Judge: Mark A. Young, Case: 24SMCV05848, Date: 2025-06-03 Tentative Ruling

Case Number: 24SMCV05848    Hearing Date: June 3, 2025    Dept: M

CASE NAME:             Moore, v. Mercedes-Benz USA, LLC

CASE NO.:                   24SMCV05848

MOTION:                     Petition/Motion to Compel Arbitration 

HEARING DATE:   6/3/2025

Defendant Mercedes-Benz USA LLC moves to compel Plaintiff Samuel Moore’s claims to arbitration, and for a stay of action pending the outcome of arbitration.

LEGAL STANDARD 

Under California and federal law, public policy favors arbitration as an efficient and less expensive means of resolving private disputes. (Moncharsh v. Heily & Blase (1992) 3 Cal.4th 1, 8-9; AT&T Mobility LLC v. Concepcion (2011) 563 U.S. 333, 339.) Accordingly, whether an agreement is governed by the California Arbitration Act (“CAA”) or the Federal Arbitration Act (“FAA”), courts resolve doubts about an arbitration agreement’s scope in favor of arbitration.  (Moncharsh, supra, 3 Cal.4th at 9; Comedy Club, Inc. v. Improv West Assocs. (9th Cir. 2009) 553 F.3d 1277, 1284; see also Engalla v. Permanente Med. Grp., Inc. (1997) 15 Cal.4th 951, 971-972 [“California law incorporates many of the basic policy objectives contained in the Federal Arbitration Act, including a presumption in favor of arbitrability [citation] and a requirement that an arbitration agreement must be enforced on the basis of state law standards that apply to contracts in general”].) “[U]nder both the FAA and California law, ‘arbitration agreements are valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract.’ ” (Higgins v. Superior Crout (2006) 140 Cal.App.4th 1238, 1247.) 

“Code of Civil Procedure section 1281.2 requires a trial court to grant a petition to compel arbitration if the court determines that an agreement to arbitrate the controversy exists.” (Avery v. Integrated Healthcare Holdings, Inc. (2013) 218 Cal.App.4th 50, 59, quotations omitted.) Accordingly, “when presented with a petition to compel arbitration, the court’s first task is to determine whether the parties have in fact agreed to arbitrate the dispute.”  (Ibid.) A petition to compel arbitration is in essence a suit in equity to compel specific performance of a contract. (Id. at 71.) As with any other specific performance claim, “a party seeking to enforce an arbitration agreement must show the agreement’s terms are sufficiently definite to enable the court to know what it is to enforce.” (Ibid. [internal citations omitted].) “Only the valid and binding agreement of the parties, including all material terms well-defined and clearly expressed, may be ordered specifically performed.” (Ibid.) An arbitration agreement “must be so interpreted as to give effect to the mutual intention of the parties as it existed at the time of contracting, so far as the same is ascertainable and lawful.” (Civ. Code, § 1636.) The language of the contract governs its interpretation if it is clear and explicit. (Civ. Code, § 1368.) If uncertainty exists, “the language of a contract should be interpreted most strongly against the party who caused the uncertainty to exist.” (Civ. Code, § 1654.)  

The party seeking to compel arbitration bears the burden of proving the existence of a valid arbitration agreement by the preponderance of the evidence. (Engalla v. Permanente Medical Group, Inc. (1997) 15 Cal.4th 951, 972.) It would then be plaintiff’s burden, in opposing the motion, to prove by a preponderance of the evidence any fact necessary to her opposition. (See Ibid.) “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.” (Ibid.) 

EVIDENTIARY ISSUES 

Plaintiff’s evidentiary objections are OVERRULED.

Defendant’s request for judicial notice is DENIED. (Evid. Code § 452(h).)

ANALYSIS 

Defendants assert that the instant claims are required to go to arbitration because Plaintiff signed an arbitration agreement covering their claims. As with any contract, mutual assent or consent is necessary for the formation of a valid arbitration agreement. (Civ. Code, §§ 1550, 1565.) “Consent is not mutual, unless the parties all agree upon the same thing in the same sense.” (Civ. Code, § 1580.) The moving party bears the initial burden of showing the existence of an agreement to arbitrate by a preponderance of the evidence. (See Mitri v. Arnel Mgmt. Co. (2007) 157 Cal.App.4th 1164, 1169 [“Because the existence of the agreement is a statutory prerequisite to granting the petition, the petitioner bears the burden of proving its existence by a preponderance of the evidence.”].)   

Defendant demonstrates that there is an arbitration agreement which covers Plaintiff’s claims. Defendant presents a copy of the subject lease, which contains the following relevant arbitration terms:

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. Any claim or dispute is to be arbitrated on an individual basis and not as a class action. The arbitration shall be administered by the American Arbitration Association, or by any other organization that you may choose, subject to our or a Third Party Beneficiary’s approval. You may get a copy of the rules of the American Arbitration Association by visiting its website at www.adr.org.

(Tingen Decl., Ex. 1.) Plaintiff does not dispute these terms. Plaintiff’s claims arise out of warranty and repair obligations in connection with a leased 2023 Mercedes-Benz C-Class. (Compl., ¶¶ 4, 8.) Plaintiff brings Song-Bevely claims against Defendant, the leased vehicle’s manufacturer and distributor. (¶¶ 17, 24.) Thus, the dispute arises out of, or relates to, a resulting transaction or relationship from the Lease: the express and implied warranties by the manufacturer/distributor regarding the leased vehicle

Defendant shows that it is an express third-party beneficiary of this arbitration agreement. A “third-party beneficiary” may enforce a contract where the contract was intended to benefit it. (Ford Motor Warranty Cases, (2023) 89 Cal. App. 5th 1324, 1337.) To show the contracting parties intended to benefit it, a third party must show that, under the express terms of the contract at issue and any other relevant circumstances under which the contract was made: (1) “the third party would in fact benefit from the contract”; (2) “a motivating purpose of the contracting parties was to provide a benefit to the third party”; and (3) permitting the third party to enforce the contract “is consistent with the objectives of the contract and the reasonable expectations of the contracting parties.” (Goonewardene v. ADP, LLC (2019) 6 Cal.5th 817, 830.) Here, the Lease itself demonstrates an intent to benefit Defendant as a third-party beneficiary. The Lease explicitly identifies Defendant as a third-party beneficiary. By its own terms, Defendant may “elect” to resolve a dispute between itself and Plaintiff in arbitration. The terms thus directly provide a benefit to Defendant. The contracting parties reasonably should expect Defendant to enforce such a provision.

These terms are materially different from the terms of the arbitration agreements found in Plaintiff’s cited cases. In those cases, the terms reflected “no intention to benefit a vehicle manufacturer” since the terms did not “directly” benefit the manufacturer by only identifying the purchaser, the dealership and its dealer’s “employees, agents, successors or assigns” as persons who could elect to enforce the agreement. (Ford Motor, supra, 89 Cal.App.5th at 1337-1340.) Unlike those circumstances, the Lease terms presented here expressly identifies Defendant as a third-party beneficiary that may enforce the arbitration terms. The parties must have intended to directly benefit Defendant by including such terms. 

Finally, although the scope of an arbitration clause is generally a question for judicial determination, the parties may, by clear and unmistakable agreement, elect to have the arbitrator rather than the court decide which grievances are arbitrable. (AT & T Technologies v. Communications Workers (1986) 475 U.S. 643, 649.) In that situation, any issues concerning the scope of the arbitration clause should be determined by the arbitrator in the arbitration proceeding. (Aanderud v. Superior Court (2017) 13 Cal.App.5th 880, 893.) The parties here agreed to arbitrate any dispute, including those over “the interpretation, scope, or validity of the arbitration section or the arbitrability of any issue.” Thus, the parties unmistakably delegated such questions to the arbitrator.

Accordingly, the motion is GRANTED. The entire action is STAYED pending the completion of the arbitration. (CCP § 1281.4.)