Defendant Nissan North America, Inc. moves to compel arbitration of the claims asserted in the Plaintiff Arturo Nungaray’s complaint. For the following reasons, the motion is DENIED.
- Request for Judicial Notice
Defendant asks the Court to take judicial notice of the Complaint filed in this case and the Notice of Entry of Dismissal filed in the Felisilda case.
The court grants the request for judicial notice. (Evi. Code § 452(d) and (h).) Although not binding, unpublished and published federal district court cases are citable as persuasive authority (Aleman v. AirTouch Cellular (2012) 209 Cal.App.4th 556, 576, fn. 8; Goldman v. KPMG, LLP (2009) 173 Cal.App.4th 209, 219), and the court must take judicial notice of the decisional law of this state and of the United States (Evid. Code, § 451(a).).
- Whether The Arbitration Agreement is Sufficiently Authenticated
Defendant attempts to authenticate the Retail Installment Sale Contract (“RISC”) — Simple Finance Charge (With Arbitration Provision”) by attaching a copy to their counsel’s declaration. MP’s counsel states:
Attached hereto as Exhibit 3 is a true and correct copy of what I am informed and believe is the Retail Installment Sale Contract (“the Sales Contract”) relating to Plaintiff Violeta Hernandez’s purchase of the 2022 Nissan Pathfinder at issue in this action.
Parties moving to compel arbitration “may meet their initial burden to show an agreement to arbitrate by attaching a copy of the arbitration agreement purportedly bearing the opposing party’s signature.” (Espejo v. Southern California Permanente Medical Group (2016) 246 Cal.App.4th 1047, 1060.) If the opposing party challenges the validity of that signature, however, the moving party must “establish by a preponderance of the evidence that the signature was authentic.” (Ibid.)
Here, Plaintiff challenges the authenticity of the Contract submitted by Defendant. Defendant does not provide any admissible evidence that the signatures on the Contract were authentic. Thus, the motion could be denied on these grounds alone. Nevertheless, the court will proceed to address the merits of the motion.
- The Arbitration Provision
Attached as Exhibit 3 to the Declaration of Paul Lecky is the Retail Installment Sale Contract – Simple Finance Charge (With Arbitration Provision) ( “Contract”). A portion of the Contract contains the following text, with Plaintiff’s signature underneath it:
Agreement to Arbitrate: By signing below, you agree that, pursuant to the Arbitration Provision on the reverse side of this contract, you or we may elect to resolve any dispute by neutral, binding arbitration and not by a court action.
Also contained in the Contract is an arbitration provision titled “ARBITRATION PROVISION – PLEASE REVIEW – IMPORTANT AFFECTS YOUR LEGAL RIGHTS” (“Arbitration Provision”). The Arbitration Provision provides, in relevant part:
- EITHER YOU OR WE MAY CHOOSE TO HAVE ANY DISPUTE BETWEEN US DECIDED BY ARBITRATION AND NOT IN COURT OR BY JURY TRIAL.
- 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 ANY RIGHT TO CLASS ARBITRATION OR ANY CONSOLIDATION OF INDIVIDUAL ARBITRATIONS.
- 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, 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 your credit application, 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 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. You expressly waive any right you may have to arbitrate a class action. You may choose the American Arbitration Association, 1633 Broadway, 10th Floor, New York, New York 10019 (www.adr.org) or any other organization to conduct the arbitration subject to our approval. You may get a copy of the rules of an arbitration organization by contacting the organization or visiting its website ….
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.
(Lecky Decl., Ex. 3.)
- Federal Arbitration Act
The Federal Arbitration Act (“FAA”), which includes both procedural and substantive provisions, governs agreements involving interstate commerce. There is no dispute that the FAA applies.
The FAA states that written arbitration agreements “shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract.” (9 U.S.C. § 2.) The Supreme Court has described this provision as reflecting both a “liberal federal policy favoring arbitration,” and the “fundamental principle that arbitration is a matter of contract.” (AT & T Mobility LLC v. Concepcion (2011) 563 U.S. 333.) The FAA permits agreements to arbitrate to be invalidated by “generally applicable contract defenses, such as fraud, duress, or unconscionability.” (Id.) When deciding whether a valid arbitration agreement exists, courts generally apply “ordinary state-law principles that govern the formation of contracts.” (First Options of Chicago, Inc. v. Kaplan (1995) 514 U.S. 938, 944.)
On a motion to compel arbitration, the court’s role is limited to deciding: “(1) whether there is an agreement to arbitrate between the parties; and (2) whether the agreement covers the dispute.” (Brennan v. Opus Bank (9th Cir. 2015) 796 F.3d 1125, 1130.) If these conditions are satisfied, the court is without discretion to deny the motion and must compel arbitration. (9 U.S.C. § 4; Dean Witter Reynolds, Inc. v. Byrd (1985) 470 U.S. 213, 218 [“By its terms, the [FAA] leaves no place for the exercise of discretion by a district court, but instead mandates that district courts shall direct the parties to proceed to arbitration.”].) “[T]he party resisting arbitration bears the burden of proving that the claims at issue are unsuitable for arbitration.” (Green Tree Fin. Corp. v. Randolph (2000) 531 U.S. 79, 91.)
The Contract at issue states: “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.” (Lecky Decl., Ex. 3.)
Defendant is not a party to the RISC. Plaintiff entered into the Contract with only Nissan of Tustin, the car dealership. Defendant contends it can compel arbitration pursuant to the doctrine of equitable estoppel as articulated in the Court of Appeal’s decision in Felisilda v. FCA US LLC (2020) 53 Cal.App.5th 486.
“Under the doctrine of equitable estoppel, as applied in ‘both federal and California decisional authority, 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. By relying on contract terms in a claim against a nonsignatory defendant, even if not exclusively, a plaintiff may be equitably estopped from repudiating the arbitration clause contained in that agreement.” (Felisilda v. FCA US LLC (2020) 53 Cal.App.5th 486, 495–496 [citations omitted].)
Where the equitable estoppel doctrine applies, the nonsignatory has a right to enforce the arbitration agreement.” (JSM Tuscany, LLC v. Superior Court (2011) 193 Cal.App.4th at 1222, 1237, fn. 18.) “ ‘The fundamental point’ 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, quoting NORCAL Mutual Ins. Co. v. Newton (2000) 84 Cal.App.4th 64, 84.) “In any case applying equitable estoppel to compel arbitration despite the lack of an agreement to arbitrate, a nonsignatory may compel arbitration only when the claims against the nonsignatory are founded in and inextricably bound up with the obligations imposed by the agreement containing the arbitration clause.” (Goldman v. KPMG, LLP (2009) 173 Cal.App.4th at 209, 219.) In determining whether the plaintiffs’ claim is founded on or intimately connected with the sales contract, courts the facts of the operative complaint. (Id. 229-230.)
In Felisilda, the Felisildas purchased a used vehicle from a dealer, and when the vehicle turned out to be defective, they sued both the dealer and the manufacturer. (53 Cal.App.5th at 489.) The dealer moved to compel arbitration under an arbitration provision that is virtually identical to the one here, the manufacturer filed a notice of non-opposition, and the trial court compelled the Felisildas to arbitrate their claims against both the dealer and the manufacturer. (Id. at 491.) The Court of Appeal affirmed the decision compelling the Felisildas to arbitrate their claims against the manufacturer “because the Felisildas expressly agreed to arbitrate claims arising out of the condition of the vehicle—even against third party nonsignatories to the sales contract.” (Id. at 497.)
Felisilda is distinguishable. The Felisildas sued both the manufacturer and the dealer. Here, Plaintiff has not sued the dealership. The Arbitration Provision defines claims as those “between you and us or our employees, agents, successors or assigns.” (Lecky Dec., Ex. 3.) Neither the dealership nor one of its “employees, agents, successors, or assigns” is currently named in this action or is seeking to enforce the arbitration provision. Plaintiff is not seeking to invoke the duties and obligations of Defendant under the Contract while seeking to avoid arbitration. Accordingly, Defendant has not shown that it can compel arbitration based on equitable estoppel.
Defendant also contends that it may compel arbitration as a third-party beneficiary because it is an intended third-party beneficiary of the Contract. California law states that “[a] contract, made expressly for the benefit of a third person, may be enforced by him at any time before the parties thereto rescind it.” (Civ. Code., § 1559.) Defendant bears the burden of proving that it is a third-party beneficiary of the Contract. (See Garcia v. Truck Ins. Exch. (1984) 36 Cal.3d 426, 436.) Courts must “interpret a contract to give effect to the mutual intention of the parties at the time they formed the contract.” (Camacho v. Target Corp. (2018) 24 Cal. App. 5th 291, 306 [citations omitted].) The intention of the parties is discerned from the written contract, but the court may also look to the subject matter of the agreement along with the circumstances under which the contract was made. (Id.) Words are given their plain meaning unless they have been given specialized meaning by the parties. (Id. [citations omitted].)
The recent Ninth Circuit decision in Ngo v. BMW of North America, LLC (9th Cir. 2022) 23 F.4th 942 is persuasive. That case involved a similar arbitration provision and similar arguments by the party moving to compel arbitration, and the Court ruled that the manufacturer was not a third-party beneficiary and rejected the contention that equitable estoppel applied to compel arbitration. (Ngo v. BMW of North America, LLC (9th Cir. 2022) 23 F.4th 942 (noting that “the Felisildas dismissed the dealership only after the court granted the motion to compel arbitration. Accordingly, Felisilda does not address the situation we are confronted with here, where the non-signatory manufacturer attempted to compel arbitration on its own. We therefore decline to affirm on the ground of equitable estoppel.”); Mesler v. Bragg Management Co. (1985) 39 Cal.3d 290, 299 (““[D]ecisions of federal courts interpreting California law are persuasive but not binding.”).)
The motion to compel arbitration is DENIED.
Plaintiff to give notice.