Judge Salvatore Sirna, Case 22PSCV01227 2023-03-20 Tentative Ruling

Judge: Salvatore Sirna, Case: 22PSCV01227, Date: 2023-03-20 Tentative Ruling

Case Number: 22PSCV01227 Hearing Date: March 20, 2023 Dept: G

Defendant FCA US, LLC’s Motion to Compel Arbitration and Stay Action

Respondent: Plaintiff Deondray Bragg

TENTATIVE RULING

Defendant FCA US, LLC’s Motion to Compel Arbitration and Stay Action is GRANTED.

BACKGROUND

This is a lemon law action. On July 7, 2018, Plaintiff Deondray Bragg entered into a warranty contract with Defendant FCA US, LLC by purchasing a 2017 Chrysler Pacifica manufactured or distributed by Defendant. The warranty contract included a bumper-to-bumper warranty, powertrain warranty, and emission warranty. During the warranty period, Plaintiff alleges Plaintiff discovered the vehicle’s transmission and engine were defective and caused the vehicle to stall.

On October 11, 2022, Plaintiff filed a complaint against Defendant, John Elway’s Claremont Chrysler Dodge Jeep Ram (John Elway’s), and Does 1-10, alleging the following causes of action: (1) violation of Civil Code section 1793.2, subdivision (d); (2) violation of Civil Code section 1793.2, subdivision (b); (3) violation of Civil Code section 1793.2, subdivision (a)(3); (4) breach of the implied warranty of merchantability; (5) fraudulent inducement – concealment; (6) negligent repair; (7) violation of the Consumer Legal Remedies Act; and (8) violation of the Magnuson-Moss Warranty Act.

On January 17, 2023, Defendant filed the present motion. A hearing on the motion, case management conference, and OSC Re: Failure to File Proof of Service are set for March 20.

REQUEST FOR JUDICIAL NOTICE

Plaintiff’s request for judicial notice of opinions by the Ninth Circuit and California Court of Appeal is GRANTED.

ANALYSIS

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

Legal Standard

“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

The¿Federal Arbitration Act (FAA)¿applies to contracts that involve interstate commerce (9 U.S.C. §§ 1,¿2), but since arbitration is a matter of contract, the¿FAA¿also applies if it is so stated in the agreement. (See¿Victrola 89, LLC v. Jaman Properties 8 LLC¿(2020) 46 Cal.App.5th 337, 355 [“[T]he presence of interstate commerce is not the only manner under which the¿FAA¿may apply. … [T]he parties may also voluntarily elect to have the¿FAA¿govern enforcement of the Agreement”].) Pursuant to the 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 the Retail Installment Sale Contract executed between Orange Coast Chrysler Jeep Dodge (Orange Coast Chrysler) and Plaintiff included an arbitration provision. (Gruzman Decl., Ex. A.) In relevant part, the arbitration provision states as follows:

“Any claim or dispute, whether in contract, tort, statute or otherwise . . . 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.” (Gruzman Decl., Ex. A.)

Plaintiff does not contest the existence of the arbitration agreement and instead argues it is unenforceable because Defendant was not a party or signatory to the agreement. (Opposition, p. 3.) Furthermore, the agreement contains a provision requiring application of the FAA and accordingly, is governed by the FAA.

Thus, the court finds an arbitration agreement exists and applies to the present action.

Equitable Estoppel

Pursuant to the doctrine of equitable estoppel, “a nonsignatory defendant may invoke an arbitration clause to compel a signatory plaintiff to arbitrate its claims when the causes of action against the nonsignatory 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 Plaintiff’s claims are intertwined with their obligations under the sales contract, Defendant 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 nonsignatories 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 covers any claim or dispute “which arises out of or relates to your . . . purchase of condition of this vehicle.” (Gruzman Decl., Ex. A.) 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 the warranty obligations of [Defendant] in connection with a motor vehicle for which [Defendant] issued a written warranty.” (Complaint, ¶ 12.) Like in Felisilda, Plaintiff’s claims arise from warranties that accompanied the sale of the vehicle under the Retail Installment Sale Contract with Orange Coast Chrysler. 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 nonsignatories” 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.

To the extent Plaintiff suggests this contradicts the plain language of the arbitration provision, the court disagrees. Plaintiff claims the language of the provision defines arbitrable disputes as “any claim or dispute . . . between you and us” and that arbitration may be commenced only “at your or our election,” therefore purportedly limiting arbitration to Plaintiff or signatory Orange Coast Chrysler. However, as explained above, equitable estoppel allows this provision to be applied to Defendant even though Defendant was not one of the parties named in the provision. This is because Plaintiff’s claims involving the condition of the vehicle are intimately founded and intertwined with the sales agreement that includes the arbitration provision since there would be no cause of action or warranties made had Plaintiff not purchased the vehicle.

Accordingly, the court need not address whether Defendant can also enforce the arbitration provision as a third-party beneficiary and finds Defendant has established the existence and applicability of an arbitration agreement.

Defenses to Enforcement

Plaintiff opposes arbitration pursuant to Code of Civil Procedure section 1281.2, subdivision (c). This code section allows an exception to enforcement of an arbitration agreement “where ‘[a] party to the arbitration agreement is also a party to a pending court action or special proceeding with a third party, arising out of the same transaction or series of related transactions and there is a possibility of conflicting rulings on a common issue of law or fact.’” (Laswell v. AG Seal Beach, LLC (2010) 189 Cal.App.4th 1399, 1405, quoting Code Civ. Proc., § 1281.2, subd. (c).) However, because there is no similar provision in the FAA and the arbitration provision at issue here is governed by the FAA, this defense is inapplicable. (Gloster v. Sonic Automotive, Inc. (2014) 226 Cal.App.4th 438, 446 [“Because the Federal Arbitration Act (9 U.S.C. § 1 et seq.; FAA) contains no provision analogous to section 1281.2, subdivision (c), that subdivision cannot be applied to deny the enforcement of arbitration clauses governed by the FAA.”].)

Accordingly, because Plaintiff has not established the existence of any defense to the enforcement of the valid and applicable arbitration provision, the court GRANTS Defendant’s motion.

CONCLUSION

Based on the foregoing, Defendant’s motion to compel arbitration is GRANTED. This action is STAYED pending the completion of arbitration proceedings.