Superior Court of California 

County of Los Angeles 

Department 78 

 

LISA ACROND, et al., 

Plaintiffs, 

v. 

HYUNDAI MOTOR AMERICA, et al., 

Defendants.   Case No.:  20STCV41850 

  Hearing Date:  October 6, 2023 

   

   [TENTATIVE] RULING RE: 

PLAINTIFFS’ MOTION TO RECONSIDER

 

 

The Court reconsiders the October 19, 2021 ruling on its own motion. Defendant Hyundai Motor America’s Motion to Compel Arbitration is DENIED. 

Moving party to provide notice and to file proof of service of such notice within five court days after the date of this order. 

FACTUAL BACKGROUND   

This is a lemon law action. The Complaint alleges as follows. On October 12, 2012, Plaintiffs Lisa Acrond (“Acrond”) and Margie Armstead (“Armstead”) purchased a 2012 Hyundai Elantra with an express written warranty from Defendant Hyundai Motor America (“Hyundai”)’s authorized dealership South Bay Hyundai. (Compl. ¶¶ 6-7.) Defendant BMW of North America, LLC (“BMW”) manufactured and/or distributed the vehicle. (Compl. ¶ 7.) During the warranty period, the vehicle developed various defects and conditions including engine defects, and Hyundai’s repair facilities have been unable to service or repair the vehicle to conform to the express warranties. (Compl. ¶¶ 8, 15-24.) 

PROCEDURAL HISTORY 

Plaintiffs filed the Complaint on October 30, 2020, alleging six causes of action: 

1. Violation of Song Beverly Act section 1793.2(d) 

2. Violation of Song Beverly Act section 1793.2(b) 

3. Violation of Song Beverly Act section 1793.2(A)(3) 

4. Breach of express warranty 

5. Breach of implied warranty 

6. Fraud by omission 

On December 23, 2020, Hyundai filed a Demurrer and Motion to Strike. 

On April 30,  2021, Hyundai filed the instant Motion to Compel Arbitration.  

On June 7, 2021, Plaintiffs filed an Opposition. 

On August 5, 2021, Hyundai filed a Reply.  

On October 19, 2021, the Court granted Hyundai’s motion to compel arbitration.

On July 18, 2023, Plaintiffs filed the instant motion for reconsideration.

DISCUSSION 

I. REQUEST FOR JUDICIAL NOTICE

The court may take judicial notice of “official acts of the legislative, executive, and judicial departments of the United States and of any state of the United States,” “[r]ecords of (1) any court of this state or (2) any court of record of the United States or of any state of the United States,” and “[f]acts and propositions that are not reasonably subject to dispute and are capable of immediate and accurate determination by resort to sources of reasonably indisputable accuracy.” (Evid. Code § 452, subds. (c), (d), and (h).)  

Here, Plaintiffs request judicial notice of the following:

1. Kielar v. The Superior Court of Placer County, No. C096773 (Cal. Ct. App. August 16, 2023) (“Kielar”), certified for publication

2. California Court of Appeal, Third Appellate District’s Response in Campos et al. v. The Superior Court of Butte County, No. C098848

Plaintiffs’ Requests for Judicial Notice are GRANTED. 

II. MOTION FOR RECONSIDERATION

Plaintiffs move for reconsideration of the Court’s October 19, 2021 order granting Defendant’s motion to compel arbitration and stay action on the grounds that there is a change of law that warrants reconsideration.

Code Civ. Proc., section 1008 states:

(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 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. 

…

(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.

A court acts in excess of jurisdiction when it grants a motion to reconsider that is not based upon “new or different facts, circumstances or law.” (Gilberd v. AC Transit (1995) 32 Cal.App.4th 1494, 1499.) Motions for reconsideration are restricted to circumstances where a party offers the Court some fact or circumstance not previously considered, and some valid reason for not offering it earlier. (Id.)   

An appellate decision published during an action’s pendency may be a change of law under section 1008, subdivision (c), and requires a trial court to reconsider its earlier ruling if the decision materially changed the law. (Valdez v. Himmelfarb (2006) 144 Cal.App.4th 1261, 1276.) A change in the law is always an appropriate basis, up until final judgment is entered, for changing an interim order. (State of California v. Superior Court (Flynn) (2016) 4 Cal.App.5th 94, 101.)

A trial court may exercise its inherent jurisdiction to reconsider an interim ruling. (Le Francois v. Goel (2005) 35 Cal.4th 1094, 1096-1097.)  The trial court is specifically authorized to exercise such inherent jurisdiction to reconsider orders compelling arbitration. (Malek v. Blue Cross of California (2004) 121 Cal.App.4th 44, 59–60.)

Judge’s Authority to Rule on Motion

Although judges generally may not reconsider rulings made by another judge, a different judge may entertain the motion if the original judge who made the ruling is unavailable. (People v. Saez (2015) 237 Cal.App.4th 1177, 1185.)

Here, the Honorable Robert S. Draper ruled on the original motion to compel arbitration. However, Department 1 has stated that Judge Draper is unavailable to hear this motion.

Timeliness

Here, Plaintiffs move for reconsideration of the Court’s order compelling arbitration. The Court relied on Felisilda¿v. FCA US LLC¿(2020) 53 Cal.App.5th 486 to determine that Hyundai was a third-party beneficiary to the sale agreement between Plaintiffs and South Bay Hyundai. On April 4, 2023, the Second Appellate District of the California Court of Appeal reached a decision contrary to Felisilda in Ochoa v. Ford Motor Company (Ford Motor Warranty Cases) (2023) 89 Cal. App. 5th 1324, review granted July 19, 2023, S279969 (“Ochoa”). Another similar decision, Montemayor v. Ford Motor Company (2023) 92 Cal.App.5th 958 (“Montemayor”), was published after Ochoa. Plaintiff argues the new law found in Ochoa, which specifically addresses the reasoning in Felisilda, justifies reconsideration of the motion. 

The motion is untimely under Code of Civil Procedure section 1008 subdivision (a) (“Section 1008”). Neither subdivision (a) nor subdivision (c) of Section 1008 give Plaintiff the authority to move for reconsideration more than ten days after the order where there is a change of law. (See Advanced Building Maintenance v. State Comp Ins. Fund (1996) 49 Cal.App.4th 1388, 1392 [finding the trial court’s denial of the motion for reconsideration correct where the motion was served more than 10 days after service of written notice of entry of the order].) Subdivision (a) limited the time in which a party may file a motion for reconsideration. Subdivision (c), on the other hand, gives the court authority to sua sponte reconsider a ruling where there is a change in law. 

Here, while the motion is untimely, the court finds the change in law warrants reconsideration of a prior order. Although Hyundai argues it has been two years since the motion to compel arbitration was granted, there is no final judgment yet in this case and it does not appear that the parties have completed arbitration. The Court is not barred from ruling on this motion.

Hyundai also argues that Ochoa is not a change of law because Ochoa did not overrule Felisilda and thus created a split of authority. Where appellate decisions are in conflict, the court exercising inferior jurisdiction can and must make a choice between the conflicting decisions. (Auto Equity Sales, Inc. v. Superior Court of Santa Clara County (1962) 57 Cal.2d 450, 456.) Here, as will be explained below, the Court finds that the more limited interpretation of the parties’ agreement in Ochoa more accurately reflects the parties’ intent.

Hyundai also argues that Ochoa is not binding because the California Supreme Court granted review in July 2023. However, the case may still be cited for its persuasive value. (Cal. Rules of Court, Rule 8.1115(e)(1).) Moreover, several other appellate decisions on this issue have followed Ochoa, including Montemayor; Kielar v. Superior Court of Placer County (Cal. Ct. App., Aug. 16, 2023, No. C096773) 2023 WL 5270559; and Yeh v. Superior Court of Contra Costa County (2023) A166537; 2023 WL 5741703.

Accordingly, the court reconsiders its prior ruling on the motion to compel arbitration pursuant to its own authority. 

Compel Arbitration

Plaintiffs’ sales agreement with the dealership, South Bay Hyundai, states, in relevant part:

“ARBITRATION PROVISION PLEASE REVIEW – IMPORTANT – AFFECTS YOUR LEGAL RIGHTS[.]” (Park Decl., Exhs. 1-2, p. 6.). The arbitration clause states: 

“Any claim or dispute, whether in contract, tort, or statute or otherwise (including the interpretation and scope of this Arbitration Provision, and the arbitrability of the claim 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 do not sign this contract), shall, at your our election, be resolved by neutral, binding arbitration and not by a court action.” (Motion to Compel Arb., Park Decl., Exhs. 1-2, p. 6.) 

In Felisilda, plaintiff purchased a vehicle from defendant dealership. After the car broke down during the warranty period, plaintiff brought a claim under the SBA against defendant dealership and defendant manufacturer. Relying on an arbitration provision in the sales contract that was identical to the instant Arbitration Agreement, defendant dealership moved to compel arbitration; defendant manufacturer filed a notice of non-opposition. 

The trial court granted defendants’ motion to compel arbitration. Thereafter, plaintiff dismissed defendant dealership. After the arbitrator found in defendant manufacturer’s favor, plaintiff appealed. 

On appeal, plaintiff argued that the trial court lacked jurisdiction to order plaintiffs to arbitrate their claim against defendant manufacturer because defendant manufacturer was a non-signatory to the sales contract. 

The Felisilda Court affirmed, holding that defendant manufacturer could compel arbitration pursuant to the doctrine of equitable estoppel. The Court found that as plaintiff’s claim against defendant manufacturer related directly to the condition of the vehicle, and “[b]ecause [plaintiff] expressly agreed to arbitrate the claims arising out of the condition of the vehicle – even against third party nonsignatories to the sales contract – [plaintiff is] estopped from refusing to arbitrate their claim against [defendant manufacturer].” (Felisilda at p. 497.) 

In Ochoa, the Second District of the Court of Appeal declined to follow Felisilda, holding that “manufacturer vehicle warranties that accompany the sale of motor vehicles without regard to the terms of the sale contract between the purchaser and the dealer are independent of the sale contract.” (Ochoa at p. 4.)

Defendant manufacturer in Ochoa argued that arbitration could be compelled pursuant to a sales contract almost identical to the instant Contract under the doctrine of equitable estoppel, or as a third-party beneficiary. 

In rejecting defendant manufacturer’s equitable estoppel argument, the Court held that as California law does not treat manufacturer warranties imposed outside the four corners of a retail sales contract as part of the sale contract, “Plaintiff’s claims in no way rely on the sale contracts. Equitable estoppel does not apply.” (Id. at p. 7.)

In rejecting defendant manufacturer’s third-party beneficiary theory, the Court held that “allowing [defendant manufacturer] to enforce the arbitration provision as a third party beneficiary would be inconsistent with the reasonable expectations of the contracting parties where they twice specifically vested the right of enforcement in the purchaser and the dealer only.” (Id. at p. 8.) 

Here, Plaintiff urges the Court to follow Ochoa and Montemayor and reverse the October 19, 2021 order compelling arbitration.

Hyundai first argues that the Ochoa Court’s finding that a manufacturer’s warranty is not a part of the sales contract is erroneous as it relied on two cases that predated the passage of both the UCC and the SBA; Greenman v. Yuba Power Products, Inc. 59 Cal.2d 57 (1963), and Corporation of Presiding Bishop of Church of Jesus Christ of Latter Day Saints v. Cavanaugh, 217 Cal.App.2d 492 (1963). 

However, the Ochoa Court addressed this issue, noting that there is “no more recent authority establishing that manufacturer warranty obligations are implied terms in a retailer’s sales contract.” (Ochoa, supra, 89 Cal.App.5th at p. 1335.) 

Hyundai next argues that the California Supreme Court has noted that the Legislature conceived of an express warranty as being part of the purchase of a consumer product. Hyundai cites Gavaldon v. DaimlerChryslerCorp. (2004) 32 Cal.4th 1246, 1258 (“Gavaldon”) in support of its position. Specifically, Hyundai argues that the legislative history of the Song Beverly Act read together with Civ. Code, section 1792’s language that the implied warranty of merchantability attaches to every sale of consumer goods that are sold at retail in this state means both express and implied warranties should be read as part of the sales contract. 

Gavaldon involved a dispute over whether a service contract was an express warranty within the meaning of the SBA. The plaintiff there purchased from the vehicle’s manufacturer a service contract protecting her against major repair bills at the time she purchased the vehicle. (Gavaldon at p.1251.) The manufacturer failed to repair defects in the vehicle after the expiration of the vehicle’s express warranty. (Gavaldon at p.1250.) The parties disputed whether the service contract was an express warranty. The court there held that, reading the language of the SBA together with its legislative history, the service contract was a distinct entity from the express warranty. (Gavaldon at 1259.) In its analysis, the Court reasoned that the legislature conceived an express warranty as being part of the purchase of a consumer product, that the service contract was purchased for additional cost, that the manufacturer chose to not to use the terms “warrant” or “guarantee”, and that the SBA statute included protections for a consumer who paid for an express warranty against the purchase of an extra overlapping service contract. (Id.) 

Gavaldon is distinguishable from Ochoa and the case at hand because the plaintiff in Gavaldon purchased her vehicle from the manufacturer. The dispute did not involve whether the manufacturer was a third party beneficiary, but whether a service contract was distinct from an express warranty. The court in Gavaldon made its analysis assuming that the contract at issue was between the manufacturer and a consumer. The court did not examine whether an express warranty was distinct from a contract of sale because the contract was already directly between the consumer and the manufacturer. In context, the court’s statement that the “Legislature apparently conceived of an express warranty as being part of the purchase of a consumer product” is not applicable to the case at hand where the seller was not the manufacturer but a dealer. (Gavaldon at p. 1258.)

Likewise, the Felisilda Court did not find that in California, a manufacturer’s warranty is inherently intertwined with the sales contract; instead, the Felisilda based its decision on the language of the sales contract itself. 

In addressing the Felisilda Court’s analysis of the contract language, the Ochoa Court stated:

The Felisilda court relied on the following italicized language to conclude that third parties could enforce the arbitration provision: “ ‘Any claim or dispute, whether in contract, tort, statute or otherwise . . . , between you and us or our employees, agents, successors or assigns, which arises out of or relates to . . . purchase or condition of this vehicle, the contract or any resulting transaction or relationship (including any such relationship with third parties who do not sign this contract) shall, at your or our election, be resolved by neutral, binding arbitration . . . .’ ” [citation].

We do not read this italicized language as consent by the purchaser to arbitrate claims with third party nonsignatories. Rather, we read it as a further delineation of the subject matter of claims the purchasers and dealers agreed to arbitrate. . .

Purchasers, like plaintiff . . . can elect to buy insurance, theft protection, extended warranties and the like from third parties, and they can finance their transactions with those third parties under the sale contract. The “third party” language in the arbitration clause means that if a purchaser asserts a claim against the dealer . . . that relates to one of those third-party transactions, the dealer can elect to arbitrate that claim. It says nothing of binding the purchaser to arbitrate with the universe of unnamed third parties. (Ochoa at p. 1335.)  

The Court finds the Ochoa’s limited interpretation of the quoted language more accurately depicts the parties’ intent when they entered into the Arbitration Agreement. Moreover, the Court will not reject the Court of Appeal’s analysis of manufacturer’s warranties in Ochoa in favor of Felisilda, a decision which did not analyze the inherent relation between manufacturer’s warranties and underlying sales contracts in any depth. Although Hyundai might find the Ochoa Court’s analysis erroneous, there is simply no analysis in Felisilda that is persuasive on the matter.  

Accordingly, the Court elects to follow the Ochoa Court’s limited interpretation of the Arbitration Agreement. 

Accordingly, the motion for reconsideration is denied as untimely. The court reconsiders the motion to compel arbitration under its own authority in light of Ochoa v Ford Motor Company (Ford Motor Warranty Cases) (2023) 306 Cal.Rprt.3d 611. (See Code Civ. Proc., section 1008, subd. (c).) Upon reconsidering the court ruling on Defendant’s motion to compel arbitration, the court denies the motion to compel arbitration. The matter is remanded to the superior court for all further proceedings.  

DATED:  October 6, 2023

___________________________

Hon. Jill Feeney   

Judge of the Superior Court