Judge Linda S. Marks, Case 2020-01145510 2022-10-24 Tentative Ruling

Judge: Linda S. Marks, Case: 2020-01145510, Date: 2022-10-24 Tentative Ruling

1. Motion to Enforce Settlement or Set Aside Court's Order filed by Cheryl W. and Timothy D. Strahan on 5/16/22
2. ADR Review Hearing

Plaintiffs, Cheryl W. Strahan and Timothy D. Strahan, seek an order either: (1) setting aside the Court’s August 9, 2021 Order compelling Plaintiffs to arbitrate their claims against Defendants Mercedes-Benz USA, LLC and Mercedes-Benz of Anaheim (“Moving Defendants”); or (2) determining that JAMS may conduct the arbitration. Plaintiffs contend the arbitration provision now used by MBUSA is unconscionable such that the order compelling arbitration must be set aside and the stay lifted so the case can proceed in state court; that the Court should find that JAMS may conduct the arbitration as the arbitration organization selected by Plaintiffs; and that a JAMS arbitrator should make the determination as to whether JAMS can arbitrate this matter.

On August 9, 2021, the hearing on Moving Defendants’ Motion to Compel Arbitration was held. The Court granted the Motion and stayed the case pending final resolution of the arbitration. (See 8/9/21 M.O.)

Plaintiffs present evidence that they “chose” to arbitrate with JAMS and filed a Demand for Arbitration with JAMS and served notice of same on November 21, 2021; that Moving Defendants stated they would not agree to use JAMS as the arbitration organization; and that on March 30, 2022, JAMS sent a notice to all parties stating that it had not received full payment from Moving Defendants for the deposit and that the case was being placed on an “administrative stay” pending payment. (See Goethals Decl., ¶¶ 6-8, Exhs. 3-5.) Plaintiffs contend that Moving Defendants cannot “reject” JAMS; that there is no provision in the RISC that requires the parties to “agree” on an “arbitration organization; that there is no reason why Plaintiffs cannot choose the arbitration organization; and that forcing Plaintiffs to be at the mercy of Moving Defendants is unconscionable.

The arbitration provision that is the basis of Defendants' motion states in pertinent part: You may choose one of the following arbitration organizations and its applicable rules: the National Arbitration Forum, Box 50191, Minneapolis, NN 55405-0191 (www.arb-forum.com), the American Arbitration Association, 335 Madison Ave., Floor 10, New York, NY 10017-4605 (www.adr.org), or any other organization that you may choose subject to our approval . . . 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 . . . shall, at your or our election, be resolved by neutral binding arbitration and not by court action. (Goethals Decl., ¶5; Ex. 2.)

In Opposition, Moving Defendants present evidence that they have offered to arbitrate with the American Arbitration Association (“AAA”) or Judicate West, but Plaintiffs stated they would not agree to arbitrate with either organization. (See Ameripour Decl., Exh. 1.) Moving Defendants present evidence they also requested Plaintiffs suggest an alternative organization aside from JAMS if both AAA and Judicate West are not agreeable, but Plaintiffs have elected to file this Motion instead. (Id.)

Here, in granting the Motion to Compel Arbitration, the Court referred to the following provision in the Retail Installment Sale Contract (“RISC”) which provides as follows:

“Any claim or dispute, whether in contract, tort, statute or otherwise (including the interpretation and scope of this Arbitration Clause, 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. If federal law provides that a claim or dispute is not subject to binding arbitration, this Arbitration Clause shall not apply to such claim or dispute. Any claim or dispute is to be arbitrated by a single arbitrator on an individual basis and not as a class action. You expressly waive any right you may have to arbitrate a class action. You may choose one of the following arbitration organizations and its applicable rules: the National Arbitration Forum, Box 50191, Minneapolis, MN 55405-0191 (www.arb-forum.com), the American Arbitration Association, 335 Madison Ave., Floor 10, New York, NY 10017-04605 (www.adr.org), or any other organization that you may choose subject to our approval. You may get a copy of the rules of an arbitration organization by contacting the organization or visiting its website …

The contract specifically states that Plaintiffs may “choose” the National Arbitration Forum or the American Arbitration Association or if they select “any other organization” it is “subject to our approval”. Code of Civil Procedure section 1281.6 states: “If the arbitration agreement provides a method of appointing an arbitrator, that method shall be followed.”

The Court notes that Moving Defendants are not in “breach” of Code of Civil Procedure section 1281.98 for failing to pay the fees to JAMS within 30-days because, again, Plaintiffs cannot unilaterally elect to arbitrate with JAMS. The RISC states that if Plaintiffs chose an entity other than National Arbitration Forum or AAA, it is “subject to” Moving Defendants’ approval.

The Court also finds that the arbitration provision is not unconscionable for stating that any choice by Plaintiff other than National Arbitration Forum or AAA is “subject to our approval”. The Court already found there was a valid agreement to arbitrate, and any claims of unconscionability should have been presented at the hearing on the Motion to Compel Arbitration. Plaintiffs cannot unilaterally force Moving Defendants to arbitrate with JAMS.

Tentative Ruling: Plaintiffs Cheryl W. Strahan and Timothy D. Strahan’s Motion to Enforce or Set Aside Court’s Order Compelling Arbitration and Lift Stay of Proceedings is DENIED in its entirety. The Court ORDERS Plaintiffs to select either National Arbitration Forum or AAA or offer another arbitration organization but Moving Defendants must approve of same. A Status Conference re: Arbitration for is set for November 28, 2022 at 1:30 pm, Department C25, at which time parties are to have selected an arbitration organization.

Moving Party is to give notice.