Judge Michael P. Linfield, Case 22STCV06322 2023-01-12 Tentative Ruling

Judge: Michael P. Linfield, Case: 22STCV06322, Date: 2023-01-12 Tentative Ruling

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.

On February 22, 2022, Plaintiff Denise Stansell filed her Complaint against Defendant Nissan North America, Inc. on causes of action regarding the Song-Beverly Consumer Warranty Act.

On November 15, 2022, Defendant filed its Motion to Compel Arbitration and Stay Proceedings. Defendant concurrently filed: (1) Memorandum of Points and Authorities; (2) Declaration of Melissa Wilner; (3) Proposed Order; and (4) Request for Judicial Notice.

On December 30, 2022, Plaintiff filed her Opposition. Plaintiff concurrently filed: (1) Declaration of Allen Amarkarian; and (2) Request for Judicial Notice.

On January 5, 2023, Defendant filed its Reply. Defendant concurrently filed its Evidentiary Objections to Declaration of Allen Amarkarian.

Defendant requests that the Court take judicial notice of: (1) the Complaint in this case; (2) the Answer in this case; and (3) 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 all items. Judicial notice is denied as superfluous to the first two items. 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).) In addition, judicial notice is denied as irrelevant to the third item. “Although a court may judicially notice a variety of matters (Evid. Code, § 450 et seq.), only relevant material may be noticed” (Am. Cemwood Corp. v. Am. Home Assurance Co. (2001) 87 Cal.App.4th 431, 441, fn. 7.)

Plaintiffs request that the Court take judicial notice of Ngo v. BMW of North America, LLC et al. (9th Cir. 2022) 23 F.4th 942. Judicial notice denied as to this item. Any party that wishes to draw the Court’s attention to another court’s opinion may simply cite that opinion.

Judicial notice is not required of case authority. Such authority can simply be cited in the briefs, pursuant to the California Rules of Court.

Defendant filed Evidentiary Objections to the Declaration of Allen Amarkarian submitted in support of Plaintiff’s Opposition. The following are the Court’s rulings as to the Evidentiary Objections.

Objection
1	SUSTAINED
2	SUSTAINED
3	SUSTAINED
4	SUSTAINED

“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.)

“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.)

“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.)

“1. EITHER YOU OR WE MAY CHOOSE TO HAVE ANY DISPUTE, EXCEPT AS STATED BELOW, BETWEEN US DECIDED BY ARBITRATION AND NOT IN COURT OR BY JURY TRIAL.

“Except as otherwise stated below, any claim or dispute, whether in contract, tort, statute or otherwise (including the interpretation and scope of this clause and the arbitrability of the claim or dispute), between you and us or our employees, agencies, successors or assigns, which arises out of or relates to your credit application, lease or condition of this vehicle, this Lease agreement or any resulting transaction or relationship (including any such relationship with third parties who do not sign this Lease) shall, at your or our election, be resolved by neutral, binding arbitration and not by a court action.”

In addition, the first section of the Lease defines the “Parties” to the Lease as following:

“‘You’ and ‘your’ refer equally to the Lessee and Co-Lessee (if any) signing this Lease. ‘We,’ ‘us’ and ‘our’ refer to the Dealer, or if this Lease is assigned, to Nissan-Infiniti LT (‘NILT’) and/or any other assignee.”

The Lease is only signed by Plaintiff Denise Stansell and a representative for Non-Party Universal City Nissan. The Lease is not signed by Defendant Nissan North America, Inc. or by one of its representatives. There is no filing before the Court that would indicate the Lease has been assigned to Defendant.

“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.)

Defendant argues that the question of arbitrability is for the arbitrator to decide. (Motion, p. 21:17.) Defendant points to the Lease for this proposition. (Id. at p. 22:2–15.)

The Court disagrees with Defendant’s argument. While the issue of arbitrability is clearly and unmistakably included in the arbitration agreement of the Lease, the only parties that have standing to invoke the arbitrability provision are Plaintiff and Non-Party Universal City Nissan. Defendant has not signed the Lease (or to the arbitration agreement). Thus, upon consideration of the arbitrability provision under the heightened standard for such provisions, the Court finds that Defendant does not have standing to invoke the arbitrability provision.

Among other things, Defendant argues that it has standing to invoke the arbitration agreement under the doctrines of equitable estoppel and third-party beneficiaries. (Motion, p. 15:3–9.)

Regarding the doctrine of equitable estoppel, Defendant cites Goldman v. KPMG, LLP (2009) 173 Cal.App.4th 209, 217–18 to argue that the test is “that the claims plaintiff asserts against the nonsignatory must be dependent upon, or founded in and inextricably intertwined with, the underlying contractual obligations of the agreement containing the arbitration clause.” (Motion, p. 15:19–22; see also JSM Tuscany, LLC v. Super. Ct. (2011) 193 Cal.App.4th 122, 1237.)

Regarding the doctrine of third-party beneficiaries, Defendant cites Goonewardene v. ADP, LLC (2019) 6 Cal.5th 817, 830 to argue that the test for third-party standing is for the purported third-party beneficiary to show: (1) that the third party would in fact benefit from the contract; (2) a motivating purpose of the contracting parties was to provide a benefit to the third party; and (3) allowing the third party to bring its own breach of contract action against a contracting party is consistent with both the objectives of the contract and the reasonable expectations of the contracting parties. (Motion, p. 20:7–13.)

Even using the tests that Defendant has proposed, the Court does not agree with Defendant’s arguments.

As to the doctrine of equitable estoppel, the Court does not find that there is anything in the Lease that inextricably binds Defendant or its rights. Rather, the Lease binds Plaintiff and Non-Party Universal City Nissan, while saying nothing about Defendant.

As to the doctrine of third-party beneficiaries, the Court does not find that a motivating purpose of the contracting parties was to provide a benefit to Defendant. Rather, the motivating purpose of the contracting parties was for Plaintiff to lease a car and for Non-Party Universal City Nissan to obtain a profit from leasing the car.

The Court does not have evidence before it that would suggest either of these doctrines are implicated here. Thus, Defendant does not meet its burden here. (Tiri, supra, at 239.) The Court finds that Defendant does not have standing to invoke the arbitration agreement in the Lease.

The Court DENIES Defendant’s Motion. The Court does not reach other arguments and issues, such as whether Defendant waived its ability to invoke the arbitration agreement or whether the arbitration agreement is valid and enforceable.

Plaintiff has also argued that Defendant’s conduct in this litigation is inconsistent with its request for arbitration. (See Opposition, § II(A).) The Court agrees.

This case was filed on February 22, 2022, almost 11 months ago. Last June, the Court set this for a jury trial which is to commence on May 15, 2023. “[T]he party seeking to compel arbitration ha[s] the responsibility to timely seek relief either to compel arbitration or dispose of the lawsuit, before the parties and the court have wasted valuable resources on ordinary litigation.” (Lewis v. Fletcher Jones Motor Cars, Inc. (2012) 205 Cal.App.4th 436, 446 [cleaned up].) 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, 1137-1139. Unreasonable delay has been found where there the party seeking arbitration has waited as little as three months to file its motion. (Guess?, Inc. v. Superior Court (Kirkland) (2000) 79 Cal.App.4th 553, 555; See also, Augusta v. Keehn & Associates (2011) 193 Cal.App.4th 331, 338-339 (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).)

The Court finds no valid reason for Defendant to have waited almost a year before moving to compel arbitration. It has often been touted that arbitrations “promise [] quicker, more informal, and often cheaper [dispute] resolutions for everyone involved” (Epic Systems Corp. v. Lewis (2018) 138 S.Ct. 1612, 1621.) However, that is not the experience of this Court. The parties are scheduled to begin trial in 4 months. It is this Court’s experience that arbitrations usually take 1½ to 2 years from the time a motion to compel arbitration is granted. Such a delay is not warranted under the circumstances.