Judge: Lee W. Tsao, Case: 23NWCV02238, Date: 2024-08-06 Tentative Ruling

Case Number: 23NWCV02238    Hearing Date: August 6, 2024    Dept: C

Fabian Allen Lacey vs SSM Dealer, Inc., et al.

Case No.: 23NWCV02238

Hearing Date: August 6, 2024 @ 9:30 a.m.

#4

Tentative Ruling

Defendant SSM Dealer, Inc.’s Motion to Compel Arbitration and to Stay Action is GRANTED as to the First, Second, Third, and Fourth Causes of Action and DENIED as to the Fifth Cause of Action.

Defendant to give notice.

Background

This is a breach of contract lawsuit regarding the sale of a used 2010 Dodge Challenger VIN # 2B3CJ5DT6AH220012. On July 19, 2023, Plaintiff Fabian Allen Lacey (“Plaintiff”) filed a Complaint against Defendant SSM Dealer, Inc. and Merchants Bonding Company Mutual alleging: (1) Intentional Misrepresentation; (2) Negligent Misrepresentation; (3) Violation of Business and Profession Code § 17200; (4) Bond Claim; (5) Violation of the Consumer Legal Remedies Act.

Defendant SSM Dealer, Inc. (“Defendant”) moves to compel arbitration and stay proceedings.  

Legal Standard

Defendant moves to compel arbitration pursuant to an Arbitration Agreement entered into between Defendant and Plaintiff when Plaintiff purchased the vehicle. 

California law reflects a strong public policy in favor of arbitration as a relatively quick and inexpensive method for resolving disputes. To further that policy, California Code of Civil Procedure section 1281.2 requires a trial court to enforce a written arbitration agreement unless one of three limited exceptions applies. Those statutory exceptions arise where (1) a party waives the right to arbitration; (2) grounds exist for revoking the arbitration agreement; and (3) pending litigation with a third party creates the possibility of conflicting rulings on common factual or legal issues.” (Acquire II, Ltd. v. Colton Real Estate Group (2013) 213 Cal.App.4th 959, 967 [citations omitted]; Code Civ. Proc. § 1281.2.) 

In deciding a petition to compel arbitration, trial courts must decide first whether an enforceable arbitration agreement exists between the parties, and then determine the second gateway issue whether the claims are covered within the scope of the agreement. (Omar v. Ralphs Grocery Co. (2004) 118 Cal.App.4th 955, 961.) The party seeking arbitration has the “burden of proving the existence of a valid arbitration agreement by a preponderance of the evidence, while a party opposing the petition bears the burden of proving by a preponderance of the evidence any fact necessary to its defense.” (Ruiz v. Moss Bros. Auto Group, Inc. (2014) 232 Cal.App.4th 836, 842.)¿The trial court “sits as the trier of fact, weighing all the affidavits, declarations, and other documentary evidence, and any oral testimony the court may receive at its discretion, to reach a final determination.” (Id.) General principles of contract law govern whether parties have entered a binding agreement to arbitrate. (Pinnacle Museum Tower Assn. v. Pinnacle Market Development (US), LLC (2012) 55 Cal.4th 223, 236; see also Winter v. Window Fashions Professions, Inc. (2008) 166 Cal.App.4th 943, 947.)¿ 

Discussion

As a preliminary matter, Plaintiff does not dispute that the First, Second, Third, and Fourth causes of action are subject to arbitration. It follows that Plaintiff submits that there is a valid and enforceable arbitration agreement as to these causes of action.  Accordingly, the Motion Compel Arbitration as to the First, Second, Third, and Fourth causes of action is GRANTED. 

The Court now turns its attention to the CLRA claim.

In opposition, Plaintiff contends that the CLRA claim is inarbitirable and therefore should not be subject to arbitration.

In reply, Defendant contends that there is no claim for injunctive relief. Defendant points to the fact that the word “injunction” appears only in paragraph 84 which states “Plaintiff seeks to obtain an injunction against Dealer which enjoins Dealer from continuing to make false and misleading statements to consumers regarding the sale of motor vehicles.” (Complaint, ¶ 84.) Defendant further argues that Plaintiff has not filed a motion for a preliminary injunction.   

CLRA and UCL claims for injunctive relief are not subject to arbitration as they are inarbitrable. (See Cruz v. PacifiCare Health Systems, Inc. (2003) 30 Cal.4th 303, 316; Broughton v. Cigna Healthplans (1999) 21 Cal.4th 1066, 1082-84.) This was recently confirmed in Sanchez v. Valencia Holding Co., LLC (2015) 61 Cal.4th 899, 917. The court in Sanchez raised, but declined to address, whether the U.S. Supreme Court’s ruling in AT&T Mobility LLC v. Concepcion (2011) 563 U.S. 333 (finding federal preemption of a California case holding unconscionability of class arbitration waivers in consumer contracts) would also result in preemption of the California rule against arbitration of UCL and CLRA injunctive claims. As such, Broughton and Cruz remain good law and Plaintiff’s UCL and CLRA claims for injunctive relief are not arbitrable. 

Absent the parties' commitment of the arbitrability decision to an arbitrator, disagreements over whether a particular dispute is within the scope of an arbitration provision are ordinarily the responsibility of a court. (Mendoza v. Trans Valley Transport (2022) 75 Cal.App.5th 748, 765.) 

As the Court held in Cruz, claims seeking injunctive relief designed to protect the public by stopping unlawful practices under the CLRA and UCL are not arbitrable. Here, Plaintiff seeks injunctive relief under both the CLRA and UCL.  

Accordingly, the Motion to Compel Arbitration as to the Fifth Cause of Action is DENIED.