Judge: William A. Crowfoot, Case: 22AHCV00286, Date: 2023-01-09 Tentative Ruling

Case Number: 22AHCV00286    Hearing Date: January 9, 2023    Dept: 3

Superior Court of California

County of Los Angeles – NORTHEAST District

Department 3

MOVING PARTY:                Defendant American Honda Motor Co., Inc.

RESPONDING PARTY:        Plaintiff Maritsa Herrera

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

The court considered the moving papers, opposition, and reply filed in connection with this motion.

BACKGROUND

            Plaintiff Maritsa Herrera [“Plaintiff”] filed this Lemon Law action on May 20, 2022 against Defendant American Honda Motor Co., Inc. (“Defendant”) arising out of the purchase of a 2021 Honda Pilot (the “Subject Vehicle”). (Complaint, ¶ 6.)

            Defendant moves to compel arbitration of all of Plaintiffs’ claims and to stay the action pending completion of arbitration.

REQUEST FOR JUDICIAL NOTICE

            The court grants Defendant’s request for judicial notice of Exhibits 1 and 3 filed with the moving papers.

LEGAL STANDARD

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; Hotels Nevada v. L.A. Pacific Center, Inc. (2006) 144 Cal.App.4th 754, 758.)

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.)

DISCUSSION

A.    Existence of Arbitration Agreement

Defendant submits evidence that Plaintiff purchased the Subject Vehicle in Concord, California and signed the Retail Installment Sale Contract (“Contract”) relating to the purchase of the Vehicle. (Grassel Decl., ¶ 2, Ex. 1.)

The Contract contains an arbitration provision which states in pertinent part:

1.     EITHER YOU OR WE MAY CHOOSE TO HAVE ANY DISPUTE BETWEEN US DECIDED BY ARBITRATION AND NOT IN COURT OR BY JURY TRIAL.

2.     IF A DISPUTE IS ARBITRATED, YOU WILL GIVE UP YOUR RIGHT TO PARTICIPATE AS A CLASS REPRESENTATIVE OR CLASS MEMBER ON ANY CLASS CLAIM YOU MAY HAVE AGAINST US INCLUDING ANY RIGHT TO CLASS ARBITRATION OR ANY CONSOLIDATION OF INDIVIDUAL ARBITRATIONS.

3.     DISCOVERY AND RIGHTS TO APPEAL IN ARBITRATION ARE GENERALLY MORE LIMITED THAN IN A LAWSUIT, AND OTHER RIGHTS YOU AND WE WOULD HAVE IN COURT MAY NOT BE AVAILABLE IN ARBITRATION.

(Grassel Decl., ¶ 2, Ex. 1 at 5.)

The arbitration provision provides that:

“[a]ny claim, dispute or controversy, 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 … 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.”

The provision further provides that “[a]ny arbitration under this Arbitration Provision shall be governed by the Federal Arbitration Act….” (Id.)

Directly above the signature line on the Contract is the following statement, set forth in bold and in capital letters: “You agree to the terms of this contract. You confirm that before you signed this contract, we gave it to you, and you were free to take it and review it. You acknowledge that you have read both sides of this contract, including the arbitration provision on the reverse side, before signing below. You confirm that you received a completely filled-in copy when you signed it.”

In a separate box that requires a separate signature is another arbitration acknowledgement which states as follows: “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.”

Plaintiff contends that her claims “have nothing whatsoever to do with the [Contract].  Rather, [Plaintiff’s] claims all arise out of [Defendant’s] express and implied warranties, which are neither premised on nor arise out of the [Contract.]” (Opp., 8:9-11.)  The Agreement is broad and explicit, however, that “[a]ny claim or dispute…which arises or relates to your…purchase or condition of this vehicle” must be resolved by binding arbitration. (Ex. 1.)  Plaintiff’s causes of action fall within the broad scope of this arbitration provision because the causes of action relate to the purchase and condition of the Subject Vehicle. (See Vianna v. Doctors’ Management Co. (1994) 27 Cal.App.4th 1186, 1189 (noting that “arbitration agreements should be liberally interpreted, and arbitration should be ordered unless the agreement clearly does not apply to the dispute in question”).)

B.    Non-Signatory

Defendant, as a nonsignatory to the Contract, argues that it may compel Plaintiff to arbitrate her claims pursuant to this arbitration provision.  Defendant contends that two nonsignatory theories support its motion: (1) third party beneficiary and (2) equitable estoppel. (Motion, 12:15; 18:16.)  The court concludes that the equitable estoppel doctrine applies and need not address the merits of Defendant’s third-party beneficiary theory.

Under the doctrine of equitable estoppel, “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.” (JSM Tuscany, LLC v. Superior Court (2011) 193 Cal.App.4th 1222, 1237.)  The doctrine applies in either of two circumstances: (1) when the signatory must rely on the terms of the written agreement containing the arbitration clause in asserting its claims against the nonsignatory or (2) when the signatory alleges “substantially interdependent and concerted misconduct” by the nonsignatory and a signatory and the alleged misconduct is “founded in or intimately connected with the obligations of the underlying agreement.” (Goldman v. KPMG, LLP (2009) 173 Cal. App. 4th 209, 218-19.)  

In Felisilda v. FCA US LLC (2020) 53 Cal. App. 5th 486, 490, the Court of Appeal examined an identical arbitration clause which stated in pertinent part:

“[A]ny claim or dispute, whether in contract, tort, statute or otherwise … between you and us … which arises out of or relates to … [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) shall … be resolved by neutral, binding arbitration and not by a court action.”

The appellate court found that the equitable estoppel doctrine applied: “The [buyers’] claim against [the manufacturer] directly relates to the condition of the vehicle that they allege to have violated warranties they received as a consequence of the sales contract. Because the [buyers] expressly agreed to arbitrate claims arising out of the condition of the vehicle — even against third party nonsignatories to the sales contract — they are estopped from refusing to arbitrate their claim against [the manufacturer].” (Id. at 496-97.)

Defendant contends that the equitable estoppel doctrine applies because Plaintiffs’ claims are inextricably intertwined with the Contract.  The court agrees. 

This arbitration agreement is not materially different from the one examined in Felisilda.  In this case, as in Felisilda, Plaintiff’s claims against Defendant “directly relate[] to the condition of the vehicle that [allegedly] violated warranties [Plaintiff] received as a consequence of the sales contract.” (Felisilda, supra, at 497.)  Because Plaintiff “expressly agreed to arbitrate claims arising out of the condition of the vehicle—even against third party nonsignatories to the sales contract—[Plaintiff is] estopped from refusing to arbitrate [her] claim.” (Id.)

Plaintiff argues that the doctrine of equitable estoppel is a rule of “fundamental fairness” and that “a party may be estopped from proceeding in court only if their own conduct renders assertion of those rights contrary to equity.” (Opp., 4:17-28; emphasis in original.)  Here, Plaintiff argues that because Plaintiff does not seek to invoke Defendant’s obligations under the Contract while simultaneously seeking to avoid arbitration, the doctrine does not apply. (Opp., 5:15-17.)  Plaintiff argues that Felisilda is not controlling authority because the moving party in the case was a signatory to the arbitration provision. (Id. at 6:6-8.)  However, the reasoning in Felisilda for upholding the equitable estoppel finding was that the buyers’ claims related to the condition of the subject vehicle and the buyers expressly agreed to arbitrate their claims arising out of the condition of the subject vehicle, including those against third party nonsignatories to the sales contract.  This same finding has been made here. 

CONCLUSION

Based on the foregoing, the court grants Defendant’s motion to compel arbitration.

The court orders that this action is stayed pending completion of arbitration of Plaintiff’s arbitrable claims.

Defendant is ordered to give notice of this ruling.

IT IS SO ORDERED.

DATED:  January 9, 2023

_____________________________

Colin Leis

Judge of the Superior Court