Judge: Melvin D. Sandvig, Case: 22CHCV00993, Date: 2023-05-24 Tentative Ruling
Case Number: 22CHCV00993 Hearing Date: May 24, 2023 Dept: F47
Dept. F47
Date: 5/24/23
Case #22CHCV00993
MOTION TO
COMPEL ARBITRATION
Motion filed on 2/14/23.
MOVING PARTY: Defendant Nissan of North America, Inc.
RESPONDING PARTY: Plaintiff Hugo Sanoni
NOTICE: ok
RELIEF REQUESTED: An order compelling arbitration
and staying this action pending the arbitration.
RULING: The motion is denied.
SUMMARY OF FACTS & PROCEDURAL HISTORY
This action arises out of Plaintiff Hugo Sanoni’s
(Plaintiff) purchase of a 2019 Nissan Sentra (the Vehicle) pursuant to a
“Retail Installment Sales Contract – Simple Finance Charge (With Arbitration
Provision)” (the Contract/RISC) Plaintiff entered with Nissan of Mission
Hills. (Dizon Decl., Ex.B; Complaint ¶¶6,
9). Plaintiff contends that the Vehicle
is defective and Defendant Nissan North America, Inc. (Nissan) has been unable
to service or repair the Vehicle to conform to the applicable express
warranties after a reasonable number of opportunities. (Complaint ¶¶56, 65-66). Plaintiff further contends that despite the
foregoing, Nissan has failed to promptly repurchase the Vehicle as required
under the Song-Beverly Act. (Complaint ¶¶11,
67).
As a result, on 10/26/22, Plaintiff filed this action
against Nissan and others for: (1) Violation of the Song-Beverly Consumer
Warranty Act – Breach of Express Warranty; (2) Fraudulent Inducement –
Intentional Misrepresentation; (3) Fraudulent Inducement – Concealment and (4)
Negligent Repair (not alleged against Nissan).
Nissan filed an answer to the complaint on 11/28/22. On 2/14/22, Nissan filed and served the
instant motion, which was originally set for hearing on 4/21/23, seeking an
order compelling arbitration and staying this action during the pendency of the
arbitration. On 4/10/23, Plaintiff filed
an opposition to the instant motion and on 4/14/23, Nissan filed a reply to the
opposition.
The opposition, which as noted above was filed on
4/10/23, noted that the California Second District Court of Appeal would be
conducting a hearing on 3/30/23 that would address the issues of equitable
estoppel and third-party beneficiary raised in the instant motion, as well as
the applicability of Felisilda (2020) 53 CA5th 486. (See Opposition, p.8, fn.3). It was unclear why the opposition did not
actually cite the case, Ochoa v. Ford Motor Company (and four other
cases – Ford Warranty Cases) (B312261) (2023 WL 2768484) which was decided
on 4/4/23. The Ford Warranty Cases
decision was also not addressed in the reply.
Since the Court in the Ford Warranty Cases, a
Second District Court of Appeal Case, declined to follow Felisilda, one
of the main authorities relied on in the motion, this Court found that it would
be in the interests of justice to allow both parties to address this recent
case. See Ford Warranty Cases,
supra at *4; (4/21/23 Minute Order).
Therefore, the Court continued the hearing on this motion to 5/24/23. Id.
The Court permitted Plaintiff and Nissan to file and serve, at least 10 court
days before the continued hearing date, supplemental briefs limited to 10 pages
each. (See 4/21/23 Minute Order). Based on the 5/24/23 continued hearing date,
the supplemental briefs were due on or before 5/10/23. Both Plaintiff and Defendant filed and served
supplemental briefs 3 court days late on 5/15/23. Despite the late filing, the Court considered
the supplemental briefs. See CRC
3.1300(d).
ANALYSIS
Plaintiff’s objection (number 1) to the declaration of
Jeck Dizon is overruled.
Nissan’s objections (numbers 1-3) to the declaration of
Jeffrey Mukai are overruled.
The RISC Plaintiff signed regarding the Vehicle contains
an arbitration provision which provides, in relevant part:
ARBITRATION
PROVISION
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 ANY 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 USE 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 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. If federal law provides that a
claim or dispute is not subject to binding arbitration, this Arbitration
Provision shall not apply to such claim or dispute.
…
…
This Arbitration Provision shall
survive any termination, payoff or transfer of this contract. If any part of
this Arbitration Provision, other than waivers of class action rights, is
deemed or found to be unenforceable for any reason, the remainder shall remain
enforceable. If a waiver of class action rights is deemed or found to be
unenforceable for any reason in a case in which class action allegations have
been made, the remainder of this Arbitration Provision shall be unenforceable.
(bold in original; italics added) (Dizon
Decl., Ex.B); (Opposition, generally; Cohen Decl., Ex.4).
Both California and federal law favor the enforcement of
valid arbitration agreements. Armendariz
(2000) 24 C4th 83, 97; Sanchez (2015) 61 C4th 899, 924; AT&T
Mobility, LLC (2011) 563 U.S. 333, 339.
The Federal Arbitration Act (FAA) applies where: (1) the
contract evidences a transaction in involving commerce; or (2) where the
parties expressly agree that the FAA governs arbitration agreement disputes
under the contract. Cronus
Investments, Inc. (2005) 35 C4th 376, 383-384; Victrola 89, LLC
(2020) 46 CA5th 337, 345-346; Buckeye Check Cashing, Inc. (2006) 546
U.S. 440, 442-443. Here, as noted above,
the Arbitration Provision in the RISC specifically states that “[a]ny
arbitration under this Arbitration Provision shall be governed by the Federal
Arbitration Act (9.U.S.C. § 1 et. seq.) and not by any state law concerning
arbitration.” (Dizon Decl., Ex.B).
Additionally, the RISC affects commerce.
A party seeking to compel arbitration under the FAA must
show: (1) the existence of a valid arbitration agreement and (2) the agreement
to arbitrate encompasses the dispute at issue.
Ashbey (9th Cir. 2015) 785 F3d 1320, 1323. Here, the evidence shows that Plaintiff
entered the RISC with the selling dealership, not Nissan, which contains the
above Arbitration Provision.
Pursuant to both federal and California law, under the
doctrine of equitable estoppel, “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.” (internal quotation
marks omitted) JSM Tuscany, LLC
(2011) 193 CA4th 1222, 1237.
With regard to the purchase of a vehicle where the
plaintiff and the selling dealership entered a RISC, this issue has recently
been before two different districts of the California Court of Appeal. In 2020, the Third District rendered a
decision in favor of compelling arbitration in Felisilda (2020) 53 CA5th
486. In Felisilda, the Court
held:
“Under the doctrine of equitable
estoppel, as applied in both federal and California decisional authority, a
non-signatory defendant may invoke an arbitration clause to compel a signatory
plaintiff to arbitrate its claims when the causes of action against the
non-signatory are ‘intimately founded in and
intertwined’ with the underlying contract obligations [i.e., the purchase
and condition of the vehicle].” (internal citations omitted).
Felisilda, supra, at
495.
However, on 4/4/23, the Second District of the Court of
Appeal decided the Ford Motor Warranty Cases (Ochoa) (2023) 89
CA5th 1324, 306 Cal. Rptr. 611, wherein the Court declined to follow Felisilda. Id. at 619. The Ford Motor Warranty Cases found
that manufacturer vehicle warranties that accompany the sale of motor vehicles
without regard to the terms of the sale contract between the purchaser and the
dealer are independent of the sale contract.
Id. at 619-620. The Court
further disagreed with the broad interpretation of the sales contract in Felisilda
to include arbitration of claims “against third party nonsignatories.” Id. at 620; Felisilda, supra
at 497. Because the plaintiffs did not
allege violations of the sale contracts’ express terms, the Court found that
their claims were not subject to arbitration under the sales contracts. Id. at 620-621. The Court further held that the vehicle
manufacturer was not a third-party beneficiary of the sale contract. Id. at 621-624.
“As a practical matter, a superior court ordinarily will
follow an appellate opinion emanating from its own district even though it is
not bound to do so. Superior courts in
other appellate districts may pick and choose between conflicting lines of
authority.” McCallum (1987) 190
CA3d 308, 315, fn.4. Nissan concedes
that the Ford Motor Warranty Cases (Ochoa) “declines to follow
and expressly disagrees with Felisilda in all respects relevant to this
motion.” (See Nissan’s
Supplemental Brief, p.2:18-19).
Based on the factual similarities between this case and
the Ford Motor Warranty Cases, which emanates from this Court’s
district, this Court will follow the appellate opinion in the Ford Motor
Warranty Cases rather than Felisilda.
CONCLUSION
The motion to compel arbitration is denied.