Judge Timothy B. Taylor, Case 37-2022-00008256-CU-BC-CTL 2023-08-04 Tentative Ruling

Judge: Timothy B. Taylor, Case: 37-2022-00008256-CU-BC-CTL, Date: 2023-08-04 Tentative Ruling

SUPERIOR COURT OF CALIFORNIA,

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HALL OF JUSTICE

TENTATIVE RULINGS - August 03, 2023

08/04/2023 01:30:00 PM C-72 COUNTY OF SAN DIEGO

JUDICIAL OFFICER:Timothy Taylor

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Civil - Unlimited Breach of Contract/Warranty Motion Hearing (Civil) 37-2022-00008256-CU-BC-CTL MALANDRA JR VS TOYOTA MOTOR SALES USA INC [IMAGED] CAUSAL DOCUMENT/DATE FILED: Motion for Reconsideration, 04/17/2023

Tentative Ruling on Motion to Reconsider Order Compelling Arbitration Malandra v. Toyota, Case No. 2022-08256 August 4, 2023, 1:30 p.m., Dept. 72 1. Overview and Procedural Posture.

This is a lemon law case involving a model year 2020 Toyota RAV4, purchased new by plaintiff in June of that year. Plaintiff alleges his vehicle suffers from 'defects and nonconformities' including 'braking system defects, HVAC system defects [and] recalls.' The complaint was filed March 3, 2022. The case was assigned to Judge Whitney, but plaintiff challenged him and the case was reassigned to Dept. 72.

ROA 10-12.

Toyota answered (ROA 13), and then filed a motion to compel arbitration pursuant to the retail sales contract, which plaintiff signed when he purchased the car from the dealership. ROA 14-17. Plaintiff filed opposition, relying on federal court decisions and seeking to distinguish Felisilda v. FCA US, LLC (2020) 53 Cal.App.5th 486 (discussed infra). ROA 26-27. The court followed Felisilda as it was bound by its oath to do, granted the motion, and stayed the case pursuant to Code of Civil Procedure section 1281.4. ROA 30.

Presently, plaintiff seeks reconsideration of court's ruling in light of the recently issued opinion in Ford Motor Warranty Cases (2023) 89 Cal.App.5th 1324 ('Ford Motor'). ROA 32-35. Toyota filed opposition.

ROA 36. Plaintiff replied. ROA 37. The court has reviewed the briefs, and no further submissions are authorized in connection with this motion.

2. Applicable Standards.

A. A party's motion for reconsideration of an order must be made within ten days after service of notice of entry of the order. Code Civ. Proc. § 1008(a). But that time limitation does not apply when there has been a change of law. Code Civ. Proc. § 1008(c). 'When a trial court concludes there has been a change of law that warrants reconsideration of a prior order, it has jurisdiction to reconsider and change its order' (International Ins. Co. v. Superior Court (1998) 62 Cal.App.4th 784, 788), and may do so at any time prior to entry of judgment (Darling, Hall & Rae v. Kritt (1999) 75 Cal.App.4th 1148, 1156).

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2963737 45 CASE NUMBER: CASE TITLE: MALANDRA JR VS TOYOTA MOTOR SALES USA INC [IMAGED] 37-2022-00008256-CU-BC-CTL Moreover, '[e]ven without a change of law, a trial court has the inherent power to reconsider its prior rulings on its own motion at any time before entry of judgment.' State of California v. Superior Court (2016) 4 Cal.App.5th 94, 100.

B. The court incorporates part 2 of the minutes from October 28, 2022 (ROA 30).

3. Discussion and Rulings.

The motion for reconsideration is granted.

A. As an initial matter, Toyota asserts that the court lacks jurisdiction to reconsider the ruling inasmuch as the arbitration has commenced and the case is stayed. Plaintiff does not respond to this argument.

Nevertheless, while it is correct as a general matter that the granting of a stay under section 1281.4 places the proceedings before the trial court in 'the twilight zone of abatement' (Brock v. Kaiser Foundation Hospitals (1992) 10 Cal.App.4th 1790, 1796), the law is clear that such a stay does not affect the court's jurisdiction to reconsider a prior ruling compelling arbitration. See Pinela v. Neiman Marcus Group, Inc. (2015) 238 Cal.App.4th 227, 237-38; Malek v. Blue Cross of California (2004) 121 Cal.App.4th 44, 59-60.

B. Turning to the merits, the court concludes that Ford Motor constitutes a 'change of law' and warrants reconsideration of the October 2022 ruling.

The court has 'very broad power' to determine what constitutes a 'change of law.' Farmers Ins.

Exchange v. Superior Court (2013) 218 Cal.App.4th 96, 106. 'An appellate decision published during an action's pendency may be a change of law under section 1008, subdivision (c)[.]' State of California, supra, 4 Cal.App.5th at 100. Such is the case here.

In Felisilda, the Third District Court of Appeal held that equitable estoppel required vehicle purchasers to arbitrate their claim against the vehicle manufacturer pursuant to a retail sales contract the purchasers entered into with the dealership. Felisilda, supra, 53 Cal.App.5th at 489-90. The court reasoned that the sales contract, in which the purchasers had agreed to arbitrate claims arising out of the condition of the vehicle, was the 'source of the warranties' at the heart of the case. Id. at 496. Thus, the purchasers' breach of warranty claim against the manufacturer was 'directly relate[d] to the condition of the vehicle.' Id. This was the state of the law in California at the time the court issued its ruling in October 2022.

Six months later, on April 4, 2023, the Second District Court of Appeal, Division 8, issued Ford Motor, supra. In that case, the court declined to follow Felisilda because it found that the purchasers' claims were not intertwined with the sale contract. Ford Motor, 89 Cal.App.5th at 1333-34. The court explained that the reasoning in Felisilda ran counter to California law, which has never treated manufacturer warranties as part of the sale contract. Id. at 1335-36. Thus, the fact that the purchasers and the original dealer agreed in the sales contract to arbitrate disputes between them about the condition of the vehicle did not equitably estop the purchasers from asserting that the manufacturer had no right to demand arbitration.* Id. at 1334.

In sum, Ford Motor changed the law with respect to motions to compel arbitration involving lemon law claims. The court therefore exercises its discretion to reconsider the motion to compel arbitration.

C. The court's earlier order granting the motion to compel arbitration is set aside, and the motion is denied. Toyota has failed to establish a right to compel arbitration. See Jones v. Jacobson (2011) 195 Cal.App.4th 1, 15.

The California Supreme Court has made clear that 'all tribunals exercising inferior jurisdiction are required to follow decisions of courts exercising superior jurisdiction.' Auto Equity Sales, Inc. v. Superior Court (1962) 57 Cal.2d 450, 455. If appellate decisions conflict – as is now the case here – the inferior tribunal 'can and must make a choice between the conflicting decisions.' Id. at 456. Under these Calendar No.: Event ID: TENTATIVE RULINGS

2963737 45 CASE NUMBER: CASE TITLE: MALANDRA JR VS TOYOTA MOTOR SALES USA INC [IMAGED] 37-2022-00008256-CU-BC-CTL principles, the court finds that Ford Motor is the better reasoned opinion and elects to follow it.** Following Ford Motor, it is clear that plaintiff's warranty claims are not 'intimately founded in and intertwined' with the retail sales contract. On the contrary, the claims are fully viable without reference to the terms of the sales contract. See Jensen v. U-Haul Co. of California (2017) 18 Cal.App.5th 295, 306. This is because, as explained in Ford Motor, 'California law does not treat manufacturer warranties imposed outside the four corners of a retail sale contract as part of the sale contract.' Ford Motor, supra, 89 Cal.App.5th at 1335.

Toyota contends that the reasoning in Ford Motor is flawed because it is based on case law – i.e., Greenman v. Yuba Power Products, Inc. (1963) 59 Cal.2d 57 and Corporation of Presiding Bishop of Church of Jesus Christ of Latter Day Saints v. Cavanaugh (1963) 217 Cal.App.2d 492 – that predates the UCC and the Song-Beverly Act. However, Toyota fails to cite any authority suggesting that either Greenman or Cavanaugh are no longer good law. Moreover, a similar argument was raised in Ford Motor, but the court rejected it because the manufacturer was unable to point to 'more recent authority establishing that manufacturer warranty obligations are implied in a retailer's sale contract.' Ford Motor, 89 Cal.App.5th at 1336. Finally, denying Toyota's motion is consistent with the overarching purpose of the so-called lemon law (which, as Justice O'Rourke has now reminded the court several times, is to level the playing field between consumers and automobile manufacturers).

Accordingly, the court finds that Toyota is not entitled to compel arbitration pursuant to the doctrine of equitable estoppel. The motion to compel arbitration is therefore denied. The stay issued in connection with the October 2022 ruling is hereby lifted. The court sets a CMC for September 15, 2023 at 10:00 a.m. in Dept. 72, and will set the case for trial at that time.

_________________________ *On July 19, 2023, the California Supreme Court granted review in Ford Motor. See Case No. S279969.

In so doing, the Court did not de-publish the Court of Appeal decision.

**On June 26, 2023, the Second District Court of Appeal, Division 7, reached a similar conclusion as its colleagues in Division 8 by declining to follow Felisilda. See Montemayor v. Ford Motor Company, Case No. B320477.

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