Judge: Shirley K. Watkins, Case: 22VECV02105, Date: 2023-05-04 Tentative Ruling

Case Number: 22VECV02105    Hearing Date: May 4, 2023    Dept: T



22VECV02105 ERICK CU, et al. vs NISSAN NORTH AMERICA


[TENTATIVE] ORDER:  Defendant Nissan North America, Inc.’s Motion to Compel Arbitration and Stay the Action is DENIED.

Introduction

            Defendant Nissan North America, Inc. (Defendant) moved to compel arbitration and stay Plaintiffs Erick and Antoni Cu’s (Plaintiffs) action.

            Procedure

            This matter was previously set to be heard on April 20, 2023.  The Court continued the matter for the parties to have notice and opportunity to argue the recent Second District Court of Appeal opinion in Ford Motor Warranty Cases/Ochoa v. Ford Motor Company [And four other cases] (Apr. 4, 2023, B312261) 89 Cal.App.5th 1324 [2023 WL 2768484] (FMWC.)  Plaintiffs were ordered to file a supplemental brief by April 25, 2023, and Defendant was ordered to file a supplemental brief by May 1, 2023.  Neither party filed supplemental briefing.  Despite the parties failure to comply with the Court order, the Court proceeded with the application of FMWC to the instant issues.

            The Court noted that Defendant was the only moving party on the motion.  Co-Defendant Downey Import Cars, Inc. (DICI) was not identified as a moving party on the notice to the motion or the motion.  DICI did not file a notice of joinder to the motion.  However, DICI is now identified as a moving party on the Reply filed on April 13, 2023.  Because DICI was not identified as a moving party on the notice to the motion or the motion itself and failed to file a joinder to the motion, DICI’s attempt to include itself into the motion through the reply is improper.  DICI’s inclusion into the motion through the reply is improper because it did not provide Plaintiffs with proper notice and opportunity to be heard on DICI’s defenses.  Because DICI did not provide proper notice and opportunity to be heard to Plaintiffs, DICI’s inclusion into this hearing via the reply is stricken.  The Court did not and will not consider argument by DICI, if any.  The Court only considered contentions/arguments by Defendant.

            Plaintiffs objected to the submission of the Retail Installment Sales Contract.  Despite the Court sustaining the Plaintiffs’ evidentiary objection, the Court reviewed the merits of the motion because Plaintiffs’ opposition addressed the substantive arguments of the motion.

            Discussion 

            Defendant asserted that the Retail Installment Contract (RISC) entered between Plaintiffs and non-party Nissan of Van Nuys contained an arbitration agreement.  Despite Defendant not being a signatory to the RISC, Defendant asserted that they can enforce the arbitration agreement against Plaintiffs through equitable estoppel doctrine and third-party beneficiary doctrine.  The Court exercises its discretion in following FMWC, especially because the instant arbitration agreement is a verbatim copy of the arbitration agreement reviewed in FMWC.  The Court finds that the FMWC opinion to be directly on point with the two issues presented in the motion – equitable estoppel and third-party beneficiary.   The Court agrees with FMWC that equitable estoppel is inapplicable because there are insufficient facts to show that Plaintiffs are taking advantage of their own misconduct.  Further, Plaintiffs’ claims for violations of the Song-Beverly Consumer Warranty Act (Act) and breaches of express and implied warranties were not founded upon or intertwined with the RISC.  Because Plaintiffs’ claims were not founded upon or intertwined with the RISC, Defendant’s equitable estoppel argument was unpersuasive.  The Court further agrees with FMWC that Defendant is not an intended third-party beneficiary to the RISC or the RISC’s arbitration agreement.  As opined by FMWC, Defendant must show that they are an intended third-party beneficiary by applying a “three-part test.”  (Goonewardene v. ADP, LLC (2019) 6 Cal.5th 817, 830 (Goonewardene.))  Defendant did not prove-up the three-part test to show that Defendant is a third-party beneficiary to the RISC.  The equitable estoppel argument and third-party beneficiary argument are unpersuasive per the FMWC opinion.

            Defendant argued that there is a split of authority between Felisilda v. FCA USA LLC (2020) 53 Cal.App.5th 486 (Felisilda) and FMWC.  Because of the split of authority, Defendant argued that the Court should follow Felisilda.  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.)  Despite Defendant’s argument that the reasoning of the opinion in FMWC is distinguishable and the Felisilda opinion is the correct opinion, the Court again exercises its discretion to follow the reasoning in FMWC. 

Defendant disputed the FMWC Court’s 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, the Court, again, finds the FMWC opinion to be directly on point and did not find Defendant’s attempt to distinguish Cavanaugh and Greenman to be persuasive.  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.”  (Ford Motor Warranty Cases/Ochoa v. Ford Motor Company [And four other cases] (Apr. 4, 2023, B312261) 89 Cal.App.5th 1324 [2023 WL 2768484] *6.)  The Court follows the reasoning of FMWC. 

            Defendant argued that the issue of interpretation and scope of the arbitration provision and the arbitrability of the claim or dispute is required to be determined by the arbitrator.  However, interpretation and scope of arbitration provision or arbitrability of the instant claim or dispute was not the issue.  The issue presented was whether Defendant has standing to enforce the arbitration agreement and not if the claims alleged in the Complaint are covered under the arbitration agreement.  Per FMWC, Defendant lacked standing to enforce. 

            The motion to compel arbitration and to stay the action is DENIED.