Judge: Lee W. Tsao, Case: 24NWCV01994, Date: 2024-10-29 Tentative Ruling
Case Number: 24NWCV01994 Hearing Date: October 29, 2024 Dept: C
Darlene Davis vs Hyundai Motor
America
Case No.: 24NWCV01994
Hearing Date: October 29, 2024 @ 10:30 a.m.
#8
Tentative Ruling
Defendant Hyundai Motor America’s Motion to
Compel Arbitration is GRANTED. Proceedings are STAYED pending completion of
arbitration.
Defendant to give notice.
In a Complaint filed on June 28, 2024, Plaintiff Darlene
Davis (“Plaintiff”) alleges she acquired a 2022 HYUNDAI SANTA FE which Defendant
Hyundai Motor America (“Defendant”) failed to conform to warranty within a
reasonable number of repair attempts or within the warranty periods and failed
to promptly replace the vehicle or make restitution to Plaintiff. Plaintiff alleges that Defendant is liable
for: (1) “Breach of Express Warranty”; (2) “Breach of Implied Warranty”; and
(3) “Violation of the Song-Beverly Act Section 1793.2(b)”.
On August 2, 2024, Defendant requested Plaintiff stipulate
to arbitration. Plaintiff has not agreed
to this request. (Ameripour Decl. ¶ 3.) Defendant now moves for an order compelling
arbitration.
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.)¿
Arbitration Under the Owner’s Handbook and
Warranty Information
Plaintiff’s vehicle was accompanied by a warranty provided
by Hyundai Motor America and located in the Owner’s Handbook & Warranty
Information. The warranty included a binding
arbitration clause which provides as follows:
“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.
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.”
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., ¶4, Ex. 2, pp. 11-17.)
Plaintiff
argues that the arbitration provision in the Warranty is unenforceable because
Defendant has presented no evidence that Plaintiff agreed to the arbitration
provision prior to, or during, the purchase of the vehicle. In this regard, Plaintiff argues that at the
time of sale she was never informed that any warranty claims against Hyundai
Motor America would be subject to binding arbitration, or that an arbitration
agreement existed within the Warranty Booklet. Plaintiff was never informed she
was required to opt out of the post-sale arbitration agreement and was
completely oblivious to it. Further, Plaintiff contends that the arbitration
provision was one-sided and unsigned.
However,
Plaintiff does rely on the warranty in her Complaint. The Complaint states:
“On JULY 23, 2022, Plaintiff acquired a 2022 HYUNDAI SANTA FE, VIN:
5NMS6DAJ9NH439985 ("vehicle").” (Complaint, ¶ 6.) “Defendant HYUNDAI
MOTOR AMERICA is a “warrantor” as contemplated by Ca. Civ. Code § 1795.”
(Complaint, ¶ 10.) “Defendants violated the Song-Beverly Consumer Warranty Act
by failing to conform the Vehicle to the express written warranties within a
reasonable number of repair attempts or within the warranty periods, and by
failing to promptly replace the vehicle or make restitution to Plaintiff.”
(Complaint, ¶ 12.)
“[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.) Plaintiff relies on the existence of the
warranty in order to maintain causes of action under the Song-Beverly Warranty
Act and breach of warranty claims. The doctrine of equitable estoppel is meant
to “prevent a party from playing fast and loose with its commitment to
arbitrate, honoring it when advantageous and circumventing it to gain undue
advantage.” (Metalclad Corp. v. Ventana Environmental Organizational
Partnership (2003) 109 Cal.App.4th 1705, 1714.)
The Court determines that Defendant has met its
burden of proving the existence of a valid arbitration agreement in the
Warranty which covers the subject of this lawsuit.
Unconscionability
Plaintiff objects to arbitration
provision in the Warranty as unconscionable.
Unconscionability
generally includes the absence of meaningful choice on the part of one of the
parties together with contract terms that unreasonably favor the other party. (Carboni
v. Arrospide (1991) 2 Cal.App.4th 76, 82-83.) As the party asserting
unconscionability, Plaintiff has the burden of proving both procedural and
substantive unconscionability. (Crippen v. Central Valley RV Outlet. Inc.
(2004) 124 Cal.App.4th 1159, 1165). Courts analyze the unconscionability
standard in Civil Code section 1670.5 as invoking elements of procedural and
substantive unconscionability. (Nyulassy v. Lockheed Martin Corp. (2004)
120 Cal.App.4th 1267, 1280-81.) Procedural unconscionability focuses on whether
there is ‘oppression’ arising from an inequality of bargaining power or
‘surprise’ arising from buried terms in a complex printed form. (Id.)
The substantive element addresses the existence of overly harsh or one-sided
terms. (Id.) An agreement to arbitrate is unenforceable only if both the
procedural and substantive elements are satisfied. (Stirlen v. Supercuts,
Inc. (1997) 51 Cal.App.4th 1519, 1533.) “[T]he more substantively
oppressive the contract term, the less evidence of procedural unconscionability
is required to come to the conclusion that the term is unenforceable, and vice
versa.” (Armendariz v. Foundation Health Psychcare Services, Inc. (2000)
24 Cal.4th 83, at 114.)
Procedural
Unconscionability
Plaintiff
argues the warranty booklet’s arbitration clause is procedurally unconscionable
because Defendant has provided no evidence that the warranty booklet and its
arbitration provision were shown to Plaintiff prior to or at the time of
purchase, or that Plaintiff ever read the arbitration provision.
Plaintiff also argues that even if
Defendant had presented evidence that the booklet and its arbitration provision
were shown to Plaintiff, the arbitration clause would still be procedurally
unconscionable. Plaintiff argues that the arbitration agreement was not
disclosed to Plaintiff, it was buried in the warranty booklet, and she never
signed the agreement. But these
circumstances alone do not constitute procedural unconscionability. (See Dougherty
v. Roseville Heritage Partners (2020) 47 Cal.App.5th 93, 103.)
Defendant
argues that it had no duty to call out or highlight the arbitration provision
in the Warranty and Plaintiffs were expressly provided an opt-out option for
the arbitration provision. (Sanchez v. Valencia Holding Co., LLC
(2015) 61 Cal.4th 899, 914.) Moreover, the Court notes that the
arbitration provision is prominently displayed in bold lettering in the first
section of the “Hyundai Warranty Information”. (Ameripour Decl., Ex. 3, pp.
12-14.) Plaintiff has not met his burden of
establishing oppression or surprise.
Substantive
Unconscionability
Despite
that “[t]he principle that an arbitration agreement may not limit statutorily
imposed remedies . . . appears to be undisputed,” Defendant’s arbitration
agreement limits statutory rights. (Armendariz v. Foundation Health
Psychcare Services, Inc. (2000) 24 Cal.4th 83, 103.) An agreement
cannot waive non-waivable statutory rights because statutes enacted for the
public benefit and to enforce public policy are unwaivable as a matter of
law. (Id. at 100.) Thus, it “is indisputable that an
employment contract that required employees to waive their rights under the
FEHA to redress . . . harassment and discrimination would be contrary to public
policy and unlawful.” (Id. at 100-101.)
“Where
. . . arbitration provisions undermine statutory protections, courts have
readily found unconscionability.” (Samaniego v. Empire Today LLC
(2012) 205 Cal.App.4th 1138, 1147, citing Nyulassy v. Lockheed Martin Corp.
(2004) 120 Cal.App.4th 1267, 1283, Martinez v. Master Protection Corp.
(2004) 118 Cal.App.4th 107, 117, Wherry v. Award, Inc. (2011) 192
Cal.App.4th 1242, 1249.)
Plaintiff argues that the arbitration provision is
substantively unconscionable because Plaintiff did not sign it and the 30 day
opt out provision is too short given the length of time a purchaser would
typically take to bring a vehicle in for repairs. Plaintiff also contends that the 30 day
opt-out is hidden within a large text that is part of an overwhelming amount of
paperwork and responsibilities.
Defendant does not respond to these arguments other than to
reiterate that Plaintiff relies upon the Warranty in bringing suit. While it is true that Defendant gives a
purchaser only 30 days to opt out of the arbitration provisions, the fact
remains that the purchaser can choose to opt out. Plaintiff has not met his burden of
establishing that the arbitration provision is overly harsh or one sided.
Thus, Plaintiff has not met his burden of establishing both
procedural and substantive unconscionability.
Accordingly, Defendant’s Motion to Compel Arbitration is
GRANTED.