Judge: David A. Rosen, Case: 22GDCV00655, Date: 2023-03-17 Tentative Ruling
Case Number: 22GDCV00655 Hearing Date: March 17, 2023 Dept: E
Hearing Date: 03/17/2023 – 8:30am
Case No: 22GDCV00655
Trial Date: Unset
Case Name: KRISTOPHER LUKE WHITE JR., an indiv; v. FORD MOTOR COMPANY, a
Delaware Corporation
TENTATIVE
RULING ON MOTION TO COMPEL ARBITRATION
Moving Party: Defendant, Ford Motor Company
Responding Party: Plaintiff, Kristopher Luke White Jr.
(White)
Moving Papers: Motion; Declaration Jonathan Won;
Proposed Order
Opposing Papers: Opposition; Request for Judicial
Notice; Declaration of Camran Pakbaz
Reply Papers: Reply
Proof of Service Timely Filed (CRC Rule 3.1300): Ok
16/21 Court Days Lapsed (CCP 1005(b)): Ok
Proper Address: Ok
CCP §1290.4
“A copy of the petition and a written notice of
the time and place of the hearing thereof and any other papers upon which the
petition is based shall be served in the manner provided in the arbitration
agreement for the service of such petition and notice.” (CCP §1290.4(a).) “If
the arbitration agreement does not provide the manner in which such service
shall be made and the person on whom service is to be made has previously
appeared in the proceeding or has previously been served in accordance with
subdivision (b) of this section, service shall be made in the manner provided
in Chapter 5 (commencing with Section 1010) of Title 14 of Part 2 of this code.”
(CCP §1290.4(c).)
Here, Plaintiff has
already appeared as indicated by the fact that Plaintiff filed the action.
Defendant appears to have served this notice and the accompanying papers of
this motion by e-mail, and Opposition has made no objections to how the instant
motion has been served.
RELIEF REQUESTED
Defendant
Ford Motor Company (“FMC” or “Defendant”) will and hereby does move this Court,
pursuant to California Code of Civil Procedure § 1281, et seq., and the Federal
Arbitration Act, 9 U.S.C. § 1, et seq., for an order compelling arbitration of
the claims between Plaintiff Kristopher Luke White, Jr. (“Plaintiff”) and
Defendant and to dismiss the action or in the alternative stay the litigation
as between Defendant and Plaintiff pending completion of the arbitration.
BACKGROUND
On
09/30/2022, Plaintiff filed a Complaint against Defendant, Ford Motor Company, alleging
three causes of action: (1) Violation of Song-Beverly Act – Breach of Express
Warranty, (2) Violation of Song-Beverly Act – Breach of Implied Warranty, and
(3) Violation of the Song-Beverly Act Section 1793.2.
Plaintiff alleges that on September 13, 2021, Plaintiff
purchased a 2021 Ford F-150, that Ford Motor Company warranted the subject
vehicle and agreed to preserve or maintain the utility or performance of
Plaintiff’s vehicle or to provide compensation if there was a failure in such
utility or performance, and that the subject vehicle was delivered to Plaintiff
with serious defects and nonconformities to warranty.
The instant motion pertains to whether or not
Defendant (Ford Motor Company) a nonsignatory to the “Retail Installment Sale
Contract – Simple Finance Charge (With Arbitration Provision” (RISC), can
compel arbitration of this action under the RISC when it was not a party to the
RISC because the only listed parties to the RISC were Buyer (White) and
Seller-Creditor (Worthington Ford).
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
In
purchasing the subject vehicle, Plaintiff executed a “Retail Installment Sale
Contract – Simple Finance Charge (With Arbitration Provision)” (RISC) with the
Seller-Creditor, Worthington Ford. The RISC contains an arbitration provision
that provides in relevant part:
1.
EITHER YOU OR WE MAY CHOOSE TO HAVE ANY DISPUTE BETWEEN US DECIDED BY
ARBITRATION AND NOT IN COURT OR BY JURY TRIAL…
Any
claim or dispute, whether in contract, tort, statute or otherwise (including
the interpretation and scope of this Arbitration Provision, 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, purchase or 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 and not by a court action.
(Ex.
B, Won Decl.)
On
the first page of the RISC, “You,” is defined as the Buyer and Co-Buyer, if any,
and “we” or “us” is defined as Seller-Creditor.
Defendant
first argues that it is the arbitrator, not the Court who must consider whether
Plaintiff’s claims are subject to arbitration and any questions as to the
validity and enforceability of the arbitration clause.
Defendant’s
argument is unavailing, as it presumes there is an agreement to arbitrate
between Plaintiff and Defendant. Defendant presented the RISC, and Defendant is
not a party to the agreement.
Defendant
then argues that the parties’ claims fall within the arbitration provision’s
scope. Defendant argues that there is no
doubt that Plaintiff entered into an arbitration agreement broad enough to
cover the dispute in this litigation.
Again,
Defendant’s argument is unavailing, as it presumes there is an agreement to
arbitrate between the Plaintiff and Defendant. Defendant has not demonstrated
that an agreement to arbitrate exists between the parties.
Equitable
Estoppel
Next,
Defendant argues that this entire matter should be ordered to arbitration under
the doctrine of equitable estoppel.
Equitable estoppel associated with a nonsignatory compelling arbitration
arises as follows:
To
summarize, under both federal and California decisional authority, a
nonsignatory defendant may invoke an arbitration clause to compel a signatory
plaintiff to arbitrate its claims when the causes of action against the
nonsignatory are “intimately founded in and intertwined” with the underlying
contract obligations. By relying on contract terms in a claim against a
nonsignatory defendant, even if not exclusively, a plaintiff may be equitably
estopped from repudiating the arbitration clause contained in that
agreement. The focus is on the nature of the claims asserted by the
plaintiff against the nonsignatory defendant. That the claims are cast in tort
rather than contract does not avoid the arbitration clause. Moreover, the
federal decisional authority is not limited, as plaintiff suggests, to cases in
which a contract with a subsidiary corporation is relied upon to compel
arbitration with a parent entity. The fundamental point is that a party may not
make use of a contract containing an arbitration clause and then attempt to
avoid the duty to arbitrate by defining the forum in which the dispute will be
resolved.
(Boucher
v. Alliance Title Co., Inc. (2005) 127 Cal.App.4th 262, 271-272 [internal
citations omitted].)
Defendant
argues as follows:
Under
this doctrine, Plaintiff’s claims against FMC are properly ordered to
arbitration. Plaintiff alleges violations of the Song–Beverly Consumer Warranty
Act against nonsignatory FMC, which stem from issues with the vehicle. (See
generally Complaint.) Furthermore, all of the purported wrongful conduct is
alleged to have arisen out of Plaintiff’s purchase of the subject vehicle that
was manufactured by FMC. Every claim Plaintiff asserts arises from the purchase
of the Subject Vehicle. If Plaintiff did not enter into the RISC Agreement, he
would not have received the vehicle or the corresponding warranties and
certifications from FMC. FMC’s duty to comply with warranties arose only after
Plaintiff purchased the vehicle. In sum, all of Plaintiff’s claims are intimately
founded in and intertwined with the underlying contract.
(Def.
Mot. p.15.)
In
Opposition, Plaintiff argues that the claims against Defendant are not
intimately founded in and intertwined with the financing agreement he entered
with Worthington Ford because Plaintiff’s complaint doesn’t even reference, let
alone rely on, the financing agreement. Plaintiff points out how the Complaint
is not trying to enforce the terms of the RISC, but instead Plaintiff is
seeking to enforce FMC’s statutory obligations under the Song-Beverly Act.
Further, Plaintiff argues that the RISC does not impose upon FMC any obligation
to comply with its warranty and that this obligation is separate from the RSIC
between Plaintiff and Worthington Ford.
Here,
the Court finds Plaintiff’s argument more convincing. As stated in Ngo,
“Lastly, BMW’s standing argument fails. It is the retail sale – the fact that
Ngo bought a BMW – not the purchase agreement, that gives a plaintiff standing
to bring claims under the Song-Beverly Act…Because Ngo’s standing to bring
these claims against BMW does not derive from the purchase agreement, BMW
cannot establish that Ngo’s claims are “inextricably tied up” with the purchase
agreement.” (Ngo v. BMW of North America, LLC (9th Cir. 2022)
23 F.4th 942, 950.) Further, “As an initial matter, under California law,
warranties from a manufacturer that is not a party to a sales contract are ‘not
part of [the] contract of sale.” (Ngo v. BMW of North America, LLC (9th
Cir. 2022) 23 F.4th 942, 949 citing Corp. of Presiding Bishop of Church of
Jesus Christ of Latter-Day Saints v. Cavanaugh (1963) 217 Cal.App.2d 492,
514.)
Further,
as stated in Ngo, “Like Ngo's purchase agreement, the contracts in Kramer [cite]
“expressly differentiate[d] dealer warranties from manufacturer warranties” and
disclaimed any effect on the manufacturer's warranties. Id. We
held that warranty claims against the manufacturer “arise[ ] independently from
the Purchase Agreements, rather than intimately relying on them.” Id.”
(Ngo v. BMW of North America, LLC (9th Cir. 2022) 23 F.4th 942,
950.)
Here,
Paragraph 4 of the RISC 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.
(Ex.
B., Won Decl.)
This
disclaimer evidences an intent that the RISC warranties and the Song-Beverly
warranties are separate.
Defendant
also argues:
Moreover,
the arbitration provision in the RISC Agreement specifically states that either
party to the RISC Agreement may elect to enforce arbitration for any claims
arising out of “any such relationship with third parties who do not sign this
contract.” FMC would be included as a nonsignatory party under this definition,
since Plaintiff’s claims are against FMC, even though FMC is not a party to the
RISC Agreement. The RISC Agreement contemplates that arbitration would involve
a nonsignatory third party to the RISC Agreement, such as FMC, against whom
claims are alleged relating to the Plaintiff’s transaction of purchasing the
Vehicle.
(Def.
Mot. p.15.)
The
Court finds this argument unavailing as the arbitration provision states that “at
your or our election.” Here, moving Defendant is not “you” or “our” under the
RISC.
Defendant
also argues that “all of Plaintiff’s claims allege only one violation of the
same primary right arising out of the RISC Agreement—the right to receive a
working automobile in exchange for payments. (See Bescos v. Bank of America
(2003) 105 Cal.App.4th 378, 397 (affirming a demurrer to both fraud and
conspiracy claims after dismissing the plaintiffs CLRA claims, on the ground
that the additional theories “were not `different wrongs’ that gave rise to
different primary rights, but rather are different ways of committing the same
wrongs.”).) Thus, equitable estoppel applies to require arbitration of all
Plaintiff’s claims.” (Def. Mot. p. 15-16.)
However,
as the Plaintiff noted, the basis for this complaint alleges violations based
on Song-Beverly and not the RISC.
Defendant
also argues that FMC has not waived its ability to enforce the arbitration
provision; however, this argument is of no importance to the Court.
In
Reply, Defendant states that Felisilda is binding on this court and that
federal authorities are not binding on state courts, even as to issues of
federal law.
In
Felisilda, the Third District Court of Appeal upheld an order compelling
the plaintiffs to arbitration with the manufacturer of the alleged lemon
vehicle even though it was not a signatory to the contract. The Felisilda court
stated:
In
signing the sales contract, the Felisildas agreed that “[a]ny claim or dispute,
whether in contract, tort, statute or otherwise ... between you and us
... which arises out of or relates to ... [the] condition
of this vehicle ... shall ... be resolved by neutral, binding
arbitration and not by a court action.” (Italics added.) Here, the
Felisildas’ claim against FCA relates directly to the condition of the vehicle.
In
their complaint, the Felisildas alleged that “express warranties accompanied
the sale of the vehicle to [them] by which FCA ... undertook to preserve or
maintain the utility or performance of [their] vehicle or provide compensation
if there was a failure in such utility or performance.” Thus, the sales
contract was the source of the warranties at the heart of **648 this
case. The Felisildas noted they “delivered the vehicle to an authorized FCA ...
repair facility for repair of the nonconformities.” However, “FCA ... has
failed to *497 either promptly replace the new motor vehicle
or promptly make restitution in accordance with the Song-Beverly Consumer
Warranty Act.”
The
Felisildas’ claim against FCA directly relates to the condition of the vehicle
that they allege to have violated warranties they received as a consequence of
the sales contract. Because the Felisildas 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 FCA. Consequently, the trial court properly
ordered the Felisildas to arbitrate their claim against FCA.
(Felisilda
v. FCA US LLC (3d dist.-2020) 53 Cal.App.5th 486, 496-496.)
Here,
the Court notes that Defendant’s argument that Felisilda is controlling
and binding and that the Court should not apply the federal law of Ngo,
is unavailing. Felisilda is not
binding authority on this Court in this case as Plaintiff successfully distinguished
Felisilda from the instant facts. Therefore, even to the degree that Felisilda
could be persuasive authority, Felisilda is not on point with the
case at bar. Further, while Ngo is not binding authority, the Court finds
it and Plaintiff’s arguments more persuasive.
Distinguishing
Felisilda
Defendant heavily relies on Felisilda
to compel arbitration by the Defendant, a nonsignatory, because Felisilda
had a similar arbitration provision and Felisilda compelled
arbitration of a nonsignatory to the sales contract. While Defendant is correct
to note that here the causes of action against Defendant do concern the
condition of the subject vehicle, Plaintiff accurately distinguished Felisilda
because in Felisilda the plaintiffs sued a dealership and the
manufacturer. Here, Plaintiff only sued the manufacturer. Further, in Felisilda,
the motion to compel arbitration was brought by the seller-dealer/signer of the
arbitration agreement with the motion seeking to include the manufacturer. (Felisilda,
supra, 53 Cal.App.5th at 498.) Here, moving Defendant was not named the
seller-dealer in the RISC. Further here, Seller-Dealer is not even a named
party in the action.
TENTATIVE RULING
Defendant’s
motion to compel arbitration and stay proceedings is DENIED.
REQUEST FOR JUDICIAL NOTICE
Plaintiff
in Opposition requested judicial notice of:
1. The
Ninth’s Circuit, February 12, 2022, Opinion, in Ngo v. BMW of North America,
LLC et al., (9th Cir. 2022) 23 F.4th 942. attached as Exhibit 1 hereto.
Plaintiff requests judicial notice under evidence code
452 and 453.
Under Evidence Code §452:
Judicial notice
may be taken of the following matters to the extent that they are not embraced
within Section 451:
(a) The decisional,
constitutional, and statutory law of any state of the United States and the
resolutions and private acts of the Congress of the United States and of the
Legislature of this state.
(b) Regulations
and legislative enactments issued by or under the authority of the United
States or any public entity in the United States.
(c) Official
acts of the legislative, executive, and judicial departments of the United
States and of any state of the United States.
(d) Records
of (1) any court of this state or (2) any court of record of the United States
or of any state of the United States.
(e) Rules of
court of (1) any court of this state or (2) any court of record of the United
States or of any state of the United States.
(f) The law
of an organization of nations and of foreign nations and public entities in
foreign nations.
(g) Facts and
propositions that are of such common knowledge within the territorial
jurisdiction of the court that they cannot reasonably be the subject of
dispute.
(h) Facts and
propositions that are not reasonably subject to dispute and are capable of
immediate and accurate determination by resort to sources of reasonably
indisputable accuracy.
(Ibid..)
Under Evidence Code 453:
The trial court
shall take judicial notice of any matter specified in Section 452 if a party
requests it and:
(a) Gives
each adverse party sufficient notice of the request, through the pleadings or
otherwise, to enable such adverse party to prepare to meet the request; and
(b) Furnishes
the court with sufficient information to enable it to take judicial notice of
the matter.
(Ibid.)
RJN is Granted.