Case Number: 22STCV00175    Hearing Date: April 17, 2023    Dept: 40

Superior Court of California

County of Los Angeles

Department 40

MOVING PARTY:              Defendant Nissan North America, Inc.

OPPOSITION:                      Plaintiff Adrienne Bridges.

REPLY:                                 Defendant Nissan North America, Inc.

Background

Plaintiff Adrienne Bridges sues Defendant Nissan North America, Inc. and Does 1 through 10 pursuant to a January 4, 2022 Complaint alleging (1)-(4) four lemon law claims arising from obligations owed to Plaintiff by Nissan North America under the Song-Beverly Consumer Warranty Act (SBA) and a (5) fraudulent concealment claim. The lemon law claims arise from allegations that on May 4, 2021, Plaintiff purchased a 2022 Nissan Rogue (Subject Vehicle), subject to express warranties from Nissan North America relating to the condition of the Subject Vehicle, only for the Subject Vehicle to manifest defects during the express warranty period, including, but not limited to, electrical, transmission, and/or other defects and nonconformities, where Defendant and its representatives in California have been unable to, after a reasonable number of opportunities, service or repair the Subject Vehicle to conform it to the applicable express warranties. The concealment claim arises from allegations that Nissan North America concealed from Plaintiff defects related to the continuously variable transmission (CVT transmission) in the Subject Vehicle.

On October 10, 2022, Nissan North America moved to compel arbitration of Plaintiff’s claims based on the invocation of an arbitration clause in the sales contract for the purchase of the Subject Vehicle executed by Nissan of Sacramento and Plaintiff Bridges.

On October 31, 2022, Nissan North America made an ex parte application to stay this acting pending the outcome of the motion to compel arbitration, which Plaintiff opposed on the same day, but which the Court granted on November 1, 2022.

On April 4, 2023, Plaintiff opposed the October 10th motion to compel arbitration.

On April 10, 2023, Nissan North America replied to the April 4th opposition.

The October 10th motion is now before the Court.

Request for Judicial Notice

The Court TAKES JUDICIAL NOTICE of the Complaint and Answer in this case per Nissan North America’s request, but DECLINES to take judicial notice of the dismissal in Felisilda v. FCA US LLC because while the Court discusses that case below, its notice is not necessary for the disposition of this motion. (Mot., RJN, p. 2; see Evid. Code, §§ 452, subd. (d), 453.)

The Court DECLINES Plaintiff’s request for the Court to take judicial notice of decisions made by the Ninth Circuit, the United States Supreme Court, and California courts because though the Court discusses some of these decisions below, their notice is not necessary for disposition of this motion. (Opp’n, RJN, p. 2, Exs. A-C; see Evid. Code, §§ 452, subd. (d), 453.)

Motion to Compel Arbitration

Standing – Equitable Estoppel

Though Nissan North America is not expressly a party to the sales contract between Nissan of Sacramento and Plaintiff Bridges, Nissan North America argues that it may invoke the arbitration clause therein based on the doctrine of equitable estoppel, as held by the court of appeal in Felisilda v. FCA US LLC (2020) 53 Cal.App.5th 486. (Mot., pp. 11-16.)

A litigant who is not a party to an arbitration agreement may invoke arbitration under the Federal Arbitration Act if the relevant state contract law allows the litigant to enforce the agreement. (Kramer v. Toyota Motor Corp. (9th Cir. 2013) 705 F.3d 1122, 1128 [citing Arthur Andersen LLP v. Carlisle (2009) 556 U.S. 624, 632].)

Under the doctrine of equitable estoppel, “a nonsignatory defendant may invoke an arbitration clause to compel a signatory plaintiff to arbitrate its claims when the causes of action against the nonsignatory are ‘intimately founded in and intertwined’ with the underlying contract obligations.” (JSM Tuscany, LLC v. Superior Court (2011) 193 Cal.App.4th 1222, 1237.) The doctrine applies in either of two circumstances: (1) when the signatory must rely on the terms of the written agreement containing the arbitration clause in asserting its claims against the nonsignatory or (2) when the signatory alleges “substantially interdependent and concerted misconduct” by the nonsignatory against a signatory and the alleged misconduct is “founded in or intimately connected with the obligations of the underlying agreement.” (Goldman v. KPMG, LLP (2009) 173 Cal.App.4th 209, 218-19.) At bottom, “the linchpin for equitable estoppel is equity—fairness.” (Id. at p. 220.) A nonsignatory seeking to enforce an arbitration agreement has the burden to establish at least one of these circumstances applies. (Jones v. Jacobson (2011) 195 Cal.App.4th 1, 16.)

In Felisilda, the plaintiffs purchased an automobile pursuant to a sales contract with an arbitration clause and later sued their vehicle’s nonsignatory manufacturer and the signatory dealership, with the dealership moving for compelled arbitration, which the trial court granted. After this, plaintiffs dismissed the dealership from the action and arbitrated the action against the manufacturer, ultimately losing before the arbitrator and having judgment rendered against them thereon by the trial court, leading plaintiff to appeal on various grounds, including that the trial court erred by including the nonsignatory manufacturer in the arbitration. (Felisilda v. FCA US LLC (2020) 53 Cal.App.5th 486, 491-92, 494.) The Court of Appeal for the Third Appellate District determined that “[b]ecause the [plaintiffs] expressly agreed to arbitrate claims arising out of the condition of the vehicle – even against third party nonsignatories to the sales contract – they [were] estopped from refusing to arbitrate their claim against [the manufacturer].” (See Id. at pp. 496-97.)

In its motion, Nissan North America generally argues that it may invoke the arbitration clause in the sales contract for the purchase of the Subject Vehicle because precedent in Felisilda shows that the claims by Plaintiff against Nissan North America are intimately founded in and intertwined with the obligations of the sales contract. (Mot., pp. 11-14.) Nissan North America also argues that any attempt to distinguish Felisilda based on the fact that the dealership is not a party to this action is irrelevant where the court of appeals in Felisilda knew that that the dealership had been dismissed from the action prior to arbitration, and that attempts to cite to federal authority in Ngo v. BMW of N. Am., LLC (9th Cir. 2022) 23 F.4th 942 or Kramer v. Toyota Motor Corp. (9th Cir. 2013) 705 F.3d 1122 is unavailing where those cases are not binding on this Court. (Mot., pp. 14-15.)

In opposition, Plaintiff generally argues that arbitration is not proper here because: (1) no arbitration agreement exists between Plaintiff and Nissan North America where the sales contract only involved Nissan of Sacramento and Plaintiff; (2) Felisilda is distinguishable from this case for various reasons; (3) the arbitration agreement states that federal law would determine arbitrability, making federal case law cited by Plaintiff on point; and (4) equitable estoppel does not apply because (a) Plaintiff’s claims are brought pursuant to statute, not to the sales contract that contains the arbitration clause, (b) Plaintiff’s claims are not rooted in the sales contract but on statutory warranties, and (c) the sales contract distinguishes between itself and manufacturer warranties by explicitly disclaiming the latter. (Opp’n, pp. 6-14.)

Plaintiff also provided a supplemental authority indicating that the Second Appellate District’s decision in Ford Motor Warranty Cases compels a conclusion that, unlike the decision in Felisilda, the doctrine of equitable estoppel does not apply to a plaintiff’s warranty claims against a manufacturer. (Supp. Auth., pp. 2-4.)

In reply, Nissan North America argues that: (1) California law, not federal law, controls this discussion; (2) Plaintiff’s claims are intimately intertwined with the sales contract for the purchase of the Subject Vehicle; (3) there are no material differences between this case and Felisilda, which should control; and (4) the Court should follow Felisilda and not the Ford Motor Warranty Cases because the warranties at issue in Plaintiff’s claims arose from the sales contract.

The Court agrees with Plaintiff Bridges.

Despite Nissan North America’s arguments, Felisilda is distinguishable from the facts of this current action. The plaintiffs in that case sued both the nonsignatory manufacturer and the signatory dealership. (Felisilda v. FCA US LLC, supra, 53 Cal.App.5th at pp. 491-92, 499.) Here, on the other hand, Plaintiff brought this action against the manufacturer, Nissan North America. Plaintiff did not include non-party dealership Nissan of Sacramento in the Complaint.

Additionally, the sales contract sufficiently disclaims any written warranties from the manufacturer, thus making a distinction between the arbitration agreement and “any warranties covering the vehicle that the vehicle manufacturer may provide.” (Mot., Salas Decl., Ex. 4, Sales Contract, Other Important Agreements, § 4, Warranties Seller Disclaims.)

Further—contrary to Nissan North America’s reading of the sales contract—the arbitration clause in the sales contract expressly defines ‘claims’ as those “between you and us or our employees, agents, successors or assigns” (Mot., Salas Decl., Ex. 4, Sales Contract, Arbitration Provision), which the Court reads narrowly to encompass Plaintiff and Nissan of Sacramento, or any or Nissan of Sacramento’s employees, agents, successors or assigns, where Nissan North America is not shown to be encompassed under such terms.

Moreover—contrary to Nissan North America’s reading of Felisilda—the basis of equitable estoppel that was relied on by the Felisilda Court is not present here. As Felisilda stated, “‘[t]he fundamental point’ is that a party is ‘not entitled to make use of [a contract containing an arbitration clause] as long as it worked to [his or] her advantage, then attempt to avoid its application in defining the forum in which [his or] her dispute ... should be resolved.’” (Felisilda v. FCA US LLC, supra, 53 Cal.App.5th at p. 496 [quoting Jensen v. U-Haul Co. of California (2017) 18 Cal.App.5th 295, 306, 226, quoting NORCAL Mutual Ins. Co. v. Newton (2000) 84 Cal.App.4th 64, 84, 100].) But in the case at bar, Plaintiff is not trying to use the arbitration clause to his advantage against one defendant (or in one forum) and simultaneously trying to avoid arbitration against another defendant (or avoid arbitration in another forum). Hence, there is no basis to hold that Plaintiff is equitably estopped from preventing Nissan North America from arbitrating. As reasoned in Ngo v. BMW of North America, LLC (9th Cir. 2022) 23 F.4th 942, 950, “[i]t makes a critical difference that the Felisildas, unlike Ngo, sued the dealership in addition to the manufacturer. … Felisilda does not address the situation we are confronted with here, where the non-signatory manufacturer attempted to compel arbitration on its own.”

Last, the Court cites to Ford Motor Warranty Cases, which found that claims by a signatory vehicle purchaser against the vehicle’s manufacturer did not arise from the sales contract for the purchase of the vehicle because that the claims did not rely on the sales contract where “[t]he sale contracts include[d] no warranty, nor any assurance regarding the quality of the vehicle sold, nor any promise of repairs or other remedies in the event problems ar[o]se” and “California law does not treat manufacturer warranties imposed outside the four corners of a retail sale[s] contract as part of the sale[s] contract.” (Ford Motor Warranty Cases (April 4, 2023) __ Cal. Rptr.3d __ [2023 WL 2768484 *1, *5-*6].) This decision is binding on this court and to the degree that it is inconsistent with the decision in Felisilda, the Court follows the reasoning in the Ford Motor Warranty Cases.

Standing – Third-Party Beneficiary Status

Nissan North America also argues that it may invoke the arbitration clause in the sales contract because it is a third-party beneficiary thereto because the arbitration clause’s language extends to third parties who do not sign the contract, citing Felisilda in support. (Mot., pp. 15-16.) Defendant also argues that though Plaintiff argues Nissan North America is a stranger to the sales contract, Nissan North America is sufficiently connected to the sales contract through its relationship to dealerships like Nissan of Sacramento and through the manufacturer’s rebate included in the sales contract. (Mot., p. 16.)

In opposition, Plaintiff argues that Nissan North America is not a third-party beneficiary of the sales contract because Nissan North America does not benefit from the sales contract and because the sales contract does not show an express or implied intent to benefit Nissan North America by limiting the invocation of the arbitration agreement therein to “you and us,” i.e., Plaintiff and Nissan of Sacramento. (Opp’n, pp. 13-15.)

In reply, Nissan North America only once references third-party beneficiary status in an argument advancing the position that the Ford Motor Warranty Cases support a beneficiary status in this case. (Reply, p. 1.)

The Court agrees with Plaintiff Bridges.

A holistic reading of the entire arbitration clause leads the Court to conclude that only Plaintiff and Nissan of Sacramento or its “employees, agents, successors or assigns” have the ability to trigger arbitration. (Mot., Salas Decl., Ex. 4, Sales Contract, Arbitration Provision.) Otherwise stated, only Plaintiff and Nissan of Sacramento or its “employees, agents, successors or assigns” have the ability to submit to arbitration (1) claims related to Plaintiff’s purchase or the condition of the Subject Vehicle or (2) claims related to any relationship with a third party that resulted from the purchase or condition of the Subject Vehicle. Further, the Court adopts the reasoning of Ford Motor Warranty Cases to find that claims founded in SBA warranties—such as causes of action one through four here—do not relate to a sales contract for the purchase of an automobile, undercutting a third-party beneficiary argument by a nonsignatory manufacturer. (See Ford Motor Warranty Cases, supra.)

Conclusion

Defendant Nissan North America, Inc.’s Motion to Compel Arbitration is DENIED because Nissan North America has failed to present adequate grounds for standing to compel arbitration of Plaintiff’s claims based on the language of the arbitration clause in the sales contract for the purchase of the Subject Vehicle at issue in this action, either through equitable estoppel grounds or third-party beneficiary status.

In light of this decision, the Court LIFTS THE STAY ordered on November 1, 2022.