Judge: Michael P. Linfield, Case: 21STCV44252, Date: 2023-04-24 Tentative Ruling
Case Number: 21STCV44252 Hearing Date: April 24, 2023 Dept: 34
SUBJECT: Renewed Motion to Compel Arbitration
and Stay Proceedings
Moving Party: Defendant
Nissan North America, Inc.
Resp. Party: Plaintiffs Benetta Ware and Harold Ware
Defendant’s
Renewed Motion to Compel Arbitration is DENIED.
PRELIMINARY
COMMENT¿
¿
The Court is denying the motion for the legal
reasons set forth below. However, the Court cannot struthiously ignore the policy implications that would
inure should our Courts grant Nissan’s motion. Since there are arbitration
provisions in virtually every lease agreement, upholding Defendant’s motion to
compel arbitration would prevent any Lemon Law case from being heard in our State’s courts. The Song-Beverly Act is a “strongly
pro-consumer” law aimed at protecting Californians who buy or lease a car. (Murillo
v. Fleetwood Enterprises, Inc. (1998) 17 Cal.4th 985, 990.)¿ Upholding such
a motion would eviscerate these consumer protection statutes passed by our
Legislature.¿
BACKGROUND:
On December 2, 2021,
Plaintiffs Benetta Ware and Harold Ware filed their Complaint against Defendant
Nissan North America, Inc. on causes of action regarding the Song-Beverly
Consumer Warranty Act.
On February 9, 2022,
Defendant Nissan North America, Inc. filed its Answer, which among other things
included an affirmative defense for arbitration.
On October 21, 2022,
the Court denied Defendant’s Motion to Compel Arbitration and Stay Proceedings.
On March 6, 2023,
Defendant filed its Renewed Motion to Compel Arbitration and Stay Proceedings
(“Renewed Motion”). Defendant concurrently filed: (1) Memorandum of Points and
Authorities (“Memorandum”); (2) Declaration of Melina Manetti; (3) Request for
Judicial Notice; (4) Proposed Order; and (5) Proof of Service.
On March 17, 2023,
Plaintiffs filed their Opposition. Plaintiffs concurrently filed: (1)
Declaration of Daniel Law; and (2) Request for Judicial notice.
On April 11, 2023,
Plaintiff filed its Notice of Supplemental Authority.
On April 17, 2023, Defendant
filed its Reply.
ANALYSIS:
I.
Judicial
Notice
A.
Defendant’s
Request for Judicial Notice
Defendant requests that the Court take judicial notice of the notice of
entry of dismissal in Felisilda, et al. v. FCA US LLC, et al., case
number 34-2015-00183668.
Judicial notice is denied as irrelevant. “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.)
However, the Court has read and considered Felisilda v. FCA US LLC
(2020) 53 Cal.App.5th 486.
B.
Plaintiff’s
Request for Judicial Notice
Plaintiff requests that the Court take judicial notice of the following
cases: (1) Ngo v. BMW of North America, LLC (9th Cir., 2022) 23 F.4th
942; (2) Morgan v. Sundance, Inc. (2022) 142 S. Ct. 1708; and (3) Davis
c. Shiekh Shoes, LLC (2022) 84 Cal.App.5th 956.
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.)
Further,
it is not necessary for the Court to take judicial notice of published
cases. Counsel need only cite the cases
(and attach them, if required by the Rules of Court).
II.
Legal
Standard
A.
Legal
Standard for a Renewed Motion
“A party who originally made an application for an order which
was refused in whole or part, or granted conditionally or on terms, may make a
subsequent application for the same order upon new or different facts,
circumstances, or law, in which case it shall be shown by affidavit what
application was made before, when and to what judge, what order or decisions
were made, and what new or different facts, circumstances, or law are claimed
to be shown. For a failure to comply with this subdivision, any order made on a
subsequent application may be revoked or set aside on ex parte motion.” (Code
Civ. Proc., § 1008, subd. (b).)
B. Legal
Standard for a Motion to Compel Arbitration
“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 makes certain determinations].” (Code Civ. Proc.,
§ 1281.2.)¿¿¿¿¿¿
“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. . . . Reasons
that would render any contract revocable under state law include fraud, duress,
and unconscionability.” (Tiri v. Lucky Chances, Inc. (2014) 226
Cal.App.4th 231, 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
Pursuant to Code of Civil Procedure section 1008, subdivision (b),
Defendant renews its request for the Court to compel arbitration and stay this
case. (Memorandum, pp. 4:23, 16:25–26.)
Defendant argues: (1) that Plaintiffs’ claims are subject to
arbitration under the Federal Arbitration Act (FAA); (2) that the arbitration
provision is valid and enforceable; (3) that Defendant can enforce the
arbitration provision under the doctrine of equitable estoppel; (4) that
Defendant can enforce the arbitration provision as a third-party beneficiary;
(5) that the question of arbitrability is for the arbitrator to decide; and (6)
that Plaintiffs’ claims should be stayed pending completion of arbitration. (Id.
at pp. 6:14, 7:7, 9:1–2, 13:12–13, 14:27, 16:1.)
Plaintiffs oppose the Renewed Motion, arguing: (1) that Defendant
has waived any alleged right to arbitration; (2) that no arbitration agreement
exists between the Parties and that the language of the sales contract excludes
this dispute and Defendant from electing arbitration; (3) that Felisilda is
factually and procedurally distinguishable from this case; (4) that equitable
estoppel does not apply; (5) that Defendant is not a third-party beneficiary of
the sales contract; and (6) that the Court decides arbitrability. (Opposition,
pp. 3:19, 6:14–15, 8:2, 10:8, 13:15, 14:17.)
In its Reply, Defendant argues: (1) that the renewed motion is
procedurally proper; (2) that Defendant did not waive its right to compel
arbitration; (3) that Defendant can enforce the arbitration provision under the
doctrine of equitable estoppel; and (4) that the Court should follow Felisilda
rather than the recently-published decision in Ford Motor Warranty Cases
(2023) 2023 Cal.App. LEXIS 255. (Reply, pp. 1:13, 2:10, 4:8, 7:3.)
The Court first considers the renewed motion, arbitrability and
waiver, as those are threshold issues.
A. The
Renewed Motion
Defendant claims that new facts justify renewal of Defendant’s
Motion to Compel Arbitration and Stay Proceedings. According to Defendant,
because the Court denied the original Motion on the basis that the arbitration
provision had not been properly authenticated, discovery in this matter has
produced new facts that now allow Defendant to authenticate the arbitration
provision. (Memorandum, pp. 4:24–28, 5:1–6.)
The Court disagrees with this argument.
When a motion is denied, the moving party may file a motion for
reconsideration of the order denying the motion pursuant to Code of Civil
Procedure section 1008, subdivision (a), or the moving party may file a renewed
motion pursuant to Code of Civil Procedure section 1008, subdivision (b).
“Courts have construed section 1008 to require a party filing an application for
reconsideration or a renewed application to show diligence with a satisfactory
explanation for not having presented the new or different information earlier.”
(Even Zohar Constr. & Remodeling, Inc. v. Bellaire Townhouses, LLC (2015)
61 Cal.4th 830, 839, citations omitted.)
It is not a satisfactory explanation for Defendant, who is the car
manufacturer, to merely claim without submitting any evidence that Defendant
did not have the ability to authenticate the contract prior to filing the
original Motion. Defendant has not shown
diligence with a satisfactory explanation for why it is only now presenting the
new or different information (i.e., evidence that the arbitration agreement is
authenticated). It is irrelevant to the
analysis for the renewed motion standard that, as a result of discovery,
Plaintiff has since conceded that the arbitration agreement is authentic. If Defendant were correct, then Defendant
could file a motion for arbitration at the beginning of every case. If the motion is denied, Defendant could then
pursue discovery, and file seriatim “renewed” motions to compel discovery whenever
its discovery uncovered another nugget that would support arbitration. In other words, Defendant could engage in
litigation, yet reserve its right to move to compel arbitration at any
time. This is not the law.
The Court also notes that Defendant claims that Plaintiff admitted
the authenticity of the arbitration agreement no later than December 23,
2022. (Motion, p. 4: 16-17; Manetti
Declaration, ¶ 4.) Yet this motion was
not filed until March 6, 2023, just two months prior to trial, and 14 months
after the complaint was filed. There is no explanation for this ten-week delay.
On this basis, the Court DENIES Defendant’s Renewed Motion.
However, assuming arguendo that
the evidence of authentication is new, and this motion was timely filed, the
Court considers the other threshold issues.
B.
Arbitrability
In its Order on the original Motion to Compel Arbitration and Stay
Proceedings, the Court already stated the legal standard for arbitrability,
discussed the arbitration clause at issue, and found “that the Court must
decide arbitrability . . . [and] that this contract language does not meet the
heightened pleading standard for arbitrability by an arbitrator[.]” (Minute
Order dated October 21, 2022, pp. 5–8.) Nothing has changed since the Court
issued that Order, and the authentication of the arbitration agreement does not
affect the Court’s analysis of arbitrability. Arbitrability must still be
determined by the Court, not by the arbitrator.
C.
Waiver
1.
Legal
Standard
It is well established that a party’s failure
to “properly timely assert” a right to¿arbitration may constitute a waiver of the right to arbitrate. (Guess?, Inc. v. Super. Ct.¿(2000) 79 Cal.App.4th 553, 557.) Waiver may also be found where a party has “previously taken steps
inconsistent with an intent to invoke¿arbitration,” such as by engaging in
litigation in the Superior Court for an extended period of time. (Id.)
¿
An unreasonable delay, by itself, may
constitute a waiver of the right to arbitrate. (Burton v.
Cruise¿(2010) 90 Cal.App.4th 939, 945;¿Spracher v. Paul M. Zagaris, Inc.¿(2019) 39 Cal.App.5th 1135, 1137–39.)
Unreasonable delay has been found where there the party seeking¿arbitration¿has
waited as little as three months to file its motion. (Guess?, supra, at 555; See also,¿Augusta v.
Keehn & Associates¿(2011) 193 Cal.App.4th 331, 338–39 (6.5-month
delay);¿Adolph v. Coastal Auto Sales¿(2010) 184 Cal.App.4th 1443, 1449,
1451–52 (6-month delay);¿Kaneko Ford Design v. Citipark, Inc. (1988) 202 Cal.App.3d 1220, 1228–29
(5.5-month delay).)
¿
“Arbitration¿loses much, if not all, of its
value if undue time and money is lost in the litigation process preceding a
last-minute petition to compel.” (Burton v. Cruise¿(2010) 190
Cal.App.4th 939, 948.)
2.
Discussion
Plaintiffs filed their Complaint on December 2, 2021. Defendant filed
its Answer on February 9, 2022. On September 8, 2022 – more than nine months
after Plaintiff filed the Complaint, and nearly than seven months after the
Answer was filed – Defendant filed its original Motion to Compel Arbitration
and Stay Proceedings. Such a lengthy delay before Defendant filed the original
Motion is more than sufficient for the Court to find that Defendant waived any alleged
right to arbitrate.
The Court denied the original Motion on October 21, 2022. Defendant
then waited more than four months before filing this Renewed Motion on March 6,
2023. Indeed, Defendant actively engaged in discovery, and a trial is currently
set to be held in this matter on May 15, 2023 — three weeks after the hearing
on the Renewed Motion. Again, this delay would alone be sufficient for the
Court to find that Defendant waived any right to arbitration. (See, e.g., Guess?, supra,
at p. 555;¿Augusta v. Keehn & Associates, supra, at pp. 338–39; ¿Adolph
v. Coastal Auto Sales, supra, at pp. 1451–52;¿Kaneko Ford Design v. Citipark, Inc., supra, at pp. 1228–29.)
The Court finds that Defendant twice waived its right to arbitrate this
matter. The Court DENIES the Renewed Motion on this basis also.
The Court need not reach the substantive
arguments about the arbitration agreement. However, the Court notes that no
evidence has been presented that would support arguments that Defendant has
standing to enforce the arbitration agreement as a nonsignatory, that Defendant
could otherwise enforce the agreement as a third-party beneficiary, or that
Defendant can equitably estop Plaintiff regarding the agreement. The Court
further notes that, on April 4, 2023, in a case with arguments and material
facts nearly identical to those in this case, the Court of Appeal held: (1)
that Felisilda is inapposite; (2) that a nonsignatory manufacturer is
not a third-party beneficiary; and (3) that a nonsignatory manufacturer cannot
invoke equitable estoppel. (Ford Motor Warranty Cases (2023) 2023
Cal.App. LEXIS 255.) Were the Court to reach the substantive arguments raised
regarding the arbitration agreement, the Court would deny the motion on the
bases discussed in the Ford Motor Warranty Cases.
IV.
Sanctions
Plaintiff has not requested sanctions, and this Court is therefore not
imposing sanctions. However, for the
reasons stated above, the Court finds this renewed motion borderline-frivolous.
V.
Conclusion
Defendant’s
Renewed Motion is DENIED.