Judge: Frank M. Tavelman, Case: 24NNCV02181, Date: 2025-05-09 Tentative Ruling

Case Number: 24NNCV02181    Hearing Date: May 9, 2025    Dept: A

PETITION TO COMPEL ARBITRATION

NOTICE:

The Court is not requesting oral argument on this matter.  The Court is guided by California Rules of Court, Rule 3.1308(a)(1) whereby notice of intent to appear is requested.  Unless the Court directs argument in the Tentative Ruling, no argument is required and any party seeking argument should notify 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 argument is received.  

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

ALLEGATIONS: 

Simon Gharassimian (Plaintiff) brings this action against Mercedes Benz USA, Inc. (Mercedes) and Calstar Motors Inc. (Calstar) alleging violation of certain provisions of Civil Code § 1791.2, commonly known as the Song Beverly Act. Plaintiff alleges Calstar leased him a defective sold him a defective Mercedes Benz TRE QE5 (the Subject Vehicle) and thereafter Mercedes Benz refused to adequately repair or repurchase the vehicle in violation of Song Beverly. Plaintiff states causes of action for (1) Breach of Express Warranty, (2) Breach of Implied Warranty, (3) Violation of the Song-Beverly Act § 1793.2, and (4) Negligent Repair.

Before the Court is a motion by Mercedes to compel Plaintiff’s claims to arbitration. Calstar joins the motion. Plaintiff opposes and Mercedes 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.                 EVIDENTIARY OBJECTIONS

Plaintiff’s objection to the declaration of Mercedes Counsel, Angela Do, are sustained in part and overruled in part.  As to paragraph 4, the objection is SUSTAINED as the declarant would not have personal knowledge concerning the transaction and also calls for legal and factual conclusions for which such a declaration is improper. Counsel was not present during the transaction and thus the assertions lack personal knowledge.  The objection as to Exhibit A is OVERRULED.

III.              MERITS

The Court must first determine whether Mercedes has evidenced a valid arbitration agreement which applies to the claims Plaintiff assets. Mercedes’ motion is premised on a Motor Vehicle Lease Agreement (MLA) executed between Plaintiff and Calstar. (See Do Decl. Exh. A.) For reasons set forth below, the Court finds the MLA is sufficient to satisfy Mercedes’ burden to demonstrate an enforceable arbitration agreement. Briefly, the Court finds the language of the MLA is substantially different from those arbitration clauses in prior Court of Appeal cases which held that a manufacturer could not compel arbitration on the basis of an agreement to which it was not a signatory.

Authentication

The Court first addresses Plaintiff’s argument that the MLA was not authenticated. Plaintiff argues that the MLA is produced in connection with the declaration of Mercedes’ counsel, who does not attest to how they acquired the executed MLA. This is incorrect. The declaration to which the MLA does describe how the MLA was acquired. Mercedes’ counsel testifies that the MLA was acquired from Plaintiff, who refused to informally produce a copy and instead demanded Mercedes propound written discovery to obtain it. (Do Decl. ¶ 8.) Plaintiff’s argument that the MLA, which he produced, has not been authenticated is not persuasive.

 Third Party Beneficiary

The arbitration clause present in the MLA reads in relevant part:

Any 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, assigns, or the vehicle distributor, including Mercedes-Benz USA LLC (each a “Third-Party Beneficiary”), which arises out of or relates to ... this lease, or any resulting transaction or relationship arising out of this lease (including any such relationship with third parties who do not sign this contract) shall, at the election of either you, us, or a Third Party Beneficiary, be resolved by a neutral, binding arbitration and not by court action. Any claim or dispute is to be arbitrated on an individual basis and not by class action. The arbitration shall be administered by the American Arbitration Association, or by any other organization that you may choose, subject to our Third Party Beneficiary’s approval.

(Do Decl., Exh. A at p. 8.)

In moving to compel arbitration, Mercedes argues that the language of this clause is distinguishable from the language examined in Ochoa v. Ford Motor Company (2023) 89 Cal.App.5th 1324. Mercedes argues that this new language is sufficient to entitle them to compel arbitration as a third party nonsignatory. For reasons set forth below, the Court finds this argument persuasive.

The lease agreement in Ochoa read in relevant part,

Either you or we may choose to have any dispute between us decided by arbitration and not in court or by jury trial….[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 claims 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.

(Ochoa supra, 89 Cal.App.5th at 1330.)

The changes from the language in Ochoa and the MLA here are twofold. First, the MLA dispenses with the “employees, agents, successors or assigns” and instead explicitly states that Mercedes is a third party beneficiary (“…between you and us or any of our employees, agents, successors, assigns, or the vehicle distributor, including Mercedes-Benz USA LLC.”) As Plaintiff astutely observes however, mere identification of a party as a third party beneficiary is not sufficient to entitle that party to enforce the contract. The crucial determination is instead whether the contracting parties must have intended to benefit a third party and whether such intent appears on the terms of the agreement. (Id.)

Ochoa found that its arbitration provision did not evidence such intent. (Ochoa supra, at 1335.) Ochoa found that the language referencing third-parties was meant as a “further delineation of the subject matter of claims the purchasers and dealers agreed to arbitrate.” (Ochoa supra, at 1335.)  In other words, whether a contract contemplates claims against a third party and whether that contract intends to benefit that third party are two entirely separate questions. Ochoa went on to observe that the use of “at your or our election” language further underscored a lack of intent. (Id. at 1335.) While the clause contemplated claims arising from actions of a third party, its language only evidenced intent to allow either the dealership or the plaintiff to invoke arbitration. (Id.)

This brings the Court to the second major alteration of the arbitration language. The MLA states that arbitration may be invoked “…at the election of either you, us, or a Third Party Beneficiary…” rather than the language in Ochoa which was “either you or us”. In the Court’s view, this new language is sufficient to establish that the parties must have intended to benefit Mercedes in executing the MLA. This plain language clearly informs any signee that they, the dealer, or Mercedes can elect to invoke the arbitration clause. Plaintiff presumably read this MLA prior to signing the agreement and would have declined to enter into the contract if he did not consent to Mercedes being able to invoke arbitration. (See Inyere v. Wise Auto Group (2023) 87 Cal.App.5th 747, 846 [“It is hornbook law that failing to read an agreement before signing it does not prevent formation of a contract…. That settled rule cannot be evaded by adding, "... and if I had read the contract, I wouldn't've signed it." Plaintiffs' allegation as to why they did not read the contract before signing it --- i.e., that they were pressured to sign it quickly and not given time to read it --- is material only to whether enforcement of the agreement is barred by the defense of unconscionability”].)

In short, the Court finds the language of the MLA is sufficient to evidence the intent of the parties that Mercedes be entitled to compel arbitration. Mercedes has thus satisfied its burden to demonstrate the existence of valid arbitration agreement which binds Plaintiff’s claims. As such, the burden shifts to Plaintiff to demonstrate that the MLA is either false or unenforceable/unconscionable. Here, Plaintiff has presented no argument or evidence as to either factor, instead relying solely on their argument that Mercedes is not a third party beneficiary. The only argument Plaintiff interposes in addition to these are that Mercedes cannot enforce the contract as the result of their having waived the ability to arbitrate.

Waiver

In determining waiver, a court can consider ‘(1) whether the party’s actions are inconsistent with the right to arbitrate; (2) whether “the litigation machinery has been substantially invoked” and the parties “were well into preparation of a lawsuit” before the party notified the opposing party of an intent to arbitrate; (3) whether a party either requested arbitration enforcement close to the trial date or delayed for a long period before seeking a stay; (4) whether a defendant seeking arbitration filed a counterclaim without asking for a stay of the proceedings; (5) “whether important intervening steps [e.g., taking advantage of judicial discovery procedures not available in arbitration] had taken place”; and (6) whether the delay “affected, misled, or prejudiced” the opposing party.’ ” (Sobremonte v. Superior Court, 61 Cal.App.4th 980, 992.)

Generally, the determination of waiver is a question of fact, and the trial court’s finding. (Platt Pacific, Inc. v. Andelson (1993) 6 Cal.4th 307, 316.) Here, Plaintiff’s argument that Mercedes waived its right to arbitration is predicated entirely on the argument that Mercedes unduly delayed brining this motion and, in the interim, engaged in substantial litigation activity. The Court finds this argument is unsupported by the evidence. Mercedes appears to have engaged in preliminary discovery only to the extent required to determine the nature of the arbitration clause in the MLA. Further, Mercedes directly asserted as an affirmative defense that Plaintiff’s claims were barred by the existence of a valid arbitration agreement. All other litigation activity in the time between the adjudication of this motion and Mercedes Answer appears to have been initiated by Plaintiff (additional discovery and Plaintiff’s motion to compel further discovery responses.

Conclusion

The motion to compel arbitration is GRANTED. Mercedes and Calstar have sufficiently evidenced an enforceable arbitration agreement binding Plaintiff’s claims. Conversely, Plaintiff has failed to demonstrate the agreement is either false or unconscionable. Accordingly, this action is ordered stayed pending the resolution of 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 

Mercedes Benz USA, Inc.’s Motion to Compel Arbitration came on regularly for hearing on May 9, 2025, 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 GRANTED.  

ALL FUTURE DATES CURRENTLY SET ARE ADVANCED AND VACATED.  THIS ACTION IS ORDERED STAYED PENDING ARBITRATION.

STATUS CONFERENCE RE: ARBITRATION IS SET FOR MAY 13, 2026 AT 9:00 A.M. 

MERCEDES BENZ TO GIVE NOTICE.

IT IS SO ORDERED.