Judge: Melvin D. Sandvig, Case: 24CHCV02197, Date: 2024-10-23 Tentative Ruling

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Case Number: 24CHCV02197    Hearing Date: October 23, 2024    Dept: F47

Dept. F47

Date: 10/23/24

Case #24CHCV02197

 

MOTION TO COMPEL ARBITRATION

 

Motion filed on 7/31/24.

 

MOVING PARTY: Defendant Mercedes-Benz USA, LLC

RESPONDING PARTY: Plaintiff Edward Khechemyan

NOTICE: ok

 

RELIEF REQUESTED: An order compelling Plaintiff Eward Khechemyan to arbitrate his claims pursuant to the arbitration agreement and (2) staying this action pending the outcome of the arbitration.

 

RULING: The motion is granted. 

 

SUMMARY OF ACTION & PROCEDURAL HISTORY

 

This action arises out of Plaintiff Edward Khechemyan’s (Plaintiff) lease of a 2022 Mercedes-Benz SL55R4 (the Vehicle) on 4/12/23.  The lease agreement includes an arbitration provision which provides, in relevant part:

 

“Important Arbitration Disclosures”

 

“Any claim or dispute, whether in contract, tort or otherwise (including any dispute over the interpretation, scope, or validity of this lease, arbitration section or the arbitrability of any issue), between you and us or any of our employees, agents , successors, assigns, or the vehicle distributor, including Mercedes-Benz USA LLC (each a “Third-Party Beneficiary”), which arises out of or relates to a credit application, this lease, or any resulting transaction or relationship arising out of this lease (including any such relationship with third parties who do not sign this contract) shall, at the election of either you, us, or a ThirdParty Beneficiary, be resolved by a neutral, binding arbitration and not by a court action.” (underlining added)

 

(See Ameripour Decl. ¶4, Ex.2, p.4)

 

The arbitration provision further provides:

 

“This lease evidences a transaction involving interstate commerce. Any arbitration under this lease shall be governed by the Federal Arbitration Act (9 USC 1, et seq).”

 

Id.

 

On 6/14/24, Plaintiff filed this action against Defendant Mercedes-Benz USA, LLC (Defendant) for: (1) Breach of Implied Warranty, (2) Breach of Express Warranty, (3) Violation of the Song-Beverly Act and (4) Violation of Uniform Commercial Code. 

 

On 7/29/24, Defendant requested that Plaintiff stipulate to arbitration pursuant to the arbitration provision in the lease agreement for the Vehicle.  (Ameripour Decl. ¶3).  Plaintiff did not agree to submit the matter to arbitration.  Id.  Therefore, on 7/31/24, Defendant filed and served the instant motion seeking an order compelling Plaintiff to arbitrate his claims pursuant to the arbitration agreement and (2) staying this action pending the outcome of the arbitration.  Plaintiff has opposed the motion and Defendant has filed a reply to the opposition. 

 

ANALYSIS

 

Defendant’s Request for Judicial Notice is denied.  Defendant requests that the Court take judicial notice of Plaintiff’s complaint.  Since the complaint is already part of the court record, the Court finds that there is no need to judicially notice same. 

 

The Federal Arbitration Act (FAA) applies to a written arbitration agreement in a contract involving commerce.  See 9 U.S.C. §2.  Here, the arbitration provision is written in the lease agreement and automotive sale contracts necessarily involve interstate commerce because even when used intra-state, “cars are themselves instrumentalities of interstate commerce.”  See United States v. Oliver (9th Cir. 1995) 60 F.3d 547, 550; Sanchez  (2015) 61 C4th 899, 906; (Ameripour Decl., Ex.2).  Additionally, as noted above, the lease agreement specifically states that “any arbitration under this lease shall be governed by the Federal Arbitration Act.”  (Ameripour Decl., Ex.2, p.4).  As such, the FAA controls.  See Rodriguez (2006) 136 CA4th 1110, 1122.  Under the FAA, an arbitration agreement is “valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract.”  9 U.S.C. § 2.  Here, no grounds exist to revoke the arbitration agreement.

 

Under California law, the arbitration agreement is also valid.  On petition of a party to an arbitration agreement alleging the existence of a written arbitration agreement and that a party to the agreement refuses to arbitrate the subject controversy, the court shall order arbitration if it determines that an agreement to arbitrate exists.  CCP 1281.2.  Again, a written agreement to arbitrate exists and Plaintiff has refused Defendant’s request to submit this matter to arbitration.  (Ameripour Decl. ¶3, Ex.2).  Under California law, the Court must compel arbitration unless it finds that the right to compel arbitration has been waived by Defendant or grounds exist for revocation of the agreement.  See Condee (2001) 88 CA4th 215, 219.  Here, there is no evidence that Defendant has waived its right to arbitration nor is there evidence of any ground for revocation of the agreement. 

 

As such, Defendant may move to compel arbitration under the FAA (9 U.S.C. §§1-16) and the California Code of Civil Procedure (CCP 1281, et seq.).

 

A non-signatory to an arbitration agreement, such as Defendant, can compel a signatory, such as Plaintiff, to arbitrate as a third-party beneficiary to the arbitration agreement.  See Mance (N.D. Cal. 2012) 901 F.Supp.2d 1147, 1155.  A non-signatory can also compel a signatory to submit to arbitration under “an alternative estoppel theory.”  Id.

 

While it is not necessary that a third-party beneficiary be named or identified in the contract, an agreement which expressly names and requires arbitration of claims against the beneficiary is sufficient to establish that party’s right to enforce the arbitration provision against signatories to the contract.  See Ronay Family Limited Partnership (2013) 216 CA4th 830, 836, 838-839; Ford Motor Warranty Cases (2023) 89 CA5th 1324, 1339  Here, Defendant is specifically named as a third-party beneficiary in the arbitration provision.  As such, Defendant is clearly an intended beneficiary of the agreement.

 

Plaintiff’s argument that the claims in this action fall outside the scope of the arbitration provision is without merit.  Plaintiff’s claims against Defendant arise out of and relate to the lease of the Vehicle and the “resulting” warranty relationship that followed the execution of the lease agreement.  As such, the arbitration  provision applies.  (See Ameripour Decl. ¶4, Ex.2, p.4).  All of Plaintiff’s claims in this action arise out of the relationship between Plaintiff as the consumer and Defendant as the manufacturer/warrantor of the Vehicle.  Plaintiff could not make the claims under the Song-Beverly Act against Defendant if not for the warrantee/warrantor relationship which arose out of the lease agreement containing the arbitration provision.  (See Complaint).

 

CONCLUSION

 

The motion is granted.  This action is stayed pending the outcome of the arbitration.  9 U.S.C. §3; CCP 1281.4.