Judge: Lee W. Tsao, Case: 23NWCV01496, Date: 2024-06-25 Tentative Ruling

Case Number: 23NWCV01496    Hearing Date: June 25, 2024    Dept: C

Angelica Garcia De Heredia, et al. vs Hyundai Motor America

Case No.: 23NWCV01496

Hearing Date: June 25, 2024 @ 9:30 AM

#3

Tentative Ruling

Defendant Hyundai Motor America’s Motion to Compel Arbitration is GRANTED.

Defendant to give notice.

Background

This is a lemon law action, arising from the purchase of a 2022 Hyundai Sonata (the “Subject Vehicle”) VIN: 5NPEJ4J29NH13645 by Plaintiffs Angelica Garcia de Heredia and Jorge Heredia (“Plaintiffs”). Plaintiffs filed this action against Defendant Hyundai Motor America (“Defendant”) on May 15, 2023 alleging violations of the Song-Beverly Act.

On June 21, 2023, Defendant requested Plaintiff stipulate to arbitration. As of this writing, Plaintiff has not agreed to this request. (Ameripour Decl. ¶ 3.)

Defendant now moves for an order from this Court compelling arbitration.

Legal Standard

Under California law, the trial court has authority to compel arbitration pursuant to CCP §1281.2 where a written agreement for such arbitration exists and one of the parties refuses to arbitrate. Specifically, the statute provides that, “[o]n petition of a party to an arbitration agreement alleging the existence of a written agreement to arbitrate a controversy and that a party thereto refuses to arbitrate such controversy, the court shall order the petitioner and the respondent to arbitrate the controversy if it determines that an agreement arbitrate the controversy exists.” The statute further sets forth four grounds upon which the trial court may refuse to compel arbitration: (a) the right to compel arbitration was waived, (b) recission of the agreement, (c) there is a pending action or special proceeding with a third party, arising out of the same transaction; and (d) petitioner is a state or federally chartered depository institution.

“[T]he petitioner bears the burden of proving the existence of a valid arbitration agreement by the preponderance of the evidence . . . .”¿¿(Giuliano v. Inland Empire Personnel, Inc.¿(2007) 149 Cal.App.4th 1276, 1284¿(Guiliano).)¿“In determining whether an arbitration agreement applies to a specific dispute, the court may examine only the agreement itself and the complaint filed by the party refusing arbitration [citation]. The court should attempt to give effect to the parties' intentions, in light of the usual and ordinary meaning of the contractual language and the¿circumstances under which the agreement was made.”¿¿(Weeks v. Crow¿(1980) 113 Cal.App.3d 350, 353.)¿ “To determine whether a contractual arbitration clause requires arbitration of a particular controversy, the controversy is first identified and the issue is whether that controversy is within the scope of the contractual arbitration clause.”¿¿(Titolo¿v. Cano¿(2007) 157 Cal.App.4th 310, 316.)¿ “Doubts as to whether an arbitration clause applies to a particular dispute are to be resolved in favor of sending the parties to arbitration. The court should order them to arbitrate unless it is clear that the arbitration clause cannot be interpreted to cover the dispute.”¿¿(California Correctional Peace Officers¿Ass'n¿v. State¿(2006) 142 Cal.App.4th 198, 205.)¿¿¿

“[A] party opposing the petition bears the burden of proving by a preponderance of the evidence any fact necessary to its defense. [Citation.] 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.”¿¿(Giuliano, supra, at p. 1284.)¿

Discussion

Hyundai’s Bluelink Service Agreement

Defendant contends that on or about December 1, 2021, Plaintiffs enrolled their vehicle in the Hyundai’s Bluelink service through the Dealer-Assisted Enrollment process. (Rao Decl., ¶ 5.) Defendant contends that Hyundai’s Bluelink services refers to a connected car system that includes various functions and features. (Id. at ¶ 3.) It is argued that in order to enroll in Hyundai’s Bluelink services, customers must agree to the then-effective Connected Services Agreement (“CSA”). (Id. at ¶ 4.) Defendants maintain to have enrolled in Hyundai’s Bluelink services, they would have had to click a box to acknowledge that they “read and agree[d] to the Blue Link Terms & Conditions” and then click the “Complete” button. (Id. at ¶ 6.) The phrase “Terms & Conditions” included a hyperlink to the CSA. (Id.) As presented to Plaintiffs, the box acknowledging the Terms & Conditions would not have been “prepopulated” with a check mark. (Id.) It is argued that Plaintiff would have had to click that box to acknowledge assent to the CSA, due to a customer not being able to successfully activate Bluelink services through the Dealer-Assisted Enrollment process unless they complete

the step requiring them to click the box acknowledging they agree to the Bluelink Terms and Conditions. (Id.)

The Bluelink Service Agreement states:

“IN THE UNLIKELY EVENT THAT THE APPROPRIATE CUSTOMER SERVICE DEPARTMENT IS UNABLE TO RESOLVE YOUR CONCERNS, WE EACH AGREE TO RESOLVE THOSE DISPUTES THROUGH BINDING ARBITRATION OR SMALL CLAIMS COURT INSTEAD OF IN COURTS OF GENERAL JURISDICTION TO THE FULLEST EXTENT PERMITTED BY LAW, AND SUBJECT TO THE TERMS OF THIS AGREEMENT. ARBITRATION IS MORE INFORMAL THAN A LAWSUIT IN COURT. ARBITRATION USES A NEUTRAL ARBITRATOR INSTEAD OF A JUDGE OR JURY, ALLOWS FOR MORE LIMITED DISCOVERY THAN IN COURT, AND IS SUBJECT TO VERY LIMITED REVIEW BY COURTS. ARBITRATORS CAN AWARD THE SAME DAMAGES AND RELIEF THAT A COURT CAN AWARD. ANY ARBITRATION UNDER THIS AGREEMENT WILL TAKE PLACE ON AN INDIVIDUAL BASIS TO THE MAXIMUM EXTENT PERMITTED BY LAW; CLASS ARBITRATIONS, CLASS ACTIONS OR REPRESENTATIVE ARBITRATIONS ARE NOT PERMITTED. HYUNDAI OR GENESIS WILL PAY ALL ADMINISTRATIVE COSTS OF THE ARBITRATOR, NO MATTER WHO WINS, SO LONG AS YOUR CLAIM IS NOT FRIVOLOUS OR BROUGHT IN BAD FAITH. HOWEVER, IN ARBITRATION, BOTH YOU AND HYUNDAI WILL BE ENTITLED TO RECOVER ATTORNEYS´ FEES FROM THE OTHER PARTY TO THE SAME EXTENT AS YOU WOULD BE IN COURT.”

(Rao Decl., Ex. 2, § 15:Resolving Disputes(c).)

The Court notes that the Complaint discusses “nonconformities substantially impaired the use, value and/or safety of the Subject Vehicle.” (Complaint ¶ 16.) As stated by Defendant, Hyundai’s Bluelink services only refers to a connected car system that includes various functions and features. The Complaint does not address the Bluelink system. Accordingly, the Court cannot find the Bluelink system’s arbitration agreement as a valid reason to force Plaintiff into arbitration based on the causes of action in the Complaint.

The Owner’s Handbook and Warranty Contract

Defendant contends that Plaintiff purchased the Vehicle from Defendant Hyundai and executed the Contract, which included an arbitration agreement, on or around December 1, 2021.

The Owner’s Handbook and Warranty Contract is 17 pages long. On page 14 of the contract in bold and capitalized lettering the contract states: “IF YOU PURCHASED OR LEASED YOUR VEHICLE IN CALIFORNIA, YOUR WARRANTY IS MADE SUBJECT TO THE TERMS OF THIS BINDING ARBITRATION PROVISION. BY USING THE VEHICLE, OR REQUESTING OR ACCEPTING BENEFITS UNDER THIS WARRANTY, INCLUDING HAVING ANY REPAIRS PERFORMED UNDER WARRANTY, YOU AGREE TO BE BOUND BY THESE TERMS. IF YOU DO NOT AGREE WITH THESE TERMS, PLEASE CONTACT US AT OPT-OUT@HMAUSA.COM WITHIN THIRTY (30) DAYS OF YOUR PURCHASE OR LEASE TO OPT-OUT OF THIS ARBITRATION PROVISION.” (Ameripour Decl., Ex. 3, pg. 14.) The Arbitration Agreement states:

PLEASE READ THIS SECTION IN ITS ENTIRETY AS IT AFFECTS YOUR RIGHTS THIS SECTION DOES NOT PRECLUDE YOU FROM FIRST PURSUING ALTERNATIVE DISPUTE RESOLUTION THROUGH BBB AUTO LINE AS DESCRIBED IN THE “ALTERNATIVE DISPUTE RESOLUTION” PROVISION IN SECTION 3 OF THIS HANDBOOK. (Ameripour Decl., Ex. 3, pg. 12.) It goes on to state:

“If you purchased or leased your Hyundai vehicle in the State of California, you and we, Hyundai Motor America, each agree that any claim or disputes between us (including between you and any of our affiliated companies) related to or arising out of your vehicle purchase, advertising for the vehicle, use of your vehicle, the performance of the vehicle, any service relating to the vehicle, the vehicle warranty, representations in the warranty, or the duties contemplated under the warranty, including without limitation claims related to false or misleading advertising, unfair competition, breach of contract or warranty, the failure to conform a vehicle to warranty, failure to repurchase or replace your vehicle, or claims for a refund or partial refund of your vehicle's purchase price (excluding personal injury claims), but excluding claims brought under the Magnuson-Moss Warranty Act, shall be resolved by binding arbitration at either your or our election, even if the claim is initially filed in a court of law. If either you or we elect to resolve our dispute via arbitration (as opposed to in a court of law), such binding arbitration shall be administered by and through JAMS Mediation, Arbitration and ADR Services (JAMS) under its Streamlined Arbitration Rules & Procedures, or the American Arbitration

Association (AAA) under its Consumer Arbitration Rules. We will pay all fees for any arbitration except for the initial filing fee of $250 SECTION 4 for JAMS or $200 for AAA. The arbitration will be held in the city or county of your residence. To learn more about arbitration, including the applicable rules and how to commence arbitration, please contact: JAMS at www.jamsadr.org; 800-352-5267; or AAA at www.adr.org; 800-778-7879. This agreement to arbitrate is intended to be broadly interpreted and to make all disputes and claims between us (including our affiliated companies) relating to or arising out of your vehicle purchase, use or performance of your vehicle, or the vehicle warranty subject to arbitration to the maximum extent permitted by law. The arbitrator (and not a court) shall decide all issues of interpretation, scope, and application of this agreement.”

(Ameripour Decl., Ex. 3, pg. 12-13.) However, this agreement is unsigned, uninitialed, Plaintiff’s name does not appear on the form, and the subject vehicle’s VIN number does not appear on the form. (See Ameripour Decl., Ex. 3, pg. 1.)

Defendants argue that the arbitration agreement states, “BY USING THE VEHICLE, OR REQUESTING OR ACCEPTING BENEFITS UNDER THIS WARRANTY, INCLUDING HAVING ANY REPAIRS PERFORMED UNDER WARRANTY, YOU AGREE TO BE BOUND BY THESE TERMS.” (Ameripour Decl., Exhibit 3, page 15.) Defendant contends that by using the subject vehicle and by having repairs performed under the warranty, Plaintiff agreed to the terms of the warranty.

The Court is unpersuaded. The Owner’s and Warranty handbook is seventeen (17) pages long. It is unsigned and was left in the glovebox of the subject vehicle. Defendant does not contend that anyone went over the document with Plaintiffs. Moreover, Plaintiff Angelica contends she cannot read English and therefore it should have been provided to her in a translated version. The Court contends that it cannot enforce the agreement based solely on it being left in the glovebox and Plaintiff usage of the vehicle.

Retail Installment Sales Contract and Promissory Estoppel

Defendant contends that when the Plaintiffs signed the retail installment sales contract with the seller that they expressly agreed to arbitrate claims arising out of the condition of the vehicle.

As a general rule, only a party to an arbitration agreement may enforce the agreement. However, there are several exceptions that allow a nonsignatory to invoke an agreement to arbitrate. The doctrine of equitable estoppel is one of the exceptions. (Felisilda v. FCA US LLC (2020) 53 Cal.App.5th 486, 495.)

Under the doctrine of equitable estoppel, a nonsignatory defendant may invoke an arbitration clause to compel a signatory plaintiff to arbitrate its claims when the causes of action against the nonsignatory are “intimately founded in and intertwined” with the underlying contract obligations. (Id.) By relying on contract terms in a claim against a nonsignatory defendant, even if not exclusively, a plaintiff may be equitably estopped from repudiating the arbitration clause contained in that agreement. (Id. at 496).

Under the doctrine of equitable estoppel, “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.” (Felisilda v. FCA US LLC (2020) 53 Cal.App.5th 486, 496.)

“In any case applying equitable estoppel to compel arbitration despite the lack of an agreement to arbitrate, a nonsignatory may compel arbitration only when the claims against the nonsignatory are founded in and inextricably bound up with the obligations imposed by the agreement containing the arbitration clause.” (Goldman v. KPMG, LLP, 173 Cal.App.4th 209, 219.) In determining whether plaintiffs' claim is founded on or intimately connected with the sales contract, we examine the facts of the operative complaint. (Goldman, at pp. 229–230.)

In this instance, the Complaint clear states: “Defendant HYUNDAI MOTOR AMERICA entered into a written warranty contract with Plaintiff(s) which included a Basic Warranty.” (Complaint ¶ 7.)

In determining whether the plaintiffs’ claim is founded on or intimately connected with the sales contract, we examine the facts of the operative complaint and the written warranty.

The sales contract states in relevant part that the parties: “agree that any claim or disputes between us… related to or arising out of your … use of your vehicle, the performance of the vehicle, any service relating to the vehicle, the vehicle warranty, representations in the warranty, or the duties contemplated under the

warranty, including without limitation claims related to… breach of contract or warranty, the failure to conform a vehicle to warranty, failure to repurchase or replace your vehicle, or claims for a refund or partial refund of your vehicle's purchase price…shall be resolved by binding arbitration at either your or our election, even if the claim is initially filed in a court of law.” (Ameripour Decl., Ex. 3, pg. 12-13.)

Here, Plaintiff’s claim against Hyundai relates directly to the condition of the vehicle. In their Complaint, Plaintiff’s state that the Subject Vehicle’s “Defects and nonconformities to warranty manifested themselves within the applicable express warranty period. The nonconformities substantially impaired the use, value and/or safety of the Subject Vehicle.” (Complaint, ¶ 16.)

Accordingly, Plaintiff’s claim against Hyundai directly relates to the condition of the vehicle that they allege to have violated warranties they received as a consequence of the sales contract. Because the Heredias’ claim is based upon the fact that the warranty is valid—despite Defendant not having a signed warranty—the arbitration agreement is held to be valid. The Court finds Plaintiffs are estopped from refusing to arbitrate their claim against Hyundai, since the claims arise out of the condition of the vehicle.

Accordingly, Defendant’s Motion to Compel Arbitration is GRANTED.