Judge: Monica Bachner, Case: 22STCV10865, Date: 2023-01-11 Tentative Ruling

Case Number: 22STCV10865    Hearing Date: January 11, 2023    Dept: 71

Superior Court of California

County of Los Angeles

DEPARTMENT 71

TENTATIVE RULING

Defendant FCA US LLC’s motion to compel arbitration of Plaintiff Merary Gomez Carbajal’s claims in this action is granted.  The case is stayed pending arbitration. The Court sets a non-appearance case review for January 10, 2024.  The parties are directed to submit a joint statement five court days in advance, apprising the Court of the status of the arbitration.

Defendant FCA US LLC (“FCA”) (“Defendant”) moves for an order compelling arbitration of all claims asserted by Plaintiff Merary Gomez Carbajal (“Gomez Carbajal”) (“Plaintiff”) and staying the action pending completion of arbitration.  (Notice of Motion, pgs. 1-2; 9 U.S.C. §1 et seq.; C.C.P. §§1280 et seq., 1281.4) 

Background

On March 30, 2022, Plaintiff filed the instant action for breach of warranty claims under the Song Beverly Consumer Warranty Act (“Song-Beverly”) and negligent repair against Defendants Premier Automotive of Placentia, LLC, dba Premier Chrysler Dodge Jeep Ram of Buena Park (“Premier”) and FCA (collectively, “Defendants”) in connection with her September 15, 2020, warranty contract regarding a 2020 Jeep Cherokee (“Subject Vehicle”).  (Complaint ¶¶5, 15, Exh. 1.)  Defendant FCA filed the instant motion on March 30, 2022.  Plaintiff filed her opposition on December 28, 2022.  Defendant FCA filed its reply on January 4, 2023.

Plaintiff opposes the motion to compel arbitration on the following grounds: (1) arbitration cannot be compelled with non-signatory Defendant FCA; (2) the Court cannot compel Plaintiff’s claims against Defendant FCA under an equitable estoppel theory because: (a) Plaintiff’s claims are not intertwined with the Retail Installment Sale Contract (“RISC”), (b) Defendant FCA has failed to establish a proven close relationship between it and the selling dealership, and (c) the case Felisilda v. FCA US LLC (2020) 53 Cal.App.5th 486 (“Felisilda”) is distinguishable from this case; and (3) Defendant FCA is not a cognizable third-party beneficiary of the RISC.  

Motion to Compel Arbitration

In deciding a motion to compel arbitration, trial courts must first decide whether an enforceable arbitration agreement exists between the parties, and then determine the second gateway issue of whether the claims are covered within the scope of the agreement.  (See Omar v. Ralphs Grocery Co. (2004) 118 Cal.App.4th 955, 961.)  “The petitioner bears the burden of proving the existence of a valid arbitration agreement by the preponderance of the evidence, and a party opposing the petition bears the burden of proving by a preponderance of the evidence any fact necessary to its defense.  [Citation] In these summary proceedings, the trial court sits as a trier of fact, weighing all the affidavits, declarations, and other documentary evidence, as well as oral testimony received at the court’s discretion, to reach a final determination.  [Citation] No jury trial is available for a petition to compel arbitration. [Citation]”  (Engalla v. Permanente Medical Group, Inc. (1997) 15 Cal.4th 951, 972; see also Chiron Corp. v. Ortho Diagnostic Systems, Inc. (9th Cir. 2000) 207 F.3d 1126, 1130 (“The court’s role under the [FAA] is therefore limited to determining (1) whether a valid agreement to arbitrate exists and, if it does, (2) whether the agreement encompasses the dispute at issue. [Citations]”).  The party opposing the petition to compel arbitration bears the burden of proving by a preponderance of the evidence any fact necessary to its defense.  (Giuliano v. Inland Empire Personnel, Inc. (2007) 149 Cal.App.4th 1276, 1284.) 

Accordingly, under both the FAA and California Law, arbitration agreements are valid, irrevocable, and enforceable, except on such grounds that exist at law or equity for voiding a contract.  (Winter v. Window Fashions Professions, Inc. (2008) 166 Cal.App.4th 943, 947.) 

A.  Arbitration Agreement

Defendant proved the existence of an arbitration agreement with Plaintiff.  Defendant submitted evidence that on September 15, 2020, Plaintiff signed an RISC with Seller-Creditor Surf City Auto Group dba Huntington Beach CDJ Ram (“Seller-Creditor”) that contained a valid and enforceable arbitration clause (“Arbitration Agreement”).  (Decl. of Stock ¶2, Exh. A.)  [The Court notes the bottom sections of the second and third pages are cut off and not properly scanned in.]

The RISC provides that the term “you” refers to the Buyer and that “we” and “us” refer to the Seller-Creditor.  The Sales Contract defines the Buyer as Plaintiff and the Seller-Creditor as Surf City Auto Group dba Huntington Beach CDJ Ram. (Decl. of Stock, Exh. A at pg. 1.)  The Arbitration Agreement provides as follows:

EITHER [Plaintiff] OR [Seller-Creditor] MAY CHOOSE TO HAVE ANY DISPUTE BETWEEN [Plaintiff and Seller-Creditor] DECIDED BY ARBITRATION AND NOT IN COURT OR BY JURY TRIAL.

. . .

Any claim or dispute, whether in contract or tort, statute or otherwise (including the interpretation and scope of this Arbitration Provision, and the arbitrability of the claim or dispute), between [Plaintiff] and [Seller-Creditor] or [Seller-Creditor’s] employees, agents, successors or assigns, which arises out of or relates to your . . . 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 [Plaintiff’s] or [Seller-Creditor’s] 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 (9 U.S.C. § 1 et. seq.) [(“FAA”)] and not by any state law concerning arbitration.

(Decl. of Stock, Exh. A at pg. 5.)

          In addition, at the bottom of the first page of the RISC, Plaintiff signed below the following:

By signing below, you agree that, pursuant to the Arbitration Provision on page 5 of this contract, [Plaintiff] or [Seller-Creditor] 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. of Stock, Exh. A at pg. 1.)

Plaintiff does not deny signing the RISC containing the Arbitration Agreement.  (See Opposition.)  Rather, Plaintiff argues Defendant FCA is not entitled to enforce the arbitration agreement against Plaintiff. 

By its terms, the Arbitration Agreement is governed by the FAA.  Moreover, the Arbitration Agreement affects commerce for purposes of FAA applicability since the RISC involves the purchase and sale of a motor vehicle, which is moved in interstate commerce.  (See Comley v. Giant Inland Empire RV Ctr., Inc. (C.D. Cal. Aug. 7, 2013) 2013 WL 12131180, at *2 (quoting Allied-Bruce Terminix Companies, Inc., v. Dobson (1995) 513 U.S. 265, 273-274) [“This contract plainly concerned a vehicle, which either itself or through its parts moved in interstate commerce.”].)

Under both California and federal case law, “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, 53 Cal.App.5th at pg. 495.)  “Where the equitable estoppel doctrine applies, the nonsignatory has a right to enforce the arbitration agreement.”   (Id. at pg. 496.)   Here, Plaintiff’s claims for Song-Beverly violations against Defendant FCA are related to the purchase and condition of the Subject Vehicle, and as such they are intertwined with the RISC containing the arbitration provision Defendant FCA seeks to enforce as a non-signatory.  As in Felisilda, given Plaintiff’s assertion of Song-Beverly allegations against Defendant FCA and given Plaintiff’s express agreement to arbitrate claims arising out of the condition of the vehicle, even against third-party non-signatories to the sales contract, Plaintiff is estopped from refusing to arbitrate her claims against Defendant FCA.  Here, Plaintiff’s causes of action relate to the condition of the subject vehicle and Plaintiff’s entering into the RISC with Seller-Creditor.  The Court finds Defendant FCA has established the existence of a valid arbitration agreement between Plaintiff and Seller-Creditor, which is enforceable by Defendant FCA, notwithstanding the fact Seller-Creditor is not a named defendant in the instant action and, as such, has not moved to compel arbitration.

The federal authorities cited by Plaintiff do not change this conclusion. Felisilda remains binding authority on this court, and the reasoning in Ngo v. BMW N.S. LLC (9th Cir. 2022) 23 F.4th 942, 946, and similar federal authorities does not find support in California decisional authority.  To the extent Ngo distinguishes Felisilda on the basis a non-signatory moved to compel arbitration, such a distinction is not found in California case law. Indeed, California cases repeatedly discuss equitable estoppel as a means for a non-signatory to “enforce” an arbitration agreement.  (See e.g., Jarboe v. Hanlees Auto Group (2020) 53 Cal.App.5th 539, 549 [when the equitable estoppel doctrine applies “a nonsignatory is allowed to enforce an arbitration clause because the claims against the nonsignatory are dependent on, or inextricably intertwined with, the contractual obligations of the agreement containing the arbitration clause”]; Goldman v. KPMG LLP (2009) 173 Cal.App.4th 209, 229-230.)

Defendant FCA is also entitled to enforce the Arbitration Agreement as third-party beneficiary to the Sales Contract.  (See Epitech, Inc. v. Kann (2012) 204 Cal.App.4th 1365, 1371; see also Ronay Family Limited Partnership v. Tweed (2013) 216 Cal.App.4th 830, 836.)  A third party is entitled to enforce a contract where: (1) it benefits from the contract, (2) a motivating purpose of the contracting parties was to provide a benefit to the third party, and (3) permitting the third party to enforce the contract is consistent with the objectives of the contract and reasonable expectations of the parties.  (Goonewardene v. ADP, I LC (2019) 6 Cal.5th 817, 830.) 

Here, the Arbitration Agreement specifically applies to “[a]ny claim or dispute, whether in contract, tort, statute or otherwise . . . between [Plaintiff] and [Seller-Creditor] or [Seller-Creditor’s] employees, agents, successors, or assigns, which arises out of or relates to . . . [Plaintiff’s] purchase [of the Subject Vehicle][,] [the] condition of [the Subject] Vehicle . . . [,] or any resulting transaction or relationship (including any such relationship with third parties who did not sign this contract) . . ..”  (Decl. of Stock, Exh. A at pg. 5, emphasis added.)  Defendant FCA did not submit that it is embraced in this language as one of Seller-Creditor’s “assigns” or otherwise for the Arbitration Agreement to explicitly apply to claims between Plaintiff and Defendant FCA.  However, Defendant FCA is an intended third-party beneficiary as the Arbitration Agreement’s expressly states that it governs claims arising out of “resulting relationships or transactions . . . with third parties who do not sign this contract.”  This language contemplates Defendant FCA’s “resulting relationship,” which is based on the Subject Vehicle’s purchase and condition as well as alleged agency/warranty relationships between Defendant FCA and Seller-Creditor.  Given the Arbitration Agreement explicitly embraces the types of claims Plaintiff asserts against Defendants by applying to claims resulting from relationships arising from the RISC with third parties who did not sign this contract, permitting such a third-party to enforce the Arbitration Agreement is consistent with the objectives of the contract and the parties’ reasonable expectations.  The Court finds Defendant FCA is entitled to enforce arbitration as a third-party beneficiary to the RISC. 

Based on the foregoing, Defendant FCA proved the existence of a valid Arbitration Agreement between Seller-Creditor and Plaintiff that is enforceable by Defendant FCA. 

B. Covered Claims

Plaintiff’s claims relate to the condition of the Subject Vehicle, and the Arbitration Agreement specifically contemplates claims relating to the “condition” of the Subject Vehicle.  As discussed above, Plaintiff does not dispute she signed the RISC, which specifically applies to claims arising out of the condition of the Subject Vehicle. In addition, the RISC underlies Plaintiff’s standing to bring the instant action as well as her right to assert a cause of action for breach of warranties and any claim for remedies. 

In its moving papers Defendant FCA suggests that the entire matter should be sent to arbitration, including the dealership who has not answered.  (See Motion, pgs. 6-88.)  Plaintiff does not address the dealership defendant in its opposition.  Defendant Premier is alleged to have repaired the Subject Vehicle and, like Defendant FCA, did not sign the RISC.  (See Decl. of Stock, Exh. A.)  In Felisilda, the defendant dealership moved to compel all of the plaintiffs’ claims to arbitration, including those pertaining to third-party non-signatory Defendant FCA.  (Felisilda, 53 Cal.App.5th at pg. 490.)  The Felisilda Court granted the defendant dealership’s motion and ordered the entire matter to arbitration, concluding that the plaintiffs’ claims “constituted a resulting transaction or relationship” relating to the “purchase or condition of the vehicle” as discussed in the arbitration provision that was “so intertwined with plaintiffs’ claim” against the defendant dealership.  (Id. at pg. 491, emphasis added.) 

Here, like Felisilda, which involves an identical Arbitration Agreement, Plaintiff’s third cause of action against non-moving Defendant Premier for negligent repairs in servicing the Subject Vehicle must also be compelled to arbitration because Plaintiff’s Complaint alleges: “[t]hese causes of action arise out of the warranty obligations of FCA . . . in connection with a motor vehicle for which FCA . . .  issued a written warranty;” “defects and nonconformities to warranties manifest themselves within the applicable express warranty period, including but not limited to electrical, engine and transmission;” “Defendant was unable to conform the Subject Vehicle to the applicable express warranty period after a reasonable number of repair attempts;” non-moving “Defendant [Premier] owed a duty to Plaintiff to use ordinary care and skill in storage, preparation and repair of the Subject Vehicle in accordance with industry standards;” and “Defendant [Premier] breached its duty to Plaintiff to use ordinary care and skill by failing to properly store, prepare and repair of the Subject Vehicle in accordance with industry standards.”  (Complaint ¶¶5, 16, 19, 40, 42, 43.)  Because Plaintiff’s Song-Beverly causes of action pertain to the purchase and condition of the Subject Vehicle, including its condition during repair, all alleged causes of action are “so intertwined,” and are contemplated by the Arbitration Agreement’s language involving claims against third parties that relate to the vehicle’s condition.  (Decl. of Stock, Exh. A at pg. 5; see Felisilda, 53 Cal.App.5th at pg. 498.)  As such, Plaintiff’s claims against Defendant FCA and non-moving Defendant Premier must be resolved through arbitration.

Based on the foregoing, Defendant FCA met its burden of establishing the Arbitration Agreement covers all causes of action asserted in Plaintiff’s complaint.

C. Conclusion

          Defendant FCA’s motion to compel arbitration is granted.  The case is stayed pending arbitration. The Court sets a non-appearance case review for January 10, 2024.  The parties are directed to submit a joint statement five court days in advance, apprising the Court of the status of the arbitration.

Dated:  January _____, 2023

Hon. Monica Bachner

Judge of the Superior Court