Judge: Teresa A. Beaudet, Case: 21STCV09458, Date: 2023-04-04 Tentative Ruling

Case Number: 21STCV09458    Hearing Date: April 4, 2023    Dept: 50

Superior Court of California

County of Los Angeles

Department 50

            Background

Plaintiffs Patricia Bonilla (“Bonilla”) and Laura Vasquez (jointly, “Plaintiffs”) filed this lemon law action on March 10, 2021 against Defendant Nissan North America, Inc. (“Defendant”). The Complaint asserts causes of action for (1) violation of Song Beverly Act – breach of express warranty, (2) violation of Song Beverly Act – breach of implied warranty, and (3) violation of Song Beverly Act section 1793.2. 

In the Complaint, Plaintiffs allege that on March 26, 2019, they purchased a new 2019 Nissan Altima (the “Subject Vehicle”). (Compl., ¶ 8.) Plaintiffs allege the “Subject Vehicle was delivered to Plaintiffs with serious defects and nonconformities to warranty and developed other serious defects and nonconformities to warranty including, but not limited to, the engine, transmission, electrical, and structural system defects.” (Compl., ¶ 9.)

Defendant now moves for an order compelling Plaintiffs to arbitrate this matter and to stay the proceedings pending completion of arbitration. Plaintiffs oppose.

Requests for Judicial Notice

The Court grants Defendant’s request for judicial notice. The Court denies Plaintiff’s request for judicial notice.

Legal Standard

In a motion to compel arbitration, the moving party must prove by a preponderance of evidence the existence of the arbitration agreement and that the dispute is covered by the agreement. The burden then shifts to the resisting party to prove by a preponderance of evidence a ground for denial (e.g., fraud, unconscionability, etc.). ((Rosenthal v. Great Western Fin. Securities Corp. (1996) 14 Cal.4th 394, 413-414.)   

Generally, on a petition to compel arbitration, the court must grant the petition unless it finds either (1) no written agreement to arbitrate exists; (2) the right to compel arbitration has been waived; (3) grounds exist for revocation of the agreement; or (4) litigation is pending that may render the arbitration unnecessary or create conflicting rulings on common issues. ((Code Civ. Proc., § 1281.2); (Condee v. Longwood Management Corp. (2001) 88 Cal.App.4th 215, 218-219.)

“California has a strong public policy in favor of arbitration and any doubts regarding the arbitrability of a dispute are resolved in favor of arbitration.” ((Coast Plaza Doctors Hospital v. Blue Cross of California (2000) 83 Cal.App.4th 677, 686.) “This strong policy has resulted in the general rule that arbitration should be upheld unless it can be said with assurance that an arbitration clause is not susceptible to an interpretation covering the asserted dispute.” ((Ibid. [internal quotations omitted].) This is in accord with the liberal federal policy favoring arbitration agreements under the Federal Arbitration Act (“FAA”), which governs all agreements to arbitrate in contracts “involving interstate commerce.” (9 U.S.C. section 2, et seq.;((Higgins v. Superior Court (2006) 140 Cal.App.4th 1238, 1247.)

            Discussion

A.    Existence of Arbitration Agreement

Defendant assert that Plaintiffs purchased the subject 2019 Nissan Altima on March 26, 2019 from Downey Nissan pursuant to a written contract (the “Sale Contract”). (Chung Decl.,    ¶ 5, Ex. 4.) The Court notes that only Bonilla’s name is listed on this Sale Contract. (Ibid.)

Moreover, the Court notes that the Sale Contract attached as Exhibit 4 to Defendant’s counsel’s (Ms. Chung’s) declaration contains two pages. As Defendant notes, the second page of the Sale Contract provides, inter alia, “Agreement to Arbitrate: By signing below, you agree that, pursuant to the Arbitration Provision on the reverse side of this contract, you or we may elect to resolve any dispute by neutral, binding arbitration and not by a court action. See the Arbitration Provision for additional information concerning the agreement to arbitrate.” (Chung Decl., ¶ 5, Ex. 4.) However, the Court notes that the subject arbitration provision is not provided with the Sale Contract attached as Exhibit 4 to Ms. Chung’s declaration. 

Rather, Defendant relies on a purported template form that was not executed by the parties here to demonstrate that Plaintiffs’ claims are covered by the arbitration provision in such form. (Chung Decl., ¶ 8, Ex. 5.) Specifically, Defendant provides a purported copy of a “553-CA-ARB Form,” which Defendant asserts is the “standardized form used by independent Nissan dealers that contains the Arbitration Provision referenced on the front side of the Sales Contract.” (Chung Decl., ¶ 8, Ex. 5.) Defendant’s counsel states, “I am informed and believe that Plaintiffs signed a Sales Contract that used Form 553-CA-ARB.” (Chung Decl., ¶ 9.) The Court does not find that Ms. Chung has demonstrated a foundation of personal knowledge to make such statement.

As discussed, “[t]he party seeking to compel arbitration bears the burden of proving by a preponderance of the evidence an agreement to arbitrate a dispute exists. To carry this burden of persuasion the moving party must first produce prima facie evidence of a written agreement to arbitrate the controversy.” ((Trinity v. Life Ins. Co. of North America (2022) 78 Cal.App.5th 1111, 1120 [internal quotations and citations omitted].) The Court does not find that Defendant has presented adequate evidence of an agreement by the parties to arbitrate the claims set forth in Plaintiffs’ Complaint.

B.    Waiver

Plaintiffs also assert that Defendant waived its right to compel arbitration by engaging in conduct inconsistent with an intent to arbitrate.

“In determining waiver, a court can consider (1) whether the party’s actions are inconsistent with the right to arbitrate; (2) whether the litigation machinery has been substantially invoked and the parties were well into preparation of a lawsuit before the party notified the opposing party of an intent to arbitrate; (3) whether a party either requested arbitration enforcement close to the trial date or delayed for a long period before seeking a stay; (4) whether a defendant seeking arbitration filed a counterclaim without asking for a stay of the proceedings; (5) whether important intervening steps [e.g., taking advantage of judicial discovery procedures not available in arbitration] had taken place; and (6) whether the delay affected, misled, or prejudiced the opposing party.” ((St. Agnes Medical Center v. PacifiCare of California (2003) 31 Cal.4th 1187, 1196 [internal quotations omitted].)

Plaintiffs assert that there are facts supporting a finding of waiver here. The Court agrees. Plaintiffs note that Defendant filed the instant motion on February 9, 2023, nearly two years after the Complaint in this case was filed on March 10, 2021. In addition, the motion was filed approximately two months before the current trial date of April 19, 2023.  

Plaintiffs also indicate that on or around June 23, 2021, Defendant produced documents and provided responses to Plaintiffs’ Requests for Production of Documents, Form Interrogatories, Special Interrogatories, and Requests for Admissions. (Nickfardjam Decl., ¶ 10.) In addition, on August 6, 2021, Defendant filed a Case Management Statement indicating that Defendant requests a jury trial. Defendant’s August 6, 2021 Case Management Statement does not check “[b]inding private arbitration” as an ADR process that Defendant is willing to participate in. (Defendant’s August 6, 2021 Case Management Statement, Item 10.)

Plaintiffs assert that they will be prejudiced due to Defendant’s failure to demand arbitration within a reasonable time. (Nickfardjam Decl., ¶ 19.) Plaintiffs note that Defendant’s motion to compel arbitration was filed nearly two years after this action was filed, and assert that a resolution of Plaintiff’s case would be further delayed if the case is submitted to arbitration. (Nickfardjam Decl., ¶¶ 19-20.)

Defendant asserts that the factors weigh in favor of a nonwaiver. Defendant notes that its Answer to the Complaint filed on April 16, 2021 alleges “demand for arbitration” as an affirmative defense. Defendant also states that there has “not been any substantive motion practice, depositions, or vehicle inspections in this matter.” (Chung Decl., ¶ 10.) Defendant assert that Plaintiff thus cannot point to conduct by Defendant whereby the “litigation machinery” was “substantially invoked.” But as set forth above, Defendant waited nearly two years after the Complaint was filed to file the instant motion, and the motion was filed and set to be heard close to the April 19, 2023 trial date. 

Conclusion

For the foregoing reasons, Defendant’s motion to compel arbitration is denied.

Plaintiff is ordered to provide notice of this Order.

DATED:  April 4, 2023                                 

________________________________

Hon. Teresa A. Beaudet

Judge, Los Angeles Superior Court