Judge: Lee W. Tsao, Case: 22NWCV01646, Date: 2023-09-05 Tentative Ruling
Case Number: 22NWCV01646 Hearing Date: September 5, 2023 Dept: C
MORAN v. FCA US, LLC
CASE NO.: 22NWCV01646
HEARING: 9/5/23
#3
TENTATIVE RULING
I.
Defendant FCA US, LLC’s unopposed motion to
compel binding arbitration is DENIED.
II.
Defendant FAB4 LLC’s unopposed motion to compel
binding arbitration is GRANTED.
Because
the motion to compel arbitration is GRANTED as to FAB4 LLC, the action is
STAYED as to the remaining parties pending arbitration.
Moving Parties to give NOTICE.
Defendants FCA US, LLC and FAB4 LLC move to compel
arbitration pursuant to CCP § 1281.2.
Complaint
On
March 30, 2021, Plaintiffs entered into a warranty contract with Defendant FCA
regarding a 2020 Dodge Ram 2500 vehicle identification number 3C6UR5HJ6LG307147. (Complaint, ¶8.) Plaintiff alleges that the vehicle had “transmission
defects; engine defects; electrical system defects; brake system defects; among
other defects and nonconformities.” (Id., ¶ 13.) Based thereon, the Complaint asserts causes
of action for:
1.
Violation
of CC 1793.2(D)
2.
Violation
of CC 1793.2(B)
3.
Violation
of CC 1793.2(A)(3)
4.
CC
1791.1, 1794, 1795.5
5.
Negligent
Repair
Arbitration Agreement
Parties
may be compelled to arbitrate a dispute upon the court finding that: (1) there
was a valid agreement to arbitrate between the parties; and (2) said agreement
covers the controversy or controversies in the parties’ dispute.¿(Omar v.
Ralphs Grocery Co. (2004)¿118 Cal.App.4th 955, 961.) A party moving to compel arbitration has the
burden of establishing the existence of a valid agreement to arbitrate and the
party opposing the petition has the burden of proving, by a preponderance of
the evidence, any fact necessary to its defense. (Banner Entertainment, Inc.
v. Superior Court¿(1998) 62 Cal.App.4th 348, 356-357.)
Here,
Plaintiff signed a Retail Installment Sale Contract (“RISC”) that contained an
arbitration clause to arbitrate “[a]ny 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,
contract or any resulting transaction or relationship (including any such
relationship with third parties who did not sign this contract) shall, at your
or our election, be resolved by neutral, binding arbitration and not by a court
action.” (Sandhu Decl., Ex. A.)
Defendant
FAB4 LLC dba Russell Westbrook Chrysler Dodge Jeep Ram is a party to the RISC
which contained a valid arbitration agreement.
Plaintiff has not opposed Defendant FAB4 LLC’s motion to compel
arbitration. Accordingly, the motion is
GRANTED as to FAB4.
Equitable Estoppel
Defendant
FCA US LLC contends it may compel arbitration pursuant to equitable estoppel.
A
nonsignatory manufacturer can compel arbitration under equitable estoppel “when
the causes of action against the nonsignatory are ‘intimately founded in and
intertwined’ with the underlying contract obligations.” (Felisilda v. FCA US
LLC (Felisilda) (2020) 53 Cal.App.5th 486, 495.) The causes of actions are intimately founded
in and intertwined even if they do not exclusively rely on the contract terms.
“ ‘The fundamental point’ is that a party is ‘not entitled to make use of [a
contract containing an arbitration clause] as long as it worked to [his or] her
advantage, then attempt to avoid its application in defining the forum in which
[his or] her dispute . . . should be resolved.’ “ (Id. at 496.)
The
court in Felisilda, supra, 53 Cal.App.5th 486, 496-497, held that the
manufacturer could compel arbitration because the condition of the vehicle was
within the subject matter of the claims made arbitrable under the sale
contract, the sale contract was the source of the manufacturer’s warranties
under which plaintiffs were suing, and plaintiffs had expressly agreed to
arbitrate claims arising out of the condition of the vehicle, even against
third party nonsignatories. The court in
Ford Motor Warranty Cases (Ford) (2023) 89 Cal.App.5th 1324, disagreed
with Felisilda that arbitration could be compelled under an identical
arbitration provision. This Court can now choose to either continue to follow
Felisilda or instead adopt Ford’s reasoning. (Sarti v. Salt Creek Ltd.
(2008) 167 Cal.App.4th 1187, 1193 [“All trial courts are bound by all published
decisions of the Court of Appeal . . . Unlike at least some federal
intermediate appellate courts, though, there is no horizontal stare decisis in
the California Court of Appeal.”].)
The
Ford court disagreed with Felisilda on the grounds that the fact
“[t]hat the Felisilda plaintiffs and the Dealers agreed in their sale
contract to arbitrate
disputes
between them about the condition of the vehicle does not equitably estop the
plaintiffs from asserting [the manufacturer] has no right to demand
arbitration. Equitable estoppel would apply if the plaintiffs had sued [the
manufacturer] based on the terms of the sale contract yet denied [the
manufacturer] could enforce the arbitration clause in that contract.” (Ford,
supra, 89 Cal.App.5th 1324, 1334.) The Ford court held that the
plaintiffs’ claims did not arise in the sale contracts and instead on the
statutory obligations under the Song-Beverly Consumer Warranty Act, breach of
implied warranty of merchantability, and fraudulent inducement. “Not one of the
plaintiffs sued on any express contractual language in the sale contract.” (Ford,
supra, 89 Cal.App.5th 1324, 1335.) Specifically, the contract contained
provisions that disclaimed any warranty by the Dealers, “while acknowledging no
effect on ‘any warranties covering the vehicle that the vehicle manufacturer
may provide.’ ” (Ibid.) Further, the California Supreme Court distinguished
between warranties from the seller arising out of contract and warranties from
the manufacturer arising “independently of a contract of sale between the
parties.” (Greenman v. Yuba Power Products, Inc. (Greenman) (1963) 59
Cal.2d 57, 60.) Thus, plaintiffs’ claims were not “intimately founded in and
intertwined” with the sale contracts because the sale contracts do not intend
to cover the manufacturer’s warranties. (Ford, supra, 89 Cal.App.5th
1324.) Therefore, equitable estoppel does not apply to compel plaintiffs to
arbitrate their claims because plaintiffs were not making use of the terms of
the sale contracts. (Ibid.)
Like
in Ford, Defendant fails to cite any authority to support its contention
that manufacturer’s warranties are founded in the contract.
Defendant
may not compel arbitration because Plaintiff’s claims arise from Defendant’s
statutory obligation and are not based on any express contractual language.
Equitable estoppel is applicable where one party relies on a contract, which includes
an arbitration provision, in asserting its claims against a third party but
attempts to avoid its application to determining the forum in pursuing its
claims. (Felisilda, supra, 53 Cal.App.5th 486, 496.) Here, like in Ford,
Plaintiff’s claims “are based on [Defendant’s] statutory obligations to
reimburse consumers or replace their vehicles when unable to repair in
accordance with its warranty,” not based “on any express contractual language
in the sale contracts.” (Id. at 620.) Plaintiff’s claims do not arise directly
out of the contract, even if Defendant’s warranties accompanied the contract of
the subject vehicle. “The sale contracts include no warranty, nor any assurance
regarding the quality of the vehicle sold, nor any promise of repairs or other
remedies in the event problems arise. To the contrary, the sale contracts
disclaim any warranty on the part of the dealers, while acknowledging no effect
on ‘any warranties covering the vehicle that the vehicle manufacturer may
provide.’ In short, the substantive terms of the sale contracts relate to sale
and financing and nothing more.” (Ibid.) Similarly, here the contract includes
no warranty, any assurance regarding the quality of the vehicle, no promise to
make repairs, and disclaims any manufacturer warranty. Thus, like Ford,
Plaintiff’s claims arise from Defendant’s statutory obligation and not from the
sales contract. Therefore, Defendant may not compel arbitration because
Plaintiffs’ claims are not intimately found in or intertwined with the contract.
Accordingly,
Defendant FCA US LLC’s motion to compel arbitration and stay proceedings is
DENIED.
Because
the motion to compel arbitration is GRANTED as to FAB4 LLC, the action is
STAYED as to the remaining parties pending arbitration.