Judge: Theresa M. Traber, Case: 19STCV41383, Date: 2023-10-17 Tentative Ruling
Case Number: 19STCV41383 Hearing Date: October 17, 2023 Dept: 47
Tentative Ruling
Judge Theresa M. Traber, Department 47
HEARING DATE: October 17, 2023 TRIAL
DATE: NOT SET
CASE: Loaolu Damilola
Oladapo v. BMW of North America, LLC, et al.
CASE NO.: 19STCV41383 
MOTION
FOR RECONSIDERATION
MOVING PARTY: Plaintiff Loaolu Damilola
Oladapo
RESPONDING PARTY(S): Defendants BMW
of North America, LLC and Crevier BMW
CASE
HISTORY:
·
11/18/19: Complaint filed.
·
07/29/20: Motion to Compel Arbitration granted.
STATEMENT
OF MATERIAL FACTS AND/OR PROCEEDINGS:
This is a lemon law action. Plaintiff
alleges that the 2013 BMW 528i that she leased in 2013 had engine defects and
other defects.
Plaintiff moves for reconsideration
of the Court’s July 29, 2020 ruling compelling this matter to arbitration and
staying all proceedings.
TENTATIVE RULING:
On the Court’s own motion, the
July 29, 2020 Order Granting Defendants’ Motion to Compel Arbitration and Stay
All Proceedings is VACATED and the stay of proceedings lifted.
Defendants’
Motion to Compel Arbitration is DENIED. The Status Conference Regarding
Arbitration scheduled for December 19, 2023 at 8:30 AM is converted into a Case
Management Conference at the same date and time.
Defendants
to give notice.
DISCUSSION:
Plaintiff moves for reconsideration
of the Court’s July 29, 2020 compelling this matter to arbitration and staying
all proceedings.
Legal
Standard
Code of Civil Procedure § 1008
provides, in relevant part:
a) When an
application for an order has been made to a judge, or to a court, and refused
in whole or in part, or granted, or granted conditionally, or on terms, any
party affected by the order may, within 10 days after service upon the party of
written notice of entry of the order and based upon new or different facts,
circumstances, or law, make application to the same judge or court that
made the order, to reconsider the matter and modify, amend, or revoke the prior
order. The party making the application shall state by affidavit what
application was made before, when and to what judge, what order or decisions
were made, and what new or different facts, circumstances, or law are claimed
to be shown.
* * *
(c) If a court at any time
determines that there has been a change of law that warrants it to reconsider a
prior order it entered, it may do so on its own motion and enter a different
order.
(d) A violation
of this section may be punished as a contempt and with sanctions as allowed by
Section 128.7. In addition, an order made contrary to this section may be
revoked by the judge or commissioner who made it, or vacated by a judge of the
court in which the action or proceeding is pending.
(e) This section
specifies the court’s jurisdiction with regard to applications for
reconsideration of its orders and renewals of previous motions, and applies to
all applications to reconsider any order of a judge or court, or for the
renewal of a previous motion, whether the order deciding the previous matter or
motion is interim or final. No application to reconsider any order or for the
renewal of a previous motion may be considered by any judge or court unless
made according to this section.
(Code Civ. Proc. § 1008(a), (c)-(e) (bold
emphasis added).)
Request for Judicial Notice
Plaintiff
requests that the Court take judicial notice of three recent appellate opinions:
(1) Ford Motor Warranty Cases (2023) 89 Cal.App.5th 1324; (2) Rosanna
Montemayor et al. v. Ford Motor Company (2023) 92 Cal.App.5th 958; and (3) Kielar
v. Superior Court of Placer County (Aug. 16, 2023) C096773; 2023 WL 5270559.
Plaintiff also requests that the Court take judicial notice of a notice from
the Court of Appeal for the Third District in the matter of Campos v.
Superior Court of Butte County (C098848).
Plaintiff
also, in a supplemental filing accompanying the reply brief, requests that the
Court take judicial notice of (1) Jaquelyn Yeh et al. v. Superior Court of
Contra Costa County (2023) 95 Cal.App.5th 264; and (2) the Court of Appeal
for the Third District’s response to a Petition for Writ of Mandate in the
matter of Ortiz et al. v. Superior Court of Sacramento County (C099135).
Plaintiff’s
requests are GRANTED pursuant to Evidence Code section 452(d) (court records).
Jurisdiction
Plaintiff concedes that this motion is
made outside the 10-day time limit under subdivision (a), and instead requests
that the Court reconsider the previous ruling on its own motion, pursuant to
subdivision (c) in light of the recent opinions, including Kielar v. Superior Court of Placer County (Cal.
Ct. App., Aug. 16, 2023, No. C096773) 2023 WL 5270559; Montemayor v. Ford
Motor Company (2023) 92 Cal.App.5th 958, (review filed Aug. 1, 2023); and Ford
Motor Warranty Cases (2023) 89 Cal.App.5th 1324, (review granted July 19,
2023). Defendants argue that such a request is improper because subdivision (c)
does not entitle Plaintiff to petition the Court for reconsideration. Even so,
however, the Court has discretion to reconsider an order on its own motion under
both section 1008(c) and its “constitutionally derived authority.” (Le
Francois v. Goel¿(2005) 35 Cal.4th 1094, 1096.) Section 1008 limits the parties’ ability to
file repetitive motions to reconsider; it does not limit the court’s ability to
reconsider its prior interim orders to correct its own errors. (Id. at
pg. 1109.)
Defendants also argue that, even if the
Court is inclined to reconsider the issue under its inherent authority, the
Court has no jurisdiction to reconsider a motion to compel arbitration once the
matter has been ordered to arbitration. Defendant relies on Code of Civil
Procedure section 1281.4, which provides that, once arbitration is ordered, the
Court shall “stay the action or proceeding until an arbitration is had in accordance
with the order to arbitrate or until such earlier time as the court specifies.”
(Code Civ. Proc. § 1281.4.) The Court of Appeal has consistently held, however,
that trial courts have jurisdiction to reconsider an initial order compelling
arbitration, particularly where there has been a change in the law, as is
asserted here. (See, e.g., Malek v. Blue Cross of California (2004) 121
Cal.App.4th 44, 60; see also Pinela v. Nieman Marcus Group, Inc. (2015)
238 Cal.App.4th 227, 236-38.)
As the Court is empowered to
reconsider its own motions under both section 1008(c) and its inherent
authority, the Court reconsiders its order compelling this matter to
arbitration.
Effect
of Prior Ruling
Defendants moved to compel
arbitration on the basis provisions in a Lease Agreement and a subsequent
Retail Installment Sales Contract (“RISC”).
Under California law, arbitration
agreements are valid, irrevocable, and enforceable, save upon such grounds as
exist at law or in equity for the revocation of any contract. (Blake v.
Ecker (2001) 93 Cal.App.4th 728, 741 (overruled on other grounds by Le
Francois v. Goel (2005) 35 Cal.4th 1094).) A party petitioning to compel
arbitration has the burden of establishing the existence of a valid agreement
to arbitrate, and the party opposing the petition has the burden of proving, by
a preponderance of the evidence, any fact necessary to its defense. (Banner
Entertainment, Inc. v. Superior Court (1998) 62 Cal.App.4th 348,
356-57.)
Plaintiff first leased and then purchased the vehicle at
issue, and Defendants sought to compel arbitration based on arbitration
provisions in both the Lease Agreement and the Purchase Agreement. The Lease
Agreement provides:
38.
ARBITRATION CLAUSE
PLEASE
REVIEW – IMPORTANT – AFFECTS OUR LEGAL RIGHTS
NOTICE:
Either you or I may choose to have any dispute between us decided by
arbitration and not in a court or by jury trial. . . .
“Claim”
broadly means any claim, dispute or controversy, whether in contract, tort,
statute or otherwise, whether preexisting, present or future, between me and
you or your employees, officers, directors, affiliates, successors or assigns,
or between me and any third parties if I assert a Claim against such third
parties in connection with a Claim I assert against you, which arises out of or
relates to my credit application, lease, purchase or condition of this Vehicle,
this Lease or any resulting transaction or relationship (including any such
relationship with third parties who do not sign this Lease).
(Defendants’ RJN ISO Mot. Compel Arbitration, Exh. A, at p. 6.)
Plaintiff’s signature appears on the next page of the Lease Agreement. (Id.
at p. 7.)
The Purchase Agreement (Retail Installment Sale Contract,
or “RISC”) includes a section stating that “[b]y 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 court action. See the Arbitration Provision for additional information
concerning this agreement to arbitrate.” (Id., Exh. B.) Plaintiff’s
signature appears in that section. The arbitration provision on the reverse
provides as follows:
1. EITHER
YOU OR WE MAY CHOOSE TO HAVE ANY DISPUTE BETWEEN US DECIDED BY ARBITRATION AND
NOT IN COURT OR BY JURY TRIAL.
* * *
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,
successors or assigns, which arises out of or relates to your 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, be
resolved by neutral, binding arbitration and not by a court action.
(Ibid.) The Lease Agreement is with Irvine BMW, which is not a party
to this action, and the Purchase Agreement is also between Plaintiff and Irvine
BMW.
On July 20, 2020, the Court heard
arguments at the regularly scheduled hearing for Defendants’ Motion to Compel
Arbitration and took the matter under submission. (July 20, 2020 Minute Order.)
The Court issued its ruling on July 29, 2020, concluding that Defendants were
third-party beneficiaries based on the definition of “claim” in both the Lease
Agreement and the RISC, and were therefore entitled to compel arbitration of
this dispute. (July 29, 2020 Ruling on Matter Taken Under Submission pp. 3-4.)
Reconsideration
Under New Authority
Plaintiff argues that the Court
should reconsider and vacate its prior ruling on the basis that the recent
appellate opinion Ford Motor Warranty Cases (2023) 89 Cal.App.5th 1324,
(review granted July 19, 2023) and its progeny reject the Court’s reasoning in
its July 29, 2020 ruling. In Ford Motor Warranty Cases, the Court
of Appeal for the Second District, interpreting the same language in an
identical RISC, concluded that the reference to “third parties who do not sign
this contract” dictated what claims might be arbitrated, not which parties may
compel arbitration, and held that the third-party beneficiary doctrine was not
available to the manufacturer based on a contract with the dealer. (Ford
Motor Warranty Cases, supra, 89 Cal.App.5th at 1339.) Our Supreme Court
granted review of Ford Motor Warranty Cases, on the limited issue of
whether a manufacturer’s express or implied warranties permit them to enforce
an arbitration agreement under an equitable estoppel theory. (Ford Motor
Warranty Cases Case No. S279969 (filed May 12, 2023).) Ford Motor
Warranty Cases remains published,
however, and may be cited both for its persuasive value and for the purpose
of establishing a conflict in authority that would empower trial courts to
exercise discretion in choosing between sides in any such conflict. (Id., see
also Cal. Rules of Court, rule 8.1115(e).) The Court therefore is empowered to
consider this opinion as persuasive authority.
Defendants argue the Court should instead reach the opposite conclusion
by following the reasoning set forth in Felisilda v. FCA US, LLC (2020)
53 Cal.App.5th 486, 495. Felisilda is not only unpersuasive for the
reasons stated below, it is also completely inapplicable to Defendant’s
third-party beneficiary claim, as the question of whether a third-party
beneficiary could independently move to compel arbitration on that basis was not
at issue in that case. The only conclusion the Felisilda court reached
was that a third party was entitled to have its claims arbitrated when a party
to the contract—i.e., the dealer—successfully moved to compel arbitration and
included the manufacturer as a party to that proceeding. (Felisilda, supra,
53 Cal.App.5th at 498-99.) As the dealer has never been a party to this case,
and Defendant is independently moving to compel arbitration, that conclusion is
not applicable here. Instead, the Court finds that the opposite conclusion,
advanced by Ford Motor Warranty Cases under highly similar
circumstances, is more appropriate.
The Court therefore finds that Defendants were not entitled to compel
this matter to arbitration under the third-party beneficiary doctrine.
Equitable
Estoppel
Defendants argue in the alternative that Plaintiff should be equitably
estopped from denying the arbitrability of the claims against Defendants
because Plaintiff signed an arbitration provision that expressly mentions
third-party claims. In opposition, Plaintiff contends that the Court of Appeal
explicitly rejected this argument in the recent Ford Motor Warranty Cases, where
the Court of Appeal concluded that claims of the sort advanced here are
independent of any sales contract. (Ford Motor Warranty Cases,
supra, 89 Cal.App.5th at 1335-36.)
Defendants argue that a warranty is an element of the sale, and as much a
part of the sale as any other aspect, (A.A. Baxter Corp. v. Colt Industries,
Inc. (1970) 10 Cal.App.3d 144, 153), that “the Legislature apparently
conceived of an express warranty as being part of the purchase of a consumer
product,” (Gavaldon v. DaimlerChrysler Corp. (2004) 32 Cal.4th 1246,
1258), and that the implied warranty of merchantability has attached under
Civil Code section 1792 and is inextricably intertwined with the sales contract
as a matter of law.
The doctrine of equitable estoppel applies if (1) the plaintiff relies
upon the contract’s terms in asserting claims against the non-signatory
defendant, or those claims are “intimately founded in or intertwined with” the
contract itself, or (2) if the plaintiff alleges “substantially interdependent
and concerted misconduct” by the defendant, where such allegations of
misconduct are “founded in or intimately connected with” the obligations of the
contract. (Goldman v. KPMG LLP (2009)
173 Cal.App.4th 209, 221.) The rule
allowing a nonsignatory to enforce an arbitration agreement on equitable
estoppel grounds is based on the principle that a party should be precluded
“‘from asserting rights “he otherwise would have had against another” when his
own conduct renders assertion of those rights contrary to equity.’” (Metalclad
Corp. v. Ventana Environmental Organizational Partnership (2003) 109
Cal.App.4th 1705, 1713 [Citations omitted].)
“So, if a plaintiff relies on the terms of an agreement to assert his or
her claims against a nonsignatory defendant, the plaintiff may be equitably
estopped from repudiating the arbitration clause of that very agreement. In
other words, a signatory to an agreement with an arbitration clause cannot
‘”have it both ways”’; the signatory ‘cannot, on the one hand, seek to hold the
non-signatory liable pursuant to duties imposed by the agreement, which
contains an arbitration provision, but, on the other hand, deny arbitration's
applicability because the defendant is a non-signatory.’” (Goldman, supra,
at p. 220 [Citation omitted].)
In this case, the signatory Plaintiff has sued nonsignatory Defendants
for warranty claims based on a written warranty and the protections of the
Song-Beverly Act. Plaintiff attached the
relevant warranty to the complaint and specifically alleges that the claims
against Defendant “arise out of the warranty obligations of BMW in connection
with a vehicle purchased by Plaintiffs and for which BMW issued a written
warranty.” (Complaint ¶ 4.) Although the sales Agreement reflects Plaintiff’s
acquisition of the vehicle as to which Defendant has provided warranties,
Plaintiff’s claims against Defendant do not “rely or depend on the terms of
[that Agreement] in asserting their claims against [Defendant], and . . . none
of the allegations against [Defendant] are in any way found in or bound up with
the terms of the [Agreement].” (Goldman,
supra, at p. 230.)
Under Goldman, the fact that Plaintiff obtained the vehicle that
is under warranty via an installment sales contract is insufficient to advance
an equitable estoppel contention. (See
also Ngo v. BMW of North America, LLC (9th Cir. 2022) LLC, 23
F.4th 942, 949 [mere ownership through the purchase agreement does not reflect
an intention to enforce any obligations of that agreement against the
manufacturer]; Ruderman v. Rolls Royce Motor Cars (C.D. Cal. 2021) 511
F.Supp.3d 1055, 1059-1060 [arbitration will not be compelled where the
plaintiff’s claims do not seek enforcement of sales contract, only the fact
that he purchased the vehicle]; Goldman, supra, 173 Cal. App. 4th
at p. 219 [because the sales contracts involve interstate commerce, as defined
in the Federal Arbitration Act, federal law governs interpretation so federal
court decisions are persuasive authority].)
Defendants contend that the language in the arbitration clause that
describes the covered claims as including those regarding “the 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” is a proper basis for equitable estoppel. Defendants’ reliance of the language of the
arbitration agreement is misplaced. As
the Court of Appeal for the Second Appellate District made clear in Goldman,
equitable estoppel applies where a plaintiff is “relying on an agreement for
one purpose while disavowing the arbitration clause of the agreement.” (Id., at p. 230.) But Plaintiff does not rely on the
arbitration provision or any other term of the Agreement to assert claims
against Defendants. Where, as here, the plaintiff’s “allegations reveal no
claim of any violation of any duty, obligation, term or
condition imposed by the [relevant] agreements” and there is no “claim
founded in or even tangentially related to any duty, obligation, term or
condition imposed by the operating agreements ... the claims are fully viable
without reference to the terms of those agreements” and equitable estoppel does
not apply. (Id.) Thus, under controlling law from our Court of
Appeal, the focus of equitable estoppel analysis is whether the plaintiff
affirmatively asserts rights under or alleges breaches of the relevant
contract, not whether plaintiff’s claims merely “’touch matters’ relating to
the arbitration agreement.” (Id.) Defendants point to no actual connection
between Plaintiff’s claims and any duty, obligation, term, or condition imposed
by the Agreement, nor any alleged violation of that Agreement asserted in
Plaintiffs’ Complaint, so it cannot compel arbitration on an equitable estoppel
theory.
Defendants urge the Court to adopt a contrary conclusion by applying the
holding in Felisilda v. FCA US LLC (2020) 53 Cal.App.5th 486, 495. In that case, the Court of Appeal for the
Third Appellate District concluded that the plaintiff car buyers were equitably
estopped from objecting to an order compelling the non-signatory manufacturer’s
claims to arbitration based on the arbitration provision in a sales contract
with language that is very similar, if not identical, to the language in the
Agreement here. The Court finds Felisilda
to be both unpersuasive and distinguishable.
It is unpersuasive because, although it quotes language from Goldman,
the Felisilda court deviates from the proper equitable estoppel
standard. The appellate court’s analysis
in Felisilda focuses on the language of the arbitration clause as the
basis for estoppel and identifies no other contract provision that, according
to the plaintiff’s complaint, the defendant manufacturer had allegedly
breached. The Ford Motor Warranty Cases opinion reached a similar
conclusion, while going further to state that “manufacturer vehicle warranties
that accompany the sale of motor vehicles without regard to the terms of the
sale contract between the purchaser and the dealer are independent of the sale
contract.” (Ford Motor Warranty Cases, supra, 89 Cal.App.5th at 1334.)
This Court concludes, therefore, that it should follow the directives of our
Court of Appeal in Goldman, as confirmed in Ford Motor Warranty, rather
than using Felisilda’s unusual approach.
Felisilda is also
factually distinguishable from this case because of the absence of any
discussion in Felisilda of a warranty disclaimer provision that
disassociates the manufacturer’s warranty from any warranties that may have
been given by the dealer. In the section entitled “Warranties Seller
Disclaims,” the Agreement states:
If you do not get a written warranty, and the Seller does not enter
into a service contract within 90 days from the date of this contract, the
Seller makes no warranties, express or implied, on the vehicle, and there will
be no implied warranties of merchantability or of fitness for a particular
purpose.
This provision does not affect any warranties covering the vehicle that
the vehicle manufacturer may provide. If
the Seller has sold you a certified used vehicle, the warranty of
merchantability is not disclaimed.
(Defendants’ RJN ISO
Mot. to Compel Arbitration Exh. B. p.2.)
The Court draws several conclusions from this disclaimer provision. The claims contemplated by the arbitration
provision may include disputes over the condition of the vehicle. As the disclaimer provision makes clear,
claims against the dealer may involve warranties about the condition of the
subject vehicle if the first clause is satisfied by a written warranty and
service contract or if the vehicle is a certified used vehicle, but the dealer
disclaims any other warranties. Further,
the provision does not apply to any separate warranties that “may” be provided
by the manufacturer. Thus, this
provision should be construed as an effective restriction on the arbitration
language referring to third parties. The Court also finds that the disclaimer
provision reinforces the idea that Plaintiff has not invoked the Agreement’s
arbitration provision by bringing claims to enforce the manufacturer
Defendant’s warranties on the subject vehicle. The Felisilda court
simply did not address these issues, and it is unclear from the opinion whether
the underlying sales contract included such a warranty disclaimer.
The Court therefore concludes that Plaintiff is not equitably estopped
from challenging Defendants’ right to compel arbitration.
As the Court is persuaded that
Defendants are not entitled to compel arbitration under a third-party
beneficiary theory, and Plaintiff is not equitably estopped from challenging
Defendants’ right to compel arbitration, the Court, sua sponte, finds
good cause to reconsider and vacate its July 29, 2020 order compelling
arbitration and staying all proceedings.
CONCLUSION:
Accordingly,
on the Court’s own motion, the July 29, 2020 Order Granting Defendants’ Motion
to Compel Arbitration and Stay All Proceedings is VACATED and the stay of
proceedings lifted.
Defendants’
Motion to Compel Arbitration is DENIED. The Status Conference Regarding
Arbitration scheduled for December 19, 2023 at 8:30 AM is converted into a Case
Management Conference at the same date and time.
Defendants
to give notice.
IT IS SO ORDERED.
Dated: October 17, 2023 ___________________________________
Theresa
M. Traber
Judge
of the Superior Court
Any party may submit on the
tentative ruling by contacting the courtroom via email at Smcdept47@lacourt.org by no later than 4:00 p.m. the day
before the hearing. All interested parties must be copied on the email. It
should be noted that if you submit on a tentative ruling the court will still
conduct a hearing if any party appears. By submitting on the tentative you
have, in essence, waived your right to be present at the hearing, and you
should be aware that the court may not adopt the tentative, and may issue an
order which modifies the tentative ruling in whole or in part.