Judge: Lynette Gridiron Winston, Case: 24PSCV03884, Date: 2025-03-10 Tentative Ruling
Case Number: 24PSCV03884 Hearing Date: March 10, 2025 Dept: 6
CASE NAME: Gilbert Shaun Anthony Gonzalez v. Hyundai Motor America, Inc.
Defendant’s Motion to Compel Arbitration
TENTATIVE RULING
The Court DENIES Defendant’s motion to compel arbitration. Defendant must file an answer to the complaint 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.
BACKGROUND
This is a lemon law case. On November 13, 2024, plaintiff Gilbert Shaun Anthony Gonzalez (Plaintiff) filed this action against defendant Hyundai Motor America, Inc. (Defendant) and Does 1 through 50, alleging causes of action for violation of Song-Beverly Act – breach of express warranty, violation of Song-Beverly Act – breach of implied warranty, violation of the Song-Beverly Act section 1793.2, subdivision (b), and violation of Civil Code section 1796.5.
On January 2, 2025, Defendant moved to compel arbitration. The motion is unopposed.
LEGAL STANDARD
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 setting forth its terms verbatim. (Condee v. Longwood Mgmt. Corp. (2001) 88 Cal.App.4th 215, 218-219 (Condee).)
“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.)
REQUESTS FOR JUDICIAL NOTICE
The Court GRANTS Defendant’s request for judicial notice. (Evid. Code, § 452, subd. (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.)
DISCUSSION
FAA v. CAA
“[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 (Victrola 89.) “[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.)
The Warranty Handbook (defined below) does not provide any language indicating that the enforcement of its arbitration terms is governed by the FAA. (Ameripour Decl., Ex. 3, p. 19 of pdf.) But, the CSA (defined below) does provide that the FAA governs the enforcement of its arbitration terms. (Rao Decl., Ex. 2, p. 34 of pdf.) Accordingly, the CAA governs the motion to compel arbitration as it pertains to the Warranty Handbook, and the FAA governs the motion as it pertains to the CSA. (Victrola 89, LLC v. Jaman Properties 8 LLC, supra, 46 Cal.App.5th at p. 345.)
Existence of Valid Arbitration Agreement and Covered Claims – Warranty Handbook
Defendant moves to compel arbitration based on language in its Owner’s Handbook & Warranty Information (the Warranty Handbook). (Ameripour Decl., Ex. 3.) Having quoted the arbitration language from the Warranty Handbook in the moving papers and having attached a copy to the motion, Defendant has met its initial burden. (Motion, 4:11-6:5; Condee, supra, 88 Cal.App.4th at p. 218; Cal. Rules of Court, rule 3.1330.) The burden now shifts to Plaintiff. (Condee, supra, 88 Cal.App.4th at p. 219.)
Plaintiff has not opposed the motion. Defendant therefore has established the existence of an arbitration agreement via the Warranty Handbook. The issue is now whether the arbitration agreement in the Warranty Handbook covers Plaintiff’s claims.
Defendant contends that Plaintiff’s claims fall within the scope of the arbitration provision of the Warranty Handbook, as it covers claims relating to the sale of the subject vehicle and the vehicle warranty, among other things. (Ameripour Decl., Ex. 3, p. 17 of pdf.)
The Court does not find that the arbitration agreement of the Warranty Handbook covers Plaintiff’s claims. First, arbitration agreements are governed by contract law, not warranty law. (Norcia v. Samsung Telecommunications Am., LLC (9th Cir. 2017) 845 F.3d 1279, 1283, 1288 (Norcia) [interpreting California law].) “A seller is bound by any express warranties given to the buyer, including statements in written warranty agreements, advertisements, oral representations, or presentations of samples or models. Language in a written warranty agreement is contractual in the sense that it creates binding, legal obligations on the seller, but a warranty does not impose binding obligations on the buyer. Rather, warranty law focuses on the seller's behavior and obligation—his or her affirmations, promises, and descriptions of the goods—all of which help define what the seller in essence agreed to sell. A buyer may have to fulfill certain statutory conditions to obtain the benefit of a warranty. But a warranty generally does not impose any independent obligation on the buyer outside of the context of enforcing the seller's promises. A condition that must be satisfied before a consumer can enforce a warranty is not equivalent to a freestanding obligation that limits a buyer's rights outside of the scope of warranty itself.” (Norcia, supra, 845 F.3d at p. 1288, internal citations and quotation marks omitted, italics in original [applying California law].)
The Warranty Handbook does not indicate that Plaintiff accepted the arbitration terms therein. (See Ameripour Decl., Ex. 3.) Defendant did not present any evidence demonstrating that Plaintiff signed or accepted the arbitration terms contained in the Warranty Handbook before or at the time of purchasing the subject vehicle. (See generally, Ameripour Decl.; Rao Decl.) Defendant did not present any evidence that Plaintiff even received the terms of the arbitration agreement in the Warranty Handbook before purchasing the subject vehicle. (See generally, Ameripour Decl.; Rao Decl.) Thus, the arbitration agreement in the Warranty Handbook does not entitle Defendant to compel arbitration.
The Court therefore DENIES Defendant’s motion to compel arbitration based on the Warranty Handbook.
Existence of Valid Arbitration Agreement and Covered Claims – Connected Services Agreement
Defendant also moves to compel arbitration based on language in the Connected Services Agreement (CSA). (Rao Decl., Exs. 1-2.) Having provided a copy of the CSA containing arbitration language, Defendant has met its initial burden. (See Dillon v. BMO Harris Bank, N.A. (4th Cir. 2015) 787 F.3d 707, 711.) The burden now shifts to Plaintiff. (See ibid.)
Plaintiff has not opposed the motion. Defendant therefore has established the existence of an arbitration agreement via the CSA. The issue is now whether the Arbitration Agreement in the CSA covers Plaintiff’s claims.
Defendant contends the arbitration agreement in the CSA covers Plaintiff’s warranty claims because it contains language providing that the parties agree to arbitrate any disputes relating to the subject vehicle and claims based in warranty or statute, among other things. (Rao Decl., Ex. 2.)
The Court does not find that the arbitration language in the CSA covers Plaintiff’s claims. “The contract must be construed as a whole and the intention of the parties must be ascertained from the consideration of the entire contract, not some isolated portion. [Citations.]” (Cnty. of Marin v. Assessment Appeals Bd. (1976) 64 Cal.App.3d 319, 325.) The purpose of the CSA concerns Defendant’s Blue Link services. (Rao Decl., Exs. 1-2.) No reasonable consumer would think that they are agreeing to arbitrate all disputes regarding vehicle defects merely by signing up for a subscription service that provides services such “Remote Service Activation,” “Stolen Vehicle Recovery,” “Enhanced Roadside Assistance,” “Digital Key 2.0,” “Verizon Hotspot,” etc. (Rao Decl., Ex. 2, p. 7 of pdf.) None of that has anything to do with hybrid system warning light illumination or smoke coming from under the hood, which are the substance of Plaintiff’s claims here. (Compl., ¶ 11.)
Moreover, Defendant’s interpretation of the arbitration provision of the CSA would render the majority of its words mere surplusage, which is improper. “’We must give significance to every word of a contract, when possible, and avoid an interpretation that renders a word surplusage.’ [Citation.]” (Advanced Network, Inc. v. Peerless Ins. Co. (2010) 190 Cal.App.4th 1054, 1063.) The arbitration provision of the CSA lists many Blue Link related services that it covers, such as “Connected Services, Connected Services Systems, Service Plans, the Vehicle, use of the sites, or products, services, or programs you purchase, enroll in or seek product/service support for, whether you are a Visitor or Customer, via the sites or through mobile application…”) (Rao Decl., p. 34 of pdf.) The fact that broader language follows in the same paragraph does not expand the provision to cover every dispute between the parties. If the language were as broad as Defendant suggest, then the language quoted above and most of the other language in the arbitration provision of the CSA would be mere surplusage.
Based on the foregoing, the Court also DENIES the motion to compel arbitration based on the CSA.
CONCLUSION
The Court DENIES Defendant’s motion to compel arbitration. Defendant must file an answer to the complaint 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.