Judge: Gary I. Micon, Case: 23CHCV01316, Date: 2024-04-05 Tentative Ruling

Case Number: 23CHCV01316    Hearing Date: April 5, 2024    Dept: F43

Dept. F43

Date: 4-5-24

Case #23CHCV01316, Carmen Cristina Oliveros-Lopez vs. American Honda Motor Co., Inc., et al.

Trial Date: N/A

PETITION TO COMPEL ARBITRATION

MOVING PARTY: Defendant American Honda Motor Co.

RESPONDING PARTY: Plaintiff Carmen Cristina Oliveros-Lopez

RELIEF REQUESTED

Defendant is requesting that the Court compel the case to arbitration and stay the action

RULING: Petition to compel arbitration is denied.

SUMMARY OF ACTION

On May 4, 2023, Plaintiff Carmen Cristina Oliveros-Lopez (Plaintiff) filed this action against Defendant American Honda Motor Co. (Defendant) for causes of action related to violations of the Song-Beverly Warranty Act. Plaintiff has alleged three causes of action for violation of the Song-Beverly Act against Defendant Honda American Motor Co. and one cause of action for negligence per se against the repair facility, Defendant Honda Lancaster. The dealership from which Plaintiff leased the vehicle, Galpin Honda, is not named in Plaintiff’s complaint.

On February 22, 2024, Defendant filed this petition to compel arbitration and stay the action. Plaintiff opposes.

Defendant’s Request for Judicial Notice: With Defendant’s petition, Defendant has requested that the Court take judicial notice of Plaintiff’s complaint. The Court takes judicial notice of this document.

Plaintiff’s Request for Judicial Notice: With Plaintiff’s opposition, Plaintiff has requested that the Court take judicial notice of three court cases. The Court takes judicial notice of these cases.

Plaintiff’s evidentiary objection: Plaintiff has objected to the paragraph in the declaration of Andres F. Michel (Defendant’s counsel) that explains what the MVLA is that this attached to the Declaration of Dedrick Manigo. (Michel Decl., ¶ 2.) Plaintiff objects to this paragraph on the basis that it lacks foundation or personal knowledge, and is irrelevant and misleading. The Court sustains Plaintiff’s objection. Defendant’s attorney did not draft or sign this document, so he lacks personal knowledge about the document. Plaintiff also objects to the entirety of Michel’s declaration. The Court overrules Plaintiff’s objection to the entire declaration.

Defendant’s Evidentiary Objections to the Declaration of Plaintiff:

            Sustained: 1

            Overruled: 2 (paragraph is not in Plaintiff’s declaration), 3, 4

ANALYSIS

California law incorporates many of the basic policy objectives contained in the Federal Arbitration Act, including a presumption in favor of arbitrability. (Engalla v. Permanente Medical Group, Inc. (1997) 15 Cal.4th 951, 971-972.) The petitioner bears the burden of proving the existence of a valid arbitration agreement by the preponderance of the evidence, the party opposing the petition then bears the burden of proving by a preponderance of the evidence any fact necessary to demonstrate that there should be no enforcement of the agreement, and the trial court sits as a trier of fact to reach a final determination on the issue. (Rosenthal v. Great Western Financial Securities Corp. (1996) 14 Cal.4th 394, 413.) The Court is empowered by CCP § 1281.2 to compel parties to arbitrate disputes pursuant to an agreement to do so.   

CCP § 1281.2 states that: 

“The court shall order the petitioner and the respondent to arbitrate the controversy if it determines that an agreement to arbitrate the controversy exists, unless it determines that: 

(a) The right to compel arbitration has been waived by the petitioner; or  

(b) Grounds exist for the revocation of the agreement.  

(c) A party to the arbitration agreement is also a party to a pending court action or special proceeding with a third party, arising out of the same transaction or series of related transactions and there is a possibility of conflicting rulings on a common issue of law or fact. For purposes of this section, a pending court action or special proceeding includes an action or proceeding initiated by the party refusing to arbitrate after the petition to compel arbitration has been filed, but on or before the date of the hearing on the petition. This subdivision shall not be applicable to an agreement to arbitrate disputes as to the professional negligence of a health care provider made pursuant to Section 1295.” (CCP § 1281.2.)

The Court denies the petition on the merits. Though Plaintiff makes arguments regarding the conscionability of the agreement, the main dispute rests on the fact that Defendant was not a signatory to the arbitration agreement in question, but Defendant argues that it should be able to compel arbitration by virtue of the doctrine of equitable estoppel and Defendant’s claim that it is a named third-party beneficiary of the arbitration agreement.

“Under that doctrine [of equitable estoppel] …a nonsignatory defendant may invoke an arbitration clause to compel a signatory plaintiff to arbitrate its claims when the causes of action against the nonsignatory are intimately founded in and intertwined with the underlying contract obligations.” (JSM Tuscany, LLC v. Superior Ct. (2011) 193 Cal.App.4th 1222, 1237, quoting Boucher v. All Title Co. (2005) 127 Cal.App.4th 262, 271 and Goldman v. KPMG, LLP (2009) 173 Cal.App.4th 209, 217–18 (internal quotation marks omitted).) The sine qua non for application of equitable estoppel as the basis for allowing a nonsignatory to enforce an arbitration clause is, “that the claims plaintiff asserts against the nonsignatory must be dependent upon, or founded in and inextricably intertwined with, the underlying contractual obligations of the agreement containing the arbitration clause.” (Goldman, supra, 173 Cal.App.4th at 217–18; accord, JSM Tuscany, LLC, supra, 193 Cal.App.4th at 1237.) “The fundamental point is that a party is not entitled to make use of [a contract containing an arbitration clause] as long as it worked to her advantage, then attempt to avoid its application in defining the forum in which her dispute . . . should be resolved.” (Jensen v. U-Haul Co. of Cal. (2017) 18 Cal.App.5th 295, 306, quoting NORCAL Mut. Ins. Co. v. Newton (2000) 84 Cal.App.4th 64, 84 (internal quotation marks omitted).) Courts examine the facts alleged in the operative complaint to determine whether equitable estoppel applies. (Goldman, supra, 173 Cal.App.4th at 229–30.) 

In one case, an arbitration agreement that was in the retail sales agreement was found to extend to a nonsignatory car manufacturer because “the arbitration provision in this case provides for arbitration of disputes that include third parties so long as the dispute pertains to the condition of the vehicle.” (Felisilda v. FCA US LLC (2020) 53 Cal.App.5th 640, 648.) 

The language of the arbitration provision in the Motor Vehicle Lease Agreement (MVLA) mentions “Honda”. Whether is refers to Galpin Honda, the dealership from which Plaintiff leased the vehicle and which signed the MVLA, or Defendant American Honda Motor Co., is not immediately evident. The agreement states in relevant part as follows: 

“PLEASE READ THIS ARBITRATION PROVISION CAREFULLY TO UNDERSTAND YOUR RIGHTS. BY ELECTING ARBITRATION, YOU AGREE THAT ANY CLAIM THAT YOU MAY HAVE IN THE FUTURE MUST BE RESOLVED THROUGH BINDING ARBITRATION…

By signing the Arbitration Consent, YOU elect to have disputes resolved by arbitration. YOU, HONDA or any involved third party may pursue a Claim. ‘Claim’ means any dispute between YOU, HONDA, or any involved third party relating to your account, this Lease, or our relationship, including any application, the Vehicle, its performance and any representations, omissions or warranties…”

(Manigo Decl., Ex. A.)

The last paragraph of the arbitration provision indicates that “American Hondo Motor Co., Inc.” is, in fact, included under the umbrella term “Honda”:

“HONDA means Lessor, Dealer, Honda Lease Trust, American Honda Finance Corporation (AHFC), American Honda Motor Co., Inc., Honda Finance Exchange. Inc., Acura Financial Services (AFS), Honda Financial Services (HFS), HVT, Inc., their parents, subsidiaries, predecessors, successors, assignees, and officers, employees, representatives and agents. YOU means Lessee and Co-Lessee to this Lease.”

(Manigo Decl., Ex. A.)

Now the question remains as to whether Defendant may invoke the MVLA as a named third party beneficiary.

This language of the agreement is somewhat similar to the language in Felisilda, which allowed the defendant car manufacturer to compel arbitration as to the condition of the vehicle. The arbitration agreement in the current case states that Plaintiff or “Honda” may pursue a Claim related to the Vehicle or any warranties. It is worth noting that the plaintiff in Felisilda had sued both the dealership and the manufacturer for Song-Beverly causes of action, which is not the case here. Plaintiff has only sued Defendant American Honda, as the manufacturer, for the Song-Beverly causes of action. The dealership that sold Plaintiff the vehicle and signed the MVLA with the arbitration provision, Galpin Honda, is not a party to this action.

As the Court of Appeal has observed, “[w]e agree with Ngo that the sales contracts reflect no intention to benefit a vehicle manufacturer…nothing in the sale contracts or their arbitration provision offers any direct “benefit” to the [manufacturer].” (Ochoa v. Ford Motor Company – Ford Motor Warranty Cases (2023) 89 Cal.App.5th 1324, 1338, review granted July 19, 2023 (S279969), pursuant to Rule of Court 8.115(e)(3), the Supreme Court ordered that while pending review the decision could be cited as persuasive authority and to establish a conflict in authority that would allow trial courts to choose between conflicting appellate decisions.) The manufacturer’s “claim that it ‘would benefit from utilizing arbitration as an efficient means of dispute resolution as an efficient means of dispute resolution’ (italics added) if treated as a third party beneficiary begs the question: does the arbitration provision directly benefit [the manufacturer]? The answer is patently ‘no.’ Its direct benefits are expressly limited to those persons who might rely on it to avoid proceeding in court – the purchaser, the dealer, the dealer’s employees, agents, successors or assigns. [The manufacturer] is none of these.” (Id.)

Ochoa is distinguishable from Felisilda because both the dealership and manufacturer were sued in Felisilda, while only the manufacturer was sued in Ochoa. In this case, the manufacturer and the repair facility (Defendant Honda Lancaster) are being sued. The dealership, Galpin Honda, is not being sued. Therefore, Ochoa would be more applicable to this case than Felisilda. As discussed in further detail below, as in Ochoa, the complaint as to Defendant American Honda Motor Co. is not based on the lease, which included an express disclaimer of any warranties as to the dealer. The complaint is based on the warranties given by Defendant American Honda Motor Co.

Though Defendant American Honda Motor Co. is a named beneficiary of the arbitration agreement in the MVLA, the agreement is not concerned with warranties given by Defendant, which is the basis upon which Plaintiff has sued. The MVLA is chiefly concerned with the financing of the vehicle and how Plaintiff intends to pay for it. In fact, Section 11 of the MVLA, “Warranties”, states that “If the Vehicle is new, the Vehicle is covered by the manufacturer’s standard new car warranty.” (Manigo Decl., Ex. A.) The MVLA goes on to state “Lessor makes no express warranties or representations as to the vehicle’s (or any of its party or accessories) condition, merchantability, suitability or fitness for a particular purpose and lessor makes no other representations or warranties whatsoever.” (Id.)

By disclaiming any warranties, that suggests that the MVLA is separate and distinct from express warranties covered by the Song-Beverly Act, meaning that, even though the arbitration agreement mentions “warranties”, such actions under those warranties would not be covered by the arbitration agreement in the MVLA. Because the manufacturer warranty obligations arise independently from the MVLA, they are not so intertwined that this action should be governed by the arbitration provision in the MVLA. (See JSM Tuscany, LLC, 193 Cal.App.4th 1222.)

Plaintiff also made arguments concerning the conscionability of the arbitration agreement. However, because the Court is denying the petition on the basis that actions for breach of warranty under the Song-Beverly Act are not covered by the MVLA, then it is not necessary for the Court to address the conscionability arguments. The Court likely would have found the agreement conscionable, however.

The petition to compel arbitration is denied on the basis that the warranty obligations under the Song-Beverly Act are not inextricably intertwined with the arbitration agreement in the MVLA.

Moving party to give notice.