Judge: William A. Crowfoot, Case: 22AHCV00534, Date: 2023-01-10 Tentative Ruling

Case Number: 22AHCV00534    Hearing Date: January 10, 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 Nathalie Lopez

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 Nathalie Lopez (“Plaintiff”) filed this Lemon Law action on August 3, 2022 against Defendant American Honda Motor Co., Inc. (“Defendant”) arising out of the lease (“Lease”) of a 2019 Honda Pilot (the “Subject Vehicle”). (Complaint, ¶ 8.)

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

EVIDENTIARY OBJECTIONS

            The court overrules Plaintiff’s evidentiary objection Nos. 1 and 2. (See Condee v. Longwood Management Corp. (2001) 88 Cal.App.4th 215, 219)

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 leased the Subject Vehicle via the Closed-End Motor Vehicle Lease Agreement (“Lease”) relating to the purchase of the Vehicle. (Lavigne Decl., ¶ 2, Ex. A)

The Lease contains the following arbitration provision:

“The parties agree that any unresolved disputes shall be submitted to arbitration in accordance with the Arbitration clause (Section 52).  By Initialing this Section, I am confirming that I have read this Section and the Arbitration clause including the method of opting out of arbitration.”

(Lavigne Decl., ¶ 2, Ex. A, ¶ 15.)

The arbitration provision in Section 52 provides that:

“[b]y agreeing to arbitrate, the right to go to court is waived and instead claims, disputes or controversies are submitted to binding arbitration…By signing the Arbitration Consent, [Plaintiff] elect[s] to have disputes resolved by arbitration.  [Plaintiff, Defendant,] or any involved third party may pursue a Claim.  ‘Claim’ means any dispute between [Plaintiff, Defendant,] or any involved third party relating to your account, this Lease, or our relationship, including any application, the Vehicle, its performance and any representations, omissions or warranties.”

(Ex. A, ¶ 52.)

Directly above the Arbitration provision in Section 52 is the following heading: “ARBITRATION: PLEASE READ THIS SECTION CAREFULLY.” (Id.)

Plaintiff’s causes of action fall within the broad scope of this arbitration provision because the causes of action relate to the lease 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”).)

Plaintiff contends that Defendant has failed to properly authenticate or lay a foundation for the existence of the arbitration clause because the declaration is signed by an attorney for Defendant rather than by the leasing dealership itself. (Opp., 1:25-28; 2:1-7.)  However, Condee v. Longwood Management Corp. (2001) 88 Cal. App. 4^th 215 held that regarding a motion to compel arbitration, a “plain reading of [Code Civ. Proc. § 1281.2] indicates that as a preliminary matter the court is only required to make a finding of the agreement’s existence, not an evidentiary determination of its validity,” and that “it is not necessary to follow the normal procedures of document authentication.” (Condee at 218-19.)

B.    Non-Signatory

Defendant, as a nonsignatory to the Lease, argues that it may compel Plaintiff to arbitrate her claims pursuant to this arbitration provision. (Motion at 7.)  Defendant contends that two nonsignatory theories support its motion: (1) third party beneficiary and (2) equitable estoppel. (Motion, 8:3; 10:4.)  Each theory is independently sufficient to grant Defendant’s motion to compel.

As to Defendant being a third party beneficiary, the Lease’s arbitration agreement applied to “HONDA” (and Plaintiff). The arbitration agreement expressly includes Defendant American Honda Motor Company, Inc. within the arbitration agreement’s definition of “HONDA.”  As such, the parties committed in writing to permit Defendant to avail itself of the Lease’s arbitration provision.

As to 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 arbitration clause similar to that between Plaintiff and Defendant 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…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 Plaintiff’s claims arise out of the Lease. (Motion, 8:16.)  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…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 their claim.” (Id.)

C.    Grounds to Deny

Plaintiff argues that (1) Felisilda is not controlling, and federal law must apply; (2) the doctrine of equitable estoppel does not apply; and, (3) the arbitration agreement is procedurally and substantively unconscionable. 

Plaintiff argues that Felisilda is not controlling authority because the Federal Arbitration Act applies. (Opp. at 3.)  The court finds Plaintiffs’ reliance on federal authorities that reach a contrary conclusion to Felisilda unpersuasive. (See, e.g., Ngo v. BMW of North America, LLC (9th Cir. 2022) 23 F.4th 942.) Plaintiff argues that Felisilda is distinguishable because the buyers in that case brought claims against both the dealership and manufacturer whereas here the claims are brought solely against the manufacturer. This is a distinction without a meaningful difference. 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.

Finally, the court finds Plaintiff’s unconscionability argument is unpersuasive.

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 10, 2023

_____________________________

Colin Leis

Judge of the Superior Court