Judge: Michael Shultz, Case: 24STCV09926, Date: 2024-12-11 Tentative Ruling
DEPARTMENT 40 - JUDGE ANNE RICHARDSON - LAW AND MOTION RULINGS
The Court issues tentative rulings on certain motions.The tentative ruling will not become the final ruling until the hearing [see CRC 3.1308(a)(2)]. If the parties wish to submit on the tentative ruling and avoid a court appearance, all counsel must agree and choose which counsel will give notice. That counsel must 1) email Dept 40 by 8:30 a.m. on the day of the hearing (smcdept40@lacourt.org) with a copy to the other party(ies) and state that all parties will submit on the tentative ruling, and 2) serve notice of the ruling on all parties. If any party declines to submit on the tentative ruling, then no email is necessary and all parties should appear at the hearing in person or by Court Call.
Case Number: 24STCV09926 Hearing Date: December 11, 2024 Dept: 40
24STCV09926 Deja Bush v. Anaheim HY LLC,
et al.
[TENTATIVE] ORDER
I.
BACKGROUND
The
first amended complaint (“FAC”) alleges that Plaintiff bought a vehicle from
Anaheim Hyundai (“Dealer”) on March 16, 2023 pursuant to A Retail Installment
Sales Contract and Financing Agreement (“RISC”). Plaintiff alleges that the terms of
the RISC permitted the Dealer to rescind the transaction provided notice was
given to Plaintiff within 10 days. Plaintiff alleges that Hagoup Mouradian,
sales manager for the Dealer (“Sales Manager”) called Plaintiff on April 5,
2023, to rescind the contract although it was past the date to rescind. When
Plaintiff informed that the rescission was untimely, Defendant, Michael Anthony
Boughossian, (“General Sales Manager”), called the police and reported the
vehicle stolen causing Plaintiff’s arrest and loss of her job. Plaintiff sues the
Dealer, Sales Manager, General Sales Manager, and Timothy John Putnam, the Fleet
Manager, for intentional infliction of emotional distress, negligence,
violations of the Rosenthal Fair Debt Collection Practices Act, conversion, and
for violation of Penal Code § 496.
II.
ARGUMENTS
The
Dealer and employee defendants collectively move to compel arbitration pursuant
to the binding arbitration provision in the RISC. The agreement is brought
pursuant to the Federal Arbitration Act (“FAA”) which mandates arbitration. The
scope of the provision requires arbitration of all disputes arising from the RISC
involving the Dealer and its agents and employees. Defendants request an order
requiring binding arbitration and staying the action.
In opposition, Plaintiff argues that Defendants
waived their right to compel arbitration by initiating a criminal action
against Plaintiff and because Defendant is equitably estopped from asserting
the right to compel arbitration under a contract it claims to have rescinded. Alternatively,
if the court requires more evidence to determine the issues of waiver and
estoppel, the court should allow limited discovery on these issues and set a
further hearing.
In reply, Defendants argue that there is
no evidence of a waiver of the right to arbitrate. Plaintiff’s reliance on
statements in a police report lack any foundation. Defendant objects to the use
of the statements on that ground. There is no authority for the proposition
that invoking the criminal justice system to address this dispute was a waiver
of the right to arbitration. Defendants seek to arbitrate the alleged claims.
Plaintiff filed a civil case to resolve the dispute although Defendants have
the right to choose arbitration. Defendants are entitled to enforce the terms
of the contract.
III.
LEGAL STANDARDS
The court can order the parties to
arbitrate the matter on petition of a party to an arbitration agreement. (Code Civ. Proc., § 1281.2) The petitioner’s burden is to establish
that a valid arbitration agreement exists under state law. (Metters
v. Ralphs Grocery Co. (2008) 161
Cal.App.4th 696, 701 ["This
federal policy in favor of arbitration [under the FAA] does not come into play,
however, until a court has found the parties entered into a valid contract
under state law.”].) The opposing party’s burden is to establish a defense to
enforcement by a preponderance of evidence.
(Molecular Analytical Systems v. Ciphergen
Biosystems, Inc. (2010) 186
Cal.App.4th 696, 705.)
Defendants need only show the existence of an agreement not its validity. (Espejo v. Southern California Permanente
Medical Group (2016) 246
Cal.App.4th 1047, 1058
["as a preliminary matter the [trial] court is only required to make a
finding of the agreement's existence, not an evidentiary determination of its
validity.”].) The moving party need only
attach a copy of the agreement to the petition and incorporate it by reference.
(Id.
at 1058; Cal. Rules of Court, rule 3.1330 [“The provisions must be stated verbatim or
a copy must be physically or electronically attached to the petition and
incorporated by reference."].)
IV.
DISCUSSION
A.
Defendants’
objections
The court sustains Defendants’
objections to the introduction of the police report prepared in this case as
well as statements made within the report on grounds of hearsay and lack of
foundation.
B.
Defendants
have established the existence of an agreement to arbitrate the types of
disputes alleged by Plaintiff.
Defendants submit a copy of the RISC signed
by Plaintiff. (Monica Scott decl., Ex. A.) The RISC requires arbitration of
“any claim or dispute, whether in contract, tort, statute or otherwise …
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 … .”
(Scott decl., Ex. A, page 5.) Such disputes “shall, at your or our
election, be resolved by neutral, binding arbitration, and not by court action.”(Id.)
Plaintiff’s claims arise from Defendants’
untimely “rescission” of the RISC. (FAC ¶ 21.) Plaintiff alleges that
Defendants demanded she return the car because they were “unable to get her
financed.” (FAC ¶ 26.) Plaintiff informed the dealership that pursuant to the
terms of the contract, it was too late to rescind, and that she was in
compliance with the contract. (FAC ¶ 32.) Accordingly, Plaintiff’s alleged claims
fall within the broad scope of disputes governed by the arbitration provision.
The court shall order the petitioner and
respondent to arbitrate the controversy unless it determines, in relevant part,
that the petitioner waived the right to compel arbitration or grounds exist for
rescission of the agreement. (Code Civ. Proc., § 1281.2 subd. (a), (b).) While there is not “single
test” for determining whether a party waived its right to arbitrate, the courts
consider the following factors:
“1) whether the party's actions are
inconsistent with the right to arbitrate; (2) whether ‘the litigation machinery
has been substantially invoked’ and the parties ‘were well into preparation of
a lawsuit’ before the party notified the opposing party of an intent to
arbitrate; (3) whether a party either requested arbitration enforcement close
to the trial date or delayed for a long period before seeking a stay; (4)
whether a defendant seeking arbitration filed a counterclaim without asking for
a stay of the proceedings; (5) ‘whether important intervening steps [e.g.,
taking advantage of judicial discovery procedures not available in arbitration]
had taken place’; and (6) whether the delay ‘affected, misled, or prejudiced’
the opposing party.’” (Quach
v. California Commerce Club, Inc.
(2024) 16 Cal.5th 562, 573.)
Plaintiff argues that by calling the police
to report the vehicle stolen, Defendants waived the right to arbitrate. This is
not one of the relevant factors articulated in Quach. Plaintiff does not
cite any authority to support this argument, rather Plaintiff argues that “Defendants
claimed to invoke a right under the contract and sought to enforce that right
by calling the police to enforce their alleged contractual right through the
criminal courts.” (Opp. 6:20-22.) These contentions support that the parties
dispute their rights and obligations under the contract, which falls within the
broad scope of the provision requiring arbitration of “any dispute” between
Plaintiff and the Dealer, its agents, and/or its employees.
C.
Plaintiff
has not persuasively demonstrated that equitable estoppel applies to bar
Defendants from invoking the right to mandatory arbitration.
Plaintiff argues that the elements of equitable estoppel require
Plaintiff to show that "[t]he party to be estopped has engaged in
blameworthy or inequitable conduct; (2) that conduct caused or induced the
other party to suffer some disadvantage; and (3) equitable considerations
warrant the conclusion that the first party should not be permitted to exploit
the disadvantage he has thus inflicted upon the second party." (City
of Hollister v. Monterey Ins. Co.
(2008) 165 Cal.App.4th 455, 488.)
Plaintiff appears to be arguing that since
Defendants asserted that the contract was rescinded, Defendants gained an
advantage that enabled Defendants to retrieve the car, and therefore,
Defendants should be estopped from asserting that the arbitration provision is enforceable.
(Opp. 8:5-13.) The argument is unpersuasive.
The RISC provided for the seller’s right to
cancel if the seller was unable to assign the contract to any one of the
financial institutions with whom the seller regularly did business. (Scott Decl.,
Ex. A, page 7.) If the seller elected to cancel, seller agreed to give written
notice “…or in any other manner in which actual notice is given to [Buyer]
within 10 days of the date the contract is signed...” (Id.)
Defendants’ alleged untimely cancellation of
the contract, which Plaintiff argues was “inequitable,” will not alone sustain
an estoppel. (City
of Hollister at 500 ["The
function of estoppel is not to punish but to relieve one party from the harm
caused by another's inequitable conduct. It seeks not to make an example or to
vindicate an abstract principle, but to restore a balance of rights and
responsibilities in a situation that has become unbalanced due to one party's
unfair conduct. Thus, inequitable conduct alone will not sustain an estoppel.
It must appear that the conduct of the party to be estopped caused the
party seeking the estoppel to suffer some harm, disadvantage, or change of
position, of sufficient gravity to justify the intervention of equity."
Based on the alleged facts, Plaintiff
contends that Defendants could not, once 10 days elapsed, exercise their right
of cancellation although Defendants were “unable to get [Plaintiff] financed,” and
after Defendants left messages for Plaintiff about “her pay stubs.” (FAC ¶¶ 22,
23, 26.) Plaintiff did not return the car, ostensibly retaining a vehicle she
could not pay for and for which Defendants could not obtain financing. The
assertion that Defendants caused the harm suffered by Plaintiff is
unpersuasive given the alleged circumstances. Nor do these circumstances warrant
intervention of equity to “justify a balance of rights and responsibilities” in
this situation. (Hollister at 500; Dickson,
Carlson & Campillo v. Pole
(2000) 83 Cal.App.4th 436, 445
[“’One who seeks equity must do equity’ is a fundamental maxim of equity
jurisprudence."].)
V.
CONCLUSION
As Plaintiff has not demonstrated any
defenses to enforcement of the arbitration provision by a preponderance of
evidence, the court GRANTS Defendants’ motion to compel arbitration pursuant to
the parties’ agreement and orders this matter stayed until completion of
arbitration. (Code Civ. Proc., §1281.4.) The court sets an Order to Show Cause Re:
Completion Of Arbitration for