Judge: Gail Killefer, Case: 20STCV43571, Date: 2023-11-16 Tentative Ruling
Case Number: 20STCV43571 Hearing Date: November 16, 2023 Dept: 37
HEARING DATE: Thursday, November 15, 2023
CASE NUMBER: 20STCV43571
CASE NAME: Alexandra Spencer, et al. v. Subaru of America
MOVING PARTY: Plaintiffs Alezandra Spencer
and Matthew Spencer
OPPOSING PARTY: Defendant Subaru of America
TRIAL DATE: N/A
PROOF OF SERVICE: OK
PROCEEDING: Motion for Reconsideration
of October 1, 2021, Order
OPPOSITION: 2 November 2023
REPLY: 8
November 2023
TENTATIVE: Plaintiffs’ Motion for Reconsideration of October
1, 2021, Order is granted.
Background
This is a lemon law action arising out of the lease
of a 2018 Subaru Outback (the “Vehicle”) by Alexandra Spencer and Matthew
Spencer (“Plaintiffs”) from Defendant Subaru Sherman Oaks (“Subaru SO”) and
manufactured by Defendant Subaru of America, Inc. (“Subaru”). Plaintiffs allege
that they received various warranties in connection with the Vehicle in which
Defendants undertook to preserve or maintain the performance of the Vehicle and
to repair the Vehicle in the event of any defects during the warranty period.
Plaintiffs allege that the Vehicle developed numerous defects during the
warranty period, including but not limited to defects related to the continuously
variable transmission (“CVT”), transmission, android play and voice
recognition. Further, Plaintiffs allege that the Defendants failed to repair
defects to the Vehicle when it was presented to Defendants and their authorized
representatives for repair.
Plaintiffs’ operative Complaint alleges six causes of
action: (1) violation of Civil Code § 1793.2(d), (2) violation of Civil Code §
1793.2(b), (3) violation of Civil Code § 1793.2(a)(3), (4) breach of express
written warranty (Civil Code § 1791.2(a), (5) breach of the implied warranty of
merchantability, and (6) fraud.
On June 10, 2021, Defendant Subaru SO was dismissed
from the action.
On October 1, 2021, the court granted Defendant
Subaru’s Motion to Compel Arbitration. Plaintiffs now seek reconsideration of
that Order. Defendant opposes the
motion.
I. Legal Standard
CCP § 1008 states, in pertinent part:¿¿¿¿
¿¿¿
(a) When an
application for an order has been made to a judge, or to a court, and refused
in whole or in part, or granted, or granted conditionally, or on terms, any
party affected by the order may, within 10 days after service upon the
party of written notice of entry of the order and based upon new or different
facts, circumstances, or law, make an application to the same judge or court
that made the order, to reconsider the matter and modify, amend, or revoke the
prior order. The party making the application shall state by affidavit what
application was made before, when and to what judge, what order or decisions
were made, and what new or different facts, circumstances, or law are claimed
to be shown.¿¿¿
¿¿
(b) A party who
originally made an application for an order which was refused in whole or in
part, or granted conditionally or on terms, may make a subsequent application
for the same order upon new or different facts, circumstances, or law, in which
case it shall be shown by affidavit what application was made before, when and
to what judge, what order or decisions were made, and what new or different
facts circumstances, or law are claimed to be shown. For a failure to comply
with this subdivision, any order made on a subsequent application may be
revoked or set aside on an ex parte motion.¿¿¿¿
¿¿
(c) If a court at any time determines that there
has been a change of law that warrants it to reconsider a prior order it
entered, it may do so on its own motion and enter a different order.
(d) A violation of this section may
be punished as a contempt and with sanctions as allowed by Section 128.7. In
addition, an order made contrary to this section may be revoked by the judge or
commissioner who made it, or vacated by a judge of the court in which the
action or proceeding is pending.
¿¿
(e)¿This
section specifies the court’s jurisdiction with regard to applications for
reconsideration of its orders and renewals of previous motions, and applies to all applications to reconsider any order of a
judge or court, or for the renewal of a previous motion, whether the order
deciding the previous matter or motion is interim or final. No application to
reconsider any order or for the renewal of a previous motion may be considered
by any judge or court unless made according to this section. . . .
II. Request for Judicial Notice
The Court may take judicial notice
of records of any court of record of the United States. (Evid. Code, §
452(d)(2).) However, the court may only judicially notice the existence of the
record, not that its contents are the truth. (Sosinsky v. Grant (1992) 6
Cal.App.4th 1548, 1565.)
Plaintiffs request judicial
notice of the following:
1)
Kielar v. Superior Court of Placer County
(2023) 94 Cal.App.5th 614 (“Kielar”), a true and correct copy attached
hereto as Exhibit A.
2)
Ford Motor Warranty Cases (2023) 89
Cal.App.5th 1324 (“Ochoa v. Ford”), a true and correct copy attached
hereto as Exhibit B.
3)
Rosanna Montemayor et al. v. Ford Motor
Company (2023) 92 Cal.App.5th 958 (“Montemayor”), a true and correct
copy attached hereto as Exhibit C.
4)
Jaquelyn Yeh et al. v. Superior Court of
Contra Costa County (Cal.Ct.App., Sept. 6, 2023) A166537; 2023 WL 5741703
(“Yeh”), a true and correct copy attached hereto as Exhibit D.
5)
Third District Court of Appeal’s response to a
Petition for Writ of Mandate in Ortiz et al. v. Superior Court of Sacramento
County (C099135); notice sent to Superior Court of Sacramento County, a
true and correct copy attached hereto as Exhibit E. Judicial notice is
requested because this item (and the below item) shows that the Third District
Court of Appeal, the same court that wrote Felisilda, does not view Felisilda
and Ochoa as a “split of authority” giving trial courts the discretion
to choose between the cases, and instead that trial courts are required to follow
the Ochoa line of cases.
6)
Third District Court of Appeal’s response to a
Petition for Writ of Mandate in Campos v. Superior Court of Butte County
(C098848); notice sent to Superior Court of Butte County, a true and correct
copy attached hereto as Exhibit F.
7)
The Minute Order in Dina C. Felisilda, et al.
v. FCA US, LLC, et al. (Sacramento County Superior Court case
34-2015-00183668-CU-BC-GDS) on signatory dealership Elk Grove Auto Group’s
Motion to Compel Arbitration and Stay Action, a true and correct copy attached
hereto as Exhibit G. Judicial notice is requested because the item shows
that the holding in the Felisilda appellate case, as an appeal from this
Order, is limited to the signatory dealership’s motion under its own contract.
Plaintiffs’ request for judicial
notice is granted.
III. Discussion
Plaintiffs move for
reconsideration of the October 1, 2021, Order compelling arbitration and
staying the action based on new case law that holds that a non-signatory
manufacturer to a sales contract cannot compel arbitration under the doctrine
of equitable estoppel, as a third party beneficiary, or as an undisclosed
principal, disagreeing with the holding in Felisilda v. FCA US LLC
(2020) 53 Cal.App.5th 486 (Felisilda). (See Ford Motor Warranty Cases
(2023) 89 Cal.App.5th 1324 (Ford Motor); Montemayor v. Ford Motor
Company (2023)92 Cal.App.5th 958 (Montemayor); Kielar v. Superior Court (2023) 94 Cal.App.5th 614, 620
(Kielar); Yeh v. Superior Court of Contra Costa County
(2023) 95 Cal.App.5th 264, 272.)
Defendant opposes the
Motion on three grounds: (1) the Motion is untimely and fails to meet the
jurisdictional requirement, (2) the decision to compel arbitration in this
action was correctly decided, and (3) Plaintiffs have ignored their duty to
arbitrate the case. The court addresses each of the Defendant’s
contentions in turn.
A. Timeliness of Motion and the Court’s
Jurisdiction to Reconsider the October 1, 2021, Order
Defendant correctly
asserts that Plaintiffs’ Motion for Reconsideration is untimely because section
1008(a) requires that the Motion be filed “within 10 days after service upon
the party of written notice of entry of the order.” Plaintiffs filed this Motion on October 20,
2023, more than two years after the Order Compelling Arbitration was granted.
(CCP § 1008(a).)
Plaintiffs do not
deny that this Motion was filed late but assert that because there was a change
in law, the court retains the inherent power to change its order at any time
prior to judgment. (CCP § 1008(c).) The California Supreme Court in Le
Francois v. Goel (2005) 35 Cal.4th 1094, 1106 (Le Froncois) stated:
We conclude that sections 437c,
subdivision (f)(2), and 1008 prohibit a party from making renewed
motions not based on new facts or law, but do not limit a court's
ability to reconsider its previous interim orders on its own motion, as long as
it gives the parties notice that it may do so and a reasonable opportunity to
litigate the question.
(Id. at pp.
1096-1097 [italics original].) Therefore, “[a] party may not file a written motion
to reconsider that has procedural significance if it does not satisfy the
requirements of section 437c, subdivision (f)(2), or 1008. The court need not
rule on any suggestion that it should reconsider a previous ruling and, without
more, another party would not be expected to respond to such a suggestion.” (Id.
at p. 1108 [italics original].) Because Plaintiffs’ Motion is based on a change
of law, the court can consider Plaintiffs’ Motion for Reconsideration. “A
‘change of law’ under section 1008, subdivision (c), ‘is always an appropriate
basis, up until a final judgment is entered, for changing an interim order....’
” (State of California v. Superior Ct. (Flynn) (2016) 4 Cal.App.5th 94,
100 quoting Blake v. Ecker (2001) 93 Cal.App.4th 728, 739, fn. 10.)
Consequently, “if the
court realizes that its earlier ruling was erroneous, on its own motion, the
court can reconsider its previous ruling and grant the relief Plaintiff seeks.
(See In re Marriage of Barthold (2008) 158 Cal.App.4th 1301, 1309 [“In
light of these circumstances, we conclude that in stating that Kay's motion for
reconsideration was ‘granted,’ the court simply meant that it was providing the
relief sought by the motion, and did not mean to say that it was
granting the motion itself.”] [italics original].) The California Supreme Court
agreed that while section 1008 limits a party’s ability to bring a motion, it
“cannot prevent a party from communicating the view to a court that it should
reconsider a prior ruling” and “it should not matter whether the judge has an
unprovoked flash of understanding in the middle of the night or acts in
response to a party's suggestion. If a court believes one of its prior interim
orders was erroneous, it should be able to correct that error no matter how it
came to acquire that belief.” (Le Francois, supra, 35 Cal.4th at
p. 1108 [internal citations and quotations omitted].)
In sum, this court
has jurisdiction to reconsider its October 1, 2021, Order based on a change of
law.
The fact that the
action is stayed pending arbitration does not deprive the court of jurisdiction
to hear Plaintiffs’ Motion. “Because contractual arbitration ‘draws its
vitality from the contract’ [Citation], a trial court has inherent power to
revisit the foundational ‘question of whether the parties are bound by a
particular arbitration agreement’ [Citation], just as it may on its own motion
revise any other interim ruling in the action pending before it [Citation].” (Pinela
v. Neiman Marcus Group, Inc. (2015) 238 Cal.App.4th 227, 238.) Because a
foundational question exists as to whether the parties in this action did, in
fact, agree to arbitrate their dispute and because any arbitration award
between the parties may be vacated on the basis that the arbitrator acted in
excess of his or her authority as no agreement to arbitrate existed, it is
appropriate for the court to reconsider Plaintiff’s Motion on the basis there
is a change of law and Plaintiffs’ may not be compelled to arbitrate their
claims based on the Lease Agreement in this action.
B. New Case Law Compels Reconsideration of
the October 1, 2021, Order
The Federal Arbitration Act’s
(“FAA”) policy “is to make ‘arbitration agreements as enforceable as other
contracts, but not more so.’ [Citation.]” (Morgan v. Sundance, Inc.
(2022) 142 S.Ct. 1708, 1713.) “[I]t is a cardinal
principle that arbitration under the FAA ‘is a matter of consent, not
coercion.’ [Citation.] Thus, ‘a party cannot be required to submit to
arbitration any dispute which he has not agreed so to submit.’ [Citations.]” (Pinnacle Museum Tower Assn. v. Pinnacle Market Development (US),
LLC (2012) 55 Cal.4th 223, 236.)
In
ordering this case to arbitration, the court found that it was bound by the
holding in Felisilda and that the arbitration provision in the Lease
Agreement at issue was sufficiently expansive as to cover the claims Plaintiffs
had against Subaru. (10/01/21 Ruling.) Since the ruling in Felisilda, four
appellate cases have been published against its holding: Ford Motor Warranty Cases (2023) 89 Cal.App.5th 1324 (Ford
Motor); Montemayor v. Ford Motor Company (2023)92 Cal.App.5th
958 (Montemayor); Yeh v. Superior Court of Contra
Costa County (2023) 95 Cal.App.5th 264, 272, including from the
Third Appellate District that rendered the Felisilda decision; see Kielar v. Superior Court (2023) 94 Cal.App.5th 614, 620
(Kielar).
In Montemayor and Ford Motor, the
Second District found that the manufacturer, as a non-signatory to the sales
contract, could not enforce the arbitration clause based on the doctrine of
equitable estoppel. (See Ford Motor, supra, Cal.App.5th at p. 1333 [review granted]; Montemayor, supra, 92 Cal.App.5th at p. 972 [review granted].)
In
Ford Motor, the Second District explicitly disagreed with Felisilda
on the basis that the sales contract was not the source of the manufacturer’s warranties
because the “manufacturer
vehicle warranties that accompany the sale of motor vehicles . . . are independent
of the sale contract.” (Ford Motor, supra,
89 Cal.App.5th at p. 1334.) According to the Ford Motor Court,
“[e]quitable estoppel would apply if the plaintiffs had sued FCA based on the
terms of the sale contract yet denied FCA could enforce the arbitration clause
in that contract.” (Id. at p. 1334.)
Both
Kielar and Yeh interpreted a similar provision as the Lease
Agreement at issue in this action, which states: “The arbitration agreement at issue in
this action provided in pertinent part as follows [a]ny claim or dispute,
whether in contract, tort, statute or otherwise ... between you and us ...
which arises out of or relates to ... [the] condition of this vehicle ... shall
... be resolved by neutral, binding arbitration and not by a court action.”
(10/01/21 Ruling.) Both Kielar and Yeh disagreed with Felisilda
and joined the holding in Ford Motor and Montemayor:
Additionally,
we agree with Montemayor and Ford Motor that the
parenthetical language in the arbitration provision referring to nonsignatory
third parties ‘was a ‘delineation of the subject matter of
claims the purchasers and dealers agreed to arbitrate’’ and does not bind the
purchaser ‘to arbitrate with the universe of unnamed third parties.’
(Kielar, supra, 94 Cal.App.5th at p. 621 [internal citations and quotations
omitted] [italics original].)
In
this case, although the parties do not provide MBUSA's express warranties, it
is undisputed that they are separate from the lease agreement and RISC because
the language of the express warranties, as described by the complaint, is not
part of the lease agreement or RISC. . . . Accordingly, MBUSA's warranties are not part of the sales
contract.
(Yeh, supra, 95 Cal.App.5th at p. 277.)
This court agrees that the October 1,
2021, Order compelling arbitration based on the holding in Felisilda should
be vacated.
C. Plaintiffs’ Ignoring Their Duty to Arbitrate
is Not Ground to Deny Motion
Finally, the court agrees that even if
Plaintiffs have ignored their duty to arbitrate, this is not a basis to deny
Plaintiffs’ motion for reconsideration. “The progress of the arbitration is not
material when considering a change in the law affecting whether the arbitral
forum was a correct one. Based on Code of Civil Procedure section 1008,
subdivision (c), the trial court could reconsider its order to compel
arbitration in light of [a new appellate decision].” (Malek v. Blue Cross of California (2004) 121
Cal.App.4th 44, 60.)
Accordingly,
the Plaintiffs’ Motion is granted.
Conclusion
Plaintiffs’ Motion for
Reconsideration of the October 1, 2021, Order is granted.
The October 1, 2021, Order
compelling arbitration and staying the action is vacated.
Plaintiffs to give notice.