Judge Teresa A. Beaudet, Case 21STCV32740 2023-01-04 Tentative Ruling

Plaintiffs Robin Aguilar and Andrew Aguilar (jointly, “Plaintiffs”) filed this lemon law action on September 3, 2021, against Defendant Nissan North America, Inc. (“Defendant”). The Complaint asserts two causes of action for (1) violation of the Song-Beverly Act – breach of express warranty, and (2) violation of the Song-Beverly Act – breach of implied warranty, arising out of the purchase of a 2015 Nissan Pathfinder. (Compl., ¶ 14.)

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

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. § 2, et seq.; (Higgins v. Superior Court (2006) 140 Cal.App.4th 1238, 1247.)

As an initial matter, the objections to the Declaration of Defendant’s counsel purporting to authenticate and provide the foundation for the documents that form the basis for this motion have all been sustained. For that reason alone, the motion fails.

Even if that were not the case, there is another fundamental defect in the evidence proffered by Defendant. Defendant indicates that Robin Aguilar purchased the subject 2015 Nissan Pathfinder on June 27, 2018 from Nissan of Mission Hills pursuant to a written Retail Installment Sale Contract – Simple Finance Charge (With Arbitration Provision) (the “Sale Contract”). (Polyakov Decl., ¶ 7, Ex. 4.) The Sale Contract attached as Exhibit 4 to Defendant’s counsel’s (Mr. Polyakov’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.” (Polyakov Decl., ¶ 7, Ex. 4.) However, the subject arbitration provision is not provided with the Sale Contract attached as Exhibit 4 to Mr. Polyakov’s declaration.

As noted by Plaintiffs, Defendant relies on a purported exemplar contract that was not executed by the parties here to demonstrate that Plaintiffs’ claims are covered by the arbitration provision in such exemplar contract.[1] As set forth above, the Court sustains Plaintiffs’ evidentiary objection to Exhibit 5 to Mr. Polyakov’s declaration, which is a purported “copy of a sample of a full sales contract that contains the front and back portions of a customary Sales Contract, like the one executed by Plaintiff Robin Aguilar.” (Polyakov Decl., ¶ 10, Ex. 5.) The Court also sustains Plaintiffs’ evidentiary objection to Mr. Polyakov’s assertion that “[t]he Sales Contract (Exhibit 5) contains a full and accurate copy of the Arbitration Provision to which Plaintiff Robin Aguilar consented when she executed her Sales Contract (Exhibit 4).” (Polyakov Decl., ¶ 12.) The Court does not find that Mr. Polyakov 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 agrees with Plaintiffs that Defendant has not presented adequate evidence of an agreement by the parties to arbitrate the claims set forth in Plaintiffs’ Complaint.

Plaintiff also asserts that Defendant waived its right to compel arbitration. “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) Trinity v. Life Ins. Co. of North America (2022) 78 Cal.App.5th 1111, 1120 [internal quotations omitted].)

Plaintiffs assert that there are facts supporting a finding of waiver here. Plaintiffs note that Defendant filed the instant motion on October 21, 2022, over a year after the Complaint in this case was filed on September 3, 2021. In addition, trial in this matter is currently set for February 15, 2023, and Plaintiffs assert that Defendant thus waited until the eve of trial to move to compel arbitration.

Plaintiffs also indicate that both parties have engaged in discovery; and assert that on April 25, 2022, Defendant responded to Plaintiffs’ Request for Production of Documents and produced, inter alia, the sales contract that Defendant contends contains the arbitration clause that is the subject of the instant motion. (Mukai Decl., ¶¶ 9, 11, 13.) This is not disputed by Defendant.

Plaintiffs also note that Defendant filed its answer on October 7, 2021, but none of the twenty-eight affirmative defenses in the answer mention arbitration. (Mukai Decl., ¶ 5, Ex. 1.) On November 16, 2021, Defendant served its Case Management Statement (“CMS”) in advance of the Case Management Conference set for December 1, 2021, but the CMS likewise did not raise arbitration as a potential issue in this matter. (Mukai Decl., ¶ 6, Ex. 2.) Further, Plaintiffs indicate that this case was mediated on December 6, 2021, April 5, 2022, August 16, 2022, and November 28, 2022, but the parties were unable to resolve the case. (Mukai Decl., ¶¶ 8, 10, 12, 15.) Plaintiffs assert that Defendant’s “last minute attempt to compel Plaintiffs’ claims into arbitration is extremely prejudicial at this late hour as it will result in additional costs, further delay in the resolution of Plaintiffs’ claims, and will result in them having to continue to drive a defective vehicle.” (Opp’n at p. 4:24-26.)

In the reply, Defendant asserts that it has not “substantially invoked” the “litigation machinery” under St. Agnes. Defendant indicates that the parties have not engaged in substantive motion practice, depositions, or vehicle inspections. (Polyakov Decl., ¶ 4.) Defendant also asserts that the mediations referenced by Plaintiffs were “mass mediations” directed to Plaintiffs’ counsel’s inventory generally and not mediations of this case in particular. (Polyakov Reply Decl., ¶ 3). But as Plaintiffs note, Defendant waited over a year after the Complaint was filed to file the instant motion; and the motion was filed and set to be heard close to the February 15, 2023 trial date.

For the foregoing reasons, Defendant’s motion to compel arbitration is denied. Plaintiff is ordered to provide notice of this Order.

[1]Defendant acknowledges in the reply that “[b]ecause Nissan only has the front side of the Sales Contract, it submitted an exemplar of the arbitration provision since it utilizes standard form language.” (Reply at p. 2:20-21.)

ROBIN AGUILAR, et al., Plaintiffs, vs. NISSAN NORTH AMERICA, INC., et al., Defendants.	Case No.:	21STCV32740
	Hearing Date:	January 4, 2023
	Hearing Time:	10:00 a.m.
	[TENTATIVE] ORDER RE: MOTION TO COMPEL ARBITRATION AND STAY PROCEEDINGS

Superior Court of California

County of Los Angeles

Department 50