Judge: Michael P. Linfield, Case: 23STCV10131, Date: 2023-11-02 Tentative Ruling

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Case Number: 23STCV10131    Hearing Date: November 2, 2023    Dept: 34

SUBJECT:        Motion to Compel Arbitration and Stay Proceedings

Moving Party: Defendants Nissan North America, Inc. and LAD-N, LLC

Resp. Party:    Plaintiff Irma Santos

The Motion to Compel Arbitration is DENIED.

BACKGROUND:

On May 5, 2023, Plaintiff Irma Santos filed her Complaint against Defendants Nissan North America, Inc. and LAD-N, LLC on causes of action arising of breach of express warranty, fraudulent inducement by intentional misrepresentation, fraudulent inducement by concealment, and negligent repair.

On June 15, 2023, Defendant Nissan North America, Inc. filed its Answer to the Complaint.

On July 25, 2023, Defendant LAD-N, LLC filed its Answer to the Complaint.

On September 13, 2023, Defendants filed their Motion to Compel Arbitration and Stay Proceedings. In support of their Motion, Defendants concurrently filed: (1) Memorandum of Points & Authorities; (2) Declaration of Jason M. Richardson; (3) Request for Judicial Notice; (4) Proposed Order; and (5) Proof of Service.

On October 20, 2023, Plaintiff filed: (1) Opposition to the Motion; and (2) Judicial Council Form CIV-110, Request for Dismissal.

On October 23, 2023, by request of Plaintiff, the Clerk’s Office dismissed without prejudice Defendant LAD-N, LLC from the Complaint.

On October 26, 2023, Defendant Nissan North America, Inc. (“Defendant”) filed its Reply regarding the Motion.

ANALYSIS:

I.          Request for Judicial Notice

Defendant requests that the Court take judicial notice of the Complaint and the Answers filed in this matter.

The Court DENIES as superfluous judicial notice to all these 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).)

II.       Legal Standard

“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.” (Tiri, supra, at p. 239.)

III.     Discussion

A.      The Parties’ Arguments

Defendant moves the Court to compel Plaintiff to arbitration and stay this action pending the completion of arbitration. (Memorandum, p. 11:4–5.)

Defendant argues: (1) that the arbitration provision exists, and requirements for its authentication and foundation have been met; (2) that Plaintiff’s claims are subject to arbitration under the Federal Arbitration Act; (3) that the arbitration provision is valid and enforceable; (4) that Defendant may compel arbitration of Plaintiff’s claims because such claims are encompassed by the arbitration provision; (5) that the question of arbitrability is for the arbitrator to decide; and (6) that the claims should be stayed pending completion of arbitration. (Memorandum, pp. 5:2, 5:23, 6:16, 7:14–15, 9:5, 10:7.)

Plaintiff disagrees, arguing: (1) that Defendant cannot compel arbitration because Plaintiff’s negligent repair cause of action is no longer at issue in this case; (2) that Defendant may not rely on equitable estoppel to force Plaintiff to arbitration; and (3) that Defendant is not a third-party beneficiary of the arbitration provision. (Opposition, pp. 8:21–22, 8:27, 9:1, 13:28, 14:1.)

In its Reply, Defendant argues: (1) that state law governs the enforcement of the arbitration provision, not federal law; (2) that there are no material differences between this action and Felisilda v. FCA US LLC (2020) 53 Cal.App.5th 486; and (3) that Plaintiff’s claims are intimately intertwined with the sale contract. (Reply, pp. 1:18, 2:25, 5:1.)

B.      Discussion

The situation here – where a non-signatory automobile manufacturer attempts to compel a consumer to arbitration when the signatory dealership is not a party to the action, whether by omission or dismissal – is akin to the situation in Ford Motor Warranty Cases (2023) 89 Cal.App.5th 1324, review pending at Ochoa v. Ford Motor Co.)

To summarize the holding of this case:  (1) equitable estoppel does not apply because the manufacturer has not shown that the claims against it are founded in or intertwined with the sale contract; (2) the manufacturer’s warranty outside of the contract is not a part of the sales contract; (3) the manufacturer is not a third-party beneficiary of the sale contract; and (4) there is no agency connection that gives the manufacturer the right to compel arbitration as an undisclosed principal. (Ford Motor Warranty Cases, supra, 89 Cal.App.5th at pp. 1332, 1335, 1336, 1340.)

The Ford Motor Warranty Cases is currently citable for its persuasive value and to allow the Court to exercise discretion under Auto Equity Sales, Inc. v. Superior Court (1962) 57 Cal.2d 450, 456.   Further, several recent cases have agreed with the holdings in the Ford Motor Warranty Cases. These cases include: Montemayor v. Ford Motor Co. (2023) 92 Cal.App.5th 958, 968, 972; Kielar v. Superior Court (2023) 94 Cal.App.5th 614, 620–621; and Yeh v. Superior Court (2023) 95 Cal.App.5th 264, 269–279.

The Court finds that the facts in this case are closer to those in the Ford Motor Warranty Cases and its progeny, than with Felisilda v. FCA US LLC (2020) 53 Cal.App.5th 486.

IV.      Conclusion

The Motion is DENIED.