jackson was concerned with an arbitration agreement that purported to delegate to the
arbitrator issues that, otherwise, properly would have been decided by the court. There is no
question of delegation in this case, however, because nothing in the parties’ arbitration
agreement purports to delegate the threshold issue of the validity of the arbitration agreement –
severed of its context and contemporaneous agreements – for decision by the arbitrator. The
FAA reserves that issue to the courts, and these parties made no agreement to have it heard and
decided elsewhere.
                                                9
       controversy thereafter arising out of such contract or transaction ... shall be
       valid, irrevocable, and enforceable, save upon such grounds as exist at law
       or in equity for the revocation of any contract.” 9 U.S.C. § 2. It is well
       settled that “the substantive law the Act created [is] applicable in state and
       federal courts.” Southland Corp., supra, at 12, 104 S.Ct. 852; see also
       Buckeye, supra, at 446, 126 S.Ct. 1204. And when parties commit to
       arbitrate contractual disputes, it is a mainstay of the Act’s substantive law
       that attacks on the validity of the contract, as distinct from attacks on the
       validity of the arbitration clause itself, are to be resolved “by the
       arbitrator in the first instance, not by a federal or state court.” Preston v.
       Ferrer, 552 U.S. 346, 349, 128 S.Ct. 978, 169 L.Ed.2d 917 (2008); see also
       Prima Paint Corp. v. Flood & Conklin Mfg. Co., 388 U.S. 395, 87 S.Ct.
       1801, 18 L.Ed.2d 1270 (1967). For these purposes, an “arbitration
       provision is severable from the remainder of the contract,” Buckeye, supra,
       at 445, 126 S.Ct. 1204, and its validity is subject to initial court
       determination; but the validity of the remainder of the contract (if the
       arbitration provision is valid) is for the arbitrator to decide.

Nitro-Lift Techs., L.L.C. v. Howard, 133 S. Ct. 500, 503 (2012) (emphasis added). No

matter what logic or fairness may undergird Ms. Ellis’ arguments, to accept them would

invite – if not require – a similar rebuke.

       Accordingly, no matter what state law infirmity the sales contract between

Ms. Ellis and JF Enterprises may have, whether it fails for lack of consideration, failure

of consideration, fraud in the inducement, unconscionability or being declared

“fraudulent and void” under section 301.210, the Supreme Court has held – clearly and

repeatedly – that such an infirmity is irrelevant to the enforceability of an arbitration

agreement contained within or executed contemporaneously. Under Prima Paint,

Buckeye, and Nitro-Lifts, only a discrete challenge directed specifically at the arbitration

agreement itself – viewed severally and in isolation from its allegedly void context – and

showing that it is invalid under generally applicable state law principles will prevent an

arbitration agreement’s enforcement. Ms. Ellis makes no such claim. Instead, she claims

                                              10
that the arbitration agreement is unenforceable because the underlying contract is void

under section 301.210.

       Nor does it suffice for Ms. Ellis to argue that there is no consideration for the

arbitration agreement because JF Enterprises failed to deliver title and, under section

301.210, such a failure renders the sales contract “fraudulent and void.” This logic would

have applied equally well in Prima Paint, Buckeye, and Nitro-Lifts, yet the Supreme

Court refused to entertain such an exception to its holding that the FAA limits courts to

determining only whether the arbitration agreement – “plucked” from its context – is

valid without regard to the validity of any underlying or contemporaneous contracts. As

a result, Ms. Ellis’ argument that section 301.210 renders the arbitration agreement

without consideration is not a “discrete challenge” to the arbitration agreement because it

requires the court to determine whether the sales contract is void in order to determine

whether to enforce the arbitration agreement. Such end-runs around section 2 of the FAA

have been directly – and repeatedly – rejected by the Supreme Court in in Prima Paint,

Buckeye, and Nitro-Lifts, and this Court is bound to follow those decisions.

                                        Conclusion

       Because Ellis’ challenge is based on the validity and performance of the sales

contract as a whole and not aimed discretely at the arbitration agreement alone, the trial

court erred when it concluded that the arbitration agreement was void and unenforceable

under section 301.210. Accordingly, the trial court’s order is vacated and the cause




                                             11
remanded with instructions to enter an order staying Ellis’ suit against JF Enterprises and

compelling arbitration between Ellis and JF Enterprises.



                                                 _____________________________
                                                 Paul C. Wilson, Judge


Breckenridge, C.J., Fischer and Russell, JJ., concur;
Teitelman, J., dissents in separate opinion filed;
Stith and Draper, JJ., concur in opinion of Teitelman, J.




                                            12
             SUPREME COURT OF MISSOURI
                                        en banc



LASHIYA D. ELLIS,                             )
                                              )
                             Respondent,      )
                                              )
v.                                            )    No. SC95066
                                              )
JF ENTERPRISES, LLC D/B/A                     )
JEREMY FRANKLIN’S SUZUKI OF                   )
KANSAS CITY,                                  )
                                              )
                             Appellant.       )

                                 DISSENTING OPINION

       I respectfully dissent. The principal opinion holds that federal law requires

Ms. Ellis to arbitrate her claim against JF Enterprises because she did not specifically

establish that the arbitration agreement is invalid under generally applicable state law

principles. Federal law does not, however, require Ms. Ellis to arbitrate claims relating to

the formation of the contract and that are not subject to arbitration according to the plain

language of the arbitration contract.

       When the formation of the arbitration contract is at issue, “state courts are

permitted to apply state law defenses to the formation of the particular contract at issue.”

Baker v. Bristol Care, Inc., 450 S.W.3d 770, 774 (Mo. banc 2014). State law defenses to

the formation of a contract include lack of consideration because legal consideration is
                                              1
essential for the formation of any contract, including one for arbitration. Kunzie v. Jack-

In-The-Box, Inc., 330 S.W.3d 476 (Mo. App. 2010). Ms. Ellis asserts that neither the

sales contract nor the arbitration clause was supported by legal consideration because JF

Enterprises failed to deliver title pursuant to section 301.210, RSMo 2000. Ms. Ellis

raises a plausible claim, as there are cases holding that the failure to comply with the

delivery requirement of section 301.210 means that the contract fails for lack of

consideration. Peel v. Credit Acceptance Corp., 408 S.W.3d 191, 203 (Mo. App. 2013)

(citing Public Fin. Corp. of Kansas City, Mo., No. 1 v. Shemwell, 345 S.W.2d 494, 497-

498 (Mo. App. 1961); Smith v. G.F.C. Corp., 255 S.W.2d 69 (Mo. App. 1953); C.I.T.

Corp. v. Byrnes, 38 S.W.2d 750, 752 (Mo. App. 1931); Morgan v. Mulcahey, 298 S.W.

242, 245 (Mo. App.1927)). Therefore, Ms. Ellis’ challenge to the formation of the

contract rests squarely on state law defenses that are subject to resolution by the courts

rather than in arbitration.

       Any doubt as to whether Ms. Ellis should be required to submit to arbitration is

removed by analyzing the language of the arbitration contract. The contract provides for

the arbitration of “[a]ny claim or dispute, whether in contract, tort, statute or otherwise

(including the interpretation and scope of this Arbitration Agreement, and the arbitrability

of the claim or dispute) … which arises out of or relates to [buyer’s] credit application,

purchase or condition of this vehicle, [buyer’s] purchase or financing contract or any

resulting transaction or relationship .…”   The plain language of the arbitration contract

specifically limits the range of disputes subject to arbitration to those involving the

financing, purchase or condition of the vehicle. At no point does the arbitration contract

                                              2
purport to authorize the arbitration of defenses pertaining to the formation of the sales

contract. Ms. Ellis should not be compelled to arbitrate a claim that she did not agree to

arbitrate.

       The trial court’s judgment should be affirmed.



                                                  _____________________________
                                                  Richard B. Teitelman, Judge




                                             3
