Darlene Garza et al. v. Ford Motor Company et al.

At issue is Dealership’s petition to compel arbitration, based on the Retail Installment Sales Contract (“RISC”) signed by Plaintiffs and Dealership when Plaintiffs purchased the Subject Vehicle. Having reviewed the language of the RISC’s arbitration provision and the circumstances of its execution, the court will grant the petition and stay the action.

LEGAL STANDARD

Dealership maintains that the Federal Arbitration Act (“FAA”) governs the arbitration provision based on the language itself and because the agreement affects interstate commerce. (Mtn. to Compel Arbitration at pp. 6:21-7:1.) The arbitration provision states “[a]ny 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.” (Declaration of Trina Clayton [“Clayton Decl.”], Ex. A at p. 7.) Under the FAA, the court’s role is limited to determining “(1) whether a valid agreement to arbitrate exists, and if it does (2) whether the agreement encompasses the dispute at issue.” (Chiron Corp. v.

Ortho Diagnostic Systems, Inc. (9th Cir. 2000) 207 F.3d 1126, 1130.) To determine “whether a valid contract to arbitrate exists,” courts apply “ordinary state law principles that govern contract formation.” (Davis v. Nordstrom, Inc. (9th Cir. 2014) 755 F.3d 1089, 1093 [citations omitted]; Ingle v. Circuit City Stores, Inc. (9th Cir. 2003) 328 F.3d 1165, 1170.)

Code of Civil Procedure section 1281.2 provides: “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 such controversy, the court shall order the petitioner and respondent to arbitrate the controversy if it determines that an agreement to arbitrate the controversy exists, unless it determines that: [¶] The right to compel arbitration has been waived by the petitioner; or [¶] (b) Grounds exist for rescission of the agreement.”

In determining the threshold question of whether an arbitration agreement exists between the parties, the court employs a three-step burden shifting analysis. (Iyere v. Wise Auto Group (2023) 87 Cal.App.5th 747, 755 (Iyere); Espejo v. Southern California Permanente Medical Group (2016) 246 Cal.App.4th 1047, 1060.) The party seeking to compel arbitration bears the initial burden of showing an agreement to arbitrate. If that burden is met, the burden shifts to the opposing party to show a factual dispute regarding the agreement’s

existence. If the opposing party does so, then the burden shifts back to the proponent of arbitration to show the existence of a valid agreement by a preponderance of the evidence. (Iyere, supra, 87 Cal.App.5th at p. 755.)

ANALYSIS

There is a Valid Agreement to Arbitrate

The arbitration provision in the RISC provides, in relevant part:

Any claim or dispute, whether in contract, tort, statute or otherwise (including the interpretation and scope of this Arbitration Provision, any allegation of waiver of rights under 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.

(Clayton Decl., Ex. A at p. 7.) Plaintiffs do not dispute that they signed the RISC when they purchased the Subject Vehicle. Plaintiffs signed and acknowledged the following notice of the arbitration provision: “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 the agreement to arbitrate.” (Id. at p. 1.)

The RISC further drew the arbitration provision to Plaintiffs’ attention through the following disclaimer: “. . . YOU ACKNOWLEDGE THAT YOU HAVE READ BOTH SIDES OF THIS CONTRACT, INCLUDING THE ARBITRATION PROVISION ON PAGE 7 OF THIS CONTRACT, BEFORE SIGNING BELOW.” (Id. at p. 6.) Plaintiffs’ signatures on those sections of the RISC indicates express assent to the arbitration provision. (See Mendoza v. Trans Valley Transport (2022) 75 Cal.App.5th 748, 777 [“ ‘ “A party’s acceptance of an agreement to arbitrate may be express, as where a party signs the agreement.” ’ ”].)

Plaintiffs argue Dealership failed to properly authenticate the RISC and thus failed to meet its burden of proving the existence of a valid agreement to arbitrate. “The moving party ‘can meet its initial burden by attaching to the [motion or] petition a copy of the arbitration agreement purporting to bear the [opposing party’s] signature. Alternatively, the moving party can meet is burden by setting forth the agreement’s provisions in the motion.’ ” (Gamboa v. Northeast Community Clinic (2021) 72 Cal.App.5th 158, 165, internal citations and quotations omitted.)

Here, Dealership attached a copy of the RISC signed by Plaintiffs as Exhibit A to the Declaration of Trina Clayton. Dealership has also set forth the terms of the arbitration provision in the motion itself. (Mtn. to Compel Arbitration at pp. 3:17-4:9.) In any event, “[f]or purposes of a petition to compel arbitration, it is not necessary to follow the normal procedures of authentication.” (Gamboa, supra, 72 Cal.App.5th at pp. 165-166.) Dealership has shown a valid agreement to arbitrate.

The Scope of the Arbitration Agreement Covers Plaintiff’s Claims

Here, the arbitration provision broadly applies to “[a]ny claim or dispute, whether in contract, tort, statute or otherwise..., between you and us..., which arises out of or relates to your credit application, purchase or condition of this Vehicle, this contract or any resulting transaction or relationship.” (Clayton Decl., Ex. A at p. 7.) Plaintiffs’ sole cause of action against Dealership is a tort action for negligent repair. Plaintiffs and Dealership are the parties to the transaction. Plaintiffs’ action relates to the condition of the vehicle, namely the condition of the vehicle following repair by Dealership.

That the allegedly negligent repair occurred after the parties signed the RISC is ultimately irrelevant because the arbitration provision states it applies to both “this contract” and “any resulting transaction or relationship” between the parties. Plaintiffs’ claim against Dealership is covered by the arbitration provision.

Plaintiffs rely on Ford Motor Warranty Cases (2025) 17 Cal.5th 1122 to argue “warranty performance is not arbitrable through the form Sales Contract proffered by [Dealership].” (Opposition at p. 2:8-10.) That opinion is distinguishable. Ford Motor Warranty Cases involved an attempt by an automobile manufacturer to compel arbitration based on a sales contract between a buyer and a dealership to which the manufacturer was not a party. The Supreme Court rejected the manufacturer’s attempt to compel arbitration on a third party equitable estoppel theory. (Id. at p. 1126.) By contrast, here the entity petitioning to compel arbitration is a party to the contract containing the arbitration provision. The RISC is an agreement Plaintiffs entered into with Dealership. As the dealership and a party to the agreement, Dealership may compel arbitration of Plaintiffs’ claims.

The court does not reach Dealership’s arguments about lack of waiver and lack of unconscionability. Plaintiffs forfeited any argument about waiver and unconscionability by not addressing Dealership’s arguments on those points.

This Action is Stayed in its Entirety

Dealership requests a stay of the entire action. As Dealership notes, Plaintiffs have sued two entities, Ford Motor Company and Dealership, for different causes of action. Dealership argues “[p]roceeding against both defendants in separate forums carries an extremely high risk of rendering inconsistent rulings and rendering arbitration as to [Dealership] ineffective.” (Reply at p. 8:24-25.) Plaintiffs have not offered any arguments opposing a stay to the entire action. A stay of these proceedings is proper under Code of Civil Procedure § 1281.4 and 9 U.S.C. § 3. The court STAYS this action in its entirety pending the outcome of arbitration.

CONCLUSION

The petition to compel arbitration is GRANTED. This action is STAYED in its entirety pending the outcome of arbitration.

The court will prepare the order.

- oo0oo -