Judge: Christian R. Gullon, Case: 24PSCV01926, Date: 2025-05-01 Tentative Ruling

Case Number: 24PSCV01926    Hearing Date: May 1, 2025    Dept: O

Tentative Ruling

(1)   DEFENDANT MERCEDES-BENZ USA, LLC’S MOTION TO COMPEL BINDING ARBITRATION is GRANTED.

(2)   DEFENDANT ENVISION WC MB AUTO, LLC’S DEMURRER TO FIRST AMENDED COMPLAINT is CONTINUED.

(3)   DEFENDANT ENVISION WC MB AUTO, LLC’S MOTION TO STRIKE PORTIONS OF FIRST AMENDED COMPLAINT is CONTINUED.

The matter is stayed pending arbitration. (A proposed order has been filed.)

Background

This case arises from the purchase of a new 2023 Mercedes-Benz GLE53. Plaintiff GEVORG GABRIELYAN alleges the following against Defendants ENVISION WC MB AUTO, LLC (“Dealer”); MERCEDES BENZ USA, LLC (“Mercedes”): After taking possession of the Subject Vehicle, Plaintiff learned that, at the time of sale,[1] the Subject Vehicle was in a state of disrepair and was worth significantly less than the amount the Plaintiff paid for the Subject Vehicle — all due to the misrepresentations of Dealer. Specifically, the car had a rough idle and there were fault codes stored related to the voltage of sensors having a malfunction and a short circuit to ground; there was overspray on the chassis ground point which is an indication that there was body reconditioning performed after a vehicle suffered damage; and there were extensive abnormalities in paint thickness as well as fit and finish, which suggest that the car had sustained serious damage and reconditioning work.

On June 14, 2024, Plaintiff filed suit (only v. the Dealer).

On December 9, 2024, Plaintiff filed a first amended complaint (FAC) against Defendants for:

1.     Intentional Misrepresentation

2.     Negligent Misrepresentation Code

3.     Violation of Business and Professions 17200

4.      Violation of the Consumer Legal Remedies Act

5.     Breach of Implied Warranty

6.     Breach of Express Warranty

7.     Violation of the Song Beverly Act

8.     Violation of the Uniform Commercial Code

On January 10, 2025, Mercedes filed the instant motion.

On February 10, 2025, Plaintiff filed his opposition to the Dealer’s demurrer and motion to strike.

On February 18, 2025, the Dealer filed its replies.

To date, as of 4/30, no opposition has been filed by Plaintiff or the Dealer opposing the motion and the request to stay the entire action.

Discussion

As set forth in the motion, Plaintiff signed a Lease that included an agreement to arbitrate. The Agreement to arbitrate is prominently displayed with a distinctive border on the fourth page with a notice that reads: “IMPORTANT ARBITRATION DISCLOSURES”.  The arbitration provision provides: 

Any claim or dispute, whether in contract, tort or otherwise (including any dispute over the interpretation, scope, or validity of this lease, arbitration section or the arbitrability of any issue), between you and us or any of our employees, agents , successors, assigns, or the vehicle distributor, including Mercedes-Benz USA LLC (each a “Third-Party Beneficiary”), which arises out of or relates to a credit application, this lease, or any resulting transaction or relationship arising out of this lease (including any such relationship with third parties who do not sign this contract) shall, at the election of either you, us, or a Third-party Beneficiary, be resolved by a neutral, binding arbitration and not by a court action.

Here, as a third-party beneficiary, Mercedes can enforce the arbitration provision in the Lease. (See Motion, pp. 4, 5 citing e.g. Ronay Family Ltd P’ship v. Tweed, 216 Cal. App. 4th 830, 836 (2013); Macauly v. Norlander, 12 Cal. App. 4th 1, 6–8 (1992); Mance v. Mercedes-Benz USA (N.D. Cal. 2012) 901 F.Supp.2d 1147, 1155; Cione v. Foresters Equity Services, Inc. (1997) 58 Cal.App.4th 625, 636.)

Moreover, as the Lease explicitly states that “any arbitration under this lease shall be governed by the Federal Arbitration Act.” The FAA applies to any arbitration agreement that is “written” and in a contract “evidencing a transaction involving commerce.”  (9 U.S.C. § 2.)  Both criteria are met here: (i) the arbitration provision is in writing and (ii) automotive sale contracts necessarily involve interstate commerce, because even when used intra-state, “cars are themselves instrumentalities of interstate commerce.”  (Motion p. 9, citing United States v. Oliver (9th Cir. 1995) 60 F.3d 547, 550.) What is more, The FAA requires enforcement of Plaintiff’s arbitration agreement. Under the FAA, there is a “liberal federal policy favoring arbitration agreements.” (Motion p. 10, quoting (AT&T Mobility LLC v. Concepcion (2011) 563 U.S. 333, 346.)

To the extent there are grounds that “exist at law or in equity for the revocation of [Plaintiff’s arbitration agreement]” pursuant to 9 U.S.C. § 2 such as that the arbitration provision is unconscionable, no opposition has been filed.

Furthermore, as again argued by Mercedes, Plaintiff’s claims arise out of not only the Lease and the relationship between Plaintiff and Mercedes. After all, Plaintiff’s Claims against Mercedes are brought primarily under the SBA which create statutory claims arising out of retail purchases and leases made by consumers of vehicles. Put differently, there would be no claim for breach of warranty under the SBA but for this relationship as Plaintiff alleges that this action arises out of the warranty obligations of Mercedes.

Lastly, per as 9 U.S.C. § 3 and Code of Civil Procedure § 1281.4, if an application has been made to a court of competent jurisdiction for an order to arbitrate a controversy which is an issue involved in an action or proceeding pending before a court of this State and such application is undetermined, the court in which such action or proceeding is pending shall, upon motion of a party to such action or proceeding, stay the action or proceeding until the application for an order to arbitrate is determined and, if arbitration of such controversy is ordered, until an arbitration is had in accordance with the order to arbitrate. Thus, the court stays in the instant case pending the outcome of arbitration.

Conclusion

Based on the foregoing, the motion to arbitrate is granted, rendering the case stayed.