Judge: Linda S. Marks, Case: 01247544, Date: 2022-07-25 Tentative Ruling

Motion to Compel Arbitration filed by Hyundai

Defendant is not a signatory to the subject arbitration agreement, which appears in the retail installment sales contract (RISC) between Plaintiff Merry McWilliams (“Plaintiff”) and nonparty seller-creditor “Hyundai of El Cajon,” dated 12/30/2020. (See Sniderman Decl. at Exh. A [RISC].) A nonsignatory seeking to enforce an arbitration agreement bears the burden to establish standing to enforce the agreement. (Jones v. Jacobson (2011) 195 Cal.App.4th 1, 15.)

Defendant has failed to meet this burden. First, contrary to Defendant’s contentions, Plaintiff did not expressly agree to arbitrate her claims against Defendant HYUNDAI. The arbitration agreement explicitly requires only that the Plaintiff and the signatory-seller to resolve “any dispute between us”—i.e., any disputes between plaintiffs and the nonparty seller (including the seller’s employees, agents, assigns)—by binding arbitration. (See Sniderman Decl. at Exh. A.) At multiple places in the RISC, the arbitration agreement is explicitly limited in this manner to only “you” (the plaintiff) and “us” (the signatory-seller). (Id.) There is no express agreement requiring Plaintiff to bring her claims against any other party, such as the manufacturer, in arbitration.

Next, Felisilda v. FCA USA LLC (2020) 53 Cal.App.5th 486 (“Felisilda”) is distinguishable, and the principles of equitable estoppel do not apply here. Here, unlike in Felisilda, the Complaint does not allege or so even indicate that the sales contract between the Plaintiff and the nonparty dealer is the source of the warranties at the heart of this action. Nothing in the Complaint suggests that Plaintiff’s claims are based on any express or implied warranty in the RISC, and the material terms of the express written warranty alleged in the Complaint appear nowhere in the RISC. (See SAC ¶ 10.) Further, unlike in Felisilda, the moving party is not the dealer who unquestionably would have standing as a signatory to the arbitration agreement to enforce it, and maybe perhaps also have standing, as the dealer did in Felisilda, to enforce it as to claims involving the manufacturer. Instead, the moving party here is the nonsignatory manufacturer, and the dealer is not even a party to this case.

Moreover, the principles of equitable estoppel do not apply here because Plaintiff’s claims do not depend on the existence of the RISC or any term contained therein. “In any case applying equitable estoppel to compel arbitration despite the lack of an agreement to arbitrate, a nonsignatory may compel arbitration only when the claims against the nonsignatory are founded in and inextricably bound up with the obligations imposed by the agreement containing the arbitration clause.” (Goldman v. KPMG, LLP (2009) 173 Cal.App.4th at 209, 219.) “[T]he sine qua non for application of equitable estoppel as the basis for allowing a nonsignatory to enforce an arbitration clause is that the claims the plaintiff asserts against the nonsignatory must be dependent upon, or founded in and inextricably intertwined with, the underlying contractual obligations of the agreement containing the arbitration clause.” (Id. at pp. 217-218; accord, Jensen v. U-Haul Co. of California (2017) 18 Cal.App.5th 295, 306.) As discussed above, Plaintiff’s claims against Defendant are independent from and do not rely on the existence or terms of the RISC.

Finally, Defendant has also failed to demonstrate that it is a third-party beneficiary of the RISC or the arbitration agreement. Nothing in the RISC or the arbitration provision shows that it was made for the benefit of Defendant. The terms of the agreement—which in no uncertain terms repeatedly grants only “you” (the plaintiff) and “us” (the seller) the right to compel arbitration—do not suggest the parties also intended bestow upon the manufacturer any right to compel arbitration against the buyer, and a buyer entering into the RISC would not, by its terms, expect that the buyer was granting such a right or conferring such a benefit on Defendant. (See Sniderman Decl. at Exh. A.)

Tentative Ruling: Defendant Hyundai Motor America’s (“Defendant” or “HYUNDAI”) Motion to Compel Arbitration is DENIED.

Moving Party is to give notice.