Judge Thomas Falls, Case 22PSCV01021 2023-03-20 Tentative Ruling

RE: STELLA ESPINOZA BROWNE vs SOLO 1 KUSTOMS RESTORATION, INC., et al. (22PSCV01021)

Defendants SOLO 1 KUSTOM RESTORATION, INC.’s, JOSEPH HERNANDEZ’s, AND LIZBETH GUTIERREZ’s (collectively, “Defendants”) MOTION TO COMPEL ARBITRATION AND STAY COURT PROCEEDINGS

Defendants SOLO 1 KUSTOM RESTORATION, INC.’s, JOSEPH HERNANDEZ’s, AND LIZBETH GUTIERREZ’s MOTION TO COMPEL ARBITRATION AND STAY COURT PROCEEDINGS is DENIED.

Plaintiff Stella Espinoza Browne,[1] As Special Administrator for the Estate of Rurico Espinoza alleges the following against Defendants SOLO 1 KUSTOMS RESTORATION, INC. (“Solo 1”); JOSEPH HERNANDEZ; ELIZABETH GUTIERREZ (AKA LIZ GUTIERREZ), STATE OF CALIFORNIA DEPARTMENT OF MOTOR VEHICLES; STEVEN GORDON IN HIS CAPACITY OF DIRECTOR OF STATE OF CALIFORNIA DEPARTMENT OF MOTOR VEHICLES ONLY: Plaintiff is the adult daughter of decedent Rurico Espinoza (“decedent”). After a car accident, decedent presented his vehicle to Solo 1 for repair. Despite efforts to retrieve the vehicle—which during one incident involved a physical altercation (First Amended Complaint (“FAC”) ¶33)—Defendants wrongfully and illegally sold the vehicle. Based thereon, Plaintiff claims that she “has incurred unnecessary expense, time, and loss of use of the vehicle based on Defendants’ wrongful keeping and interference with the subject vehicle.” (FAC ¶42) (emphasis and underline added).

On January 21, 2022, Defendants, SOLO 1 KUSTOMS RESTORATION, INC. and JOSEPH HERNANDEZ filed a Small Claims Court action against Plaintiff seeking $7,820.00 in Los Angeles County Case Number: 22WCSC00099. (FAC ¶23.) On February 23, 2022, the Small Claims Court held a hearing and issued the following Judgment:

Court orders judgment entered on the Plaintiff’s Claim filed by Solo 1 Kustoms Restoration Inc., on 01/21/2022 as follows: Defendant Maria Stella Espinoza Browne does not owe the plaintiff Solo 1 Kustoms Restoration Inc. any money on plaintiff’s claim. Other: - The Court finds on Plaintiff’s Claim that Plaintiff might have been entitled to a lien sale against [R]urico Espinoza or his estate for past due storage fees and deductible but failed to give notices legally required and therefore the Lien Sale was improvidently started. The Court makes no commitment regarding the validity of any future sale or lawsuit thereon. The Court rejects Plaintiff’s claim against Defendant Browne. On Plaintiff’s claim Judgment is for Defendant . . . On Defendant’s claim, the Court orders a Conditional Judgment for Defendant in the sum of $2,000.00 for the loss of use of the vehicle. Plaintiff is to allow a representative of Department of Motor Vehicles to inspect and verify the VIN number of the 2017 Nissan or is to take the vehicle to DMV to verify the VIN number or allow Defendant to schedule an appointment at Plaintiff’s place of business for a peace officer to verify the VIN. Defendant is to make the arrangements and notify Plaintiff by Email only. This Case is calendared for a Compliance hearing on March 24, 2022, at 8:30. In the event that Plaintiff complies with this order, Judgment is to be entered for Plaintiff on Defendant’s claim.

On March 24, 2022, the Court found that SOLO 1 KUSTOMS RESTORATION, INC. was in substantial compliance of ensuring Plaintiff got the VIN verification and to that end, Judgment on STELLA ESPINOZA BROWNE’S counterclaim against SOLO 1 KUSTOMS RESTORATION, INC. was for SOLO 1 KUSTOMS RESTORATION. (FAC ¶27.)

On September 8, 2022, Plaintiff filed her complaint for (1) Conversion; (2) Fraud And Deceit; (3) Unlawful, Fraudulent, And Unfair Business Practices; (4) Breach Of Bailment; (5) Breach Of Contract; (6) Breach Of Implied Covenant Of Good Faith And Fair Dealing. (7) Waste; (8) Declaratory Relief; (9) Injunctive Relief (10) Preliminary Injunction.

On November 14, 2022, Plaintiff filed her FAC against the same Defendants for (1) Conversion; (2) Fraud; (3) Civil Extortion; (4) Injunctive Relief; (5) Preliminary Injunction.

On January 9, 2023, Defendants SOLO 1 KUSTOM RESTORATION, INC., erroneously sued herein as Solo 1 Kustoms Restoration, Inc., JOSEPH HERNANDEZ, AND LIZBETH GUTIERREZ, erroneously sued herein as Elizabeth Gutierrez filed the instant Motion To Compel Arbitration And Stay Court Proceedings (“Motion”).

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.) “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.... 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.’ ” (Rice v. Downs (2016) 248 Cal.App.4th 175, 185, quoting Coast Plaza Doctors Hospital v. Blue Cross of California (2000) 83 Cal.App.4th 677, 686 (Coast Plaza).) 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 by the petitioner, 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.)

Defendants move for arbitration because “Plaintiff alleges in summary that defendant and its employees have wrongfully demanded storage fees, refused to return the vehicle to plaintiff, and wrongfully attempted to transfer title of the vehicle.” (Motion p. 5:9-11.) Moreover, there is an arbitration in the contract that Plaintiff’s father signed which states the following:

(I) DISPUTE SETTLEMENT. CUSTOMER AND SOLO 1 KUSTOM RESTORATION INC. ACKNOWLEDGE AND AGREE THAT IN THE EVENT A DISPUTE OR CONTROVERSY ARISES CONCERNING THIS AGREEMENT OR THE REPAIRS TO THE VEHICLE, CUSTOMER AND SOLO 1 KUSTOM RESTORATION INC. SHALL FIRST ATTEMPT IN GOOD FAITH TO SETTLE THE DISPUTE BY MEDIATION ADMINISTERED BY THE AMERICAN ARBITRATION ASSOCIATION UNDER ITS COMMERCIAL MEDIATION PROCEDURES. IN THE EVENT THAT THE MATTER IS NOT SETTLED BY MEDIATION AS PROVIDED, CUSTOMER AND SOLO 1 KUSTOM RESTORATION INC. AGREE THAT SUCH DISPUTE OR CONTROVERSY SHALL BE RESOLVED BY BINDING ARBITRATION ADMINISTERED BY THE AMERICAN ARBITRATION ASSOCIATION UNDER ITS COMMERCIAL ARBITRATION RULES.

(Motion p. 5, citing agreement) (capitalization original and emphasis and underline added). Accordingly, these are all claims and controversies that arise under the Agreement and Plaintiff, as an heir and successor in interest, is bound by the Arbitration provision. (Motion p. 5.)

In Opposition, Plaintiff argues that (i) the “alleged signature on the arbitration agreement does not resemble Decedent’s signature” such that there is no valid arbitration agreement (Opp. p. 3, see also Browne Decl., ¶6 [“I am very familiar with Decedent’s signature, and the signature on the alleged signature on the Arbitration Agreement does not resemble Decedent’s signature.”]) and (ii) if there is deemed to be a valid arbitration agreement, the claims at issue do no arise out of the agreement because “[a]ll of the claims arising from the contract were decided by the Small Claims court on February 23, 2022” whereas the causes of action alleged in the FAC “ involve issues that arose after February 23, 2022, and they . . . are not based upon performance or failure to perform under the contract.” (Opp. p. 10.)

On a petition to compel arbitration, the trial court must first determine whether an “agreement to arbitrate the controversy exists.” (Code Civ. Proc., § 1281.2.) “The party seeking arbitration can meet its initial burden by attaching to the petition a copy of the arbitration agreement purporting to bear the respondent's signature.” (Bannister v. Marinidene Opco, LLC (2021) 64 Cal.App.5th 541, 543-544.) When the respondent challenges the validity of the signature, such as here, “the petitioner must ‘establish by a preponderance of the evidence that the signature was authentic.” (Id. at p. 544) “In such proceedings, ‘the trial court sits as a trier of fact, weighing all the affidavits, declarations, and other documentary evidence, as well as oral testimony received at the court's discretion, to reach a final determination.’” (Id., quoting Engalla v. Permente Medical Group, Inc. (1997) 15 Ccal.4th 951, 972.)

Despite Plaintiff’s contention that Defendants have not met their initial burden to demonstrate that Rurico signed the Agreement, the court finds otherwise.

First, Defendants state in the Motion that “Rurico Espinoza signed a Vehicle Authorization Agreement (Agreement).” (Motion p. 3) (emphasis added).

Second, Plaintiff does not dispute the validity of the Agreement whether in her original complaint, FAC, or opposition. In fact, the premise of Plaintiff’s action against Defendants is predicated upon this valid agreement because Plaintiff admits that her father took his vehicle to Defendants’ business for repairs.

Third, Plaintiff does not offer evidence (nor a legal argument) to show that the signature was not her father’s signature (i.e., provide a document bearing her father’s signature for comparison).

Fourth, though raised in Reply, Defendant Joseph Hernandez provides his supplemental declaration that he witnessed decedent Rurico Espinoza sign and date the Agreement. (Reply p. 3, citing Hernandez Decl., ¶3, p. 7 of 17 of PDF) [“Attached as Exhibit "A" is a true and correct copy of the Vehicle Authorization Agreement (Agreement) signed by Rurico Espinoza authorizing the repairs to the Subject Vehicle. I use this same form with all of my customers and I personally witnessed Rurico Espinoza sign and date the Agreement on September 11, 2021.”].)

Therefore, while Defendants met their evidentiary burden to indicate that Rurico did sign the agreement, but Plaintiff did not provide evidence to the contrary, then there is a valid arbitration agreement. With that, the court next turns to the inquiry regarding the relation, if any, between the instant controversy and arbitration agreement.

The court turns to the Agreement followed by a comparison to Plaintiff’s allegation.

- The introductory paragraph[3] to the Agreement states that the customer, as the title holder of the vehicle, is “authorizing repairs to the vehicle.”

- The introductory paragraph continues to state that the “work order shall govern prices, parts, and warranties in the repair.”

- The ‘Terms and Conditions of Repair Services’ section states that “Solo 1 Kustom Restoration Inc. follows its own repair procedure to ensure a quality repair.”

- “Solo 1 Kustom Restoration Inc. will do its best to prevent delays in the repair of your vehicle.”

- If upon closer inspection, it is found that additional repairs are necessary, Customer will be contacted for authorization to make such additional repairs.”

- There is a ‘Color Match and Weather’ provision explaining color tinting and the effects of weather on paint drying; thus, this provision inherently pertains to repairs.

- If the customer does not pick up the vehicle within 3 days of repair completion, storage fees commence, and the defendants may begin a lien sale.

(See generally Agreement, Ex. A) (emphasis and underline added). In sum, nearly the entire Agreement pertains to repairs, with one provision mentioning storage fees and the consequences of failing to pay storage fees (lien sale).

The allegations in Plaintiff’s FAC, however, do not pertain to repairs, the amount of storage fees, nor a lien sale.

As for repairs, Defendants themselves admit that “repairs were completed.” (Motion p. 3:12-13) (emphasis and underline added). Therefore, as repairs are not at issue, then most of the Agreement also does not apply to the instant controversy.

As for storage fees, Defendants’ interpretation of the allegations appears misplaced because Plaintiff is not disputing the validity of storage fees. In fact, Plaintiff has made multiple attempts to pay the storage fees, but each time Defendants refused to accept payment from Plaintiff in exchange for release of the vehicle.” (Opp. p. 3, see also FAC ¶21.) The fact that storage fees are not in dispute is further evidenced by Plaintiff’s damages wherein she has not identified storage fees as part of her damages. (See FAC ¶47 [“Plaintiff has been harmed by loss of use of the vehicle, loss of time from work in having to attempt to retrieve the vehicle, litigation costs for bringing this action, and emotional harm caused by the protracted litigation in this case and in the probate case.”].) What is more, the issue of storage fees was already determined by the Small Claims court on February 23, 2022. (Opp. p. 13). Even assuming arguendo that storage fee costs were at issue, Defendants have waived their right to arbitrate that claim because they already litigated the issue. (See Opp. p. 11, citing Hoover v. American Income Life Ins. Co. (2012) 206 Cal.App.4th 1193, 1203 [“Although participation in litigation of an arbitrable claim does not itself waive a party's right later to seek arbitration, at some point, litigation of the issues in dispute justifies a finding of waiver.”].)[4]

Rather, the gravamen of Plaintiff’s claims pertains to Defendants’ alleged unlawful retention of the vehicle, as evidenced by Plaintiff’s relief for injunctive relief. (See FAC ¶47.)

To the extent that Defendants may argue that the dispute regarding the lien sale issue is a ‘controversy that concerns’ the Agreement (which they do not), the court determines that the lien sale issue also has been waived, or, in the alternative, contractual interpretation does not lend itself to such a deduction.

For one, the Small Claims Court on February 23, 2022 already spoke on the issue of the lien sale: it was invalid because Defendants failed to give legally required notices. Therefore, the issue is waived.

Second, the Agreement does not contain a broad arbitration clause because a “‘broad’ clause includes those using language such as ‘any claim arising from or related to this agreement’ [citation] ‘arising in connection with the [a]greement.’” [citation]. (Rice, supra, 248 Cal.App.4th at p. 186) (emphasis added). And where the arbitration provision states it pertains to any controversy arising out of or relating to the contract, “courts have held such arbitration agreements sufficiently broad to include torts, as well as contractual.” (Id.) Here, however, the arbitration provides states that it the parties agree to arbitrate “in the event a dispute or controversy arises concerning this agreement or the repairs to the vehicle;” therefore, it does not provide the arbitration pertains to any claim. (Agreement, emphasis added).[5] Accordingly, the arbitration clause is narrow, and such clauses are generally considered to be more limited in scope, meaning it may not cover misconduct arising out of the agreement. (Id.)

Third, and of import, in determining the scope of an arbitration clause, the ordinary rules of contract interpretation apply to arbitration agreements. (Id. at p. 185.) In performing contract interpretation, the court gives effect to the “parties' intentions, in light of the usual and ordinary meaning of the contractual language and the circumstances under which the agreement was made [citation].” (Id. at p. 185.) Additionally, “a court must view the language in light of the instrument as a whole and not use a ‘disjointed, single-paragraph, strict construction approach.’” (Id.) Here, the Agreement—with nearly all references being to the repair of a vehicle—indicates that the parties’ intention was as follows: Rurico Espinoza would pay Defendants in exchange for Defendants’ repair of his vehicle.

In sum, the issues in the FAC are not about storage fees, repairs, or a lien sale. The issues in the FAC concern issues that arose after February 23, 2022 and pertain to the predominant allegation and concern which is that Defendants refuse to return the vehicle.

Based on the foregoing—notably that absent a broad arbitration clause which would cover this tort of conversion—the court determines that the controversy does not arise from the arbitration agreement such that the Motion is DENIED.

[1] Plaintiff, an attorney, is pro per in this matter.

[2] The court notes that it is unclear whether the signature was handwritten or electronic. However, as Plaintiff does not accord significance to the difference, the observation is inconsequential for purposes of this motion.

[3] Though not labeled as the “introduction,” the court finds it of import that this information was found in the beginning of the Agreement because in general terms, an introduction explains the assertions, premises, and/or purpose of a document. Here, if the opening lines of the Agreement refer to repairs, then it is reasonable to presume that the provisions set forth in the Agreement will relate to what is said in the introduction (i.e., repairs). This will be discussed in more detail in the section relating to contract interpretation.

[4] Defendants did not respond in its Reply to Plaintiff’s point that Defendants waived their right to arbitrate the issues of the storage fees and lien sale.

[5] Plaintiff heavily relied upon Rice in her opposition for the proposition that the arbitration agreement contains a narrow arbitration clause, but Defendants did not address the case nor the legal analysis in its Reply.