Judge: Michelle Williams Court, Case: 21STCV23469, Date: 2022-09-06 Tentative Ruling
Case Number: 21STCV23469 Hearing Date: September 6, 2022 Dept: 74
21STCV23469 FREDY
CAMPOS vs NISSAN NORTH AMERICA
Defendant Nissan North America, Inc.’s Motion to Compel
Arbitration
TENTATIVE RULING: Defendant Nissan North America, Inc.’s Motion
to Compel Arbitration is GRANTED. Plaintiff must submit his claims to
arbitration. This action is STAYED
pending the outcome of arbitration. A
Status Conference re Initiation of Arbitration is scheduled for October 6, 2022
at 8:30 a.m.
Background
On June 24,
2021, Plaintiff Fredy Campos filed this lemon law action against Defendant
Nissan North America arising out of Plaintiff’s purchase of a 2019 Nissan
Altima. The complaint asserts two causes of action under the Song-Beverly Act.
Motion
On June 30,
2022, Defendant Nissan North America, Inc. filed the instant motion to compel
arbitration.
Opposition
In
opposition, Plaintiff contends Defendant failed to authenticate the arbitration
agreement, it cannot enforce the agreement as a non-signatory, the arbitration
provisions are unconscionable, and it strips Plaintiff of his statutory rights.
Reply
In reply,
Defendant reiterates its arguments that Plaintiff is estopped from arguing the
agreement does not apply, it is a third-party beneficiary to the agreement,
Plaintiff did not meet his burden as to unconscionability, the effective
vindication doctrine does not apply, it is not collaterally estopped from
enforcing the agreement, and it met its initial burden regarding the existence
of an arbitration agreement.
Judicial
Notice and Reliance Upon Superior Court Orders
In support of
its motion, Defendant requests the Court take judicial notice of the complaint
in this action, which is GRANTED, though unnecessary. (Evid. Code § 452(d).)
Defendant also requests the Court take judicial notice of a notice of dismissal
filed in the trial court case underlying Felisilda
v. FCA US LLC (2020) 53 Cal.App.5th 486.
The request is GRANTED. (Evid. Code § 452(d).)
In opposition, Plaintiff attaches a
trial court ruling in another department of the Los Angeles Superior Court. In
addition to being a non-binding ruling, it notably only involved waiver of the
right to arbitrate, an issue not raised here. (Matera Decl. Ex. 1 (“THE COURT
DENIES THE MOTIONS TO COMPEL ARBITRATION AND STAY PROCEEDINGS on the ground
that moving party's delay in bringing the motion waived its rights to compel
arbitration under the RISC. The Court does not rule on Plaintiffs remaining
objections to the arbitration provision.”).) In reply, Defendant requests
judicial notice of its notice of appeal of that decision as well as a ruling
from a different department of the Los Angeles Superior Court in a separate
case involving arbitration of claims against Nissan. This request is DENIED.
The Court does not consider any of the trial court rulings. (See City of Bakersfield v. West Park Home Owners
Assn. & Friends (2016) 4 Cal.App.5th 1199, 1210 (“the City relies on
similar financing plans having been validated by at least eight California
trial courts. The City requests this court to take judicial notice of these
trial court orders. However, trial court orders hold no precedential value.
Accordingly, we will neither rely upon, nor take judicial notice of, these orders.”)
(internal citation omitted); Aguirre
v. Amscan Holdings, Inc.
(2015) 234 Cal.App.4th 1290, 1299 n.5 (“Rule 8.1115 of the California Rules of
Court prohibits the citation of unpublished opinions of California state
courts, with certain limited exceptions. (Cal. Rules of Court, rule 8.1115(a).)
We shall disregard the unpublished superior court opinions cited and relied
upon by plaintiff.”).)
Evidentiary
Objections
In both his
opposition and separately filed objection, Plaintiff objected to Defendant’s
counsel’s declaration attaching the Retail Installment Sale Contract and argued
it was not properly authenticated. (Opp. at 1:17-28.) However, Plaintiff does
not challenge the existence of the agreement or his signature thereon.
Accordingly,
the objection is OVERRULED. (See Espejo v. Southern California Permanente
Medical Group (2016) 246 Cal.App.4th 1047, 1060 (“the question before
us—whether defendants may meet their initial burden to show an agreement to
arbitrate by attaching a copy of the arbitration agreement purportedly bearing
the opposing party's signature. We conclude they may, in compliance with the
requirements of section 1281.2 and California Rules of Court, rule 3.1330.”); Condee
v. Longwood Management Corp. (2001) 88 Cal.App.4th 215, 218 (“For purposes
of a petition to compel arbitration, it is not necessary to follow the normal
procedures of document authentication.”).)
Motion to Compel
Arbitration
Standard
“California
law reflects a strong public policy in favor of arbitration as a relatively
quick and inexpensive method for resolving disputes. To further that policy,
section 1281.2 requires a trial court to enforce a written arbitration
agreement unless one of three limited exceptions applies. Those statutory
exceptions arise where (1) a party
waives the right to arbitration; (2) grounds exist for revoking the arbitration
agreement; and (3) pending litigation with a third party creates the
possibility of conflicting rulings on common factual or legal issues.” (Acquire II, Ltd. v. Colton Real Estate Group
(2013) 213 Cal.App.4th 959, 967; Code Civ. Proc. § 1281.2.) Similarly, “under
the FAA, the strong federal policy favoring arbitration agreements requires
courts to resolve any doubts concerning arbitrability in favor of arbitration.”
(Valencia v. Smyth (2010) 185 Cal.App.4th 153, 176 (internal quotations
omitted).)
In deciding a petition to compel
arbitration, trial courts must decide first whether an enforceable arbitration
agreement exists between the parties, and then determine the second gateway issue
whether the claims are covered within the scope of the agreement. (Omar
v. Ralphs Grocery Co. (2004) 118 Cal.App.4th 955, 961.) The opposing party
has the burden to establish any defense to enforcement. (Gatton v. T-Mobile USA, Inc. (2007) 152 Cal.App.4th 571, 579 (“The
petitioner, T–Mobile here, bears the burden of proving the existence of a valid
arbitration agreement and the opposing party, plaintiffs here, bears the burden
of proving any fact necessary to its defense.”).)
Procedurally, a petition to compel
arbitration or stay proceedings must state verbatim the provisions providing
for arbitration, or must have a copy of them attached. (Cal. R. Ct., rule 3.1330.)
The Arbitration Agreement
“With
respect to the moving party’s burden to provide evidence of the existence of an
agreement to arbitrate, it is generally sufficient for that party to present a
copy of the contract to the court.” (Baker
v. Italian Maple Holdings, LLC
(2017) 13 Cal.App.5th 1152, 1160.)
Defendant
provides a copy of the Retail Installment Sales Contract between Plaintiff
Fredy Campos and Downey Nissan. Plaintiff signed the “Agreement to Arbitrate,”
which stated “[b]y signing below, you agree that, pursuant to the Arbitration
Provision on page 7 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.” (Maugeri Decl. Ex. 3.) The
Arbitration Provision provided:
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 . . .
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. . . . Any arbitration under this
Arbitration Provision shall be governed by the Federal Arbitration Act.
(Id.
Ex. 4.)
Defendant May Enforce the Agreement as
a Non-Signatory
“[W]hether
a contract may be enforced by or against a nonsignatory to the contract is
determined by principles of state law. [Citations] To that, there are six
theories by which a nonsignatory may be bound to arbitrate: ‘(a) incorporation
by reference; (b) assumption; (c) agency; (d) veil-piercing or alter ego; (e)
estoppel; and (f) third-party beneficiary.” (Philadelphia Indemnity Ins. Co.
v. SMG Holdings, Inc. (2019) 44 Cal.App.5th 834, 840-841.) Defendant relies
upon estoppel and its status as a third-party beneficiary.
“Under
the doctrine of equitable estoppel, as applied in both federal and California
decisional authority, a nonsignatory defendant may invoke an arbitration clause
to compel a signatory plaintiff to arbitrate its claims when the causes of
action against the nonsignatory are intimately founded in and intertwined with
the underlying contract obligations.” (Felisilda, supra, 53 Cal.App.5th
at 495.) In Felisilda, the court addressed an identical arbitration
provision to the one at issue in this case:
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 ... 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.
(Felisilda, supra, 53 Cal.App.5th at
490.) The Court of Appeal upheld the trial court’s order compelling the
plaintiffs to arbitrate their Song-Beverly claims against the manufacturer:
The Felisildas’ claim
against FCA directly relates to the condition of the vehicle that they allege
to have violated warranties they received as a consequence of the sales
contract. Because the Felisildas expressly agreed to arbitrate claims arising
out of the condition of the vehicle – even against third party nonsignatories
to the sales contract – they are estopped from refusing to arbitrate their
claim against FCA. Consequently, the trial court properly ordered the
Felisildas to arbitrate their claim against FCA.
(Id.
at 497.) “[T]he arbitration provision in this case provides for arbitration
of disputes that include third parties so long as the dispute pertains to the
condition of the vehicle.” (Ibid.)
In
opposition, Plaintiff cites non-binding federal authority to argue Felisilda
was incorrectly decided. (Opp. at 2:1-4:2; 6:25-12:20.) However, “[d]ecisions
of every division of the District Courts of Appeal are binding upon all the
justice and municipal courts and upon all the superior courts of this state,
and this is so whether or not the superior court is acting as a trial or
appellate court.” (Auto Equity Sales, Inc. v. Superior Court of Santa Clara
County (1962) 57 Cal.2d 450, 455.) Because the arbitration provision and
claims in this case are identical to those in Felisilda, this binding
precedent controls and Plaintiff Campos is estopped from refusing to
arbitration his claims against Defendant Nissan.
Defendant
Nissan is also a third-party beneficiary to the arbitration agreement. The
elements to demonstrate a third-party beneficiary relationship are “(1) whether
the third party would in fact benefit from the contract, but also (2) whether a
motivating purpose of the contracting parties was to provide a benefit to the
third party, and (3) whether permitting a third party to bring its own breach
of contract action against a contracting party is consistent with the
objectives of the contract and the reasonable expectations of the contracting parties.
All three elements must be satisfied to permit the third party action to go
forward.” (Goonewardene v. ADP, LLC (2019) 6 Cal.5th 817, 830.)
Defendant Nissan would benefit from the arbitration provision, the parties
expressly agreed to arbitrate claims “with third parties who do not sign this
contract,” and allowing Defendant Nissan to enforce an arbitration provision,
as the manufacturer of the vehicle whose condition is at issue, is consistent
with the objectives and reasonable expectations of the parties.
In
reply, Defendant addresses a claim of collateral estoppel, (Reply at 9:7-10:7),
which was not raised by Plaintiff. Plaintiff merely attached a trial court
ruling to the declaration of his counsel without analysis. As noted above, the
Court does not rely upon or address other trial court rulings.
Plaintiff Failed to Demonstrate
Unconscionability
Plaintiff
also argues the agreement is unconscionable. (Opp. at 4:3-6:24.) “Both procedural and substantive
unconscionability must be present for a court to refuse to enforce a contract,
although they need not be present in the same degree.” (Baxter v. Genworth
N. Am. Corp., (2017) 16 Cal.App.5th 713, 721 (citing Baltazar v. Forever
21, Inc. (2016) 62 Cal.4th 1237, 1243.) “Procedural unconscionability
focuses on oppression or surprise due to unequal bargaining power. Oppression
arises from an inequality of bargaining power that results in no real
negotiation and an absence of meaningful choice. Surprise involves the extent
to which the supposedly agreed-upon terms are hidden in a prolix printed form
drafted by the party seeking to enforce them. . . . The substantive element of
the unconscionability analysis focuses on overly harsh or one-sided results.” (Baxter,
supra, 16 Cal.App.5th at 722-724.)
As
argued by Defendant in reply, Plaintiff failed to provide any evidence
regarding procedural unconscionability. (Reply at 8:15-24.) “In this case,
plaintiff failed to show any procedural unconscionability at all. . . .
Plaintiff did not introduce or rely on any evidence of the circumstances
surrounding the execution of the agreement, so he could not show inequality of
bargaining power, lack of negotiation, or lack of meaningful choice based on
those circumstances. He has not presented us with any reason to suppose
substantially unequal bargaining power was inherent in his relationship with
the seller. Nor does the form of the document itself show procedural
unconscionability. The Arbitration Addendum was not set in small type or hidden
in a prolix form. It was printed on a separate page, in ordinary type, with
‘Arbitration Addendum’ at the top, and was signed separately by plaintiff.” (Crippen
v. Central Valley RV Outlet (2004) 124 Cal.App.4th 1159, 1165.) “[T]here is
no general rule that a form contract used by a party for many transactions is
procedurally unconscionable.” (Ibid.) Moreover, Plaintiff separately
initialed an acknowledgment of the arbitration provision, which reduces any
claimed procedural unconscionability. (See e.g. Serafin v. Balco Properties Ltd.,
LLC (2015) 235 Cal.App.4th 165, 179 (“where the arbitration provisions
presented in a contract of adhesion are highlighted for the employee, any
procedural unconscionability is ‘limited.’”).) Plaintiff failed to demonstrate
procedural unconscionability and therefore did not meet his burden.
Moreover,
Plaintiff solely points to the asserted inability to compel third-party
discovery as a basis for substantive unconscionability. (Opp. at 4:3-5:19.)
However, neither CVS Health Corporation v. Vividus, LLC (9th Cir. 2017)
878 F.3d 703 nor Aixtron, Inc. v. Veeco Instruments Inc. (2020) 52
Cal.App.5th 360 cited by Plaintiff involved unconscionability and are therefore
inapplicable. Nothing in the arbitration agreement limits the discovery
available to the parties and Plaintiff similarly failed to demonstrate
substantive unconscionability. (See Coast Plaza Doctors Hosp. v. Blue Cross
of California (2000) 83 Cal.App.4th 677, 689 (“We are not aware of any case
that has ever held that an arbitration provision is substantially
unconscionable merely because a party's discovery rights are limited in
arbitration. Limited discovery rights are the hallmark of arbitration.”); Torrecillas
v. Fitness International, LLC (2020) 52 Cal.App.5th 485, 497 (“limiting
discovery is one point of arbitration.”).)
Plaintiff
failed to demonstrate the existence of procedural and substantive
unconscionability sufficient to avoid enforcement of the agreement.
Plaintiff Has Not Demonstrated the
Agreement Violates Plaintiff’s Statutory Rights
Plaintiff
also argues the arbitration provision violates public policy, citing the
“effective vindication” doctrine. However, Plaintiff fails to cite any relevant
authority or provisions in the agreement that demonstrate enforcing the
arbitration provision would cause Plaintiff to lose any substantive statutory
rights. (Opp. at 14:10-15:19. See American Exp. Co. v. Italian Colors
Restaurant
(2013) 570 U.S. 228, 236 (“As we have described, the exception finds its origin
in the desire to prevent ‘prospective waiver of a party's right to pursue
statutory remedies,’ Mitsubishi Motors, supra, at 637, n.
19, 105 S.Ct. 3346 (emphasis added). That would certainly cover a provision in
an arbitration agreement forbidding the assertion of certain statutory
rights.”); Prima
Donna Development Corp. v. Wells Fargo Bank, N.A. (2019) 42
Cal.App.5th 22, 36 (“A party does not waive statutory rights by agreeing to
arbitrate them. By agreeing to arbitrate
a statutory claim, a party does not forgo the substantive rights afforded by
the statute; it only submits to their resolution in an arbitral, rather than a
judicial, forum.”).) Plaintiff’s argument is unpersuasive.