Judge: Thomas Falls, Case: 22PSCV00182, Date: 2022-08-08 Tentative Ruling

Case Number: 22PSCV00182    Hearing Date: August 8, 2022    Dept: R

Alan Xu v. American Honda Motor Company, Inc. (22PSCV00182)

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Defendant American Honda Motor Company, Inc.’s Motion to Compel Arbitration and Stay Proceedings

            Responding Party: Plaintiff

Tentative Ruling

Defendant American Honda Motor Company, Inc.’s Motion to Compel Arbitration and Stay Proceedings is GRANTED.

Background

This is a lemon law case.

On February 23, 2022, Plaintiff filed its Complaint.

On April 1, 2022, Defendant Honda filed its Answer.

On July 8, 2022, Defendant Honda filed the instant Motion to Compel Arbitration and Stay Proceedings (“Arbitration Motion” or “Motion”).

On July 20, Plaintiff filed an Opposition to the Arbitration Motion.

On July 26, 2022, Defendant filed its Reply.

Legal Standard

The Court’s starting point is whether a valid agreement to arbitrate exists. (Cruise v. Kroger Co. (2015) 233 Cal.App.4th 390, 396.) A petition to compel arbitration must allege both (1) a “written agreement to arbitrate” the controversy, and (2) that a party to that agreement “refuses to arbitrate” the controversy. (Code Civ. Proc., § 1281.2.) Once this is done, the burden shifts to the opposing party to demonstrate the falsity of the purported agreement. (Condee v. Longwood Management Corp. (2001) 88 Cal.App.4th 215, 218–219.) 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.) A petition to compel arbitration is a suit in equity to compel specific performance of a contract. (Frog Creek Partners, LLC. v. Vance Brown, Inc. (2012) 206 Cal.App.4th 515, 532.) 

Discussion

Defendant Honda moves for arbitration because the sales contract Plaintiff signed contained a broad arbitration provision. The court compels arbitration for the following reasons.

First, there is valid, written agreement that Plaintiff signed, which has a clear arbitration agreement provision.

Second, even as a nonsignatory, Honda may enforce the arbitration provision under both (i) equitable estoppel and (ii) third-party beneficiary status.[1]

Equitable Estoppel

Generally, only a party to an arbitration agreement may enforce the agreement.¿ (Thomas v. Westlake (2012) 204 Cal.App.4th 605, 613.)¿ However, “[u]nder the doctrine of equitable estoppel, ‘as applied in “both federal and California decisional authority, a nonsignatory defendant may invoke an arbitration clause to compel a signatory plaintiff to arbitrate its claims when the causes of action against the nonsignatory are ‘intimately founded in and intertwined’ with the underlying contract obligations.”¿ [Citations omitted.]¿ “By relying on contract terms in a claim against a nonsignatory defendant, even if not exclusively, a plaintiff may be equitably estopped from repudiating the arbitration clause contained in that agreement.”¿ [Citations omitted.]’”¿ (Felisilda v. FCA US LLC (2020) 53 Cal.App.4th 486, 495-96 [citing JSM Tuscany, LLC v. Superior Court (2011) 193 Cal.App.4th 1222, 1237].) 

In Felisilda, plaintiff filed suit against the manufacturer (FCA) and the dealer/FCA repair facility (Elk Grove Dodge) for violation of the SBA. Elk Grove Dodge moved to compel arbitration.[2] In so moving, the dealer argued that the “entire matter should be ordered to arbitration—including FCA, even though FCA was not a signatory to the sales contract. FCA filed a ‘notice of non-opposition’ to Elk Grove Dodge.” (Felisilda, supra, 53 Cal.App.4th at 491.) Elk Grove Dodge argued that California law allows a court to order a non-signatory to a sales contract to arbitration along with the signatories to the contract.” (Id. at 492.) Consequently, one of the issues presented before the appellate court was whether “the trial court erred in order [plaintiffs] to arbitrate their claim against FCA because FCA was a nonsignatory to the sales contract that contained the arbitration provision.” (Id. at 493.) The appellate court disagreed reasoning that “based on the language in the sales contract and the nature of the [plaintiffs’] claim against FCA.” (Id. at 496.) More specifically, the court explained that “the arbitration provision in this case provides for arbitration of disputes that include third parties so long as the dispute pertains to the condition of the vehicle.” (Id. at 497.)

Similarly, here, the court finds an expression extension of arbitration to claims involving nonsignatories that relate to the Vehicle. After all, similar to Felisildas wherein the arbitration provision explicitly and expressly uses the word “third parties,” the agreement also states:

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.

Furthermore, “‘[t]he fundamental point is that a party is ‘not entitled to make use of [a contract containing an arbitration clause] as long as it worked to [his or] her advantage, then attempt to avoid its application in defining the forum in which [his or] her dispute ... should be resolved.’” (Jensen v. U-Haul Co. of California (2017) 18 Cal.App.5th 295, 306, quoting NORCAL Mutual Ins. Co. v. Newton (2000) 84 Cal.App.4th 64, 84.) This fundamental point is what Plaintiffs are attempting to circumvent: they are attempting to apply the warranty provision of sales agreement against Defendant Honda yet attempting the very application of that contract which allows for Defendant Honda to invoke arbitration.

To the extent that Plaintiff argues that equitable estoppel does not apply because Felisildas is inapplicable, it does so by relying on non-binding authority.  

Conclusion

Based on the foregoing, the motion is granted. All matters are stayed pending arbitration.