Judge: Ashfaq G. Chowdhury, Case: 23GDCV02284, Date: 2025-01-29 Tentative Ruling

Case Number: 23GDCV02284    Hearing Date: January 29, 2025    Dept: E

Hearing Date: 01/29/2025 – 8:30am
Case No: 23GDCV02284
Trial Date: 09/15/2025
Case Name: MINAS BADALYAN, an individual; v. NISSAN NORTH AMERICA, INC., a corporation; GLENDALE NISSAN, a business entity, form unknown; and DOES 1-50 inclusive

TENTATIVE RULING MOTION TO COMPEL ARBITRATION

Moving Party: Defendants, Nissan North America, Inc. (NNA), and K Motors SJC dba Glendale Nissan (Glendale Nissan) [collectively Defendants]

Responding Party: Plaintiff, Minas Badalyan

Moving Papers: Notice; Memorandum; Request for Judicial Notice; Casey Douglas Declaration; Proposed Order; Proof of Service

Opposing Papers: Opposition; Evidentiary Objections; Kyle B. Sample Declaration; Proposed Order; Proof of Service

Reply Papers: Reply; Response to Evidentiary Objections

Proof of Service Timely Filed (CRC Rule 3.1300(c)): Ok
16/21 Court Days Lapsed (CCP § 1005(b)): Ok
Correct Address (CCP § 1013, § 1013a, § 1013b): Ok

RELIEF REQUESTED
“Defendants NISSAN NORTH AMERICA, INC. and K MOTORS SJC dba GLENDALE NISSAN (collectively, “Defendants”) will and hereby jointly move this Court: (1) for an order compelling Plaintiff MINAS BADALYAN (“Plaintiff”) to arbitrate this matter and to stay the proceedings pending completion of arbitration, and (2) in the event Plaintiff fails to recognize the mandatory stay of proceedings pursuant to the Federal Arbitration Act, for an order staying all proceedings— including all discovery and discovery-related motion practice—until this motion is decided (hereinafter, “Motion”).

Defendants bring this Motion pursuant to the Federal Arbitration Act on the grounds that Plaintiff expressly agreed to arbitrate all claims asserted in the Complaint. Defendants’ request for a mandatory stay of proceedings is brought pursuant to 9 U.S.C. § 3. Defendants further contend that all proceedings and discovery are stayed until this Motion is decided and, if granted, during the pendency of the arbitration, pursuant to the Federal Arbitration Act.”

(Def. Notice, p. 2.)

LEGAL STANDARD – MOTION TO COMPEL ARBITRATION
CCP § 1281.2, governing orders to arbitrate controversies, provides in pertinent part:

On petition of a party to an arbitration agreement alleging the existence of a written agreement to arbitrate a controversy and that a party to the agreement refuses to arbitrate that controversy, the court shall order the petitioner and the respondent to arbitrate the controversy if it determines that an agreement to arbitrate the controversy exists, unless it determines that:

(a)   The right to compel arbitration has been waived by the petitioner; or

(b)   Grounds exist for recission of the agreement.

(CCP § 1281.2(a)-(b).

Under the Federal Arbitration Act, arbitration agreements “shall be valid, irrevocable and enforceable, save upon such grounds that exist at law or in equity for the revocation of a contract.”  (9 U.S.C. section 2.)

There is a strong public policy in favor of arbitration of disputes and any doubts concerning the scope of arbitrable disputes should be resolved in favor of arbitration. (Moncharsh v. Heily & Blase (1992) 3 Cal.4th 1, 9 (“courts will ‘indulge every intendment to give effect to such proceedings.’”) (quotation omitted)). (See also AT&T Mobility, LLC v. Concepcion (2011) 563 U.S. 333, 339.) 

ANALYSIS
The instant action was filed on 10/27/2023 by Plaintiff, Minas Badalyan, against Defendants, Nissan North America, Inc. and Glendale Nissan, alleging two causes of action – (1) Breach of Express Warranty Obligations under the Song-Beverly Act and (2) Breach of Implied Warranty Obligations under the Song-Beverly Act.

Existence of Arbitration Agreement
The party seeking arbitration bears the initial burden of demonstrating the existence of an arbitration agreement. (Pinnacle Museum Tower Assn. v. Pinnacle Market Development (US), LLC (2012) 55 Cal.4th 223, 236.) In ruling on a motion to compel arbitration, the Court must first determine whether the parties actually agreed to arbitrate the dispute, and general principles of California contract law help guide the court in making this determination. (Mendez v. Mid-Wilshire Health Care Center (2013) 220 Cal.App.4th 534, 541; Victoria v. Superior Court (1985) 40 Cal. 3d 734, 835.) Even when the FAA applies, “interpretation of the arbitration agreement is governed by state law principles.” (Hotels Nevada, LLC v. Bridge Banc, LLC (2005) 130 Cal.App.4th 1431, 1435.)

Defendants, NNA (manufacturer) and Glendale Nissan (leasing dealer), move to compel arbitration of Plaintiff’s claims based on a document titled “Motor Vehicle Lease Agreement With Arbitration Clause – California.” This lease agreement is attached as Exhibit 5 to the Douglas Declaration accompanying the moving papers.

It is signed by Plaintiff/lessee Minas Badalyan and Glendale Nissan (leasing dealer). Defendant NNA (manufacturer) is not a signatory to the lease agreement.

Plaintiff argues that Defendants’ motion must be denied on procedural grounds because Defendants did not authenticate this lease agreement because Defendants’ counsel did not describe how he came to possess the lease agreement and thus did not show personal knowledge, authentication, or foundation to submit the arbitration agreement.

The Court does not find Plaintiff’s argument availing for several reasons.

First, this Court does not find Plaintiff’s argument availing because as stated in Condee:

For purposes of a petition to compel arbitration, it is not necessary to follow the normal procedures of document authentication. “[T]he court shall order the petitioner and the respondent to arbitrate the controversy if it determines that an agreement to arbitrate the controversy exists....” (§ 1281.2) The statute does not require the petitioner to introduce the agreement into evidence. A plain reading of the statute indicates that as a preliminary matter the court is only required to make a finding of the agreement's existence, not an evidentiary determination of its validity.

(Condee v. Longwood Management Corp. (2001) 88 Cal.App.4^th 215, 218-19.)

Here, Defendants demonstrated the existence of the arbitration agreement.

Second, Plaintiff attempts to rely on Ruiz v. Moss Bros. Auto Group, Inc. (2014) 232 Cal.App.4th 836.

The Court does not find Plaintiff’s argument availing.

In Ruiz, Ruiz submitted a declaration claiming he did not recall signing the agreement to arbitrate at any time and that he would not have signed it had it been presented to him. (Ruiz v. Moss Bros. Auto Group, Inc. (2014) 232 Cal.App.4th 836, 840 & 846.) Therefore, the court of appeal held that in light of this, Moss Bros. had the burden of proving by a preponderance of the evidence that the electronic signature was authentic. (Ruiz v. Moss Bros. Auto Group, Inc. (2014) 232 Cal.App.4th 836, 846.)

Here, Plaintiff attempts to shift the burden to Defendants to authenticate the lease agreement by arguing that Defendants/their counsel did not authenticate the document, did not have personal knowledge, did not establish the necessary foundation, and that the lease agreement is hearsay.

Nowhere in the opposing papers does Plaintiff attach a declaration by Plaintiff attesting that Plaintiff did not sign the lease agreement. In Ruiz, a declaration was submitted contesting the validity of the signatures on the agreements. Here, no such declaration was attached with the opposing papers that contested the existence of this agreement. Therefore, under Condee, Defendants met their initial burden of demonstrating the existence of an agreement to arbitrate. The burden did not shift back to Defendants to prove, by a preponderance of the evidence, that the signatures were authentic because Plaintiff never submitted a declaration in Opposition actually challenging the validity of the signature.

In fact, Plaintiff’s Opposition papers rely on the existence and language of the lease agreement when Plaintiff argues that only Glendale Nissan signed the agreement and that NNA did not sign the agreement.

Plaintiff’s objections – lack of personal knowledge, lack of foundation, and hearsay – to Defendants’ Exhibit 5 (lease agreement) are overruled.

Agency/Equitable Estoppel/Third-Party Beneficiaries
Defendants attach as Exhibit 5 to the Douglas Declaration the “Motor Vehicle Lease Agreement With Arbitration Clause – California” (lease agreement).

Page 1 of the lease agreement indicates that Glendale Nissan (Defendant or dealer) is the lessor, and Minas Badalyan (Plaintiff) is the lessee/co-lessee.

Page 1 also states:

“You” and “your” refer equally to the Lessee and Co-Lessee (if any) signing this Lease. “We”, “us” and “our” refer to the Dealer, or if this Lease is assigned, to Nissan-Infiniti LT LLC (“NILT”) and/or any other assignee.

(Douglas Decl., Ex. 5, p. 1.)

In relevant part, the arbitration clause states:

1. EITHER YOU OR WE MAY CHOOSE TO HAVE ANY DISPUTE, EXCEPT AS STATED BELOW, BETWEEN US DECIDED BY ARBITRATION AND NOT IN COURT OR BY JURY TRIAL.

2. IF A DISPUTE IS ARBITRATED, YOU WILL GIVE UP YOUR RIGHT TO PARTICIPATE AS A CLASS REPRESENTATIVE OR CLASS MEMBER ON ANY CLASS CLAIM YOU MAY HAVE AGAINST US INCLUDING CLASS ARBITRATION OR ANY CONSOLIDATION OF INDIVIDUAL ARBITRATIONS.

3. DISCOVERY AND RIGHTS TO APPEAL IN ARBITRATION ARE GENERALLY MORE LIMITED THAN IN A LAWSUIT, AND OTHER RIGHTS THATYOU AND WE WOULD HAVE IN COURT MAY NOT BE AVAILABLE IN ARBITRATION.

Except as otherwise stated below, any claim or dispute, whether in contract, tort, statute or otherwise (including the interpretation and scope of this clause and the arbitrability of the claim or dispute), between you and us or our employees, agents, successors or assigns, which arises out of or relates to your credit application, lease or condition of this vehicle, this lease agreement or any resulting transaction or relationship (including any such relationship with third parties who do not sign this lease) shall, at your or our election, be resolved by neutral, binding arbitration and not by a court action.

…

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

(Douglas Decl., Ex. 5, p. 4.)

When Defendants filed the instant motion, both Defendants were still named as Defendants in this action.

Defendant, Glendale Nissan (dealer), was dismissed by Plaintiff on January 13, 2025, which was after the filing of Defendants’ motion.

Defendants argue that NNA (manufacturer) can compel arbitration, despite the fact that NNA did not sign the lease, under the theory of equitable estoppel and the theory of third-party beneficiary.

As stated in Jensen v. U-Haul Co. of California:

[A]s a general rule, “[t]he right to arbitration depends on a contract, and a party can be compelled to submit a dispute to arbitration only if the party has agreed in writing to do so.” (Matthau v. Superior Court (2007) 151 Cal.App.4th 593, 598, 60 Cal.Rptr.3d 93 (Matthau).) “Even the strong public policy in favor of arbitration does not extend to those who are not parties to an arbitration agreement or who have not authorized anyone to act for them in executing **802 such an agreement.” (County of Contra Costa v. Kaiser Foundation Health Plan, Inc. (1996) 47 Cal.App.4th 237, 245, 54 Cal.Rptr.2d 628 (Contra Costa).)

Nevertheless, there are circumstances under which persons who have not signed an agreement to arbitrate are bound to do so. One treatise has stated that there are “six theories by which a nonsignatory may be bound to arbitrate: ‘(a) incorporation by reference; (b) assumption; (c) agency; (d) veil-piercing or alter ego; (e) estoppel; and (f) third-party beneficiary.’ ” (Suh, supra, 181 Cal.App.4th at p. 1513, 105 Cal.Rptr.3d 585 [quoting 2 Oehmke, Commercial Arbitration (3d ed. 2006 update) § 41.57 at pp. 41-195]; see 1 Oehmke, Commercial Arbitration (3d ed. Aug. 2017 update) § 8.1 [similar].) 

(Jensen v. U-Haul Co. of California (2017) 18 Cal.App.5th 295, 300-301.)

Defendants support their argument that NNA (manufacturer) can compel arbitration under theories of equitable estoppel and third-party beneficiary, despite the fact that NNA did not sign the lease, with Felisilda v. FCA US LLC (2020) 53 Cal.App.5th 486.

However, this Court does not find Defendants’ arguments on equitable estoppel and the third party beneficiary doctrine availing in light of: (1) Ford Motor Warranty Cases (2023) 89 Cal.App.5th 1324, rev. granted, (Ford Motor Warranty Cases) (2) Montemayor v. Ford Motor Co. (2023) 92 Cal.App.5th 958, rev. granted, (Montemayor) and (3) Kielar v. Superior Court (2023) 94 Cal.App.5th 614, rev. granted.

Although Defendants cite to Felisilda v. FCA US LLC (2020) 53 Cal.App.5th 486, this Court notes it is following Ford Motor Warranty Cases, rev. granted. “Of course, the rule under discussion has no application where there is more than one appellate court decision, and such appellate decisions are in conflict. In such a situation, the court exercising inferior jurisdiction can and must make a choice between the conflicting decisions.” (Auto Equity Sales, Inc. v. Superior Court of Santa Clara County (1962) 57 Cal.2d 450, 456.)

While this Court agrees with Plaintiff that Defendant NNA does not have the ability to compel arbitration under the theory of equitable estoppel and under the third-party beneficiary doctrine, Plaintiff’s Opposition does not address Defendants’ argument that Defendants can compel arbitration under a theory of agency.

Defendants pointed to the agency allegations in the Complaint that allege:

PLAINTIFF is informed and believes, and thereon alleges, that at all times herein mentioned, Defendants, and each of them, were the agents, servants, and/or employees of each of their Co-Defendants.

PLAINTIFF is informed and believes, and thereon alleges, that in doing the things hereinafter alleged, Defendants, and each of them, were acting in the course and scope of their employment as such agents, servants, and/or employees, and/or with the permission, consent, knowledge, and/or ratification of their Co-Defendants, principals, and/or employers.

(Compl. ¶¶ 5a-5b.)

Defendants point to the case of Thomas v. Westlake to argue that Defendants can compel arbitration despite the fact that NNA is not a signatory to the lease agreement:

There are, however, “exceptions to the general rule that a nonsignatory ... cannot invoke an agreement to arbitrate, without being a party to the arbitration agreement.” (Westra, supra, 129 Cal.App.4th at p. 765, 28 Cal.Rptr.3d 752.) One such exception provides that when a plaintiff alleges a defendant acted as an agent of a party to an arbitration agreement, the defendant may enforce the agreement even though the defendant is not a party thereto.

(Thomas v. Westlake (2012) 204 Cal.App.4th 605, 614.)

Here, Plaintiff alleged that that Defendants are agents of each other; therefore, the Court finds Defendants’ arguments availing that arbitration can be compelled. Although NNA did not sign the instant lease agreement, Glendale Nissan did, and Plaintiff’s Complaint alleges that the two are agents of each other.

In Opposition, Plaintiff does not attempt to attack Defendants’ agency argument.

Plaintiff simply argues that Glendale Nissan has been dismissed and is no longer a party nor a movant. However, the Court does not find this argument availing because Plaintiff does not provide any legal authority as to how the fact that Glendale Nissan was dismissed defeats Defendants’ argument regarding agency/Thomas v. Westlake.

The Reply notes that Plaintiff dismissed Glendale Nissan after the filing of Defendants’ motion to compel arbitration in attempt to evade the arbitration clause. The Court notes that it cannot determine whether or not Plaintiff dismissed Glendale Nissan in attempts to avoid arbitration. However, the Court does note that the Reply is correct to note that Plaintiff did not address Defendants’ agency theory to compel arbitration.

Therefore, this Court plans to GRANT Defendant, NNA’s, motion to compel arbitration under the theory of agency.

FAA & SBA Anti-Waiver
Plaintiff argues that the FAA does not apply, so SBA’s anti-waiver statute does.

As to Plaintiff’s argument here, the Court is not entirely sure what Plaintiff is trying to argue.

Plaintiff appears to be arguing that the FAA can preempt state legislation when state legislation prohibits arbitration, but that the FAA can only preempt state legislation when the FAA applies. Plaintiff appears to argue that Defendants have to show that the instant action involved interstate commerce, and since Defendants did not show that the action involved interstate commerce, the FAA cannot preempt the Song-Beverly Act (SBA). Plaintiff appears to be arguing that the SBA does not allow for arbitration of disputes, and since the FAA does not apply here, the FAA does not preempt the SBA.

The Court does not find Plaintiff’s arguments availing for several reasons.

First, it appears that the FAA does apply here. The lease agreement provided:

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

(Douglas Decl., Ex. 5, p. 4.)

Second, Plaintiff argues, “If the movant fails to make a factual record that the transaction involved interstate commerce, the FAA does not preempt a state statute precluding arbitration. (Woolls v. Superior Court (2005) 127 Cal.App.4th 197, 205-206.)” (Pl. Oppo. p. 13.)

Plaintiff’s reliance on Woolls appears to be inapposite.

In Wools, the party seeking to compel arbitration did not comply with Business & Professions Code § 7191, which imposed certain disclosure requirements in specified residential contracts. The Court of Appeal noted how 7191 was mandatory; therefore, the party seeking to compel arbitration could not compel arbitration because 7191 was not complied with. The party seeking to compel arbitration also argued that the FAA preempted Section 7191, but the Court of Appeal noted that movant did not establish preemption because movant did not present facts that showed the transaction involved interstate commerce.

The Court finds Plaintiff’s reliance on Wools inapposite for several reasons. First, the parties here agreed that the FAA would apply in the lease agreement. Second, in Wools, there was Section 7191, which is a state statute that was not complied with. Here, Plaintiff does not cite to any statute that Defendants did not comply with.

It appears that Plaintiff is arguing that the SBA has an anti-waiver provision that precludes arbitration. However, Plaintiff does not point to such a provision.

Plaintiff cites to Murillo v. Fleetwood Enterprises, Inc. (1998) 17 Cal.4th 985 to argue that the SBA has an anti-waiver provision that precludes arbitration.

In relevant part, Plaintiff cites:

Popularly known as the automobile “lemon law” (see Nightingale v. Hyundai Motor America (1994) 31 Cal.App.4th 99, 101 [37 Cal.Rptr.2d 149]), the Song-Beverly Act is strongly pro-consumer, expressly providing that waiver of its provisions by a buyer, “except as expressly provided in this chapter, shall be deemed contrary to public policy and shall be unenforceable and void.” (Civ. Code, § 1790.1.) The Act also makes clear its pro-consumer remedies are in addition to those available to a consumer pursuant to the Commercial Code (Civ. Code, § 1790.3) and the Unfair Practices Act (Civ. Code, § 1790.4). 

(Murillo v. Fleetwood Enterprises, Inc. (1998) 17 Cal.4th 985, 990.)

Plaintiff then generally cites to Civil Code § 1794(a) which states, “Any buyer of consumer goods who is damaged by a failure to comply with any obligation under this chapter or under an implied or express warranty or service contract may bring an action for the recovery of damages and other legal and equitable relief.” (Civil Code § 1794(a).)

The Court does not find Plaintiff’s argument availing because Murillo is a case that has nothing to do with arbitration. Murillo deals with costs and attorney fees. Further, Plaintiff does not cite to any case law that demonstrates that claims under the SBA are precluded from arbitration.

Plaintiff also points to Hoover v. American Income Life Ins. Co. (2012) 206 Cal.App.4th 1193 to argue that Defendants cannot compel an SBA claim to arbitration because Defendants did not show that the transaction involves interstate commerce.

However, the Court finds Plaintiff’s reliance on Hoover unavailing. Hoover has nothing to do with the SBA, and Plaintiff has not pointed to a single case showing that SBA claims are barred from going to arbitration when the parties agree that the FAA applies and when the parties agree that their disputes in “statute” can be compelled to arbitration.

Scope of Agreement
Under the theory of agency, Defendants have shown that the instant parties can be compelled to arbitration. Further, based on the language of the arbitration agreement, the scope of the arbitration agreement covers the instant claims because it mentions claims in “statute” and claims that arise out of the “condition of this vehicle.”

In relevant part:

Except as otherwise stated below, any claim or dispute, whether in contract, tort, statute or otherwise (including the interpretation and scope of this clause and the arbitrability of the claim or dispute), between you and us or our employees, agents, successors or assigns, which arises out of or relates to your credit application, lease or condition of this vehicle, this lease agreement or any resulting transaction or relationship (including any such relationship with third parties who do not sign this lease) shall, at your or our election, be resolved by neutral, binding arbitration and not by a court action.

(Douglas Decl., Ex. 5, p. 4, [emph added].)

TENTATIVE RULING
Defendant(s) motion to compel arbitration and stay proceedings is GRANTED. Plaintiff did not assert any arguments against Defendants’ agency theory of compelling arbitration.