Superior Court of California 

County of Los Angeles – West District  

Beverly Hills Courthouse / Department 205 

 

 

MOVING PARTY: Defendant American Honda Motor Company, Inc. 

 

RESPONDING PARTY: Plaintiff Maria Maldonado 

 

 

BACKGROUND 

 

  This case arises from a dispute over an allegedly defective Honda Pilot.  Plaintiff Maria Maldonado leased a 2020 Honda Pilot, manufactured and/or distributed by Defendant American Honda Motor Company, Inc. (“AHMC”).  (Compl. ¶ 6.)  Plaintiff received an express warranty which provided that in the event of a defect during the warranty period, Plaintiff could deliver the car for repair service to AHMC’s representative and the car would be repaired.  (Compl. ¶ 10.)   

During the warranty period, the car contained or developed defects including a defective audio system, connectivity system and display system.  (Compl. ¶ 12.)  Plaintiff provided AHMC and its representatives an opportunity to service or repair the car.  (Compl. ¶ 14.)  AHMC was unable and/or failed to service the car within a reasonable number of attempts.  (Compl. ¶ 15.)  

The operative complaint alleges claims for (1) violation of Civil Code Section 1793.2(d), (2) violation of Civil Code Section 1793.2(b), (3) violation of Civil Code Section 1793.2(a)(3), (4) breach of express warranty, in violation of Civil Code Sections 1791.2(a) and 1794, and (5) breach of the implied warranty of merchantability, in violation of Civil Code Sections 1791.1 and 1794.       

Plaintiff leased the car pursuant to a closed-ended motor vehicle lease agreement (the “Agreement”).  (Ex. A to Dao Decl.)  The Agreement contains an arbitration provision that requires binding arbitration of “any dispute between YOU, HONDA or any involved third party relating to your account, this Lease or our relationship including any application, the Vehicle, its performance and any representation, omissions or warranties.”  (Id.)  “HONDA” is defined to include AHMC.  (Id.) 

This hearing is on AHMC’s motion to compel arbitration.  AHMC argues that while it is a non-signatory to the Agreement, it is entitled to enforce the arbitration provision under the doctrine of equitable estoppel.   

LEGAL STANDARD 

The¿Federal Arbitration Act (“FAA”)¿applies to contracts that involve interstate commerce (9 U.S.C. §§ 1,¿2), but since arbitration is a matter of contract, the¿FAA¿also applies if it is so stated in the agreement.  (See¿Victrola 89, LLC v. Jaman Properties 8 LLC¿(2020) 46 Cal.App.5th 337, 355 [260 Cal. Rptr. 3d 1]¿(“[T]he presence of interstate commerce is not the only manner under which the¿FAA¿may apply. … [T]he parties may also voluntarily elect to have the¿FAA¿govern enforcement of the Agreement”].)   

Here, the arbitration provision in the Lease Agreement states, “YOU and HONDA agree and acknowledge that this Lease affects interstate commerce and the Federal Arbitration Act (‘FAA’) applies.”  (Ex. A to Dao Decl.).  The language of this provision is unambiguous: the parties specified that the¿FAA¿governs the arbitration agreement.¿(Cf.¿Victrola 89, LLC, 46 Cal.App.5th at pp. 343, 348¿(contracting parties’ explicit “reference to ‘enforcement’ under the¿FAA required the court to consider the [defendants’] motion to¿compel arbitration under the¿FAA.”).) 

Under the FAA, “any doubts concerning the scope of arbitrable issues should be resolved in favor of arbitration …”.  Moses H. Cone Memorial Hospital v. Mercury Constr. Corp.¿(1983) 460 U.S. 1, 24–25.  This federal policy favoring arbitration preempts any state law impediments to the policy’s fulfillment.  If a state law interferes with the FAA’s purpose of enforcing arbitration agreements according to their terms, the FAA preempts the state law provision, no matter how laudable the state law’s objectives. (AT&T Mobility LLC v. Concepcion (2011) 563 U.S. 333, 352.)   

However, while the arbitration agreement here is governed by the FAA, the agreement may be enforced via the summary procedures provided by California arbitration law.  (Rosenthal v. Great Western Financial Securities Corp. (1996) 14 Cal. 4th 394, 409-410.)  It is a “general and unassailable proposition . . . that States may establish the rules of procedure governing litigation in their own courts,” even though the controversy is governed by substantive federal law.  (Felder v. Casey¿(1988) 487 U.S. 131, 138.)  By the same token, however, a state procedural rule must give way “if it impedes the uniform application of the federal statute essential to effectuate its purpose, even though the procedure would apply to similar actions arising under state law.” (McCarroll v. L.A. County etc. Carpenters¿(1957) 49 Cal. 2d 45, 61, 62.)   

“We think it plain¿the California procedures for a summary determination of the petition to compel arbitration serve to further, rather than defeat, the enforceability policy of the [FAA.]” ¿(Rosenthal, 14 Cal. 4th at 409.)  Code Civ. Proc. § 1281.2 and¿1290.2¿are neutral as between state and federal law claims for enforcement of arbitration agreements.  (Id.)  “They display no hostility to arbitration as an alternative to litigation; to the contrary, the summary procedure provided, in which the existence and validity of the arbitration agreement is decided by the court in the manner of a motion, is designed to further the use of private arbitration as a means of resolving disputes more quickly and less expensively than through litigation.”  (Id.) 

As with federal law, under California¿law,¿public policy favors arbitration as an efficient and less expensive means of resolving private disputes.  (Moncharsh¿v.¿Heily¿&¿Blase¿(1992) 3 Cal.4th 1, 8-9;¿AT&T Mobility LLC v. Concepcion,¿563 U.S. at 339.)¿ To further that policy, Code Civ. Proc. §1281.2 requires a trial court to enforce a written arbitration agreement unless it finds (1) no written agreement to arbitrate exists, (2) the right to compel arbitration has been waived, (3) grounds exist for rescission of the agreement or (4) litigation is pending that may render the arbitration unnecessary or create conflicting rulings on common issues.    

When seeking to compel arbitration, the initial burden lies with the moving party to demonstrate the existence of a valid arbitration agreement by a preponderance of evidence.¿ (Ruiz v. Moss Bros. Auto Group (2014) 232 Cal.App.4th 836, 841-42; Gamboa v. Northeast Community Clinic (2021), 72 Cal.App.5th 158, 164-65.)¿ It is sufficient for the moving party to produce a copy of the arbitration agreement or set forth the agreement’s provisions.¿ (Gamboa, 72 Cal.App.5th at 165.)¿ The burden then shifts to the opposing party to prove by a preponderance of evidence any defense to enforcement of the contract or the arbitration clause.¿ (Ruiz, 232 Cal.App.4th at 842; Gamboa, 72 Cal.App.5th at 165.)  The trial court then weighs all the evidence submitted and uses its discretion to make a final determination.¿ (Id.)¿  

If the court orders arbitration, then the court shall stay the action until arbitration is completed.¿ (See Code Civ. Proc., § 1281.4.)  

DISCUSSION 

Existence of an Agreement 

In ruling on a motion to compel arbitration, the Court must first determine whether the parties actually agreed to arbitrate the dispute, and general principles of California contract law  help guide the court in making this determination. (Mendez v. Mid-Wilshire Health Care Center (2013) 220 Cal.App.4th 534, 541; Victoria v. Superior Court (1985) 40 Cal. 3d 734, 835.)¿¿  

Although “[t]he law favors contracts for arbitration of disputes between parties” (Player v. Geo. M. Brewster & Son, Inc. (1971) 18 Cal.App.3d 526, 534), “there is no policy compelling persons to accept arbitration of controversies which they have not agreed to arbitrate[.]” (Weeks v. Crow (1980) 113 Cal. App. 3d 350, 353..)¿ “[A]rbitration is a matter of contract and a party cannot be required to submit to arbitration any dispute which he has not agreed so to submit.” (AT&T Technologies v. Communications Workers (1986) 475 U.S. 643, 648 (citations and internal quotations omitted); see also Sparks v. Vista Del Mar Child & Family Services (2012) 207 Cal.App.4th 1511, 1518¿ (“Because arbitration is a contractual matter, a party that has not agreed to arbitrate a controversy cannot be compelled to do so”).)¿¿¿¿¿¿¿  

Here, Plaintiff signed the Agreement which contains an arbitration provision.  The arbitration provision was clearly titled and stated in bold “PLEASE READ THIS ARBITRATION PROVISION CAREFULLY TO UNDERSTAND YOUR RIGHTS.  BY ELECTING ARBITRATION, YOU AGREE THAT ANY CLAIM YOU MAY HAVE IN THE FUTURE MUST BE RESOLVED THROUGH BINDING ARBITRATION.  YOU WAIVE THE RIGHT TO HAVE YOUR DISPUTE HEARD IN COURT AND WAIVE THE RIGHT TO BRING CLASS CLAIMS.  YOU UNDERSTAND THAT DISCOVERY AND APPEAL RIGHTS ARE MORE LIMITED IN ARBITRATION.”  (Ex. A to Dao Decl.)   

The arbitration provision provides that by signing, Plaintiff elects to have “Claims” resolved by binding arbitration.  “Claims” means “any dispute between YOU, HONDA or any involved third party relating to your account, this Lease, or our relationship, including any application, the Vehicle, its performance and any representations, omissions or warranties.”  (Id.)  “HONDA” is defined to include AHMC.  (Id.)   

Plaintiff signed the Agreement and initialed Paragraph 15 of the Agreement which states: “The parties agree that any unresolved disputes shall be submitted to arbitration in accordance with the Arbitration clause (Section 52).  By initialing this Section, I am confirming that I have read this Section and the Arbitration clause.”  (Id.)     

Accordingly, the Court concludes AHMC has met its burden to demonstrate the existence of a valid arbitration agreement.  

AMHC’s Right to Enforce Agreement 

An entity seeking to compel arbitration must generally establish it was a party to an arbitration agreement. (DMS Services LLC v. Superior Court (2012) 205 Cal.App.4th 1346, 1352–1353; JSM Tuscany, LLC v. Superior Court (2011) 193 Cal.App.4th 1222, 1236.)  Only in limited circumstances may an arbitration agreement be enforced by non-signatories.   

One such circumstance is where a benefit is conferred on the non-signatory as a result of the agreement, making the nonsignatory a third party beneficiary of the arbitration agreement. (Jensen v. U-Haul Co. of California (2017) 18 Cal.App.5th 295, 301.)  “To invoke the third party beneficiary exception, [a third party beneficiary] ha[s] to show that the arbitration clause … was made expressly for [its] benefit.” (Ronay Family Limited Partnership v. Tweed (2013) 216 Cal.App.4th 830, 838.)  Here, the arbitration agreement provides for the arbitration of disputes between Plaintiff and “HONDA,” and “HONDA” is defined to include AHMC.  (Ex. A to Dao Decl.)  Accordingly, AHMC is a third party beneficiary to the arbitration agreement and may enforce it.  (Cione v. Foresters Equity Servs., Inc. (1997) 58 Cal.App.4th 625, 636-37 (non-party to the arbitration agreement who was expressly named in the arbitration agreement was a third party beneficiary).)   

AHMC also argues that it may enforce the arbitration provision under the doctrine of equitable estoppel.  There is a split of authority in the Court of Appeals on the application of equitable estoppel to claims against non-signatory manufacturers.     

In Felisilda v. FCA US LLC, plaintiffs sued the manufacturer (FCA) and dealer for breaches of the Song Beverly Act.  The manufacturer who was not a signatory to the sales contract sought to enforce the arbitration agreement.  The arbitration agreement in Felisilda required arbitration of “[a]ny claim or dispute, whether in contract, tort, statute or otherwise … 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).”  (53 Cal.App.5th at 490 (emphasis in original).)  Relying on the doctrine of equitable estoppel, the Third District¿Court of Appeal concluded the plaintiffs were bound to arbitrate with FCA under the plaintiffs’ sale¿contract with the dealer for three reasons.  First, the court reasoned that the condition of the car was within the subject matter of the claims made arbitrable¿under the sale contract.¿(Id.¿at p. 496.)  Second, based on the plaintiffs’ allegation that the vehicle was covered by FCA’s warranties, the court found “the sales contract was the source of the warranties,” and equitable estoppel applies where the claims against the nonsignatory are founded in and inextricably bound up with¿the obligations imposed by the agreement containing the arbitration clause.  (Id.)  Third, the court noted the plaintiffs had “expressly agreed to arbitrate claims arising out of the condition of the vehicle—even against third party nonsignatories to the sales contract.” (Id.¿at p. 497.)  ¿  

The Second District Court of Appeal in In re Ford Motor Warranty Cases (2023) 89 Cal.App.5th 1324 explicitly rejects the holding and analysis in Felisilda.  First, the Court rejected from a contract interpretation standpoint that the reference to claims based on relationships with nonsignatory third parties means that the manufacturer can compel arbitration of the buyer's claims. (Id. at 1334 (the arbitration provision “says nothing of binding the purchaser to arbitrate with the universe of unnamed third parties”).)  Second, the Court reasoned that the claims for breach of express and implied warranties and fraudulent concealment in that case were not founded on obligations set forth in the sales contract.  As the Court explained, none of the plaintiffs “alleged violations of the sales contracts’ express terms” or “sued on any express contractual language in the sale contracts.” (Id. at 1335.)  The Court also found “it does not ‘naturally follow’ from any contractual character of the manufacturer warranty claims that they inhere in a retail sale contract containing no warranty terms.” (Id. at 1336.)  Finally, the Court rejected the application of the equitable estoppel doctrine because there is no inequity in not compelling the buyer to arbitrate those claims. As the Court stated, “Again, the ‘fundamental point’ of using equitable estoppel to compel arbitration is to prevent a party from taking advantage of a contract’s substantive terms while avoiding those terms requiring arbitration. Plaintiffs’ claims in no way rely on the sale contracts. Equitable estoppel does not apply.”  (Id. at 1336 (internal citations and quotation marks omitted).) 

Because Felisilda and Ford Motor Warranty reach conflicting holdings on the application of equitable estoppel to claims against a non-signatory manufacturer, the Court must choose which holding to follow.  (Auto Equity Sales, Inc. v. Superior Court (1962) 57 Cal.2d 450, 455-456.)  In accordance with Auto Equity Sales, the Court chooses to follow the holding and analysis in Ford Motor Warranty. The Court finds the reasoning of Ford Motor Warranty persuasive.  The fact that the purchase transaction results in the manufacturer providing express and implied warranties to the buyer for the goods purchased does not mean that the buyer is relying on or basing her claims on the lease agreement, such that it would be inequitable for Plaintiff to rely on enforcing certain contract terms or obligations while avoiding the arbitration provision in the contract.  AHMC does not point to anything in the Complaint that alleges it violated the lease agreement.  Indeed, the lease agreement expressly disclaims the warranties on which Plaintiff is suing.  (Ex. A to Dao Decl.) 

In sum, while the Court concludes AHMC cannot enforce the arbitration agreement under the doctrine of equitable estoppel, the Court finds AHMC may enforce the agreement as a third party beneficiary.      

Arbitrability of Dispute 

 The Court next considers who should decide the arbitrability of the dispute, i.e., whether the arbitration provision encompasses the claims asserted by Plaintiff.  “Although threshold questions of arbitrability are ordinarily for courts to decide in the first instance under the FAA [citation], the ‘[p]arties to an arbitration agreement may agree to delegate to the arbitrator, instead of a court, questions regarding the enforceability of the agreement.’” (Pinela v. Neiman Marcus Group, Inc.¿(2015) 238 Cal.App.4th 227, 239.)¿  

 “There are two prerequisites for a delegation clause to be effective.¿First, the language of the clause must be clear and unmistakable. [Citation.]¿Second, the delegation must not be revocable under state contract defenses such as fraud, duress, or unconscionability.” (Tiri v. Lucky Chances, Inc.¿(2014) 226 Cal.App.4th 231, 242; see also¿Rent-A-Center, 561 U.S. at 68, 69, fn. 1.)¿The “clear and unmistakable” test reflects a “heightened¿standard of proof” that reverses the typical presumption in favor of the arbitration of disputes. (Ajamian v. CantorCO2e, L.P.¿(2012) 203 Cal.App.4th 771, 787.) 

Here, the arbitration provision states the arbitrator shall “decide all issues relating to the interpretation, construction, enforceability and applicability of this provision.”  (Ex. A to Dao Decl.)  This language delegates to the¿arbitrator questions of¿arbitrability and is clear and unmistakable evidence that the parties intended to arbitrate¿arbitrability. (See, e.g.,¿Malone v. Superior Court¿(2014) 226 Cal.App.4th 1551, 1560¿(delegation clause that provided “[t]he arbitrator has exclusive authority to resolve any dispute relating to the interpretation, applicability, or enforceability of this binding arbitration agreement” was clear and unmistakable agreement to arbitrate the question of arbitrability);¿Momot v. Mastro¿(9th Cir. 2011) 652 F.3d 982, 988¿(language that delegated authority to arbitrator to determine “the validity or application of any of the provisions of” the arbitration clause was a clear and unmistakable agreement to arbitrate the question of arbitrability).) 

Accordingly, the Court defers to the arbitrator the question of whether Plaintiff’s claims are within the scope of the arbitration agreement.   

Stay of Proceedings 

Code Civ. Proc. §1281.4 provides that if the court has ordered the arbitration of a controversy, it “shall, upon motion of a party to such action or proceeding, stay the action or proceeding until an arbitration is had in accordance with the order to arbitrate or until such earlier time as the court specifies.”  Pursuant to Section 1281.4, therefore, the Court stays this action pending conclusion of the arbitration proceedings.    

CONCLUSION 

For the foregoing reasons, the Court GRANTS AMHC’s motion to compel arbitration and issues a stay of the proceedings pending completion of the arbitration. 

 

DATED: June 29, 2023 ___________________________ 

Edward B. Moreton, Jr. 

Judge of the Superior Court