Judge Curtis A. Kin, Case Number: 21STCV03186, Date: 2024-01-30 Tentative Ruling

Judge: Curtis A. Kin, Case: 21STCV03186, Date: 2024-01-30 Tentative Ruling

Case Number: 21STCV03186 Hearing Date: January 30, 2024 Dept: 82

MOTION FOR RECONSIDERATION

Date: 1/30/24 (1:30 PM)

Case: Edwin Villagonzalo et al. v. Hyundai Motor America (21STCV03186)

TENTATIVE RULING:

Plaintiffs Edwin Villagonzalo and Carlisle Villagonzalo’s Motion for Reconsideration is DENIED.

The Order for which plaintiffs seek the Court’s reconsideration was issued on August 31, 2021. At the hearing at which the Court made the Order in question, both parties waived notice thereof. (8/31/21 Minute Order.) Plaintiffs did not file the instant Motion for Reconsideration until over two years later on October 19, 2023. CCP § 1008(a) requires a motion for reconsideration to be brought “within 10 days after service upon the party of written notice of entry of the order.” Accordingly, the instant motion is untimely and must be DENIED.

However, pursuant to CCP § 1008(c), “at any time,” the Court may on its own motion “reconsider a prior order it entered . . . and enter a different order” where the Court “determines there has been a change of law that warrants it.” For the reasons that follow, the Court hereby VACATES its August 31, 2021 Order compelling arbitration and enters a new and different Order denying defendant Hyundai Motor America’s Motion to Compel Arbitration in this matter.

In deciding whether to reconsider a prior order on its own motion, the Court “may consider a number of factors in determining whether to exercise its discretion, including the importance of the change of law, the timing of the motion, and the circumstances of the case.” (Farmers Ins. Exchange v. Superior Court (2013) 218 Cal.App.4th 96, 107, citing Phillips v. Sprint PCS (2012) 209 Cal.App.4th 758, 769.) As discussed below, notwithstanding the other factors the Court may consider, due to the importance of the change of law, the Court finds that granting relief under CCP § 1008(c) is appropriate here.

Before proceeding to discuss the change in the law, the Court pauses to consider the other relevant factors for reconsideration on the Court’s own motion, which would otherwise counsel strongly in favor of leaving the Court’s over two- and one-half year old decision in effect. As noted above, the Court’s decision to compel arbitration was issued in August 2021. Thereafter, in the ensuing years, the Court held no fewer than seven different hearings and status conferences to monitor the progress of the Court-ordered arbitration—3/2/22; 8/31/22; 12/9/22; 2/3/23; 2/17/23; 4/26/23; 5/31/23—including hearings on Orders to Show Cause why the case should not be dismissed for plaintiffs’ failure to proceed with arbitration as ordered by the Court. Consistent with this failure by plaintiffs to meaningfully proceed, defendants describe in their supplemental brief how plaintiffs “through their counsel have done everything in their power to ignore that order, delay the selection of an arbitral forum, and delay completion of arbitration.” (Def. Supp. Br. at 2.) Indeed, even the bringing of the instant motion highlights plaintiffs’ extreme dilatoriness. Plaintiffs filed the Motion for Reconsideration on October 19, 2023, citing appellate decisions evidencing a change in law, including Ford Motor Warranty Cases (2023) 89 Cal.App.5th 1324, which was decided more than six months prior on April 4, 2023.

Remarkably, plaintiffs dispute none of the foregoing. Nor could they. Instead, plaintiffs merely cite Malek v. Blue Cross of California (2004) 121 Cal.App.4th 44, 60, for the proposition that “[t]he progress of the arbitration is not material when considering a change in the law affecting whether the arbitral forum was a correct one.” The Court does not view this language lifted from Malek as establishing and/or limiting factors a court may consider when evaluating whether to exercise its discretion under CCP § 1008(c). Were the court in Malek to have so intended, one would expect a far more expansive discussion of the applicable factors and acknowledgment that the court was setting forth or establishing a particular multi-factor test. “Cases are not authority for propositions not considered therein.” (State Farm Fire & Casualty Ins. Co . Pietak (2001) 90 Cal.App.4th 600, 614.) Rather, Malek is best read as indicating that the progress of the arbitration was not a relevant factor in the court’s CCP § 1008(c) determination in that case. (Cf. Farmers Ins. Exchange, 218 Cal.App.4th at 107 [discussing several factors court considered as applied to reconsideration in that case].)

Regardless, if this Court has interpreted Malek correctly, the apparently willful and extreme delay by plaintiffs to avoid arbitration nonetheless gives way to the change in law counseling in favor of CCP § 1008(c) reconsideration, as discussed below. If plaintiffs’ read of Malek is correct, then the result is the same, because plaintiffs’ apparent bad faith and disregard of professional obligations through counsel are not relevant to the § 1008(c) determination currently before the Court—though it could very well prove to be quite relevant with regard to other determinations the Court may later make in this case. (See, e.g., Howard v. Thrifty Drug & Discount Stores (1995) 10 Cal.4th 424, 443-444 [upholding discretionary dismissal for failure to bring to trial within three years]; Snoeck v. Exaktime Innovations, Inc.(2023) 96 Cal.App.5th 908, 929-929 [affirming reduction of attorney’s fee lodestar amount due to attorney incivility, unprofessionalism, and other case-specific factors].)

As for the importance of the change in law, when the Court granted defendant’s motion to compel arbitration, Felisilda v. FCA US LLC (2020) 53 Cal.App.5th 486 was the only case that opined on whether equitable estoppel allowed a manufacturer to compel a consumer to arbitration under the Retail Installment Sales Contract. The Felisilda court found that “because 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 are estopped from refusing to arbitrate their claim against [the nonsignatory manufacturer].” (Felisilda, 53 Cal.App.5th at 497.) Irrespective of whether the Court agreed with the Felisilda decision, the Court explicitly acknowledged in its Order compelling arbitration that “the outcome is dictated by binding authority in Felisilda.” (8/31/21 Minute Order at 2.)

Since Felisilda, the Courts of Appeal in Ford Motor Warranty Cases, 89 Cal.App.5th at 1324, Montemayor v. Ford Motor Co. (2023) 92 Cal.App.5th 958, Kielar v. Superior Court (2023) 94 Cal.App.5th 614, and Yeh v. Superior Court (2023) 95 Cal.App.5th 264, 267 found the opposite – that equitable estoppel was inapplicable.

“Decisions of every division of the District Courts of Appeal are binding upon all the justice and municipal courts and upon all the superior courts of this state, and this is so whether or not the superior court is acting as a trial or appellate court.” (Auto Equity Sales, Inc. v. Superior Court (1962) 57 Cal.2d 450, 455.) However, “where there is more than one appellate court decision, and such appellate decisions are in conflict . . . the court exercising inferior jurisdiction can and must make a choice between the conflicting decisions.” (Auto Equity, 57 Cal.2d at 456.) The California Supreme Court has granted review of Ford Motor, Montemayor, Kielar, and Yeh. The high court has allowed citation of Ford Motor “for the limited purpose of establishing the existence of a conflict in authority that would in turn allow trial courts to exercise discretion under Auto Equity…to choose between sides of any such conflict.” (Ford Motor Warranty Cases (Cal. 2023) 310 Cal.Rptr.3d 440.)

The Court agrees with Ford Motor’s holding that equitable estoppel does not permit the manufacturer to compel arbitration based on provisions in the sale contract regarding claims arising out of the condition of the vehicle. “[M]anufacturer vehicle warranties that accompany the sale of motor vehicles without regard to the terms of the sale contract between the purchaser and the dealer are independent of the sale contract.” (Ford Motor, 89 Cal.App.5th at 1334.) Plaintiffs’ claims arise out of defendant’s express written warranty, not their sales contract with the dealer. (Compl. ¶¶ 7, 8, 22, 25, 28, 32, 33, 34, 36, 38-41; cf. Ford Motor, 89 Cal.App.5th at 1335 [“[N]o plaintiffs alleged violations of the sale contracts’ express terms. Rather, plaintiffs’ claims are based on [the manufacturer]s statutory obligations to reimburse consumers or replace their vehicles when unable to repair in accordance with its warranty”].)

The Ford Motor court persuasively explains that the plaintiffs in Felisilda did not agree to arbitrate claims with third party nonsignatories. (See Felisilda, 53 Cal.App.5th at 490 [arbitration provision stated “ ‘Any claim or dispute, whether in contract, tort, statute or otherwise…between you and us or our employees, agents, successors or assigns, which arises out of or relates to ... condition of this vehicle, this contract or any resulting transaction or relationship (including any such relationship with third parties who do not sign this contract) shall, at your or our election, be resolved by neutral, binding arbitration….’ ”].) The reference to any relationships with third parties was a “further delineation of the subject matter of claims the purchasers and dealers agreed to arbitrate.” (Ford Motor, 89 Cal.App.5th at 1334-35.) “The ‘third party’ language in the arbitration clause means that if a purchaser asserts a claim against the dealer (or its employees, agents, successors or assigns) that relates to one of these third party transactions, the dealer can elect to arbitrate that claim.” (Id. at 1335.) The “third party” language does not mean that plaintiffs agreed to arbitrate claims against defendant that arise out the condition of the vehicle.

Notwithstanding the similarity of the arbitration provisions in Felisilda and the instant case, because plaintiffs’ claims do not arise out of the Retail Installment Sales Contract, the Court finds that equitable estoppel does not apply. Plaintiffs’ claims are not subject to arbitration. The importance of this change in the law cannot be understated.

For the foregoing reasons, pursuant to CCP § 1008(c), the Court hereby VACATES its August 31, 2021 Order compelling arbitration in this matter and instead hereby DENIES defendant’s Motion to Compel Arbitration. Accordingly, the stay in this matter is hereby lifted.

As this matter has been assigned to the Honorable Joseph Lipner, Judge in Department 72, for all purposes as of August 7, 2023, plaintiff is ORDERED to contact Department 72 within seven days hereof to schedule further proceedings in this matter.