Judge Olivia Rosales, Case 22NWCV00716 2022-12-27 Tentative Ruling

Judge: Olivia Rosales, Case: 22NWCV00716, Date: 2022-12-27 Tentative Ruling

Case Number: 22NWCV00716 Hearing Date: December 27, 2022 Dept: SEC

ANGELES v. HYUNDAI MOTOR AMERICA

CASE NO.: 22NWCV00716

HEARING: 12/27/22 @ 10:30 AM

TENTATIVE ORDER

Defendant Hyundai Motor America’s motion to compel binding arbitration is GRANTED. The case is STAYED until conclusion of the arbitration.

Moving Party to give NOTICE.

Defendant Hyundai Motor America (“Hyundai”) moves to compel arbitration pursuant to CCP § 1281.2.

Except for specifically enumerated exceptions, the court must order the petitioner and respondent to arbitrate a controversy if the court finds that a written agreement to arbitrate the controversy exists. (See CCP § 1281.2.) “In California, [g]eneral principles of contract law determine whether the parties have entered a binding agreement to arbitrate.” (Craig v. Brown & Root, Inc. (2000) 84 Cal.App.4th 416, 420.) “A petition to compel arbitration or stay proceedings pursuant to CCP §§ 1281.1 and 1281.4 must state, in addition to other required allegations, the provisions of the written agreement and the paragraph that provides for arbitration. The provisions must be stated verbatim or a copy must be physically or electronically attached to the petition and incorporated by reference.” (CRC Rule 3.1330.)

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. 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. (Engalia v. Permanente Medical Group, Inc. (1997) 15 Cal.4th 951.)

This is a lemon law action. Plaintiff Tiffany Angeles alleges that Hyundai is the vehicle manufacturer. (Complaint ¶ 2.) The Arbitration Agreement at issue was signed by Plaintiff and the selling dealership — Win Hyundai Carson (“Win Hyundai”). (Ameripour Decl., Ex. 2, Retail Sales Installment Contract (“RISC”).) The Agreement states in pertinent part, “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 (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 court actions.” (Id.)

It is undisputed that Hyundai is not a signatory to the RISC containing the Agreement.

As a general rule, only a party to an arbitration agreement may enforce the agreement. (Thomas v. Westlake (2012) 204 Cal.App.4th 605, 613.) However, the equitable estoppel exception may enable a non-signatory party such as the vehicle manufacturer to invoke an agreement to arbitrate. (JSM Tuscany, LLC v. Sup. Ct. (2011) 193 Cal.App.4th 1222, 1236-37.) A plaintiff may be equitably estopped from repudiating the arbitration clause contained in a contract where he or she relies on contract terms in acclaim against a non-signatory defendant, and when the causes of action against the non-signatory are “intimately founded in and intertwined” with the underlying contract obligations that are subject to the arbitration clause. (Boucher v. Alliance Title Co., Inc. (2005) 127 Cal.App.4th 262, 271.) Applying these principles, the Third District recently affirmed a trial court’s granting of an order compelling SBA plaintiffs to arbitrate their claim against a manufacturer even though the manufacturer was not a party or signatory to the sales contract that contained the arbitration provision. (Felisilda v. FCA US LLC (2020) 53 Cal.App.5th 486, 493.) In Felisilda, the sales contract provided that “[a]ny claim or dispute, whether in contract, tort, statute or otherwise ... between you and us ... which arises out of or relates to ... [the] condition of this vehicle ... shall ... be resolved by neutral, binding arbitration and not by a court action.” (Italics added.) There was no dispute that the Felisildas’ refund-or-replace claim against the manufacturer under the SBA related directly to the condition of the vehicle, because the suit alleged the existence of nonconformities covered by the express warranty that the selling dealer did not remedy after a reasonable number of attempts to repair.

Relying on Felisilda, Hyundai argues that Plaintiff’s claims arise out the purchase of the subject vehicle that form the basis of the RISC, and thus, that it may enforce the Arbitration Agreement in the RISC under the doctrine of equitable estoppel.

In Opposition, Plaintiff argues that Hyundai should not be allowed to enforce the Arbitration Agreement because the arbitration clause is void and unenforceable since it waives Plaintiff’s right to select a neutral arbitrator.

However, The FAA and CAA both require that arbitrator selection clauses be enforced according to their terms. (9 U.S.C. § 5 - “If in the agreement provision be made for a method of naming or appointing an arbitrator ... such method shall be followed.”; CCP § 1281.6 - “If the arbitration agreement provides a method of appointing an arbitrator, that method shall be followed.”) Here, RISC sets the method for appointing the arbitral forum, the arbitrator, and the applicable rules. The arbitration provision in the RISC states: “You may choose the American Arbitration Association, 1633 Broadway, 10th Floor, New York, New York 10019 (www.adr.org), or any other organization to conduct the arbitration subject to our approval.” The arbitrator selection process utilized by AAA is neutral. The Arbitration Provision provides that “Arbitrators shall be attorneys or retired judges and shall be selected pursuant to the applicable rules.”

Furthermore, the Arbitration Agreement here is identical to that in Felisilda. “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.” (Felisilda v. FCA US LLC (2020) 53 Cal.App.5th 486, 497.) A review of the Complaint at issue confirms that Plaintiff’s claims directly relate to the condition of the subject vehicle and the contention that Defendant violated warranties she received as a consequence of the RISC.

Plaintiff also relies on Ngo v. BMW of North America, LLC (9^th Cir. 2022) 23 F.4th 942, wherein the Ninth Circuit opined, as to the issue of equitable estoppel, that it “ma[de] a critical difference that the Felisildas, unlike Ngo, sued the dealership in addition to the manufacturer” and noted that the signatory dealership in Felisilda was the party that moved to compel arbitration. However, “the decision of federal district and circuit courts, although entitled to great weight, are not binding on state courts even as to issues of federal law.” (Alan v. Sup. Ct. (2003) 111 Cal.App.4th 217, 229.)

This matter involves an identical arbitration provision as the arbitration provision in the seminal Court of Appeal case of Felisilda v. FCA US LLC (2020) 53 Cal.App.5th 486.

The Court determines that Hyundai may compel arbitration on the basis of equitable estoppel.

The Motion is GRANTED.