Judge: Martha K. Gooding, Case: 22-01291855, Date: 2023-07-20 Tentative Ruling
1) Motion to Compel Arbitration
2) Case Management Conference
The Motion by Defendant FCA US, LLC (“Defendant”) to Compel Arbitration is DENIED.
On November 14, 2022, Plaintiffs filed a Complaint against Defendant alleging violations of the Song-Beverly Act and for fraudulent inducement - concealment. (ROA 2.) Defendant contends all of Plaintiffs claims are subject to binding arbitration, pursuant to an arbitration provision in the “Retail Installment Sale Contract – Simple Finance Charge (With Arbitration Provisions),” (the “RISC”), between Plaintiff and non-dismissed party dealership, Jim Manning Dodge Inc.
RJN
Defendant’s request to judicially notice a state court case is denied.
Plaintiffs’ request to judicially notice Federal authority is granted. Lower federal court decisions may be treated as persuasive. (Guarantee Forklift, Inc. v. Capacity of Texas Inc. (2017) 11 Cal.App.5th 1066, 1080, fn. 3.)
Federal Arbitration Act ("FAA")
The arbitration provision expressly states that it “shall be governed by the FAA (9 U.S.C. § 1 et. seq.) and not by any state law concerning arbitration.” The parties do not dispute that the FAA applies. The FAA requires the existence of a valid arbitration agreement before arbitration can be compelled. (See 9 U.S.C. § 2.) In any event, California and federal arbitration law are identical for the purposes of this motion. Under the FAA, state law governs the question whether a nonsignatory party may enforce an arbitration agreement. (Kramer v. Toyota Motor Corp. (9th Cir. 2013) 705 F.3d 1222, 1228, 1132, fn.6.)
Agreement to Arbitrate
On March 7, 2017, Plaintiffs executed the RISC. The RISC included a half-page arbitration clause, which stated in capital letters, "EITHER YOU OR WE MAY CHOOSE TO HAVE ANY DISPUTE BETWEEN US DECIDED BY ARBITRATION AND NOT IN COURT OR BY JURY TRIAL." (Bajaj Decl., at Exh. A.) The RISC also provided, in relevant part, that:
Any claim or dispute, whether in contract, tort, statute or otherwise (including the interpretation and scope of this Arbitration Provision, and the arbitrability of the claim or dispute), between you and us or our employees, agents, successors or assigns, which arises out of or relates to your credit application, purchase or condition of this vehicle, this contract or any resulting transaction or relationship (including any such relationship with third parties who do not sign this contract) shall, at your or our election, be resolved by neutral, binding arbitration and not by a court action…
(Bajaj Decl., at Exh. A.) The RISC identified Plaintiffs as the "Buyer" and "you". Dodge LLC was identified as the "Seller" and referred to as "we" and "us." Defendant was not a party to the RISC.
Merits
The general rule is that “one must be a party to an arbitration agreement to be bound by it or invoke it.” (DMS Services., Inc. v. Superior Court (2012) 205 Cal.App.4th 1346, 135, internal quotes and citation omitted.) Courts have recognized limited exceptions to this general rule: “there are six theories by which a nonsignatory may be bound to arbitrate: (a) incorporation by reference; (b) assumption; (c) agency; (d) veil-piercing or alter ego; (e) estoppel; and (f) third-party beneficiary.” (Young Seok Suh v. Superior Court (2010) 181 Cal.App.4th 1504, 1513.) In other words, nonsignatories to a contract may enforce a contractual arbitration provision where there is a sufficient agency or identity between the signatories and nonsignatory. (See Molecular Analytical Systems v. Ciphergen Biosystems, Inc. (2010) 186 Cal.App.4th 696, 715 [“the claims against the nonsignatory were dependent upon, or inextricably bound up with, the obligations imposed by the contract . . . . Under the doctrine of equitable estoppel, if a plaintiff relies on the terms of an agreement to assert his or her claims against a nonsignatory defendant, the plaintiff may be equitably estopped from repudiating the arbitration clause of that very agreement”]; Nguyen v. Tran (2007) 157 Cal.App.4th 1032, 1036–1037.)
There is a split in the appellate decisions as to whether an arbitration clause in a RISC such as the one in the instant case can be enforced by a non-signatory car manufacturer under the doctrines of third party beneficiary and equitable estoppel. (See Felisilda v. FCA US LLC (2020) 53 Cal.App.5th 486, 495; Ford Motor Warranty Cases (2023) 89 Cal.App.5th 1324, 1334; Montemayor v. Ford Motor Company (June 26, 2023, B320477) __ Cal.App.4th __ [2023 WL 418909].) Accordingly, this Court must make a choice between the conflicting opinions. (Auto Equity Sales, Inc. v. Superior Court (1962) 57 Cal.2d 450, 456.) Montemayor is the most recent appellate decision and discussed both Felisilda and Ford Motor Company. This Court follows Montemayor and its reasoning. (Montemayor v. Ford Motor Company, supra, __ Cal.App.4th at p. __ [2023 WL 418909 at pp. *7-*10].) Its reasoning equally applies to the instant case. Accordingly, the motion to compel arbitration is denied.
Defendant is ordered to give notice of this ruling.