Judge Robert S. Draper, Case 22STCV39278 2023-04-07 Tentative Ruling

Defendant Nissan North America, Inc.’s Motion to Compel Arbitration is DENIED.

This is an action brought under the Song-Beverly Consumer Warranty Act (“SBA”). The Complaint alleges as follows.

Plaintiffs Ariadne Acosta and Sonia Acosta (“Plaintiffs”) purchased a new 2019 Nissan Sentra (the “Subject Vehicle”) manufactured by defendant Nissan North America (“Nissan”). (Compl. ¶ 5.) The Subject Vehicle was purchased with express and implied warranties. (Compl. ¶ 7.) Plaintiffs have delivered the Subject Vehicle to Nissan’s authorized repair facility four times, but Nissan has been unable to conform the vehicle to the applicable warranties. (Compl. ¶¶ 10, 13.)

On December 19, 2023, Plaintiffs filed the Complaint asserting two causes of action:

Nissan moves to compel arbitration pursuant to an arbitration provision (“Arbitration Agreement”) in the Retail Installment Sales Contract (the “Sales Contract”) entered into between Plaintiffs and the dealership where they purchased the Subject Vehicle, non-party Cerritos Nissan (the “Dealership”.)

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. (Mejia Decl., Ex. D.)

Nissan contends that Nissan may compel arbitration as a non-party to the Sales Contract under the doctrine of equitable estoppel, or as a third-party beneficiary. Nissan cites Felisilda v. FCA US LLC (2020) 53 Cal.App.5^th 486 to support this contention.

In Felisilda, plaintiff purchased a vehicle from defendant dealership. After the car broke down during the warranty period, plaintiff brought a claim under the SBA against defendant dealership and defendant manufacturer. Relying on an arbitration provision in the sales contract that was identical to the instant Arbitration Agreement, defendant dealership moved to compel arbitration; defendant manufacturer filed a notice of non-opposition.

The trial court granted defendants’ motion to compel arbitration. Thereafter, plaintiff dismissed defendant dealership. After the arbitrator found in defendant manufacturer’s favor, plaintiff appealed.

On appeal, plaintiff argued that the trial court lacked jurisdiction to order plaintiffs to arbitrate their claim against defendant manufacturer because defendant manufacturer was a non-signatory to the sales contract.

The Felisilda Court affirmed, holding that defendant manufacturer could compel arbitration pursuant to the doctrine of equitable estoppel. The Court found that as plaintiff’s claim against defendant manufacturer related directly to the condition of the vehicle, and “[b]ecause [plaintiff] expressly agreed to arbitrate the 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 their claim against [defendant manufacturer].” (Felisilda at p. 497.)

While Nissan’s argument is compelling, in the recently decided Ford Motor Warranty Cases, No. B312261, 2023 WL 2768484 (Cal. Ct. App. Apr. 4, 2023)[1], the Second District of the Court of Appeal explicitly declined to follow Felisilda, holding that “manufacturer vehicle warranties that accompany the sale of motor vehicles without regard to the terms of the sale contract between the purchaser and the dealer are independent of the sale contract.” (Ford Motor Warranty Cases at p. 4.)

Defendant manufacturer in the Ford Motor Warranty Cases argued that arbitration could be compelled pursuant to a sales contract identical to the instant Sales Contract under the doctrine of equitable estoppel, or as a third-party beneficiary.

In rejecting defendant manufacturer’s equitable estoppel argument, the Court held that as California law does not treat manufacturer warranties imposed outside the four corners of a retail sales contract as part of the sale contract, “Plaintiff’s claims in no way rely on the sale contracts. Equitable estoppel does not apply.” (Id. at p. 7.)

In rejecting defendant manufacturer’s third-party beneficiary theory, the Court held that “allowing [defendant manufacturer] to enforce the arbitration provision as a third party beneficiary would be inconsistent with the reasonable expectations of the contracting parties where they twice specifically vested the right of enforcement in the purchaser and the dealer only.” (Id. at p. 8.)

As the Ford Motor Warranty Cases was decided in the Second Appellate District, it is binding on this Court. And, as the Ford Motor Warranty Cases Court considered arguments identical to those in front of this Court, based on an Arbitration Agreement identical to that in front of this Court, the decision is on-point and mandates that Nissan cannot compel Plaintiffs to arbitrate pursuant to a Sales Contract to which it is not a party.

[1] The Court recognizes that the Ford Motor Warranty Cases decision was entered after the briefing on the instant matter. Should Nissan wish to file supplemental briefing regarding this matter, the Court will consider that request at hearing.

ARIADNE ACOSTA, et al., Plaintiffs, vs. NISSAN NORTH AMERICA, INC., et al., Defendants.	Case No.:	22STCV39278
	Hearing Date:	April 7, 2023

	[TENTATIVE] RULING RE: DEFENDANT NISSAN NORTH AMERICA, INC.’S MOTION TO COMPEL ARBITRATION.