Judge Elaine W. Mandel, Case 22SMCV01191 2023-04-21 Tentative Ruling

Judge: Elaine W. Mandel, Case: 22SMCV01191, Date: 2023-04-21 Tentative Ruling

Case Number: 22SMCV01191 Hearing Date: April 21, 2023 Dept: P

Tentative Ruling

Stringer v. Nissan North America, Inc., Case No. 22SMCV01191

Hearing Date April 21, 2023

Defendant Nissan’s Motion to Compel Arbitration

Plaintiff Stringer purchased a 2019 Nissan Sentra and sues defendant Nissan North America, Inc. under the Song-Beverly Warranty Act, alleging the vehicle was defective and Nissan failed to repair it. Nissan moves to compel arbitration under the sales contract Stringer signed with the dealership, which is not a party, when she bought the vehicle.

California public policy favors arbitration. People v. Mapblebear, Inc. (2022) 81 Cal.App.5th 923, 930. Under the doctrine of equitable estoppel, a nonsignatory defendant can enforce an arbitration clause if the claims against it are intimately intertwined with and arise out of the underlying contract obligations. E.g., JSM Tuscany, LLC v. Superior Court (2011) 193 Cal.App.4th 1222, 1237.

The arbitration clause states “[a]ny 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 did not sign this contract) shall, at your or our election, be resolved by neutral, binding arbitration and not by a court action.” Rixit Decl., Exhibit A.

Nissan is a nonparty to the sales contract, but argues Stringer’s claims arise out of the contract, so she is equitably estopped under JSM Tuscany and other cases from avoiding arbitration.

Stringer argues a party invoking equitable estoppel must show wrongdoing by the opposite party, which Nissan fails to do. She argues that under Morgan v. Sundance, Inc. (2022) 142 S.Ct. 1708, any equitable estoppel standard that does not require a showing of wrongdoing – including the one set forth in JSM Tuscany – is improper, placing arbitration contracts on a “higher footing” than other agreements.

Morgan held that the federal policy favoring arbitration does not authorize courts to invent special, arbitration-preferring procedural rules favoring arbitration over litigation. The case does not directly address equitable estoppel. Stringer’s argument extrapolates from Morgan, arguing it should be interpreted to overrule California cases, such as JSM Tuscany, that allow third parties to enforce arbitration clauses when they are sued under a contract containing such a clause.

Tuscany and other equitable estoppel cases Nissan cites do not impose a special standard for parties seeking to compel arbitration. As Stringer correctly notes, the principle underlying the equitable estoppel doctrine is that a party should not be allowed to “take advantage of their own wrong.” In the California cases applying equitable estoppel in an arbitration context, courts concluded it would be wrong for a contracting party to seek to enforce parts of a contract against a third party while disclaiming other parts, such as an arbitration clause. The courts therefore reasoned the equitable estoppel doctrine can be used to halt this inequitable conduct. JSM Tuscany and similar cases do not apply a “bespoke” equitable estoppel standard to arbitration but use well-established equitable principles. Morgan does not overrule the California cases Nissan cites.

Stringer also argues her complaint does not rely on the terms of the underlying purchasing agreement, so Nissan, as a third-party, cannot enforce the agreement’s arbitration provision against her. Nissan acknowledges a split in authority as to this issue.

In Felisilda v. FCA US LLC (2020) 53 Cal. App.5th 486, the court found a claim under the Song-Beverly Act against a vehicle manufacturer was “intimately intertwined” with the underlying sales contract, since the case related to the condition of a car purchased and subject to a warranty under that contract.

However, this year’s second district Court of Appeal case Ford Motor Warranty Cases v. Ford Motor Company (2023) WL2768484 dealt with a set of facts generally identical to those at issue in Felisilda and the instant case. Id. *2. Ford explicitly disagreed with Felisilda, finding plaintiff’s claims under Song-Beverly were not based on the express contractual language of the sale agreement but relied on the manufacturer’s warranty. Ford concluded plaintiff’s claims were not intimately intertwined with the underlying contract and declined to impose arbitration.

This court, since it sits the second district and the facts herein are aligned, follows the more recent Ford holding. Plaintiff’s claims arise from statute and common law. They do not rely on any specific term in the sales agreement between Stringer and the dealership. As in Ford, plaintiff seeks to enforce the manufacturer’s warranty, not the sales warranty. As the dealer is not a party, it does not seem equitable to allow Nissan to invoke the arbitration clause in a contract to which it was not a party. The claims against Nissan are not intimately intertwined with the sale contract, so there is no equitable basis for Nissan to enforce the contract’s arbitration clause.

Plaintiff’s Evidentiary objection re defense counsel’s declaration: sustained for improper opinion and legal conclusion.

DENIED.