Motion to Compel Arbitration (Judge Richard Y. Lee)

Defendant Nissan moves to compel arbitration, asserting that the arbitration provision is governed by the Federal Arbitration Act (“FAA”).  “Although the FAA preempts any state law that stands as an obstacle to its objective of enforcing arbitration agreements according to their terms… we apply general California contract law to determine whether the parties formed a valid agreement to arbitrate their dispute. [Citation.]” (Avery v. Integrated Healthcare Holdings, Inc. (2013) 218 Cal.App.4th 50, 59-60.)

“If a party to a civil action asks the court to compel arbitration of [a] pending claim, the court must determine in a summary proceeding whether an ‘agreement to arbitrate the controversy exists.’ [Citations] ‘Because the existence of the agreement is a statutory prerequisite to granting the petition, the petitioner bears the burden of proving its existence by a preponderance of the evidence. If the party opposing the petition raises a defense to enforcement … that party bears the burden of producing evidence of, and proving by a preponderance of the evidence, any fact necessary to the defense.’ [Citation.]” (Iyere v. Wise Auto Group (2023) 87 Cal.App.5th 747, 754 (Iyere).)

Existence of an arbitration agreement

When the parties dispute the existence of an arbitration agreement, courts “resolve the dispute using a three-step burden-shifting process. [Citation.]”  (Iyere, supra, 87 Cal.App.5th at p. 755.)

In support of its motion, Defendant submitted a declaration from its attorney who provided, on information and belief, a copy of the RISC executed by Plaintiffs.  [ROA 36, Hudson decl., ¶ 2 and Exh. 1]  Plaintiffs objected to that portion of the declaration, as well as to the copy of the RISC, on grounds that it is hearsay, lacks foundation and authentication, and is speculation and prejudicial.  [ROA 62]  However, Plaintiffs did not offer any evidence to dispute the RISC’s existence or authenticity.

Here, Defendant met its burden of proving by a preponderance the existence of the RISC and the arbitration provision therein.


The Court recognizes that there is a split of authority on the issue.  The Third District in Felisilda v. FCA US LLC (2020) 53 Cal.App.5th 486 found that an arbitration agreement contained in a sales contract between the dealer and purchaser could be enforceable against the manufacturer under the doctrine of equitable estoppel.  More recently, Div. 8 of the Second District in Ford Motor Warranty Cases v. Ford Motor Co. (2023) 89 Cal.App.5th 1324 (rev. granted 7/19/2023) and Div. 7 of the Second District in Montemayor v. Ford Motor Co. (2023) 92 Cal.App.5th 958, 310 Cal.Rptr. 3d 82 (June 26, 2023) disagreed with the reasoning in Felisilda and concluded that the manufacturer was not entitled to enforce the arbitration agreement.

When there is a split in authority, the trial court may follow the decision it finds to be the most persuasive.  (Auto Equity Sales, Inc. v. Superior Court (1962) 57 Cal.2d 450, 456 [when “appellate decisions are in conflict” a “court exercising inferior jurisdiction can and must make a choice between the conflicting decisions”].)

In reviewing the cases, this humble trial court is persuaded that the typical arbitration agreement found in these purchase contracts between the purchaser and the car dealership does not explicitly encompass the manufacturer.  Specifically, the language provides that “either you or we” could elect to arbitrate, in relevant part, “[a]ny claim or dispute … between you and us or our employees, agents, successors or assigns, 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 did not sign this contract)….” (emphasis added.)  In other words, this court agrees that the term “third parties who do not sign this contract” refers to the subject matter of the claims, not the scope of who may enforce the arbitration provision. (See Kielar v. Superior Court (Aug. 16, 2023, C096773) 2023 WL 5270559; Montemayor v. Ford Motor Company (2023) 92 Cal.App.5th 958, 971; Ford Motor Warranty Cases v. Ford Motor Co. (2023) 89 Cal.App.5th 1324, 1334-1335, rev. granted 7/19/2023.)

The court notes that the Felisilda court largely relied on this express language to support its conclusion that the purchaser’s claims against the manufacturer are inextricably intertwined with the sale contract.  (Felisildasupra, 53 Cal.App.5th at p. 498).  However, as set forth in Montemayor, “the parenthetical language referring to third-party nonsignatories was a delineation of the subject matter of claims the purchasers and dealers agreed to arbitrate, but the purchasers clearly agreed only to arbitrate disputes between ‘you and us,’ that is, with the dealership.  In other words, [t]he ‘third party’ language in the arbitration clause means that if a purchaser asserts a claim against the dealer (or its employees, agents, successors or assigns) that relates to one of these third party transactions, the dealer can elect to arbitrate that claim. It says nothing of binding the purchaser to arbitrate with the universe of unnamed third parties.”  (Montemayor, supra, 92 Cal.App.5th at p. –, 310 Cal.Rptr.3d at 92 (quoting and relying on Ford Motor Warranty Cases v. Ford Motor Co. (2023) 89 Cal.App.5th 1324 (rev. granted 7/19/2023); quotations and citations omitted.)

Accordingly, the court disagrees with Felisilda’s reasoning here.  The court believes that the better argument for the manufacturer is that the manufacturer’s claims are inextricably intertwined with the car dealership and is not the result of “but-for” causation.  However, Felisilda specifically declined to “resolve the conflict between the . . . federal district courts regarding the applicability of the ‘but-for’ test for equitable estoppel as it relates to arbitrability.”  (Felisilda, supra, 53 Cal.App.5th at p. 497).  Accordingly, the court is bound to follow the analysis set forth in Montemayor and Ford Motor Warranty Cases and their reliance on DMS Services, LLC v. Superior Court (2012) 205 Cal.App.4th 1346, 1348-49 (holding “[t]his argument confuses the concept of ‘claims founded in and intertwined with the argument containing the arbitration clause’ with but-for causation.”).  There is no conflict.

Accordingly, the petition to compel arbitration is DENIED.

Defendants to answer within 30 days.

The Case Management Conference is continued to 10/19/2023 at 1:30 p.m.

Plaintiff to give notice.