Judge: Armen Tamzarian, Case: 22STCV35080, Date: 2023-04-25 Tentative Ruling

Case Number: 22STCV35080    Hearing Date: April 25, 2023    Dept: 52

Tentative Ruling:

            Defendant Toyota Motor Sales, U.S.A., Inc.’s Motion to Compel Binding Arbitration

Defendant Toyota Motor Sales, U.S.A., Inc. moves to compel arbitration of this action by plaintiffs Luis Villegas and Yesenia Rivera.

Defendant is not entitled to enforce the arbitration agreement between plaintiffs and non-party auto dealer Hamer Toyota.  Defendant did not sign the agreement.  Defendant relies on the doctrine of equitable estoppel and the opinion in Felisilda v. FCA US LLC (2020) 53 Cal.App.5th 486 (Felisilda).  “[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.”  (Id. at p. 495.)

After defendant filed this motion, the Second District Court of Appeal issued an opinion disagreeing with Felisilda.  In Ford Motor Warranty Cases (Cal. Ct. App., Apr. 4, 2023, No. B312261) 2023 WL 2768484 (Ford), the Court of Appeal concluded that equitable estoppel did not apply to plaintiffs’ claims under the Song-Beverly Consumer Warranty Act, which “in no way rely on the sales contracts.”  (Id. at *6.) 

The court finds Ford more persuasive than Felisilda.  (See Auto Equity Sales, Inc. v. Superior Court of Santa Clara County (1962) 57 Cal.2d 450, 456 [“where there is more than one appellate court decision, and such appellate decisions are in conflict,” the trial court “can and must make a choice between the conflicting decisions”].) 

As in Ford, the court finds that plaintiffs’ claims here are not founded in the contract with the arbitration provision.  Plaintiffs allege seven causes of action.  The first four allege violations of the Song-Beverly Consumer Warranty Act.  The fifth alleges breach of the implied warranty of merchantability.  “[I]ndependent manufacturer warranties are not part of, but are independent from, retail sale contracts.”  (Ford, supra, at *6.)  The sales contract expressly disclaims all warranties and acknowledges that the manufacturer’s warranties are independent.  “If you do not get a written warranty, and the Seller does not enter into a service contract within 90 days… , the Seller makes no warranties, express or implied, on the vehicle.  …  This provision does not affect any warranties covering the vehicle that the vehicle manufacturer may provide.”  (Beatty Decl., Ex. A, p. 5, ¶ 4.) 

Plaintiffs’ sixth and seventh causes of action allege fraud by concealment and intentional misrepresentation.  These also do not arise from the contract.  Plaintiffs do not allege they relied on misrepresentations made in the contract.  They allege Toyota made misrepresentations in their marketing brochures.  (Comp., ¶¶ 72-77.)  Assuming the dealer provided marketing brochures to plaintiffs, that would not make the fraud claims arise from the contract.  At most, that would mean the signatory dealer—not defendant Toyota Motor Sales, U.S.A., Inc.—could enforce the arbitration agreement if plaintiffs sued the dealer for fraud. 

Defendant argues equitable estoppel applies because all of plaintiffs’ claims arise from the sale of the vehicle, which was sold via the contract.  Though their claims arise from the sale of the vehicle, it does not follow that the claims arise from the contract itself.  Plaintiffs do not seek to enforce any terms in the sale contract.  All seven of plaintiffs’ causes of action would remain unchanged if plaintiffs had purchased the car without any written contract. 

Disposition

            Defendant’s motion to compel arbitration is denied.  Defendant shall file a responsive pleading within 20 days.