Judge Gregory Keosian, Case 22STCV17643 2022-10-10 Tentative Ruling

Defendant Nissan North America, Inc.’s Motion to Compel Arbitration is GRANTED.

On petition of a party to an arbitration agreement to arbitrate a controversy, a court must order the petitioner and respondent to arbitrate the controversy if it determines the arbitration agreement exists, unless (1) the petitioner has waived its right to arbitrate; (2) grounds exist for the revocation of the agreement; or (3) “[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.” (Code Civ. Proc., § 1281.2.)

“[T]he party moving to compel arbitration bears the burden of establishing the existence of a valid agreement to arbitrate, and the party opposing arbitration bears the burden of proving by a preponderance of the evidence any fact necessary to its defense. The role of the trial court is to sit as a trier of fact, weighing any affidavits, declarations, and other documentary evidence, together with oral testimony received at the court's discretion, to reach a determination on the issue of arbitrability.” (Hotels Nevada v. L.A. Pacific Center, Inc. (2006) 144 Cal.App.4th 754, 758.)

Defendant presents an arbitration agreement executed by Plaintiff upon the purchase of the subject vehicle in in May 2019, which includes an arbitration agreement applicable to claims or disputes “between you and us or our employees, agents, successors or assigns, which arises out of relates to your . . . 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)[.]” (Motion Exh. A.) Defendant is not a signatory to the contract, which was propounded by the selling dealership.

Plaintiff argues that Defendant cannot enforce the arbitration agreement because it is not a signatory to an agreement between Plaintiff and the dealership. (Opposition at pp. 1–4, 9–12.) However, Defendant argues that arbitration should be compelled under the holding of Felisilda v. FCA US LLC (2020) 53 Cal.App.5^th 486, in which the court held that a nonsignatory vehicle manufacturer could compel arbitration of a lemon law plaintiff’s claims, based on application of the doctrine of equitable estoppel to an arbitration agreement signed with the dealership. The arbitration clause in Felisilda, as with the clause here, required arbitration of disputes relating to “the condition of the vehicle” or “any resulting transaction or relationship (including any such relationship with third parties who do not sign this contract).” (Felisilda, supra, 53 Cal.App.5^th at p. 490.) The case was a lemon law action for violations of the Song Beverly Act. (Id. at p. 491.) The trial court granted the co-defendant dealership’s motion to compel arbitration (which included the claims against the manufacturer), and after the arbitration concluded, the court of appeal affirmed, reasoning that the lemon law plaintiff was barred from objecting to the manufacturer’s enforcement of the arbitration agreement by the doctrine of equitable estoppel. (Id. at p. 496.) “Under the 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.” (Id. at p. 495, internal quotation marks omitted.)

The court reasoned that the case at issue was covered by the contract, since it was a lemon law action related to the condition of the vehicle, and because the agreement squarely applied to disputes with third-party nonsignatories. (Id. at p. 496.) The court further held that the plaintiff’s warranty claims were intimately bound up with the purchase agreement: “The Felisildas’ claim against FCA directly relates to the condition of the vehicle that they allege to have violated warranties they received as a consequence of the sales contract. Because the Felisildas expressly agreed to arbitrate claims arising out of the condition of the vehicle – even against third party nonsignatories to the sales contract – they are estopped from refusing to arbitrate their claim against FCA.” (Id. at p. 497.)

This logic applies here. The warranty claims that Plaintiffs allege relate to the condition of the vehicle. They allege that they entered into the warranty agreement at the same time as the purchase agreement, and their claims under Felisilda arise out of the latter agreement, which contains the arbitration clause.

Plaintiff in opposition attempts to distinguish Felisilda by arguing the motion in that case was brought by the dealership — the signatory party — not by the manufacturer, who passively supported the dealership’s motion. (Opposition at pp. 1–4.) Some federal decisions have embraced this distinction. (See Ngo v. BMW of North America, LLC (9th Cir. 2022) 23 F.4th 942, 950.) But the decisions of federal district and appellate courts cited by Plaintiff are not binding upon this court except to the extent that their reasoning is persuasive. (Brakke v. Economic Concepts, Inc. (2013) 213 Cal.App.4th 761, 770; Felisilda, supra, 53 Cal.App.5^th at p. 486.) Their reasoning is not persuasively applicable here, as Plaintiff’s argument relies on a distinction that was not material to Felisilda’s holding. The claims against the dealership in Felisilda, which Plaintiff claims were critical to the decision, were dismissed prior to the commencement of arbitration, leaving only the claims against the manufacturer. (Felisilda, supra, 53 Cal.App.5^th at p. 489.) The Felisilda court expressly framed the issue as “the question of whether a nonsignatory to the agreement has a right to compel arbitration under that agreement.” (Id. at p. 495.) The court did not cite the fact of the dealership’s joinder in the case or its bringing the initiating motion as material. Indeed, the court expressly disapproved the holding of the case Jurosky v. BMW of North America, LLC (C.D. Cal. 2020) 441 F.Supp.3d 963, in which the federal district court had denied a motion to compel arbitration brought by the manufacturer in similar circumstances. (Felisilda, supra, 53 Cal.App.5th at p. 498.) The Felisilda court held that the Jurosky decision had “gloss[ed] over language in an arbitration clause that expressly include[d] third party nonsignatories,” much like the arbitration clause in the agreement here. (Ibid.)[1] The distinction hat Plaintiff offers is therefore unpersuasive.

Plaintiff asks this court, if it grants the motion, to order arbitration with Judicate West or JAMS, which provide more details about each case’s potential arbitrators than the arbitrator provided in the agreement. (Motion at pp. 12–13.) No such order is appropriate here. The arbitration agreement states: “You may choose the American Arbitration Association . . . , or any other organization to conduct the arbitration subject to our approval.” (Motion Exh. A.) Thus the options under the arbitration agreement are the AAA, or another ADR organization agreed to by the parties. Although Plaintiff anticipates that Defendant will flatly reject any proposal for other arbitrators, in conformity with past practice, Plaintiff presents no persuasive evidence that Defendant’s preference for AAA under the contract is in bad faith or unreasonable. (See Storek & Storek, Inc. v. Citicorp Real Estate, Inc. (2002) 100 Cal.App.4th 44, 58.)

[1] The decisions of federal district and appellate courts cited by Plaintiff are not binding upon this court except to the extent that their reasoning is persuasive. (Brakke v. Economic Concepts, Inc. (2013) 213 Cal.App.4th 761, 770; Felisilda, supra, 53 Cal.App.5^th at p. 486.)