Superior Court of California 

County of Los Angeles – West District  

Beverly Hills Courthouse / Department 205 

 

 

 

BACKGROUND 

 

  This case arises from a dispute over an allegedly defective Honda Odyssey.  Plaintiffs Raman Nourizad and Maytal Nourizad leased a new 2018 Honda Odyssey which was manufactured and/or distributed by Defendant American Honda Motor Co., Inc. (“AHMC”). (Compl. ¶ 6.)  Plaintiffs entered into a written warranty contract with AHMC which included bumper-bumper warranty, powertrain warranty, and emission warranty.  (Compl. ¶¶ 6-7.)   

During the warranty period, the car contained or developed defects including a defective infotainment system, seat belts, electrical systems, engine and body.  (Compl. ¶ 11.)  Plaintiffs provided AHMC and its representatives an opportunity to service or repair the car.  (Compl. ¶ 23.)  AHMC was unable and/or failed to service the car within a reasonable number of attempts.  (Compl. ¶ 26.)  

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 the implied warranty of merchantability, in violation of Civil Code Sections 1791.1, 1794 and 1795.5, and (5) fraudulent inducement-concealment.       

Plaintiffs leased the car pursuant to a closed-ended motor vehicle lease agreement (the “Agreement”).  (Ex. 1 to Hartmann 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 as a third party beneficiary.   

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. 1 to Hartmann 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.)  

REQUEST FOR JUDICIAL NOTICE 

Plaintiffs request judicial notice of the following opinions:  (1) Ford Motor Warranty Cases (Cal. Ct. App. Apr. 4, 2023) 89 Cal.App.5th 1324 (“Ochoa v. Ford”), (2) Montemayor et al. v. Ford Motor Company, 92 Cal.App.5th 958 (Cal. Ct. App. June 26, 2023) (“Montemayor”), (3) Kielar v. The Superior Court of Placer County, 94 Cal.App. 5th 614 (Cal. Ct. App. August 16, 2023) (“Kielar”), (4) California Court of Appeal, Third Appellate District’s August 28, 2023 Response to Petition for Writ of Mandate in Campos et al. v. The Superior Court of Butte County, No. C098848, (5) California Court of Appeal, Third Appellate District’s August 28, 2023 Response to Petition for Writ of Mandate in Ortiz et al. v. The Superior Court of Sacramento County, No. C099135, and (6) Yeh v. Superior Ct. of Contra Costa Cnty., 95 Cal.App.5th 264 (Cal. Ct. App. Sept. 6, 2023) (“Yeh”).  The Court denies the request.  There is¿no need to seek¿judicial notice of court opinions, at least when they are statements of domestic law; the requesting party can simply cite the cases.  (See, e.g., Mangini v. R J. Reynolds Tobacco Co. (1994) 7 Cal. 4th 1057, 1064,¿overruled on other grounds by¿In re Tobacco Cases II (2007) 41 Cal. 4th 1257.)¿ 

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. 1 to Hartmann 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 non-signatory 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 an express 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).)   

Plaintiffs cite to cases holding that a non-signatory manufacturer cannot invoke the arbitration provision in a lease agreement because a warranty claim against a manufacturer is not inextricably intertwined with a lease agreement.  (Opp. at 2-4.)  But the leading case Plaintiffs cite specifically distinguishes the situation here where AHMC is an expressly named third-party beneficiary of the arbitration provision in Plaintiffs’ lease agreement.  In Ford Motor Warranty Cases (2023) 89 Cal.App.5th 1324, the court stated that the manufacturer, Ford Motor Company (“FMC”), could not enforce the arbitration provision at issue because it was not named in the contract, and was therefore not an intended beneficiary of the contract.  However, the Court specifically stated that the result would be different and arbitration could be compelled by the manufacturer, if the manufacturer had been expressly named in the arbitration provision.  (Id. at 1339.)  The Court stated that “[i[f the signatories had intended to benefit FMC, such a purpose would have been easy to articulate.  They could have simply named FMC—directly or by class as the vehicle’s manufacturer—as a person entitled to compel arbitration.  But they did not.”  (Id.)  That is exactly what the lease agreement here does – it expressly names AHMC as a party that is entitled to enforce the arbitration provision in the lease agreement.  

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. 1 to Hartmann 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.   

Waiver 

Plaintiffs argue AHMC has waived its right to arbitrate the dispute.  The Court disagrees. 

Plaintiffs argue that AHMC could have filed its motion in July 2023 when Plaintiffs provided a copy of the lease agreement, and thus AHMC unreasonably delayed nearly a year to file the motion to compel arbitration (in May 2024.)  But Plaintiffs produced only a portion of the lease agreement which did not contain the operative arbitration provision.  (Ex. 3 to Hartmann Reply Decl.)  AHMC received a complete copy of the lease agreement from the dealer on May 3, 2024 and filed its motion to compel arbitration and stay action on May 10, 2024.  (Harmann Reply Decl. ¶ 2.)  Accordingly, there was no unreasonable delay. 

The parties dispute whether waiver can occur in the absence of prejudice.  Plaintiffs argue that unreasonable delay alone can support a finding of waiver, and there is no requirement to show prejudice.  Meanwhile, AHMC argues that the presence or absence of prejudice is a determinative issue.  The Court need not resolve this dispute as it concludes there was no unreasonable delay. 

Plaintiffs also argue that AHMC waived its right to compel arbitration because it participated in brief discovery.  The basic rule in California is that waiver does not occur by mere participation in litigation. (Keating v. Superior Court (1982) 31 Cal.3d 584, 605.).  For waiver to occur as the result of participation in litigation, “there must be judicial litigation of the merits of arbitrable issues.” (Id.).  The mere service of discovery, without obtaining any information about the other side’s case that could not have been gained in arbitration, does not constitute waiver of arbitration. (See, e.g. St. Agnes Medical Center v. PacificCare of Cal. (2003) 31 Cal.4th 1187, 1195.)  

Here, AHMC has only served limited discovery requests, seeking repair records and the information allowing it to determine if an enforceable agreement to arbitrate exists.  (Ex. B to Hartmann Reply Decl.)  Further, AHMC’s responses to Plaintiffs’ discovery requests specifically state that AHMC will be filing a Motion to Compel Arbitration and that AHMC will not respond to discovery on the merits until the motion is resolved.  (Ex. C to Hartmann Reply Decl.)  There is no claim that AHMC attempted to take discovery not otherwise available in arbitration.  Accordingly, AHMC did not act in any way fundamentally inconsistent with the right to compel arbitration.   

Unconscionability 

The Court must next consider whether the arbitration agreement is unconscionable.  Unconscionability generally includes the absence of meaningful choice on the part of one of the parties together with contract terms that unreasonably favor the other party. (Carboni v. Arrospide (1991) 2 Cal.App.4th 76, 82-83.)  Unconscionability has both a “procedural” and a “substantive” element.  (A & M Produce Co. v. FMC Corp. (1982) 135 Cal.App.3d 473, 486.)  An agreement to arbitrate is unenforceable only if both procedural and substantive unconscionability is shown. (Stirlen v. Supercuts, Inc. (1997) 51 Cal.App.4th 1519, 1533.)   

Procedural unconscionability focuses on whether there is “oppression” arising from an inequality of bargaining power or “surprise” arising from buried terms in a complex printed form. (Id. at 1280.)  Substantive unconscionability addresses the existence of overly harsh or one-sided terms.  (Id.)   

Plaintiff has the burden of proving both procedural and substantive unconscionability. (Crippen v. Central Valley RV Outlet. Inc. (2004) 124 Cal.App.4th 1159, 1165).  Both, however, need not be present to the same degree.  A sliding scale is applied so that the “more substantively oppressive the contract term, the less evidence of procedural unconscionability is required to come to the conclusion that the term is unenforceable, and vice versa.” (Morris v. Redwood Empire Bancorp (2005) 128 Cal.App.4th 1305, 1317; see also A & M Produce Co., 135 Cal.App.3d at 486.)   
Here, while there is unequal bargaining power between the parties, there is no lack of disclosure of the arbitration agreement.  (Robinson v. City of Mateca (2000) 78 Cal.App.4th 452, 459 (“Procedural unconscionability requires an inequality in bargaining power accompanied by lack of disclosure of material provisions.”)  There are two references to the arbitration provision in the lease agreement.  One contains only two simple, clear sentences:  “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, including the method of opting out of arbitration.”  (Id.)  The other provision appears under the prominent heading “ARBITRATION: PLEASE READ THIS SECTION CAREFULLY.”  (Ex. 1 to Hartmann Decl.)   

In any event, “a finding of procedural unconscionability does not mean that a contract will not be enforced, but rather that courts will scrutinize the substantive terms of the contract to ensure they are not manifestly unfair or one-sided.” (Gentry v. Superior Court (2007) 42 Cal.4th 443, 469.)   We now address whether the Agreement is substantively unconscionable. 

“Substantive unconscionability focuses on the one-sidedness or overly harsh effect of the contract term or clause.”  (Harper, 113 Cal.App.4th at 1406-1407.)  The agreement’s terms are not one-sided.  The agreement states that either party is bound to arbitrate the disputes:  “The parties agree that any unresolved disputes shall be submitted to arbitration in accordance with the Arbitration clause (Section 52).”  (Ex. 1 to Hartmann Decl.)  “You, HONDA or any involved third party may pursue a Claim.”  (Id.)  “‘Claim’ 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.) “YOU or HONDA may select arbitration with American Arbitration Association, JAMS or National Arbitration and Mediation.”  (Id.) 

Plaintiff also argues that the arbitration provision is unenforceable on public policy grounds because it impedes the enforcement of the Song-Beverly Act.  Plaintiffs do not cite any authority, and the Court has found none, that holds that enforcement of an otherwise valid arbitration clause is somehow against public policy merely because the claims are brought under the Song-Beverly Act.  Numerous cases have been brought before the California Courts of Appeal dealing with arbitration clauses in Song-Beverly Act claims, and the courts have not refused to enforce them on the ground the claims involve the Song-Beverly Act.  Plaintiff’s position cannot be reconciled with the existing body of case law compelling arbitration in Song-Beverly cases.¿ (See, e.g.,¿Fikhman v. BMW of N. Am. LLC (C.D. Cal. Oct. 15, 2019) 2019 U.S. Dist. LEXIS 216891, 2019 WL 6721626, at *3¿(order granting motion to compel arbitration in Song-Beverly case);¿Min Soon Lee v. BMW of N. Am., LLC (C.D. Cal. Apr. 10, 2020) 2020 U.S. Dist. LEXIS 87160, 2020 WL 2405253, at *5¿(same); Vargas-Lopez v. Hyundai Motor Am. (C.D. Cal. Feb. 13, 2023) 2023 U.S. Dist. LEXIS 24935¿*¿at *21 (same).) 

In sum, the Court finds that there is no procedural or substantive unconscionability. 

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 14, 2024 ___________________________ 

Edward B. Moreton, Jr. 

Judge of the Superior Court