Judge: David A. Hoffer, Case: 30-2021-01223342, Date: 2023-05-15 Tentative Ruling

The Motion To Compel Arbitration and Stay Action filed by Defendant Nissan North America, Inc. (“NNA”) is DENIED.

To compel arbitration, the moving party must prove by a preponderance of the evidence that a written agreement to arbitrate a controversy exists and that a party thereto refuses to arbitrate such controversy. (C.C.P. § 1281.2.)  The provisions of the written agreement to arbitrate and the paragraph that provides for arbitration must either be stated verbatim in the petition or attached thereto.  (C.R.C. 3.1330.)  NNA moves to compel arbitration based on the arbitration agreement contained in the Retail Installment Sale Contract (“RISC”) attached as Exhibit 4 to the Maugeri Declaration. 

The RISC, dated 5/30/20, is between plaintiffs Yesenia Delao and Patricia Delao (“Plaintiffs”) as “Buyer” and Buena Park Nissan as “Seller-Creditor.”  NNA acknowledges that it is not a signatory to the RISC.  A nonsignatory seeking to enforce an arbitration agreement bears the burden to establish standing to enforce the agreement.  (Jones v. Jacobson (2011) 195 Cal.App.4th 1, 15.) 

NNA has failed to meet this burden. Felisilda v. FCA USA LLC (2020) 53 Cal.App.5th 486 (Felisilda), upon which Nissan relies, is distinguishable. Unlike in Felisilda, the complaint in this case does not allege or otherwise indicate that the sales contract between Plaintiffs and Buena Park Nissan, the nonparty dealer, is the source of the warranties at the heart of this action as brought against NNA. (See Felisilda, supra, 53 Cal.App.5th at p. 496.) Nothing in the complaint suggests that Plaintiffs’ claims against NNA are based on any warranty in the RISC.  In fact, the RISC expressly disclaims any warranty claims and states: “WARRANTIES SELLER DISCLAIMS  ¶If you do not get a written warranty, and the Seller does not enter into a service contract within 90 days from the date of this contract, the Seller makes no warranties, express or implied, on the vehicle, and there will be no implied warranties of merchantability or of fitness for a particular purpose. ¶ This provision does not affect any warranties covering the vehicle that the vehicle manufacturer may provide.  If the Seller has sold you a certified used vehicle, the warranty of merchantability is not disclaimed.” (RISC at ¶4)   The allegations of the complaint show that the only warranties at issue consist of those warranties directly between Plaintiffs and NNA. Further, unlike in Felisilda, the moving party here is the nonsignatory manufacturer.

The better reasoned authority on this issue is found in Ford Motor Warranty Cases (Ochoa) (2023) 89 Cal.App.5th 1324 where the Court examined identical contractual language and expressly declined to follow Felisilda.  This Court opts to follow the reasoning in Ochoa and, for the reasons stated therein, finds that equitable estoppel does not apply.

The Ochoa Court “disagree[d] with Felisilda that ‘the sales contract was the source of [FCA’s] warranties at the heart of this case.”  (Ford Motor Warranty Cases (Ochoa) (2023) 89 Cal.App.5th 1324)  Instead, the Court explained that “manufacturer 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.” (Id.)

The Court in Ochoa further explained: ““California law does not treat manufacturer warranties imposed outside the four corners of a retail sale contract as part of the sale contract.” (Ford Motor Warranty Cases (Ochoa) (2023) 89 Cal.App.5th 1324)  “[O]ur Supreme Court [has] distinguished between, on the one hand, warranty obligations flowing from the seller to the buyer by contract, and, on the other hand, manufacturer warranties ‘that arise[] independently of a contract of sale between the parties.’” (Id.)  Based on the above, the Court in Ford Motor Warranty Cases held that “Plaintiff’s claims in no way rely on the sale contracts” and, consequently, “[e]quitable estoppel does not apply.” (Id.)

As was the case in Ochoa and Felisilda, Defendant asserts Plaintiffs’ claims fall within the arbitration provision, given language referencing third parties and the condition of the vehicle; however, the Court in Ochoa “also disagree[d] with the Felisilda court’s interpretation of the sale contract as broadly calling for arbitration of claims ‘against third party nonsignatories.’” (Id.) Citing the identical language discussed in Felisilda and included herein, referring to “any such relationship with third parties who do not sign this lease,” the Ochoa court explained: “We do not read this italicized language as consent by the purchaser to arbitrate claims with third party nonsignatories.  Rather, we read it as a further delineation of the subject matter of claims the purchasers and dealers agreed to arbitrate.  They agreed to arbitrate disputes ‘between’ themselves – ‘you and us’ – arising out of or relating to ‘relationship[s],’ including ‘relationship[s] with third parties who [did] not sign th[e] [sale] contract[s],’ resulting from the ‘purchase, or condition of th[e] vehicle, [or] th[e] [sale] contract.’” (Id.)  “It says nothing of binding the purchaser to arbitrate with the universe of unnamed third parties.” (Id.)

Consistent with Ochoa, this Court finds that “manufacturer vehicle warranties that accompany the sale of motor vehicles…are independent of the sale contract.” (Ford Motor Warranty Cases (Ochoa) (2023) 89 Cal.App.5th 1324)  Consequently, as Plaintiffs herein are not asserting any claims against NNA based on the terms of the RISC (See Complaint, generally), equitable estoppel does not apply.

NNA has also failed to demonstrate that it is a third-party beneficiary of the RISC or the arbitration agreement therein, as nothing in the RISC or the arbitration provision shows that the motivating purpose of the contracting parties was to benefit NNA. (Goonewardene v. ADP, LLP (2019) 6 Cal.5th 817, 830.)  The arbitration agreement defines “we” and “us” as the seller and not the manufacturer.  The RISC states on page one that only “you or we may elect to resolve any dispute by neutral, binding arbitration.”  The Arbitration Provision at page 4 of the RISC states that disputes “shall, at your or our election, be resolved by neutral, binding arbitration.” The dealership was aware of the fact that each car had a manufacturer and if the dealership intended the manufacturer to be able to invoke the arbitration clause, it could have easily included the manufacturer in the definition of “us.”  Here, as was the case in Ochoa and for the same reasons stated therein, “the sale contract[] reflect[s] no intention to benefit a vehicle manufacturer under Goonewardene.” (Ford Motor Warranty Cases (Ochoa) (2023) 89 Cal.App.5th 1324.)  The holding in Ochoa applies with equal force herein, as the instant action includes the same contractual language and Defendant identifies no other language, which it asserts demonstrates an intent to benefit NNA.

Defendants’ Request for Judicial Notice is GRANTED as to the existence of the documents attached thereto.

The Court orders counsel for plaintiffs to give notice of this ruling.