Talia Kelley vs Hyundai Motor America

Case Number

24CV06256

Case Type

Hearing Date / Time

Fri, 03/28/2025 - 10:00

Nature of Proceedings

Motion to Compel

Tentative Ruling

For the reasons set forth herein, the motion of defendant Hyundai Motor America to compel arbitration is granted. This action is ordered stayed pending disposition of the arbitration.

Background:

On January 19, 2024, plaintiff Talia Kelley filed the initial complaint in this action in Orange County Superior Court alleging a cause of action for violation of the Song-Beverly Consumer Warranty Act arising out of issues with a then-new 2020 Hyundai Santa Fe vehicle (Vehicle).

On May 2, 2024, defendant Hyundai Motor America (Hyundai) filed its motion to compel arbitration. The motion is opposed by Kelley. The hearing on this motion was vacated pending disposition of a venue issue.

On August 19, 2024, the Orange County Superior Court held a hearing on an order to show cause regarding the proper venue. After taking the matter under submission, on November 1, 2024, that court transferred venue to the Santa Barbara County Superior Court.

Following transfer, on January 8, 2025, Hyundai refiled its papers and noticed the motion to compel arbitration for this hearing date.

Analysis:

“On petition of a party to an arbitration agreement alleging the existence of a written agreement to arbitrate a controversy and that a party to the agreement refuses to arbitrate that controversy, the court shall order the petitioner and the respondent to arbitrate the controversy if it determines that an agreement to arbitrate the controversy exists ….” (Code Civ. Proc., § 1281.2, 1st par.)

“A petition to compel arbitration or to stay proceedings pursuant to Code of Civil Procedure sections 1281.2 and 1281.4 must state, in addition to other required allegations, 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.” (Cal. Rules of Court, rule 3.1330.)

Hyundai bases its motion to compel arbitration upon two different arbitration agreements, one agreement found in the Retail Installment Sales Contract (RISC) and the other found in the “Owner’s Handbook & Warranty Information” (Warranty) for the vehicle.

(1)       Citation of Superior Court Decisions

In footnote 9 to the reply, Hyundai cites to exhibits 1 through 12 of the reply declaration of attorney James P. Mayo. These exhibits are “copies of recent rulings in other jurisdictions granting motions to compel arbitration in similarly situated cases” and “while not cited as binding on this Court, should be considered” because of the “logic and outcome of these cases.” (Reply, at p. 9, fn. 9.)

All of the exhibits are rulings of California Superior Courts. “A trial court judgment cannot properly be cited in support of a legal argument, absent exceptions not applicable here.” (San Diego County Employees Retirement Assn. v. County of San Diego (2007) 151 Cal.App.4th 1163, 1184; accord, Neary v. Regents of University of California (1992) 3 Cal.4th 273, 282; Pep Boys Manny Moe & Jack of California v. Old Republic Insurance Company (2023) 98 Cal.App.5th 329, 341; Santa Ana Hospital Medical Center v. Belshe (1997) 56 Cal.App.4th 819, 831.) The court does not consider the improperly cited material. Counsel are reminded of their obligation not to cite uncitable material.

(2)       Retail Installment Sales Contract

One of the two arbitration agreements asserted by Hyundai is found in the RISC. (Willette decl., exhibit A.) The RISC is between Kelley and CardinaleWay Hyundai. (Ibid.) The RISC does not include, expressly or impliedly, defendant Hyundai as a party or beneficiary of the arbitration agreement. (Ibid.)

There is a split in authority as to whether an arbitration agreement in an agreement like the RISC is enforceable by an automobile manufacturer under an equitable estoppel theory; that issue is now pending before the California Supreme Court. (Ford Motor Warranty Cases (2023) 89 Cal.App.5th 1324, 1329, review granted July 19, 2023, S279969 [equitable estoppel does not apply]; Felisilda v. FCA US LLC (2020) 53 Cal.App.5th 486, 496-499 [equitable estoppel applies].)

“Under the authority recognized by subdivision (e)(3) of this rule, and as explained in the second paragraph of the comment to that subdivision, by standing administrative order of the Supreme Court, superior courts may choose to be bound by parts of a published Court of Appeal decision under review when those parts conflict with another published appellate court decision. (See Auto Equity Sales, Inc. v. Superior Court (1962) 57 Cal.2d 450, 456 (Auto Equity) [‘where there is more than one appellate court decision, and such appellate decisions are in conflict[,] ... the court exercising inferior jurisdiction can and must make a choice between the conflicting decisions’].)” (Cal. Rules of Court, 8.1115, com. to subd. (e)(1).)

In the absence of controlling Supreme Court authority, this court follows those authorities holding that equitable estoppel does not apply. (E.g., Rivera v. Superior Court (2024) 105 Cal.App.5th 288, 293-294, review granted Dec. 18, 2024, S287725.) The court will therefore not grant the motion on the basis of the arbitration agreement in the RISC.

(3)       Warranty

Hyundai alternatively argues that the arbitration agreement in the Warranty applies. The arbitration provision provides in part:

“If you purchased or leased your Hyundai vehicle in the State of California, you and we each agree that any claim or disputes between us (including between you and any of our affiliated companies) related to or arising out of your vehicle purchase, use of your vehicle, the vehicle warranty, representations in the warranty, or the duties contemplated under the warranty, including without limitation claims related to the failure to conform a vehicle to warranty, failure to repurchase or replace your vehicle, or claims for a refund or partial refund of your vehicle’s purchase price (excluding personal injury claims), shall be resolved by binding arbitration at either your or our election, even if the claim is initially filed in a court of law. If either you or we elect to resolve our dispute via arbitration (as opposed to in a court of law), such binding arbitration shall be administered by and through JAMS Mediation, Arbitration and ADR Services (JAMS) under its Streamlined Arbitration Rules & Procedures.” (Willette decl., exhibit B, p. 26 [Warranty, p. 13].)

“This agreement to arbitrate is intended to be broadly interpreted and to make all disputes and claims between us (including our affiliated companies) relating to or arising out of your vehicle purchase, use of your vehicle, or the vehicle warranty subject to arbitration to the maximum extent permitted by law.” (Willette decl., exhibit B, p. 26 [Warranty, p. 13].)

“In any arbitration, the arbitrator shall be bound by the terms of this agreement and shall follow the applicable law. The arbitrator shall not have the power to commit manifest errors of law, and any award rendered by the arbitrator that employs a manifest error of law may be vacated or corrected by a court of competent jurisdiction for such error. The arbitrator may only resolve disputes between you and us and may not consolidate claims without the consent of all parties. The arbitrator cannot hear class or representative claims or requests for relief on behalf of others purchasing or leasing Hyundai Motor America vehicles as permitted by law. In other words, you and we may bring claims against the other only in your or our individual capacity, and not as a plaintiff or class member in any class or representative action to the maximum extent permitted by law. If a court or arbitrator decides that any part of this agreement to arbitrate cannot be enforced as to a particular claim for relief, then that claim (and only that claim) must be brought in court and must be stayed pending arbitration of the arbitrable claims. If arbitration is elected by either party, the parties collectively agree that they waive their right to a jury trial. In no events shall class arbitration be permitted. Notwithstanding the above, you may file a lawsuit in small claims court for any claims that otherwise require binding arbitration. This agreement evidences a transaction involving interstate commerce and shall be governed by the Federal Arbitration Act, 9 U.S.C. §§ 1-16. Judgment upon any award in arbitration may be entered in any court having jurisdiction.

IF YOU PURCHASED OR LEASED YOUR VEHICLE IN CALIFORNIA, YOUR WARRANTY IS MADE SUBJECT TO THE TERMS OF THIS BINDING ARBITRATION PROVISION. BY ACCEPTING BENEFITS UNDER THIS WARRANTY, INCLUDING HAVING ANY REPAIRS PERFORMED UNDER WARRANTY, YOU AGREE TO BE BOUND BY THESE TERMS. IF YOU DO NOT AGREE WITH THESE TERMS, PLEASE CONTACT US AT OPT-OUT@HMAUSA.COM WITHIN THIRTY (30) DAYS OF YOUR PURCHASE OR LEASE TO OPT-OUT OF THIS ARBITRATION PROVISION.” (Willette decl., exhibit B, p. 27 [Warranty, p. 14].)

The terms of this arbitration agreement apply to Kelley’s claims in this action. Kelley does not dispute the scope of the terms of this arbitration agreement. However, in opposition, Kelley argues that Hyundai offers no evidence in the moving papers that Kelley’s vehicle came with the Warranty. (Opposition, at p. 3.) According to Kelley, the only evidence presented is the statement by Hyundai’s attorney, Jordan A. Willette, that exhibit B attached to the declaration “is a true and correct copy of the Owner’s Handbook & Warranty Information manual that accompanied the sale of the Vehicle.” (Willette decl., ¶ 3.) Willette provides the following basis for this statement: “I am an attorney duly licensed to practice in the State of California and an attorney with Gordon Rees Scully Mansukhani, LLP, attorneys of record for Defendant Hyundai Motor America (‘HMA’). I have personal knowledge of the facts set forth herein, and if called upon, I could and would competently testify thereto.” (Willette decl., ¶ 1.)

The bare statement that the Willette is setting forth the declaration with personal knowledge is by itself insufficient to show personal knowledge. (Mamou v. Trendwest Resorts, Inc. (2008) 165 Cal.App.4th 686, 692, fn. 1; Snider v. Snider (1962) 200 Cal.App.2d 741, 754.) The assertion that exhibit B “accompanied the sale of the Vehicle” is not a fact that Willette, as an attorney for Hyundai, would be assumed to have personal knowledge, and so that fact is not presented with admissible evidence. (See Maltby v. Shook (1955) 131 Cal.App.2d 349, 353.)

Rather than attempting to correct this evidentiary gap, Hyundai in reply instead argues that Hyundai does not need to present admissible evidence of the agreement, citing Condee v. Longwood Management Corp. (2001) 88 Cal.App.4th 215 (Condee). In Condee, the action arose out of the alleged negligence of a residential care facility that led to the death of a resident. (Id. at p. 217.) When the decedent took up residence at the facility, the decedent’s sister allegedly signed an arbitration agreement with the facility on the decedent’s behalf. (Ibid.) When the sister and decedent’s heirs filed suit against the facility, the facility moved to compel arbitration under that agreement. (Ibid.) The trial court denied the motion to compel. (Ibid.)

On appeal in Condee, the principal issue was whether the arbitration agreement was properly authenticated. (Condee, supra, 88 Cal.App.4th at p. 218.) “[A]lthough no evidence was ever introduced to verify the signature’s authenticity, it was never challenged.” (Ibid.) In reversing the denial of the motion to compel arbitration, the Condee court stated:

“The parties needlessly spill a fair quantity of ink arguing whether the court properly excluded the Hawkins declaration and whether the declaration would have authenticated the arbitration agreement. 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 pp. 218–219.)

Based upon this language from Condee, Hyundai argues that it need only allege the existence of the arbitration agreement in order to shift the burden to the plaintiff. This reading has subsequently been rejected by other courts:

“In California, ‘[g]eneral principles of contract law determine whether the parties have entered a binding agreement to arbitrate.’ [Citations.] Generally, an arbitration agreement must be memorialized in writing. [Citation.] A party’s acceptance of an agreement to arbitrate may be express, as where a party signs the agreement. A signed agreement is not necessary, however, and a party’s acceptance may be implied in fact [citation] or be effectuated by delegated consent [citation]. An arbitration clause within a contract may be binding on a party even if the party never actually read the clause. [Citation.] [¶] The party seeking arbitration bears the burden of proving the existence of an arbitration agreement, and the party opposing arbitration bears the burden of proving any defense, such as unconscionability.” (Pinnacle Museum Tower Assn. v. Pinnacle Market Development (US), LLC (2012) 55 Cal.4th 223, 236.)

“Properly understood, Condee holds that a petitioner is not required to authenticate an opposing party’s signature on an arbitration agreement as a preliminary matter in moving for arbitration or in the event the authenticity of the signature is not challenged. [Citations.] Though Ruiz did not deny that the electronic signature on the 2011 agreement was his, he claimed he did not recall signing the 2011 agreement and would not have signed it had it been presented to him. In the face of Ruiz’s failure to recall signing the 2011 agreement, Moss Bros. had the burden of proving by a preponderance of the evidence that the electronic signature was authentic (Evid. Code, § 1401), that is, it was what Moss Bros. claimed it was: ‘the act of’ Ruiz (Civ. Code, § 1633.9, subd. (a)). Moss Bros. did not meet this evidentiary burden.”

“[O]ur Supreme Court [in Rosenthal v. Great Western Fin. Securities Corp. (1996) 14 Cal.4th 394, 402, 414] has clearly stated that a court, before granting a petition to compel arbitration, must determine the factual issue of ‘the existence or validity of the arbitration agreement.’ [Citation.] In this way, a court’s role, though limited, is critical. ‘There is indeed a strong policy in favor of enforcing agreements to arbitrate, but there is no policy compelling persons to accept arbitration of controversies which they have not agreed to arbitrate and which no statute has made arbitrable.’ [Citation.]” (Toal v. Tardif (2009) 178 Cal.App.4th 1208, 1219–1220.) “Under the Condee rationale, ‘[o]nce the petitioners [allege] that the agreement exists, the burden [shifts] to respondents to prove the falsity of the purported agreement.’ [Citation.] To the extent Condee conflicts with Rosenthal, our Supreme Court’s decision is controlling.” (Id. at p. 1219, fn. 8.)

Here, the issue is not whether a document exists that contains the arbitration terms, but rather whether that document represents the agreement of the parties, i.e., whether a contract of arbitration exists between the parties. Hyundai has the burden to prove the existence of a contract of arbitration. The court finds the evidence presented by Hyundai insufficient to show that the Warranty “accompanied the sale of the Vehicle.” If the sole basis for finding an agreement was the that the Warranty accompanied the sale of the vehicle, Hyundai would fail in its burden to establish the existence of the agreement of arbitration.

There is, however, an important additional aspect to the Warranty as an agreement. In Kelley’s complaint, Kelley alleges:

“Upon Plaintiff’s purchase of the Subject Vehicle, Defendant issued an express warranty to Plaintiff, which Defendant undertook to preserve or maintain the utility or performance of the Subject Vehicle.” (Complaint, ¶ 9.)

“Defendant’s express warranty was integral to Plaintiff’s purchase of the Subject Vehicle.” (Complaint, ¶ 10.)

“Since purchasing the Subject Vehicle, Plaintiff has delivered the Subject Vehicle for repair to Defendant or its authorized repair facility(s) no less than eight (8) times for repair of nonconformity(s) to warranty ….” (Complaint, ¶ 11.)

There is no dispute between the parties that the Warranty is not an agreement signed by Kelley. “[T]he sine qua non for application of equitable estoppel as the basis for allowing a nonsignatory to enforce an arbitration clause is that the claims the plaintiff asserts against the nonsignatory must be dependent upon, or founded in and inextricably intertwined with, the underlying contractual obligations of the agreement containing the arbitration clause.” (Goldman v. KPMG, LLP (2009) 173 Cal.App.4th 209, 217–218.)

Kelley’s allegations themselves explain that the express warranty issued by Hyundai was integral to Kelley’s purchase and Kelley sought to obtain the benefits of the Warranty by delivering the Vehicle for repair. (See Womack v. Lovell (2015) 237 Cal.App.4th 772, 786 [complaint constitutes judicial admission].) While Hyundai’s evidence is insufficient to show that the Warranty accompanied the sale of the Vehicle, the allegations are sufficient to demonstrate that Kelley’s claims against Hyundai in this action are inextricably intertwined with Hyundai’s obligations under the terms of the Warranty. Hyundai’s evidence, including the text of the entire handbook that is the Warranty document, is sufficient to show that the Warranty attached as exhibit B sets forth the terms of the express warranty Kelley has alleged. Insofar as Kelley presents only argument and no affirmative evidence by declaration or otherwise, there is no evidence presented by Kelley to contradict these inferences.

Accordingly, the court concludes that the Warranty is enforceable as an arbitration agreement covering the scope of Kelley’s claims against Hyundai. Kelley makes no argument that the terms of the Warranty are unconscionable or otherwise subject to any defense to enforcement. The motion to compel arbitration will therefore be granted.

“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, 1st par.)

Hyundai has requested, and the court will order, that this action be stayed pending disposition of the arbitration.