Judge: Jon R. Takasugi, Case: 22STCV17351, Date: 2023-05-03 Tentative Ruling

Case Number: 22STCV17351    Hearing Date: May 3, 2023    Dept: 17

Superior Court of California

County of Los Angeles

DEPARTMENT 17

TENTATIVE RULING

Defendant’s motion to compel arbitration is DENIED. 

            On 5/26/2022, Plaintiff Luis-Miguel Blas (Plaintiff) filed suit against Nissan North America (Defendant) alleging statutory violations.

            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 1/28/2019, Plaintiff entered into a purchase contract (RISC) for a new 2019 Nissan Frontier King (Subject Vehicle). The Purchase Agreement reads “ARBITRATION PROVISION” and “PLEASE REVIEW – IMPORTANT- AFFECTS YOUR LEGAL RIGHTS”).” (Complaint, Exh. 4.) 

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.

The Court agrees. In the past, this Court has concluded that Defendant could enforce the arbitration agreement under a theory of equitable estoppel. This was based on a conclusion that Song-Beverly claims: (1) necessarily rely on the underlying contract, given that if a plaintiff did not enter into the RISC, he or she would not have received the Subject Vehicle or the corresponding warranties and certifications from the defendant; and (2) all directly relate to the condition of the vehicle and thus are intimately founded in and intertwined with the underlying contract and the condition of the vehicle bought subject to that contract.

            However, the Court of Appeal directly addressed the manufacturer’s standing vis-à-vis the Sales Contract and equitable estoppel in the newly published Martha Ochoa v. Ford Motor Company (2023) Cal.Ct.App. In rejecting the car manufacturer’s right to enforce the Sales Contract’s arbitration agreement under a theory of third-party beneficiary or equitable estoppel, the Court wrote:

We agree with the trial court that FMC [Ford] could not compel arbitration based on plaintiffs’ agreements with the dealers that sold them the vehicles. Equitable estoppel does not apply because, contrary to FMC’s arguments, plaintiffs’ claims against it in no way rely on the agreements. FMC was not a third party beneficiary of those agreements as there is no basis to conclude the plaintiffs and their dealers entered into them with the intention of benefitting FMC.

            Moreover, as noted by Plaintiff in opposition, Felisilda, the authority relied upon to allow manufacturers to enforce arbitration, dealt with a dealership’s motion under its own contract. As such, Ochoa is more directly analogous to the facts here, and the Court declines to follow Felisilda over Ochoa.

            Given the conclusion that Defendant does not have standing to enforce the underlying arbitration provision, Defendant has not met its burden to show that it has standing to enforce the arbitration agreement.

            Based on the foregoing, Defendant’s motion to compel arbitration is denied.

It is so ordered.

Dated:  May    , 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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