Judge Andrew E. Cooper, Case Number: 23CHCV01261, Date: 2023-09-14 Tentative Ruling

Counsel wishing to submit on a tentative ruling may inform the clerk or courtroom assisant in North Valley Department F51, 9425 Penfield Ave., Chatsworth, CA 91311, at (818) 407-2251. Please be aware that unless all parties submit, the matter will still be called for hearing and may be argued by any appearing/non-submitting parties. If the matter is submitted on the court's tentative ruling by all parties, counsel for moving party shall give notice of ruling. This may be done by incorporating verbatim the court's tentative ruling. The tentative ruling may be extracted verbatim by copying and specially pasting, as unformatted text, from the Los Angeles Superior Court’s website, http://www.lasuperiorcourt.org. All hearings on law and motion and other calendar matters are generally NOT transcribed by a court reporter unless one is provided by the party(ies).

Los Angeles Superior Court Case # 23CHCV01261

RELIEF REQUESTED: An order staying the instant action based on the grounds that this court constitutes an inconvenient forum by virtue of the mandatory forum selection clause in the limited express warranty provided by Defendant.

TENTATIVE RULING: The motion is granted. The action is stayed pending the outcome of litigation of Plaintiff’s claims against Defendant in Indiana. Defendant’s evidentiary objections are sustained.

Plaintiff is reminded to review the 5/3/19 First Amended General Order Re Mandatory Electronic Filing for Civil. When e-filing documents, parties must comply with the “TECHNICAL REQUIREMENTS” which are set forth at page 4, line 4 through page 5, line 12 of the Court’s 5/3/19 First Amended General Order Re Mandatory Electronic Filing for Civil (particularly bookmarking declarations and exhibits). (CRC 3.1110(f)(4).) Failure to comply with these requirements in the future may result in papers being rejected, matters being placed off calendar, matters being continued so documents can be resubmitted in compliance with these requirements, documents not being considered and/or the imposition of sanctions.

Plaintiff brings this action under the Song-Beverly Consumer Warranty Act (Civil Code § 1790 et seq.) for a motor home vehicle manufactured in Indiana, which he purchased in Santa Clarita, California on or around 3/10/22. Defendant is the manufacturer of the subject vehicle, and provided the manufacturing warranty. (Compl. ¶ 9.) Plaintiff alleges that certain vehicle defects manifested during the warranty period including “the shower surround bowing, a water leak, mold underneath the shower pan and shower walls, and wet wires.” (Id. at ¶ 11.)

On 4/28/23, Plaintiff filed his complaint, alleging against Defendant a single cause of action for Violation of the Song-Beverly Consumer Warranty Act. On 6/1/23, Defendant filed its answer.

On 8/16/23, Defendant filed the instant motion for stay of proceedings based on inconvenient forum. On 8/31/23, Plaintiff filed his opposition. On 9/7/23, Defendant filed its reply.

“When a court upon motion of a party or its own motion finds that in the interest of substantial justice an action should be heard in a forum outside this state, the court shall stay or dismiss the action in whole or in part on any conditions that may be just.” (Code Civ. Proc. § 410.30, subd. (a).) The enforceability of a forum selection clause in a contract between the plaintiff and the defendant is properly raised by a motion to stay or dismiss for inconvenient forum under Code of Civil Procedure section 410.30(a), because it is a request to the court to decline jurisdiction. (Drulias v. 1st Century Bancshares, Inc. (2018) 30 Cal.App.5th 696, 703.) Although the parties may not deprive a court of jurisdiction by private agreement, a court may decline to exercise jurisdiction in recognition of the parties' free and voluntary choice of a different forum. (Smith, Valentino & Smith, Inc. v. Superior Court (1976) 17 Cal.3d 491, 495.)

Here, Defendant proffers a copy of the Warranty Registration Form agreement, which Plaintiff signed in relation to his purchase of the subject vehicle and receipt of the Warranty Guide. (Ex. B to Decl. of Frank Suarez.) The subject forum selection clause in the Warranty Registration Form provides as follows: “I UNDERSTAND THAT EXCLUSIVE JURISDICTION FOR DECIDING LEGAL DISPUTES RELATING TO ALLEGED BREACH OF EXPRESS WARRANTY AND IMPLIED WARRANTIES THAT ARISE BY OPERATION OF LAW AS WELL AS THOSE RELATING [TO] REPRESENTATIONS OF ANY NATURE MUST BE FILED IN THE COURTS WITHIN THE STATE OF MANUFACTURE, WHICH [IS INDIANA.]”[1] (Ibid. [emphasis in original].)

In addition, Defendant proffers the Warranty Guide, which states the forum selection and choice-of-law provision in full:

“Exclusive jurisdiction for deciding legal disputes relating to alleged breach of express warranty and breach of implied warranties arising by operation of law as well as those relating to representations of any nature must be filed in a state or federal court within the state of manufacture, which is Indiana. Also, this limited warranty shall be interpreted and construed in accordance with the laws of the state of Indiana. Any and all claims, controversies and causes of action arising out of or relating to this limited warranty, whether sounding in contract, tort, or statute, shall be governed by the laws of the state of Indiana, including its statute of limitations, without giving effect to any conflict-of-law rule that would result in the application of the laws of a different jurisdiction.” (Ex. C to Decl. of Mark D. Stanley, p. 9.)

As a preliminary matter, Defendant asserts that the language of the subject forum selection clause renders it mandatory rather than permissive. (Def.’s Mot. 5:22–7:10.) The Court notes that Plaintiff does not appear to contest that the subject agreement contains a mandatory forum selection clause.

A judge must ordinarily give a mandatory clause effect without any analysis of the traditional public and private inconvenient forum factors involved with a permissive forum selection clause. Nevertheless, the judge must still determine whether enforcement of the clause would be unreasonable, whether the selected forum has a logical connection to the parties or their transaction, and whether there is a rational basis for the selected forum. (Smith, 17 Cal.3d at 496; Global Financial Distribs. Inc. v. Superior Court (2019) 35 Cal.App.5th 179, 192.)

Traditionally, the plaintiff has the burden of showing that enforcement of the clause would be unreasonable or unfair, and the factors involved in the traditional inconvenient forum analysis do not control. (Drulias, 30 Cal.App.5th at 703.) The burden is reversed, however, when the plaintiff's claims are based on statutory rights that the legislature has specified cannot be waived. (Id.; Verdugo v. Alliantgroup, L.P. (2015) 237 Cal.App.4th 141, 147.)

In such a case, a defendant that seeks to enforce the forum selection clause has the burden of showing that enforcement would not diminish these rights. (Verdugo, 237 Cal.App.4th at 144–145, 147–148.) A defendant can meet this burden only by showing that the designated forum provides the same or greater rights than California or that it will apply California law to the claims at issue. (Id. at 157–159.)

Here, the parties agree that Defendant bears the burden to show that enforcement of the mandatory forum selection clause contained in the Warranty Registration Form does not diminish Plaintiff’s unwaivable statutory rights under the Song-Beverly Act. (Pl.’s Opp. 2:18–20; Def.’s Reply 2:7–11; Civ. Code § 1790.1.)

“The law effectively presumes that everyone who signs a contract has read it thoroughly, whether or not that is true. A basic rule of contract law is, ‘in the absence of fraud, overreaching or excusable neglect, that one who signs an instrument may not avoid the impact of its terms on the ground that he failed to read the instrument before signing it.’ … Moreover, courts must also presume parties understood the agreements they sign, and that the parties intended whatever the agreement objectively provides, whether or not they subjectively did.” (Roldan v. Callahan & Blaine (2013) 219 Cal.App.4th 87, 93.)

Here, the Warranty Registration Form proffered by Defendant, and purportedly signed by Plaintiff, states: “Before I purchased my motorhome, I received, read and agreed to the terms and conditions of the Thor Motor Coach Limited Warranty and the [Thor Motor] Coach Structural and Lamination Limited Warranty. … I understand and agree to the forum selection clause and choice of law clause set forth in the Thor Motor Coach Limited Warranty and the [Thor Motor] Coach Structural and Lamination Limited Warranty.” (Ex. B to Decl. of Frank Suarez [emphasis added].)

Plaintiff argues that Defendant cannot invoke the forum selection clause because “the Warranty Guide was not presented to, or read by Plaintiff before he signed the purchase contract or the Warranty Registration form because the Guide was inside the motorhome, in a binder, and not discovered by Plaintiff until after purchase. … Thus, Plaintiff could not have agreed to the terms and conditions of the Warranty Guide prior to purchase.” (Pl.’s Opp. 3:15–22, citing Decl. of Stephen Cobb ¶ 4.) The Court finds this argument unavailing, particularly where Plaintiff does not dispute the validity of his signature on the proffered agreement, and where, as Defendant observes, “Plaintiff subsequently accepted the benefits of the Limited Warranty when he presented the motor home for repairs and filed suit for rights he claims under the same.” (Def.’s Reply 5:22–24.)

Based on the foregoing, the Court finds that the forum selection clause does not fail for lack of mutual assent.

Plaintiff argues that the entire Warranty Guide should be stricken as unenforceable based on its unconscionability. Unconscionability generally includes the absence of meaningful choice on the part of one of the parties together with contract terms that unreasonably favor the other party. (Carboni v. Arrospide (1991) 2 Cal.App.4th 76, 82–83.) The party asserting unconscionability has the burden of proving both procedural and substantive unconscionability. (Crippen v. Central Valley RV Outlet. Inc. (2004) 124 Cal.App.4th 1159, 1165). Courts analyze the unconscionability standard as invoking elements of procedural and substantive unconscionability. (Nyulassy v. Lockheed Martin Corp. (2004) 120 Cal.App.4th 1267, 1280–1281.)

Procedural unconscionability focuses on whether there is “oppression” arising from an inequality of bargaining power or “surprise” arising from buried terms in a complex printed form. (Id. at 1280.) Circumstances relevant to establishing oppression include but are not limited to: (1) the amount of time a party is given to consider the proposed agreement; (2) the amount and type of pressure exerted on the party to sign the proposed agreement; (3) the length of the proposed agreement and the length and complexity of the challenged provision; (4) the party's education and experience; and (5) whether an attorney assisted the party in reviewing the proposed agreement. (OTO, L.L.C. v Kho (2019) 8 Cal.5th 111, 126–127.)

Warranty agreements are considered contracts of adhesion when they are presented on a take-it-or-leave-it basis as a preprinted form contract. (Bruni v. Didion (2008) 160 Cal.App.4th 1272, 1293 “Even assuming that plaintiffs could have negotiated over some terms of the purchase and sale agreement, such as the purchase price, it seems apparent that any attempt to negotiate over the terms of the Warranty would have been fruitless.”) When a contract is an adhesion contract, imposed and drafted by the party with superior bargaining power, the adhesive nature of the contract is evidence of some degree of procedural unconscionability. (Sanchez v Carmax Auto Superstores Cal., LLC (2014) 224 Cal.App.4th 398, 403.)

Here, the parties appear to agree that the instant Warranty Registration Form is an adhesion contract. (Pl.’s Opp. 4:19–20, Def.’s Reply 5:3–19.) However, the Court also notes that the forum selection clause is not “buried” in a complex form, as it appears in bold and all-capital lettering above the signature line on a one-page document. (Ex. B to Decl. of Frank Suarez.) Based on the foregoing, the Court finds that Plaintiff has shown that the Warranty Registration Form contains a moderate degree of procedural unconscionability.

An agreement is unenforceable as unconscionable only if both the procedural and substantive elements are satisfied. (Stirlen v. Supercuts, Inc. (1997) 51 Cal.App.4th 1519, 1533.) However, “the more substantively oppressive the contract term, the less evidence of procedural unconscionability is required to come to the conclusion that the term is unenforceable, and vice versa.” (Armendariz v. Foundation Health Psychcare Services, Inc. (2004) 24 Cal.4th 83, 114). The substantive element addresses the existence of overly harsh or one-sided terms. (Nyulassy, 120 Cal.App.4th at 1280.) “‘Substantive unconscionability’ focuses on the terms of the agreement and whether those terms are ‘so one-sided as to shock the conscience.’” (Kinney v. United HealthCare Services, Inc. (1999) 70 Cal.App.4th 1322, 1330.)

Here, Plaintiff argues that the Warranty Registration Form is substantively unconscionable because “several substantive terms and conditions embedded within the Warranty Guide … specifically contravene California law and public policy.” (Pl.’s Opp. 5:22–24.) Specifically, Plaintiff points to the statute of limitations, repair remedy, and back-up remedy provisions, which he argues contravene the Song-Beverly Act. (Id. at 6:3–8:28.)

Defendant argues in reply that the purportedly unconscionable provisions cited by Plaintiff are severable by the Court because they are ancillary to the purpose of the Warranty Guide, which is to provide for the “terms by which Plaintiff can seek warranty repairs for covered defects in his motor home.” (Def.’s Reply 8:23–24.) “If the court as a matter of law finds the contract or any clause of the contract to have been unconscionable at the time it was made the court may refuse to enforce the contract, or it may enforce the remainder of the contract without the unconscionable clause, or it may so limit the application of any unconscionable clause as to avoid any unconscionable result.” (Civ. Code § 1670.5, subd. (a).)

“Courts are to look to the various purposes of the contract. If the central purpose of the contract is tainted with illegality, then the contract as a whole cannot be enforced. If the illegality is collateral to the main purpose of the contract, and the illegal provision can be extirpated from the contract by means of severance or restriction, then such severance and restriction are appropriate.” (Armendariz, 24 Cal.4th at 124.) Here, the Court agrees with Defendant that the central purpose of the Warranty Registration Form is to agree to the terms of the Warranty Guide, which provides for the coverage terms of the manufacturer’s limited express warranty.

The Court also agrees that striking the warranty agreement as unconscionable and therefore unenforceable in its entirety would cause an absurd result because Plaintiff’s claims against Defendant in the instant action arise out of the same warranty agreement he now seeks to strike. Therefore, to the extent that any of the terms of the Warranty Guide are unenforceable as a matter of law, they are severable from the separate and distinct forum selection and choice-of-law provision at issue here.

As previously set forth, “a defendant seeking to enforce a mandatory forum selection clause bears the burden to show enforcement will not in any way diminish the plaintiff's unwaivable statutory rights.” (Verdugo, 237 Cal.App.4th at 157.) “By definition, this showing requires the defendant to compare the plaintiff's rights if the clause is not enforced and the plaintiff's rights if the clause is enforced. Indeed, a defendant can meet its burden only by showing the foreign forum provides the same or greater rights than California, or the foreign forum will apply California law on the claims at issue.” (Ibid.)

In Verdugo, the Court of Appeal ultimately found that the mandatory forum selection clause found in the agreement between the parties was unenforceable as against public policy absent a showing that enforcement would not diminish the plaintiffs’ unwaivable rights. (Verdugo, 237 Cal.App.4th at 154.) The Verdugo court found that the defendant employer failed to meet its burden to show that enforcement of its forum selection clause in Texas would not in any way diminish the plaintiff employee’s unwaivable statutory rights under California labor and employment law. (Id. at 158.)

“[Defendant] Alliantgroup could have eliminated any uncertainty on which law a Texas court would apply by stipulating to have a Texas court apply California law in deciding [plaintiff] Verdugo's claims, but Alliantgroup did not do so. Instead, Alliantgroup has preserved its ability to argue to a Texas court that it should apply Texas law, and Alliantgroup has hinted at its intention to do so by downplaying the significance of the statutory rights Verdugo seeks to enforce through this action.” (Ibid.) The Verdugo court further explained that such a stipulation would not be ineffective because “Texas law does not include an antiwaiver provision that would prevent the parties from preserving Verdugo's unwaivable Labor Code rights by stipulating to have a Texas court apply California law.” (Id. at 158–159.)

Here, Defendant asserts that the subject forum selection clause is not unreasonable because unlike in Verdugo, here Defendant intends to stipulate that Plaintiff’s unwaivable rights under the Song-Beverly Act should be preserved, and that the Indiana courts should apply the Song-Beverly Act to adjudicate Plaintiff’s claims. (Def.’s Mot. 9:8–11.) Defendant also notes that like in Verdugo, here, “Indiana’s ‘lemon law’ specifically excludes motor homes from vehicles to which those statutes apply.” (Def.’s Mot. p. 10, fn. 1, citing Ex. F to Decl. of Dolores E. Gonzales.)

Plaintiff argues in opposition that this stipulation is superfluous, because “whether California law will indeed be applied upon Plaintiff’s unopposed request, is for an Indiana court to decide.” (Pl.’s Opp. 9:16–17.) Plaintiff therefore contends that Defendant’s purported stipulation “neither resuscitates the invalidity of the forum selection clause, nor protects Plaintiff’s unwaivable rights under Song-Beverly.” (Id. at 10:25–27.) The Court disagrees.

“A comparison is necessary to determine whether enforcing a forum selection and choice-of-law clause would violate California's public policy embodied in its governing statutes.” (Verdugo, 237 Cal.App.4th at 157.) Like in Verdugo, here, the Court finds no conflict between California’s unwaivable Song-Beverly rights and the rights under Indiana’s “lemon law” (Indiana Code 24-5-13-1 et seq.) because the Indiana law does not appear to contain an antiwaiver provision, and specifically carves out motor homes from its application. (Ind. Code 24-5-13-5.)

Based on the foregoing, the Court finds that Defendant has sufficiently met its burden to show that enforcement of the forum selection clause, along with its stipulation, will not diminish Plaintiff’s unwaivable statutory rights under California law. Accordingly, the Court grants Defendant’s motion to stay proceedings based on inconvenient forum.

The motion is granted. The action is stayed pending the outcome of litigation of Plaintiff’s claims against Defendant in Indiana.

[1] The Court notes that the copy of the signed Warranty Registration Form proffered by Defendant appears to be incomplete, with the right-hand side of the scanned agreement being cut off.