Judge: Joseph Lipner, Case: 24STCV17899, Date: 2024-12-03 Tentative Ruling

Case Number: 24STCV17899    Hearing Date: December 3, 2024    Dept: 72

SUPERIOR COURT OF CALIFORNIA

COUNTY OF LOS ANGELES

DEPARTMENT 72

TENTATIVE RULING

            Defendant Hyundai Motor America, Inc. moves to compel Plaintiffs to arbitrate their claims and to stay this action pending the outcome of arbitration.

            The Court tentatively DENIES Defendant’s motion to compel arbitration.

            The Court, however, requests that Plaintiffs address at the hearing Defendant’s reply argument that Plaintiffs have not opposed arbitration based on the Owner’s Handbook and Warranty Information (“Handbook”), and that Plaintiffs’ claim of express warranty is based on the Handbook and therefore must include the arbitration clause.

Background

            Plaintiffs Brad Lee and Kathy Louise Breckenridge (“Plaintiffs”) filed this Lemon Law action against defendant Hyundai Motor America (“Defendant”) on July 18, 2024. Plaintiffs allege they purchased a 2024 Hyundai Tucson (“the Vehicle”) manufactured and/or distributed by Defendant in February 2024. The Vehicle allegedly exhibited substantial defects that could not be repaired after a reasonable number of attempts, and Defendant failed to promptly replace the Vehicle or make restitution.

            On September 26, 2024, Defendant filed the instant motion to compel Plaintiffs to arbitrate their claims and to stay this action pending the outcome of arbitration.

            On November 18, 2024, Plaintiffs filed their opposition.  On November 25, 2024, Defendant filed a reply.

Request for Judicial Notice

Defendant requests judicial notice of Plaintiffs’ complaint. The Court denies the request. Judicial notice is unnecessary for filings appearing within the same docket.

Legal Standard

             Under California and federal law, public policy favors arbitration as an efficient and less expensive means of resolving private disputes. (Moncharsh v. Heily & Blasé (1992) 3 Cal.4th 1, 8-9 (Moncharsh); AT&T Mobility LLC v. Concepcion (2011) 563 U.S. 333, 339.) Accordingly, whether an agreement is governed by the California Arbitration Act or the Federal Arbitration Act, courts resolve doubt about an arbitration agreement’s scope in favor of arbitration. (Moncharsh, supra, 3 Cal.4th at p. 9.)

            The party seeking to compel arbitration bears the burden of proving the existence of a valid arbitration agreement by the preponderance of the evidence.  (Engalla, supra, 15 Cal.4th 951, 972.)  A petition to compel arbitration must allege both a “written agreement to arbitrate” the controversy, and that a party to that agreement “refuses to arbitrate” the controversy. (Code Civ. Proc. § 1281.2.) It then becomes plaintiff’s burden, in opposing the motion, to prove by a preponderance of the evidence any fact necessary to her opposition. (Ibid.)

Discussion

Defendant’s motion relies on two separate asserted arbitration agreements.

First, Defendant contends Plaintiffs are bound by an arbitration provision located in the “Owner’s Handbook and Warranty Information” (“Handbook”) that Plaintiffs purportedly received when they purchased the Vehicle.

Second, Defendant relies on an arbitration provision within the “Bluelink Connected Services Agreement” (“CSA”) associated with Defendant’s “Bluelink” services, “a connected car system that includes various functions and features”. (Rao Decl., Exh. 2; Mot., 6:9-10, citing Rao Decl., ¶ 3.) Defendant contends that despite the CSA’s ancillary relationship to the Vehicle’s warranty, the language of the CSA is broad enough to encompass Plaintiffs’ claims here.

Defendant has not established the parties mutually assented to the arbitration agreement purportedly contained within the Owners’ Handbook.

As to the arbitration terms within the purported Owner’s Handbook: Defendant’s evidence does not establish the Handbook was executed by Plaintiffs. Their signature does not appear anywhere on the document. The only testimony supporting the existence of the agreement is Defendant’s counsel’s statement characterizing it as “Plaintiffs’ Owners Handbook & Warranty Information for Plaintiffs’ vehicle.” (Ameripour Decl., ¶ 3.) The exhibit lacks foundation, and even if it had proper foundation, there is no evidence Plaintiffs assented to its terms.

Defendant has not established Plaintiffs ever agreed to the terms contained in the Owner’s Handbook, so it has not carried its burden as to that agreement.

Defendant has not established that the parties mutually assented to the Bluelink Connected Services Agreement.

Defendant has not established Plaintiffs executed the CSA at all. Defendant advances the declaration of Vijay Rao, who only offers general testimony about what consumers who subscribe to Bluelink “would do” or “must do”. (See Rao Decl., ¶ 6.) Rao attests “[o]n February 12, 2024[,] Plaintiff [sic] enrolled their Vehicle in Bluelink services.” (Id., ¶ 5.) But he lays no foundation for this assertion; neither the Court nor Plaintiffs can ascertain the basis for his knowledge of this fact.

This lack of proof of mutual assent is, in itself, sufficient reason to deny the motion.  The Court denies it on that basis.

Plaintiffs’ claims do not fall within the scope of the Bluelink Connected Services Agreement.

            Moreover, even if Defendant established Plaintiffs executed the CSA, the CSA does not apply to this dispute. The arbitration provision appears at paragraph 14 of the agreement, and reads:

“Hyundai and you agree to arbitrate any and all disputes and claims between us arising out of or relating to this Agreement, Connected Services, Connected Services Systems, Service Plans, your Vehicle, use of the sites, or products, services, or programs you purchase, enroll in or seek product/service support for, whether you are a Visitor or Customer, via the sites or through mobile application, except any disputes or claims which under governing law are not subject to arbitration, to the maximum extent permitted by applicable law.”

(Rao Decl., Exh. 2, ¶ 14(C)(a).)

The document refers to connected vehicle services, not to Plaintiffs’ purchase of the vehicle. The single inclusion of the term “your Vehicle” in the arbitration provision cannot reasonably be held to extend to statutory warranty claims far outside the subject matter of the CSA itself.  Moreover, as a matter of contract interpretation, inclusion of the term “your Vehicle” in the CSA cannot be construed to encompass all claims related to the Vehicle, regardless of how attenuated the claims’ relationship is to Bluelink services themselves. The courts interpret contract terms to avoid surplusage where possible. (See VFLA Eventco, LLC v. William Morris Endeavor Entertainment, LLC (2024) 100 Cal.App.5th 287, 297.) If “the Vehicle” were construed to encompass any claim the Vehicle’s purchaser could possibly have, then all other subsets of claims in the same list would fall by the wayside. Such an interpretation does not comport with law.

            Defendant also relies on language appearing later in the same paragraph of the Agreement:

“The agreement to arbitrate otherwise includes, but is not limited to: claims based in contract, tort, warranty, statute, fraud, misrepresentation or any other legal theory; . . . [and] claims relating to the Vehicle for which you seek product or service support via the sites.”

(Ibid.)

This language does not further Defendant’s argument. Despite referring to “warranty” and “statute”, the clause appears to be related to Bluelink services, the subject of the agreement. Moreover, the CSA itself distinguishes between the “Connected Services” it addresses and other issues that may be covered by Defendant’s warranty. At its tenth paragraph, the CSA disclaims all relation to a customer’s warranty agreement:

“10. NO WARRANTIES. Warranties are special kinds of promises. THE VEHICLE’S LIMITED WARRANTY does not cover the Connected Services . . . .”

The term “the Vehicle for which you seek product or service support via the sites” also suggests the term does not apply to all claims related to the Vehicle generally. It only refers to claims related to the Vehicle once the Plaintiffs seek product or service support – and, implicitly, only regarding that support, which is the subject matter of the CSA.

            Defendant has not established that Plaintiffs are bound by either of the arbitration agreements Defendant advances in support of its motion. Defendant has failed to carry its threshold burden, and the motion must be denied.