Judge Lee W. Tsao, Case Number: 23NWCV01867, Date: 2024-04-11 Tentative Ruling

Judge: Lee W. Tsao, Case: 23NWCV01867, Date: 2024-04-11 Tentative Ruling

Case Number: 23NWCV01867 Hearing Date: April 11, 2024 Dept: C

(Judge Olivia Rosales)

DIAZ v. THOR MOTOR COACH, INC.

CASE NO.: 23NWCV01867

HEARING: 04/11/24

Defendant THOR MOTOR COACH, INC.’s Motion to Stay is GRANTED.

Moving party to give notice.

This lemon law action concerning the sale of a Thor Aria Vehicle to Plaintiffs EDWARD DIAZ and LINDA DIAZ (“Plaintiffs”) was filed on June 16, 2023.

Plaintiffs allege that “[o]n or about June 25, 2021… a retail merchant, GIANT RV DOWNEY, sold the SUBJECT VEHICLE, a 2021 Thor Aria… to Plaintiff for their personal use….[T]he sales contract was assigned to U.S. Bank on or about June 25, 2021.” (Complaint ¶5.) “In connection with the sale of the SUBJECT VEHICLE, Plaintiff received an express limited warranty from THOR MOTOR COACH, INC; U.S. BANK.” (Complaint ¶6.) “During the warranty period, THOR MOTOR COACH, INC.; U.S. BANK, and its authorized repair facilities failed to perform all necessary repairs on the SUBJECT MOTORHOME in order to correct the defects in materials and/or workmanship that plagued the SUBJECT MOTORHOME. Despite several repair opportunities, Defendant THOR MOTOR COACH, INC.; U.S. BANK, and it’s authorized repair facilities have been unable to conform the SUBJECT MOTORHOME to the applicable express and implied warranties which accompanied the SUBJECT MOTORHOME.” (Complaint ¶7.)

Plaintiffs’ Complaint asserts one sole cause of action for Violation of the Song-Beverly Consumer Warranty Act against Defendants THOR MOTOR COACH, INC. (“Thor”); U.S. BANK (“U.S. Bank”); GIANT RV DOWNEY (“Giant RV”); and DOES 1-20.

Thor moves to dismiss or stay the action under CCP §410.30, arguing that the parties are bound to litigate their claims in Indiana under the forum selection clause contained in the express warranty, that this agreement is mandatory, and that the agreement requires application of Indiana law. Thor indicates that they will stipulate to “not object” to the application of California law in an Indiana court.

In Opposition, Plaintiffs argue: (1) the forum selection clause at issue violates public policy; (2) the jury trial waiver in the warranty registration form renders the forum selection clause unenforceable; and (3) the forum selection clause is unconscionable. Plaintiffs maintain that they did not consent to the forum selection clause, and whether consent was given is irrelevant because it is unconscionable. Plaintiffs additionally argue that Defendants’ offer of stipulation to “not object” to the application of California law in and Indiana court does not address the unenforceability of other warranty terms.

Joinders

Defendants Giant RV and U.S. Bank filed separate Joinders to Thor’s instant Motion to Stay. Both Joinders argue that non-signatories to the contract containing a forum selection clause may also enforce the forum selection when the non-signatory party agrees to be bound by the terms of the contract or when the non-signatory party has a defined and intertwining business relationship with a contracting party. (Bancomer v. Sup. Ct. (2006) 44 Cal.App.4th 1450, 1461.)

Giant RV argues that since it negotiated the sale of the Subject Vehicle to Plaintiffs, delivered the warranty agreement to Plaintiffs, and was the primary consumer point of contact for access to services under the warranty agreement, Giant RV is sufficiently intertwined with the transaction.

U.S. Bank argues that, as the lienholder, it effectively agreed to be bound by the terms of the warranty agreement, and is sufficiently intertwined with the transaction.

The Joinder of U.S. Bank to the subject Motion is unopposed. The unopposed Joinder of U.S. Bank to Thor’s Motion to Stay is GRANTED.

Plaintiffs object to the Joinder of Giant RV to the Subject Motion. Plaintiffs filed two separate Oppositions to Giant RV’s Joinder—the first Opposition was filed on March 29, 2024, and the second Opposition was filed on April 2, 2024. In the Oppositions, Plaintiffs argue that: (1) Thor’s Warranty specifically excludes Giant RV; and (2) Giant RV has no standing to enforce the forum selection clause because (a) Giant RV is not a third-party beneficiary; and (b) Giant RV is not “closely related to the contractual relationship” between Plaintiffs and Thor. Plaintiffs maintain that the sales contract between Plaintiffs and Giant RV was separate and distinct from the warranty agreement between Plaintiffs and Thor.

For a non-signatory “to demonstrate that it was so closely related to the contractual relationship that it is entitled to enforce the forum selection clause, it must show by specific conduct or express agreement that (1) it agreed to be bound by the terms of the [ ] agreement, (2) the contracting parties intended the [non-signatory] to benefit from the purchase, or (3) there was sufficient evidence of a defined and intertwining business relationship with a contracting party.” (Bancomer, S.A. v. Sup. Ct. (1996) 44 Cal.App.4th 1450, 1461.)

Here, it is undisputed that Giant RV provided the warranty repairs to the Subject Vehicle, sold the Subject Vehicle to Plaintiffs, delivered the warranty to Plaintiffs, and acted as the consumer point of contact for access to warranty services. Giant RV engaged in conduct showing that it agreed to be bound by the terms of the warranty agreement between Thor and Plaintiffs. Moreover, Giant RV had a “defined and intertwining business relationship” with Thor, sufficient to be bound by the terms of the warranty agreement containing the forum selection agreement. Indeed, Giant RV bore a great deal of the burdens to repair the Subject RV imposed by the Warranty.

Giant RV’s Joinder to the Motion to Stay is GRANTED.

Merits

On June 25, 2021, Plaintiff purchased a 2021 Thor Aria Vehicle (“the Subject Vehicle”), from GIANT RV DOWNEY.

The Sales Contract had a Warranty Registration, which stated in relevant part: “EXCLUSIVE JURISDICTION FOR DECIDING LEGAL DISPUTES RELATING TO ALLEGED BREACH OF EXPRESS WARRANTY AND BREACH OF IMPLIED WARRANTIES ARISING BY OPERATION OF LAW AS WELL AS THOSE RELATING TO REPRESENTATIONS OF ANY NATURE MUST BE FILED IN A STATE OR FEDERAL COURT WITHIN THE STATE OF MANUFACTURE, WHICH IS INDIANA.” (Stanley Decl., Ex. C.)

A “mandatory [forum selection] clause will ordinarily be given effect without any analysis of convenience; the only question is whether enforcement of the clause would be unreasonable. On the other hand, when the clause merely provides for submission to jurisdiction and does not expressly mandate litigation exclusively in a particular forum, then the traditional forum non conveniens analysis applies.” (Intershop Communications A.G. v. Superior Court (2002) 104 Cal.App.4th 191, 196.) “[I]f there is a mandatory forum selection clause, the test is simply whether application of the clause is unfair or unreasonable, and the clause is usually given effect… ‘Mere inconvenience or additional expense is not the test of unreasonableness…’ of a mandatory forum selection clause.” (Berg v. MTC Electronics Technologies (1998) 61 Cal.App.4th 349, 358-359.)

“Given the importance of forum selection clauses, both the United States Supreme Court and the California Supreme Court have placed a heavy burden on a plaintiff seeking to defeat such a clause, requiring it to demonstrate that enforcement of the clause would be unreasonable under the circumstances of the case.” (Lu v. Dryclean-U.S.A. of California, Inc. (1992) 11 Cal.App.4th 1490, 1493.) “[T]he selected jurisdiction must be ‘suitable,’ ‘available,’ and able to ‘accomplish substantial justice.’” (America Online, Inc. v. Superior Court (2001) 90 Cal.App.4th 1, 12.)

The Court notes that Plaintiffs signed the Thor Motor Coach Warranty Registration Form, which states: “Before I purchased my motorhome, I received, read and agreed to the terms and conditions of the Thor Motor Coach Limited Warranty and the Thor Motor Coach Structural Limited Warranty….. I understand and agree to the forum selection clause and choice of law clause set forth in the Thor Motor Coach Limited Warranty and the Thor Motor Coach Structural Limited Warranty… I UNDERSTAND THAT EXCLUSIVE JURISDICTION FOR DECIDING LEGAL DISPUTES RELATED TO ALLEGED BREACH OF EXPRESS WARRANTY AND IMPLIED WARRANTIES THAT ARISE BY OPERATION OF LAW AS WELL AS THOSE RELATING TO REPRESENTATIONS OF ANY NATURE RESTS IN THE COURTS WITHIN THE STATE OF MANUFACTURE, WHICH IS INDIANA.” (Stanley Decl., Ex. B.) The relevant language of the terms of the express warranty at issue is as follows: “EXCLUSIVE JURISDICTION FOR DECIDING LEGAL DISPUTES… MUST BE FILED IN A STATE OR FEDERAL COURT WITHIN THE STATE OF MANUFACTURE, WHICH IS INDIANA. ALSO, THIS LIMITED WARRANTY SHALL BE INTERPRETED AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF INDIANA….” (Id., Ex. C.)

Here, the contract terms at issue provide for mandatory jurisdiction in Indiana. Therefore, the Court will limit its analysis to determining whether its enforcement is unreasonable given the circumstances of this case. This requires a showing that “the forum selected would be unavailable or unable to accomplish substantial justice.” (Smith, Valentino & Smith, Inc. v. Superior Court (1976) 17 Cal.3d 491, 494.) California’s public policy favoring residents’ access to its court is not thwarted when residents surrender this right voluntarily in the course of negotiating a contract. A forum selection clause will only be disregarded if it is the result of overreaching or the unfair use of unequal bargaining power or if the forum chosen by the parties would be a seriously inconvenient one for the trial of the action. There is no public policy which would compel denial of a forum selection clause in a contract which has been entered into freely and voluntarily by the parties who have negotiated at arms’ length. Thus, forum selection clauses may be given effect in the court’s discretion and in the absence of a showing that enforcement would be unreasonable. (See CQL Original Products, Inc. v. NHL Players Assoc. (1995) 39 Cal.App.4th 1347.)

Where forum selection clauses are presumptively valid, and may be given effect absent a showing that enforcement of such a clause would be unreasonable—the crux of the instant motion lies in determining whether the underlying forum selection clause is unreasonable.

Plaintiffs argue that the warranty clause is unconscionable because it is a contract of adhesion. “A forum selection clause need not be subject to negotiation to be enforceable. [Citations.] Rather, a forum selection clause contained in a contract of adhesion, and thus not the subject of bargaining, is ‘enforceable absent a showing that it was outside the reasonable expectations of the weaker or adhering party or that enforcement would be unduly oppressive or unconscionable.’ [Citations.]” (Drulias v. 1st Century Bancshares, Inc. (2018) 30 Cal.App.5th 696, 707-708.) Indeed, the Agreement appears to be a contract of adhesion in that it is, on its face, a sale contract unilaterally drafted by the seller and presented on a “take it or leave it basis”. However, Plaintiffs present no evidence to show that Plaintiffs were pressured, rushed, or denied the ability to negotiate the terms of the warranty. Further, Plaintiffs singed the Thor Motor Coach Product Warranty Registration Form. (Stanley Decl., Ex. B.) In addition, Plaintiffs fail to make any showing that the Agreement is substantively unconscionable. The terms of the Warranty appear on its face to be bilateral, reasonable, and not unfairly favorable to either party. As a result, the Court finds that the Warranty Agreement lacks the “one-sidedness” necessary to be deemed substantively unconscionable. (See e.g., Lhotka v. Geographic Expeditions, Inc. (2010) 181 Cal.App.4th 816, 825-826.) The Court does not find that the Agreement is so one-sided as to shock the conscience or that it “unfairly limits discovery”.

Plaintiffs also argue that they did not agree to the terms of the warranty including the forum selection clause because there is no evidence that they received the full warranty. First, Plaintiffs are availing themselves of the warranty by filing this action and cannot now claim that they should be relieved of the obligations but granted the privileges under the warranty. Second, Plaintiffs signed the Warranty Registration Form which contains the forum selection clause. Therefore, the forum selection clause is enforceable because Defendant has met its burden of proving that Plaintiff signed the forum selection clause and Plaintiffs’ Song-Beverly Rights can be readily preserved.

Accordingly, the Motion to Stay is GRANTED. This matter is stayed during the pendency of the matter in Indiana courts. Thor is to sign a stipulation to not oppose the application of California law in Indiana courts and should the Indiana courts decline to apply Plaintiff’s Song-Beverly Act rights in their jurisdiction, Plaintiff may move to lift the stay in this Court.