Judge Lee W. Tsao, Case Number: 23NWCV02476, Date: 2024-04-04 Tentative Ruling

Judge: Lee W. Tsao, Case: 23NWCV02476, Date: 2024-04-04 Tentative Ruling

Case Number: 23NWCV02476 Hearing Date: April 4, 2024 Dept: C

SANCHEZ v. FREEWAY AUTO GROUP INC.

CASE NO.: 23NWCV02476

HEARING: 04/04/24

Defendant BLACKFISH CAPITAL, LLC’s motion to compel arbitration is GRANTED. The case is STAYED until conclusion of the arbitration.

Moving Party to give Notice.

On or about October 30, 2022, Plaintiff JOSE SANCHEZ (“Plaintiff”) and Defendant Freeway Auto Group, Inc. (“Freeway”) entered into a Retail Installment Sale Contract (“RISC”) concerning Plaintiff’s purchase of a used 2017 Nissan Pathfinder vehicle. Sometime thereafter, the RISC was assigned to Defendant Blackfish Capital, LLC (“Blackfish”).

This action was filed by Plaintiff against Defendants Freeway; Blackfish; and HUDSON INUSRANCE COMPANY (“Hudson”) (collectively “Defendants”) on August 3, 2023.

Plaintiff’s Complaint asserts the following causes of action:

(1) Violation of the Consumers Legal Remedies Act against Freeway and Blackfish;

(2) Violation of Song-Beverly Act against Freeway and Blackfish ; and

(3) Claim Against Dealer Bond against Hudson

Blackfish now moves to compel arbitration and stay this action pursuant to the Arbitration Agreement contained in the RISC. Defendant Freeway joins in the Subject Motion.

In Opposition, Plaintiff states that he “does not oppose arbitration.” (Opp. 2:3-4.) Plaintiff merely opposes that arbitration proceed before AAA on the grounds that the arbitration clause submitting this matter to arbitration before AAA is unconscionable.

Except for specifically enumerated exceptions, the court must order the petitioner and respondent to arbitrate a controversy if the court finds that a written agreement to arbitrate the controversy exists. (See CCP §1281.2.) “In California, [g]eneral principles of contract law determine whether the parties have entered a binding agreement to arbitrate.” (Craig v. Brown & Root, Inc. (2000) 84 Cal.App.4th 416, 420.) “A petition to compel arbitration or stay proceedings pursuant to CCP §§1281.1 and 1281.4 must state, in addition to other required allegations, the provisions of the written agreement and the paragraph that provides for arbitration. The provisions must be stated verbatim or a copy must be physically or electronically attached to the petition and incorporated by reference.” (C.R.C. Rule 3.1330.)

(i) The Existence of an Arbitration Agreement

The petitioner bears the burden of proving the existence of a valid arbitration agreement by the preponderance of the evidence, and a party opposing the petition bears the burden of proving by a preponderance of the evidence any fact necessary to its defense. 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. (Engalia v. Permanente Medical Group, Inc. (1997) 15 Cal.4th 951.)

The Court finds that Defendant has met it’s burden of proving the existence of a valid arbitration agreement between Plaintiff and Freeway/Blackfish. The RISC attached as Exhibit 1 to the Declaration of Chris Tauscher states: “Any claim or dispute, whether in contract, tort, statute or otherwise (including the interpretation and scope of this Arbitration Provision, any allegation of waiver of rights under this Arbitration Provision, and the arbitrability of the claim or dispute), between you and us or employees, agents, successors or assigns, which arises out of or relates to your credit application, purchase or condition of this Vehicle, this contract or an resulting transaction or relationship (including any such relationship with third parties who do not sign this contract) shall, at your or our election, be resolved by neutral, binding arbitration and not by a court action.” (Tauscher Decl., Ex. 1.)

Plaintiff’s signature at the end of the Agreement, and the corroborating information contained in the Declaration of Chris Tauscher demonstrate that Plaintiff had knowledge of, reviewed, signed, and thus agreed to the Arbitration Agreement. The Court finds that Blackfish has met its burden in proving, by a preponderance of the evidence, that a valid Arbitration Agreement exists between the parties.

(ii) Unconscionability

Plaintiff contends that the Arbitration Agreement is unenforceable because it is unconscionable.

The party seeking the defense of unconscionability bears the burden of proof. (Sanchez v. Valencia Holding Co., LLC (2015) 61 Cal.4th 899, 911. “[T]he doctrine of unconscionability has both a procedural and substantive element, the former focusing on oppression or surprise due to unequal bargaining power, the latter on overly harsh or one-sided results.” (Id. at 910.) “Oppression occurs where a contract involves lack of negotiation and meaningful choice, and surprise occurs where the allegedly unconscionable provision is hidden within a prolix printed form.” (Pinnacle Museum Tower Assn. v. Pinnacle Market Development (US), LLC (2012) 55 Cal.4th 223, 247.) “The procedural element of an unconscionable contract generally takes the form of a contract of adhesion, which, imposed and drafted by the party of superior bargaining strength, relegates to the subscribing party only the opportunity to adhere to the contract or reject it.” (Little v. Auto Stiegler, Inc. (2003) 29 Cal.4th 1064, 1071.)

“[Procedural and substantive unconscionability] must both be present in order for a court to exercise its discretion to refuse to enforce a contract or clause under the doctrine of unconscionability. [Citation]…. The unconscionability doctrine ensures that contracts [ ] do not impose terms that have been variously described as ‘overly harsh,’ [citation], ‘unduly oppressive,’ [citation], ‘so one-sided as to shock the conscience,’ [citation] or ‘unfairly one-sided.’ [citation]. All of these formulations point to the central idea that unconscionability doctrine is [ ] concerned [ ] with terms that are ‘unreasonably favorable to the more powerful party.’ (Sanchez, supra, 6 Cal.4th at 910-911.) If the Court finds that an agreement to arbitrate or any clause of such an agreement is unconscionable, the Court may refuse to enforce the contract, or it may enforce the remainder of the contract without the unconscionable clause, or it may so limit the application of any unconscionable clause as to avoid any unconscionable result. (Cal. Civ. Code §1670.5(a).)

Plaintiff argues that the Agreement is procedurally unconscionable. 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”. In Sanchez v. Valencia Holding Co., LLC (2015) 61 Cal.4th 899, 906, the Supreme Court of California reviewed a motion to compel arbitration by a car dealer against car buyers based on an arbitration provision in a sale contract. While the Supreme Court of California found that the adhesive nature of the sale contract established some degree of unconscionability, “a finding of procedural unconscionability does not mean that a contract will not be enforced.” (Ibid.) However, as noted in Sanchez, the dealership is under no obligation to highlight or explain to buyers the arbitration clause in the Sale Contract. (Id. at 914.) Plaintiff presents no evidence to show that Plaintiff was pressured, rushed, or denied the ability to negotiate the terms of the RISC. Further, Plaintiff signed the California Language Acknowledgement, which provides in Spanish, that Plaintiff negotiated the RISC in English. (Reply Tauscher Decl., ¶2, Ex. 5.) The procedural unconscionability due to the adhesive nature of the RISC is low.

In addition, Plaintiff fails to make any showing that the Agreement is substantively unconscionable. The terms of the Arbitration Agreement appear on its face to be bilateral, reasonable, and not unfairly favorable to either party. As a result, the Court finds that the Arbitration 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”.

The motion to compel arbitration is GRANTED. This action is STAYED until conclusion of arbitration.

Blackfish also requests costs pursuant to CCP §1293.2. However, this section does not support costs on a Motion to Compel Arbitration. This request is DENIED without prejudice as premature.