Judge: Jon R. Takasugi, Case: 21STCV33267, Date: 2022-10-19 Tentative Ruling

Case Number: 21STCV33267    Hearing Date: October 19, 2022    Dept: 17

Superior Court of California

County of Los Angeles

DEPARTMENT 17

TENTATIVE RULING

Defendant’s motion to compel arbitration is GRANTED. This matter is ordered stayed pending the completion of arbitration proceedings.

On 9/9/2021, Plaintiff Jazz Serfontein (Plaintiff) filed suit against Ford Motor Company (Defendant) alleging violations of the Song-Beverly Act.

            Now, Defendant moves to compel arbitration of Plaintiff’s Complaint.

Legal Standard

Where the Court has determined that an agreement to arbitrate a controversy exists, the Court shall order the petitioner and the respondent to arbitrate the controversy …unless it determines that…  grounds exist for rescission of the agreement.” (Code Civ. Proc., § 1281.2.) Among the grounds which can support rescission are fraud, duress, and unconscionability. (Tiri v. Lucky Chances, Inc. (2014) 226 Cal.App.4th 231, 239.) The Court may also decline to compel arbitration wherein there is possibility of conflicting rulings on a common issue of law or fact. (Code Civ. Proc., § 1281.2 (c).)

Discussion

The party moving to compel arbitration “bears the burden of proving [the] existence [of an arbitration agreement] by a preponderance of the evidence.” (Rosenthal v. Great Western Fin. Securities Corp. (1996) 14 Cal.4th 394, 413.) The moving party also bears the burden of demonstrating that the claims fall within the scope of the arbitration agreement. (Omar v. Ralphs Grocery Co. (2004) 118 Cal.App.4th 955, 961.)

A.    Existing Agreement

Defendant submitted evidence that on 9/21/2019, Plaintiff entered into a purchase contract (RISC) for a new 2019 Ford Fiesta. The Purchase Agreement is a single-page, two-sided document with a title in bold font that reads “RETAIL INSTALLMENT SALE CONTRACT – SIMPLE FINANCE CHARGE (WITH ARBITRATION PROVISION).” (Polyakov Decl., Exh. 2.)

On the first page, Plaintiff signed a box explaining:

Agreement to Arbitrate: By signing below, you agree that, pursuant to the Arbitration Provision on the reverse side of this contract, you or we may elect to resolve any dispute by neutral, binding arbitration and not by a court action. See the Arbitration Provision for additional information concerning the agreement to arbitrate. 

            (Ibid., original emphasis.)

            Plaintiff also signed the following provision:

YOU AGREE TO THE TERMS OF THIS CONTRACT. YOU CONFIRM THAT BEFORE YOU SIGNED THIS CONTRACT, WE GAVE IT TO YOU, AND YOU WERE FREE TO TAKE IT AND REVIEW IT. YOU ACKNOWLEDGE THAT YOU HAVE READ BOTH SIDES OF THIS CONTRACT, INCLUDING THE ARBITRATION PROVISION ON THE REVERSE SIDE, BEFORE SIGNING BELOW. YOU CONFIRM THAT YOU RECEIVED A COMPLETELY FILLED-IN COPY WHEN YOU SIGNED IT.

(Ibid., original emphasis.)

In opposition, Plaintiff argues that Defendant has no standing as a non-signatory to invoke arbitration because there is no principal-agent relationship, no third-party beneficiary relationship, and because the doctrine of equitable estoppel does not apply. In particular, Plaintiff alleges that the agreement was purely between Plaintiff and the non-party selling dealership, and that his claims against Defendant in no way reference the underlying RISC.

Where a nonsignatory seeks to enforce an arbitration clause, the doctrine of equitable estoppel applies in two circumstances: (1) when a signatory must rely on the terms of the written agreement in asserting its claims against the nonsignatory or the claims are “intimately founded in and intertwined with” the underlying contract [citations], and (2) when the signatory alleges substantially interdependent and concerted misconduct by the nonsignatory and another signatory and “the allegations of interdependent misconduct [are] founded in or intimately connected with the obligations of the underlying agreement.” (Felisilda v. FCA US LLC (2020) 53 Cal.App.5th 486, 495.) 

For several reasons, the Court is persuaded that the doctrine of equitable estoppel applies here.

First, Plaintiff’s Complaint not only assumes the existence of the underlying vehicle sales contract, but necessarily relies on this contract’s existence in order to assert causes of action under the Song-Beverly Consumer Warranty Act. While Plaintiff may argue otherwise, Plaintiff received the Subject Vehicle and manufacturer warranties when he executed the RISC. If Plaintiff did not enter into the RISC, he would not have received the Subject Vehicle or the corresponding warranties and certifications from Defendant.  Defendant’s duty to comply with warranties arose only after Plaintiff purchased the vehicle.

Second, Plaintiff’s Song-Beverly claims all directly relate to the “condition” of the subject vehicle that Plaintiff alleges violated warranties received via the sales contract.  Specifically, Plaintiff’s Complaint alleges the Subject Vehicle contained structural, suspension, and electrical system defects and nonconformities (Complaint ¶ 10) and Defendant was unable to conform the Subject Vehicle to its express warranties and failed to disclose these defects (Complaint ¶¶ 22-23.) As such, Plaintiff’s claim are intimately founded in and intertwined with the underlying contract and the condition of the vehicle bought subject to that contract.

In sum, all of Plaintiff’s claims center on the condition of the Subject Vehicle, whether for breach of warranties or alleged fraud arising from the purchase of the Subject Vehicle. Given that Plaintiff’s claims are intertwined with the “purchase or condition” of the vehicle, and given that Plaintiff’s claim relies on the existence of the underlying sales contract, the doctrine of equitable estoppel applies. (Felisilda, supra, 53 Cal.App.5th at p. 495.) 

B.    Covered Claims

As set forth above, Plaintiff’s claims against Defendant arise out of the purchase and condition of the subject vehicle, and thus fall within the scope of the arbitration agreement. 

Given that Defendant has established by a preponderance of the evidence that an arbitration agreement exists, and that Plaintiff’s claims are covered by that agreement, the burden shifts to the Plaintiff to establish that the arbitration clause should not be enforced. (Pinnacle Museum Tower Assn. v. Pinnacle Market Development (US), LLC (2012) 55 Cal.4th 223, 236. (Pinnacle).)

II.               Plaintiff’s Burden 

The party opposing arbitration bears the burden of proving, by a preponderance of the evidence any defense, such as unconscionability or duress. (Pinnacle, supra, 55 Cal.4th at p. 236.)

            Here, Plaintiff did not advance any substantive arguments other than those set forth above.

            As a result, Plaintiff has not met her burden to prove any defense to enforcement.

Based on the foregoing, Defendant’s motion to compel arbitration is granted. This matter is ordered stayed pending the completion of arbitration proceedings.

It is so ordered.

Dated:  October    , 2022

   Hon. Jon R. Takasugi
   Judge of the Superior Court

Parties who intend to submit on this tentative must send an email to the court at smcdept17@lacourt.org by 4 p.m. the day prior as directed by the instructions provided on the court website at www.lacourt.org.  If a party submits on the tentative, the party’s email must include the case number and must identify the party submitting on the tentative.  If all parties to a motion submit, the court will adopt this tentative as the final order.  If the department does not receive an email indicating the parties are submitting on the tentative and there are no appearances at the hearing, the motion may be placed off calendar. 

            Due to Covid-19, the court is strongly discouraging in-person appearances.  Parties, counsel, and court reporters present are subject to temperature checks and health inquiries, and will be denied entry if admission could create a public health risk.  The court encourages the parties wishing to argue to appear via L.A. Court Connect.  For more information, please contact the court clerk at (213) 633-0517.  Your understanding during these difficult times is appreciated.