Hector Lopez v. Esquivel Auto Depot, Inc., et al.

SUPERIOR COURT OF THE STATE OF CALIFORNIA

FOR THE COUNTY OF SAN BERNARDINO

HECTOR LOPEZ, Case No.: CIVSB2531093 Plaintiff, [TENTATIVE] ORDER GRANTING MOTION TO v. COMPEL ARBITRATION AND STAY ACTION FILED BY ESQUIVEL AUTO DEPOT, INC., et al., PLAINTIFF HECTOR LOPEZ Defendants.

I. INTRODUCTION On October 22, 2025, Plaintiff Hector Lopez filed a complaint against Defendants

Esquivel Auto Depot, Inc., Veros Credit, LLC, and The Ohio Casualty Insurance Company,

alleging causes of action for:

(1) Civil Code section 1750 et seq. (as to Esquivel Auto and Veros Credit);

(2) violation of California Business and Professions Code section 17200, et seq. (as to

Esquivel Auto and Veros Credit);

(3) violation of Civil Code section 1632 (as to Esquivel Auto and Veros Credit);

(4) implied warranty of merchantability (as to Esquivel Auto and Veros Credit);

(5) claim against surety (as to Ohio Casualty); and

(6) violation of Code of Civil Procedure sections 1281.97 and 1281.99 (as to Veros

Credit).

Plaintiff alleges that on March 9, 2023, he purchased a used 2017 Honda Accord from

Defendant Esquivel Auto Depot, Inc. (Esquivel Auto). Plaintiff contends that before the sale,

Defendant Esquivel Auto represented the vehicle’s history, safety, and condition while failing to

disclose that it had been in a major accident, had structural/frame or unibody damage, had

undergone substandard repair, and had other defects. (Comp. ¶¶ 16-20.) Plaintiff alleges he relied

on those representations in entering into the retail installment sales contract (RISC), would not

have purchased the vehicle had he known its true condition, later discovered the damage and

defects, and suffered diminished value and other damages as a result. (Comp. ¶¶ 21-39.)

Defendant Veros Credit, LLC (Veros Credit) was assigned the RISC and accepted

payments under it. (Comp. ¶¶ 6, 37-39.) Defendant Ohio Casualty is the surety on Esquivel

Auto’s bond required by Vehicle Code section 11710. (Comp. ¶ 8.)

Plaintiff now moves to (1) compel arbitration as to Defendants Esquivel Auto and Veros

Credit and (2) confirm Defendant Veros Credit is in material breach of the arbitration clause and

for fees and costs. Defendants Esquivel Auto and Veros Credit oppose and Plaintiff replies. After

issuing a tentative ruling and holding a hearing on the motion, the Court now issues its final

ruling.1

1 The Court finds that the moving party has complied with its meet-and-confer obligation.

II. APPLICABLE LAW

A. Federal Arbitration Act (FAA)

The FAA authorizes enforcement of arbitration clauses unless grounds exist in law or

equity for the revocation of any contract. (9 U.S.C. § 2.) In situations governed by the FAA,

conflicting state law is preempted in either state or federal courts. (Volt Info. Sciences, Inc. v.

Board of Trustees of Leland Stanford Junior University (1989) 489 U.S. 468, 477.)

Under the FAA, to compel arbitration, a finding must be made that an agreement exists

for arbitration between the parties and that the agreement covers the dispute. (AT&T

Technologies, Inc. v. Communications Workers of America (1986) 475 U.S. 643, 648-49.) The

enforcement of an arbitration clause is a matter of ordinary state-law contract principles and

should be enforced according to their terms. (AT&T Mobility LLC v. Concepcion (2011) 563

U.S. 333, 339.) Thus, arbitration agreements can be declared unenforceable on contract defenses

of fraud, duress, or unconscionability. (Id. at p. 1746.) Any doubt about the arbitrability of a

dispute under the FAA is resolved in favor of arbitration. (Id. at p. 650.)

B. California Arbitration Act (CAA)

Under the CAA, a party to an arbitration agreement may move to compel arbitration if

the other contractual party refuses to arbitrate, and the court shall order the parties to arbitrate if

an agreement to arbitrate exists unless (a) the right to arbitration has been waived, (b) grounds

exist to revoke the agreement, or (c) a party to the arbitration agreement is a party to a pending

action with a third-party, arising from the same or series of related transactions, and a probability

exists of conflicting rulings. (Code Civ. Proc., § 1281.2.)

The court must determine whether a written arbitration agreement exists, if any defense

to its enforcement is raised, and whether the agreement is enforceable. (Rosenthal v. Great

Western Fin. Sec. Corp. (1996) 14 Cal.4th 394, 413.) The petitioner bears the burden of proving

the existence of the arbitration agreement by the preponderance of the evidence, while the

respondent bears the burden of proving by a preponderance of the evidence any defense to

enforcement. (Ibid.) The trial court’s role is to resolve these factual issues. (Id. at p. 414.)

California law favors the enforcement of valid arbitration agreements. (Ericksen,

Arbuthnot, McCarthy, Kearney & Walsh, Inc. v. 100 Oak Street (1983) 35 Cal.3d 312, 320

(Ericksen); In re Tobacco I (2004) 124 Cal.App.4th 1095, 1103.) Any doubts about arbitration

will be resolved against the party asserting a defense to arbitration, whether the issue is the

construction of contract language, waiver, delay, or any like defense to arbitrability. (Ericksen,

supra, 35 Cal.3d at p. 320; In re Tobacco I, supra, 124 Cal.App.4th at p. 1103.)

The party may also seek a stay of pending litigation either by itself or in conjunction with

a petition to compel arbitration. (Code Civ. Proc., § 1281.4; see also 9 U.S.C. § 3.)

III. REQUEST FOR JUDICIAL NOTICE Defendants request judicial notice of a court reporter’s transcript from a separate action

(Hawthorne Auto Market, Inc., dba Hawthorne Motor Express v. Kasra Sadr, Esq.; The Sadr

Law Firm; The Car Law Firm, Los Angeles Superior Court Case No. 20STCV29268). (RJN,

Exh. A.)

Defendants also request judicial notice of the Minute Order in San Bernardino Superior

Court Case No. CIVSB2522359, relating to a similar motion to compel arbitration. (RJN, Exh.

B.)

Plaintiff does not object to the judicial notice of the existence of either document.

As to Exhibit A, the transcript is offered to provide background regarding unrelated

litigation and alleged conduct of Plaintiff’s counsel. (Chandler Decl. ¶¶ 6-11.) This use does not

make the factual assertions within the transcript judicially noticeable for their truth, nor are those

assertions relevant to the issues presented in this motion. Accordingly, Defendants’ request for

judicial notice is DENIED as to Exhibit A.

As to Exhibit B, the Minute Order is offered to provide background regarding another

San Bernardino Superior Court case relating to similar facts, allegations, and motion to compel

arbitration in CIVSB2522359. (Chandler Decl. ¶¶ 13-18.) This use does not make the truth of

any factual findings or legal conclusions stated in that order judicially noticeable for their truth,

nor does the Order have binding or precedential effect in this case. Accordingly, the Court

DENIES Defendants’ request for judicial notice as to Exhibit B. (County of San Bernardino v.

Cohen (2015) 242 Cal.App.4th 803, 816 [declining to take judicial notice of trial court decisions

as “not citable under the Rules of Court (Cal. Rules of Court, rule 8.1115), and they bear no

precedential weight”].)

IV. WHY THE MOTION SHOULD BE GRANTED A. Does the FAA apply?

Yes, the RISC expressly provides for the FAA coverage: “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.” (Heydari Decl. ¶ 3, Exh. 1.) Under these provisions,

the FAA applies. (Cronus Investments, Inc. v. Concierge Services (2005) 35 Cal.4th 376, 394;

Davis v. Shiekh Shoes, LLC (2022) 84 Cal.App.5th 956, 964.)

B. Does an enforceable arbitration provision to arbitrate the claims at issue exist?

Yes. Plaintiff admits he executed the arbitration agreement. (Lopez Decl. ¶ 3, Exh. 1.)

Defendants do not challenge that they are parties to the arbitration agreement. Rather,

Defendants oppose and argue for denial of Plaintiff’s motion based on the financial burden that

arbitration would impose. (Opp. at pp. 5:9-17, 7:5-8:15.)

Furthermore, no party disputes that the arbitration agreement covers any claim or dispute

arising out of or relating to the purchase of or condition of the vehicle or resulting transaction or

relationship (including any relationship with third parties who did not sign the contract). (Lopez

Decl. ¶ 3, Exh. 1, p. 2.)

Based on the above, an enforceable agreement to arbitrate the disputes herein exists.

C. Is there a defense to the enforcement of the arbitration provision?

Defendants argue that under Code of Civil Procedure section 1281.2, subdivision (a),

Plaintiff Lopez waived the right to arbitration.2 (Opp. at p. 3:6-26.)

Contractual rights may be waived. (Quach v. California Commerce Club, Inc. (2024) 16

Cal.5th 562, 569 (Quach).) Waiver arises when “the party seeking to enforce a known

contractual right has intentionally relinquished or abandoned that right.” (Ibid.) It must be proven

by clear and convincing evidence. (Id. at p. 584.) The knowledge may be actual or constructive.

(Ibid.) The intentional relinquishment or abandonment can be proven through words expressing

the intent to relinquish the right or conduct that is inconsistent with the intent to enforce the

contractual right that would lead a reasonable factfinder to conclude the party abandoned it.

(Ibid.)

In determining if a party waived its right to compel arbitration, the courts consider the

following factors:

• Whether the party’s actions are inconsistent with the right to arbitrate,

2 Defendants also cites to section 1281.2, subdivision (c), in support of the contention that procedural protections exist when the controversy also affects claims not subject to arbitration. But no further analysis is provided for this contention. Further, the agreement is governed by the FAA. The FAA allows piecemeal resolution. (Mastick v. TD Ameritrade, Inc. (2012) 209 Cal.App.4th 1258, 1263.)

• Whether the litigation machinery has been substantially invoked, and the parties

were well into the preparation of a lawsuit before the party notified the opposing party of an

intent to arbitrate,

• Whether a party either requested arbitration enforcement close to the trial date or

delayed for a long period before seeking a stay,

• Whether a defendant seeking arbitration filed a counterclaim without asking for a

stay of the proceedings, and

• Whether important intervening steps have taken place.

(Saint Agnes Med. Ctr. v. PacifiCare of Calif. (2003) 31 Cal.4th 1187, 1196, overruled on other

grounds in Quach, supra, 16 Cal.5th at p. 582, fn. 4.) Prejudice is no longer required as a factor.

(Quach, supra, 16 Cal.5th at pp. 569, 581-82, 583.) The Saint Agnes factors should not be

applied as a single multifactor test for determining waiver; rather, a court should only consider

the factors relevant to the specific state-law defense raised by the party resisting arbitration. (Id.

at p. 584.)

Defendants argue Plaintiff delayed in seeking to compel arbitration. Plaintiff filed the

complaint on October 22, 2025. Defendants filed their answer on December 18, 2025. Plaintiff

filed the present motion to compel arbitration on April 14, 2026, or approximately four months

after Defendants’ appearance in this matter. In addition, Defendants were aware of Plaintiff’s

intent to arbitration as early as October 2024, when Plaintiff’s counsel sent correspondence

demanding arbitration prior to filing the complaint. (Heydari Decl. ¶ 4, Exh. 2.) On this record,

Defendants cannot claim unfair surprise. There is no meaningful delay, and waiver has not been

established.

Accordingly, the Court GRANTS Plaintiff’s motion to compel arbitration. Based on the

arbitration agreement, Plaintiff may choose arbitration before the American Arbitration

Association (AAA) or National Arbitration and Mediation.

D. Stay

Section 3 of Title 9 of the United States Code mandates a stay as to parties of an

arbitration agreement. (California Crane School, Inc. v. Google LLC (N.D. Cal. 2022) 621

F.Supp.3d 1024, 1032-33.) Similarly, the CAA mandates a stay when the pending action

involves both an arbitrable question and the same parties. (Code Civ. Proc., § 1281.4; Leenay v.

Superior Court (2022) 81 Cal.App.5th 553, 563.)

Based on the above, a stay is mandated between Plaintiff and Defendants Esquivel Auto

and Veros Credit. However, the claim against Ohio Casualty is not subject to the mandatory stay.

Rather, the court may stay the action as to Ohio Casualty while the arbitration moves forward.

(Code Civ. Proc., § 1281.2, subd. (d).) Accordingly, the Court STAYS the action in its entirety

until the resolution of the arbitration.

E. Plaintiff’s request to confirm breach by Veros Credit

Under the California Arbitration Act (CAA) associated with consumer arbitrations, if the

drafting party of the arbitration agreement is required to pay all fees and costs before the

arbitration can proceed, then if any fee and costs are not paid within 30 days after the due date,

“the drafting party is in material breach of the arbitration agreement, is in default of the

arbitration, and waives its right to compel arbitration under Section 1281.2.” (Code Civ. Proc.,

§ 1281.97, subd. (a)(1).) If this provision is breached, the court shall impose a monetary sanction

against the drafting party by ordering him to pay the fees and costs incurred by the consumer

because of the material breach. (Code Civ. Proc., § 1281.99, subd. (a).)

Plaintiff’s counsel attests that on January 15, 2025, on behalf of Lopez, arbitration was

opened with AAA. After AAA accepted the arbitration, it sent Veros Credit an invoice for initial

fees. Veros Credit failed to pay. Thus, AAA closed the arbitration. (Heydari Decl. ¶¶ 8-13, Exhs.

4-8.)

Based on this evidence, Plaintiff seeks a finding that Veros Credit breached the

arbitration agreement and requests fees and costs. However, Plaintiff has already alleged a claim

for violation of Code of Civil Procedure section 1281.97 (sixth cause of action). That cause of

action is subject to arbitration. Accordingly, the arbitrator, not this Court, must determine

whether a violation occurred. Therefore, the Court DENIES the motion to confirm breach and

award of fees and costs.

F. The Hawthorne matter

Plaintiff’s reply points out that a substantial portion of Defendants’ opposition is devoted

to discussing a separate action in Los Angeles Superior Court (Hawthorne Auto Market, Inc.,

dba Hawthorne Motor Express v. Kasra Sadr, Esq., et al., Case No. 20STCV29268).

That matter is not relevant to the issues presently before the Court. The conduct of

Plaintiff’s counsel in unrelated litigation, or the outcome of another case, does not bear on

whether the arbitration agreement here is enforceable. To the extent Defendants rely on the

Hawthorne matter to argue that arbitration should be denied based on Plaintiff’s counsel’s

litigation strategy, cost concerns, or perceived patterns of conduct, such arguments are not proper

grounds for denying a motion to compel arbitration. Accordingly, the Hawthorne matter is not

considered.

V. CONCLUSION

1. Plaintiff Lopez’s motion to compel arbitration is GRANTED as against

Defendants Esquivel Auto and Veros Credit; the arbitration shall take place before either the

American Arbitration Association or National Arbitration and Mediation.

2. This litigation is STAYED in its entirety until resolution of the arbitration.

3. Plaintiff Lopez’s motion to confirm breach by Veros Credit is DENIED because

he pled that breach as a cause of action, which was compelled to arbitration.

4. Defendants’ request for judicial notice of Exhibit A and Exhibit B is DENIED.

IT IS SO ORDERED.

Dated: [TENTATIVE – NOT FINAL] Hon. Joseph B. Widman Judge of the Superior Court