Judge Lee W. Tsao, Case Number: 22NWCV01610, Date: 2023-06-20 Tentative Ruling

Judge: Lee W. Tsao, Case: 22NWCV01610, Date: 2023-06-20 Tentative Ruling

Case Number: 22NWCV01610 Hearing Date: June 20, 2023 Dept: C

COLLINS, et al. v. HYUNDAI MOTOR AMERICA

CASE NO.: 22NWCV01610

HEARING: 6/20/23

TENTATIVE ORDER

Defendant Hyundai Motor America’s opposed motion to compel arbitration is DENIED.

Moving Party to give NOTICE.

On December 15, 2022, Beverly Collins, and Mamie Collins (“Plaintiffs”) filed an action for violations of the Song-Beverly Act against Defendant Hyundai Motor America (“Defendant”) (Case No. 22NWCV01610). On January 17, 2023, Defendant moved to compel arbitration.

Plaintiffs allege that on September 18, 2022, Plaintiffs purchased a 2020 Hyundai Kona, bearing the Vehicle Identification Number of KM8K33A58LU415037 (the “Subject Vehicle”). (Complaint ¶ 9.) Express warranties accompanied the sale of the Subject Vehicle to Plaintiffs by which Hyundai Motor America undertook to preserve or maintain the utility or performance of Plaintiffs’ vehicle or to pay if there was a failure in such utility or performance. (Ibid.) The Subject Vehicle was delivered to Plaintiffs with serious defects and nonconformities to warranty and developed other serious defects and nonconformities to warranty including, but not limited to, defects in the powertrain system, engine, and transmission as well as other serious nonconformities to warranty. (Id. at 10.)

Merits

Preliminary, the Court grants Defendant’s request for judicial notice of the complaint in this action. (Evid. Code, § 452, subd. (d).)

Defendant moves to compel arbitration as a third-party beneficiary and on the grounds of equitable estoppel. Defendant argues that because Plaintiffs agreed to be bound by a Retail Installment Sale Contract (“RISC”) requiring them to resolve any disputes concerning the purchase or condition of the vehicle by binding arbitration, it must arbitrate its dispute with Defendant.

In opposition, Plaintiffs argue that this lawsuit concerns Defendant’s warranty, a separate guarantee from the RISC. Defendant’s warranties are not contractual terms of the sales contract and Plaintiff’s causes of action do not rely upon the obligations of the sales contract and are not “intimately founded in and intertwined with” its sales contract with Norm Reeves Hyundai, the dealer. Plaintiffs also argue that Defendant is not a third-party beneficiary because the language of the arbitration clause indicates that it does not benefit Norm Reeves Hyundai.

In reply, Defendant argues that the court should not follow Ford Motor Warranty Cases (2023) 89 Cal.App.5th 1324 but rather Felisilda v. FCA US LLC (2020) 53 Cal.App.5th 486 because Plaintiff’s complaint concedes that the warranty is intertwined with the purchase. Defendant argues that Plaintiff alleges “Express warranties accompanied the sale of the Subject Vehicle to Plaintiffs by which Hyundai Motor America undertook to preserve or maintain the utility or performance of Plaintiffs’ vehicle or to provide compensation if there was a failure in such utility or performance,” and this is the kind of allegation that led the Court in Felisilda to hold that warranty claims arise out of RISCs. Defendant argues that in Ford Motor Warranty Cases, unlike in this instant case, the Plaintiffs did not allege in their complaint the connection between the sale of the vehicle and the resulting warranty relationship that accompanied the sale, and the court’s ruling made this point clear.

The Court disagrees with Defendant’s argument about Ford Motor Warranty Cases. Defendant does not cite to a page number in Ford Motor Warranty Cases, and there is not one that supports Defendant’s argument that because Plaintiffs did not allege in their complaint the connection between the sale of the vehicle and the resulting warranty relationship that accompanied the sale, Plaintiffs have shown that their claims are not founded in or intertwined with the sale contracts.

The facts in Ford Motor Warranty Cases, supra, 89 Cal.App.5th 1324 are the same as the one in this case. The Court found that Ford Motor Company could not compel arbitration based on plaintiffs’ agreements with the dealers that sold them the vehicles. (Ford Motor Warranty Cases, supra, 89 Cal.App.5th 1324.) The Court found that equitable estoppel did not apply because plaintiffs’ claims against it in no way rely on the agreements. (Id. at 1332-1336.) Further, the Court found that Ford Motor Company was not a third-party beneficiary of those agreements as there is no basis to conclude the plaintiffs and their dealers entered them with the intention of benefitting Ford Motor Company. (Id. at 1336-1340.) This is although like here, there is language in the RISC that says, ““third parties who do not sign this contract.” (Id. at 1334.) As the Court decided, the language is a further delineation of the subject matter of claims the purchasers and dealers agreed to arbitrate. (Id. at 1335.) They agreed to arbitrate disputes “between” themselves— “you and us”—arising out of or relating to “relationship[s],” including “relationship[s] with third parties who [did] not sign th[e] [sale] contract[s],” resulting from the “purchase, or condition of th[e] vehicle, [or] th[e] [sale] contract.” (Ibid.) It is not a broad call for arbitration against third parties. (Id. at 1334.)

Thus, Defendant cannot compel arbitration.

Accordingly, the motion to compel arbitration is DENIED.