Judge Stephen Morgan, Case Number: 23AVCV00495, Date: 2023-08-22 Tentative Ruling

Judge: Stephen Morgan, Case: 23AVCV00495, Date: 2023-08-22 Tentative Ruling

Case Number: 23AVCV00495 Hearing Date: August 22, 2023 Dept: A14

Background

Plaintiff Inga Smith (“Plaintiff”) filed a personal injury and/or product liability claim against Defendants Hertz Rental Car and Hertz Global Holding, Inc. (collectively, “Defendants”). Plaintiff did not include any attachment to support her cause of action. Plaintiff claims that she suffered loss of use of property, hospital and medical expenses, general damage, and other damage for “very important and valuable items.” (Compl., at 2.)

On May 8, 2023, Plaintiff filed her complaint (“Complaint”).

On June 9, 2023, Defendants filed this Motion to Compel Arbitration and Stay Action (“Motion to Compel Arbitration”).

“All papers opposing a motion so noticed shall be filed with the court and a copy served on each party at least nine court days.” (Cal. Code Civ. Proc. § 1005(b).) No Opposition has been filed. Any opposition would be considered untimely at this stage.

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Legal Standard

Standard for Compel Arbitration and Stay – California law incorporates many of the basic policy objectives contained in the Federal Arbitration Act, including a presumption in favor of arbitrability. (Engalla v. Permanente Medical Group, Inc. (1997) 15 Cal.4th 951, 971-72.) Cal. Code¿Civ.¿Proc.¿§ 1281.2 permits a party to file a motion to request that the Court order the parties to arbitrate a controversy. Under Cal. Code¿Civ.¿Proc. § 1281.2, the Court shall order the petitioner and the respondent to arbitrate the controversy if it determines that an agreement to arbitrate the controversy exists, unless it determines that:

(a) The right to compel arbitration has been waived by the petitioner; or

(b) Grounds exist for the revocation of the agreement.

(c) 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. For purposes of this section, a pending court action or special proceeding includes an action or proceeding initiated by the party refusing to arbitrate after the petition to compel arbitration has been filed, but on or before the date of the hearing on the petition. This subdivision shall not be applicable to an agreement to arbitrate disputes as to the professional negligence of a health care provider made pursuant to Section 1295.

(Cal. Code¿Civ.¿Proc.¿§ 1281.2.)

A second statute creates further impositions for arbitration for uninsured or underinsured motor vehicles: “The policy or an endorsement added thereto shall provide that the determination as to whether the insured shall be legally entitled to recover damages, and if so entitled, the amount thereof, shall be made by agreement between the insured and the insurer or, in the event of disagreement, by arbitration. The arbitration shall be conducted by a single neutral arbitrator. . .” (Cal. Ins. Code § 11580(f).)

Doubts as to whether an arbitration clause applies to a particular dispute are to be resolved in favor of sending the parties to arbitration.¿(Id.)¿The Court should order them to arbitrate unless it is clear that the arbitration clause cannot be interpreted to cover the dispute.¿(Id., Cal. Code Civ. Proc. §1281.2 [“. . .unless it determines that: (a) The right to compel arbitration has been waived by the petitioner; or (b) Grounds exist for the revocation of the agreement”].)¿Unless the parties clearly and unmistakably provide otherwise, the question of whether the parties agreed to arbitrate is to be decided by the court, not the arbitrator.¿(Id.)

The right to arbitration depends upon contract; a petition to compel arbitration is simply a suit in equity seeking specific performance of that contract.¿(Id.)¿There is no public policy favoring arbitration of disputes which the parties have not agreed to arbitrate.¿(Id.)

The party seeking to enforce the arbitration agreement bears the burden of proving the existence of a valid arbitration agreement by the preponderance of the evidence.¿(Giuliano v. Inland Empire Personnel, Inc.¿(2007) 149 Cal.App.4th 1276, 1284.)¿The trial court first decides whether an enforceable arbitration agreement exists between the parties and then¿determine whether the plaintiff’s claims are covered by the agreement.¿(Omar v. Ralphs Grocery Co.¿(2004) 118 Cal.App.4th 955, 961.)

The party opposing the petition to compel arbitration bears the burden of proving by a preponderance of the evidence any fact necessary to its defense.¿(Giuliano v. Inland Empire Personnel, Inc.,¿supra,¿at¿1284.)¿In these summary proceedings, the trial court sits as a trier of fact, weighing all the affidavits, declarations, and other documentary evidence, as well as oral testimony received at the court’s discretion, to reach a final determination. (Id.)

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Discussion

Application – Defendants move to compel arbitration for following reasons: (1) Plaintiff agreed to arbitrate any dispute with Hertz, (2) Plaintiff’s only factual allegations are that Hertz “fail[ed] to release property” and that “very important and valuable items were never returned or not released” (Def.’s Mem. P. & A., ¶ 2, at 3 [quoting Compl., ¶ 11]), and (3) Plaintiff’s only allegations relate to and arise from her rental with Hertz Car Rental. (Id. ¶ 2, at 3.)

i. Existence of an Arbitration Agreement

Under both the Federal Arbitration Act (“FAA”) and California law, arbitration agreements are valid, irrevocable, and enforceable, except on such grounds that exist at law or equity for voiding a contract. (Winter v. Window Fashions Professions, Inc. (2008) 166 Cal.App.4th 943, 947.) The party moving to compel arbitration must establish the existence of a written arbitration agreement between the parties. (Code of Civ. Proc. § 1281.2.) In ruling on a motion to compel arbitration, the court must first determine whether the parties actually agreed to arbitrate the dispute, and general principles of California contract law help guide the court in making this determination. (Mendez v. Mid-Wilshire Health Care Center (2013) 220 Cal.App.4th 534, 541.)

Once petitioners allege that an arbitration agreement exists, the burden shifts to respondents to prove the falsity of the purported agreement, and no evidence or authentication is required to find the arbitration agreement exists. (See Condee v. Longwood Mgt. Corp. (2001) 88 Cal.App.4th 215, 219.) However, if the existence of the agreement is challenged, "petitioner bears the burden of proving [the arbitration agreement's] existence by a preponderance of the evidence." (Rosenthal v. Great Western Fin. Securities Corp. (1996) 14 Cal.4th 394, 413; see also Espejo v. Southern California Permanente Medical Group (2016) 246 Cal.App.4th 1047, 1058-1060.)

“With respect to the moving party's burden to provide evidence of the existence of an agreement to arbitrate, it is generally sufficient for that party to present a copy of the contract to the court. (See Condee, supra, 88 Cal.App.4th 215, 218; see also Cal. Rules of Court, Rule 3.1330 [“A petition to compel arbitration or to stay proceedings pursuant to Code of Civil Procedure sections 1281.2 and 1281.4 must state, in addition to other required allegations, the provisions of the written agreement and the paragraph that provides for arbitration. The provisions must be stated verbatim or a copy must be physically or electronically attached to the petition and incorporated by reference”].) Once such a document is presented to the court, the burden shifts to the party opposing the motion to compel, who may present any challenges to the enforcement of the agreement and evidence in support of those challenges. [Citation]” (Baker v. Italian Maple Holdings, LLC (2017) 13 Cal.App.5th 1152, 1160.)

According to Defendants, Plaintiff rented a car from Defendants’ facility at the Kansas City International Airport. (MCA, Mem. P. & A., ¶ 6, at 5.) Defendants claim that Plaintiff signed a rental agreement that includes an arbitration provision. (Id.) The arbitration provision reads:

ARBITRATION PROVISION: THIS AGREEMENT REQUIRES ARBITRATION OR A SMALL CLAIMS COURT CASE ON AN INDIVIDUAL BASIS, RATHER THAN JURY TRIALS OR CLASS ACTIONS. BY ENTERING INTO THIS AGREEMENT, YOU AGREE TO THIS ARBITRATION PROVISION.

Except for claims for property damage, personal injury or death, ANY DISPUTES BETWEEN You and us (“us” and “we” for the purposes of

this Arbitration Provision means The Hertz Corporation, (“Hertz”) its parent and affiliate corporations, and their respective officers, directors

and employees and any vendor or third party providing services for this rental transaction) MUST BE RESOLVED ONLY BY ARBITRATION OR

IN A SMALL CLAIMS COURT ON AN INDIVIDUAL BASIS; CLASS ARBITRATIONS AND CLASS ACTIONS ARE NOT ALLOWED. YOU AND WE EACH WAIVE THE RIGHT TO A TRIAL BY JURY OR TO PARTICIPATE IN A CLASS ACTION, EITHER AS A CLASS REPRESENTATIVE OR CLASS MEMBER. You and we remain free

to bring any issues to the attention of government agencies.

This Arbitration Provision’s scope is broad and includes, without limitation, any claims arising from or relating to this Agreement or any aspect of the relationship or communications between us, whether based in contract,

tort, statute, fraud, misrepresentation, equity, or any other legal theory.

It is governed by the Federal Arbitration Act, 9 U.S.C §§ 1 et seq.

In any arbitration under this Arbitration Provision, all issues are for the arbitrator to decide, including his or her own jurisdiction, and any

objections with respect to the existence, scope or validity of this

Arbitration Provision. The arbitration will take place in the county of

Your billing address unless agreed otherwise.

The American Arbitration Association (“AAA”) will administer any arbitration pursuant to its Consumer Arbitration Rules (the “Rules”).

You can obtain the Rules at www.adr.org.

You or we may commence an arbitration by providing a written

demand for arbitration to the other (to us: The Hertz Corporation,

8501 Williams Road, Estero, FL 33928 Attn: Arbitration) and two

copies of the demand to the AAA. If You seek $10,000 or less through

arbitration, we will reimburse You for any AAA required filing fee.

The arbitrator may award injunctive relief as well as money, but only in

favor of and as warranted by the claim of the individual party seeking

relief. Judgment on the arbitral award may be entered in any court

having jurisdiction. An arbitration award and any judgment confirming it

apply only to the specific parties in that case and cannot be used in

any other case except to enforce the award itself. The arbitrator may

not consolidate more than one person’s claims, and may not otherwise

preside over any form of representative or class action.

IF YOU DO NOT WISH TO AGREE TO THIS ARBITRATION PROVISION, YOU MUST NOTIFY HERTZ IN WRITING WITHIN 30 DAYS OF YOUR RECEIPT OF THIS AGREEMENT BY EMAILING US AT no.arbitration@hertz.com OR BY MAIL TO The Hertz

Corporation, 8501 Williams Road, Estero, FL 33928 Attn: Arbitration.

Include Your name, address, the number at the top of this Rental

Record, and a clear statement that You do not agree to this Arbitration

Provision. If you have previously notified Hertz of Your decision to opt

out of this Arbitration Provision, You do not need to do so again.

(MCA, Ex. A, at 6.)

Defendants allege that Plaintiff did not opt out of arbitration by providing notice, in the manner specified, within 30 days of entering the contract. (Id. ¶¶ 5-6, at 5.) Therefore, Defendants maintain that any claim arising from or relating to the car rental agreement must resolve through arbitration or a small claims court. (Id. ¶ 1, at 6.)

Defendants have sufficiently demonstrated evidence of the arbitration agreement. Plaintiff did not respond.

ii. The FAA and Arbitration in the Action

The trial court must rule on the threshold question of the FAA’s applicability to the arbitration agreement. (Garcia v. Superior Court (2015) 236 Cal.App.4th 1138 [failure to rule on FAA’s applicability resulted in reversal of ruling compelling parties to arbitrate]; accord Citizens of Humanity, LLC v. Applied Underwriters, Inc. (2017) 17 Cal.App.5th 806, rev. denied, (March 14, 2018) [court decides “reverse preemption” argument based on McCarran-Ferguson Act].)

The Court finds that the FAA governs this instant action. The arbitration agreement provides that the FAA governs any claims arising from or relating to the contract between Plaintiff and Defendants:

tort, statute, fraud, misrepresentation, equity, or any other legal theory.

It is governed by the Federal Arbitration Act, 9 U.S.C §§ 1 et seq.

(MCA, Ex. A, ¶ 3, at 18.)

Additionally, the California Supreme Court held that “[p]arties to an arbitration agreement are not precluded from expressly agreeing that any arbitration proceeding should move forward under the procedural provisions of the Federal Arbitration Act (FAA).” (Cronus Investments, Inc. v. Concierge Services (2005) 35 Cal.4th 376, 379 [25 Cal.Rptr.3d 540, 107 P.3d 217].) However, the FAA permits the invalidation of an arbitration clause for “generally applicable contract defenses, such as fraud, duress, or unconscionability.” (See FAA § 2; AT&T Mobility LLC v. Concepcion (2011) 563 U.S. 333, 339.)

The Court now analyzes whether Plaintiff must arbitrate her claims under the arbitration agreement.

iii. The Arbitration Agreement

Defendants assert that Plaintiff’s only factual allegations are that Hertz “fail[ed] to release property” and that “very important and valuable items were never returned or not released.” (Id. ¶ 2, at 3 [quoting Compl., ¶ 11].) Accordingly, Defendants have taken the position that Plaintiff’s claims relate to and arise from the rental contract (id.), and Defendants argue Plaintiff’s claims are subject to arbitration. (MCA, Mem. P. & A., ¶ 2, at 9.)

In Plaintiff’s complaint form, Plaintiff marked “Personal Injury” and wrote “failur[e] to release property” for the “Other Damages” checkbox. (Compl., at 1.) Plaintiff claims to have suffered hospital and medical expenses, loss of property use, general damage, and other damages for “very important and valuable items were never returned and or not released.” (Id., No. 11, at 2.) So, “failur[e] to release …” and “very important and valuable items …” pertain to other damages (see ante), whereas personal injury and medical expenses are independent but potentially related claims.

Additionally, Plaintiff marked “Products Liability” as a cause of action and indicated “compensatory damages” and damages “according to proof.” (Compl., Nos. 10-12, at 2.) The case cover sheet likewise shows that Plaintiff marked “Product liability” and “monetary” remedies. (Compl., Cover Sheet, at 1.) While Plaintiff’s complaint is limited to the four corners of the standardized form, the Court focuses on “substance over form in characterizing pleadings.” (Ameron Internat. Corp. v. Insurance Co. of State of Pennsylvania (2010) 50 Cal.4th 1370, 1386; see also Cal. Civ. Code § 3528 [“The law respects form less than substance.”].) The Court notes that, as Defendants have not demurred, the Complaint is not clear. However, it appears the gravamen of Plaintiff’s complaint points to either personal injury or some form of property damage. The Court need not make a distinction between the potential causes of action because property damage, personal injury, and death claims are all exempted from the arbitration agreement:

Except for claims for property damage, personal injury or death, ANY DISPUTES BETWEEN You and us (“us” and “we” for the purposes of

this Arbitration Provision means The Hertz Corporation, (“Hertz”) its parent and affiliate corporations, and their respective officers, directors

and employees and any vendor or third party providing services for this rental transaction) MUST BE RESOLVED ONLY BY ARBITRATION OR

to bring any issues to the attention of government agencies.

(MCA, Ex. A, ¶ 2, at 18.)

Therefore, Plaintiff’s Complaint is not subject to arbitration.

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Conclusion

Defendants Hertz Rental Car and Hertz Global Holding, Inc.’s Motion to Compel Arbitration and Stay Action is DENIED.