Judge Michael P. Linfield, Case Number: 22STCV39551, Date: 2023-05-11 Tentative Ruling

Judge: Michael P. Linfield, Case: 22STCV39551, Date: 2023-05-11 Tentative Ruling

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SUBJECT: Motion to Compel Arbitration and Request to Stay All Legal Proceedings

Defendant BMW NA’s Motion to Compel Arbitration and Request to Stay All Legal Proceedings is DENIED.

On December 21, 2022, Plaintiffs Willie L. Fair and Julie Fair filed their Complaint against Defendants BMW of North America, LLC, and SAI Monrovia B, Inc. on causes of action arising from the Song-Beverly Consumer Warranty Act.

On April 10, 2023, Defendant BMW of North America, LLC filed: (1) Notice of Motion to Compel Arbitration; (2) Motion to Compel Arbitration and Request to Stay All Legal Proceedings (“Motion”); and (3) Declaration of Aaron Grener.

On April 28, 2023, Plaintiffs filed: (1) Opposition; (2) Request for Judicial Notice; (3) Evidentiary Objections to the Declaration of Aaron Grener; (4) Proposed Order; and (5) Proof of Service.

On May 4, 2023, Defendant BMW of North America, LLC filed: (1) Reply; (2) Request for Judicial Notice; (3) Response to Plaintiffs’ Evidentiary Objections to Declaration of Aaron Grener; and (4) Objections to Plaintiffs’ Request for Judicial Notice.

Plaintiffs request that the Court take judicial notice of a variety of cases from various jurisdictions. Defendant BMW of North America, LLC filed Objections to Plaintiffs’ Request for Judicial Notice.

The Court declines to take judicial notice of these cases because they are not “necessary, helpful or relevant.” (Jordache Enterprises, Inc. v. Brobeck, Phleger & Harrison (1998) 18 Cal.4th 739, 748, fn. 6.)

Defendant requests that the Court take judicial notice of a variety of cases from various jurisdictions, none of which are binding authority on the Court.

Plaintiffs filed evidentiary objections to the Declaration of Aaron Grener. The following are the Court’s rulings on the evidentiary objections.

Objection
1		OVERRULED
2		OVERRULED
3		OVERRULED
4		OVERRULED
5		OVERRULED

“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.)

Defendant BMW of North America, LLC (“BMW NA”) submits to the Court a Retail Installment Sales Contract that is signed by: (1) Buyer Willie L. Fair; and (2) Seller BMW of El Cajon. (Decl. Grener, Exh. A, p. 1.)

The Buyer and the Seller both signed the agreement on August 5, 2019, and the sections for Co-Buyer signature and date both state “N/A”. Buyer further signed a section titled “Agreement to Arbitrate,” which states: “By signing below, you agree that, pursuant to the Arbitration Provision on the reverse side of this contract, you or we may elect to resolve any dispute by neutral, binding arbitration and not by a court action. See the Arbitration Provision for additional information concerning the agreement to arbitrate.” (Decl. Grener, Exh. A, p. 1.)

1. EITHER YOU OR WE MAY CHOOSE TO HAVE ANY DISPUTE BETWEEN US DECIDED BY ARBITRATION AND NOT IN COURT OR BY JURY TRIAL.

2. IF A DISPUTE IS ARBITRATED, YOU WILL GIVE UP YOUR RIGHT TO PARTICIPATE AS A CLASS REPRESENTATIVE OR CLASS MEMBER ON ANY CLASS CLAIM YOU MAY HAVE AGAINST US INCLUDING ANY RIGHT TO CLASS ARBITRATION OR ANY CONSOLIDATION OF INDIVIDUAL ARBITRATIONS.

3. DISCOVERY AND RIGHTS TO APPEAL IN ARBITRATION ARE GENERALLY MORE LIMITED THAN IN A LAWSUIT, AND OTHER RIGHTS THAT YOU AND WE WOULD HAVE IN COURT MAY NOT BE AVAILABLE IN ARBITRATION.

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.

Defendant BMW NA moves the Court to: (1) order Plaintiffs to submit this entire matter to arbitration; and (2) order the arbitration stayed pending completion of arbitration. (Motion, p. 17:7–10.)

Defendant BMW NA argues: (1) that the Court must compel arbitration because Plaintiffs entered into a purchase contract containing a valid arbitration provision that encompasses the entire dispute; (2) that Defendant BMW NA may compel arbitration as a third-party beneficiary; (3) that BMW NA may compel arbitration under the doctrine of equitable estoppel; and (4) that proceedings should be stayed while arbitration is pending. (Motion, pp. 8:25–26, 12:24, 14:5, 16:9–10.)

Plaintiffs oppose the Motion, arguing: (1) that the Motion must be denied on procedural grounds; (2) that the Motion must be denied because Defendant BMW NA cannot invoke the arbitration clause; and (3) that collateral estoppel applies here; (4) that equitable estoppel does not apply here; (5) that Plaintiff’s preferred case law (i.e., Ford Motor Warranty Cases (2023) 89 Cal.App.5th 1324) applies here, not Defendant BMW NA’s preferred case law (i.e., Felisilda v. FCA US LLC, et al. (2020) 53 Cal.App.5th 486); (6) that the Federal Arbitration Act (“FAA”) does not apply here; and (7) that Plaintiff Julie Fair cannot be compelled to arbitration. (Opposition, pp. 2:2, 3:1–2, 4:1–2, 6:26, 8:2–3, 11:1–2, 12:16, 13:17.)

In its Reply, Defendant BMW NA argues: (1) that Defendant BMW NA established a valid arbitration agreement exists; (2) that Plaintiffs have not presented evidence that a valid arbitration agreement does not exist; (3) that Defendant BMW NA is a third-party beneficiary; (4) that Felisilda is binding California authority that holds equitable estoppel applies; (5) that Plaintiffs’ arguments that collateral estoppel applies is improper; and (6) that the agreements’ choice of law provision establishes that the FAA applies. (Reply, pp. 3:2–3, 3:21, 6:3, 7:26, 8:26.)

There is no disagreement: the contract clearly falls within the ambit of the FAA. (See Armendariz v. Found. Health Psychcare Servs. (2000) 24 Cal.4th 83, 96–99, abrogated in part on other grounds by AT&T Mobility LLC v. Concepcion (2010) 565 U.S. 333.).

Defendant BMW NA has put forth sufficient evidence to meet its initial burden that there is a signed contract between Buyer Willie L. Fair (who is one of the two Plaintiffs) and Seller BMW of El Cajon (who is not a party to this litigation).

However, as thoroughly discussed regarding an equivalent situation by the recent Court of Appeal decision in Ford Motor Warranty Cases, Defendant BMW NA does not have standing to invoke the arbitration provision pursuant to either the doctrine of equitable estoppel or the doctrine of third-party beneficiaries. (Ford Motor Warranty Cases, supra, at pp. 1332–40.)

Accordingly, BMW NA, as the owner of assigned party BMW Bank of North America, cannot invoke the arbitration provision. Plaintiffs meet their burden of establishing a defense to the Motion.

Because BMW NA cannot invoke the arbitration provision, the Court does not reach the question of whether Plaintiff Julie Fair could be compelled to arbitrate these claims.

Defendant BMW NA’s Motion to Compel Arbitration and Request to Stay All Legal Proceedings is DENIED.