Judge: Michael P. Linfield, Case: 21STCV44252, Date: 2022-10-21 Tentative Ruling

Case Number: 21STCV44252    Hearing Date: October 21, 2022    Dept: 34

SUBJECT:         Motion to Compel Arbitration and Stay Proceedings

Moving Party:  Defendant Nissan North America, Inc.

Resp. Party:    Plaintiffs Benetta Ware and Harold Ware

The Court DENIES Defendant’s Motion to Compel Arbitration and Stay Proceedings.  

BACKGROUND:

On December 2, 2021, Plaintiffs Benetta Ware and Harold Ware filed their Complaint against Defendant Nissan North America, Inc. on various causes of action related to the Song-Beverly Act, Civil Code section 1790 et seq.

On February 9, 2022, Defendant Nissan North America, Inc. filed its Answer, which among other things included an affirmative defense for arbitration.

On September 8, 2022, Defendant filed its Motion to Compel Arbitration and Stay Proceedings. Defendant concurrently filed: (1) Memorandum of Points and Authorities; (2) Request for Judicial Notice; and (3) Declaration of Carmen G. Espinosa.

On October 10, 2022, Plaintiffs filed their Opposition. Plaintiffs concurrently filed: (1) Request for Judicial Notice; and (2) Declaration of Daniel Law.

 On October 14, 2022, Defendant filed its Reply.

ANALYSIS:

I.           Judicial Notice

A.      Defendant’s Request for Judicial Notice

Defendant requests that the Court take judicial notice of: (1) the Complaint in this case; and (2) the notice of entry of dismissal and proof of service in Felisida, et al. v. FCA US LLC, et al., case number 34-2015-00183668.

Judicial notice is denied as to both items. Judicial notice is denied as superfluous to the first item. Any party that wishes to draw the Court’s attention to a matter filed in this action may simply cite directly to the document by execution and filing date. (See Cal. Rules of Court, rule 3.1110(d).) Judicial notice is denied as irrelevant to the second item. “Although a court may judicially notice a variety of matters (Evid. Code, § 450 et seq.), only relevant material may be noticed” (American Cemwood Corp. v. American Home Assurance Co. (2001) 87 Cal.App.4th 431, 441, fn. 7.)

B.      Plaintiff’s Request for Judicial Notice

Plaintiffs request that the Court take judicial notice of 10 opinions from a variety of courts. The Court declines to take judicial notice of materials because they are not “necessary, helpful or relevant.”  (Jordache Enterprises, Inc. v. Brobeck, Phleger & Harrison (1998) 18 Cal.4th 739, 748, fn. 6.)

II.        Legal Standard for a Petition to Compel Arbitration

A.      Statutes

“A written agreement to submit to arbitration an existing controversy or a controversy thereafter arising is valid, enforceable and irrevocable, save upon such grounds as exist for the revocation of any contract.” (Code Civ. Proc., § 1281.)

“On petition of a party to an arbitration agreement alleging the existence of a written agreement to arbitrate a controversy and that a party to the agreement refuses to arbitrate that controversy, the court shall order the petitioner and the respondent to arbitrate the controversy if it determines that an agreement to arbitrate the controversy exists, unless it determines that:

(a)        “The right to compel arbitration has been waived by the petitioner; or

(b)       “Grounds exist for rescission of the agreement.

(c)        “A party to the arbitration agreement is also a party to a pending court action or special proceeding with a third party, arising out of the same transaction or series of related transactions and there is a possibility of conflicting rulings on a common issue of law or fact. …

(d)       “The petitioner is a state or federally chartered depository institution….”

(Code Civ. Proc., § 1281.2, subds. (a–d), rest of statute omitted for brevity.)      

“If a court of competent jurisdiction, whether in this State or not, has ordered arbitration of a controversy which is an issue involved in an action or proceeding pending before a court of this State, the court in which such action or proceeding is pending shall, upon motion of a party to such action or proceeding, stay the action or proceeding until an arbitration is had in accordance with the order to arbitrate or until such earlier time as the court specifies.” (Code Civ. Proc., § 1281.4, rest of statute omitted for brevity.)

B.      Common Law

“Under both federal and state law, arbitration agreements are valid and enforceable, unless they are revocable for reasons under state law that would render any contract revocable.” (Tiri v. Lucky Chances, Inc. (2014) 226 Cal.App.4th 231, 239, citations omitted.)

“When a party to an arbitration agreement challenges the agreement as unenforceable, we decide the issue based on the same state law standards that apply to contracts generally. The United States Arbitration Act (9 U.S.C. § 1 et seq.), commonly known as the Federal Arbitration Act, creates a presumption in favor of arbitrability and permits courts to refuse to enforce agreements to arbitrate only ‘upon such grounds as exist at law or in equity for the revocation of any contract’ (9 U.S.C. § 2). Similarly, title 9 of the Code of Civil Procedure (§ 1280 et seq.) expresses a strong public policy favoring the enforcement of valid agreements to arbitrate.” (Boghos v. Certain Underwriters at Lloyd’s of London (2005) 36 Cal.4th 495, 502, citations omitted.)

“Reasons that would render any contract revocable under state law include fraud, duress, and unconscionability.” (Tiri, supra, at 239, citations omitted.)

“The party seeking to compel arbitration bears the burden of proving by a preponderance of the evidence the existence of an arbitration agreement. The party opposing the petition bears the burden of establishing a defense to the agreement's enforcement by a preponderance of the evidence. In determining whether there is a duty to arbitrate, the trial court must, at least to some extent, examine and construe the agreement.” (Id.)

III.     Discussion

A.      Arbitrability

1.       Legal Standard

“In general, it is left to an arbitrator to construe the meaning and extent of the arbitration agreement between the parties. However, it is for the courts to decide questions of arbitrability, which include whether the parties are bound by a given arbitration clause, or whether it is unenforceable as unconscionable. (Indep. Ass’n of Mailbox Ctr. Owners, Inc. v. Super. Ct. (2005) 133 Cal.App.4th 396, 406, citations omitted.)

“Although threshold questions of arbitrability are ordinarily for courts to decide in the first instance under the FAA, the ‘[p]arties to an arbitration agreement may agree to delegate to the arbitrator, instead of a court, questions regarding the enforceability of the agreement.’” (Pinela v. Neiman Marcus Group, Inc. (2015) 238 Cal.App.4th 227, 239, quoting Tiri, supra, at 241.)

“For a delegation clause to be effective, two prerequisites must be satisfied. First, the language of the clause must be clear and unmistakable. (Rent-A-Center, West, Inc. v. Jackson (2010) 561 U.S. 63, 69, fn. 1.) The required clear and unmistakable expression is a ‘heightened standard’ …. Thus, ‘[u]nless the parties clearly and unmistakably provide otherwise, the question of whether the parties agreed to arbitrate is to be decided by the court, not the arbitrator.’” (Pinela, supra, at 239–40, quoting Rent-A-Center, supra, at 69, fn. 1, and quoting AT&T Techs. v. Commc’ns Workers (1986) 475 U.S. 643, 649, other citations omitted.)

“Second, the delegation must not be revocable under state contract defenses to enforcement. Among these defenses is unconscionability.” (Pinela, supra, at 240, citation omitted.)

“When deciding whether the parties agreed to arbitrate a certain matter (including arbitrability), courts generally . . . should apply ordinary state-law principles that govern the formation of contracts.” (Aanderud v. Super. Ct. (2017) 13 Cal.App.5th 880, 890, quoting First Options of Chicago, Inc. v. Kaplan (1995) 514 U.S. 938, 944, internal quotation marks omitted.)

2.       Analysis

Defendant argues that the question of arbitrability (i.e., whether the arbitration agreement is enforceable) should be delegated to the arbitrator instead of the Court. (Pet., pp. 15–16.) Defendant points the Court to the alleged arbitration agreement, which, among other things, states:

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.

(Decl. Espinosa, Ex. C, p. 7, italics and underlines added.)

        Plaintiff argues: (1) that the issue of arbitrability is left to the Court unless the parties clearly and unmistakably provide otherwise; (2) that Defendant is not a party to the alleged arbitration agreement and thus Defendant does not have the clear and unmistakable right to enforce the agreement; and (3) that the issue of arbitrability is properly before this Court. (Opp’n, p. 15:7–18.)

        Defendant does not make any additional arguments regarding arbitrability in its Reply.

        On the issue of arbitrability, the Court concludes that the Court must decide arbitrability, although not for the reasons Plaintiffs argue. The Court finds that the language in the alleged contract is in fact clear and unmistakable: “Any claim or dispute . . . (including the interpretation and scope of this Arbitration Provision, and the arbitrability of the claim or dispute) . . . shall, at your or our election, be resolved by neutral, binding arbitration and not by a court action.” (Decl. Espinosa, Ex. C, p. 7.) The phrase “your or our election” only refers to two parties: Plaintiffs (Benetta and Harold Ware) and non-party Mossy Nissan Kearny Mesa. Defendant Nissan North America, Inc. is not an actual signatory to the alleged arbitration agreement. Thus, as to the narrow issue of arbitrability, the alleged contract clearly and unmistakably does not bind the parties to arbitration in this situation. The Court concludes as a matter of law that this contract language does not meet the heightened pleading standard for arbitrability by an arbitrator, and thus the Court continues to assess the arbitrability of this matter.

B.      The Arbitration Agreement

Defendant moves the Court to compel arbitration based on an arbitration agreement that Plaintiffs and non-party Mossy Nissan Kearny Mesa allegedly signed on September 5, 2019. (Decl. Espinosa, Ex. C, p. 6.) It is undisputed that Defendant has not signed the arbitration agreement.

Plaintiffs argue that no actual arbitration agreement exists between Plaintiffs and Defendant. (Opposition, p. 5.) Among other arguments, Plaintiffs argue that the arbitration agreement produced by Defendant is not properly authenticated by a witness with personal knowledge, that Plaintiffs do not waive these procedural defects, and that the Motion should be denied on this basis alone. (Id.)

The Court agrees with Plaintiffs that the arbitration agreement has not been properly authenticated. No custodian has provided a declaration to the Court, and the declaration of Defendant’s attorney is insufficient for authentication. (Evid. Code, §§ 1401, subd. (a), 1561, subd. (a).)  First, it is not clear to the Court that an attorney could authenticate an arbitration agreement that he didn’t witness being signed.  Second, the attorney’s declaration doesn’t even state that the attached agreement was entered into by the parties.  Rather, the declaration only states that “Attached hereto as Exhibit C is a true and correct copy of what I am informed and believe is the signed Retail Installment Sale Contract (“Sales Contract”) relating to Plaintiffs Benetta Ware and Harold Ware (“Plaintiffs) purchase of the 2019 Nissan Sentra at issue in this action.”  (Espinosa Declaration, ¶ 2.)  This purported authentication is based on hearsay.

As indicated above, “[t]he party seeking to compel arbitration bears the burden of proving by a preponderance of the evidence the existence of an arbitration agreement.”  (Tiri v. Lucky Chances, Inc. (2014) 226 Cal.App.4th 231, 239.)  Defendant has failed to meet its burden.

Therefore, the Court finds that there is no arbitration agreement. The Court does not reach the further questions raised by the parties, including issues of waiver of the arbitration agreement, minimum requirements under Armendariz, unconscionability, or applicability of Felisilda and the doctrine of equitable estoppel.

IV.        Conclusion

The Court DENIES Defendant’s Motion to Compel Arbitration and Stay Proceedings.