Judge: Yolanda Orozco, Case: 21STCV30087, Date: 2023-01-09 Tentative Ruling
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Case Number: 21STCV30087 Hearing Date: January 9, 2023 Dept: 31
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 13, 2021, Plaintiff Marciela Meza filed a Complaint against Defendant Nissan North America, Inc. (“Nissan”) for violations of the Song-Beverly Act.
The Complaint alleges violations of:
1) Section 1793.2(d) of the Song-Beverly Act;
2) Section 1793.2(b) of the Song-Beverly Act;
3) Section 1793.2(a)(3) of the Song-Beverly Act;
4) Breach of Express Written Warrant;
5) Breach of Implied Warranty of Merchantability;
6) Violation of the Magnuson-Moss Warranty Act; and
7) Fraud by Omission.
On December 01, 2022, Defendant Nissan moved to Compel Arbitration and Stay Proceedings.
Plaintiff filed opposing papers on December 23, 2022.
Nissan filed a reply on December 30, 2022.
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 requests Judicial Notice of the following:
1. Complaint for Damages, filed in Imperial County Superior Court by Plaintiff on August 13, 2021, in the matter of Maricela Meza v. Nissan North America, Inc. (Case No. 21STCV30087), a true and correct copy of which is attached to this request as EXHIBIT 1.
2. Notice of Entry of Dismissal and Proof of Service, filed in Sacramento Superior Court by Plaintiffs Dina C. Felisilda and Pastor O. Felisilda on February 11, 2016 in the matter of Dina C. Felisida, 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 2.
Defendant’s request for Judicial Notice is GRANTED.
Plaintiff requests Judicial Notice of the following:
1. Ngo v. BMW of N. Am., LLC (9th Cir. Jan. 12, 2022) 23 F.4th 942, a true and correct copy attached hereto as Exhibit A.
2. Morgan v. Sundance, Inc., (U.S. Supreme Court, May 2022) 142 S.Ct. 1708, a true and correct copy attached hereto as Exhibit B.
3. Davis v. Shiekh Shoes, LLC (Oct. 31, 2022) 84 Cal.App.5th 956, a true and correct copy attached hereto as Exhibit C.
Plaintiff’s request for Judicial Notice is GRANTED.
Discussion
Defendant Nissan North America, Inc. (“Nissan”) seeks an Order Compelling Plaintiff to arbitrate her claims and stay proceedings.
Nissan asserts that on January 28, 2015, Plaintiff purchased a new 2015 Nissan Pathfinder (the “subject vehicle” and Plaintiff also entered into Retail Installment Sales Contract (“Sales Contract”) that contained an arbitration provision. Nissan now asserts that it has standing to enforce the arbitration provision in the Sales Contract either under the Doctrine of Equitable Estoppel or as a Third-Party Beneficiary to the arbitration agreement.
Plaintiff opposes Nissan’s motion on the basis that federal law favors the finding that the Doctrine of Equitable Estoppel does not apply and Nissan is not a Third-Party Beneficiary of the agreement to arbitrate.
Before the Court can decide on the issue of waiver of the right to compel arbitration, the Court must determine that Nissan has the right to enforce the arbitration provision in the Sales Contract.
Existence of an Arbitration Agreement.
The initial burden of proving the existence of an arbitration agreement is on Nissan which can meet this initial burden by attaching to the motion or the petition a copy of the arbitration agreement purporting to bear the opposing party’s signature. (Bannister v. Marinidence Opco, LLC (2021) 64 Cal.App.5th 541, 541-543 [“The party seeking arbitration can meet its initial burden by attaching to the petition a copy of the arbitration agreement purporting to bear the¿respondent's signature.”].) Alternatively, the moving party can meet its initial burden by setting forth the agreement’s provisions in the motion. (See Cal. Rules of Court, rule 3.1330; see also Condee v. Longwood Management Corp. (2001) 88 Cal.App.4th 215, 219.)
Nissan does attach a copy of the arbitration provision contained in a standardized Sales Contract, to this instant motion but it lacks Plaintiff’s signature. (Tang Decl. ¶ 4.) Nissan also attaches a copy of Plaintiff’s Sales Contract but there appears to be no signature. (Id. ¶ 4, Ex. 3.) The Sales Contract does identify the subject vehicle by its VIN. (Id.). California Rules of Court rule 3.1330 does not require a copy of the arbitration agreement bearing Plaintiff’s signature, only a petition that sets forth “the provisions of the written agreement and the paragraph that provides for arbitration. The provisions must be stated verbatim or a copy must be physically or electronically attached to the petition and incorporated by reference.” (Id., see also Condee, supra, 88 Cal.App.4th at 219.) Nissan has met its initial burden by incorporating the arbitration provisions into its Motion and attaching a copy of the arbitration provision that would be included in a standardized Sales Contract.
“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. at 72 Cal.App.5th 158, 165–166.)
Plaintiff does not dispute that she signed a Sales Contract with an arbitration provision. Plaintiff’s opposition only focuses on the fact that the back side of the Sales Contract is missing, and that the Sales Contract cannot be properly authenticated. Without Plaintiff expressly challenging the existence of an arbitration agreement, Nissan need not produce evidence authenticating the Sales Contract.
“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, supra, 88 Cal.App.4th at 218–219.)
Without a declaration from Plaintiff disputing the existence of an arbitration provision in the Sales Contract or the facts attesting that Plaintiff never signed or recalled signing the arbitration provision, Plaintiff has not challenged the existence of a valid agreement to arbitrate her claims.
Therefore, Nissan has met its burden of showing that an arbitration agreement exists.
The Sales Contract’s Arbitration Provision
Plaintiff does not dispute that the Sales Contract contains an arbitration provision with the following language:
“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.”
(Tang Decl. Ex. 3.)
The standard arbitration provision as it appears in a Sales Contract is titled:
“ARBITRATION PROVISION
PLEASE REVIEW – IMPORTANT – AFFECT YOUR LEGAL RIGHTS
1. EITHER YOU OR WE MAY CHOOSE TO HAVE ANY DISPUTE, EXCEPT AS STATED BELOW, 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 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 THAT YOU AND WE WOULD HAVE IN COURT MAY NOT BE AVAILABLE IN ARBITRATION.”
“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.”
(Trang Decl. Ex. 4.)
The arbitration provision further provides:
“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. . . . The arbitration hearing shall be conducted in federal district in which you reside . . . any arbitration under this Arbitration Provision shall be governed by the Federal Arbitration Act (9 U.S.C. § 1 et seq.) and not by any state law concerning arbitration.”
(Trang Decl. Ex. 4.)
Plaintiff does not dispute that the FAA governs the arbitration agreement only that Nissan lacks standing to enforce the arbitration provision in the Sales Contract, including any delegation clause.
Choice of Law Provision
Plaintiff argues that the arbitration provision contains a choice-of-law provision stating that federal law applies to the dispute: “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.” (See Trang Ex. 4.) Accordingly, Plaintiff asserts that federal law, and not California law should be used to interpret the arbitration provision.
In Felisilda v. FCA US LLC (2020), the Appeal Court interpreted a similar arbitration provision as the one at issue here: “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.” (Felisilda v. FCA US LLC (2020) 53 Cal.App.5th 486, 490.) Although the plaintiffs in Felisilda do not appear to have raised the argument that the phrase constituted a choice-of-law provision, the Felisilda Court did not treat the provision as such. Plaintiff does not cite any legal authority interpreting the phrase: “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,” as being a choice-of-law provision.
Cases holding that choice-of-law provisions have found language explicitly stating that the agreement is governed by a specific law will be upheld. (See Washington Mutual Bank, FA v. Superior Court (2001) 24 Cal.4th 906, 912 [“‘This Security Instrument shall be governed by federal law and the law of the jurisdiction in which the [secured property] is located.’”]; Mount Diablo Medical Center v. Health Net of California, Inc. (2002) 101 Cal.App.4th 711, 722 [“‘[t]he validity, construction, interpretation and enforcement of this Agreement’ shall be governed by California law.”]; Nedlloyd Lines B.V. v. Superior Court (1992) 3 Cal.4th 459, 463 [“‘This agreement shall be governed by and construed in accordance with Hong Kong law and each party hereby irrevocably submits to the non-exclusive jurisdiction and service of process of the Hong Kong courts.’”].)
Absent similar clear language in the Sales Contract at issue here, the Court declines to find that the arbitration provision contains a choice of law provision stating that federal law governs the agreement. Moreover, the FAA does not alter the principles of state contract law, including who is bound by the agreement. (See Arthur Andersen LLP v. Carlisle (2009) 556 U.S. 624, 630.)
Lastly, the Court presumes that the arbitration provision is governed by the FAA because Plaintiff has not disputed Nissan’s assertion that the FAA governs the agreement to arbitrate.
Equitable Estoppel Doctrine
“A nonsignatory plaintiff can be compelled to arbitrate a claim even against a nonsignatory defendant, when the claim is itself based on, or inextricably intertwined with, the contract containing the arbitration clause.” (JSM Tuscany, LLC v. Superior Court¿(2011) 193 Cal.App.4th 1222, 1241.) 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.) A nonsignatory seeking to enforce an arbitration agreement has the burden to establish at least one of these circumstances applies. (Jones v. Jacobson¿(2011) 195 Cal.App.4th 1, 16.)¿
Although Plaintiff relies on federal authorities to argue that equitable estoppel does not apply to the sales contract, this Court is not bound by those decisions. “[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.)
Given Nissan’s conduct prior to filing this Motion, the Court declines to apply the Doctrine of Equitable Estoppel to Nissan.
“A petition to compel arbitration is a suit in equity seeking specific performance of an arbitration agreement.” (Espejo v. S. Cal. Permanente Med. Grp. (2016) 246 Cal.App.4th 1047, 1057.) “The fundamental point” of equitable estoppel “is that a party is ‘not entitled to make use of [a contract containing an arbitration clause] as long as it worked to [his or] her advantage, then attempt to avoid its application in defining the forum in which [his or] her dispute ... should be resolved.” (Jensen v. U-Haul Co. of California (2017) 18 Cal.App.5th 295, 306; citing NORCAL Mutual Ins. Co. v. Newton (2000) 84 Cal.App.4th 64, 84.) “[T]he rational and purpose of equitable estoppel [is] to prevent a person from asserting a right which has come into existence by contract, statute or other rule of law where, because of his conduct, silence or omission, it would be unconscionable to allow him to do so.” (Feduniak v. California Coastal Com. (2007) 148 Cal.App.4th 1346, 1371.)
Plaintiff commenced this case more than two years ago. Without providing any explanation for its delay, Nissan now brings this Motion to Compel Arbitration. Nissan’s Answer to Plaintiff’s Complaint affirmed its knowledge that an arbitration agreement existed between the parties because it asserted arbitration as an affirmative defense, yet Nissan made effort to affirm its right to arbitrate until now.
After Nissan filed its Answer, Nissan continued to participate in litigation, including asking for and receiving extensions for discovery responses, requesting a jury trial, stating in a Joint Case Management Statement that there would be no motion to compel arbitration, demanding an exchange of witnesses for trial, and then waiting almost a month before the start of trial to bring this Motion and failing to provide good cause for the delay. (See Opp. at 2-10.)
It would be unfair for Nissan to avail itself of this Court’s equitable powers and compel Plaintiff to arbitrate her claims under the doctrine of equitable estoppel when Nissan has benefitted from not asserting its right to arbitrate and lulled Plaintiff and this Court into believing it would not seek a motion to compel arbitration.
Therefore, equity bars Nissan from seeking to enforce the Doctrine of Equitable Estoppel.
Third-Party Beneficiary and Agency Exception
The agency exception is an exception to the general rule that only a party to an arbitration agreement may enforce the agreement. (Thomas v. Westlake (2012) 204 Cal.App.4th 605, 614 [“One such exception provides that when a plaintiff alleges a defendant acted as an agent of a party to an arbitration agreement, the defendant may enforce the agreement even though the defendant is not a party thereto.”].) Here, Plaintiff has sufficiently alleged that an agency relationship exists between “Nissan and its network of dealers.”. (Compl. ¶ 51, 54.)
Accordingly, Nissan can enforce the arbitration provision in the Sales Contract under the agency exception.
Moreover, Nissan may compel arbitration as a third-party beneficiary to the arbitration provision. (See Ronay Family Limited Partnership v. Tweed¿(2013) 216 Cal.App.4th 830, 839 [holding that an arbitration provision can be enforced by a third-party beneficiary even when its name does not appear in the agreement].)
In Felisilda, the Appeal Court analyzed an arbitration provision with language that mirrors the arbitration provision in this instant action and found the language 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 “arbitration provision lacked the key language present in this case, namely 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 this case 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.)
Likewise, the Court finds that the language of the arbitration provision at issue in this instant action is broad enough to encompass any disputes Plaintiff may have against the manufacturer:
“Any 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.”
(Trang Decl. Ex. 4.)
Accordingly, the language in the arbitration provision supports a finding that Nissan was an intended beneficiary of the Sales Contract.
To permit a third-party action to go forward, 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 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. (See Ronay, supra, 216 Cal.App.4th 830, 839.)
Accordingly, Nissan has standing to enforce the arbitration provision and compel Plaintiff to arbitrate her claims.
Waiver
Plaintiff raises the claim that Nissan has waived any right to compel arbitration by unreasonably delaying in bringing this Motion and engaging fully in the litigation of the case.
“[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.)
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.].)
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) 212 L.Ed.2d 753 [“[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 that 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 inconsistent with the right to arbitrate. Nissan filed an Answer asserting arbitration as an affirmative defense but delayed taking any action to compel arbitration for more than two years. Nissan also stated in a Joint Management Statement that there would be no motion to compel.
Second, the litigation machinery has already been substantially invoked as Nissan has participated in substantial discovery and requested the exchange of expert witnesses for trial. In fact, the trial is set to start next month. (See Law Decl. ¶ 3, Ex. 3 [Demand for Exchange of Expert Witness Information].)
Third, Nissan moved to compel arbitration close to the start of trial and more than two years after this action was filed. 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 already occurred, and the parties are preparing for trial.
Nissan’s reliance on Quach v. California Commerce Club (Cal. 2022) 297 Cal.Rptr.3d 592 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 the has been “no judicial litigation of the merits of arbitrable issues.” (Id. at 478.)
Various appellate courts have found waiver where the party unreasonably delayed in moving to compel arbitration and the parties had engaged in discovery as in this case. (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].)
Here, Nissan unreasonably delayed by waiting twenty-five months to bring this Motion and offering no explanation for the delay or arguments as to why its actions were not inconsistent with the intent to arbitrate.
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.
For the reasons stated, 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.