Judge: William A. Crowfoot, Case: 23AHCV02875, Date: 2025-02-13 Tentative Ruling

Case Number: 23AHCV02875    Hearing Date: February 13, 2025    Dept: 3

SUPERIOR COURT OF THE STATE OF CALIFORNIA

FOR THE COUNTY OF LOS ANGELES - NORTHEAST DISTRICT

I.            INTRODUCTION

On December 13, 2023, plaintiffs Bobbie Smith and Brittany Dove (“Plaintiffs”) filed this action against defendant Mercedes Benz USA, LLC (“Defendant”) alleging violations of the Song-Beverly Consumer Warranty Act.

On May 13, 2024, Defendant filed this motion for an order compelling Plaintiffs to arbitrate their claims.

On September 16, 2024, Plaintiffs filed an opposition brief.

II.          LEGAL STANDARD

Parties may be compelled to arbitrate a dispute upon the court finding that: (1) there was a valid agreement to arbitrate between the parties; and (2) said agreement covers the controversy or controversies in the parties’ dispute. (Code Civ. Proc., § 1281.2.) A party petitioning to compel arbitration has the burden of establishing the existence of a valid agreement to arbitrate and the party opposing the petition has the burden of proving, by a preponderance of the evidence, any fact necessary to its defense. (Banner Entertainment, Inc. v. Superior Court (1998) 62 Cal.App.4th 348, 356-357.) “If a court of competent jurisdiction . . . has ordered arbitration of a controversy which is an issue involved in an action or proceeding pending before a court of this State, the court in which such action or proceeding is pending shall, upon motion of a party to such action or proceeding, stay the action or proceeding until an arbitration is had in accordance with the order to arbitrate or until such earlier time as the court specifies.” (Code Civ. Proc., § 1281.4.)

III.        DISCUSSION

Defendant argues that Plaintiffs are bound to arbitrate their claims arising from a 2017 Mercedes-Benz G63 (“Vehicle”) because the Retail Installment Sale Contract (“RISC”) entered into at the time of purchase contains an arbitration clause. (Motion, p. 5; Ameripour Decl., Ex. 2.) Defendant acknowledges that it is not a signatory to the RISC, as it was entered into between Plaintiffs and co-defendant Mercedes-Benz of Arcadia. (Motion, p. 3.) However, Defendant argues that it has standing to enforce the arbitration provision as a third-party beneficiary. Defendant also argues that it may enforce arbitration under the doctrine of equitable estoppel. Neither argument is persuasive.

First, Defendant is not an intended third-party beneficiary because the language of the arbitration agreement specifies that it may only be enforced by either Plaintiffs or Mercedes-Benz of Arcadia. (Ameripour Decl., Ex. 2, p.7 [“Either you or we may elect to resolve any dispute between us by arbitration[.]”]) The use of the term “third parties” refers to the types of disputes that signatories to the RISC could elect to arbitrate, not the category of those entitled to enforce the arbitration agreement. (Ford Motor Warranty Cases (2023) 89 Cal.App.5th 1324, 1335 (“Ochoa”); Montemayor v. Ford Motor Co. (2023) 92 Cal.App.5th 958, 971.)

Second, Defendant’s argument based on the doctrine of equitable estoppel is not persuasive. Defendant relies on Felisilda v. FCA US LLC (2020) 53 Cal.App.5th 486, which is an outlier in holding that the sale contract for a vehicle was the source of the warranties provided by the nonsignatory car manufacturer. Plaintiff cites to several appellate cases published after Felisilda was decided and states that every appellate case following Felisilda rejects its reasoning and holding, including Ochoa and Montemayor. In Ochoa and Montemayor, the Court of Appeal rejected the holding in Felisilda because “manufacturer vehicle warranties that accompany the sale of motor vehicles without regard to the terms of the sale contract between the purchaser and the dealer are independent of the sale contract.” (Ochoa, supra, 92 Cal.App.5th at p. 1334; Montemayor, supra, 92 Cal.App.5th at p. 969; see also Ngo v. BMW of North America, LLC (9th Cir. 2022) 23 F.4th 942, 949 [“the express and implied warranties arise ‘independently of a contract of sale’ ”].)

IV.        CONCLUSION

In light of the foregoing, Defendant’s motion to compel arbitration is DENIED.

Dated this 13th day of February 2025

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.