Judge: Lee W. Tsao, Case: 22NWCV00633, Date: 2023-01-19 Tentative Ruling

Case Number: 22NWCV00633    Hearing Date: January 19, 2023    Dept: C

FERRER v. PRO X MOTORS INC.

CASE NO.:  22NWCV00633

HEARING:  01/19/23

ADD ON 2

TENTATIVE ORDER

     I.        Plaintiff DAISY FERRER’s Motion to Compel Arbitration is GRANTED as to Defendant PRO X MOTORS, INC. only. This entire action is STAYED until conclusion arbitration.

    II.        Defendant AMERICAN FIRST CREDIT UNION’s Demurrer to Plaintiff’s First Amended Complaint (inadvertently captioned as a Demurrer to Plaintiff’s Complaint) is OFF-CALENDAR.

  III.        Defendant AMERICAN FIRST CREDIT UNION’s Motion to Strike Portions of Plaintiff’s First Amended Complaint is OFF-CALENDAR.

Plaintiff to give notice.

No Reply filed as of January 18, 2023.

The Purchase Agreement containing the subject Arbitration Clause was executed by Plaintiff and Defendant Pro X Motors, Inc., and states: “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 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.” (Roberts Decl., Ex. A.)  

In Opposition, Defendant Pro X Motors, Inc. argues that Plaintiff waived her right to compel arbitration; that Plaintiff’s Motion is procedurally improper; there is no valid existence of an arbitration agreement; and not all defendants are subject to the arbitration clause.  

In a separately filed Opposition, Defendant American First Credit Union (“AFCU”) argues that it should not be compelled to arbitration because it did not sign the Arbitration Agreement at issue and was not a party to the Arbitration Agreement at issue. AFCU states that Plaintiff re-financed her vehicle loan with AFCU in a separate, written agreement, which does not contain an arbitration provision.

Except for specifically enumerated exceptions, the court must order the petitioner and respondent to arbitrate a controversy if the court finds that a written agreement to arbitrate the controversy exists. (See CCP §1281.2.) “In California, [g]eneral principles of contract law determine whether the parties have entered a binding agreement to arbitrate.” (Craig v. Brown & Root, Inc. (2000) 84 Cal.App.4th 416, 420.) “A petition to compel arbitration or stay proceedings pursuant to CCP §§1281.1 and 1281.4 must state, in addition to other required allegations, the provisions of the written agreement and the paragraph that provides for arbitration. The provisions must be stated verbatim or a copy must be physically or electronically attached to the petition and incorporated by reference.” (C.R.C. Rule 3.1330.)

The petitioner bears the burden of proving the existence of a valid arbitration agreement by the preponderance of the evidence, and a party opposing the petition bears the burden of proving by a preponderance of the evidence any fact necessary to its defense. In these summary proceedings, the trial court sits as a trier of fact, weighing all the affidavits, declarations, and other documentary evidence, as well as oral testimony received at the court’s discretion, to reach a final determination. (Engalia v. Permanente Medical Group, Inc. (1997) 15 Cal.4th 951.)

“For purposes of a petition to compel arbitration, it is not necessary to follow the normal procedures of document authentication … The statute does not require the petitioner to introduce the agreement into evidence.  A plain reading of the statute indicates that as a preliminary matter the court is only required to make a finding of the agreement’s existence, not an evidentiary determination of its validity.”  (Condee v. Longwood Management Corp. (2001) 88 Cal.App.4^th 215. 

This matter was last heard on January 12, 2023.  Plaintiff did not make an appearance.  Defendant Pro X Motors raised various objections to the copy of the sales agreement included as Exhibit A in Plaintiff’s Motion to Compel Arbitration.  Among other things, Defendant Pro X Motors noted that the copy of the sales agreement was missing pages and that it failed to identify the signatories by name.  The court was also concerned that the sales agreement indicated that it was signed on October 27, 2021, whereas the moving papers indicated the agreement was reached on June 29, 2021.  (Plaintiff’s Motion to Compel Arbitration, 3:26.)  In light of these concerns, the court continued the matter to January 19, 2023 and permitted Plaintiff an opportunity to file a Supplemental Declaration addressing Defendant Pro X Motors’ evidentiary objections.  As of January 18, 2023, no additional filings have been received from Plaintiff. 

After conducting another review of the pleadings and relevant authorities, the Court finds that Plaintiff has met her burden of proving the existence of a valid arbitration agreement between the parties. In her moving papers, Plaintiff recites verbatim the provisions of the written agreement providing for arbitration.  (Motion to Compel Arbitration, 4:13-23.)  Nothing more is required of her to meet her initial burden.  C.R.C. Rule 3.1330 (“The provisions must be stated verbatim or a copy must be physically or electronically attached to the petition and incorporated by reference.”)  That Plaintiff did not attach a complete copy of the sales agreement to her motion (or provide one after the last hearing) is immaterial because she was not required to produce one in the first instance.  Defendant Pro X Motors has offered no evidence tending to show that an arbitration agreement did not exist.  Moreover, the court is satisfied from the pleadings that the actual date of the sales agreement was in fact October 27, 2021, not June 29, 2021. 

The Court does not find that Plaintiff waived their contractual right to arbitrate the dispute by filing the subject civil action. It is undisputed that there are non-signatory defendants that are parties to this action.

With respect to the non-signatory defendants—AFCU and Hudson Insurance Company- Plaintiff has not proffered a successful argument to substantiate a basis to compel them into arbitration. “As one authority has stated, there are six theories by which a nonsignatory may be bound to arbitrate: ‘(a) incorporation by reference; (b) assumption; (c) agency; (d) veil-piercing or alter ego; (e) estoppel; and (f) third-party beneficiary.” (Jenks v. DLA Piper Rudnick Gray Cary US LLP (2015) 243 Cal.App.4th 1, 9-10.)  Plaintiff fails to articulate what “theory” the non-signatories should be compelled into arbitration under. The Court does not find that the non-signatory Defendants should be compelled to arbitration.

Defendant Pro X Motors, Inc. argues that the entire Motion should be denied due to the possibility of conflicting rulings. (See CCP §1281.2(c).) Pursuant to CCP §1281.2(c) and (d): “[T]he court (1) may refuse to enforce the arbitration agreement and may order intervention or joinder of all parties in a single action or special proceeding; (2) may order intervention or joinder as to all or only certain issues; (3) may order arbitration among the parties who have agreed to arbitration and stay the pending court action or special proceeding pending the outcome of the arbitration proceeding; or (4) may stay arbitration pending the outcome of the court action or special proceeding…” when “[a] party to the arbitration agreement is also a party to a pending court action or special proceeding with a third party, arising out of the same transaction or series of related transactions and there is a possibility of conflicting rulings on a common issue of law or fact.” (emphasis added.)  The request to deny the motion due to the possibility of conflicting rulings is DENIED. 

Accordingly, the Court will GRANT the Motion to Compel Arbitration as to Defendant X Pro Motors, Inc. only. The entire case will be STAYED until conclusion of arbitration.

Defendant’s Demurrer and Motions to Strike are placed OFF-CALENDAR as MOOT.