Judge: Barbara M. Scheper, Case: 24STCV14388, Date: 2024-12-12 Tentative Ruling

Case Number: 24STCV14388    Hearing Date: December 13, 2024    Dept: 30

Dept. 30

Calendar No.

Rose, et. al. vs. Hyundai Motor America, et. al., Case No. 24STCV14388

Tentative Ruling re:  Defendant’s Motion to Compel Arbitration

Hyundai Motor America (Defendant) moves for an order compelling Dianna Rose and Michael Goldsmith (Plaintiffs) to submit their claims to binding arbitration and stay this action pending resolution of the arbitration. The motion is denied.

“On petition of a party to an arbitration agreement alleging the existence of a written agreement to arbitrate a controversy and that a party thereto refuses to arbitrate such 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 the revocation of the agreement.” (Code Civ. Proc. § 1281.2, subds. (a), (b).)

A proceeding to compel arbitration is in essence a suit in equity to compel specific performance of a contract. (Freeman v. State Farm Mutual Auto Insurance Co. (1975) 14 Cal.3d 473, 479.) Such enforcement may be sought by a party to the arbitration agreement. (Code Civ. Proc., § 1280, subd. (e)(1).)

            A motion to compel arbitration requires the facts to be proven by affidavit or declaration and documentary evidence with oral testimony taken only in the court’s discretion. (Code Civ. Proc., §1290.2; Rosenthal v. Great Western Fin. Securities Corp. (1996) 14 Cal.4th 394, 413–414.) The motion must set forth the provisions of the written agreement and the arbitration clause verbatim, or such provisions must be attached and incorporated by reference. (Cal. Rules of Court, rule 3.1330; see Condee v. Longwood Mgmt. Corp. (2001) 88 Cal.App.4th 215, 218.) 

            Once the moving party alleges that an arbitration agreement exists, the burden shifts to the responding party to prove the falsity of the purported agreement, and no evidence or authentication is required to find the arbitration agreement exists. (See Condee, supra, 88 Cal.App.4th at p. 219.) However, if the existence of the agreement is challenged, “[movant] bears the burden of proving [the arbitration agreement’s] existence by a preponderance of the evidence.” (Rosenthal, supra, p. 413; see also Espejo v. Southern California Permanente Medical Group (2016) 246 Cal.App.4th 1047, 1058–1060.)

Defendant argues that a valid arbitration agreement exists. A party moving to compel arbitration may meet its initial burden by providing a copy of the signed arbitration agreement. (Gamboa v. Northeast Community Clinic (2021) 72 Cal.App.5th 158, 165–166 (Gamboa).) The opposing party may produce evidence to challenge the agreement in response. (Ibid.) Then, the moving party must use admissible evidence to show a valid agreement. (Ibid.) Here, Defendant provides evidence of a Bluelink Services Agreement (Agreement) that it claims binds Plaintiffs to arbitration through Plaintiffs’ checking a digital box. (Rao Decl. ¶ 6, Ex. 1.)

Plaintiffs challenge the existence of the Agreement in pointing out that Defendant has not provided a signed agreement and by objecting to the Declaration of Vijay Rao.  Plaintiffs’ objection is sustained.  While declarant Rao may have personal knowledge regarding how a customer would sign up for the Bluelink subscription, he offers no admissible evidence to establish that Plaintiffs did in fact sign up for the service.

In addition, Plaintiffs challenge the applicability of the agreement to Plaintiffs’ present claims. Vehicle sale contracts are governed by Civil Code sections 2981 et seq. Every sale contract shall be in writing and “contain in a single document all of the agreements of the buyer and seller with respect to the total cost and the terms of payment for the motor vehicle.” (Civ. Code, § 2981.9.) “An exact copy of the contract or purchase order shall be furnished to the buyer by the seller at the time the buyer and the seller have signed it.” (Ibid.) Additionally, vehicle sale contracts are excluded from the Uniform Electronic Transactions Act. (Id., § 1633.3, subd. (c).) These rules are designed to provide protections to purchasers of motor vehicles, and a contract that does not substantially conform to the requirements is unenforceable. (Kunert v. Mission Financial Services Corp. (2003) 110 Cal.App.4th 242, 248 (Kunert).)

Here, Defendant argues that Plaintiffs entered an agreement to arbitrate all future claims regarding the subject vehicle when they agreed to be bound by Hyundai’s Bluelink services comprehensive service agreement. (Rao Decl. ¶ 4.) The Agreement provides that “Hyundai and you agree to arbitrate any and all disputes and claims between us arising out of or relating to this Agreement, Connected Services, Connected Services Systems, Service Plans, your Vehicle, use of the sites, or products, services, or programs you purchase, enroll in or seek product/service support for, whether you are a Visitor or Customer, via the sites or through mobile application,  except any disputes or claims which under governing law are not subject to arbitration, to the maximum extent permitted by applicable law. This agreement to arbitrate is intended to be broadly interpreted and to make all disputes and claims between us subject to arbitration to the fullest extent permitted by law.” (Rao Decl., Ex. 2.) The agreement extends to “claims based in contract, tort, warranty, statute, fraud, misrepresentation or any other legal theory; claims that arose before this or any prior Agreement.” (Ibid.)

Defendant’s argument that a binding arbitration agreement exists fails because the Agreement does not cover Plaintiffs’ claims. Even if it did, the Agreement would not be enforceable because Defendant failed to comply with Civil Code section 2981.

Plaintiffs’ claims arise out of various mechanical issues with the vehicle, including a foul odor emitted by the HVAC system, various recalls, a problem with the invertor coolant warning light, battery failure, a malfunctioning power window system, and an inoperative fast charger. (Compl. ¶ 10.) None of these issues are related to Bluelink services. The Agreement allegedly completed by Plaintiffs is titled “Connected Services Agreement.” (Rao Decl., Ex. 2.) The Agreement begins, in bold, with the words “Welcome to Hyundai Bluelink for your Hyundai Vehicle.” (Ibid.) In doing so, it immediately sets Bluelink apart as separate from the vehicle itself, signifying that the rest of the Agreement will apply specifically to Bluelink services. The Agreement then discusses various electronic services in depth. (Ibid.)

Section 15, subsection (C) of the Agreement on page 14 includes the relevant arbitration agreement. The Agreement states that “you agree to arbitrate any and all disputes and claims between us arising out of or relating to this Agreement, Connected Services, Connected Services Systems, Service Plans, your Vehicle, use of the sites, or products, services, or programs you purchase, enroll in or seek product/service support for, whether you are a Visitor or Customer, via the sites or through mobile application.” (Ibid.) The structure of the Agreement makes clear that it is not meant to apply to claims unrelated to Bluelink services. Rather, the signor agrees to arbitrate any disputes and claims arising out of or relating to the Agreement concerning Bluelink services and any issues with those services in the signor’s vehicle. No reasonable person reading the Agreement would understand it to be an agreement to arbitration concerning any future separate mechanical defects with the vehicle unrelated Bluelink services. Indeed, “a contract may be explained by reference to the circumstances under which it was made, and the matter to which it relates.” (Civ. Code, § 1647.) Accordingly, the Court finds that the Agreement does not apply to Plaintiffs’ claims.

Even if the Agreement contained language making it explicitly applicable to Plaintiffs’ claims, it would still violate section 2981. Defendant failed to provide a physical copy of the contract or obtain a physical signature as required under section 2981.9. Such failures would make the Agreement unenforceable as a matter of law under Kunert. Thus, Defendant has failed to establish the existence of a valid agreement to arbitrate covering Plaintiffs’ claims.