Judge: Teresa A. Beaudet, Case: 21STCV10768, Date: 2022-08-18 Tentative Ruling

Case Number: 21STCV10768    Hearing Date: August 18, 2022    Dept: 50

Superior Court of California

County of Los Angeles

Department 50

            Background

Plaintiffs Daniel Villa and Jasmine P. Sepulveda (“Sepulveda”) (jointly, “Plaintiffs”) filed this action on March 19, 2021 against Defendants BMW of North America, LLC (“BMWNA”) and SAI Long Beach B, Inc., dba Long Beach BMW (“SAI”). 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, (3) violation of Song-Beverly Act – Section 1793.2, and (4) negligent repair, arising out of the purchase of a 2017 BMW 430GC

(the “Subject Vehicle”).

On October 13, 2021, the Court issued an Order granting BMWNA’s motion for an order compelling arbitration and staying the action. The motion was also granted as to SAI’s joinder. The Court ordered that the entire action is stayed pending completion of arbitration of Plaintiffs’ arbitrable claims. 

On December 7, 2021, Plaintiffs submitted a demand for arbitration to JAMS against BMWNA, SAI, and “McKenna BMW.” (Inscore Decl., ¶ 6, Exs. 3-4.) Plaintiffs’ filing fee was paid by check dated December 8, 2021. (Inscore Decl., ¶ 7, Ex. 5.) On December 15, 2021, JAMS Case Manager Joshua Kroll sent the parties correspondence of “Notice of Intent to Initiate Arbitration,” indicating that Plaintiffs are responsible for $250 of the filing fee, and that the remainder of the fees fall to the other parties. (Inscore Decl., ¶ 8, Ex. 6.)

On February 11, 2022, on the behalf of JAMS, Mr. Kroll confirmed the appearance of Cliff LLP for McKenna BMW via email and reissued the filing fee invoices to each respondent,

due on receipt. (Inscore Decl., ¶ 9, Exs. 7-8.) Mr. Kroll followed up with McKenna BMW on February 25, 2022, March 11, 2022, March 25, 2022, and April 8, 2022. (Inscore Decl., ¶ 10, Ex. 8.) Plaintiffs’ counsel indicates that McKenna BMW did not respond to this correspondence and did not pay its initiation fees. (Inscore Decl., ¶ 10.)

Plaintiffs now move pursuant to Code of Civil Procedure section 1281.97 for an order that Plaintiffs may withdraw from arbitration and proceed in Court. BMWNA and SAI oppose.

Evidentiary Objections

The Court rules on BMWNA’s evidentiary objections to the Declaration of Jasmine Sepulveda as follows:

Objection 1: sustained as to “my brother Daniel Villa,” overruled as to the remainder

The Court rules on BMWNA’s evidentiary objections to the Declaration of Daniel Z. Inscore as follows:

Objection 1: sustained  

Objection 2: overruled

Objection 3: overruled

Objection 4: overruled

            Discussion

            Code of Civil Procedure section 1281.97 provides as follows:

(a)

(1) In an employment or consumer arbitration that requires, either expressly or through application of state or federal law or the rules of the arbitration provider, the drafting party to pay certain fees and costs before the arbitration can proceed, if the fees or costs to initiate an arbitration proceeding are not paid within 30 days after the due date the drafting party is in material breach of the arbitration agreement, is in default of the arbitration, and waives its right to compel arbitration under Section 1281.2.

(2) After an employee or consumer meets the filing requirements necessary to initiate an arbitration, the arbitration provider shall immediately provide an invoice for any fees and costs required before the arbitration can proceed to all of the parties to the arbitration. The invoice shall be provided in its entirety, shall state the full amount owed and the date that payment is due, and shall be sent to all parties by the same means on the same day. To avoid delay, absent an express provision in the arbitration agreement stating the number of days in which the parties to the arbitration must pay any required fees or costs, the arbitration provider shall issue all invoices to the parties as due upon receipt.

(b) If the drafting party materially breaches the arbitration agreement and is in default under subdivision (a), the employee or consumer may do either of the following:

(1) Withdraw the claim from arbitration and proceed in a court of appropriate jurisdiction.

(2) Compel arbitration in which the drafting party shall pay reasonable attorney’s fees and costs related to the arbitration.

For purposes of Section 1281.97, “drafting party” means “the company or business that included a predispute arbitration provision in a contract with a consumer or employee. The term includes any third party relying upon, or otherwise subject to the arbitration provision, other than the employee or consumer.” (Code Civ. Proc., § 1280, subd. (e).)

As set forth above, Plaintiffs assert that McKenna BMW failed to timely pay its initial arbitration fees.[1] McKenna BMW was not named as a defendant in the instant action, although Plaintiffs allege that Sepulveda leased the Subject Vehicle from McKenna BMW. (Compl., ¶ 9.) Plaintiffs indicate that they elected to allege an additional claim for breach of implied warranty against McKenna BMW in the arbitration demand, and assert that McKenna BMW is a “drafting party” for purposes of Code of Civil Procedure section 1281.97.

As an initial matter, the Court notes that it sustains BMWNA’s evidentiary objection to the statement in paragraph 3 of Plaintiffs’ counsel’s declaration that “McKenna BMW drafted and signed the lease contract with Plaintiffs for the subject vehicle, which Plaintiffs leased for personal, family and household purposes.” The Court agrees with BMWNA that Plaintiffs’ counsel lacks foundation and personal knowledge to make these statements.

BMWNA also asserts that Plaintiffs cannot withdraw from the arbitration and proceed in Court under Section 1281.97(b) because this Court does not have jurisdiction over third party McKenna BMW. As set forth above, Plaintiffs did not name McKenna BMW as a party to this lawsuit, and McKenna BMW was thus not subject to the Court’s October 13, 2021 Order compelling the matter to arbitration. BMWNA asserts that claims against McKenna BMW are thus not the subject of the Court’s action here. The Court notes that Plaintiffs do not address this argument in the reply, which the Court construes as a concession as to the merits of the argument. 

In light of the foregoing, the Court does not find that Plaintiffs have demonstrated entitlement to relief under Code of Civil Procedure section 1281.97. The Court thus finds it unnecessary to consider the merits of BMWNA’s remaining arguments. 

Conclusion

For the foregoing reasons, Plaintiffs’ motion is denied.  

BMWNA is ordered to provide notice of this ruling.

DATED:  August 18, 2022                            

________________________________

Hon. Teresa A. Beaudet

Judge, Los Angeles Superior Court