Judge: Frank M. Tavelman, Case: 23BBCV01751, Date: 2024-02-16 Tentative Ruling

Case Number: 23BBCV01751    Hearing Date: February 16, 2024    Dept: A

LOS ANGELES SUPERIOR COURT

NORTH CENTRAL DISTRICT - BURBANK

DEPARTMENT A

MOTION TO COMPEL ARBITRATION

NOTICE:

The Court is not requesting oral argument on this matter.  Pursuant to California Rules of Court, Rule 3.1308(a)(1) notice of intent to appear is required.  Unless the Court directs argument in the Tentative Ruling, no argument will be permitted unless a “party notifies all other parties and the court by 4:00 p.m. on the court day before the hearing of the party’s intention to appear and argue.  The tentative ruling will become the ruling of the court if no notice of intent to appear is received.”  

Notice may be given either by email at BurDeptA@LACourt.org or by telephone at (818) 260-8412.

ALLEGATIONS: 

Mauricio Hernandez (Plaintiff) brings this action against Toyota Motor Sales U.S.A. Inc. (Toyota) and TNH Motors, Inc (TNH) for claims arising out of the purchase of a 2022 Toyota Tacoma. The Complaint alleges several causes of action for violation of the Song-Beverly Consumer Warranty Act. Toyota is the manufacturer of the vehicle and TNH is the dealership from which it was purchased.

Before the Court is a joint motion by Toyota and TNH to compel arbitration of Plaintiff’s claims against them. Plaintiff has rendered no opposition to this motion.

ANALYSIS: 

I.                    LEGAL STANDARD 

C.C.P. § 1281.2 states: “[o]n petition of a party to an arbitration agreement alleging the existence of a written agreement to arbitrate a controversy and that a party thereto refuses to arbitrate such controversy, the court shall order the petitioner and the respondent to arbitrate the controversy if it determines that an agreement arbitrate the controversy exists.”

A party seeking to compel arbitration has the initial burden to prove, by a preponderance of the evidence, the existence of a valid and enforceable arbitration agreement. (Engalla v. Permanente Medical Group, Inc. (1997) 15 Cal.4th 951, 972.) If the moving party has met its initial burden, then the burden shifts to respondents to prove the falsity or unenforceability of the arbitration agreement. (Id.) 

“In determining whether an arbitration agreement applies to a specific dispute, the court may examine only the agreement itself and the complaint filed by the party refusing arbitration [citation]. The court should attempt to give effect to the parties' intentions, in light of the usual and ordinary meaning of the contractual language and the circumstances under which the agreement was made.”¿¿(Weeks v. Crow¿(1980) 113 Cal.App.3d 350, 353.)¿

The Plaintiff has declined to file an opposition to the Motions to Compel Arbitration.  Failure to file an opposition to the motion indicates the other parties' acquiescence that the motion is meritorious. California Rules of Court, Rule 8.54(c).

II.                 MERITS

Motion to Compel

The basis of Toyota and TNH’s motion is the Retail Installment Sale Contract (“Sales Contract”) signed by Plaintiff on November 17, 2021. (Ameripour Decl. Exh. 2.) The Sales Contract was made exclusively between Plaintiff and TNH. (Id.) The Sales Contract contained an arbitration clause (“Arbitration Agreement”) that reads, in relevant part, as follows.

EITHER [Plaintiff] OR [Dealer] MAY CHOOSE TO HAVE ANY DISPUTE BETWEEN [Plaintiff and Dealer] DECIDED BY ARBITRATION AND NOT IN COURT OR BY JURY TRIAL…

Any claim or dispute, whether in contract or 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… 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 [Plaintiff’s] or [Dealer’s] election be resolved by neutral, binding arbitration and not by a court action…

(Ameripour Decl. Exh. 2, p. 7.)

As between Plaintiff and TNH, the Court finds the claims to be arbitrable. “[T]he moving party bears the burden of producing prima facie evidence of a written agreement to arbitrate the controversy. The moving party can meet its initial burden by attaching to the motion or petition a copy of the arbitration agreement purporting to bear the opposing party's signature.” (Gamboa v. Northeast Community Clinic (2021) 72 Cal.App.5th 158, 165 [internal citations omitted].) “It is not necessary to follow the normal procedures of document authentication. If the moving party meets its initial prima facie burden and the opposing party does not dispute the existence of the arbitration agreement, then nothing more is required for the moving party to meet its burden of persuasion.” (Id. at 166 [internal citations omitted].) Here, TNH has produced prima facie evidence of an agreement to arbitrate which Plaintiff has failed to rebut.

Accordingly, TNH’s motion to compel arbitration is GRANTED.

However, the claims against Toyota remain apart from those against TNH because Toyota does not have a direct contractual agreement with Plaintiff containing an arbitration clause.

Toyota argues that it can enforce the arbitration agreement between Plaintiff and TNH because it is a contemplated third party within the meaning of the Arbitration Agreement. Toyota’s primary authority for this argument is the Fourth District Appellate Court decision in Felisilda v. FCA US LLC (2020) 53 Cal.App.5th 486. Felisilda concerned arbitration clauses in dealership contracts which are nearly identical to those used by various dealerships, including the one in this case. For some time, Felisilda was the only on-point precedent in these matters, and many courts employed its holding to compel arbitration of automobile manufacturer claims based on dealership contracts.

On July 19, 2023, the Second District Appellate Court rendered an opposite decision in Ochoa v. Ford Motor Company (2023) 89 Cal.App.5th 1324.  Ochoa disagreed with Felisilda and found manufacturers could not compel arbitration under equitable estoppel or as third party nonsignatories.

On July 19, 2023, the California Supreme Court granted review of the ruling in Ochoa. In granting review, the Supreme Court held that the decision in Ochoa may be cited for its persuasive value and to show a conflict in authority which would allow trial courts to exercise discretion in ruling on such motions. (Ochoa v. Ford Motor Co. (In re Ford Motor Warranty Cases) (July 19, 2023, No. S279969) [2023 Cal. LEXIS 4235].) “Where there is more than one appellate court decision, and such appellate decisions are in conflict the superior court can and must make a choice between the conflicting decisions” (Auto Equity Sales, Inc. v. Superior Court (1962) 57 Cal.2d 450, 456, citations and quotation marks omitted.)

The Court notes the arbitration clauses in Felisilda, Ochoa, and this case are virtually identical.

The rulings in Felisilda and Ochoa present conflicting opinions from the Fourth and Second Appellate districts respectively. However, since the Motion to Compel Arbitration is unopposed, the Court finds that Plaintiff has conceded that in this instance the Ochoa holding advocated by the Toyota should apply.

Accordingly, Toyota’s motion to compel arbitration is GRANTED.

Arbitration Stay - Granted

Once arbitration has been compelled, in whole or in part, a stay of proceedings is mandatory if the issues in the arbitration and the pending action overlap. (C.C.P. § 1281.4 (if a court “has ordered arbitration of a controversy which is an issue involved in an action or proceeding pending before a court of this State, the court in which such action or proceeding is pending 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.”)) 

“The purpose of the statutory stay [under section 1281.4] is to protect the jurisdiction of the arbitrator by preserving the status quo until arbitration is resolved. In the absence of a stay, the continuation of the proceedings in the trial court disrupts the arbitration proceedings and can render them ineffective.” (Federal Ins. Co. v. Superior Court (1998) 60 Cal.App.4th 1370, 1374-1375 (citations omitted).) 

As the Court grants the motion to compel arbitration, the Court orders the action stayed pending arbitration.

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RULING:

In the event the parties submit on this tentative ruling, or a party requests a signed order or the court in its discretion elects to sign a formal order, the following form will be either electronically signed or signed in hard copy and entered into the court’s records. 

ORDER 

Toyota Motor Sales U.S.A. Inc. and TNH Motors, Inc.’s Motion to Compel Arbitration came on regularly for hearing on February 16, 2024, with appearances/submissions as noted in the minute order for said hearing, and the court, being fully advised in the premises, did then and there rule as follows: 

TNH MOTORS INC.’S MOTION TO COMPEL ARBITRATION IS GRANTED, THE CLAIMS AGAINST THEM ARE STAYED PENDING ARBITRATION.

TOYOTA MOTOR SALES U.S.A. INC.’S MOTION TO COMPEL ARBITRATION IS GRANTED AND ITS MOTION TO STAY PROCEEDINGS IS GRANTED.

THE CASE MANAGEMENT CONFERENCE SCHEDULED FOR FEBRUARY 16, 2024 IS VACATED.

A STATUS CONFERENCE RE: ARBITRATION IS SCHEDULED FOR SEPTEMBER 18, 2024 AT 9:00 A.M.

UNLESS ALL PARTIES WAIVE NOTICE, TOYOTA MOTOR SALES U.S.A. INC. TO GIVE NOTICE.

IT IS SO ORDERED. 

DATE:  February 16, 2024                            _______________________________ 

                                                                        F.M. TAVELMAN, Judge 

Superior Court of California 

County of Los Angeles