Judge: Maurice A. Leiter, Case: 23STCV06981, Date: 2024-02-20 Tentative Ruling

Case Number: 23STCV06981    Hearing Date: February 20, 2024    Dept: 54

Hearing Date: February 20, 2024

Department 54, Judge Maurice A. Leiter

Motion to Compel Arbitration

Moving Party: Defendant Norman Reeves, Inc., joined by Defendant Honda Motor Co., Inc.

Responding Party: Plaintiffs Lillian B. Scott and Patricia Y. Mogart and Defendant Hudson Insurance Company

T/R:     DEFENDANTS’ MOTION TO COMPEL ARBITRATION IS GRANTED AS AGAINST PLAINTIFFS ONLY.

THE ACTION IS STAYED IN ITS ENTIRETY.

DEFENDANTS TO NOTICE.  

If the parties wish to submit on the tentative, please email the courtroom at SMCdept54@lacourt.org with notice to opposing counsel (or self-represented party) before 8:00 am on the day of the hearing.

The Court considers the moving papers, oppositions, and reply.

BACKGROUND

This is a lemon law and consumer fraud action arising out of Plaintiffs’ purchase of a 2016 Honda Pilot from Defendant Norman Reeves, Inc., manufactured and distributed by Defendant American Honda Motor Co., Inc.

ANALYSIS

“On 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 a controversy, the court shall order the petitioner and the respondent to arbitrate the controversy if it determines that an agreement to arbitrate the controversy exists….”  (CCP § 1281.2.)  The right to compel arbitration exists unless the court finds that the right has been waived by a party’s conduct, other grounds exist for revocation of the agreement, or where a pending court action arising out of the same transaction creates the possibility of conflicting rulings on a common issue of law or fact.   (CCP § 1281.2(a)-(c).)  “The party seeking arbitration bears the burden of proving the existence of an arbitration agreement, and the party opposing arbitration bears the burden of proving any defense, such as unconscionability.”  (Pinnacle Museum Tower Assn. v. Pinnacle Market Development (US), LLC (2012) 55 Cal.4th 223, 236.)

A. Existence of Arbitration Agreement

Defendant Norman Reeves, Inc., joined by Defendant Honda, moves to compel arbitration based on the arbitration provision in the Retail Installment Sale Contract executed by Plaintiffs on February 27, 2021. (Decl. Marquez, Exh. A.) The agreement provides, in pertinent part, “Any claim or dispute, whether in contract, tort, statute or otherwise ... between you [Plaintiffs] and us [NR Honda] 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.” (Id.) The agreement is governed by the FAA.

In opposition, Plaintiffs assert Honda’s joinder is untimely and argue Honda cannot compel arbitration as a non-signatory. After execution, Defendant Norman Reeves, Inc. assigned the contract to Defendant Honda. No parties dispute this. The agreement specifically includes claims against any assignees and as an assignee, Honda has become a party to the agreement. Honda may compel arbitration against Plaintiffs.

Defendant Hudson asserts that it cannot be compelled to arbitrate because it is neither a party nor assignee of the RISC. The Court agrees. Moving Defendants do not address this in reply.

Defendants have met their burden to establish the existence of an agreement to arbitrate. The burden shifts to Plaintiffs to establish any defenses to enforcement.

B. Waiver

“The question of waiver is one of fact.” (Augusta v. Keehn & Associates (2011) 193 Cal.App.4th 331, 337 (quoting Berman v. Health Net (2000) 80 Cal.App.4th 1359, 1363-64).) “There is no single test for waiver of the right to compel arbitration, but waiver may be found where the party seeking arbitration has (1) previously taken steps inconsistent with an intent to invoke arbitration, (2) unreasonably delayed in seeking arbitration, or (3) acted in bad faith or with willful misconduct.” (Id.)

Plaintiffs assert Defendants have waived the right to arbitrate because they have delayed in filing this motion despite discussion and a preliminary stipulation to arbitrate as early as July 2023. Plaintiffs argue that they will be prejudiced by arbitration at this stage because trial is only months away, currently set for July 2024. This is insufficient to establish waiver. Defendants have made their intention to arbitrate clear since the beginning of this case and have taken no steps inconsistent with this intention.

C. JAMS v. AAA

Plaintiffs assert the Court should order the arbitration be administered by JAMS rather than AAA. The agreement provides for AAA as arbitrator but allows for a different arbitrator with mutual consent from the parties. The Court will not order the action to JAMS; Defendants have not agreed to JAMS.

Defendants’ motion to compel arbitration is GRANTED as to these Defendants only. The action is STAYED in its entirety.