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 2023 Mercedes Benz GLC300C4.  Plaintiff Erika Janes leased the allegedly defective car.  Defendant Mercedes-Benz USA, LLC (“Mercedes-Benz”) issued a written warranty for the car.   

Plaintiff claims the car was delivered with serious defects and non-conformities to warranty, including “the Vehicle displaying blind spot assist inoperative message, 360 sensor issues, repeated airbag warning light illumination, inoperative volume button, faulty heater, and other serious nonconformities to warranty.” 

Plaintiff signed a Motor Vehicle Lease Agreement (“Lease”) containing an arbitration provision.  (Ex. 2 to Ameripour Decl.)  Mercedes Benz is not a signatory to the Lease.  (Id. at p.1.)   

The agreement to arbitrate is prominently displayed with a distinctive heading that states “IMPORTANT ARBITRATION DISCLOSURES.”  (Ex. 2 to Ameripour Decl. at p. 4.)  The provision states that “if either you or we choose, any dispute between you and us will be decided by arbitration and not in court.”  (Id.)  It further states that “[a]ny claim or dispute, whether in contract, tort or otherwise (including any dispute over the interpretation, scope or validity of this lease, arbitration section or the arbitrability of any issue), between you and us or any of our employees, agents, successors or assigns, or the vehicle distributor, including Mercedes Benz-USA, LLC (each a “Third Party Beneficiary”), which arises out of or relates to a credit application, this lease, or any resulting transaction or relationship arising out of this lease shall, at the election of either you, or us, or our successors or assigns, be resolved by a neutral, binding arbitration and not by a court action.”  (Id.)   

The operative complaint asserts claims for (1) breach of express warranty, (2) breach of implied warranty, (3) violation of the Song-Beverly Act Section 1793.2 and (4) violation of Civil Code Section 1796.5. 

This hearing is on Mercedes Benz’s motion to compel arbitration.  Mercedes Benz seeks to compel Plaintiff to arbitrate her claims and for a stay of the proceedings pending the completion of arbitration.  Mercedes Benz argues that while it is a non-signatory to the Lease, it is an intended third party beneficiary and therefore has standing to enforce the arbitration agreement.  Mercedes Benz also argues that it may enforce the arbitration provision under the equitable estoppel doctrine.   

REQUEST FOR JUDICIAL NOTICE 

Mercedes Benz requests judicial notice of the Complaint filed in this action.  The request is denied.  It is¿unnecessary¿to ask the court to take judicial notice of materials previously filed in this case.  A party may “simply¿call the court’s attention to such papers.”  (Weil & Brown, Cal. Practice Guide: Civil Procedure Before Trial (The Rutter Group 2019) ¶ 9:53.1a.) 

LEGAL STANDARD 

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.)¿ “California law, like [federal law], reflects a strong policy favoring arbitration agreements[.]”¿ (Wagner Const. Co. v. Pacific Mechanical Corp. (2007) 41 Cal.4th 19, 31 (internal quotations omitted).)  

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

DISCUSSION 

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 argues there is no agreement to arbitrate between the parties.  Plaintiff argues that the agreement between Plaintiff and Defendant is not the lease agreement, but is a separate, independent warranty and repair agreement, and there is no arbitration provision in the warranty or repair agreement.  Citing Marsch v. Williams (1994) 23 Cal.App.4th 250, 256, Plaintiff argues that “[w]here ... the parties have separate contractual relationships ... an arbitration clause which governs one contractual relationship cannot be imposed in the other relationship,” absent the incorporation of one contract’s terms into the other.   

But Plaintiff’s argument would render meaningless the arbitration clause’s reference to Mercedes Benz.  Under Plaintiff’s theory, there is no scenario under which Mercedes Benz could take advantage of the arbitration clause, even though the arbitration clause specifically refers to it.  That cannot be correct.   

The Court then turns to the question of whether Mercedes-Benz (a non-signatory to the Lease) can seek to enforce the arbitration agreement as a third party beneficiary.  The Court agrees with Mercedes-Benz that it is a third party beneficiary to the arbitration agreement.   

“A third party beneficiary is someone who may enforce a contract because the contract is made expressly for his benefit.” (Jensen v. U-Haul Co. of California¿(2017) 18 Cal.App.5th 295, 301; see also¿Civ. Code, § 1559¿(“[a] contract, made expressly for the benefit of a third person, may be enforced by him … .”).)  A person “only incidentally or remotely benefited” from a contract is not a third party beneficiary.  (Lucas v. Hamm¿(1961) 56 Cal.2d 583, 590 [15 Cal. Rptr. 821, 364 P.2d 685].)  Thus, “the mere fact that a contract results in benefits to a third party does not render that party a third party beneficiary.” (Jensen, 18 Cal.App.5th at 302.)  Nor does knowledge that the third party may benefit from the contract suffice. ¿(Goonewardene v. ADP, LLC¿(2019) 6 Cal.5th 817, 830.)  Rather, the parties to the contract must have¿intended¿the third party to benefit.  (Hess v. Ford Motor Co.¿(2002) 27 Cal.4th 516, 524¿(putative third party’s rights under a contract are predicated upon the contracting parties’ intent to benefit it).) 

To show the contracting parties intended to benefit it, a third party must show that, under the express terms of the contract at issue and any other relevant circumstances under which the contract was made, (1) “the third party would in fact benefit from the contract”; (2) “a motivating purpose of the contracting parties was to provide a benefit to the third party”; and (3) permitting the third party to enforce the contract “is consistent with the objectives of the contract and the reasonable expectations of the contracting parties.” (Goonewardene, 6 Cal.5th at 830.)  Application of these factors shows Merdeces-Benz is a third-party beneficiary.   

Here, the Court need go no further than the language of the Lease itself.  The Lease specifically names Mercedes Benz as an intended third-party beneficiary of the arbitration provision.  Accordingly, Mercedes Benz has standing to enforce the arbitration provision as a third-party beneficiary.   

Plaintiff relies on Martha Ochoa v. Ford Motor Company (2023) 89 Cal.App.5th 1324, to argue that manufacturers can never be third party beneficiaries of a sales contract.  But Ochoa is distinguishable because there, the manufacturer was not specifically named in the arbitration clause as a beneficiary.  Instead, the arbitration agreement in Ochoa vaguely referred to unidentified “third parties who did not sign this contract.”  (Id. at 1330.)  Ochoa also supports the Court’s rejection of Plaintiff’s theory that because the warranty and lease contract are separate, the manufacturer cannot be a third-party beneficiary to an arbitration clause in the lease contract.  If that were correct, there would have been no need in Ochoa to even consider the issue of whether the manufacturer is a third-party beneficiary.     

Marsch v. Williams also does not support Plaintiff’s argument.  Marsch involves the different question of whether terms in one contract can be imported into another simply because both contracts are between the same parties.  Marsch did not deal with the question of third-party beneficiaries.  Obviously, one cannot be a third-party beneficiary to one’s own contract.     

Plaintiff also points to recent appellate court cases including Ochoa that have held that a non-signatory manufacturer cannot enforce an arbitration agreement in a sales contract under the doctrine of equitable estoppel.  But the Court need not even reach the issue of equitable estoppel when it has concluded that Mercedes Benz is a third-party beneficiary.   

Plaintiff then argues that the claims it has raised do not fall within the scope of the arbitration agreement.  But the parties agreed that the issue of arbitrability would be decided by the arbitrator.  The arbitration clause states that “any dispute over the interpretation, scope, or validity of this lease, arbitration section or the arbitrability of any issue” would be decided by the arbitrator.   

“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.’ [Citations.] The ‘clear and unmistakable’ test reflects a ‘heightened¿standard of proof’ that reverses the typical presumption in favor of the arbitration of disputes.¿[Citation.]” (Aanderud v. Superior Court¿(2017) 13 Cal.App.5th 880, 892.) 

Here, the delegation clause is clear and unmistakable.  It clearly delegates the “arbitrability of the issue” to the arbitrator.  Moreover, Plaintiff has not shown that the delegation clause itself, as opposed to the arbitration agreement as a whole, is revocable due to fraud, duress or unconscionability. (Malone, 226 Cal.App.4th at 1559-1560 (the delegation clause itself must be unconscionable).)  As the party opposing arbitration, Plaintiff bears the burden of proof to show fraud, duress or unconscionability, and it failed to do so here.  (See e.g., Ramirez, 16 Cal.5th at 492.)  

Plaintiff also argues that the arbitration agreement is not properly authenticated because “Defendant provides no declaration from any dealership employee as to the authenticity of the signature of the dealership nor as to the terms and conditions of the lease agreement.”  Notably, Plaintiff does not challenge that he in fact signed the lease agreement.  In any event, for purposes of a petition to compel arbitration, it is not necessary to follow the normal procedures of document authentication. “The court shall order the petitioner and the respondent to arbitrate the controversy if it determines that an¿agreement to arbitrate the controversy exists. . . .” (Code Civ. Proc. § 1281.2)  The statute does not require the petitioner to introduce the agreement into evidence.  A plain reading of the statute indicates that as a preliminary matter the court is only required to make a finding of the agreement’s existence, not an evidentiary determination of its validity.  (Condee v. Longwood Management Corp. (2001) 88 Cal.App.4th 215, 218-219.)  This is further supported by the fact that the moving party need not even produce a copy of the arbitration agreement but may simply set forth its terms.  (Gamboa, 72 Cal.App.5th at 165.)¿ 

Lastly, pursuant to 9 U.S.C. § 3, as well as Code Civ. Proc. § 1281.4, if an application has been made to a court of competent jurisdiction 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.  Accordingly, the Court stays the instant case pending the outcome of the arbitration.   

CONCLUSION 

For the foregoing reasons, the Court GRANTS Defendant Mercedes-Benz’s motion to compel arbitration and for a stay.   

DATED: April 30, 2025 ___________________________ 

Edward B. Moreton, Jr. 

Judge of the Superior Court