Judge: Ronald F. Frank, Case: 23TRCV02233, Date: 2024-04-04 Tentative Ruling
Case Number: 23TRCV02233 Hearing Date: April 4, 2024 Dept: 8
Tentative Ruling¿
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HEARING DATE: April 4, 2024
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CASE NUMBER: 23TRCV02233
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CASE NAME: Setareh Nazarian;
Jabbar Nazarian v. American Honda Motor Co., Inc.
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MOVING PARTY: (1) Defendant,
American Honda Motor Co., Inc.
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RESPONDING PARTY: (1) Plaintiff, Setareh Nazarian and Jabbar Nazarian
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TRIAL DATE: Not
Set.
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MOTION:¿ (1) Motion to Compel Arbitration
(2) CMC
Tentative Rulings: (1) GRANTED; civil case is stayed pending
further order of the Court
(2)
CMC is mooted but the Court will set an arbitration status conference for
February 6, 2025, at 8:30 a.m.
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I. BACKGROUND¿¿
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A. Factual¿¿
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On September 21, 2023,
Plaintiffs, Daniel Wei and Natalie Wei (collectively “Plaintiffs”) filed a
Complaint against Defendants, American Honda Motor Co., Inc, and DOES 1 through
10. The Complaint alleges causes of action for: ” (1) Violation of Civil Code §
1793.2(d); (2) Violation of Civil Code § 1793.2(b); (3) Violation of Civil Code
§ 1793.2(a)(3); and (4) Breach of the Implied Warranty of Merchantability –
Civil Code §§ 1791.1, 1794; 1795.5.
The Complaint is based on a
January 25, 2021 lease by Plaintiffs of a 2020 Honda Civic with corresponding
identification number VIN: 2HGFC2F60LH525084 (hereafter
"Vehicle") from Scott Robinson Honda. Plaintiffs further note that
the causes of action contained in his complaint arise out of warranty and
repair obligations of Honda. (Complaint, ¶ 10.) Plaintiffs contend that the
defects and nonconformities to warranty manifested themselves within the
applicable express warranty period, and include, but are not limited to:
climate control defects, electrical defects, infotainment defects, body
defects, and other defects and nonconformities. (Complaint, ¶ 11.)
Defendant, American Honda Motor Co., Inc. (“AHM”) now
files a Motion to Compel Binding Arbitration.
B. Procedural¿¿
¿
On March 8, 2024, AHM filed a Motion to Compel
Arbitration. On March 21, 2024, Plaintiffs filed an opposition. To date, no
opposition has been filed.
II. REQUEST FOR JUDICIAL
NOTICE
With its moving papers, AHM requested this Court take
judicial notice of the following documents:
1.
Complaint for Violation of Statutory
Obligations, filed in the Los Angeles Superior Court by Plaintiffs SETAREH
NAZARIAN AND JABBAR NAZARIAN on July 11, 2023, in the matter of Setareh
Nazarian And Jabbar Nazarian v. American Honda Motor Company, Inc. (Case No.
23TRCV02233) (Exhibit 1.)
2.
Notice of Entry of Dismissal and Proof of
Service, filed in Sacramento Superior Court by plaintiffs Dina C. Felisilda and
Pastor O. Felisilda on February 11, 2016, in the matter of Dina C. Felisilda,
et al. v. FCA US LLC, et al. (Case No. 34-2015-00183668).(Exhibit 2.)
3.
Defendant American Honda Motor Co., Inc.’s
Answer to Complaint, filed in the Los Angeles Superior Court on August 14,
2023, in the matter of Setareh Nazarian And Jabbar Nazarian v. American Honda
Motor Company, Inc. (Case No. 23TRCV02233). (Exhibit 3.)
The Court GRANTS this request and
takes judicial notice of the above documents.
With
the opposition papers, Plaintiffs request this Court take judicial notice of
the following documents:
1. Ford
Motor Warranty Cases (Cal. Ct. App. Apr. 4, 2023) 89 Cal.App.5th 1324
(“Ochoa v. Ford”), review granted, (Exhibit A.)
2. Rosanna
Montemayor et al. v. Ford Motor Company, 92 Cal.App.5th 958 (Cal. Ct. App.
June 26, 2023) (“Montemayor”), review granted. (Exhibit B.)
3. Kielar
v. The Superior Court of Placer County, 94 Cal.App. 5th 614 (Cal. Ct. App.
August 16, 2023) (“Kielar”), review granted, (Exhibit C.)
4. California
Court of Appeal, Third Appellate District’s August 28, 2023 Response to
Petition for Writ of Mandate in Campos et al. v. The Superior Court of Butte
County, No. C098848. (Exhibit D.)
5. California
Court of Appeal, Third Appellate District’s August 28, 2023 Response to
Petition for Writ of Mandate in Ortiz et al. v. The Superior Court of
Sacramento County, No. C099135. (Exhibit E.)
6. Yeh
v. Superior Ct. of Contra Costa Cnty., 95 Cal.App.5th 264 (Cal. Ct. App.
Sept. 6, 2023) (“Yeh”), review granted. (Exhibit F.)
The Court also GRANTS this request and takes judicial notice of
the above documents.
III. ANALYSIS
A.
Legal Standard
The purpose
of the Federal Arbitration Act (“FAA”) is “to move the parties in an arbitrable
dispute out of court and into arbitration as quickly and easily as possible.”¿
(Moses H. Cone Memorial Hosp. v. Mercury Constr. Corp. (1983) 460 U.S.
1, 23.)¿ California Code of Civil Procedure, Section 1281 provides that
“[a] written agreement to submit to arbitration an existing controversy or a
controversy thereafter arising is valid, enforceable, and irrevocable, save
upon such grounds as exist for the revocation of any contract.”¿ “California
law, like federal law, favors enforcement of valid arbitration agreements.”¿ (Armendariz
v. Foundation Health Psychcare Services,
Inc. (2000) 24 Cal.4th 83, 97.)¿ “On petition of a party to an arbitration
agreement alleging the existence of a written agreement to arbitrate a
controversy and that a party to the agreement refuses to arbitrate that
controversy, the court shall order the petitioner and the respondent to
arbitrate the controversy” unless grounds exist not to compel arbitration.¿
(Code Civ. Proc. § 1281.2.) The Song-Beverly Act also favors
arbitration of Lemon Law disputes with a series of “carrot and stick”
provisions that immunize a warrantors from a species of civil penalty if, like
Defendant Honda, they have a certified lemon arbitration program in place.
Here,
the analysis is somewhat different because AHM is a nonsignatory to the agreement,
although one of its authorized dealers is a signatory to the agreement upon
which AHM’s motion rests, and Plaintiff is a party to that same arbitration
agreement.
B.
Discussion
a. Existence of Arbitration Agreement
Here, the parties agree that there was a written
agreement, the Lease Agreement, that included an arbitration agreement.
However, as noted in Plaintiffs’ opposition, that agreement is between
Plaintiff and Penske Honda Ontario, the dealership. Plaintiffs also note that
they brought this case against Honda based on its breach of its statutory
obligations under the Song-Beverly Act and the express warranty it gave on the
subject vehicle. The portions of the arbitration agreement in the
Lease Agreement state, in pertinent part, as follows:
15. ARBITRATION. The parties
agree that any unresolved disputes shall be submitted to arbitration in
accordance with the Arbitration clause (Section 52). By initialing this
Section, I am confirming that I have read this Section and the Arbitration
clause, including the method of opting out of arbitration. (Id., at p. 3, bold
in original.)
52. ARBITRATION: PLEASE READ THIS ARBITRATION PROVISION
CAREFULLY TO UNDERSTAND YOUR RIGHTS. BY ELECTING ARBITRATION, YOU AGREE THAT
ANY CLAIM THAT YOU MAY HAVE IN THE FUTURE MUST BE RESOLVED THROUGH BINDING
ARBITRATION. YOU WAIVE THE RIGHT TO HAVE YOUR DISPUTE HEARD IN COURT AND WAIVE
THE RIGHT TO BRING CLASS CLAIMS. YOU UNDERSTAND THAT DISCOVERY AND APPEAL
RIGHTS ARE MORE LIMITED IN ARBITRATION
Defendant, AHM, also
notes that the Arbitration Provision then states the following:
Arbitration is a method of resolving
a claim, dispute or controversy without filing a lawsuit. By agreeing to
arbitrate, the right to go to court is waived and instead claims, disputes or
controversies are submitted to binding arbitration. This provision sets forth
the terms and conditions of our agreement…
By signing the Arbitration Consent, YOU
elect to have disputes resolved by arbitration. YOU, HONDA, or
any involved third party may pursue a Claim. “Claim” means any dispute between YOU,
HONDA, or any involved third party relating to your account, this Lease, or
our relationship, including any application, the Vehicle, its performance and
any representations, omissions or warranties.
(Declaration of Jeanette
C. Suarez (“Suarex Decl.”), ¶ 2, Exhibit A, Lease Contract.)
Here, the Court finds that AHM has
met its initial burden in establishing the existence of an arbitration
agreement. Under Cal. Rules of Court, Rule 3.1330, Defendant only needs to
allege the existence of an arbitration agreement and provide the written
agreement or state verbatim the provision that provides for arbitration. (See Condee
v. Longwood Management Corp. (2001) 88 Cal.App.4th 215, 218-19 [“[Cal.
Rules Court, Rule 3.1330] does not require the petitioner to introduce the
agreement into evidence or provide the court with anything more than a copy or
recitation of its terms. Petitioner need only allege the existence of an
agreement and support the allegation as provided in [Cal. Rules Court, Rule,
Rule 3.1330].”].)
Thus, the burden now shifts to
Plaintiffs to establish that an arbitration agreement does not exist, to
demonstrate that the subject arbitration provision cannot be interpreted to
require arbitration of the dispute, or to provide evidence establishing a defense
to the arbitration agreement.
b. Equitable
Estoppel
Here,
AHM first argues that it can enforce the arbitration provision under the
doctrine of Equitable Estoppel. Generally, only parties to a contract
containing an arbitration agreement may enforce that arbitration clause. (Thomas
v. Westlake (2012) 204 Cal.App.4th 605, 613.) There are exceptions to the
general rule. Under one such exception, the doctrine of equitable estoppel, a
nonsignatory defendant may move to enforce an arbitration clause. (JSM
Tuscany, LLC v. Superior Court (2011) 193 Cal.App.4th 1222, 1236.) AHM’s
motion relies on Felisilda and the First District’s reasoning on the
equitable estoppel exception to the non-signatory rule. However, there has been
a recent conflict in the Courts of Appeal in Lemon Law litigation as to the
enforceability of an arbitration agreement by a non-signatory manufacturer to
the dealer’s contract containing the arbitration provision. On April 4, 2023,
the Second District Court of Appeal declined to follow Felisilda in its
decision of Martha Ochoa v. Ford Motor Company (2023) 89 Cal.App.5th
1324. The Court notes that on July 19, 2023, the Supreme Court of California
granted review of Ochoa and instructed that California Rules of Court,
Rule 8.1115(e)(3) applies. However, the Supreme Court clarified that the Second
District’s opinion may be cited to, “not only for its persuasive value, but
also for the limited purpose of establishing the existence of a conflict in
authority that would in turn allow trial courts to exercise discretion under Auto
Equity Sales, Inc. v. Superior Court (1962) 57 Cal.2d 450, 456, to choose
between sides of any such conflict.” This Court is exercising its discretion to
follow Ochoa rather than Felislida as the better-reasoned
appellate decision bearing on the equitable estoppel exception.
AHM
argues that Plaintiffs are bound to arbitrate by equitable estoppel because
their claims are “intimately founded in and intertwined” with the lease
contract because Plaintiff alleges that all causes of action are based on the
performance and warranties of the vehicle he acquired through the lease
contract.
“Inextricable
Intertwined with the Underlying Contract”
As noted above, AHM argues that
Plaintiff is bound by the doctrine of equitable estoppel to arbitrate because
his Song-Beverly claims are intimately founded in and intertwined with the
obligations of the Lease Agreement giving rise to his claims. AHM argues that
Plaintiffs read the arbitration provision containing functionally identical
language as the Felisilda plaintiff’s arbitration provision and
expressly agreed to arbitrate claims arising out of the lease, and/or condition
of the vehicle, including any claims against third party non-signatories. Based
on this, AHM contends that pursuant to the express terms of the lease
agreement, which accounts for third parties such as AHM, Plaintiff’s claims
against it should be resolved through binding arbitration.
To be sure, this case presents facts
akin to Felisilda. For example, the arbitration agreements have similar
language, the plaintiffs causes of action are very similar, and the charging
allegations of the complaints are similar. However, the facts here are also
very similar to those presented in Ochoa. The Ochoa court
disagreed with Felisilda because the Felisilda plaintiffs and the
dealer agreed in their sale contract to arbitrate disputes between them about
the condition of the vehicle but did not expressly or impliedly agree to
arbitrate disputes under the consumer protection statutes governing
manufacturer warranties as distinct from promises or warranties made in the
sales contract with the dealer. Ochoa noted that equitable estoppel
would apply if the plaintiffs had sued FCA based on the terms of the sale. But
that was not the gravamen of the Lemon Law suit in Felisilda, Ochoa,
or here. Like the plaintiffs in Felisilda and in Ochoa, Plaintiff
here predicates the suit on Honda’s claimed breach of its statutory duties and
for breach of the express and implied warranties, not based on plaintiff’s
lease agreement with the dealer.
Here,
AHM argues that Plaintiff signed a contract that bound Plaintiff to arbitration
against third party non-signatories. Such language was also present in the
contracts at issue in Felisilda and Ochoa. The Court in Ochoa
disagreed with the Felisilda court’s interpretation of the sales
contract as broadly calling for arbitration of any claims concerning the
condition of the vehicle “against third party nonsignatories,” and instead
noted that it did not read that language as consent by the purchaser to arbitrate
any or all claims with third-party nonsignatories. Rather, the Ochoa
Court read it as a further delineation of the subject matter of claims the
purchasers and dealers agreed to arbitrate, noting the purchaser(s) agreed to
arbitrate disputes “between” themselves—“you and us”— arising out of or
relating to “relationship[s],” including “relationship[s] with third parties
who [did] not sign th[e] [sale] contract[s],” resulting from the “purchase, or
condition of th[e] vehicle, [or] th[e] [sale] contract.” The Ochoa Court
further noted that the “third-party” language in the arbitration clause means
that if a purchaser asserts a claim against the dealer (or its employees,
agents, successors or assigns) that relates to one of these third-party
transactions (such as electing to buy insurance, theft protection, extended
warranties, and the like), the dealer can elect to arbitrate that claim. The
Second District found that such language says nothing of binding the purchaser
to arbitrate with the universe of unnamed third parties. IF
Plaintiff had sued the individual owners or sales personnel at the leasing
dealership regarding fraud in the inducement of the sale, or refusal to perform
services listed on the Due Bill, or for leasing a vehicle with scratches on the
paint finish (i.e., the condition of the vehicle) that were not visible at the
time of retail delivery, or for failure to obtain a promised insurance binder,
such third-party claims would be arbitrable. But that is not what Plaintiff
here is claiming.
AHM’s warranty, by itself, and
without the inclusion of the definition of “HONDA” including AHM, would not be intertwined
with the leasing agreement. Song-Beverly claims are not intimately founded in
the leasing agreement. AHM and its dealer are separate entities. The warranty
and the leasing agreement are separate legal documents, neither of which refer
to or incorporate each other. Most automotive manufacturers prohibit their
authorized dealers from binding the manufacturer to warranties. Applying Ochoa
to this case, the Arbitration Agreement present in Plaintiffs’ leasing
agreement does not, by itself and without the inclusion of the definition of
“HONDA” including AHM, bind them to arbitrate non-lease agreement issues with AHM.
While a Lemon Law case arguably is related to the “condition” of the vehicle
sold via the Leasing Contract/Financing Agreement, the gravamen of Plaintiffs’
suit here is not as to the condition of the vehicle at the time of sale, but
rather as to subsequent events that manifest only after Plaintiffs drove the
vehicle off the lot, later experienced malfunctions or defect, and
unsuccessfully sought to have those post-sale matters remedied within a
reasonable number of repair attempts.
However, as briefly mentioned above,
and as described in detail below, the Arbitration Agreement includes a
definition of “HONDA” which is defined in the Lease Contract to include AHM. As
such, despite the similarities of Felisilda and Ochoa, this
Arbitration Agreement includes a key difference by including AHM in the very
definition of “HONDA.” In the Court’s
view, that factual difference is most applicable to the third party beneficiary
exception discussed below.
c. Third-Party Beneficiary
AHM
argues that it can compel arbitration as a third-party beneficiary to the
arbitration provision. “ ‘A third party beneficiary is someone who may enforce
a contract because the contract is made expressly for his benefit.’ ” (Jensen
v. U-Haul Co. of California (2017) 18 Cal.App.5th 295, 301, 226 Cal.Rptr.3d
797; see also Civ. Code, § 1559 [“[a] contract, made expressly for the benefit
of a third person, may be enforced by him ....”].) A person “only incidentally
or remotely benefited” from a contract is not a third-party beneficiary. (Lucas
v. Hamm (1961) 56 Cal.2d 583, 590, 15 Cal.Rptr. 821, 364 P.2d 685.) Thus,
“the ‘mere fact that a contract results in benefits to a third party does not
render that party a “third party beneficiary.” (Jensen, at p. 302, 226
Cal.Rptr.3d 797.) Nor does knowledge that the third party may benefit from the
contract suffice. (Goonewardene v. ADP, LLC (2019) 6 Cal.5th 817, 830,
243 Cal.Rptr.3d 299, 434 P.3d 124 (Goonewardene).) Rather, the parties
to the contract must have intended the third party to benefit.
In
order for a third party to show that the contracting parties intended to
benefit it, under the express terms of the contract at issue and any other
relevant circumstances under which the contract was made, “(1) “the third party
would in fact benefit 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 the reasonable expectations of the contracting
parties.” (Ochoa, citing Goonewardene, supra, 6 Cal.5th at
p. 830.) Here, AHM argues that it is a member of the class of persons for whose
benefit the contract was made. The terms of the lease expressly define “HONDA”
to include:
HONDA means Lessor, Dealer,
Honda Lease Trust, American Honda Finance Corporation (AHFC), American Honda
Motor Co., Inc., Honda Finance Exchange, Inc., Acura Financial Services
(AFS), Honda Financial Services (HFS), HVT, Inc., their parents, subsidiaries,
predecessors, successors, assignees, and officers, employees, representatives
and agents. YOU means Lessee and Co-Lessee to this Lease.
(Suarez Decl., ¶ 2, Exhibit A, Least
Contract, p. 6.)
Here,
this Court notes that in circumstances in which the manufacturer is not defined
in the arbitration agreement, and the manufacturer has brough a motion claiming
they are a third party beneficiary because of language similar to: “[a]ny claim
or dispute . . . which arises out of or relates to . . . any resulting
transaction or relationship (including any such relationship with third parties
who do not sign this contract,” this this Court will not find that the
manufacture is manifested as “including any such relationship with third
parties who do not sign this contract.” This is because the Court in of Martha
Ochoa v. Ford Motor Company (2023) 89 Cal.App.5th 1324, noted that that
allowing a 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. The Court also notes the Ninth Circuit
Court of Appeal’s decision of Ngo v. BMW of North America (9th Cir.
2022) 23 F.4th 943. As noted by the Second District, federal authority is not
binding on this court. In Ngo,
the Ninth Circuit Court found that BMW could not enforce the arbitration
provision because the clause, which is identical to the one at issue, was
strictly limited to the dealership and the Plaintiff, but not BMW. (See Ngo,
supra, at p. 948.) As such, BMW was not a party to the agreement, and its
obligations to the Ngo family arose independently of the plaintiff’s agreement
with the dealership. (Id. at 949.) The Second District analyzed Ngo
at length, ultimately reaching the conclusion that the Sales Contract in
Ochoa did not benefit a vehicle manufacturer under Goonewardene for
three fundamental reasons that the Court need not recite here.
However, this contract in this case,
did not merely state a clause like: “[a]ny claim or dispute . . . which arises
out of or relates to . . . any resulting transaction or relationship (including
any such relationship with third parties who do not sign this contract.”
Instead, included in the definition of HONDA, was AHM. As such, this Court
finds that Defendant AHM has shown that although it is a nonsignatory of the
lease agreement, the inclusion of AHM in the arbitration clause would benefit
defendant by allowing these claims to be resolved by arbitration. Further, the
inclusion of AHM as a party who may pursue a claim in arbitration shows that
the parties, or at least the leasing dealer by including AHM as a party to be benefitted
by its inclusion in the scope of intended parties, indeed provide a benefit to
AHM. Lastly, under the arbitration clause AHM would have also been able to
pursue a claim through arbitration. Therefore, despite arguments made in
Plaintiffs’ opposition, this Court finds that all three elements are met, and
the defendant is an expressly intended third party beneficiary. The Court finds that permitting AHM to enforce
the contract is consistent with the objectives of the contract and the
reasonable expectations of the contracting parties, at least the expectations
of those who read the language of the arbitration agreement.
But Plaintiff contends he did not expect
to arbitrate Lemon Law claims and certainly did not expect or intend to
arbitrate against AHM, which was not a signatory to nor party to the
arbitration agreement. That raises the
unconscionability issue, discussed below.
As an aside, the Court notes that Plaintiff did not expect or intend to
have any need to bring a Lemon Law suit, much less expect or intend what forum
any such dispute would be litigated in.
But such is the nature of many terms and conditions of contracts that
parties sign without carefully reading, including such terms as forum selection,
choice of law, and similar “boilerplate” provisions.
C.
Unconscionability
Plaintiffs next argue that in their opposition that
the contract drafted to include AHM is unconscionable. Unconscionability
is a valid defense to a petition to compel arbitration. (Sonic-Calabasas A,
Inc. v. Moreno (2013) 57 Cal.4th 1109, 1143.) State law governs the
“unconscionability” defense. (Doctor’s Assocs., Inc. v. Casarotto (1996)
517 US 681, 687.) The core concern of the unconscionability doctrine is the
“absence of meaningful choice on the part of one of the parties together with
contract terms which are unreasonably favorable to the other party.” (Sonic-Calabasas,
supra, 57 Cal.4th at 1145.) The unconscionability doctrine ensures that
contracts—particularly contracts of adhesion—do not impose terms that have been
variously described as overly harsh, unduly oppressive, so one-sided as to
shock the conscience, or unfairly one-sided. (Id.) Here, Plaintiffs have not identified any
overly harsh or unduly oppressive provisions, other than depriving them of the
court system to resolve their dispute without any other option. The Court finds that such a deprivation,
without much more, is no overly harsh, unduly oppressive, nor shocking of the
conscience.
“The procedural element of unconscionability focuses on
whether the contract is one of adhesion. (Armendariz, supra, 24
Cal.4th at p. 113; Mercuro v. Superior Court, supra, 96
Cal.App.4th at p. 174.) Procedural unconscionability focuses on whether there
is “oppression” arising from an inequality of bargaining power or “surprise”
arising from buried terms in a complex printed form. (Armendariz, supra,
24 Cal.4th at p. 114; Mercuro v. Superior Court, supra, 96 Cal.App.4th
at p. 174.) The substantive element addresses the existence of overly harsh or
one-sided terms. (Little v. Auto Stiegler, Inc. (2003) 29 Cal.4th 1064,
1071 [130 Cal.Rptr.2d 892, 63 P.3d 979]; Armendariz, supra, 24
Cal.4th at p. 114.) An agreement to arbitrate is unenforceable only if both the
procedural and substantive elements are satisfied. (Armendariz, supra,
24 Cal.4th at p. 113; Mercuro v. Superior Court, supra, 96
Cal.App.4th at p. 174.) However, Armendariz held, “[T]he more
substantively oppressive the contract term, the less evidence of procedural
unconscionability is required to come to the conclusion that the term is
unenforceable, and vice versa.” (Armendariz, at p. 114; see also Kinney
v. United HealthCare Services, Inc., supra, 70 Cal.App.4th at p. 1329.).” McManus
v. CIBC World Markets Corp. (2003) 109 Cal.App.4th 76, 87.)
Procedural Unconscionability
Plaintiffs
argue that the arbitration agreement are adhesive and therefore procedurally
unconscionable. Plaintiffs base their arguments on the fact that contract is
presented as a ‘take it or leave it’ without any opportunity to negotiate its
harshly one-sided terms. Further, Plaintiffs argue that the full definition of
“HONDA” was only later defined what entities comprised the term, and that the
arbitration provision itself is attenuated with small fine print. Here, the
Court disagrees. The Arbitration Agreement appears to be on the last page, is
in the same size type as the rest of the agreement, and is in fact, bolded more
so than other provisions on the page. Further, when there is no other
indication of oppression other than the adhesive aspect of an agreement, the
degree of procedural unconscionability is low. (Serpa v. California Surety
Investigations, Inc. (2013) 215 Cal.App.4th 695, 704.)
As such,
this Court find that the procedural unconscionability is low.
Substantive Unconscionability
Next, Plaintiffs argue that the
arbitration agreement is substantively unconscionable because it is devoid of
mutuality as AHM is not bound to arbitrate any claims against Plaintiffs. The
Court does not find that this – alone – is enough to find substantive
unconscionability. What
Plaintiffs fail to acknowledge is that while AHM may not be bound to
arbitrating claims against Plaintiffs, the terms of the arbitration, if chosen
by the parties, apply equally to both sides. An arbitration agreement is
generally enforceable, if it (1) provides for neutral arbitrators, (2) provides
for more than minimal discovery, (3) requires a written award, (4) provides for
all of the types of relief that would otherwise be available in court, and (5)
does not require the parties to pay unreasonable costs and fees as a condition
of access to an arbitration forum. (See Armendariz v. Foundation Health
Psychcare Services, Inc. (2000) 24 Cal.4th 83, 102.)
Unlike other arbitration agreements with substantively
problematic provisions, the HONDA arbitration agreement does not require
Plaintiff to travel to another state to arbitrate, does not apply the law of
any state besides California, does not contain its own internal statute of
limitations, does not require Plaintiffs to advance the costs of the
arbitrator, and does not contain a limitation of remedies provision preventing
Plaintiff from obtaining a refund or a civil penalty or their attorneys fees if
they prevail. Those types of provisions
where present raise the substantive unconscionability level above the Court’s
threshold for finding an arbitration agreement unenforceable. While this Court has found arbitration
agreements in Song-Beverly cases to be unconscionable, such findings have been
on a much stronger showing than Plaintiffs have made here.
On
balance, the Court does not find any arguable substantive unconscionability to rise
above the low level, and thus the Court finds the overall arbitration agreement
enforceable and not unconscionable.
IV. CONCLUSION¿¿
¿¿¿
For the foregoing reasons, AHM’s Motion to
Compel Arbitration is GRANTED. AHM is ordered to give notice and to pay its initial fee to the
arbitration forum within 30 days. The Court
sets a hearing on an arbitration status conference 10 months out, on February
6, 2024 at 8:30 a.m. Proceedings in this
civil action are stayed until further order of the Court.
AHM is ordered to give
notice.