Judge Gail Killefer, Case 21STCV27129 2022-08-29 Tentative Ruling

Judge: Gail Killefer, Case: 21STCV27129, Date: 2022-08-29 Tentative Ruling

Case Number: 21STCV27129 Hearing Date: August 29, 2022 Dept: 37

HEARING DATE: August 29, 2022

CASE NUMBER: 21STCV27129

CASE NAME: Gabriel Reuven v. FCA US, LLC., et al.

MOVING PARTIES: Defendants, FCA US, LLC, and Rydell Chrysler Dodge Jeep Ram

OPPOSING PARTY: Plaintiff, Gabriel Reuven

TRIAL DATE: Not set.

PROOF OF SERVICE: OK

MOTION: Defendant’s Motion to Compel Arbitration

OPPOSITION: August 16, 2022

REPLY: None as of August 25, 2022.

TENTATIVE: FCA’s motion is granted. Plaintiffs are ordered to arbitrate their claims against FCA. This action is stayed pending completion of arbitration or further order of the court. The court sets an order to show cause re status of the arbitration for August 28, 2023, at 8:30 a.m. in Department 37. FCA is to give notice.

Background

This is a lemon law action arising in connection with the lease by Gabriel Reuven (“Plaintiff”) of a 2018 Dodge Ram 1500 (“Vehicle”) on November 30, 2017. Plaintiff alleges that FCA US LLC (“FCA”), who manufactured the Vehicle, and Rydell Chrysler Dodge Jeep Ram (together “Defendants”) allegedly had superior knowledge that the PowerNet Electrical Architecture (“PowerNet”) was defective and resulted in various issues to vehicles like the Vehicle. Specifically, FCA’s knowledge of defects allegedly dated to at least 2007 and was obtained through various consumer complaints, recalls, and Technical Service Bulletins (“TSB”). Plaintiff allegedly brought the Vehicle to FCA and its authorized representatives on several occasions for repairs of various defects but FCA and its representative failed to repair the Vehicle in order to conform it to warranty despite being presented a reasonable number of opportunities to do so.

Plaintiff’s Complaint alleges the following causes of action: (1) violation of the Song-Beverly Act § 1793.2(d)-FCA; (2) violation of the Song-Beverly Act § 1793.2(b)-FCA; (3) violation of the Song-Beverly Act § 1793.2(a)(3)-FCA; (4) violation of the Song-Beverly Act – Breach of Express Warranty-FCA; (5) violation of the Song-Beverly Act – Breach of Implied Warranty-Rydell; and (6) fraudulent inducement – concealment-FCA.

On August 25, 2022, the court granted Plaintiff’s Request for Dismissal as to Rydell CDJR.

FCA now moves to compel arbitration and for a stay of this action pending completion or arbitration. Plaintiff opposes the motion.

Request for Judicial Notice

Plaintiff requests judicial notice of the following in support of its motion:

1. Exhibit A: Ngo v. BMW of N. Am., LLC, 23 F.4th 942, 949 (9th Cir. Jan. 12, 2022);

2. Exhibit B: Order denying defendant’s Motion to Compel Arbitration in the matter of Messih v. Mercedes-Benz USA, LLC (N.D. Cal., June 24, 2021) No. 21-CV-03032-WHO, 2021 WL 2588977;

3. Exhibit C: Order denying defendant’s Motion to Compel Arbitration in the matter of Safley v. BMW of North America, No 20-cv-00366-BAS-MDD, 2021 WL 409722 (S.D. Cal. Feb. 5, 2021);

4. Exhibit D: Order denying defendant’s Motion to Compel Arbitration in the matter of Nation v. BMW of North America, No. 220CV02709JWHMAAX, 2020 WL 7868103 (C.D. Cal. Dec. 28, 2020);

5. Exhibit E: Order denying defendant’s Motion to Compel Arbitration in the matter of Ruderman v. Rolls Royce Motor Cars, LLC, No. 220CV04529JWHRAOX, __.F.Supp.3d___, 2021 WL 141179 (C.D. Cal. Jan. 7, 2021);

6. Exhibit F: Order denying defendant’s Motion to Compel Arbitration in the matter of In re Ford Motor Co. DPS6 Powershift Transmission Products Liab. Litig, 2020 WL 3637631 (C.D. Cal. 2020);

7. Exhibit G: Order denying defendant’s Motion to Compel Arbitration in the matter of In re Toyota Motor Corp. Hybrid Brake Mktg., Sales, Practices & Products Liab. Litig., 2011 WL 13160304 (C.D. Cal. 2011);

8. Exhibit H: Jarboe v. Hanlees Auto Group (2020) 53 Cal.App.5th 539;

9. Exhibit I: Fuentes v. TMCSF, Inc., 26 Cal. App. 5th 541 (2018);

10. Exhibit J: Order denying defendant’s Motion to Compel Arbitration in the matter of Chen v. BMW of North America, 21-cv-03531-DMR, 2021 WL 3604691, at *5 (N.D. Cal., Aug. 13, 2021).

Plaintiff’s request is granted. The existence and legal significance of this document are proper matters for judicial notice. (Evidence Code § 452(d), (h).)

However, the court may not take judicial notice of the truth of the contents of the documents. (Herrera v. Deutsche Bank National Trust Co. (2011) 196 Cal.App.4th 1366, 1375.) Documents are only judicially noticeable to show their existence and what orders were made. The truth of the facts and findings within the documents are not judicially noticeable. (Lockley v. Law Office of Cantrell, Green, Pekich, Cruz & McCort (2001) 91 Cal.App.4th 875, 885.)

Discussion

I. Legal Standard

“California law reflects a strong public policy in favor of arbitration as a relatively quick and inexpensive method for resolving disputes. To further that policy, Code of Civil Procedure, section 1281.2 requires a trial court to enforce a written arbitration agreement unless one of three limited exceptions applies. Those statutory exceptions arise where (1) a party waives the right to arbitration; (2) grounds exist for revoking the arbitration agreement; and (3) pending litigation with a third party creates the possibility of conflicting rulings on common factual or legal issues.” (Code of Civ. Proc., § 1281.2; Acquire II, Ltd. v. Colton Real Estate Group (2013) 213 Cal.App.4th 959, 967.) Similarly, public policy under federal law favors arbitration and the fundamental principle that arbitration is a matter of contract and that courts must place arbitration agreements on an equal footing with other contracts and enforce them according to their terms. (AT&T Mobility LLC v. Concepcion (2011) 563 U.S. 333, 339.)

In deciding a motion or petition to compel arbitration, trial courts must first decide whether an enforceable arbitration agreement exists between the parties and then determine whether the claims are covered within the scope of the agreement. (Omar v. Ralphs Grocery Co. (2004) 118 Cal.App.4th 955, 961.) The opposing party has the burden to establish any defense to enforcement. (Gatton v. T-Mobile USA, Inc. (2007) 152 Cal.App.4th 571, 579 [“The petitioner ... bears the burden of proving the existence of a valid arbitration agreement and the opposing party, plaintiffs here, bears the burden of proving any fact necessary to its defense.”].)

II. Existence of an Arbitration Agreement

A motion to compel arbitration or stay proceedings must state verbatim the provisions providing for arbitration or must have a copy of them attached. (Cal. Rules of Court, rule 3.1330.)

A party may demonstrate express acceptance of the arbitration agreement in order to be bound (e.g., Mago v. Shearson Lehman Hutton Inc. (9th Cir. 1992) 956 F.2d 932 [agreement to arbitrate included in job application]; Nghiem v. NEC Electronic, Inc. (9th Cir. 1994) 25 F.3d 1437 [agreement to arbitrate included in handbook executed by employee]; Lagatree v. Luce, Forward, Hamilton & Scripps (1999) 74 Cal. App. 4th 1105 [employer may terminate employee who refuses to sign agreement to arbitrate]) or implied-in-fact in fact acceptance (Asmus v. Pacific Bell (2000) 23 Cal. 4th 1, 11 [implied acceptance of changed rules regarding job security]; DiGiacinto v. Ameriko-Omserv Corp. (1997) 59 Cal. App. 4th 629, 635 [implied acceptance of changed compensation rules]). (Craig v. Brown & Root (2000) 84 Cal.App.4th 416, 420 (Craig).)

“A signed agreement is not necessary, however, and a party’s acceptance [of an agreement to arbitrate] may be implied in fact….” (Pinnacle Museum Tower Ass’n v. Pinnacle Market Dev. (US), LLC (2012) 55 Cal.4th 223, 23 (Pinnacle), 6.) “An arbitration clause within a contract may be binding on a party even if the party never actually read the clause.” (Ibid.)

FCA contends that Plaintiff must be ordered to arbitrate his claims because the Arbitration Agreement found in the Retail Installment Sales Agreement (the “Agreement”) Plaintiff executed at the time he purchased the Vehicle requires it. (Motion, 7-8; Declaration of Itzel Gutierrez (“Gutierrez Decl.”), Exh. A.) The Agreement provides in pertinent part as follows:

30. ARBITRATION

You agree that if a dispute of any kind arises out of this agreement, either you or we can choose to have that dispute resolved by binding arbitration. If arbitration is chosen by any party, neither you nor we will have the right to litigate that claim in court or to have a jury trial on that claim in court, or to have a jury trial on that claim, or to engage in pre-arbitration discovery, except as provided for in the arbitration rules. In addition, you will not have the right to participate as a representative or member of any class of claimants pertaining to any claim subject to arbitration. The arbitrator's decision will generally be final and binding. Other rights that you would have if you went to court may also not be available in arbitration. It is important that vou read this entire arbitration provision carefully before accepting the terms of this agreement.

Any claim, dispute or controversy (whether in contract, regulatory, tort, or otherwise, whether pre-existing, present or future and including constitutional, statutory, common law, intentional tort and equitable claims) arising from or relating to (a) the credit or services offered or provided to you, (b) the actions of you, us or third parties or (c) the validity of this arbitration provision (individually and collectively, a "Claim") must, after an election by you or us, be resolved by binding arbitration in accordance with this arbitration provision and the Commercial Arbitration Rules of the American Arbitration Association ("AAA") in effect when the Claim is filed (or, in the event this arbitrator or these arbitration rules are no longer available, then a comparable substitute arbitration procedure and/or arbitration organization that does business on a nationwide basis). There shall be no authority for any Claims to be arbitrated on a class action basis. An arbitration can only decide our or your Claim and may not consolidate or join the claims of other persons who may have similar claims. You may obtain rules and forms by calling the AAA at 800-778-7879. Any arbitration hearing that you attend will take place in the federal judicial district where you reside. At your request, we will advance the first $250 of the filing and hearing fees for any Claim you may file against us; the arbitrator will decide whether we or you will ultimately pay those fees. The arbitrator shall apply applicable substantive law consistent with the Federal Arbitration Act and applicable statutes of limitations, and shall honor claims of privilege recognized at law. Judgment upon the award rendered by the arbitrator may be entered in any court having jurisdiction. This arbitration provision shall survive repayment of your extension of credit and termination of your account. This arbitration provision shall be governed by the Federal Arbitration Act, 9 U.S.C. Ill I, et seq. If any provision of this Section is ruled invalid or unenforceable, this Section shall be rendered null and void in its entirety.

(Motion, 8.)

Additionally, FCA contends that notwithstanding its status as a non-signatory to the Agreement, FCA may still compel arbitration because claims against it are related to the condition of the vehicle. (Motion, 8-9.) FCA alternatively contends that it has standing to compel arbitration because it is an intended third-party beneficiary of the Agreement, as FCA is the manufacturer of the Vehicle. (Motion, 8-11.) Defendants cite to Felisilda v. FCA US LLC, (2020) 53 Cal.App. 5th 486 (Felisilda) for this argument.

Felisilda arose in connection with the sale of a used Dodge Grand Caravan that Plaintiffs purchased from a dealership and manufactured by defendant, FCA US, LLC. (“FCA”) (Id. at 489.) Plaintiffs brought an action against the dealership and FCA after the vehicle began exhibiting problems. (Id.) The dealership moved to compel arbitration relying on the retail installment sales contract signed by Plaintiffs, and the trial court ordered Plaintiffs to arbitrate against both the dealership and FCA. (Id.) FCA did not move to compel arbitration but instead filed a notice of non-opposition. (Id.) The Court of Appeal concluded that the trial court correctly determined that Plaintiff’s claims against FCA were encompassed by the arbitration agreement. (Id.) In reaching this conclusion, the Court of Appeal opined that “based on the language in the sales contract and the nature of” Plaintiff’s claims against FCA, the trial court correctly ordered the entire matter to be submitted to arbitration because Plaintiff expressly agreed to arbitrate claims “arising out of the condition of the vehicle.” (Id. at 497.) 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.” (Id. at 496.)

In opposition, Plaintiffs contend that FCA’s motion must be denied because it is a non-signatory to the Agreement. (Opposition, 1-14.) Additionally, Plaintiffs contend that the Agreement does not apply to the dispute because the Agreement states on its face that no warranties are being made in connection with the Agreement. (Opp., 13-14.) Plaintiffs contend that Felisilda does not apply because it was wrongfully decided and flawed, while the holding and reasoning in Jarboe v. Janless Auto Group (2020) 53 Cal.App.5th 539 (Jarboe) and Ngo v. BMW of N. Am., LLC, 23 F.4th 942, 949 (9th Cir. 2022) (Ngo) should apply to this action and bar FCA from moving to compel arbitration. (Id. at 8-11.) Plaintiffs also contend that equitable estoppel does not apply and FCA is not a third-party beneficiary of the Agreement. (Id. at 6-11.)

In Jarboe, Plaintiff, who was terminated from an automobile dealership, brought a wage and hour action individually and on behalf of a putative class against his former employer and affiliated dealerships. (Jarboe, supra, 53 Cal.App.5th at 543-544.0 The trial court granted Defendants’ motion to compel arbitration as to 11 out of 12 causes of action against the employer and denied the motion as to the request for a stay and as to the other defendants. (Id.) The Court of Appeal found that the trial court correctly rejected Defendants’ arguments about standing to compel arbitration as third-party beneficiaries and under the theory of equitable estoppel. (Id. at 547.) According to the Court of Appeal, even if the other owners had standing to compel arbitration under the operative agreement, it is limited to the “context of their ownership” of the company named in the employment agreement also at issue. (Id. at 550.) Additionally, the Jarboe court concluded that it was correct to refuse to compel arbitration against the other defendants because there was no showing that plaintiff’s claims against these other defendants are “rooted” in his employment with his former employer or his agreement to arbitrate with his former employer. (Id. at 552-556.)

The court finds Plaintiff’s reliance on Kim Ngo v. BMW of N. Am., LLC, 23 F.4th 942 (9th Cir. 2022) to be unhelpful as well. In Ngo, as it had done previously in Phillips-Harris v. BMW of N. Am., LLC, No. 20-55612, 2022 WL 72355 (9th Cir. Jan. 7, 2022), the Ninth Circuit reversed an order compelling arbitration because the court reasoned that BMW was not a third-party beneficiary to an underlying vehicle transaction. (Id. at 948.) But unlike Phillips-Harris, the arbitration provision at issue in Ngo had not defined arbitrable disputes as including affiliates of the assigned. (Id. at 947, [defining a “Claim” as “any claim ... between you and us or our employees, agents, successors, or assigns”]). The Ngo court further distinguished its ruling from Hajibekyan v. BMW of N. Am., LLC, 839 F. App'x 187 (9th Cir. 2021) because the arbitration provision did not include the term “affiliates,” but like Phillips-Harris, Ngo reasoned that “[l]anguage limiting the right to compel arbitration to a specific buyer and a specific dealership (and its assignees) means that extraneous third parties may not compel arbitration.” (Id.)

As the Agreement here specifically mentions “the actions of... third parties,” the court agrees with FCA that Felisilda applies and gives FCA standing to move to compel arbitration in this action. Pursuant to Felisilda, FCA has standing to compel arbitration if Plaintiff’s claims relate to the condition of the vehicle and Plaintiff has agreed to arbitrate claims arising out of the condition of the vehicle. Further, the court agrees with FCA that Jarboe does not conflict with Felisilda. Instead, Jarboe held that arbitration could not be compelled against non-signatory companies because there was no showing that plaintiff’s claims arise out of his employment with his former employer or his agreement to arbitrate with his former employer. Thus, Felisilda and Jarboe stand for the same principles.

As discussed above, the Agreement provides in pertinent part that Plaintiff agrees to arbitrate claims “which arise out of or relate 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 do not sign this contract).” Thus, Plaintiff has agreed to arbitrate claims arising out of or relating to the “condition” of the Vehicle, or any resulting “relationship,” including any relationship with “third parties who do not sign the contract,” such as FCA.

For these reasons, the court finds that a valid agreement to arbitrate exists which applies to all of Plaintiff’s claims against FCA in this action. The court will now look to the parties’ arguments regarding defenses to enforcement.

III. Defenses to Enforcement

Because the parties do not dispute the conscionability of the Agreement and both parties do not put forth other defenses to enforcement, FCA’s motion is granted.

Conclusion

FCA’s motion is granted. Plaintiffs are ordered to arbitrate their claims against FCA. This action is stayed pending completion of arbitration or further order of the court. FCA is to give notice.