Judge: Melvin D. Sandvig, Case: 23CHCV00484, Date: 2024-09-20 Tentative Ruling

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Case Number: 23CHCV00484    Hearing Date: September 20, 2024    Dept: F47

Dept. F47

Date: 9/20/24                                                              TRIAL DATE: 1/27/25

Case #23CHCV00484

 

MOTION TO COMPEL ARBITRATION

 

Motion filed on 2/5/24.

 

MOVING PARTY: Defendant American Honda Motor Co., Inc.

RESPONDING PARTY: Plaintiff Mario Vega Aguilera

NOTICE: ok

 

RELIEF REQUESTED: An order compelling arbitration of this controversy and staying this action.

 

RULING: The motion is granted. 

 

SUMMARY OF FACTS & PROCEDURAL HISTORY

 

This action arises out of Plaintiff Mario Vega Aguilera’s (Plaintiff) lease of a new 2020 Honda Pilot on 3/17/20 from non-party Galpin Honda (Galpin).  The “Closed-End Motor Vehicle Lease Agreement – California” (Lease Agreement) includes an arbitration provision which provides:

 

“52. ARBITRATION:

 

PLEASE READ THIS ARBITRATION PROVISION CAREFULLY TO UNDERSTAND YOUR RIGHTS. BY ELECTING ARBITRATION, YOU AGREE THAT ANY CLAIM THAT YOU MAY HAVE IN THE FUTURE MUST BE RESOLVED THROUGH BINDING ARBITRATION. YOU WAIVE THE RIGHT TO HAVE YOUR DISPUTE HEARD IN COURT AND WAIVE THE RIGHT TO BRING CLASS CLAIMS. YOU UNDERSTAND THAT DISCOVERY AND APPEAL RIGHTS ARE MORE LIMITED IN ARBITRATION.

 

Arbitration is a method of resolving a claim, dispute or controversy without filing a lawsuit. By agreeing to arbitrate, the right to go to court is waived and instead claims, disputes or controversies are submitted to binding arbitration. This provision sets forth the terms and conditions of our agreement. YOU and HONDA agree and acknowledge that this Lease affects interstate commerce and the Federal Arbitration Act (“FAA") applies.

 

By signing the Arbitration Consent, YOU elect to have disputes resolved by arbitration. YOU, HONDA or any involved third party may pursue a Claim. "Claim” means any dispute between YOU, HONDA, or any involved third party relating to your account, this Lease, or our relationship, including any application, the Vehicle its performance and any representations, omissions or warranties. "Claim'' does not include personal injury or wrongful death claims. YOU or HONDA may seek remedies in small claims court or provisional judicial remedies without arbitrating.

 

YOU or HONDA may select arbitration with American Arbitration Association, JAMS or National Arbitration and Mediation. Contact these sponsors for their rules. The hearing will be in the federal district where YOU reside. If agreed, it may be by telephone or written submissions. Filing and arbitrator fees to be paid per the sponsor rules. You may contact the sponsor for a fee waiver. If no fee waivers, HONDA will pay filing and arbitrator fees up to $5,000, unless law requires more. Each party is responsible for other fees. Arbitrator may award costs or fees to prevailing party, if permitted by law. HONDA will not seek fees, unless the claims are frivolous.

 

Arbitrator shall be an attorney or current or retired judge familiar with automotive or consumer finance. The arbitrator shall follow substantive law, statute of limitations and decide all issues relating to the interpretation, construction, enforceability and applicability of this provision. The arbitrator may order relief permitted by law. This provision is governed and enforceable by the FAA. An award shall include a written opinion and be final, subject to appeal by the FAA.

 

This provision survives termination of this Lease or relationship, bankruptcy, assignment or transfer. If part of this provision is unenforceable, the remainder remains in effect. If unenforceability allows arbitration as a class action, then this provision is entirely unenforceable. YOU may opt out within 30 days of signing this Lease by sending a signed, written notice to HONDA at Honda Financial Services. P.O Box 165007, Irving, TX 75016. HONDA reserves the right to make changes to this provision after providing written notice and an opportunity to opt out.

 

HONDA means Lessor, Dealer, Honda Lease Trust, American Honda Finance Corporation (AHFC), American Honda Motor Co., Inc., Honda Finance Exchange, Inc., Acura Financial Services (AFS), Honda Financial Services (HFS), HVT, Inc., their parents, subsidiaries, predecessors, successors, assignees, and officers, employees, representatives and agents. YOU means Lessee and Co-Lessee to this Lease.”  (Bold in original, Underlining added)

 

(Manigo Decl., Ex.A).

 

 

On 2/21/23, Plaintiff filed this action against Defendant for: (1) Violation of Song-Beverly Act – Breach of Express Warranty, (2) Violation of Song-Beverly Act – Breach of Implied Warranty and (3) Violation of the Song-Beverly Act Section 1793.2.  On 3/24/23, Defendant answered the complaint.  After Galpin produced the Lease Agreement in October of 2023, Defendant requested that Plaintiff submit this matter to arbitration which Plaintiff refused.  (See Michel Decl. ¶¶8-10).

 

Therefore, on 2/5/24, Defendant filed and served the instant motion seeking an order compelling arbitration of this controversy and staying this action.  Plaintiff has opposed the motion and Defendant has filed a reply to the opposition.

 

ANALYSIS

 

Defendant’s Request for Judicial Notice (RJN) is granted. 

 

Both federal and California law favor the enforcement of valid arbitration agreements.  See Sanchez (2015) 61 C4th 899; Armendariz (2000) 24 C4th 83. 

 

Here, the arbitration provision in the Lease Agreement acknowledges that the lease affects interstate commerce and that the Federal Arbitration Act (FAA) applies.  (Manigo Decl., Ex.A ¶52).  The FAA provides, in relevant part:

 

“A written provision in any maritime transaction or a contract evidencing a transaction involving commerce to settle by arbitration a controversy thereafter arising out of such contract or transaction, or the refusal to perform the whole or any part thereof, or an agreement in writing to submit to arbitration an existing controversy arising out of such a contract, transaction, or refusal, shall be valid, irrevocable, and enforceable save upon such grounds as exist at law or in equity for the revocation of any contract or as otherwise provided in chapter 4.”

 

(See 9 USC §2)

 

Based on the strong policy in favor of arbitration, courts broadly construe “commerce.”  See Societe Generale de Surveillance, S.A. (1st Cir. 1981) 643 F.2d 863, 867; Concepcion (2011) 131 S.Ct. 1740, 1745-1746.  A “transaction involving commerce” has been defined as one where the “petitioner while performing his duties under the employment contract…was producing goods for commerce, or engaging in activity that affected commerce.”  Bernhardt (1956) 350 U.S. 198, 200-201.  Here, Defendant warrants, distributes and, for of the Song-Beverly Act, manufactures  the Subject Vehicle.  Additionally, Defendant manages and responds to consumer concerns pursuant to the express warranties.

 

In this action, the gravamen of Plaintiff’s claims are that the Subject Vehicle contained or developed “serious defects and nonconformities to warranty including, but not limited to, electrical and structural system defects.”  (Complaint ¶10).  As such, Plaintiff’s claims fall under the arbitration provision.  Not only did Plaintiff agree to arbitrate such claims expressly against Defendant and others, but the California Supreme Court has held that such arbitration provisions in automobile contracts are not unconscionable and are enforceable.  See Sanchez (2015) 61 CA4th 899, 907-908.  Plaintiff provides no support for his claim that the arbitration provision is procedurally or substantively unconscionable.  Plaintiff is charged with having read the Lease Agreement he signed containing the arbitration provision and there is no evidence that the provision contains one-sided or oppressive terms.

 

Although arbitration under the Lease Agreement is governed by the FAA, it may also be enforced by the summary procedures under California law (California Arbitration Act).  See Sanchez, supra at 922; Rosenthal (1996) 14 C4th 394, 409-410.  As noted above, California has a strong public policy in favor of arbitration with any ambiguities in the scope of arbitration being resolved in favor of arbitration.  Moncharsh (1992) 3 C4th 1, 9; Hayes Children Leasing Co. Children (1995) 37 CA4th 775, 788; See also United Transportation Union (1992) 7 CA4th 804, 808.  The party opposing arbitration has the burden of establishing that an arbitration provision cannot be interpreted to require arbitration of the dispute.  Coast Plaza Doctors Hospital (2000) 83 CA4th 677, 686-687. 

 

Here, the arbitration provision expressly names Defendant as one of the parties against whom Plaintiff has agreed to arbitrate disputes such as the ones set forth in the complaint.  (Manigo Decl., Ex.A ¶52; Complaint ¶¶4, 8, 14, 21, 45, 46).  The foregoing makes this case distinguishable from Ngo (9th Cir. 2022) 23 F.4th 942 and Kramer (9th Cir. 2013) 705 F.3d 1122, relied on by Plaintiff.  In Ngo, the arbitration clause expressly stated that only three parties – Ngo, the dealership and the assignee – could compel arbitration.  See Ngo, supra at 946.  Similarly, in Kramer, the arbitration clause was limited to claims between plaintiffs and the dealerships.  See Kramer, supra at 1128.

 

The broad language in the arbitration provision which specifically identifies Defendant as a third-party beneficiary provides Defendant with standing to enforce the provision against Plaintiff.  See Ronay Family Ltd Partnership (2013) 216 CA4th 830, 838-839.

 

Defendant’s minimal participation in the court proceedings before filing this motion does not provide a basis to find that Defendant waived its right to compel arbitration of Plaintiff’s disputes against it.  See Khalatian (2015) 237 CA4th 651, 661-662.    

 

CONCLUSION

 

The motion is granted.  This action is stayed pending the resolution of the arbitration.  See 9 USC §3; CCP 1281.4 

 

The Court notes that Plaintiff’s counsel has failed to electronically bookmark the exhibits attached to the Schmitt declaration filed in support of the opposition.  See CRC 3.1110(f)(4).  Counsel for the parties are warned that failure to comply with this rule in the future may result in matters being continued so that papers can be refiled in compliance with the rule, papers not being considered and/or the imposition of sanctions.