Judge: Melvin D. Sandvig, Case: 24CHCV00452, Date: 2024-08-19 Tentative Ruling
Case Number: 24CHCV00452 Hearing Date: August 19, 2024 Dept: F47
Dept. F47
Date: 8/19/24
Case #24CHCV00452
MOTION TO
COMPEL ARBITRATION
Motion filed on 5/24/24.
MOVING PARTY: Defendant Hyundai
Motor America
RESPONDING PARTY: Plaintiff Michael D. Diaz
NOTICE: ok
RELIEF REQUESTED: An order compelling
arbitration and staying this action pursuant to CCP 1281, et seq.
RULING: The motion is granted.
SUMMARY OF FACTS & PROCEDURAL HISTORY
This action arises out of Plaintiff Michael D. Diaz’s
(Plaintiff) purchase of a 2020 Hyundai Sonata (the Vehicle) from non-party, Parkway
Hyundai, located in Valencia, California (the Dealership), on 1/24/20. The Vehicle came with Defendant Hyundai Motor
America’s (HMA) New Vehicle Limited Warranty, which includes an agreement to
arbitrate. (Willette Decl., Ex.B,
pp.12-14).
The Retail Installment Sales Contract – Simple Finance
Charge (With Arbitration Provision) (RISC) Plaintiff entered with the
Dealership also contains an arbitration agreement along with several clauses
which relate to and/or call attention to the arbitration agreement. (See Willette Decl., Ex.A).
On 2/13/24, Plaintiff filed this action against HMA and Mission
Hills-H, Inc. dba Keyes Hyundai of Mission Hills (Keyes) for: (1) Violation of
the Song-Beverly Act – Breach of Express Warranty (against HMA), (2) Violation
of the Song-Beverly Act – Breach of Implied Warranty (against HMA), (3)
Violation of the Song-Beverly Act – Section 1793.2(b) (against HMA) and (4)
Negligent Repair (against Keyes). Plaintiff
alleges that the Vehicle was delivered to Plaintiff with serious defects and
nonconformities to warranty and developed other serious defects and
nonconformities to warranty which HMA was unable to conform to the applicable
express warranty after a reasonable number of repair attempts. (See Complaint ¶¶9, 11, 38). On 3/18/24, HMA and Keyes, represented by the
same counsel, each filed separate answers to the complaint.
On 4/8/24, HMA requested that Plaintiff agree to binding
arbitration . (Willette Decl. ¶9,
Ex.E). Plaintiff did not respond to the
request. (Id. ¶10). On 5/24/24, HMA filed and served the instant
motion seeking an order compelling arbitration and staying this action pursuant
to CCP 1281, et seq. Plaintiff has
opposed the motion and HMA has filed a reply to the opposition.
PROCEDURAL DEFECTS
1. HMA and
Plaintiff have both failed to properly electronically bookmark the exhibits
attached to their respective papers as required. See CRC 3.1110(a)(4). The exhibits attached to the declaration of
Jordan A. Willette filed in support of the motion and the exhibits attached to
the declaration of James P. Mayo filed in support of the reply are not
electronically bookmarked at all.
The exhibits attached to Plaintiff’s Request for Judicial
Notice are also not properly labeled and/or electronically bookmarked.
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 re-filed in compliance with the rule, papers not being considered
and/or the imposition of sanctions.
2. Both the
opposition and reply memorandums of points and authorities exceed the page limits
set forth in CRC 3.1113(d) without obtaining prior court approval. See CRC 3.1110(e). The opposition exceeds the 15-page limit by 5
pages and the reply exceeds the 10-page limit by 3 pages. Despite the excessive pages, the entire
memorandums were considered by the Court.
See CRC 3.1113(g); CRC 3.1300(d).
However, the parties are warned that filing memorandums
which exceed the page limits set forth in CRC 3.1113(d) without first obtaining court
approval will result in the Court not considering the arguments in the pages which
are beyond the page limits.
REQUEST FOR JUDICIAL NOTICE
Plaintiff requests judicial notice of three published
judicial opinions: Ford Motor Warranty Cases (2023) 89 CA5th 1324 (Ex.1);
Kielar (2023) 94 CA5th 614 (Ex.2); and Ngo (9th Cir. 2022) 23
F.4th 942. Since the opinions are
published, judicial notice of the opinions is unnecessary and, therefore,
denied. See Quelimane Co.
(1998) 19 C4th 26, 45 fn.9. The Court considers
the request as a citation to the foregoing cases. Id.
EVIDENTIARY OBJECTION
Plaintiff’s objection to the declaration of Jordan A.
Willette is overruled.
ANALYSIS
HMA moves to compel arbitration on two alternative bases. First, HMA seeks to have the Court compel
arbitration of Plaintiff’s claims against it under the arbitration agreement contained
in the 2020 Owner’s Handbook & Warranty Information (the Warranty). (Willette Decl., Ex.B). Alternatively, HMA asks the Court to compel the
arbitration of Plaintiff’s claim under the arbitration provisions contained in
the RISC entered into between Plaintiff and the non-party Dealership from which
Plaintiff purchased the Vehicle.
(Willette Decl., Ex.A). The Court
will address the alternative basis (arbitration under the RISC) first.
RISC
The RISC Plaintiff, but not HMA, signed regarding the
Vehicle contains an arbitration provision.
(Willette Decl., Ex.A).
Relying on Felisilda (2020) 53 CA5th 486, a Third
District Court of Appeal opinion, HMA argues that as a non-signatory to the
RISC it can enforce the arbitration agreement contained therein under the
doctrine of equitable estoppel. The
holding in Felisilda has since been rejected by the Second District
Court of Appeal (the District in which this Court lies) in Ford Motor
Warranty Cases (2023) 89 CA5th 1324.
See also Montemayor (2023) 92 CA5th 958 (An automobile
manufacturer cannot enforce an arbitration provision in a sales contract
between the consumer and a dealership where the consumer’s claims against the
manufacturer are based on the manufacturer’s express warranty for the vehicle,
not any obligation of the dealer under the sales contract.).
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. Ford Motor Warranty Cases, supra
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. 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.
Based on the foregoing, the Court finds that HMA cannot
compel the arbitration of Plaintiff’s claims under the arbitration provision
contained in the RISC.
Warranty
Plaintiff alleges that his “causes of action arise out of
warranty and repair obligations of [HMA] in connection with a vehicle Plaintiff
purchased and for which [HMA] issued a written warranty.” (See Complaint ¶¶5, 9). Plaintiff specifically alleges that the
warranty was not issued by the selling dealership. (Complaint ¶9). Plaintiff received the express warranty upon
the purchase of the Vehicle. (Willette
Decl., Ex.A, B).
The Warranty contains the following arbitration provision
under the section titled “BINDING ARBITRATION FOR CALIFORNIA VEHICLES ONLY”:
“PLEASE READ THIS SECTION IN ITS
ENTIRETY AS IT AFFECTS YOUR RIGHTS
If you purchased or leased your
Hyundai vehicle in the State of California, you and we, each agree that any
claim or disputes between us (including between you and any of our affiliated
companies) related to or arising out of your vehicle purchase, use of your
vehicle, the vehicle warranty, representations in the warranty, or duties
contemplated under the warranty, including without limitation claims relate the
failure to conform a vehicle to warranty, failure to repurchase or replace your
vehicle, or claims for a refund or partial refund of your vehicle’s purchase
price (excluding personal injury claims), shall be resolved by binding
arbitration at either your or our election, even if the claim is initially
filed in a court of law. If either you or we elect to resolve our dispute via
arbitration (as opposed to in a court of law), such binding arbitration shall
be administered by and through JAMS Mediation, Arbitration and ADR Services
(JAMS) under its Streamlined Arbitration Rules & Procedures.
We will pay all JAMS fees for any
arbitration except for the initial filing fee of $250. The arbitration will be
held in the city or county of your residence. To learn more about arbitration,
including the applicable rules and how to commence arbitration, you may call
any JAMS office or go to www.jamsadr.org.
This agreement to arbitrate is
intended to be broadly interpreted and to make all disputes and claims between
us (including our affiliated companies) relating to or arising out of your
vehicle purchase, use of your vehicle, or the vehicle warranty subject to
arbitration to the maximum extent permitted by law.
In any arbitration, the arbitrator
shall be bound by the terms of this agreement and shall follow the applicable
law. The arbitrator shall not have the power to commit manifest errors of law,
and any award rendered by the arbitrator that employs a manifest error of law
may be vacated or corrected by a court of competent jurisdiction for such
error. The arbitrator may only resolve disputes between you and us and may not
consolidate claims without the consent of all parties. The arbitrator cannot
hear class or representative claims or requests for relief on behalf of others
purchasing or leasing Hyundai Motor America vehicles as permitted by law. In
other words, you and we may bring claims against the other only in your or our
individual capacity, and not as a plaintiff or class member in any class or
representative action to the maximum extent permitted by law. If a court or
arbitrator decides that any part of this agreement to arbitrate cannot be
enforced as to a particular claim for relief, then that claim (and only that
claim) must be brought in court and must be stayed pending arbitration of the
arbitrable claims. If arbitration is elected by either party, the parties
collectively agree that they waive their right to a jury trial. In no events
shall class arbitration be permitted.
Notwithstanding the above, you may
file a lawsuit in small claims court for any claims that otherwise require
binding arbitration. This agreement evidences a transaction involving
interstate commerce and shall be governed by the Federal Arbitration Act, 9
U.S.C. §§ 1-16. Judgment upon any award in arbitration may be entered in any
court having jurisdiction.
IF YOU PURCHASED OR LEASED YOUR
VEHICLE IN CALIFORNIA, YOUR WARRANTY IS MADE SUBJECT TO THE TERMS OF THIS
BINDING ARBITRATION PROVISION. BY ACCEPTING BENEFITS UNDER THIS WARRANTY,
INCLUDING HAVING ANY REPAIRS PERFORMED UNDER WARRANTY, YOU AGREE TO BE BOUND BY
THESE TERMS. IF YOU DO NOT AGREE WITH THESE TERMS, PLEASE CONTACT US AT
OPT-OUT@HMAUSA.COM WITHIN THIRTY (30) DAYS OF YOUR PURCHASE OR LEASE TO OPT-OUT
OF THIS ARBITRATION PROVISION.”
(Willette Decl., Ex.B, pp.12-14).
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. As set forth above, the arbitration
agreement in the Warranty covers a broad range of disputes. Additionally, the Warranty expressly states
that it is made subject to the terms of the binding arbitration provision. (Willette Decl., Ex.B, p.14).
The fact that Plaintiff did not sign the Warranty which
includes the arbitration agreement does not preclude HMA’s enforcement of
same. Under the doctrine of equitable
estoppel a party, such as Plaintiff, may not claim that the lack of his
signature on a written contract precludes enforcement of the contract’s
arbitration provision when he has consistently maintained that other provisions
in the same contract should be enforced to benefit him. See Boucher (2005) 127 CA4th
262, 269, 272; Goldman (2009) 173 CA4th 209, 217-218; Marenco
(2015) 233 CA4th 1409, 1419-1420; JSM Tuscany, LLC (2011) 193 CA4th
1222, 1237; Metalclad Corp. (2003) 109 CA4th 1705, 1714.
Contrary to Plaintiff’s assertion, his claims under the
Song-Beverly Act depend on the terms of the Warranty. (See Complaint ¶¶5, 9-11). Since Plaintiff purchased the Vehicle in
California, is bringing this action pursuant to the Warranty, and has alleged
that repairs have been performed under the Warranty, the Court finds that the
arbitration agreement in the Warranty applies and HMA has standing to enforce
it.
Plaintiff’s argument that the arbitration agreement
contained in the Warranty is unconscionable and, therefore, unenforceable, is
also without merit.
Unconscionability consists of procedural and substantive
elements, both of which must be present.
Armendariz, supra at 114.
However, both elements do not need to be present to the same degree –
the more substantively unconscionable the contract term the less procedural unconscionability
must be shown and vice versa. Id. Procedural unconscionability tests the
circumstances of contract negotiation and formation and focuses on “oppression”
or “surprise” due to unequal bargaining power.
Id. “Oppression” occurs
when a contract involves lack of negotiation and meaningful choice, and
“surprise” occurs where the alleged unconscionable provision is hidden within a
printed form. Pinnacle Museum Tower
Association (2012) 55 C4th 223, 247, citing Morris (2005) 128 CA4th
1305, 1317; Tiri (2014) 226 CA4th 231; Serafin (2015) 235 CA4th
165, 179. Substantive unconscionability
“focuses on the actual terms of the agreement and evaluates whether they create
overly harsh or one-sided results.” Serafin,
supra at 177.
Plaintiff contends that the Warranty’s arbitration
provision is unconscionable because he did not sign it, he was not provided
notice of it, and the arbitration agreement is buried in the 50-page Warranty
booklet.
As noted above, the fact that Plaintiff did not sign the
Warranty or the arbitration provision contained therein does not make them
unenforceable – Plaintiff cannot seek to enforce the terms of the Warranty
while disavowing the arbitration provision contained within the same contract.
Plaintiff’s claim that he was not provided notice of the
arbitration agreement also fails. In the
Complaint, Plaintiff alleges facts indicating he entered the Warranty contract
when he purchased the Vehicle and sought to enforce the terms of such Warranty
by presenting the Vehicle for repairs under the Warranty. (Complaint ¶¶9-24). Additionally, Plaintiff does not dispute
receiving the Warranty at the time he purchased the Vehicle. Rather, Plaintiff states that the Warranty
was “presumably” delivered to him. (See
Diaz Decl. ¶¶5-6). The fact that
Plaintiff may not have looked through and/or read the documents he received,
including the Warranty which contains a 30 day opt-out provision, provided to
him upon the purchase of the Vehicle does not mean that he is not bound by
same. See Gutierrez (2003)
114 CA4th 77, 78.
Contrary to Plaintiff’s assertion, the arbitration
provision in the Warranty is noted in the Table of Contents and clearly set
forth in the pages denoted thereafter.
The fact that Plaintiff chose not to read the contents of the Warranty
does not make its terms unenforceable against Plaintiff, especially since
Plaintiff is attempting to enforce the terms of the same contract in this
action. Gutierrez, supra.
Based on the foregoing, Plaintiff has failed to establish
that the arbitration provision is procedurally unconscionable.
The terms of the arbitration provision are also not
substantively unconscionable. The terms
are equally applied and gives Plaintiff the option of selecting JAMS in the
city or county of Plaintiff’s residence, and JAMS is a neutral providers of arbitration
services. Additionally, HMA has not only
agreed to pay all fees for any arbitration except for the initial filing fee of
$250 for JAMS, there is no “fee-shifting” provision stated therein. See CCP 1284.3(a). Further, as noted above, the arbitration
provision contains an opt-out provision.
CONCLUSION
The motion is granted.
This action is stayed pending the resolution of the arbitration. CCP 1281.4.