Judge: Stephen I. Goorvitch, Case: 21STCV38002, Date: 2022-08-24 Tentative Ruling

Case Number: 21STCV38002    Hearing Date: August 24, 2022    Dept: 39

Jacqueline Schaeffer, et al. v. Nissan North America, Inc.

Case No. 21STCV38002

Motion to Compel Arbitration

            Plaintiffs Jacqueline Schaeffer and May Schaeffer (collectively, “Plaintiffs”) filed this action against Nissan North American, Inc. (“Defendant”) alleging violations under the Song-Beverly Consumer Warranty Act.  Plaintiffs signed an arbitration agreement which states:

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, successor or assigns, which arises out of or relates to you 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, bet resolved by neutral, binding arbitration, and not by court action. . . .  Any arbitration under this Arbitration Provision shall be governed by the Federal Arbitration Act (9 U.S.C. § 1 et. seq.) and not by any state law concerning arbitration. 

(Declaration of Nicholas S. Maugeri II, Exh. #3.)  The agreement was between Plaintiffs and “Universal City Nissan,” which sold the vehicle at issue.  (Ibid.) 

            Plaintiff argues that Defendant cannot enforce the arbitration agreement because it is not a signatory to the agreement.  This issue has been resolved by Felisilda v. FCA US LLC (2020) 53 Cal.App.5th 486.  That case held that the doctrine of equitable estoppel permitted a non-signatory automobile manufacturer to enforce an identical arbitration clause.  Plaintiffs argue that the case “was incorrectly decided” and “[t]he holding of Felisilda was incorrect as a matter of law.”  The Court follows precedent until it is overruled by the California Supreme Court. 

            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 express 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 the arbitration provision.  The Federal Arbitration Act (the “FAA”) governs this arbitration agreement.  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.) 

In this case, the complaint was filed on October 14, 2021, and the answer was filed on November 17, 2021.  Defendant made a demand for arbitration in the answer.  The Court held a case management conference on February 14, 2022, and the motion to compel arbitration was filed on June 20, 2022.  This chronology does not evidence undue delay.  Nor does the record demonstrate that Defendant has sought to take advantage of litigating in this forum.  The only motions in this case—two motions to compel further responses—were filed by Plaintiff, not Defendant.  Plaintiff argues that Defendant has engaged in written discovery, but Plaintiff’s counsel cites Exhibit #4, and there is no such exhibit attached to the declaration of Otis R. Haynes III.  Regardless, the basic written discovery referenced in Plaintiff’s opposition is not sufficient to find a waiver under the Federal Arbitration Act.  In fact, Plaintiff’s opposition suggests that Plaintiff has propounded most of the discovery in this matter, and Defendant merely was responding to those requests. 

Plaintiff cites Marciela Aguilar v. Nissan North America, Inc., Case Number 21STCV41178, arguing that the judge in that case denied a motion to compel arbitration under allegedly similar circumstances, i.e., waiting six months to file the motion after Plaintiff had already propounded discovery.  An order from another Superior Court Judge is not binding, and this Court disagrees with that analysis, given the favorable standard under the FAA.  Moreover, Case Number 21STCV41178 did not involve a final determination of this issue because Defendant appealed the judge’s ruling on the motion to compel arbitration. 

Plaintiffs argue that the warranty manual affords a right to “non-binding alternative dispute resolution” and suggests that buyers may pursue a court action if they desire to do so.  That provision relates to potential cases under the Federal Magnuson-Moss Warranty Act, Title 15, United States Code, section 2301.  Moreover, the provision merely states: “Some states specify that informal dispute settlement mechanisms such as BBB Auto Line must be used before you may use state-operated complaint resolution processes, before you may file a lawsuit under state law, and/or before you may have certain other rights or remedies available under state law.”  (Declaration of Otis R. Haynes III, Exh. #1.)  This language does not impact the arbitration agreement signed by Plaintiffs.

The Court has considered Plaintiffs’ remaining arguments and find them to be without merit.  Based upon the foregoing, the Court orders as follows:

1.         Defendant’s motion to compel arbitration is granted. 

2.         The parties shall meet-and-confer and schedule the arbitration forthwith.  The Court sets an Order to Show Cause why this case should not be dismissed following arbitration for February 27, 2023, at 8:30 a.m.  The Court provides notice that if Plaintiff’s counsel does not appear, absent good cause, the Court will assume the case has been resolved by way or arbitration or settlement and will dismiss the case with prejudice.

3.         The Court takes Plaintiffs’ motions to compel further responses off-calendar as moot, having ordered arbitration.

4.         Defendant’s counsel shall provide notice and file proof of such with the Court.