MOTION TO COMPEL ARBITRATION AND STAY PROCEEDINGS¿¿ 

TENTATIVE RULING 

Defendant Nissan North America Inc.’s Motion to Compel Arbitration and Stay Proceedings is DENIED.¿¿  

BACKGROUND 

On August 11, 2021, Plaintiff Pauline Parsekhian filed a Complaint against Defendant Nissan North America, Inc. (“Nissan”) for violations of the Song-Beverly Act and the Magnuson-Moss Act.

On December 22, 2022, Nissan filed a Motion to Compel Arbitration and Stay Proceedings.

Plaintiff filed opposing papers on January 11, 2023.

Nissan filed a reply on January 18, 2023. 

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; Omar v. Ralphs Grocery Co. (2004)¿118 Cal.App.4th 955, 961.)¿¿¿ ¿¿¿¿ 

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, 356-57.)¿¿¿¿¿ 

“If a court of competent jurisdiction, whether in this State or not, 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.)¿¿ 

REQUEST FOR JUDICIAL NOTICE 

The Court may take judicial notice of records of any court of record of the United States. (Evid. Code, § 452(d)(2).) However, the court may only judicially notice the existence of the record, not that its contents are the truth. (Sosinsky v. Grant (1992) 6 Cal.App.4th 1548, 1565.)¿  

Defendant Nissan requests Judicial notice of the following:

1)            Complaint for Damages, filed in Los Angeles County Superior Court by Pauline Parsekhian on August 11, 2021, in the matter of Pauline Parsekhian v. Nissan North America, Inc. (Case No. 21STCV29546), a true and correct copy of which is attached to this request as Exhibit 1. Exhibit 1 omits the exhibit attached thereto, which is in the Court’s records and files.

2)            Answer to Plaintiff’s Complaint, filed in Los Angeles County Superior Court by Nissan on September 15, 2021, in the matter of Pauline Parsekhian v. Nissan North America, Inc. (Case No. 21STCV29546), a true and correct copy of which is attached to this request as Exhibit 2.

3)            Notice of Entry of Dismissal and Proof of Service, filed in Sacramento County Superior Court by Plaintiffs Dina C. Felisilda and Pastor O. Felisilda on February 11, 2016 in the matter of Dina C. Felisilda, et al, v. FCA US LLC, et al. (34-2015-00183668), a true and correct copy of which is attached to this request as Exhibit 3.

Nissans’ request for Judicial Notice is GRANTED. 

EVIDENTIARY OBJECTIONS 

Plaintiff submitted evidentiary objections to the Declaration of Michael Yu filed in Support of the Motion to Compel Arbitration. 

Objections to Paragraphs 4 and 6 are SUSTAINED. 

Objections to Paragraphs 5 and 7 are OVERRULED. 

“For purposes of a petition to compel arbitration, it is not necessary to follow the normal procedures of document authentication. ‘[T]he court shall order the petitioner and the respondent to arbitrate the controversy if it determines that an¿agreement to arbitrate the controversy exists....’ (§ 1281.2) The statute does not require the petitioner to introduce the agreement into evidence. A plain reading of the statute 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.” (Condee v. Longwood Management Corp. (2001) 88 Cal.App.4th 215, 218-219.) 

Accordingly, the Sales Contract does need to be authenticated unless its existence or Plaintiff’s signature on the Sales Contract is disputed with sufficient evidence. “If the moving party meets its initial prima facie burden and the opposing party disputes the agreement, then in the second step, the opposing party bears the burden of producing evidence to challenge the authenticity of the agreement.” (Gamboa v. Northeast Community Clinic¿(2021) 72 Cal.App.5th 158, 165.) “If the opposing party meets its burden of producing evidence, then in the third step, the moving party must establish with admissible evidence a valid arbitration agreement between the parties. The burden of proving the¿agreement by a¿preponderance of the evidence remains with the moving party. (Id. at165–166.) 

DISCUSSION 

Defendant Nissan North America, Inc. (“Nissan”) seeks an Order Compelling Plaintiffs to arbitrate their claims and stay proceedings.¿ 

Existence of an Arbitration Agreement  

Nissan asserts that on January 27, 2019, Plaintiff bought a used 2017 Nissan Sentra (the “subject vehicle”) and entered into a Retail Installment Sales Contract (the “Sales Contract”) agreeing to arbitrate all claims relating to the condition of the subject vehicle. (Yu Decl. Ex. 4.) 

The Sales Contract is titled, “RETAIL INSTALLMENT SALE CONTRACT – SIMPLE FINANCE CHARGE (WITH ARBITRATION PROVISION).” (Yu Decl. Ex. 4.) 

The Sales Contract includes an acknowledgment box alleged to have been signed by Plaintiff that states: 

“Agreement to Arbitrate: By signing below, you agree that pursuant to the Arbitration Provision on page 7 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 agreement to arbitrate.” (Yu Decl. Ex. 4.) 

The Arbitration Provision on page 7 of the Sales Contract states:

“ARBITRATION CLAUSE¿ 

PLEASE REVIEW – IMPORTANT – AFFECT YOUR LEGAL RIGHTS¿ 

[. . .]

“Any claim or dispute, whether in contract, tort or 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, successor or assigns, which arise or relate to . . . 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 you or our election, be resolved by neutral binding arbitration and not by a court action. If federal law provides that a claim or dispute is not subject to binding arbitration, this Arbitration Provision shall not apply to such claim or dispute.”

[ . . . ]

Any arbitration under this Arbitration Provision shall governed by the Federal Arbitration Act (9 U.S.C. § 1 et seq.) and not by any state law concerning arbitration.”   

(Yu Decl. ¶ Ex. 4.) 

Nissan asserts that it can compel arbitration as a third-party beneficiary or under the doctrine of equitable estoppel. 

Plaintiff does not dispute that she signed the Sales Contract with the Arbitration Provision or that the Federal Arbitration Act (FAA) governs the agreement to arbitrate. Plaintiff only disputes Nissan’s ability to enforce arbitration under the Sales Contract and asserts that Nissan has waived the right to compel arbitration by waiting until the eve of trial to file this Motion. 

Before the Court addressed the issue of waiver, the Court must first find that Nissan has a right to compel arbitration under the sales contract. 

Nissan Has Standing to Compel Arbitration 

In Felisilda v. FCA US LLC (2020), the Appeal Court interpret a similar arbitration provision such as the one at issue in this instant action: 

‘“Any claim or dispute, 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 ... 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. If federal law provides that a claim or dispute is not subject to binding arbitration, this Arbitration Provision shall not apply to such claim or dispute. Any claim or dispute is to be arbitrated by a single arbitrator on an individual basis and not as a class action.”’ 

(Felisilda v. FCA US LLC¿(2020) 53 Cal.App.5th 486, 490 [italics original].) 

The Felisilda Court interpreted the language of the arbitration clause to be broad enough to be enforceable “even against third party nonsignatories to the sales contract.” (Felisilda, supra, 53 Cal.App.5th at 486.) The Felisilda Court explained that the arbitration provision contained “an express extension of arbitration to claims involving third parties that relate to the vehicle's condition.¿The express language of the arbitration agreement in [Felisilda] sets it apart from the arbitration provisions in the¿[Soto v. American Honda Motor Co.¿(N.D. Cal. 2012) 946 F.Supp.2d 949] and [Kramer v. Toyota Motor Corp. (9th Cir. 2013) 705 F.3d 1122] decisions.” (Id. at 498.)¿  

Under Felisilda, the Court finds that the language of the arbitration clause at issue here is broad enough to encompass any disputes Plaintiff may have against Nissan as the manufacturer of the subject vehicle.   

Although Ngo v. BMW of N. Am., LLC (9th Cir. 2022) 23 F.4th 942 is persuasive, it is not binding on this Court. “[A]lthough ‘the decisions of federal district and circuit courts, although entitled to great weight, are not binding on state courts even as to issues of federal law.’” (Felisilda, supra, 53 Cal.App.5th at 497, citing Alan v. Superior Court¿(2003) 111 Cal.App.4th 217, 229.) 

To permit a third-party action to compel arbitration, three factors must be established: (1) the third party would in fact benefit from the contract; (2) a motivating purpose of the contracting parties was to provide a benefit to the third party; and (3) permitting the third party to bring its own breach of contract action against a contracting party is consistent with the objectives of the contract and reasonable expectations of the third parties. (Goonewardene v. ADP, LLC¿(2019) 6 Cal.5th 817, 830.) The third element “calls for a judgment regarding the potential effect that permitting third party enforcement would have on the parties’ contracting goals, rather than a determination whether the parties actually anticipated third party enforcement at the time the contract was entered into.” (Id. at 831.)¿ 

Defendant Nissan would in fact benefit from the Sales Contract’s Arbitration Provision because it will allow it to adjudicate Plaintiff’s claims in a more expedient and less expensive forum. Furthermore, the Arbitration Provision explicitly embraces the type of claims Plaintiff asserts against Nissan, which encompass claims arising out of relationships with third parties who do not sign the Sales Contract and the condition of the subject vehicle. Plaintiff’s warranty claims necessarily require Plaintiff to contend that Nissan benefitted from the Sales Contract. Lastly, permitting Nissan to enforce the arbitration provision is consistent with the objectives and reasonable expectations of the contracting parties.¿¿ ¿ 

Because Plaintiff seeks to hold Nissan liable based on the warranty relationships between her and Nissan, Nissan is an intended third-party beneficiary under the Sales Contract and is one of the classes of entities (i.e., vehicle manufacturers) for whom the arbitration provision was intended to benefit. 

Accordingly, Nissan has standing to enforce the arbitration provision and compel Plaintiff to arbitrate her claims as a third party beneficiary. In addition, since Nissan has standing to enforce the Arbitration Provision as a third party beneficiary, the Court need not decide if Nissan has standing to enforce the arbitration agreement under the doctrine of equitable estoppel. 

Waiver of the Right to Arbitrate 

 “[Q]uestions of waiver are for the court rather than the arbitrator[.]” (Wagner Const. Co. v. Pacific Mechanical Corp. (2007) 41 Cal.4th 19, 28; see also Code Civ. Proc., § 1281.2 subd. (a).) “The question of waiver is generally a question of fact, and the trial court's finding of waiver is binding on [appeal] if it is supported by substantial evidence.” (Bower v. Inter-Con Security Systems, Inc.¿(2014) 232 Cal.App.4th 1035, 1043.) “Even if the record reflects that the trial court misunderstood or misapplied the law in reaching its conclusion, it will be affirmed if supported by any legal theory.” (Kokubu v. Sudo¿(2022) 76 Cal.App.5th 1074, 1082.)  

Plaintiff argues that Nissan has waived any right to compel arbitration by unreasonably delaying in bringing this Motion.   

Since neither party disputes that the FAA governs the arbitration provision, the FAA and federal law control the inquiry of whether Nissan has waived its right to arbitrate this dispute. (See Davis v. Shiekh Shoes, LLC¿(2022) 84 Cal.App.5th 956 (Davis); see also Aviation Data, Inc. v. American Express Travel Related Services Co., Inc.¿(2007) 152 Cal.App.4th 1522, 1535–1536.)¿ The United States Supreme Court has stated that the federal policy favoring the enforcement of arbitration agreements is based on the enforcement of contract and not the preference for arbitration as an alternative dispute resolution forum. (See Dean Witter Reynolds, Inc. v. Byrd¿(1985) 470 U.S. 213, 219 [“The legislative history of the Act establishes that the purpose behind its passage was to ensure judicial enforcement of privately made agreements to arbitrate. We therefore reject the suggestion that the overriding goal of the Arbitration Act was to promote the expeditious resolution of claims.”].)¿ 

“‘Thus, the question of whether there has been waiver in the arbitration agreement context should be analyzed in much the same way as in any other contractual context. The essential question is whether, under the totality of the circumstances, the defaulting party has acted inconsistently with the arbitration right.’” (Davis, supra, 84 Cal.App.5th 956 citing National Foundation for Cancer Research v. A.G. Edwards & Sons, Inc.¿(D.C. Cir. 1987) 821 F.2d 772, 774.)¿  

In Morgan v. Sundance, Inc.¿(2022), the United States Supreme Court held that prejudice is not a condition to be considered in finding that a party waived its right to compel arbitration under the FAA. (Morgan v. Sundance, Inc.¿(2022) 142 S.Ct. 1708, 1714 [“[T]he usual federal rule of waiver does not include a prejudice requirement.].) In Davis, the Appeal Court found that the waiver test articulated by the California Supreme Court in St. Agnes Medical Center v. PacifiCare of California (2003) 31 Cal.4th 1187, which was adopted from the Tenth Circuit opinion in Peterson v. Shearson/American Express, Inc. (10th Cir. 1988) 849 F.2d 464, is the correct test to apply to the question of waiver “minus the prejudice requirement.” (Davis, supra, 84 Cal.App.5th 956.) As found in Davis, the St.Agnes/Peterson waiver “test is substantially similar to the test adopted by most federal circuit courts.” (Id.; see also Zamora v. Lehman (2010) 186 Cal.App.4th 1, 21–22.)  

The St.Agnes/Peterson factors to assess claims of waiver are:¿¿ ¿ 

(1) whether the party's actions are inconsistent with the right to arbitrate;¿¿ 

(2) whether the litigation machinery has been substantially invoked and the parties were well into preparation of a lawsuit before the party notified the opposing party of an intent to arbitrate;¿¿ 

(3) whether a party either requested arbitration enforcement close to the trial date or delayed for a long period before seeking a stay;¿¿ 

(4) whether a defendant seeking arbitration filed a counterclaim without asking for a stay of the proceedings; and¿¿ 

(5) whether important intervening steps [e.g., taking advantage of judicial discovery procedures not available in arbitration] had taken place.¿ 
¿ 

(See Davis, supra, 84 Cal.App.5th 956; St. Agnes, supra, 31 Cal.4th at 1196; Peterson, supra, 849 F.2d at 467-468.)¿  

First, Nissan has taken the following actions that are consistent with the right to arbitrate. Nissan filed an Answer on September 15, 2021, asserting arbitration as an affirmative defense. However, Nissan acted inconsistently with the right to arbitrate by unreasonably delaying in bringing this instant Motion. More than 16 months have passed, and trial preparation is now ongoing in light of a February 14, 2023 trial date.  

Second, trial is set to start on February 14, 2023, and most discovery has been concluded. Defendant’s expert deposition should have been completed on January 16, 2023. The Final Status Conference is scheduled for February 01, 2023, and trial binders are due on January 27, 2023. Motions in limine are due January 25, 2023. Defendants also demanded expert witness disclosures on December 06, 2022 and designated an expert witness on December 27, 2022. (Romano Decl. ¶ 4.) All of these actions are inconsistent with Nissan’s intent to arbitrate its claims. 

Third, Nissan filed this instant motion close to the trial date and delayed in bringing this motion. Nissan does not explain the delay in its moving papers. Although Nissan did not file a counterclaim, important intervening steps such as judicial discovery have been mostly concluded, and the parties have already started trial preparation.   

Nissan’s reliance on Quach v. California Commerce Club¿(2022) 78 Cal.App.5th 470 is unavailing because the California Supreme Court has granted review of that opinion. While Quach may be cited for its persuasive value, other appellate cases have upheld waiver even where there has been “no judicial litigation of the merits of arbitrable issues,” which is not the case here. (Id. at 478.)¿  

A number of  appellate courts have found waiver where the party unreasonably delayed in moving to compel arbitration and the parties had engaged in discovery. (Garcia v. Haralambos Beverage Co.¿(2021) 59 Cal.App.5th 534, 543 [waiver of the right to arbitrate was upheld where the party waited twenty-four months before filing its motion to compel arbitration and engaged in actions inconsistent with the right to arbitrate]; Bower v. Inter-Con Security Systems, Inc.¿(2014) 232 Cal.App.4th 1035, 1046 [waiver upheld where party delayed bringing a motion to compel by nineteen months and had propounded discovery]; Kokubu v. Sudo¿(2022) 76 Cal.App.5th 1074, 1087 [party delayed by sixteen months to bring a motion to compel and took advantage of judicial discovery procedures not available in arbitration]; Fleming Distribution Company v. Younan¿(2020) 49 Cal.App.5th 73, 83 [finding a twenty-month delay in seeking arbitration was unreasonable]; Sobremonte v. Superior Court (Bank of America Nat. Trust and Sav. Ass'n)¿(1998) 61 Cal.App.4th 980 [affirmed waiver due to ten-month delay in seeking arbitration after parties had engaged in expansive discovery and trial preparation].)¿  

For the foregoing reasons, the Court finds that Nissan unreasonably delayed by waiting 16 months to bring this Motion, and by engaging in the litigation machinery and preparing for trial. 

Accordingly, the Court finds that there is substantial evidence to support the finding that Nissan waived its right to compel arbitration under the St.Agnes/Peterson factors.¿¿  

The Motion is DENIED. 

CONCLUSION 

Defendant Nissan North America Inc.’s Motion to Compel Arbitration and Stay Proceedings is DENIED.¿¿ ¿ 

Moving party to give notice.