Judge Salvatore Sirna, Case 22PSCV00615 2023-01-30 Tentative Ruling

Judge: Salvatore Sirna, Case: 22PSCV00615, Date: 2023-01-30 Tentative Ruling

Case Number: 22PSCV00615 Hearing Date: January 30, 2023 Dept: G

Defendant Nissan North America, Inc.’s Motion to Compel Arbitration and Stay Proceedings

Respondent: Plaintiff Harold Lara

TENTATIVE RULING

Defendants Nissan North America, Inc.’s Motion to Compel Arbitration and Stay Proceedings is GRANTED.

Proceedings are STAYED pending the outcome of arbitration.

BACKGROUND

This is a lemon law action. On July 15, 2019, Plaintiff Harold Lara purchased a certified pre-owned 2019 Nissan Pathfinder and alleges express warranties from Defendant Nissan North America, Inc. accompanied the sale, including that Defendant undertook to preserve or maintain the utility or performance of Plaintiff’s vehicle and provide compensation if there was a failure in such utility or performance. Plaintiff alleges the vehicle has serious defects and nonconformities including engine, electrical, emission, transmission, suspension, structural, and steering system defects.

On June 21, 2022, Plaintiff filed a complaint against Defendant and Does 1-10, alleging (1) violation of the Song-Beverly Act – breach of express warranty, (2) violation of the Song-Beverly Act – breach of implied warranty, and (3) violation of the Song-Beverly Act section 1793.2.

On September 2, 2022, Defendant filed the present motion. A hearing on the motion and case management conference are set for January 30, 2023.

REQUEST FOR JUDICIAL NOTICE

The court GRANTS Plaintiff’s request for judicial notice of Ngo v. BMW of North America, LLC (9th Cir. 2022) 23 F.4th 942.

ANALYSIS

Defendant argues Plaintiff’s complaint is subject to a valid and binding arbitration agreement. For the following reasons, the court agrees.

“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.” (Code Civ. Proc., § 1281.) The court must grant a petition to compel arbitration unless it finds no written agreement to arbitrate exists, the right to compel arbitration has been waived, grounds exist for revocation of the agreement, or litigation is pending that may render the arbitration unnecessary or create conflicting rulings on common issues. (Code Civ. Proc., § 1281.2.) A petition to compel arbitration functions as a motion. (Code Civ. Proc., § 1290.2.)

“[T]he moving party bears the burden of producing ‘prima facie evidence of a written agreement to arbitrate the controversy.’” (Gamboa v. Northeast Community Clinic (2021) 72 Cal.App.5th 158, 165 (Gamboa).) Once the court finds an arbitration agreement exists, the opposing party bears the burden of establishing a defense to enforcement by preponderance of the evidence. (Rosenthal v. Great Western Fin. Securities Corp. (1996) 14 Cal.4th 394, 413.) In interpreting an arbitration agreement, courts apply the same principles used to interpret contractual provisions with the fundamental goal of giving effect to the parties’ mutual intentions and applying contractual language if clear and explicit. (Valencia v. Smyth (2010) 185 Cal.App.4th 153, 177.) Because public policy strongly favors arbitration, “any doubts regarding the arbitrability of a dispute are resolved in favor of arbitration.” (Coast Plaza Doctors Hosp. v. Blue Cross of California (2000) 83 Cal.App.4th 677, 686.)

Existence of an Arbitration Agreement

Under the Federal Arbitration Act (FAA), the court’s role “is limited to determining (1) whether a valid agreement to arbitrate exists and, if it does, (2) whether the agreement encompasses the dispute at issue.” (Philadelphia Indemnity Ins. Co. v. SMG Holdings, Inc. (2019) 44 Cal.App.5th 834, 840, quoting U.S. ex rel. Welch v. My Left Foot Children’s Therapy, LLC (9th Cir. 2017) 871 F.3d 791, 796.)

In this case, Defendant claims Plaintiff entered into a binding arbitration agreement when Plaintiff purchased Plaintiff’s vehicle from Metro Nissan of Montclair (Metro Nissan). The Defendant notes the sales contract included the title “Retail Installment Sale Contract – Simple Finance Charge (with Arbitration Provision)” and points to an arbitration provision on the second page of the sales contract. (Sharp Decl., Ex. B.) In relevant part, the arbitration provision states as follows:

“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.” (Motion, p. 10:8-14.)

The court notes Defendant was not a signatory to the arbitration provision, which was part of a sales contract between Plaintiff and Metro Nissan. However, “there are six theories by which a non-signatory may be bound to arbitrate: ‘(a) incorporation by reference; (b) assumption; (c) agency; (d) veil-piercing or alter ego; (e) estoppel; and (f) third-party beneficiary’ [Citations].” (Suh v. Superior Court (2010) 181 Cal.App.4th 1504, 1513, quoting 2 Oehmke, Commercial Arbitration (3d ed. 2006 update) § 41.57 at p. 41-195.) Defendant claims the right to enforce the arbitration provision under equitable estoppel and as a third-party beneficiary.

Validity

As an initial matter, the court addresses whether Defendant has established the existence of an arbitration agreement. To establish prima facie evidence of an arbitration agreement, the party moving for arbitration need only provide a copy of the arbitration provision that purports to be signed by the parties or set forth the agreement’s terms in the motion. (Gamboa, supra, 72 Cal.App.5th at p. 165.) The moving party is not required “to follow the normal procedures of document authentication.” (Ibid, quoting Condee, supra, 88 Cal.App.4th at p. 218.) The opposing party “bears the burden of producing evidence to challenge the authenticity of the agreement” and can do so with statements under oath. (Ibid.) If the opposing party meets their burden, the moving party must then establish a valid arbitration with admissible evidence by preponderance of the evidence. (Ibid.)

Here, Defendant sets forth the agreement’s terms verbatim in Defendant’s motion and attaches a copy of the provision in a supporting declaration, although the court notes text along the right margin of the arbitration agreement is cut off. (Motion, p. 9-10; Sharp Decl., Ex. B.) Plaintiff does not contest or provide any evidence challenging the authenticity of this agreement.

Accordingly, the court finds an arbitration agreement exists.

Equitable Estoppel

The court next addresses whether the arbitration agreement is applicable to this action under equitable estoppel. Under equitable estoppel, “a non-signatory defendant may invoke an arbitration clause to compel a signatory plaintiff to arbitrate its claims when the causes of action against the non-signatory are ‘intimately founded in and intertwined’ with the underlying contract obligations.” (Boucher v. Alliance Title Co., Inc. (2005) 127 Cal.App.4th 262, 271.) A signatory’s claims are intertwined with the agreement containing the arbitration provision if “based on the same facts and are inherently inseparable from arbitrable claims against signatory defendants.” (Turtle Ridge Media Group, Inc. v. Pacific Bell Directory (2006) 140 Cal.App.4th 828, 833, quoting Metalclad Corp. v. Ventana Environmental Organizational Partnership (2003) 109 Cal.App.4th 1705, 1713-1714.)

In arguing Plaintiffs’ claims are intertwined with their obligations under the sales contract, Defendants cites Felisilda v. FCA US LLC (2020) 53 Cal.App.5th 486 (Felisilda) as binding authority. In Felisilda, the court held a non-signatory automobile manufacturer could compel plaintiffs in a lemon law action to arbitration because the sales contract expressly required arbitration for “claims arising out of the condition of the vehicle – even against third party non-signatories to the sales contract.” (Id., at p. 497.) The court noted plaintiffs’ lemon law claim “directly relates to the condition of the vehicle that they allege to have violated warranties they received as a consequence of the sales contract.” (Ibid.)

The court finds Felisilda applicable and controlling here. The arbitration provision between Plaintiff and Metro Nissan covers any claim or dispute “which arises out of or relates to your . . . purchase of condition of this vehicle.” (Motion, p. 10:8-14.) In Felisilda, the court noted plaintiffs established the sales contract was the source of the warranties at issue in that case because plaintiffs pled “that ‘express warranties accompanied the sale of the vehicle to [them] by which [manufacturer] . . . undertook to preserve or maintain the utility or performance of [their] vehicle or provide compensation if there was a failure in such utility or performance.” (Id., at p. 496.)

In Plaintiff’s complaint, Plaintiff’s lemon law claims “arise out of warranty and repair obligations of [Defendant] in connection with a vehicle Plaintiff purchased and for which [Defendant] issued a written warranty.” (Complaint, ¶ 4.) Like in Felisilda, Plaintiff’s claims arise from warranties that accompanied the sale of the vehicle under the sales contract. Also, both cases involve an arbitration agreement that explicitly applies to claims involving the condition of the vehicle and including third parties.

Plaintiff responds that the Ninth Circuit recently distinguished Felisilda in Ngo v. BMW of North America, LLC (9th Cir. 2022) 23 F.4th 942, 950 (Ngo). In Ngo, the Ninth Circuit held a non-signatory manufacturer could not compel arbitration of lemon law claims under equitable estoppel. (Id., at p. 948.) While the manufacturer argued Felisilda broadened equitable estoppel under California law, the Ninth Circuit disagreed. (Id., at p. 950.) Instead, the court distinguished Felisilda on the grounds that plaintiff there had brought suit against both the signatory dealership and non-signatory manufacturer and the signatory dealership was the one who sought to compel arbitration. (Ibid.) The court contrasted that case with the facts in Ngo where the non-signatory manufacturer was the only party sued and sought to compel arbitration on its own.

Even when interpreting the FAA, federal circuit decisions are persuasive at best. (See Metalclad Corp. v. Ventana Environmental Organization Partnership (2003) 109 Cal.App.4th 1705, 1714-1715.) Furthermore, Ngo’s attempt to distinguish Felisilda is a distinction without a difference. In fact, Felisilda rejected a federal court decision that declined to enforce an arbitration agreement against a non-signatory manufacturer where the manufacturer was the only defendant. (Compare Felisilda, supra, 53 Cal.App.5th at p. 498, with Jurosky v. BMW of North America, LLC (S.D. Cal. 2020) 441 F.Supp.3d 963, 966, 972 (Jurosky).) The court in Felisilda noted Jurosky glossed “over language in an arbitration clause that expressly includes third party non-signatories,” as is the case here. (Felisilda, supra, 53 Cal.App.5th at p. 498.)

Thus, the court rejects Plaintiff’s arguments that Felisilda should be distinguished and finds Defendant has established the arbitration provision’s applicability to this action through equitable estoppel. Accordingly, the court need not address whether Defendant can also enforce the arbitration provision as a third-party beneficiary.

Accordingly, because Defendant established the existence and applicability of an arbitration agreement while Plaintiff failed to argue the existence of a defense or bar to enforcement, the court GRANTS Defendant’s motion.

CONCLUSION

Based on the foregoing, Defendant’s motion to compel arbitration is GRANTED.

This action is STAYED pending completion of arbitration.