Judge: Maurice A. Leiter, Case: 23STCV24568, Date: 2024-04-22 Tentative Ruling

Case Number: 23STCV24568    Hearing Date: April 22, 2024    Dept: 54

Hearing Date: April 22, 2024

Department 54, Judge Maurice A. Leiter

Motion to Compel Arbitration

Moving Party: Defendant Mercedes-Benz USA LLC

Responding Party: Plaintiff Himal Jayawardana

T/R:     DEFENDANT’S MOTION TO COMPEL ARBITRATION IS DENIED.

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 22021 Mercedes-Benz S580 manufactured and distributed by Defendant Mercedes-Benz USA LLC.

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 provision in the a Retail Installment Sale Contract executed by Plaintiff on July 26, 2021. (Decl. Salas, Exh. C.) The agreement provides, in pertinent part, “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 [the] 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.) Defendant is a non-signatory to the agreement.

B. Non-Signatory

Defendant moves to compel arbitration under the Third District Court of Appeal opinion in Felisilda v. FCA US LLC (2020) 53 Cal.App.5th 486, 489. In Felisilda, the plaintiffs purchased a vehicle and signed a sales contract, which provided in pertinent part, “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 ... 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. at 490, emphasis in original.)

The plaintiffs sued FCA; the dealership and FCA moved to compel all parties to arbitration based on the sales agreement. The plaintiffs argued that they could not be compelled to arbitrate their claims against non-signatory FCA. The Court of Appeal rejected this argument, finding that FCA could compel arbitration under equitable estoppel, which allows a non-signatory to enforce an arbitration agreement when “the causes of action against the non-signatory are ‘intimately founded in and intertwined’ with the underlying contract obligations.” (Id. at 495; quoting JSM Tuscany, LLC v. Superior Court (2011) 193 Cal.App.4th 1222, 1236-1237.) Citing the arbitration provisions above, the Court explained, “[t]he Felisildas’ claim against FCA directly relates to the condition of the vehicle that they allege to have violated warranties they received as a consequence of the sales contract. Because 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.)

On April 4, 2023, the Second District Court of Appeal issued an opinion in five actions titled Ford Motor Warranty Cases (2023) 89 Cal.App.5th 1324, review granted Jul. 19, 2023, No. S2799. The facts in Ford mirror those in this action and those in Felisilda. The Second District declined to follow Felisilda, finding that equitable estoppel does not apply because the plaintiffs’ claims are not founded or intertwined with the RISC and Ford is not a third-party beneficiary of the RISC. (Id.)

The Court agrees that Ford is the better reasoned opinion. Defendant is not entitled to compel arbitration under the RISC.

Defendant’s motion to compel arbitration is DENIED.