Judge: Robert S. Draper, Case: 22STCV09596, Date: 2022-08-12 Tentative Ruling

Case Number: 22STCV09596    Hearing Date: August 12, 2022    Dept: 78

Superior Court of California 

County of Los Angeles 

Department 78 

Defendant Hyundai Motor America’s Motion to Compel Arbitration is GRANTED. All future proceedings are stayed pending arbitration.

FACTUAL BACKGROUND 

This is an action brought under the Song-Beverly Consumer Warranty Act. The Complaint alleges as follows.

Plaintiff Juan M. Gallardo Reyes (“Plaintiff”) purchased a vehicle (the “Subject Vehicle”) manufactured by Defendant Hyundai Motor America (“Defendant”). (Compl. ¶ 2). The Subject Vehicle was new and had significant nonconformities during the factory warranty period. (Compl. ¶ 3.) Despite repeated attempts to repair the Subject Vehicle, Defendant has not been able to remedy the defects. (Compl. ¶ 5.)

PROCEDURAL HISTORY

On March 18, 2022, Plaintiff filed the Complaint asserting one cause of action for Violation of the Song-Beverly Consumer Warranty Act.

On June 24, 2022, Defendant filed the instant Motion to Compel Arbitration.

No Opposition has been filed.

DISCUSSION 

I.               MOTION TO COMPEL ARBITRATION

Defendant moves the Court to compel arbitration.

A.   Procedure

Procedurally, a motion to compel arbitration or stay proceedings must state verbatim the provisions providing for arbitration or must have a copy of them attached. (Cal. Rules of Court, Rule 3.1330.) Defendant provides a copy of the Retail Installment Sale Contract (the “Contract”) which contains an Arbitration Provision (the “Provision”). (Tahsildoost Decl., Ex. 2). A party seeking to compel arbitration must “plead and prove a prior demand for arbitration under the parties’ arbitration agreement and a refusal to arbitrate under the agreement.” (Mansouri v. Superior Court (2010) 181 Cal.App.4th 633, 640-41.) Defendant states that on April 21, 2022, Defendant’s Counsel asked Plaintiff to stipulate to arbitration, and Plaintiff refused. (Tahsildoost Decl. ¶ 3.)

B.   Generally

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, California Code of Civil Procedure 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 [citations omitted]; Code Civ. Proc. § 1281.2.)

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 party seeking arbitration has the “burden of proving the existence of a valid arbitration agreement by a preponderance of the evidence, while a party opposing the petition bears the burden of proving by a preponderance of the evidence any fact necessary to its defense.” (Ruiz v. Moss Bros. Auto Group, Inc. (2014) 232 Cal.App.4th 836, 842.) The trial court “sits as the trier of fact, weighing all the affidavits, declarations, and other documentary evidence, and any oral testimony the court may receive at its discretion, to reach a final determination.” (Id.) General principles of contract law govern whether parties have entered a binding agreement to arbitrate. (Pinnacle Museum Tower Assn. v. Pinnacle Market Development (US), LLC (2012) 55 Cal.4th 223, 236; see also Winter v. Window Fashions Professions, Inc. (2008) 166 Cal.App.4th 943, 947.) 

C.  Existence of a Valid Agreement

Here, Defendant attaches a copy of the Contract containing the Provision. The Provision is on the final page of the five-page contract and is labeled, in capitalized and bolded font, “ARBITRATION PROVISION – PLEASE REVIEW – IMPORTANT – AFFECTS YOUR LEGAL RIGHTS.” (Tahsildoost Decl., Ex. 2 at p. 5.)

Plaintiff signed and dated the Contract on the bottom of the page containing the Provision.

By attaching the signed and dated Contract to its filing, Defendant has shown by a preponderance of the evidence the existence of a valid arbitration agreement. As Plaintiff has not filed an Opposition, he does not contest this validity.

D.  Applicability of Agreement as to Instant Claims

The Provision states, in relevant part:

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 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 a court action.

While the Provision clearly applies to the Subject Vehicle, the central issue here, as Defendant notes in its Motion, is that the Contract is between Plaintiff and the dealership from whom Plaintiff purchased the Subject Vehicle. As such, Defendant is a non-signatory to the Arbitration Provision.

When a petitioner seeks to compel arbitration as to a non-signatory to the arbitration agreement, there are six theories which may support the petition: “‘(a) incorporation by reference; (b) assumption; (c) agency; (d) veil-piercing or alter ego; (e) estoppel; and (f) third-party beneficiary . . . . [Citations.]” (Benaroya v. Willis (2018) 23 Cal.App.5th 462, 469.) 

Here, Plaintiff argues the estoppel and third-party beneficiary exceptions apply.

The Court finds that Felisilda v. FCA US LLC (2020) 53 Cal.App.5^th 486, is on point here. In Felisilda, plaintiff purchased a used vehicle from a retailer. After the car broke down during the warranty period, plaintiff filed suit under the Song-Beverly Act against both the retailer and the manufacturer. The retailer filed a motion to compel deposition pursuant to an arbitration agreement substantially similar to the instant Provision. The trial court granted the motion to compel arbitration as to both defendants, though the manufacturer was not a signatory to the arbitration agreement. Plaintiff appealed arguing that the trial court erred as the manufacturer was  anon-signatory.

The Felisilda Court affirmed, finding that plaintiff’s “claim against [manufacturer] directly relates to the condition of the vehicle that they allege to have violated warranties they received as a consequence of the sales contract.” (Felisilda, 53 Cal.App.5^th at 498.) Additionally, the court noted that because plaintiff “expressly agreed to arbitrate claims arising out of the condition of the vehicle – even against third party nonsignatories to the sales contract – [plaintiff is] estopped from refusing to arbitrate” the claim. (Ibid.)

As in Felisilda, Plaintiff agreed to arbitrate any claim arising from the sale of the subject vehicle. (Tahsildoost Decl., Ex. 2 at p. 5.) As in Felisilda, that provision explicitly applies to non-signatories. Therefore, as in Felisilda, Defendant falls under the estoppel exception for non-signatories to an arbitration agreement.

Accordingly, Defendant’s Motion to Compel Arbitration is GRANTED. All further proceedings are stayed pending arbitration.

DATED: August 11, 2022 

____________________________

Hon. Robert S. Draper 

Judge of the Superior Court