Judge: William A. Crowfoot, Case: 22AHCV00499, Date: 2023-08-07 Tentative Ruling

Case Number: 22AHCV00499    Hearing Date: August 7, 2023    Dept: 3

SUPERIOR COURT OF THE STATE OF CALIFORNIA

FOR THE COUNTY OF LOS ANGELES - NORTHEAST DISTRICT

I.            INTRODUCTION

On July 25, 2022, plaintiff Antonio Cruz (“Plaintiff”) filed this action against defendant Nissan North America, Inc. (“Defendant”) and Martin Motors of El Monte, Inc. dba El Monte Nissan (“Martin Motors”) (collectively, “Defendants”).  Plaintiff alleges that Defendant issued a warranty in connection with Plaintiff’s purchase of a 2020 Nissan Kicks (the “Vehicle”) on September 9, 2020.  

Defendants filed a motion to compel arbitration on January 26, 2023.  On March 2, 2023, this Court issued an order which compelled the parties to arbitrate this matter (the “March 2 Order”).  In reaching its conclusion, the Court relied heavily on Felisilda v. FCA US LLC (2020) 53 Cal.App.5th 486 (Felisilda). 

On June 6, 2023, Plaintiff filed this motion for reconsideration of the March 2 Order.  Plaintiff’s motion is based on Ford Motor Warranty Cases (2023) 89 Cal.App.5th 1324, review granted July 19, 2023 (Ochoa), which was issued by the Second District Court of Appeal on April 4, 2023, and declined to follow Felisilda.  Plaintiff argues he is not limited to the statutory time limitations of Civil Procedure section 1008 because his motion is based on a change in law and the Court can reconsider its rulings on its own motion.

In an opposition brief filed on July 26, 2023, Defendant contends that the motion is untimely because it was made more than 10 days after the Court ordered this matter to arbitration.  Defendant also argues that once the Court ordered the matter to arbitration, it lost jurisdiction.  Defendant additionally argues that Ochoa is not a material or controlling change in law because it merely disagreed with Felisilda, which it contends is the better-reasoned decision.

A reply brief was filed on July 31, 2023.  On July 31, 2023, the Court continued the hearing on this motion to August 7, 2023.

II.          DISCUSSION

A.           This court has jurisdiction to rule on this motion.

Defendants argue that the Court lacks jurisdiction to rule on this motion because: (1) the motion was filed more than 10 days after the Court ordered the matter to arbitration, and (2) the action has been submitted to arbitration and the court retains “merely vestigial jurisdiction” limited to confirming, correcting, or vacating an arbitration award.  (Opp., pp. 2-5.) 

A statutory motion for reconsideration requires that the motion be made 10 days from the date the order at issue is served. (Code Civ. Proc., § 1008.) However, the Court has discretion to reconsider an order on its own motion pursuant to subdivision (c) of section 1008 as well as its “constitutionally derived authority.” (Le Francois v. Goel (2005) 35 Cal.4th 1094, 1096.) Therefore, section 1008 limits the parties' ability to file repetitive motions to reconsider but does not limit the court's ability to reconsider its prior interim orders to correct its own errors. (Id. at p. 1109.)

Furthermore, contrary to Defendant’s argument, the Court does not lose jurisdiction when it orders a matter to arbitration. While true that a case remains “in the twilight zone of abatement” once the matter is referred to arbitration and a stay is issued, the stay does not effect the ouster of the judicial power vested in the trial court.  (Pinela v. Neiman Marcus Group, Inc. (2015) 238 Cal.App.4th 227, 238 (Pinela).)  Instead, a trial court has inherent power to revisit the foundational question of whether the parties are bound by a particular arbitration agreement.  (Pinela at p. 238; Phillips v. Sprint PCS (2012) 209 Cal.App.4th 758, 768 [“Even without a change of law, a trial court may exercise its inherent jurisdiction to reconsider an interim ruling.”].)

Defendant’s case authority is distinguishable.  In Byerly v. Sale (1988) 204 Cal.App.3d 1312, 1314 (Byerly), the court found that a trial court no longer had any reason to entertain the defendant’s motion to dismiss for exceeding the five-year limitation under Civil Procedure section 583.340 (c) since the action was stayed pending completion of arbitration, and it was impossible for the plaintiffs to bring the action to trial.  Under those circumstances, and barring a stipulation not to arbitrate, “the judicial system’s future involvement should have been limited merely to confirming, correcting, or vacating any arbitration award.”  (Id. at p. 1315.)  Byerly did not consider whether the court’s referral of a matter to arbitration impaired its inherent right to reconsider its own order.

Instead, “[i]f 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.”  (Code Civ. Proc., § 1008, subd. (c).)  As “change of law” is not defined in Code of Civil Procedure section 1008, subdivision (c), the court has “very broad power” to determine if a change of law warrants an exercise of its discretion.  (Farmers Ins. Exchange v. Superior Court (2013) 218 Cal.App.4th 96, 106 (Farmers Ins.).)  In doing so, courts “may consider a number of factors in determining whether to exercise its discretion, including the importance of the change of law, the timing of the motion, and the circumstances of the case.”  (Id., at p. 107.)

At the time Defendants made their motion to compel arbitration, Defendants relied on Felisilda and argued that under the theory of equitable estoppel and as a third-party beneficiary, the arbitration agreement in a retail sales contract between Plaintiff and the nonparty dealer allowed Defendant to force Plaintiff to arbitrate his claims.  (Felisilda, supra, 53 Cal.App.5th at p. 495.)  On April 4, 2023, however, Division Eight of the Second District Court of Appeal expressly disagreed with Felisilda and held in Ochoa that equitable estoppel did not apply because the sales contract was not the source of the manufacturer warranties at issue in the case.  (Ochoa, supra, 89 Cal.App.5th at p. 1335.)  Ochoa recognized the distinction between the parties with the power to elect arbitration (“You” and “Us”) as opposed to the scope or subject matter of arbitrable issues (disputes with third parties including non-signatories) and stated that the sales contract “could not be construed to bind the purchaser to arbitrate with the universe of unnamed third parties.”.  (Id. at p. at 1339 [“Who may enforce an arbitration agreement is a separate matter from the types of disputes the agreement covers.”].) 

Since Plaintiff filed this motion for reconsideration, on June 26, 2023, another division of the Second District Court of Appeal, Division Seven, has also rejected Felisilda in Montemayor v. Ford Motor Company (2023) 92 Cal.App.5th 958.  The Montemayor court cited Ochoa to differentiate between the subject matter of arbitrable claims and the parties entitled to elect arbitration.  (Id. at p. 93.)  The Montemayor court also rejected the manufacturer’s argument that the plaintiff’s claims were closely intertwined with the sales contract because without the sales contract, no warranty would have issued.  (Ibid.)  Instead, the Montemayor court stated that this argument “conflates the concept of ‘but-for’ causation with a determination whether the [plaintiffs]’ claims are founded on obligations imposed on [the manufacturer] under the sales contract.”  (Ibid.)    

However, the Court finds that the circumstances of this case are such that reconsideration would not be appropriate.  In their opposition brief, Defendants establish that on March 14, 2023, after the Court ordered the parties to arbitration, Plaintiff’s counsel, Knight Law Group (“KLG”) sent a letter to defense counsel demanding Defendants submit the arbitration demand “immediately” and stating that they expected Defendants to do so “promptly, but in no event to exceed 30 days.”  (Hudson Decl., Ex. C.) 

On April 6, 2023, Defendants filed their demand with the American Arbitration Association (“AAA”) and paid a $600 filing fee.  (Hudson Decl., Ex. D.)  On April 20, 2023, AAA sent a letter advising that (1) all filing requirements had been met; (2) an administrator had been assigned; and (3) Defendants’ (optional) answer to the claim was due May 4, 2023, and requesting that the parties complete and return the Initial List of People Form.  (Hudson Decl., Ex. E.)  On May 24, 2023, AAA sent a letter requesting the parties notify AAA of their readiness to proceed on or before June 7, 2023.  (Hudson Decl., Ex. F.)  The day before the deadline, Plaintiff filed this motion for reconsideration.  

Another attorney for Defendant, Robert A. Shields, submits a declaration stating that in mid-March 20203, KLG pressed counsel for Defendant in all cases compelled to arbitration to initiate the arbitration process with AAA within 30 days.  This deadline was extended multiple times.  On May 4, 2023, KLG stated that if Defendant did not commence arbitration by the following week, it would argue that Defendant waived right to arbitrate those cases.  (Shields Decl., ¶ 6.)  Based on this exchange, Mr. Shields advised all counsel to pay the required fees to initiate arbitrations in dozens of cases.  He states that “he understand[s] that tens of thousands of dollars were paid by Defendant in arbitration fees to commence these arbitrations.”  (Shields Decl., ¶ 7.) 

Plaintiff’s lack of diligence in seeking reconsideration after Ochoa was issued, including Plaintiff’s counsel’s repeated insistence on pressing onward with arbitration after Ochoa was issued, has resulted in prejudice to Defendants, which Plaintiff does not address in his reply brief. In the face of this evidence, the Court declines to exercise its discretion to reconsider its March 2 Order. 

III.        CONCLUSION

Accordingly, Plaintiff’s motion for reconsideration is DENIED. 

Moving party to give notice.

Dated this 7th day of August, 2023

Parties who intend to submit on this tentative must send an email to the Court at ALHDEPT3@lacourt.org indicating intention to submit on the tentative as directed by the instructions provided on the court website at www.lacourt.org.  Please be advised that if you submit on the tentative and elect not to appear at the hearing, the opposing party may nevertheless appear at the hearing and argue the matter.  Unless you receive a submission from all other parties in the matter, you should assume that others might appear at the hearing to argue.  If the Court does not receive emails from the parties indicating submission on this tentative ruling and there are no appearances at the hearing, the Court may, at its discretion, adopt the tentative as the final order or place the motion off calendar.