Judge: Frank M. Tavelman, Case: 23BBCV02125, Date: 2024-02-23 Tentative Ruling

Case Number: 23BBCV02125    Hearing Date: March 22, 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: 

Ben and Nina Kass (Plaintiffs) bring this action against Hyundai Motor America (Hyundai) for claims arising out of the purchase of a 2020 Hyundai Santa Fe (the Subject Vehicle). The Complaint alleges several causes of action for violation of the Song-Beverly Consumer Warranty Act.

Hyundai now moves to compel Plaintiffs’ claims against them to arbitration. Hyundai argues these claims are subject to arbitration pursuant to the agreement contained in the Subject Vehicle’s “Owner’s Handbook & Warranty Information”. Plaintiffs oppose the motion and Hyundai replies.

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.) 

II.                 MERITS

The burden of production as to this finding shifts in a three-step process. (Gamboa v. Northeast Community Clinic (2021) 72 Cal.App.5th 158, 165.) First, the moving party bears the burden of producing prima facie evidence of a written agreement to arbitrate, which can be met by attaching a copy of the arbitration agreement purporting to bear the opponent’s signature or by setting forth the agreement’s provisions. (Id.) If the moving party meets this burden, the opposing party bears, in the second step, the burden of producing evidence to challenge its authenticity. (Id.) If the opposing party produces evidence sufficient to meet this burden, the third and final step requires the moving party to establish, with admissible evidence, a valid arbitration agreement between the parties. (Id.)

Hyundai, as the moving party, necessarily bears the burden of proving the existence of a valid arbitration agreement by a preponderance of the evidence. Hyundai offers a copy of the “Owner’s Handbook & Warranty Information” it states, “accompanied the sale of the vehicle”. (Willette Decl. ¶ 3, Exh. B.) The arbitration language in the warranty states:

If you purchased or leased your Hyundai vehicle in the State of California, you and we each agree that any claim or disputes between us (including between you and any of our affiliated companies) related to or arising out of your vehicle purchase, use of your vehicle, the vehicle warranty, representations in the warranty, or the duties contemplated under the warranty, including without limitation claims related to the failure to conform a vehicle to warranty, failure to repurchase or replace your vehicle, or claims for a refund or partial refund of your vehicle’s purchase price (excluding personal injury claims), shall be resolved by binding arbitration at either your or our election, even if the claim is initially filed in a court of law…

IF YOU PURCHASED OR LEASED YOUR VEHICLE IN CALIFORNIA, YOUR WARRANTY IS MADE SUBJECT TO THE TERMS OF THIS BINDING ARBITRATION PROVISION. BY ACCEPTING BENEFITS UNDER THIS WARRANTY, INCLUDING HAVING ANY REPAIRS PERFORMED UNDER WARRANTY, YOU AGREE TO BE BOUND BY THESE TERMS. IF YOU DO NOT AGREE WITH THESE TERMS, PLEASE CONTACT US AT OPT-OUT@HMAUSA.COM WITHIN THIRTY (30) DAYS OF YOUR PURCHASE OR LEASE TO OPT-OUT OF THIS ARBITRATION PROVISION.

Despite their presentation of the arbitration agreement in the Owner’s Manual, the Court finds Hyundai has not shown prima facie evidence of a valid agreement to arbitrate.

“To form a valid contract there must be a meeting of the minds, i.e., mutual assent. Mutual assent is determined under an objective standard applied to the outward manifestations or expressions of the parties, i.e., the reasonable meaning of their words and acts.” (Moritz v. Universal City Studios LLC (2020) 54 Cal.App.5th 238, 246 [internal citations and quotation marks omitted].) Mutual assent is determined under an objective standard applied to the outward manifestations or expressions of the parties, i.e., the reasonable meaning of their words and acts …’” (Chicago Title Ins. Co. v. AMZ Ins. Services, Inc. (2010) 188 Cal.App.4th 401, 422.)

Here, there is no signature on the agreement to arbitrate, nor is there a place to provide one or any other mechanism for an affirmative assent from the buyer. This alone is not fatal if Hyundai had shown that Plaintiffs were made aware of the arbitration agreement’s existence, but Hyundai has not. Hyundai makes no representations as to where the Owner’s manual was located or if Hyundai made its existence known to Plaintiffs at the time of purchase. The most Hyundai has contended is that the Warranty Booklet accompanied the sale of the Subject Vehicle. This is insufficient and fails to explain whether it was provided before the sale of the Subject Vehicle or even if it was provided before Plaintiffs took the Subject Vehicle in to Hyundai’s authorized repair facilities. Without a signature or an assertion that Plaintiff received the agreement, Hyundai has not shown a valid arbitration agreement exists.

Estoppel

Hyundai argues that Plaintiffs should be estopped from asserting that the absence of a signature on a written contract precludes the enforcement of a contract’s arbitration clause. Hyundai argues that Plaintiffs, by virtue of bringing the Subject Vehicle into Hyundai’s authorized repair facilities, availed themselves of the contract’s benefits.

In support of this argument Hyundai cites Boucher v. Alliance Title Co., Inc. which held that “[A] party may be estopped from asserting that the lack of his signature on a written contract precludes enforcement of the contract’s arbitration clause when he has consistently maintained that other provisions of the same contract should be enforced to benefit him…” (Boucher v. Alliance Title Co., Inc. (2005) 127 Cal.App.4th 262, 269)

The Court finds Boucher distinguishable. Boucher concerned a motion to compel an employee to arbitrate his labor claims. (Id. at 265.) The Boucher court considered a situation in which a parent corporation sought to compel arbitration pursuant to an agreement the employee signed with a subsidiary. (Id. 269.) In Boucher, there was no question as to the existence of a valid arbitration agreement. The facts addressed by the California Court of Appeal’s decision clearly indicate that the employee was presented and signed the agreement. (Id. at 265.)

Here, Hyundai has not shown by a preponderance of the evidence that a valid agreement to arbitrate of which Plaintiffs availed themselves. Plaintiffs are not simply averring that the agreement isn’t signed, they are stating that they were not made aware that it existed. Further, Hyundai has not shown that any of Plaintiffs’ actions were a knowing attempt to directly benefit from the contract (See Crowley Maritime Corp. v. Boston Old Colony Ins. Co. (2008) 158 Cal.App.4th 1061, 1070 [“[A] nonsignatory ‘is estopped from avoiding arbitration if it knowingly seeks the benefits of the contract containing the arbitration clause.”].)

Conclusion

The Court finds that Hyundai has not carried its initial burden of demonstrating a valid and enforceable arbitration agreement by a preponderance of the evidence. Accordingly, the motion to compel arbitration is DENIED.

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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 

Hyundai Motor America’s Motion to Compel Arbitration came on regularly for hearing on March 22, 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: 

THE MOTION TO COMPEL ARBITRATION IS DENIED.

THE CASE MANAGEMENT CONFERENCE IS CONTINUED TO JULY 2, 2024.

UNLESS ALL PARTIES WAIVE NOTICE, HYUNDAI TO GIVE NOTICE.  

IT IS SO ORDERED. 

DATE:  March 22, 2024                            _______________________________ 

                                                                        F.M. TAVELMAN, Judge 

Superior Court of California 

County of Los Angeles