Judge: Jon R. Takasugi, Case: 22STCV02224, Date: 2023-02-15 Tentative Ruling

Case Number: 22STCV02224    Hearing Date: February 15, 2023    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 1/19/2022, Plaintiff Jocelyn Sanchez (Plaintiff) filed suit against Nissan North America, Inc. (Defendant) alleging violations of statutory obligations.

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).)

Waiver

            Plaintiff contends that Defendant has waived any right to arbitration because Defendant knew about the arbitration provision and still took numerous steps inconsistent with the intent to invoke arbitration:

NNA was served in this case on Feb. 1, 2022. (Proof of Service, filed Feb. 14, 2022.) NNA knew about the arbitration provision in a form contract used by car dealerships across this state, which it attached to an opposition brief (See Ornelas Decl., ¶ 4, filed Aug. 10, 2022.) and which it also noted in its Answer. (Def.’s Answer, p. 9, ln. 22-25.) Yet NNA confirmed that the courthouse was its venue of choice in its Case Management Statement (“CMS”) of May 5, 2022, where it requested a jury trial. (Def.’s CMS, filed May 5, 2022.) This explicit waiver was repeated at the Case Management Conference on May 20, 2022, where “Jury Trial [was] demanded by both plaintiff and defendant.” (Minute Order of May 20, 2022.) As in Davis v. Shiekh Shoes, defendant has acquiesced to the trial schedule. (Davis v. Shiekh Shoes, supra, at 970.) Defendant’s trial preference was further shown in response to Plaintiff’s discovery requests, in which NNA never indicated that it might seek arbitration or that arbitration might be a potential bar to judicial discovery. (Law Decl. Ex. 2.)

            (Opp., 3: 15-26.)

In determining whether the right to arbitrate has been waived, a court can consider: “(1) whether the party's actions are inconsistent with the right to arbitrate; (2) whether “the litigation machinery has been substantially invoked” and the parties “were well into preparation of a lawsuit” before the party notified the opposing party of an intent to arbitrate; (3) whether a party either requested arbitration enforcement close to the trial date or delayed for a long period before seeking a stay; (4) whether a defendant seeking arbitration filed a counterclaim without asking for a stay of the proceedings; (5) “whether important intervening steps [e.g., taking advantage of judicial discovery procedures not available in arbitration] had taken place”; and (6) whether the delay “affected, misled, or prejudiced” the opposing party.’ ” (St. Agnes Medical Center v. PacifiCare of California (2003) 31 Cal.4th 1187, 1196.)

While the Court notes that such conduct is inconsistent with a right to arbitrate, it is insufficiently inconsistent to constitute waiver. The parties are not well into preparation of a lawsuit, and Plaintiff’s evidence concerning Defendant’s discovery participation or the setting of a trial schedule does not amount to a “substantial” invocation of litigation machinery. Defendants raised arbitration as an affirmative defense in its answer, no vehicle inspection has been performed, and Defendant has not propounded any discovery. (Polyakov Decl., ¶¶ 4-5.)

After weighing the relevant factors, the Court finds that Defendants have not waived their right to arbitrate. (St. Agnes, supra, 31 Cal.4th at p. 1196.)

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 5/6/2020, Plaintiff entered into a purchase contract (RISC) for a new 2020 Nissan Rogue Sport. The Purchase Agreement reads “ARBITRATION PROVISION” and “PLEASE REVIEW – IMPORTANT- AFFECTS YOUR LEGAL RIGHTS”).” (Polyakov Decl., Exh. 1.) 

The arbitration provision provides:

1.      EITHER YOU OR WE MAY CHOOSE TO HAVE ANY DISPUTE BETWEEN US DECIDED BY ARBITRATION AND NOT IN COURT OR BY JURY TRIAL.

2.      IF A DISPUTE IS ARBITRATED, YOU WILL GIVE UP YOUR RIGHT TO PARTICIPATE AS A CLASS REPRESENTATIVE OR CLASS MEMBER ON ANY CLASS CLAIM YOU MAY HAVE AGAINST US INCLUDING ANY RIGHT TO CLASS ARBITRATION OR ANY CONSOLIDATION OF INDIVIDUAL ARBITRATIONS.

3.      DISCOVERY AND RIGHTS TO APPEAL IN ARBITRATION ARE GENERALLY MORE LIMITED THAN IN A LAWSUIT, AND OTHER RIGHTS THAT YOU AND WE WOULD HAVE IN COURT MAY NOT BE AVAILABLE IN ARBITRATION.

(Ibid.)

The arbitration provision also states broadly that any claim arising out of the Sales Contract or any resulting relationship with “third parties who do not sign this contract” could be resolved by binding arbitration:

Any claim or dispute, whether in contract, tort, 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 or our election, be resolved by neutral, binding arbitration and not by a court action.

(Ibid, emphasis added.)

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 she executed the RISC. If Plaintiff did not enter into the RISC, she 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 suffered from a number of  defects (Complaint ¶¶ 14, 51–55) and Defendant was unable to conform the Subject Vehicle to its express warranties and failed to disclose these defects (Ibid.) 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, and arise 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 defense to enforceability. As such, she has not met her burden to show that the arbitration agreement should not be enforced.

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:  February    , 2023

   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. 

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