Judge: Stephen I. Goorvitch, Case: 20STCV27550, Date: 2023-03-27 Tentative Ruling
Case Number: 20STCV27550 Hearing Date: March 27, 2023 Dept: 39
Mario Davila, et
al. v. Nissan North America, Inc.
Case No.
20STCV27550
Motion to Compel
Arbitration
Plaintiffs
Mario Davila and Griselda Davila (collectively, “Plaintiffs”) filed this action
under the Song-Beverly Consumer Warranty Act against Nissan North America, Inc.
(“Defendant”). The complaint was filed
on July 22, 2020. Defendant filed a
motion to compel arbitration on November 7, 2020.
The moving
party on a motion to compel arbitration “bears the burden of proving the
existence of a valid arbitration agreement by a preponderance of the evidence,
while a party opposing the petition bears the burden of proving by a
preponderance of the evidence any fact necessary to its defense. The
trial court sits as the trier of fact, weighing all the affidavits,
declarations, and other documentary evidence, and any oral testimony the court
may receive at its discretion, to reach a final determination.” (Ruiz v. Moss Bros. Auto Group, Inc.
(2014) 232 Cal.App.4th 836, 842, internal citations omitted.)
The
agreement provides that Plaintiffs will arbitrate “[a]ny claim or dispute,
whether in contract, tort, statute or otherwise . . . between [Plaintiff] and [Dealership] or
[Dealership]’s employees, agents, successors or assigns, which arises out of or
relates to [Plaintiff’s] 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 .
. . be resolved by neutral, binding arbitration and not by a court
action.” (Declaration Michael Yu, Exh.
#4, p. 7.) Plaintiff does not challenge
the authenticity of the sales contract.
Plaintiff argues that the
arbitration agreement is not enforceable against Defendant because Defendant’s
representative never signed the agreement.
Plaintiff is incorrect, per Felisilda v. FCA US LLC (2020) 53
Cal.App.5th 486. That case held that the
doctrine of equitable estoppel permits a non-signatory automobile manufacturer
to enforce an identical arbitration clause.
In the alternative, the Court finds that Defendant
is a third-party beneficiary of the arbitration agreement. A non-signatory to an arbitration agreement
may enforce an arbitration agreement if the non-party is a third-party
beneficiary. (Jenks v. DLA Piper Rudnick Gray Cary US LLP (2015)
243 Cal.App.4th 1, 9-10; see also Civ. Code, § 1559.) To establish that it is a third-party
beneficiary to a contract, a party must “plead a contract which was made
expressly for his benefit and one in which it clearly appears that he was a
beneficiary . . . .” (Luis v. Orcutt
Town Water Co. (1962) 204 Cal.App.2d 433, 441.) The arbitration agreement expressly covers
lawsuits based on the “condition of this vehicle” and references “third parties
who do not sign this contract” has having a basis to enforce the arbitration
agreement.
Plaintiff
argues that Defendant has waived the right to enforce this arbitration
agreement. This arbitration agreement is
governed by the Federal Arbitration Act (the “FAA”). The issue whether litigation conduct
waived the right to compel arbitration must be decided by the trial court, not
the arbitrator, under the FAA unless the agreement requires the arbitrator to
determine this issue. (Hong v. CJ GVC
America Holdings, Inc. (2013) 222 Cal.App.4th 240, 258; see also Omar v.
Ralphs Grocery Co. (2004) 118 Cal.App.4th 955, 963 (holding that the issue of waiver
based upon non-litigation conduct is decided by the arbitrator).)
Under the FAA,
waiver of the right to compel arbitration is not viewed as a question of
substantive contract law. Thus, federal
law, and not state law, governs the inquiry whether a party has waived its
right to compel arbitration. (See, e.g.,
Aviation Data, Inc. v. American Express Travel Related Services Company,
Inc. (2010) 152 Cal.App.4th 1522, 1535.)
Under federal law, the party arguing waiver of arbitration bears a heavy
burden. (Britton v. Co-op Banking
Group, 916 F.2d 1405, 1413 (9th Cir. 1990.)
There is no concrete test to determine whether a party has engaged in
acts that are inconsistent with its right to arbitrate. (Martin v. Yasuda, 839 F.3d 1118, 1125
(9th Cir. 2016). Instead, the question
of waiver depends on the totality of the moving party’s actions. (Ibid.)
Any question whether a party has waived the right to compel arbitration
should be resolved in favor of arbitration.
(Moses H. Cone Memorial Hosp. v. Mercury Constr. Corp. (1983) 460
U.S. 1, 24.)
Plaintiff filed
this case on July 22, 2020. Defendant
filed a case management conference statement on January 21, 2021, which did not
reference any potential arbitration. To
the contrary, Defendant’s counsel requested a jury trial. Nor did Defendant’s counsel raise the issue
of arbitration at the case management conference. The Court set trial for May 10, 2022. On March 1, 2022, Defendant served a demand
for exchange of expert witness information.
(Declaration of Daniel Law, ¶ 3.)
On April 5, 2022, the parties submitted a stipulation to continue the
trial date to complete discovery and schedule a mediation. The Court granted the stipulation and
continued the trial date to January 17, 2023.
This motion was filed on November 7, 2022. Defendant filed this motion after the case
had been pending for over two years. Defendant
filed this motion three weeks before the expert designation deadline and approximately
40 days before the fact discovery cutoff.
The Court
issued a minute order stating that it did not have sufficient information to
resolve the motion. The Court ordered
Defendant to file a supplemental reply brief “discussing Defendant’s discovery
in advance of filing the motion to compel arbitration, e.g., what written
discovery was propounded by Defendant, what depositions were noticed and/or
taken by Defendant, etc.” (Court’s
Minute Order, dated February 23, 2023.) The
Court ordered Defendant to file this brief on or before March 8, 2023, and then
authorized Plaintiff to file a response.
Defendant’s counsel did not follow the Court’s order. The record reflects no good cause for having
failed to do so. The Court assumes that
Defendant’s failure to comply with this order means that the requested information
would not have benefitted Defendant’s motion, i.e., that Defendant propounded
written discovery and/or noticed depositions before seeking to compel
arbitration. Defendant cannot defeat
Plaintiff’s opposition by refusing to provide information that is relevant to the
Court’s decision on this motion. Defendant
is equitably estopped from seeking arbitration under these circumstances.
Based upon the foregoing,
the Court orders as follows:
1. The Court denies Defendant’s motion,
finding that Defendant waived the right to compel arbitration. The Court makes this finding based upon the record
before this Court, which suggests that Defendant intended to litigate this case
in the Superior Court. Defendant did not
raise the issue of arbitration during the case management conference,
requesting a jury trial instead. Defendant
served a demand to exchange expert witness information and signed a stipulation
referencing the completion of discovery.
Then, Defendant moved to compel arbitration after the case had been
pending for over two years, shortly before the expert designation deadlines and
the close of fact discovery. This record
establishes waiver.
2. In the alternative, to the extent the
above-referenced record suggests ambiguity, the Court finds that Defendant is
equitably estopped from compelling arbitration by failing to provide information
that is relevant to resolving the motion, in violation of a court order.
3. The Court sets the following dates:
Final Status Conference: October 27, 2023, at 9:30 a.m.
Trial: November
7, 2023, at 9:30 a.m.
The discovery and motions
deadlines shall be based on the new trial date.
4. Defendant’s counsel shall provide
notice and file proof of such with the Court.