Judge: Mark A. Young, Case: 24SMCV00205, Date: 2024-08-23 Tentative Ruling
Case Number: 24SMCV00205 Hearing Date: August 23, 2024 Dept: M
CASE NAME: Monique
Searls, et al. v. Mercedes-Benz USA, LLC, et al.
CASE NO.: 24SMCV00205
MOTION: Defendant
Mercedes Benz USA’s Motion to Compel Arbitration
HEARING DATE: 08/23/2024
Background
On January 17, 2024, Plaintiffs
Monique Searls (“Searls”) and Mazzy Nations Entertainment Education
Rehabilitation Center University (“Mazzy”) (collectively “Plaintiffs”) filed a Songs-Beverly
Act action against Defendants Mercedes-Benz USA, LLC (“MBUSA”) and Sonic
Calabasas M. Inc. d/b/a Mercedes Benz of Calabasas (“MB Calabasas”)
(collectively “Defendants”).
MBUSA filed its Answer to the
Complaint on February 20, 2024. MB Calabasas filed its Answer on February 26,
2024. On April 2, 2024, MBUSA filed the
instant Motion to Compel Arbitration. Plaintiffs filed their opposition on
August 12, 2024. MBUSA filed its reply on August 16, 2024.
Legal
Standard
Under California law, the trial court has
authority to compel arbitration pursuant to Code of Civil Procedure § 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.)¿¿
EVIDENTIARY OBJECTIONS
Defendant’s Request
Defendant MBUSA’s request for the Court to take judicial notice of the complaint
filed on January 17, 2024, is GRANTED under Evid. Code § 452(d) as it is a
court document.
Plaintiffs’ Request
Plaintiffs request for the Court to take judicial notice of Martha
Ochoa v. Ford Motor Company (2023) 89 Cal.App.5th 1324, referred to as Plaintiffs’
Exhibits 1, is GRANTED under Cal Evid. Code § 452(c) as it is a published
opinion of the Court of Appeal, Second District.
Plaintiffs request nos. 2-3 are DENIED as the Court did not rely on these
documents.
Analysis
A.
Existence of Arbitration Agreement
In
determining the enforceability of an arbitration agreement, the court considers
“two ‘gateway issues’ of arbitrability: (1) whether there was an agreement to
arbitrate between the parties, and (2) whether the agreement covered the
dispute at issue.”¿ (Omar v. Ralphs Grocery Co. (2004) 118 Cal.App.4th
955, 961 (Omar).)¿¿
1. Agreement Between the Parties
The moving party can meet its initial burden
of proving the existence of an arbitration agreement by attaching a copy of the
Agreement to this motion bearing the signature of the opposing party. (See Bannister
v. Marinidence Opco, LLC (2021) 64 Cal.App.5th 541, 541-543 [“The party
seeking arbitration can meet its initial burden by attaching to the petition a
copy of the arbitration agreement purporting to bear the¿respondent's
signature.”].) Alternatively, the moving party can meet its initial burden by
setting forth the agreement’s provisions in the motion. (See Cal. Rules of
Court, rule 3.1330; see also Condee v. Longwood Management Corp. (2001)
88 Cal.App.4th 215, 219.)
Here, MBUSA provides a copy of the Motor Vehicle Lease
Agreement (“Lease”). (Ameripour Decl.; Exh. 2.) The Lease provides in relevant
part,
Any claim or dispute, whether in contract, tort or
otherwise (including any dispute over the interpretation, scope, or validity of
this lease, arbitration section or the arbitrability of any issue), between you
and us or any of our employees, agents , successors, assigns, or the vehicle
distributor, including Mercedes-Benz USA LLC (each a “Third-Party
Beneficiary”), which arises out of or relates to a credit application, this
lease, or any resulting transaction or relationship arising out of this lease (including
any such relationship with third parties who do not sign this contract) shall,
at the election of either you, us, or a Third-Party Beneficiary, be resolved by
a neutral, binding arbitration and not by a court action.
(Id. at
p. 4.)
“If the moving party meets its initial prima facie burden and the
opposing party disputes the agreement, then in the second step, the opposing
party bears the burden of producing evidence to challenge the authenticity of
the agreement.” (Gamboa v. Northeast Community Clinic (2021) 72 Cal.
App. 5th 158,165 (Gamboa).) The evidence must be sufficient to create a
factual dispute to shift the burden back to the arbitration proponent who
retains the ultimate burden of proving, by a preponderance of the evidence, the
authenticity of the signature. (Iyere v. Wise Auto Group (2023) 87
Cal.App.5th 747, 755 (Iyere). Here, Plaintiffs do not present any evidence
or argument contesting the existence of the Lease. Therefore, the Court finds
that an agreement to arbitrate does exist.
2.
Applicability to the Instant Dispute
Per the Agreement, “Any claim or dispute, whether in
contract, tort or otherwise (including any dispute over the interpretation,
scope, or validity of this lease, arbitration section or the arbitrability of
any issue)… which arises out of or relates to a credit application, this lease,
or any resulting transaction or relationship arising out of this lease
(including any such relationship with third parties who do not sign this
contract) shall, at the election of either you, us, or a Third-Party
Beneficiary, be resolved by a neutral, binding arbitration and not by a court
action. The Complaint alleges a violation of Plaintiff’s warranty agreement
stemming from the lease of a 2023 Mercedes-Benz C-Class. (See. Compl.) The
Lease covers the instant dispute because it provides an express warranty over
the subject vehicle. (Ameripour Decl.; Exh. 2, p. 3.) Based on this, the
agreement covers the instant dispute.
3.
Enforcement of the Agreement by Non-Signatory
Defendants
Generally, only a party to an
arbitration agreement may enforce the agreement. (Thomas v. Westlake
(2012) 204 Cal.App.4th 605, 613.) “Nonsignatory
defendants may enforce arbitration agreements ‘where there is sufficient
identity of parties.’ [Citation.] Enforcement is permitted where the
nonsignatory is the agent for a party to the arbitration agreement [citation]
or the nonsignatory is a third-party beneficiary of the agreement [citation].
In addition, a nonsignatory may enforce an arbitration agreement under the
doctrine of equitable estoppel.”(Jenks v. DLA Piper Rudnick Gray Cary US LLP
(2015) 243 Cal.App.4th 1, 8–9.)
Here, MBUSA argues that it can
enforce the arbitration provision as a third-party beneficiary because the
Lease explicitly identifies them as such. (Mot. p. 5.) The Court agrees, noting
that the previously quoted language identifies MBUSA as a third-party
beneficiary of the Lease. MBUSA additionally argues it can enforce the
arbitration agreement under the doctrine of equitable estoppel relying on Mance
v. Mercedes-Benz USA and Felisilda v. FCA US LLC. (Mot. p. 6.) In
opposition, Plaintiffs argue that MBUSA has failed to meet its burden in
establishing that equitable estoppel applies. However, the Court need not reach
the merits of this argument as MBUSA has sufficiently established itself as a
third-party beneficiary entitling it to enforce the agreement. Therefore, MBUSA
can enforce the agreement as a third-party beneficiary.
B.
Enforceability of the Arbitration
Agreement
Once it is determined that a valid arbitration agreement exists, the
burden shifts to the opposing party to “prove by a preponderance of the
evidence any defense to the petition.” (Lacayo v. Catalina Restaurant Group
Inc. (2019) 38 Cal.App.5th 244, 257, review denied (Nov. 13, 2019)).
Plaintiffs’ opposition does not establish any grounds for the Court to conclude
that the agreement is not enforceable. Based on this, the motion satisfies the
requirements under C.C.P. 1281.2.
The Court also finds that a stay of the action is appropriate in this
case once the motion is granted, as Code of Civil Procedure § 1281.4 stipulates
that the Court shall stay the action until arbitration is completed. (Code Civ.
Proc., § 1281.4.) Therefore, the Motion is GRANTED. The action is stayed
under Code of Civil Procedure § 1281.4 pending the outcome of the parties'
arbitration. The Court sets a status
conference re arbitration for July 24, 2025, at 8:30 a.m.
Moving parties to give notice.