Judge: Lee W. Tsao, Case: 24NWCV00131, Date: 2024-11-20 Tentative Ruling
Case Number: 24NWCV00131 Hearing Date: November 20, 2024 Dept: C
ROBERTA HERNANDEZ, et al. vs HYUNDAI MOTOR AMERICA
CASE NO.: 24NWCV00131
HEARING: 11/20/2024
#6
TENTATIVE ORDER
Defendant Hyundai Motor America’s
Motion to Compel Arbitration and Stay Proceedings is DENIED.
Moving parties to give notice.
Defendant Hyundai Motor America moves to compel arbitration.
Background
This is a lemon law action. On December 4, 2023, Plaintiffs Roberta
Hernandez and Andree Hernandez (“Plaintiffs”) filed their Complaint against
Defendant Hyundai Motor America (“Defendant”) alleging (1) violation of subdivision
(d) of Civil Code Section 1793.2; (2) violation of subdivision (b) of Civil
Code Section 1793.2; (3) violation of subdivision (a)(3) of Civil Code Section
1793.2; and (4) breach of the implied warranty of merchantability.
Specifically, Plaintiffs allege that they entered into a
warranty contract with Defendant for the purchase of a vehicle that had defects
and nonconformities which rendered the vehicle worthless and/or de minimus.
(Complaint, ¶¶ 6-13.)
On February 16, 2024, Defendant filed the instant motion.
On November 6, 2024, Plaintiffs filed their opposition.
On November 13, 2024, Defendant filed a reply.
Motion to Compel Arbitration
Defendant’s Request for Judicial
Notice
Judges cannot take judicial notice
of hearsay statements asserted in court filings, but can take judicial notice
of the existence of such documents. (Johnson & Johnson v. Superior Court
(2011) 192 Cal.App.4th 757, 768; Williams v. Wraxall (1995) 33
Cal.App.4th 120, 130, fn. 7 (judges may take judicial notice of the existence
of court documents, “but cannot take judicial notice of the truth of hearsay
statements in decisions or court files, including pleadings, affidavits,
testimony, or statements of fact.”).) Courts can take judicial notice of the
fact that complaints were filed, but not of the truth of the statements
contained in those. (Arce v. Kaiser Foundation Health Plan, Inc. (2010)
181 Cal.App.4th 471, 483.)
Here, Defendant requests that the
Court take judicial notice of the Plaintiffs’ complaint in this action, filed
on January 12, 2024. The Court takes judicial notice of the fact that the
complaint was filed, but not of the truth of the statements contained therein.
Thus, Defendant’s request is granted.
Plaintiffs’ Requests for
Judicial Notice
“A request for judicial notice of
published material is unnecessary. Citation to the material is sufficient.” (Quelimane
Co. v. Stewart Title Guaranty Co. (1998) 19 Cal.4th 26, 46.)
Here, Plaintiffs request that the
Court take judicial notice of various published appellate court decisions,
which is unnecessary under Quelimane as citation to the material is
sufficient.
“The trial court shall take
judicial notice of any matter specified in Section 452 if a party requests it
and...furnishes the court with sufficient information to enable it to take
judicial notice of the matter.” (Evid. Code § 453.) “A party requesting
judicial notice of material under Evidence Code section 452 or 453 must provide
the court and each party with a copy of the material." (CRC 5.115.)
Here, Plaintiffs also request that
judicial notice be taken of Responses to Petition for Writ of Mandate in two
California Court of Appeal cases, Campos and Ortiz, as court
records under Evidence Code 452 subd. (d). However, Plaintiffs failed to attach
as exhibits these unpublished Responses to Petitions for Writ of Mandate or to
otherwise provide the court and each party with a copy of the material. Thus, Plaintiffs
did not provide sufficient information to permit the Court to take judicial
notice.
Therefore, Plaintiffs' requests for
judicial notice are denied.
Legal Standard
Under both the Federal Arbitration Act and California law,
arbitration agreements are valid, irrevocable, and enforceable, except on such
grounds that exist at law or equity for voiding a contract. (Winter v.
Window Fashions Professions, Inc. (2008) 166 Cal.App.4th 943, 947.)
In ruling on a motion to compel arbitration, the court must first determine
whether the parties actually agreed to arbitrate the dispute, and general
principles of California contract law help guide the court in making this
determination. (Mendez v. Mid-Wilshire Health Care Center (2013) 220
Cal.App.4th 534, 541.) “With respect to the moving party’s burden to
provide evidence of the existence of an agreement to arbitrate, it is generally
sufficient for that party to present a copy of the contract to the
court.” (Baker v. Italian Maple Holdings, LLC (2017) 13
Cal.App.5th 1152, 1160.)
The right to compel arbitration exists unless the court
finds that the right has been waived by a party’s conduct, other grounds exist
for revocation of the agreement, or where a pending court action arising out of
the same transaction creates the possibility of conflicting rulings on a common
issue of law or fact. (Code Civ. Proc., § 1281.2(a)-(c).)
Discussion
Applicability
of the Federal Arbitration Act (“FAA”)
“The party
seeking to enforce an arbitration agreement has the burden of showing FAA
preemption.” (Lane v. Francis Capital Mgmt. LLC (2014) 224 Cal.App.4th
676, 684.) California law provides that parties may expressly designate that
any arbitration proceeding should move forward under the FAA's procedural
provisions rather than under state procedural law. (Cronus Investments, Inc.
v. Concierge Services (2005) 35 Cal. 4th 376, 394). Otherwise, the FAA
provides for enforcement of arbitration provisions in any “‘contract evidencing
a transaction involving commerce.’ (9 USC § 2.)” (Allied-Bruce Terminix
Companies, Inc. v. Dobson (1995) 513 U.S. 265, 277.) Accordingly,
“[t]he party asserting the FAA bears the burden to show it applies by
presenting evidence establishing the contract with the arbitration provision
has a substantial relationship to interstate commerce[.]” (Carbajal v.
CWPSC, Inc. (2016) 245 Cal.App.4th 227, 234, [italics added].)
Moreover, as noted above, California contract law applies to the validity of
the arbitration agreement. (Winter, supra, 166 Cal.App.4th at p.
947.)
Here, Defendant
offers a copy of Plaintiffs’ Retail Installment Sale Contract containing an
Arbitration Provision which expressly states that it is governed by the
FAA. (Ameripour Decl., ¶ 4, Ex. 2, [“Any
arbitration under this Arbitration Clause shall be governed by the Federal
Arbitration Act (9 U.S.C. § 1 et. seq.) and not by any state law concerning
arbitration.”].)
Therefore, Defendant
meets their burden to establish that the FAA governs the purported Agreement.
Existence of a Valid Arbitration Agreement
The party moving to compel arbitration must establish the
existence of a written arbitration agreement between the parties. (Code of Civ.
Proc. § 1281.2.) “With respect to the
moving party's burden to provide evidence of the existence of an agreement to
arbitrate, it is generally sufficient for that party to present a copy of the
contract to the court. (See Condee v. Longwood Management Corp. (2001)
88 Cal.App.4th 215, 218; see also Cal. Rules of Court, rule 3.1330 [“A petition
to compel arbitration or to stay proceedings pursuant to Code of Civil
Procedure sections 1281.2 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”].) Once such a document is presented to the court, the burden
shifts to the party opposing the motion to compel, who may present any
challenges to the enforcement of the agreement and evidence in support of those
challenges. [Citation]” (Baker v. Italian Maple Holdings, LLC (2017) 13
Cal.App.5th 1152, 1160.)
Here, Defendant seeks to compel arbitration of Plaintiffs’
claims based on a Retail Installment Sale Contract containing an Arbitration
Provision. In support of the existence of an arbitration agreement, Defendant attached
to the Motion a copy of the Retail Installment Sale Contract, which contains an
Arbitration Provision (“the Agreement”). (Ameripour Decl., ¶ 4, Ex. 2.) The
pertinent provision reads:
ARBITRATION PROVISION
PLEASE REVIEW – IMPORTANT – AFFECTS
YOUR LEGAL RIGHTS
1. EITHER YOU
OR WE MAY CHOOSE TO HAVE ANY DISPUTE BETWEEN US DECIDED BY ARBITRATION AND NOT
IN COURT OR BY JURY TRIAL.
2. IF A
DISPUTE IS ARBITRATED, YOU WILL GIVE UP YOUR RIGHT TO PARTICIPATE AS A CLASS
REPRESENTATIVE OR CLASS MEMBER ON ANY CLASS CLAIM YOU MAY HAVE AGAINST US
INCLUDING ANY RIGHT TO CLASS ARBITRATION OR ANY CONSOLIDATION OF INDIVIDUAL
ARBITRATIONS.
3. DISCOVERY
AND RIGHTS TO APPEAL IN ARBITRATION ARE GENERALLY MORE LIMITED THAN IN A
LAWSUIT, AND OTHER RIGHTS THAT YOU AND WE WOULD HAVE IN COURT MAY NOT BE
AVAILABLE IN ARBITRATION.
Any 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, this contract or any
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 […]
(Ameripour Decl., ¶ 4, Ex. 2, p. 5-6.)
The Agreement, executed on May 20, 2016, appears to be
signed by Plaintiff Andree Hernandez for the sale of the subject vehicle.
(Ameripour Decl., ¶ 4, Ex. 2.) The Agreement is not signed by Defendant. (Id.)
This evidence establishes the existence of a valid arbitration agreement binding
Plaintiff in connection with their purchase of the subject vehicle. Thus, Defendant
has met their burden to prove the existence of an arbitration agreement binding
Plaintiffs. However, whether Defendant, a nonsignatory, has standing to invoke
this agreement is at issue.
Third Party Beneficiary
“[T]he nonsignatory bears the burden to establish he or she
is a party to the arbitration agreement/provision covering the dispute.” (Jones
v. Jacobson (2011) 195 Cal.App.4th 1, 15.) Generally, just signatories to
arbitration agreements have standing to enforce them, with exceptions as to
nonsignatory persons “who are agents or alter egos of a signatory party or
intended third party beneficiaries of an arbitration agreement.” (Bouton v.
USAA Casualty Ins. Co. (2008) 167 Cal.App.4th 412, 424. Accord Smith v.
Microskills San Diego L.P. (2007) 153 Cal.App.4th 892, 896.) “A
non-signatory is a third-party beneficiary only to a contract ‘made expressly
for [its] benefit.’ Cal. Civ. Code § 1559.” (Ngo v. BMW of N. Am., LLC
(9th Cir. 2022) 23 F.4th 942, 946.)
The third party must meet the Goonewardene
requirements to “prove that ‘express provisions of the contract,’ considered in
light of the ‘relevant circumstances,’ show that (1) ‘the third party would in
fact benefit from the contract;’ (2) ‘a motivating purpose of the contracting
parties was to provide a benefit to the third party;’ and (3) permitting the
third party to enforce the contract ‘is consistent with the objectives of the
contract and the reasonable expectations of the contracting parties.’” (Ngo,
supra, 23 F.4th at 946, citing Goonewardene v. ADP, LLC (2019) 6
Cal.5th 817, 830.)
Defendant argues that although they are a nonsignatory of
the Agreement, they can enforce it as a third-party beneficiary because the
arbitration provision requires Plaintiffs to arbitrate their claims against
non-signatories such as Defendant.
In Ngo, the court held that a
nonsignatory vehicle manufacturer seeking to compel arbitration as a third-party
beneficiary to a purchase agreement between a car dealership and a plaintiff satisfied
none of the Goonewardene requirements, and thus was unable to compel
arbitration. (Ngo, supra, 23 F.4th at 946.) First, the Ngo court
found that the manufacturer would not in fact benefit from the contract because
the Ngo arbitration clause expressly stated that only three parties— the
plaintiff, the dealership, and the assignee— may compel arbitration, and “language
limiting the right to compel arbitration to a specific buyer and a specific
dealership (and its assignees) means that extraneous third parties may not
compel arbitration.” (Id., at 947.) Accordingly, any benefit that the Ngo
manufacturer “might receive from the clause is peripheral and indirect
because it is predicated on the decisions of others to arbitrate.” (Id.)
The Agreement here has language identical to the Ngo clause.
The Agreement here states: “[a]ny 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, this contract
or any 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
...” (Ameripour Decl., Ex. 2, p. 5.) The Ngo clause states: “[a]ny 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, this contract or any 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 ...” (Ngo, supra, 23 F.4th
at 946.)
Like the Ngo clause which specified that “[e]ither
you or we may choose to have any dispute between us decided by arbitration and
not in court or by jury trial,” the agreement here states “either you or we may
choose to have any dispute between us decided by arbitration and not in court
or by jury trial.” (Ngo, supra, 23 F.4th at 946.) Further, like the Ngo
clause which defined “you” as
the plaintiff and “we” as the dealership and its assignee, the Agreement
here defines “you” as
the buyer (plaintiff) and “we” as the seller-creditor. (Ngo, supra,
23 F.4th at 946; Ameripour Decl., Ex. 2, p. 5.) Thus, like the Ngo manufacturer,
Defendant here fails to show an express benefit from the contract because the
arbitration clause here expressly states that only the plaintiff and the
seller-creditor may compel arbitration, such that any benefit that Defendant
might receive from the clause is peripheral and indirect as it is predicated on
the decisions of others to arbitrate. Therefore, Defendant fails to satisfy the
first Goonewardene requirement to establish that it would in fact
benefit from the contract.
In finding that the manufacturer
failed to meet the second requirement, the Ngo court stated that “the
vehicle purchase agreement in question was drafted with the primary purpose of
securing benefits for the contracting parties themselves. In such an agreement,
the purchaser seeks to buy a car, and the dealership and assignees seek to
profit by selling and financing the car. Third parties are not purposeful
beneficiaries of such an undertaking.” (Ngo, supra, 23 F.4th at 947.)
The Ngo court found that the text of the Ngo arbitration clause
supported this conclusion, as “it provides that claims and disputes ‘which
arise[ ] out of or relate[] to your credit application, purchase or condition
of this Vehicle, this contract or any 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.’” (Id. at 948.) The Ngo court stated that “though the
language allows for arbitration of certain claims concerning third parties, it
still gives only Ngo, the dealership, and the assignee the power to compel
arbitration. Nothing in the clause or, for that matter, in the purchase
agreement reflects any intention to benefit BMW by allowing it to take
advantage of the arbitration provision.” (Id.)
As already noted, the language of
the Ngo clause is identical to the language in the Agreement at issue
here. Defendant argues that the language “including any such relationship with
third parties who do not sign this contract” allows for arbitration of certain
claims concerning third parties, but as the Ngo court held, the
agreement still only gives Plaintiff and the dealership the power to compel
arbitration notwithstanding that “third party” language.
Further, like the vehicle purchase
agreement in Ngo which was drafted with the primary purpose of securing
benefits for the contracting parties themselves (purchaser seeking to buy a car
and the dealership seeking to profit by selling and financing the car,) the
Agreement here is for the sale of a vehicle and was drafted with the primary
purpose of securing benefits for the contracting parties themselves (Plaintiff
seeking to buy a car and the dealership seeking to profit by selling and
financing the car.) Therefore, Defendant fails to satisfy the second Goonewardene
requirement to establish that a motivating purpose of the contracting parties
was to provide a benefit to the third party.
In finding that the manufacturer
failed to meet the third requirement, the Ngo court held that “[n]othing in the
contract here evinces any intention that the arbitration clause should apply to
BMW” as “[t]he arbitration clause's enforcement provisions are limited to the
dealership, the assignee, and Ngo. The compelling inference from this
arrangement is that the parties knew how to give enforcement powers to
non-signatories when they wished to do so but gave none to BMW. Indeed, the
fact that the purchase agreement provides that it ‘does not affect any
warranties covering the vehicle that the vehicle manufacturer may provide,’ is
a potent indication that the parties knew how to deal with claims against the
manufacturer.” (Ngo, supra, 23 F.4th at 948.)
Here, like the Ngo arbitration
clause’s enforcement provisions which were limited to the dealership, assignee,
and purchaser, the Agreement here also limits enforcement to Plaintiff and the
dealership, such that the compelling inference is that the parties knew how to
give enforcement powers to non-signatories, like Defendant, if they wished to
do so, but gave none. Like the Ngo agreement which stated that it does
not affect any warranties covering the vehicle that the vehicle manufacturer
may provide, the Agreement here states that it “does not affect any warranties
covering the vehicle that the vehicle manufacturer may provide,” which Ngo found
to be a potent indication that the parties knew how to deal with claims against
the manufacturer. (Ameripour Decl., Ex. 2, p. 5.)
Thus, Defendant fails to satisfy
the third Goonewardene requirement to establish that permitting their
enforcement of the contract is consistent with the objectives of the contract
and the reasonable expectations of the contracting parties.
Therefore, Defendant fails to
establish that they are a third-party beneficiary of the Agreement, and thus
are not entitled to compel arbitration on this basis.
Equitable Estoppel
“When a plaintiff brings a claim which relies on contract
terms against a defendant, the plaintiff may be equitably estopped from
repudiating the arbitration clause contained in that agreement…. There is no
reason why this doctrine should not be equally applicable to a nonsignatory
plaintiff.” (JSM Tuscany, LLC v. Superior Court (2011) 193 Cal.App.4th
1222, 1239, 1241 (“there is no rational basis to limit this conclusion to
claims expressly based on … breach …. The equitable estoppel doctrine extends
to claims that are dependent upon or inextricably intertwined with the obligations
imposed by the contract containing the arbitration clause.”).)
Applying equitable estoppel to compel arbitration, without
an applicable arbitration agreement, a nonsignatory may compel arbitration when
the claims against the nonsignatory are founded in, and inextricably bound up
with, the agreement’s obligations, as determined by examining the facts of the
complaint. (Felisilda v. FCA US LLC (3d Dist. 2020) 53 Cal.App.5th 486,
496-497 (“Because the Felisildas expressly agreed to arbitrate claims arising
out of the condition of the vehicle—even against third party nonsignatories to
the sales contract—they are estopped from refusing to arbitrate their claim
against FCA.”).) But see Jaquelyn Yeh v. Superior Ct. (1st Dist. 2023)
95 Cal.App.5th 264, 272 (“Petitioners argue that we should follow Ford
Warranty, Montemayor, and Kielar, while MBUSA contends that we should follow
Felisilda. As we explain, we agree with the conclusions reached by Ford
Warranty, Montemayor, and Kielar and hold that MBUSA cannot compel arbitration
with petitioners.”); Ford Motor Warranty Cases, supra, 89 Cal.App.5th at
1334 (“We disagree with Felisilda that ‘the sales contract was the source of
[FCA's] warranties at the heart of this case.’”.)
“California law permits non-signatories to invoke
arbitration agreements under the doctrine of equitable estoppel only in limited
circumstances.” (Ngo v. BMW of N. Am., LLC (9th Cir. 2022) 23 F.4th 942,
948-49.) The two circumstances under the Kramer standard are:
(1) when a signatory must rely on
the terms of the written agreement in asserting its claims against the
nonsignatory or the claims are intimately founded in and intertwined with the
underlying contract, and
(2) when the signatory alleges
substantially interdependent and concerted misconduct by the nonsignatory and
another signatory and the allegations of interdependent misconduct are founded
in or intimately connected with the obligations of the underlying agreement.
(Ngo, supra, 23 F.4th at 948-49, citing Kramer v.
Toyota Motor Corp. (2013) 705 F.3d 1122, 1128–29.)
Here, Plaintiff did not allege any “concerted misconduct”
between the other signatory (the dealership) and Defendant, so the second basis
for equitable estoppel does not apply. Thus, Defendant must establish the first
basis by showing that Plaintiffs “rely on the terms of” the purchase agreement
or make claims that are “intimately founded in and intertwined with” it. (Id.)
In Ngo, the court found that
the plaintiff’s claims were not inextricably intertwined with the terms of the
purchase agreement because ownership of the subject vehicle “does not entail an
intention to enforce any obligations of the purchase agreement on BMW” and “BMW
was not a party to the agreement and its obligations to Ngo arose independently
of her agreement with the dealership.” (Ngo, supra, 23 F.4th at 949.) The
manufacturer in Ngo argued that if the plaintiff “had not signed the
purchase agreement with the dealership, she would not have been able to
purchase her car; if she had not purchased her car, BMW would have issued no
warranties; and if BMW had issued no warranties, Ngo could not bring statutory
claims.” (Id.)
Here, Defendant makes a similar
argument as the Ngo manufacturer in contending that “had Plaintiff not executed the Agreement, they
would not have received the Vehicle, nor the accompanying warranties which
Plaintiff is alleging were violated, and the current action against Defendant
would not exist.” (Motion, 9:2-4.) However, the Ngo court stated
that “this ‘attenuated chain of reasoning’ has been rejected by California
courts.” (Ngo, supra, 23 F.4th at 949.) The Ngo court held that “warranty
claims against the manufacturer ‘arise[ ] independently from the Purchase
Agreements, rather than intimately relying on them.’ (Id. at 950.)
Defendants rely heavily on Felisilda v. FAC US LLC
(2020) 53 Cal.App.5th 486 in arguing that Plaintiff is estopped from
disclaiming the arbitration agreement because their claims against Defendant “directly
relate to the condition of the vehicle that they allege to have violated
warranties they received as a consequence of the sales contract.” (Motion,
9:24-27.)
In Felisilda, the plaintiffs purchased a vehicle from
a dealership where they signed a purchase agreement containing an arbitration
provision that is very similar to the one signed by Plaintiffs in the instant
case, and by the plaintiffs in Ngo. (Felisilda, supra, 53
Cal.App.5th at 486.) The Felisildas sued the dealership and the manufacturer
after they discovered serious defects with their vehicle. (Id. at 491.) The
dealership then moved to compel arbitration, and the court compelled
arbitration. (Id. at 489, 491.) The Felisildas dismissed the dealership,
and the district court ordered them to arbitrate with the manufacturer alone. (Id.
at 489, 499.) In affirming the superior court's decision to order the entire
case to arbitration based on the doctrine of equitable estoppel, the Felisilda
court found that “the sales contract was the source of the warranties at the
heart of this case.” (Id. at 496.)
The Ngo court distinguished Felisilda from
their case as follows:
It makes a critical difference that
the Felisildas, unlike Ngo, sued the dealership in addition to the
manufacturer. In Felisilda, “it was the dealership—a signatory to the purchase
agreement—that moved to compel arbitration rather than the non-signatory
manufacturer.” See id. at 489, 266 Cal.Rptr.3d 640 (“Relying on the
retail installment sales contract ... signed by the Felisildas, Elk Grove Dodge
moved to compel arbitration.”). Furthermore, the Felisildas dismissed the
dealership only after the court granted the motion to compel arbitration.
Accordingly, Felisilda does not address the situation we are confronted with
here, where the non-signatory manufacturer attempted to compel arbitration on
its own. We therefore decline to affirm on the ground of equitable estoppel.
(Ngo, supra, 23 F.4th at
950.)
Here, just like in Ngo,
Plaintiff did not sue the dealership in addition to the manufacturer, and the
non-signatory manufacturer, Defendant, is now attempting to compel arbitration
on its own. These facts distinguish the instant case from Felisilda.
Plaintiffs argue in opposition that
every California Court of Appeals who has reviewed the issue of equitable
estoppel under Felisilda has rejected Felisilda. (Opposition,
2:14.)
In Ford Motor Warranty Cases
(2023) 89 Cal.App.5th 1324 (“Ochoa”), the court addressed whether a
non-signatory manufacturer could invoke the arbitration provision in a sales
contract. The Ochoa court declined to follow Felisilda, stating
“[t]hat the Felisilda plaintiffs and the dealer agreed in their sale
contract to arbitrate disputes between them about the condition of the vehicle
does not equitably estop the plaintiffs from asserting that [the manufacturer]
has no right to demand arbitration.” (Id., at 1334.)
In Montemayor et al. v. Ford
Motor Company (2023) 92 Cal.App.5th 958, the court also declined to follow Felisilda,
stating as follows:
We disagree with
the decision of our colleagues in the Third District in Felisilda v. FCA US
LLC (2020) 53 Cal.App.5th 486, 495, 266 Cal.Rptr.3d 640 (Felisilda)
that equitable estoppel applies to enable the nonsignatory manufacturer to
enforce the arbitration provision in a similar sales contract. We conclude Ford
cannot enforce the arbitration provision in the sales contract because the
Montemayors’ claims against Ford are founded on Ford's express warranty for the
vehicle, not any obligation imposed on Ford by the sales contract, and thus,
the Montemayors’ claims are not inextricably intertwined with any obligations
under the sales contract. Nor was the sales contract between the Montemayors
and AutoNation intended to benefit Ford. We affirm.
(Id. at 961.)
In Kielar v. The Superior Court
of Placer County (2023) 94 Cal.App.5th 614, the court rejected Felisilda
as follows:
Hyundai's
assertion that Kielar's claims are founded on or intimately connected with the
sales contract relies on Felisilda. We join Ford Motor and Montemayor in
disagreeing with this statement and concluding equitable estoppel does not
apply in this situation.
(Id. at 620.)
In Reply, Defendant argues that because
the California Supreme Court has granted petitions for review of Ochoa,
Montemayor, and Kielar, Plaintiffs may not rely on these cases per
California Rules of Court Rule 8.1115, subdivision (e)(1). (Reply, 1:10-23.) Rule
8.1115 states:
(e) When
review of published opinion has been granted
(1) While
review is pending
Pending review and
filing of the Supreme Court's opinion, unless otherwise ordered by the Supreme
Court under (3), a published opinion of a Court of Appeal in the matter has no
binding or precedential effect, and may be cited for potentially persuasive value
only. Any citation to the Court of Appeal opinion must also note the grant of
review and any subsequent action by the Supreme Court.
(2) After decision
on review
After decision on
review by the Supreme Court, unless otherwise ordered by the Supreme Court
under (3), a published opinion of a Court of Appeal in the matter, and any
published opinion of a Court of Appeal in a matter in which the Supreme Court
has ordered review and deferred action pending the decision, is citable and has
binding or precedential effect, except to the extent it is inconsistent with
the decision of the Supreme Court or is disapproved by that court.
(3) Supreme Court
order
At any time after
granting review or after decision on review, the Supreme Court may order that
all or part of an opinion covered by (1) or (2) is not citable or has a binding
or precedential effect different from that specified in (1) or (2).
(Cal. Rule of Court 8.1115(e)(3).)
However, review was granted as to Ochoa,
Montemayor, and Kielar with an order by the California Supreme Court
stating, “[r]eview granted. See Cal. Rules of Court 8.1105 and 8.1115 (and
corresponding Comment, par. 2, concerning rule 8.1115(e)(3)).” (Cal. Rule of
Court 8.1115(e)(3), Comment, par. 2.) Corresponding comment, paragraph 2,
states:
As provided in
Standing Order Exercising Authority Under California Rules of Court, Rule
8.1115(e)(3), Upon Grant of Review or Transfer of a Matter with an Underlying
Published Court of Appeal Opinion, Administrative Order 2021-04-21, under this
subdivision, when the Supreme Court grants review of a published Court of
Appeal opinion, the opinion may be cited, not only for its persuasive value,
but also for the limited purpose of establishing the existence of a conflict in
authority that would in turn allow superior courts to exercise discretion under
Auto Equity, supra, 57 Cal.2d at page 456, to choose between sides of any such
conflict. Superior courts may, in the exercise of their discretion,
choose to follow a published review-granted Court of Appeal opinion, even if
that opinion conflicts with a published, precedential Court of Appeal opinion.
Such a review-granted Court of Appeal opinion has only this limited and
potential precedential effect, however; superior courts are not required to
follow that opinion's holding on the issue in conflict. Nor does such a Court
of Appeal opinion, during the time when review is pending, have any
precedential effect regarding any aspect or holding of the Court of Appeal
opinion outside the part(s) or holding(s) in conflict. Instead it remains, in
all other respects, "potentially persuasive only." This means, for
example, that if a published Court of Appeal opinion as to which review has
been granted addresses "conflict issue A," as well as another issue
as to which there is no present conflict-"issue B"-the Court of
Appeal's discussion of "issue B" remains "potentially
persuasive" only, unless and until a published Court of Appeal opinion
creates a conflict as to that issue. This paragraph of this comment applies
with respect to all published Court of Appeal opinions giving rise to a grant
of review by the Supreme Court on or after April 21, 2021.
(Cal. Rule of Court 8.1115(e)(3),
Comment, par. 2., Italics added.)
Here, the core conflict in the
grant of review of Ochoa, Montemayor, and Kielar versus Felisilda
is on the issue of third-party beneficiary enforcement and equitable
estoppel. Accordingly, this court may choose to follow Ochoa, Montemayor,
and Kielar, published review-granted Court of Appeal opinions, pursuant
to the Supreme Court of California’s order that these cases have a binding or
precedential effect as to establishing the existence of a conflict in authority
that would allow superior courts to exercise discretion to choose between sides
of any such conflict. (Cal. Rule of Court 8.1115(e)(3), Comment, par. 2.)
Thus, this Court joins Ochoa,
Montemayor, and Kielar in finding that Plaintiffs’ claims are not founded
on or intimately connected with the Agreement. Thus, Defendant fails to
establish equitable estoppel.
Therefore, Defendant does not have standing to invoke the
Agreement and compel arbitration.
For the foregoing reasons, Defendant
Hyundai Motor America’s Motion to Compel Arbitration and Stay Proceedings is
DENIED.