Judge: Mel Red Recana, Case: 23STCV13001, Date: 2024-03-08 Tentative Ruling

Case Number: 23STCV13001    Hearing Date: March 8, 2024    Dept: 45

Superior Court of California

County of Los Angeles

Hearing date:              March 8, 2024

Moving Parties:          Defendant American Honda Motor Co., Inc.

Responding Parties:    Plaintiff Jeff Steven Eustice

Motion to Compel Arbitration

The court has considered the moving papers and opposition. No reply has been received.

The court DENIES Defendant American Honda Motor Co., Inc.’s motion to compel arbitration.

Background

            This is a “lemon law” case. On June 7, 2023, plaintiff Jeff Steven Eustice (“Plaintiff”) initiated this action against defendant American Honda Motor Co. Inc. (“Defendant”), alleged the following causes of action: (1) Violation of Subdivision (d) of Civil Code § 1793.2; (2) Violation of Subdivision (b) of Civil Code § 1793.2; (3) Violation of Subdivision (a)(3) of Civil Code § 1793.2; (4) Breach of Express Written Warranty; and (5) Breach of Implied Warranty of Merchantability. Plaintiff alleges various defects to his 2022 Honda Accord 4D, which he purchased on March 20, 2022. (Compl. ¶¶ 5, 10-11.)

On December 21, 2023, Defendant filed the instant motion to compel arbitration. Plaintiff filed an opposition on January 24, 2024. No reply has been received.

Legal Standard

Under CCP § 1281, a “written agreement to submit to arbitration an existing controversy or a controversy thereafter arising is valid, enforceable and revocable, save upon such grounds as exist for the revocation of any contract.” A party to an arbitration agreement may seek a court order compelling the parties to arbitrate a dispute covered by the agreement. (CCP § 1281.2.) The right to arbitration depends upon contract; a petition to compel arbitration is simply a suit in equity seeking specific performance of that contract. (Marcus & Millichap Real Estate Inv. Brokerage Co. v. Hock Inv. Co. (1998) 68 Cal. App.4th 83, 88.)

When presented with a petition to compel arbitration, the trial court's first task is to determine whether the parties have in fact agreed to arbitrate the dispute. (Id. at 88.) “[A]bsent a clear agreement to submit disputes to arbitration, courts will not infer that the right to a jury trial has been waived.” (Adajar v. RWR Homes, Inc. (2008) 160 Cal.App.4th 563, 569, internal citations and quotations omitted.)

Because the right to arbitration depends upon contract, the party seeking arbitration bears the initial burden of proving that the parties actually agreed to arbitrate the instant dispute.  (Hotels Nevada v. L.A. Pacific Center, Inc. (2006) 144 Cal.App.4th 754, 761.) If the moving party does so, the burden shifts to the opposing party to show that the subject agreement is unenforceable. (Id. at 761.) The court “sits as a trier of fact, weighing all the affidavits, declarations, and other documentary evidence, as well as oral testimony received at the court’s discretion, to reach a final determination.” (Engalla v. Permanente Med. Grp., Inc. (1997) 15 Cal.4th 951, 972.)

Discussion

A.    Request for Judicial Notice

Plaintiff requests that the court take judicial notice of the following in support of his opposition: (1) Ford Motor Warranty Cases, No. B312261, 2023 WL 2768484, (Cal. Ct. App. Apr. 4, 2023) (Exhibit 1); (2) Rosana Montemayor v. Ford Motor Company, No. B320477, (Cal. Ct. App. Jun. 26, 2023) (Exhibit 2); and (3) Kielar v. Super. Ct., No. C096773 (Cal. Ct. App. August. 16, 2023)

The court GRANTS Plaintiff’s request for judicial notice to the extent that the documents are part of the records of a court of record of the United States and are official acts of the judicial department of the United States, but not for the truth of the matter asserted therein. (Evid. Code Code §§ 452(c), (d); see Fremont Indem. Co. v. Fremont General Corp. (2007) 148 Cal.App.4th 97, 113 [“Although the existence of a document may be judicially noticeable, the truth of statements contained in the document and its proper interpretation are not subject to judicial notice if those matters are reasonably disputable.”].)

B.    Compel Arbitration

Defendant moves for an order to compel Plaintiff to arbitrate the causes of action set forth in his Complaint.

1.     Existence of an Arbitration Agreement

In moving for an order compelling arbitration, Defendant submits the “Retail Installment Sales Contract” (“RISC) signed by Plaintiff on March 20, 2022. (Motion, Dao Decl. ¶ 2, Exh. A.) Notably, Defendant is not a signatory to the RISC. The RISC contains an arbitration provision that states, in relevant part, the following:

PLEASE REVIEW- IMPORTANT – AFFECTS YOUR LEGAL RIGHTS

1. EITHER YOU OR WE MAY CHOOSE TO HAVE ANY DISPUTE BETWEEN US DECIDED BY ARBITRATION AND NOT IN COURT OR BY JURY TRIAL.

2. IF A DISPUTE IS ARBITRATED, YOU WILL GIVE UP YOUR RIGHT TO PARTICIPATE AS A CLASS REPRESENTATIVE OR CLASS MEMBER ON ANY CLASS CLAIM YOU MAY HAVE AGAINST US INCLUDING ANY RIGHT TO CLASS ARBITRATION OR ANY CONSOLIDATION OF INDIVIDUAL ARBITRATIONS.

3. DISCOVERY AND RIGHTS TO APPEAL IN ARBITRATION ARE GENERALLY MORE LIMITED THAN IN A LAWSUIT, AND OTHER RIGHTS THAT YOU AND WE WOULD HAVE IN COURT MAY NOT BE AVAILABLE IN ARBITRATION.

Any claim or dispute, whether in contract, tort, statute or otherwise (including the interpretation and scope of this Arbitration Clause, 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. If federal law provides that a claim or dispute is not subject to binding arbitration, this Arbitration Clause shall not apply to such claim or dispute. Any claim or dispute is to be arbitrated by a single arbitrator on an individual basis and not as a class action.

 (Id. at pg. 8].)

            Based on the presentation of the RISC, the court finds that Defendant has met its burden in establishing the existence of an arbitration agreement relating to the subject vehicle. However, because Defendant is not a signatory to RISC, the issue of whether Defendant has standing to compel arbitration must still be resolved. This issue shall be discussed further below.

2.     Standing to Enforce the Arbitration Agreement Pursuant to the Doctrine of Equitable Estoppel.

When a petitioner seeks to compel arbitration as to a non-signatory to the arbitration agreement, various theories are available to support the moving party’s demand, which include the doctrine of equitable estoppel. (JSM Tuscany, LLC v. Superior Court (2011) 193 Cal.App.4th 1222, 1237.) Under this doctrine, 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.)

In arguing that it has standing to compel arbitration pursuant to the RISC, Defendant relies on to Felisilda v. FCA US LLC (2020) 53 Cal.App.5th 486, review denied (Nov. 24, 2020). (Motion at pp. 3-5, 11-12.)

In Felisilda, the Court of Appeal found that purchasers of a vehicle were estopped from refusing to arbitrate Song-Beverly Act claims against the vehicle manufacturer, based on an agreement between the purchaser and the vehicle dealer. (See Felisilda, supra, at 496-99.) While Felisilda constituted precedential authority at one point, it is no longer good law. In Kielar v. Superior Court of Placer Cnty. (2023) 94 Cal.App.5th 614, the Third District Court of Appeal expressly repudiated Felisilda. (Id. at 616.) The Third District issued a preemptory writ of mandate directing the trial court in the case to vacate an order compelling arbitration of a plaintiff’s Song-Beverly Act claims against an automobile manufacturer based on an arbitration clause in the purchase agreement between the plaintiff and the dealer from which the plaintiff purchased the automobile.  (Ibid.)  The trial court order in Keilar was premised on Felisilda’s view that the doctrine of equitable estoppel applied in this context.  (Ibid.)  The Third District in Keilar held otherwise.  (Ibid.)

In abandoning Felisilda, the Third District in Keilar adopted instead the rulings of Division Eight of the Second District in the Ford Motor Warranty Cases, known by the lead case, Ochoa v. Ford Motor Co. (2023) 89 Cal.App.5th 1324, and Division Seven of the Second District in Montemayor v. Ford Motor Company (2023) 92 Cal.App.5th 958 (Montemayor).  (See Keilar, supra, 94 Cal.App.5th at 620-621 [discussing Ochoa and Montemayor].  The Courts in Ochoa and Montemayor rejected the reasoning of Felisilda and held that the claims against a non-signatory automobile manufacturer are not intimately founded in and intertwined with the obligations in the contract containing the arbitration clause between the plaintiff and the dealer from which the plaintiff purchased the automobile at issue, and therefore the manufacturer could not invoke the doctrine of equitable estoppel to enforce the arbitration clause.  (Ochoa, supra, 89 Cal.App.5th at 1333,1335-1336; Montemayor, supra, 92 Cal.App.5th at 969-971.) Thus, Defendant’s reliance on Felisilda in this instance is misplaced.

Accordingly, because the doctrine of equitable estoppel does not apply here, Defendnat lacks standing to compel arbitration pursuant to the RISC.

3.     Standing to Enforce Arbitration Agreement Pursuant to the Doctrine of Third-Party Beneficiary.

While not directly argued within Defendant’s moving papers, Plaintiff contends that Defendant also unsuccessfully invokes the doctrine of third-party beneficiary as a means to establish standing. (Opposition at pp. 12-14.) Ultimately, the court agrees with Plaintiff and finds that this doctrine does not apply.

To invoke the third-party beneficiary exception, the non-signatory must show that the arbitration clause of the agreement was “made expressly for [their] benefit.”  (Civ. Code, § 1559.) It is “not necessary that the beneficiary be named and identified as an individual. A third party may enforce a contract where he shows that he is a member of a class of persons for whose benefit it was made.”  (Garratt v. Baker (1936) 5 Cal.2d 745, 748; accord, Cargill, Inc. v. Souza (2011) 201 Cal.App.4th 962, 967.)

A third party is entitled to enforce a contract where: (1) it benefits from the contract, (2) a motivating purpose of the contracting parties was to provide a benefit to the third party, and (3) permitting the third party to enforce the contract is consistent with the objectives of the contract and reasonable expectations of the parties.  (Goonewardene v. ADP, LLC (2019) 6 Cal.5th 817, 830.)

Defendant has failed to show that the RISC was expressly made for its benefit. Rather, it appears that the RISC was drafted for the purpose of securing benefits for the contracting parties. (See Dao Decl, Exh. A.) This is evidenced by the fact that, other than referencing the contracting parties, the arbitration provision only refers to the finance company’s employees, agents, successors or assigns. Thus, Defendant may not rely on the third-beneficiary doctrine as a means of enforcing the arbitration provision within the RISC.

Accordingly, because the RISC was not created for Defendant’s benefit, the third-party beneficiary doctrine does not apply.

Based on the foregoing reasons, the court finds Defendant lacks standing to enforce the RISC. Thus, Plaintiff’s action is not subject to arbitration.

The court therefore DENIES Defendant’s motion to compel arbitration.

            It is so ordered.

Dated: March 8, 2024

_______________________

ROLF M. TREU

Judge of the Superior Court