Judge: Shirley K. Watkins, Case: 22VECV01725, Date: 2023-04-18 Tentative Ruling
Case Number: 22VECV01725 Hearing Date: April 18, 2023 Dept: T
22VECV01725 JUAN PABLO REYES PALACIOS, et al. vs FCA US, LLC, et al.
[TENTATIVE]
ORDER: Defendant FCA US, LLC’s Motion to
Compel Arbitration is DENIED and the concurrent Motion to Stay is deemed MOOT.
Plaintiffs' Request for Judicial
Notice is GRANTED.
Defendant FCA US, LLC
(Defendant) moved to compel arbitration and stay Plaintiffs Juan Pablo Reyes
Palacios and Dolores Eliza Ruiz De Reyes’ (collectively, Plaintiffs) action.
Procedure
Defendant argued that Martha Ochoa v. Ford Motor Company [And four other
cases.] (Apr. 4, 2023, B312261) __
Cal.Rptr.3d __ [2023 WL 2768484] (Ford Motor
Warranty Cases or FMWC) is not citable because
it is not final until 30 days after filing.
(Cal. Rules of Court, rule 8.264.)
However, finality of the opinion does not determine whether the opinion
is citable and considered stare
decisis. Once an opinion is published it may be
cited. (Cal. Rules of Court, rule
8.1115(d).) It is upon the California
Supreme Court’s pending review and filing of their opinion, that a published
opinion of the Court of Appeal no longer has binding or precedential
effect. (Cal. Rules of Court, rule
8.1115(e)(1).) There is no showing that
the Ford Motor Warranty Cases’ opinion is pending review by the California Supreme Court. Further, a plain reading of California Rules
of Court, rule 8.264 does not support Defendant’s contention that Court of Appeal
opinions cannot be cited during the 30 days after the opinion was filed. The rule makes no reference to whether a case
is citable or not. Decisions of every
division of the District Courts of Appeal are binding upon all the superior
courts of this state. (Auto Equity Sales, Inc. v. Superior Court (1962) 57 Cal.2d 450, 455; see also Cuccia v. Superior Court (2007) 153 Cal.App.4th 347, 353-354.)
Where
there is more than one appellate court decision and those decisions are in
conflict, the court exercising inferior jurisdiction can and must make a choice
between the conflicting decisions. (Sears v. Morrison (1999) 76 Cal.App.4th
577, 587.) A superior court ordinarily will follow an appellate opinion
emanating from its own district even though it is not bound to do so, while
superior courts in other appellate districts may pick and choose between
conflicting lines of authority. (McCallum v.
McCallum (1987) 190 Cal.App.3d
308, 315, fn. 4.) Defendant’s argument
against citing to and relying on the Ford Motor Warranty Cases is unpersuasive.
Discussion
Defendant
argued that Plaintiffs can be equitably estopped from repudiating the
arbitration agreement. (Felisilda v.
FCA US LLC (2020) 53 Cal.App.5th 486 (Felisilda.)) In the FMWC, the Second District Court
of Appeal expressly declined to follow the Felisilda opinion. The Court notes that the arbitration
provision in FMWC and the instant action are verbatim copies of
each other. Further, equitable estoppel
is inapplicable because there are insufficient factual allegations in the
Complaint showing that the claims are founded in and inextricably bound
by the obligations imposed by the agreement containing the arbitration clause. Plaintiffs’ Complaint alleged five causes of
action (COA) against Defendant. The
first three COAs are for violations of the Song-Beverly Consumer Warranty Act
(Act.) The fourth COA alleged a breach
of the implied warranty of merchantability (Civ. Code secs. 1791.1, 1794, and
1795.5.) The fifth COA alleged
fraudulent inducement – concealment. As
opined by the FMWC Court, the warranty claims at the heart of this
action are not intertwined with the Retail Sales Installment Contract (RISC)
entered with the dealership, Co-Defendant Russell Westbrook Chrysler Dodge Jeep
Ram (dismissed as of April 5, 2023.)
Some of Plaintiffs’ claims alleged in the Complaint are grounded in
Defendant’s statutory obligations to reimburse consumers or replace their
vehicles when unable to repair in accordance with its warranty and the others
are for breach of implied warranty and the tort of fraudulent inducement. Plaintiffs’ claims expressly alleged a
“warranty contract” with Defendant (Compl. pars. 8, 9, and 12.) The RISC, attached to Hailey Rogerson’s
declaration, did not contain a warranty, and expressly disclaimed any warranty
on the part of the dealers without any effect upon warranties by the
manufacturer, Defendant. (Rogerson Decl.
par. 2, Exh. A at pg. 2, par. 4.) The
instant RISC, as was the case in FMWC, only related to sale and
financing.
Defendant
disputes Plaintiffs’ reliance upon two
cases – Corp. of Presiding Bishop of Church of Jesus Christ of Latter-Day
Saints v. Cavanaugh (1963) 217 Cal.App.2d 492, 514 and Greenman v. Yuba
Power Prod., Inc. (1963) 59 Cal.2d 57, 63.
However, both these cases were reviewed in the FMWC opinion and
the Court of Appeal expressly opined that “California law does not treat
manufacturer warranties imposed outside the four corners of a retail sale
contract as part of the sale contract.”
(Martha Ochoa v. Ford Motor Company [And four other cases.] (Apr. 4, 2023, B312261)
__ Cal.Rptr.3d __ [2023 WL 2768484] *12.)
The Court finds that the FMWC is directly on point to dispute Defendant’s
argument as to equitable estoppel.
Defendant then argued in their Reply
that they can enforce the arbitration agreement as a third-party
beneficiary. The Court notes that the
third-party beneficiary argument is only made in cursory fashion in the motion
within a footnote. (Motion pg. 7, fn.
2.) Defendant cited to the provision in
the arbitration agreement where it states: “any resulting transaction or
relationship (including any such relationship with third parties who do not
sign this contract)…”. However, this
provision in verbatim was reviewed in FMWC. (Martha Ochoa v. Ford Motor Company [And four
other cases.] (Apr. 4, 2023, B312261) __ Cal.Rptr.3d __ [2023 WL 2768484] *10.) The Court of Appeal opined that the provision
was not consent by a purchaser to arbitrate claims with third party
non-signatories but found the provision as “further delineation of the subject
matter of claims” the purchaser and the dealership/seller agreed to arbitrate
(i.e., the subject matter to include transactions with third parties for
insurance, theft protection ,extended warranties.) The Court follows this line of reasoning to
determine that this provision of the arbitration agreement is insufficient to
show that Defendant is a third-party beneficiary that can enforce the
arbitration agreement.
The Court further follows the FMWC opinion as to the
third-party beneficiary issue because, as was the case in FMWC, Defendant’s motion did
not address the factors for finding third-party beneficiary status per Goonewardene v. ADP, LLC (2019) 6 Cal.5th 817, 830.)
Defendant argued the factors in the Reply but the Court does not find
the argument persuasive. The arbitration
agreement in the RISC did not directly benefit Defendant because Defendant is
not the purchaser, dealer, or dealer’s employees, agents, successors, or
assigns. Defendant again relies upon the
provision that the arbitration included “third parties who do not sign this
contract.” However, as reviewed above,
the phrase did not expand the contracting parties that could enforce
arbitration but only expanded the subject matter of the arbitration agreement. Despite Defendant’s argument otherwise, there
was no motivating purpose in the RISC to benefit Defendant. The intent of the parties was to buy, sell,
and finance the vehicle. Lastly, to
allow Defendant to enforce the arbitration agreement as a third-party
beneficiary is inconsistent with the reasonable expectation of Plaintiffs and
the dealership since the right to arbitrate was limited to buyer and seller
(i.e., Plaintiffs and Dealership.) Again,
the Court finds that the opinion of the FMWC opinion to be directly on
point with the third-party beneficiary issue presented by Defendant. Defendant’s third-party beneficiary argument
is not persuasive.
Defendant also argued that, as a non-signatory
to the arbitration agreement, they can enforce it due to Plaintiffs’
allegations of agency. (Compl. pars. 63
and 69.) However, the allegations do not
allege a principal-agent relationship.
At most, the allegations show that Defendant and its representative
failed to service or repair the vehicle.
A reading of the entire Complaint infers that the “representative” is
the dealership since Plaintiffs went to the dealership for the repairs (see
Compl pars. 5, 27, 74, and 90-94.) However,
the allegation that the purchaser can go to a dealership for warranty repairs
is insufficient to show an agency relationship.
Defendant’s arguments as to an agency relationship are not supported by
the facts alleged in the four corners of the Complaint. Because the factual allegations do not plead
an agency relationship, Defendant’s argument as to agency is unpersuasive.
The Motion to Compel Arbitration is DENIED.
Defendant’s
arguments disputing waiver of the arbitration agreement are not considered
because Defendant did not present persuasive argument to show that they are
within the scope of the arbitration agreement in the RISC.
Defendant’s
preemptive arguments as to unconscionability are also not considered since Defendant
did not present persuasive argument to show that they are within the scope of
the arbitration agreement in the RISC.
Defendant’s
concurrent motion to stay is MOOT since the motion to compel arbitration is
DENIED.
IT IS SO ORDERED, CLERK TO GIVE
NOTICE.