Judge: Martha K. Gooding, Case: 2021-01232540, Date: 2022-09-26 Tentative Ruling
1) Motion to Compel Arbitration
2) Case Management Conference
Motion to Compel Arbitration
The Motion to Compel Arbitration brought by Defendant Theodore Robins, Inc. has been rendered MOOT by the Request for Dismissal filed by Plaintiffs on September 6, 2022. (ROA No. 46).
The Motion to Compel Arbitration brought by Defendant Ford Motor Company, Inc. is GRANTED, pursuant to C.C.P. §1281.2 and 9 U.S.C. §2. Plaintiffs are ordered to arbitrate their claims against Defendant Ford Motor Company, Inc. and the instant action shall be stayed pending conclusion of the arbitration proceeding. (C.C.P. §1281.4 and 9 U.S.C. §3).
The Court finds Defendant Ford Motor Company sufficiently established the existence of an arbitration agreement, applicable to Plaintiffs’ claims herein, which Defendant is entitled to enforce through equitable estoppel.
Both the Federal Arbitration Act (“FAA”) and the California Arbitration Act (“CAA”) require the existence of a valid arbitration agreement before arbitration can be compelled. (See 9 U.S.C. §2 and C.C.P. §1281.2).
Regardless of whether the FAA applies, “we apply general California contract law to determine whether the parties formed a valid agreement to arbitrate their dispute.” (Avery v. Integrated Healthcare Holdings, Inc. (2013) 218 Cal.App.4th 50, 59-60). Similarly, “[s]tate law determines whether a non-signatory to an agreement containing an arbitration clause may compel arbitration.” (Ngo v. BMW of North America, LLC (2022) 23 F.4th 942, 946).
In this instance, Defendants base their motion on a Retail Installment Sale Contract (“RISC”), which is attached to the Declaration of Michelle Dechon, the custodian of records for former Defendant Theodore Robins, Inc. Dechon Decl. (¶¶2-4 and Exh. A [ROA No. 25]).
Of note, Plaintiffs do not dispute that they signed the referenced agreement. Consequently, the Court need not further evaluate whether Plaintiffs’ signatures have been properly authenticated: “[A] petitioner is not required to authenticate an opposing party’s signature on an arbitration agreement as a preliminary matter in moving for arbitration or in the event the authenticity of the signature is not challenged.” (Ruiz v. Moss Bros. Auto Group, Inc. (2014) 232 Cal.App.4th 836, 846, citing Condee v. Longwood Management Corp. (2001) 88 Cal.App.4th 215, 218).
Additionally, it undisputed that Defendant Ford Motor Company, Inc. is not a party to the Agreement.
“As a general rule, only a party to an arbitration agreement may enforce the agreement.” (Felisilda v. FCA US LLC (2020) 53 Cal.App.5th 486, 495). Nonetheless, equitable estoppel is an exception to this general rule. (Id.).
“Under the doctrine of equitable estoppel, ‘as applied in ‘both federal and California decisional authority, a nonsignatory defendant may invoke an arbitration clause to compel a signatory plaintiff to arbitrate its claims when the causes of action against the nonsignatory are intimately founded in and intertwined’ with the underlying contract obligations.” (Id. at 495). “By relying on contract terms in a claim against a nonsignatory defendant, even if not exclusively, a plaintiff may be equitably estopped from repudiating the arbitration clause contained in that agreement.” (Id. at 496).
“Where the equitable estoppel doctrine applies, the nonsignatory has a right to enforce the arbitration agreement.” (Id.). “In any case applying equitable estoppel to compel arbitration despite the lack of an agreement to arbitrate, a nonsignatory may compel arbitration only when the claims against the nonsigantory are founded in and inextricably bound up with the obligations imposed by the agreement containing the arbitration clause.” (Id.). “In determining whether the plaintiffs’ claim is founded on or intimately connected with the sales contract, we examine the facts of the operative complaint.” (Id.).
Similar to the agreement herein, the Plaintiffs in Felisilda agreed that “[a]ny claim or dispute, whether in contract, tort, statute or otherwise…between you and us…which arises out of or relates to…[the] condition of this vehicle…shall…be resolved by neutral, binding arbitration and not by a court action.” (Id. at 496; See also Dechon Decl. ¶¶2-4 and Exh. A thereto [ROA No. 25]).
Likewise, the Plaintiffs in Felisilda alleged that “express warranties accompanied the sale of the vehicle,” such that the Complaint made clear the sales contract was the source of the warranties being disputed. (Felisilda v. FCA US LLC (2020) 53 Cal.App.5th 486, 496).
Based on the above, the Court concluded that “the Felisildas’ agreement to the sales contract constituted express consent to arbitrate their claims regarding vehicle condition even against third parties.” (Id. at 498). Additionally, “[b]ecause the Felisildas expressly agreed to arbitrate claims arising out of the condition of the vehicle – even against third party nonsignatories to the sales contract – they are estopped from refusing to arbitrate their claim against FCA.” (Id. at 497).
As noted above, the Agreement herein also refers to “[a]ny claim or dispute, whether in contract, tort, statute or otherwise…between you and us…which arises out of or relates to…[the] condition of this vehicle… or any resulting transaction or relationship (including any such relationship with third parties who do not sign this contract)…” Dechon Decl. ¶¶2-4 and Exh. A thereto [ROA No. 25]). Additionally, the Complaint similarly alleges Plaintiffs received an express written warranty “[i]n connection with the sale…” (Complaint: 3:11-12).
Based on the above, the circumstances herein mirror the circumstances in Felisilda.
In response to the Motion to Compel, Plaintiffs urge the Court to follow the holding in Ngo v. BMW of North America, LLC (2022) 23 F.4th 942, which distinguished Felisilda. However, as explained by the Court in Ngo: “It makes a critical difference that the Felisildas, unlike Ngo, sued the dealership in addition to the manufacturer.” (Id. at 950). “In Felisilda, it was the dealership – a signatory to the purchase agreement – that moved to compel arbitration rather than the non-signatory manufacturer.” (Id.). “Furthermore, the Felisildas dismissed the dealership only after the court granted the motion to compel arbitration. Accordingly, Felisilda does not address the situation we are confronted with here, where the non-signatory manufacturer attempted to compel arbitration on its own.” (Id.).
Here, as in Felisilda, Plaintiffs brought suit against both Ford Motor Company (the manufacturer) and Theodore Robins, Inc. (the dealership-signatory). (See Complaint, generally). Further, similar to Felisilda, both the signatory dealership and Defendant Ford Motor Company initially moved to compel arbitration. (ROA No. 32).
Although Plaintiffs now assert that they “do[] not seek to enforce or challenge any of the terms in the Purchase Agreement with Theodore Robins, Inc.,” (Opposition: 3:26-27), the Complaint alleged the express warranty with Ford Motor Company was received “[i]n connection with the sale.” (Complaint: 3:11-12). Additionally, the Complaint expressly referenced the RISC within the claim against Ford Motor Company and attached the agreement thereto. (Complaint: 3:3-7 and Exhibit A thereto).
Based on the above, Plaintiffs’ pleading inextricably intertwines the claim against Ford Motor Company, Inc. with the RISC and equitable estoppel applies.
Further, to the extent Ngo simply disagrees with the reasoning in Felisilda, “the decisions of federal district and circuit courts, although entitled to great weight, are not binding on state courts even as to issues of federal law.” (Felisilda, supra, 53 Cal.App.5th at 497). In contrast, the holding in Felisilda is binding and is not distinguishable. “Decisions of every division of the District Courts of Appeal are binding upon all the justice and municipal courts and upon all the superior courts of this state, and this is so whether or not the superior court is acting as a trial or appellate court.” (Auto Equity Sales, Inc. v. Superior Court of Santa Clara County (1962) 57 Cal.2d 450, 455).
Based on all of the above, the Court finds Defendant Ford Motor Company sufficiently established the existence of an arbitration agreement, applicable to Plaintiffs’ claims herein, which Defendant is entitled to enforce.
As mentioned above, “[t]he petitioner bears the burden of proving the existence of a valid arbitration agreement by the preponderance of the evidence, and a party opposing the petition bears the burden of proving by a preponderance of the evidence any fact necessary to its defense.” (Engalla v. Permanente Medical Group, Inc. (1997) 15 Cal.4th 951, 972; See also Green Tree Financial Corp.-Alabama v. Randolph (2000) 531 U.S. 79, 91-92).
Here, because Plaintiffs do not assert any defense that would prevent enforcement of the arbitration agreement, the Motion is GRANTED as to Defendant Ford Motor Company, Inc.
Defendant is ordered to give notice.