Judge Lynette Gridiron Winston, Case Number: 24PSCV01626, Date: 2024-11-25 Tentative Ruling

Judge: Lynette Gridiron Winston, Case: 24PSCV01626, Date: 2024-11-25 Tentative Ruling

The Court DENIES Defendant’s motion to compel arbitration. Defendant is ordered to file an Answer or responsive pleading within 10 Court days of this Order.

Plaintiff is ordered to give notice of the Court’s ruling within five calendar days of this order.

This is a lemon law case. On May 20, 2024, plaintiff Elsy Hernandez (Plaintiff) filed this action against defendant Hyundai Motor America (Defendant) and Does 1 through 10, alleging causes of action for Violation of Song-Beverly Act – Breach of Express Warranty, Violation of Song-Beverly Act – Breach of Implied Warranty, and Violation of the Song-Beverly Action section 1793.2.

On June 24, 2024, Defendant moved to compel arbitration. On November 12, 2024, Plaintiff opposed the motion. On November 18, 2024, Defendant replied.

Parties may be compelled to arbitrate a dispute upon the court finding that: (1) there was a valid agreement to arbitrate between the parties; and (2) said agreement covers the controversy or controversies in the parties’ dispute.¿(Omar v. Ralphs Grocery Co. (2004)¿118 Cal.App.4th 955, 961.) A party moving to compel arbitration has the burden of establishing the existence of a valid agreement to arbitrate and the party opposing the petition has the burden of proving, by a preponderance of the evidence, any fact necessary to its defense. (Banner Entertainment, Inc. v. Superior Court¿(1998) 62 Cal.App.4th 348, 356-357.) A party seeking to compel arbitration meets their initial burden of establishing the existence of a valid arbitration agreement by attaching a copy to the motion or petition to compel arbitration. (Espejo v. Southern California Permanente Medical Group (2016) 246 Cal.App.4th 1047, 1060.)

“California has a strong public policy in favor of arbitration and any doubts regarding the arbitrability of a dispute are resolved in favor of arbitration.” (Coast Plaza Doctors Hospital v. Blue Cross of California (2000) 83 Cal.App.4th 677, 686.) “This strong policy has resulted in the general rule that arbitration should be upheld unless it can be said with assurance that an arbitration clause is not susceptible to an interpretation covering the asserted dispute.” (Ibid. [internal quotations omitted].) This is in accord with the liberal federal policy favoring arbitration agreements under the Federal Arbitration Act (“FAA”), which governs all agreements to arbitrate in contracts involving interstate commerce. (9 U.S.C. § 2, et seq.; Higgins v. Superior Court (2006) 140 Cal.App.4th 1238, 1247.)

Defendant submitted new evidence on reply. Generally, new evidence is not permitted on reply unless it fills in gaps in the evidence created by the opposing party’s opposition and is not raising new substantive issues for the first time; otherwise, a further hearing would be required to permit the opposing party to respond. (Jay v. Mahaffey (2013) 218 Cal.App.4th 1522, 1537-1538.) None of the new evidence submitted on reply fills in any gaps of Plaintiff’s arguments. Accordingly, the Court declines to consider such evidence.

The Court SUSTAINS Plaintiff’s Objection Numbers 2 and 4 for lack of foundation and authentication. The Court OVERRULES the remaining objections.

The Court GRANTS the parties’ requests for judicial notice. (Evid. Code § 452, subds. (a)-(d).) However, the Court takes judicial notice of the foregoing documents only as to “the existence, content and authenticity of public records and other specified documents”; it does not take judicial notice of the truth of the factual matters asserted in those documents. (Dominguez v. Bonta (2022) 87 Cal.App.5th 389, 400.)

“[T]he FAA's procedural provisions do not apply unless the contract contains a choice-of-law clause expressly incorporating them. [T]he question is not whether the parties adopted the CAA’s procedural provisions: The state's procedural statutes apply by default because Congress intended the comparable FAA sections to apply in federal court. The question, therefore, is whether the parties expressly incorporated the FAA’s procedural provisions into their agreements.” (Victrola 89, LLC v. Jaman Properties 8 LLC (2020) 46 Cal.App.5th 337, 345, internal citations omitted and italics in original.) “[P]revious cases have held that when an arbitration agreement provides that its ‘enforcement’ shall be governed by California law, the [CAA] governs a party's motion to compel arbitration. It follows that when an agreement provides that its ‘enforcement’ shall be governed by the FAA, the FAA governs a party's motion to compel arbitration.” (Id., at p. 346.)

Neither of the warranties Defendant submitted for this motion contain language indicating that the enforcement of the arbitration agreements contained within those warranties is governed by the FAA. (Ameripour Decl., Exs. 2, 3.)[1] Accordingly, the CAA applies by default and governs this motion. (Victrola 89, LLC v. Jaman Properties 8 LLC, supra, 46 Cal.App.5th at p. 345.)

Defendant moves to compel arbitration based on language in its Certified Used Vehicle Limited Warranty (Limited Warranty) and its Owner’s Handbook & Warranty Information (collectively, the Warranties). (Ameripour Decl., Exs. 2-3.) Having provided copies of the Warranties containing the arbitration language, Defendant has met its initial moving burden in establishing the existence of an arbitration agreement. (Espejo v. Southern California Permanente Medical Group, supra, 246 Cal.App.4th at p. 1060.) The burden now shifts to Plaintiff. (Gamboa v. Ne. Cmty. Clinic (2021) 72 Cal.App.5th 158, 167 (Gamboa).)

Plaintiff objected to the Warranties on the grounds that they, among other things, lack foundation and authentication, and the Court sustained Plaintiff’s objections on those grounds. The declaration of Ali Ameripour does not provide facts demonstrating personal knowledge regarding the Warranties or whether Plaintiff saw or signed the arbitration agreements in the Warranties. (See Ameripour Decl., ¶¶ 4-5; Gamboa, supra, 72 Cal.App.5th at p. 169 [objection to declaration for lack of foundation and authentication on motion to compel arbitration affirmed on appeal where declarant did not provide foundational facts].) The fact that motions to compel arbitration do not necessarily require authentication of the arbitration agreement with the moving papers does not mean Defendant may avoid the foundation requirement altogether; rather, it must be established once the opposing party challenges the validity of the arbitration agreement, which Plaintiff has done here. (See id. at p. 167.) Plaintiff also challenged the validity of the arbitration agreements by Plaintiff stating that Plaintiff never signed any post-sale arbitration agreement like the ones Defendant submitted for this motion. (Hernandez Decl., ¶ 6.) Plaintiff also states that Plaintiff was never informed or given notice about any agreement to arbitrate warranty claims in the Warranties or that Plaintiff had 30 days to opt out from the arbitration agreements after purchasing the subject vehicle. (Hernandez Decl., ¶¶ 4-5.)

Additionally, the Court notes that the Limited Warranty appears to have been created in 2023, i.e., the year after Plaintiff purchased the subject vehicle, based on the copyright notices at the bottom of each page indicating the year 2023. (Compl., ¶ 8; Ameripour Decls., Exs. 2, 3.) Defendant appears to be referencing a different set of written warranties other than those Plaintiff may have received when purchasing the subject vehicle. Defendant’s reply also presented no new evidence to lay the foundation for the arbitration agreements either or otherwise prove their validity by a preponderance of the evidence. (See generally, Reply; Gamboa, supra, 72 Cal.App.5th at pp. 164-165.) Thus, the Warranties are inadmissible and Defendant has failed to establish the existence of a valid arbitration agreement between the parties. This by itself is sufficient to deny the motion.

Moreover, even if the Warranties were admissible, they would not be sufficient to demonstrate the existence of an arbitration agreement between the parties. Defendant did not present any evidence demonstrating that Plaintiff signed or accepted the arbitration agreements contained in the Warranties before or at the time of purchasing the subject vehicle. (Ameripour Decl., Exs. 2, 3.) Defendant did not present any evidence that Plaintiff even received the terms of the arbitration agreements in the Warranties before purchasing the subject vehicle. (Ameripour Decl., Exs. 2, 3.) The fact the complaint alleges Plaintiff received a written warranty from Defendant in connection with the purchase of the subject vehicle is not the same as saying that Plaintiff accepted the arbitration agreements in the Warranties, nor is it the same as saying that Plaintiff received the terms of the arbitration agreements before purchasing the subject vehicle. (Compl., ¶¶ 4, 8.)

Based on the foregoing, the Court DENIES the motion and declines to consider the parties’ remaining arguments..

The Court DENIES Defendant’s motion to compel arbitration. Defendant is ordered to file an Answer or responsive pleading within 10 Court days of this Order.

Plaintiff is ordered to give notice of the Court’s ruling within five calendar days of this order.

[1] The Court’s reference to the warranties as attached to the declaration of Ali Ameripour here is only for purposes of determining whether the FAA or CAA governs this motion to compel arbitration. As noted above, the Court sustained Plaintiff’s objection to these warranties for lack of foundation and authentication, and the Court’s ruling remains the same in that regard.