Judge: Maurice A. Leiter, Case: 23STCV08425, Date: 2023-10-03 Tentative Ruling

Case Number: 23STCV08425    Hearing Date: October 3, 2023    Dept: 54

Hearing Date: October 3, 2023

Department 54, Judge Maurice A. Leiter

Motion to Compel Arbitration

Moving Party: Defendant Tesla, Inc.

Responding Party: Plaintiff Flora Zhang

T/R:     DEFENDANT’S MOTION TO COMPEL ARBITRATION IS GRANTED. THE ACTION IS STAYED.

DEFENDANT 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, opposition, and reply.

BACKGROUND

This is a lemon law action arising out of Plaintiff’s purchase of a 2022 Tesla Model 3 manufactured and distributed by Defendant.

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 moves to compel arbitration based on the arbitration provisions in the Motor Vehicle Order Agreement (“MVOA”) executed by Plaintiff on March 8, 2022 and the Retail Installment Sale Contract (“RISC”) executed by Plaintiff and Defendant on June 15, 2022.

The MVOA provides, “you agree that any dispute arising out of or relating to any aspect of the relationship between you and Tesla will not be decided by a judge or jury but instead by a single arbitrator in an arbitration administered by the American Arbitration Association (AAA) under its Consumer Arbitration Rules.” (Decl. Kim, Exh. 1.) The RISC provides, “[a]ny claim or dispute, whether in contract, tort, statute or otherwise ..., between you and us or our employees, agents, successors or assigns, which arises out of or relates to your... 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., Exh. 2.)

Defendant has met its burden to establish to the existence of an agreement to arbitrate. The burden shifts to Plaintiff to establish any defenses to enforcement.

B. Enforceability

Plaintiff argues that the RISC controls over the MVOA because the RISC was executed after the MVOA. Plaintiff contends that the RISC is unconscionable. As the party asserting unconscionability, Plaintiff has the burden of proving both procedural and substantive unconscionability. (Crippen v. Central Valley RV Outlet. Inc. (2004) 124 Cal.App.4th 1159, 1165).  

Plaintiff asserts the RISC is procedurally unconscionable because it is one of adhesion and substantively unconscionable because it obligates Defendant to only pay the first $5,000.00 in arbitration costs. This is insufficient to render the agreement unenforceable. Procedural unconscionability is very low here. This is a contract for the purchase of a vehicle, it is not an employment agreement or some other agreement where the drafter has significant authority over the other party. Plaintiff’s decision to purchase this vehicle was wholly voluntary. Similarly, the cost provision is not substantively unconscionable as the cost shifting provisions of Song-Beverly still apply.

Plaintiff has failed to show the arbitration agreements are unenforceable. Defendant’s motion is GRANTED. The action is STAYED.