Judge: Robert B. Broadbelt, Case: 19STCV46989, Date: 2023-11-21 Tentative Ruling

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Case Number: 19STCV46989    Hearing Date: November 21, 2023    Dept: 53

Superior Court of California

County of Los Angeles – Central District

Department 53

MOVING PARTIES:             Plaintiffs Adela Sanchez and Livia Larios

RESPONDING PARTY:       Defendant Kia America, Inc.

Motion for Reconsideration

The court considered the moving, opposition, and reply papers filed in connection with this motion.

REQUEST FOR JUDICIAL NOTICE

The court denies plaintiffs Adela Sanchez and Livia Larios’s request for judicial notice, filed on November 14, 2023, as an improper attempt to introduce new evidence in reply.  (Jay v. Mahaffey (2013) 218 Cal.App.4th 1522, 1537 [“new evidence is not permitted with reply papers”].)

DISCUSSION

Plaintiffs Adela Sanchez and Livia Larios (“Plaintiffs”) move the court for an order reconsidering the court’s February 25, 2022 order granting the motion to compel arbitration filed by defendant Kia Motors America, Inc. (“Defendant”).

“If a court at any time determines that there has been a change of law that warrants it to reconsider a prior order it entered, it may do so on its own motion and enter a different order.”  (Code Civ. Proc., §¿1008, subd. (c).)  “An appellate decision published during an action’s pendency may be a change of law under section 1008, subdivision (c), and requires a trial court to reconsider its earlier ruling if the decision materially changed the law.”  (State of California v. Superior Court (Flynn) (2016) 4 Cal.App.5th 94, 100.)  “Even without a change of law, a trial court has the inherent power to reconsider its prior rulings on its own motion at any time before entry of judgment.”  (Ibid.)  “In addition, the court may consider a number of factors in determining whether to exercise its discretion, including the importance of the change of law, the timing of the motion, and the circumstances of the case.”  (Farmers Ins. Exchange v. Superior Court (2013) 218 Cal.App.4th 96, 107.)  

First, Defendant argues that Plaintiffs’ motion is untimely because it was not filed within 10 days of service of the notice of entry of the court’s February 25, 2022 order.  The court disagrees.  While motions for reconsideration pursuant to Code of Civil Procedure section 1008, subdivision (a) must be made within 10 days after service upon the moving party of written notice of entry of the subject order, Plaintiffs have moved for reconsideration under section 1008, subdivision (c), which does not have the same 10-day filing requirement.  (Code Civ. Proc., § 1008, subd. (c); Flynn, supra, 4 Cal.App.5th at p. 100 [a change of law “‘is always an appropriate basis, up until a final judgment is entered, for changing an interim order’”] [emphasis added].)  Thus, the court finds that Plaintiffs’ motion is not untimely.  (Ibid.)

Second, Defendant contends that the court does not have jurisdiction to hear Plaintiffs’ motion because, once the court ordered the parties to submit to arbitration, the court retained jurisdiction only to make certain orders (e.g., to appoint an arbitrator, grant provisional remedies, and confirm, correct, or vacate arbitration awards).  The court disagrees.  “While it is correct as a general matter that the granting of a stay under Code of Civil Procedure section 1281.4 places the proceedings before the trial court in ‘the twilight zone of abatement’ [citation], such a stay does not effect the ‘ouster of the judicial power vested in the trial court of this state by our Constitution’ [citation].  Because contractual arbitration ‘dr[aws] its vitality from the contract’ [citation], a trial court has inherent power to revisit the foundational ‘question of whether the parties are bound by a particular arbitration agreement’ [citation], just as it may on its own motion revise any other interim ruling in the action pending before it [citation].”  (Pinela v. Neiman Marcus Group, Inc. (2015) 238 Cal.App.4th 227, 238 [internal citations omitted].)  Thus, the court finds that it has the jurisdiction to hear Plaintiffs’ motion.  (Ibid.)

Third, the court finds that there has been a material change in law regarding the enforcement of arbitration agreements by nonsignatory defendants.

Since the court issued its order granting Defendant’s motion to compel arbitration, numerous appellate cases have since disagreed with and rejected Felisilda v. FCA US LLC (2020) 53 Cal.App.5th 486 (“Felisilda”), on which the court relied in granting Defendant’s motion on February 25, 2022.  (Feb. 25, 2022 Order, pp. 5:17-6:5.)

In Ford Motor Warranty Cases (2023) 89 Cal.App.5th 1324, 1334-1335, review granted July 19, 2023, S279969, the Court of Appeal expressly disagreed with and declined to follow Felisilda, concluding that equitable estoppel did not apply since the plaintiffs’ claims were based on the manufacturer defendant’s statutory obligations, and not the underlying sale contracts.  Thereafter, in Montemayor v. Ford Motor Co. (2023) 92 Cal.App.5th 958, 961, review granted September 20, 2023, S281237,  the Court of Appeal also disagreed with Felisilda and concluded that the nonsignatory defendant could not enforce the arbitration provision in the underlying sales contract because the plaintiffs’ claims were founded on the manufacturer’s express warranty, and not any obligation imposed by the underlying sales contract.  Similarly, in Kieler v. Superior Court of Placer County (2023) 94 Cal.App.5th 614, 616, 621, review granted October 25, 2023, S281937, the Court of Appeal joined the other decisions disagreeing with Felisilda, again concluding that equitable estoppel was inapplicable.   

The court finds that these cases demonstrate that there has been a material change in the law because the weight of authority now disagrees with the reasoning set forth in Felisilda and supports Plaintiffs’ position that Defendant cannot enforce the arbitration agreement at issue here pursuant to the doctrine of equitable estoppel.  The court also finds that other factors warrant reconsideration of the court’s order, including the importance of this change of law and Plaintiffs’ promptness in filing this motion on June 21, 2023.  (Farmers Ins. Exchange, supra, 218 Cal.App.4th at p. 107.)  The court therefore exercises its discretion to grant Plaintiffs’ motion for reconsideration.  (Code Civ. Proc., § 1008, subd. (c).)

Fourth, the court orders that its February 25, 2022 order granting Defendant’s motion to compel arbitration and stay proceedings is vacated.

The court finds that the authorities rejecting Felisilda are better reasoned and elects to follow the reasoning set forth therein.  (Auto Equity Sales, Inc. v. Superior Court of Santa Clara County (1962) 57 Cal.2d 450, 456 [when appellate decisions are in conflict, “the court exercising inferior jurisdiction can and must make a choice between the conflicting decisions”].)  Thus, the court finds that Defendant cannot enforce the underlying arbitration agreement, as set forth in the Purchase Agreement entered into by and between plaintiff Adela Sanchez, on the one hand, and Kia of Downtown, on the other hand, pursuant to the doctrine of equitable estoppel.  (Balladares Decl., Ex. A [Purchase Agreement]; Def. Mot. to Compel Arbitration, filed January 28, 2021, p. 2:14-21; Ford Motor Warranty Cases, supra, 89 Cal.App.5th at pp. 1334-1335, rev. granted [the language encompassing claims with third party nonsignatories is a “delineation of the subject matter of claims the purchasers and dealers agreed to arbitrate” and does not bind purchaser-plaintiffs “to arbitrate with the universe of unnamed third parties”] [emphasis in original].)  The court also finds that Defendant cannot enforce the arbitration agreement as a third-party beneficiary.  (Id. at p. 1339 [language encompassing claims with third party nonsignatories “concerns what may be arbitrated, not who may arbitrate”] [emphasis in original].)  The court therefore finds that Defendant’s motion to compel arbitration should be denied.

ORDER

The court grants plaintiffs Adela Sanchez and Livia Larios’s motion for reconsideration.

The court orders that the February 25, 2022 order granting defendant Kia Motors America, Inc.’s motion to compel arbitration is vacated.

The court issues a new order denying defendant Kia Motors America, Inc.’s motion to compel arbitration.

The court orders that the stay of action issued as part of the February 25, 2022 order is lifted. 

The court orders plaintiffs Adela Sanchez and Livia Larios to give notice of this ruling.

IT IS SO ORDERED.

DATED:  November 21, 2023

_____________________________

Robert B. Broadbelt III

Judge of the Superior Court