VICTOR MONTOYA, ET AL. VS. HYUNDAI MOTOR AMERICA

“[T]he threshold question presented by a petition to compel arbitration is whether there is an agreement to arbitrate.” (Long v. Provide Commerce, Inc. (2016) 245 Cal.App.4th 855, 861, quoting Cruise v. Kroger Co. (2015) 233 Cal.App.4th 390, 396.) “This threshold inquiry stems from the basic premise that arbitration is consensual in nature. Thus, while California public policy favors arbitration, there is no policy compelling persons to accept arbitration of controversies which they have not agreed to arbitrate.” (B.D. v. Blizzard Entertainment, Inc. (2022) 76 Cal.App.5th 931, 943 [quotation marks omitted].)

The procedure by which courts in this state determine whether an agreement to arbitrate exists is governed by California statutes, even where the agreement is expressly governed by the Federal Arbitration Act. (Rosenthal v. Great Western Financial Securities Corp. (1996) 14 Cal.4th 394 (“Rosenthal”), 409–410.) Under California law, a petition to compel arbitration shall be summarily heard in the manner provided by law for the making and hearing of motions. (Code of Civ. Proc., § 1290.2.) Arbitration will be ordered as long as the court finds an agreement to arbitrate exists, absent limited exceptions. (Id., at § 1281.2.) “Because the existence of the

July 14, 2026 Law and Motion Calendar PAGE 31 Judge: HONORABLE NANCY L. FINEMAN, Department 04 ________________________________________________________________________ agreement is a statutory prerequisite to granting the petition, the petitioner bears the burden of proving its existence by a preponderance of the evidence.” (Rosenthal, at p. 413.)

Here, Hyundai carries this burden. It provides a copy of the Handbook (Apr. 8, 2026 Declaration of Ali Maeripour, exh. 2 (“Handbook”)), and the Montoyas do not dispute nether its authenticity nor Hyundai’s representation that it accompanied the vehicle and constitutes the express written warranty referenced by the Complaint. The Handbook provides in relevant part:

If you purchased or leased your Hyundai vehicle in the State of California, you and we, Hyundai Motor America, 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, advertising for the vehicle, use of your vehicle, the performance of the vehicle, any service relating to the vehicle, the vehicle warranty, representations in the warranty, or the duties contemplated under the warranty, including without limitation claims related to false or misleading advertising, unfair competition, breach of contract or warranty, 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), but excluding claims brought under the Magnuson-Moss Warranty Act, shall be resolved by binding arbitration at either your or our election, even if the claim is initially filed in a court of law.

(Id., at p. 12.) The Handbook further provides that requesting benefits or having repairs performed under the warranty contained therein constitutes acceptance and binds the owner to the terms of the arbitration provision. (Id., at p. 14.) While not all warranties constitute bilateral contracts, the warranty here was offered subject to the agreement to arbitrate, rendering its interpretation and enforcement subject to normal contract law. (See ibid. [“if you purchased or leased your vehicle in California, your warranty is made subject to the terms of this binding arbitration provision” (all-capitals omitted)].)

The claims in the Complaint easily fall within the scope of the arbitration agreement. (See Feb. 27, 2026 Complaint, passim [asserting claims for breach of warranties and unfair competition].) It also alleges that the Montoyas presented the vehicle to Hyundai for repair under warranty, which demonstrates their acceptance of the Handbook’s terms. (See id., at ¶¶ 13–14.)

The Montoyas contend that, because neither they nor Hyundai signed the arbitration agreement, it cannot be enforced. But is established contract law that a signed writing is not necessary in every case to bind each party. (See, e.g., O’Donnell v. Lutter (1945) 68 Cal.App.2d 376, 382–383.) Only when a contract makes clear that its enforceability is contingent upon all or some of the parties signature are signatures are necessary for formation. (See Banner Entertainment, Inc. v. Superior Court (1998) 62 Cal.App.4th 348, 358.)

Here, the offer stated the terms of acceptance, and the Montoyas affirmatively manifested their objective assent by requesting and receiving warranty benefits and repairs. Furthermore, as Hyundai points out, the Montoyas are estopped from challenging the enforceability they themselves seek to enforce. (See Civ. Code, § 1589; Boucher v. Alliance Title Co., Inc. (2005) 127 Cal.App.4th 262, 269; Windsor Mills, Inc. v.

July 14, 2026 Law and Motion Calendar PAGE 32 Judge: HONORABLE NANCY L. FINEMAN, Department 04 ________________________________________________________________________ Collins & Aikman Corp. (1972) 25 Cal.App.3d 987, 992; Complaint, ¶ 13; see also Civ. Code, § 1793.2, subd. (a) [consumer protection statutes, on which Montoyas’ causes of action are based, are entirely dependent on issuance of express warranty] .)

The Montoyas also contend that Hyundai’s arguments are foreclosed by Ford Motor Warranty Cases (2025) 17 Cal.5th 1122, but the opinion has little bearing on the present case. In that opinion, the issues were (1) whether a defendant manufacturer could enforce an arbitration agreement contained in the sales contract between the plaintiff and the dealership as a third-party beneficiary and (2) whether a plaintiff was estopped from disputing the agreement’s enforceability when suing upon a warranty separate from the sales contract containing the agreement. (Ford Motor Warranty Cases, supra, at pp. 1128–1138.) The present case involves an arbitration agreement in a contract made directly between the Montoyas and Hyundai, a contract the Montoyas explicitly seek to enforce.

The Montoyas’ final contention is that the arbitration agreement is unconscionable, which is their burden to establish. (Pinnacle Museum Tower Assn. v. Pinnacle Market Development (US), LLC (2012) 55 Cal.4th 223, 236 (“Pinnacle”).)

The general law regarding unconscionability is well-established. Unconscionability has both a procedural and substantive element, and both must be found in order for a court to exercise its discretion to refuse to enforce a contract or clause based on unconscionability. (Armendariz v. Foundation Health Psychcare Services, Inc. (2000) 24 Cal.4th 83, 114.) Procedural unconscionability looks at the process surrounding the contract formation, and focuses on “oppression” or “surprise” due to unequal bargaining power. (Ibid.)

Substantive unconscionability applies such that even if a contract or provision is consistent with the reasonable expectations of the parties, the contract or provision will not be enforced if it is “overly harsh” or has “one-sided” results. (Ibid.) Although both procedural and substantive unconscionability must be found, they need not be present in the same degree. (Ibid.) In other words, the more substantively oppressive a provision or contract, the less evidence of procedural unconscionability is required, i.e. a “sliding” scale is invoked. (Ibid.; see also Sanchez v.

Valencia Holding Co., LLC (2015) 61 Cal.4th 899, 910 (“Sanchez”).)

Procedural unconscionability pertains to the making of the agreement; it examines the “oppression that arises from unequal bargaining power and the surprise to the weaker party that results from hidden terms or the lack of informed choice.” (Ajamian v. CantorCO2e, L.P. (2012) 203 Cal.App.4th 771, 795).

Substantive unconscionability refers to agreement terms which are “overly harsh,” “unduly oppressive,” “unreasonably unfavorable,” or “so one-sided as to shock the conscience,” all of which mean the same thing. (Sanchez, supra, 61 Cal.4th at pp. 910-911.) The test is whether the terms impair the integrity of the bargaining process or otherwise contravene public policy, or the terms “attempt to alter in an impermissible manner fundamental duties otherwise imposed by the law” or “negate the reasonable expectations of the nondrafting party.” (Sonic-Calabasas A, Inc. v. Moreno (2013) 57 Cal.4th 1109, 1145 [internal quotes omitted]; see also Carbajal v. CWPSC,

July 14, 2026 Law and Motion Calendar PAGE 33 Judge: HONORABLE NANCY L. FINEMAN, Department 04 ________________________________________________________________________ Inc. (2016) 245 Cal.App.4th 227, 247 [courts must consider the extent to which a disputed term is “outside the reasonable expectation of the nondrafting party or is unduly oppressive”].)

According to the Montoyas, the arbitration agreement is procedurally unconscionable because (1) Hyundai made no effort to provide notice to the Montoyas of the existence of the agreement prior to purchase of the vehicle, apart from notice in the Handbook itself, and thus they were surprised by its terms, (2) the agreement is a contract of adhesion, (3) the Handbook does not explain the differences between arbitration and litigation in court nor sets forth the American Arbitration Association’s rules that will govern any arbitration.

However, the Montoyas are equitably estopped from claiming surprise or unfairness; their exploitation of the warranty—the terms of which are unmistakably prefaced by the arbitration agreement—and acceptance of its benefits precludes this argument. The Montoyas cannot avoid the obligations of the contract, whether or not they knew its terms and their consequences before purchase.

Furthermore, the Montoyas were able to avoid the agreement by opting out. “[F]reedom to choose whether or not to enter a contract of adhesion is a factor weighing against a finding of procedural unconscionability.” (Gentry v. Superior Court (2007) 42 Cal.4th 443, abrogated on other grounds as stated in Iskanian v. CLS Transportation Los Angeles, LLC (2014) 59 Cal.4th 348, 359–360.) While there still “may be procedural unconscionability if there is not ‘an authentic informed choice’ to make that decision,” there is no evidence showing that the Montoyas were not aware of their ability to opt out or otherwise did not freely choose to accept the arbitration agreement by electing not to reject it. (Haydon v. Elegance at Dublin (2023) 97 Cal.App.5th 1280, 1288.)

Lastly, “The fact that [a plaintiff] either chose not to read or take the time to understand [the] provisions is legally irrelevant.” (Harris v. TAP Worldwide, LLC (2016) 248 Cal.App.4th 373, 383; see also Pinnacle, supra, 55 Cal.4th 223, 226 [“An arbitration clause within a contract may be binding on a party even if the party never actually read the clause.”].) A company is not required to highlight an arbitration clause of its contract nor is it required to specifically call the agreement to the plaintiff’s attention. (Sanchez, supra, 61 Cal.4th at p. 914.) “Arbitration itself is a fairly common means of dispute resolution and would not be beyond the reasonable expectation of the weaker party.” (Parada v. Superior Court (2009) 176 Cal.App.4th 1554, 1571.)

As for substantive unconscionability, the Montoyas’ arguments conflate substantive unconscionability with procedural, arguing that they had not ability to negotiate the terms ‘hidden’ in the Handbook that was not part of the purchase and sale contract with whomever the Montoyas bought the vehicle from. When these arguments are disentangled, the Montoyas make only two points as to why the agreement’s substance is unconscionable: (1) it requires arbitration and therefore waiver of the normal right to sue in court and (2) it specifies that the arbitration shall be conducted by and through American Arbitration Association.

The fact that the agreement requires arbitration of statutory claims under the Song–Beverly Consumer Warranty Act (the “SBCWA”) does nothing to tip the scales toward unconscionability. Arbitration is not disfavored, and parties may agree to resolve claims under the SBCWA by arbitration. (See Sanchez, supra, 61 Cal.4th at pp. 909–910.) Nor does the provision for the rules

July 14, 2026 Law and Motion Calendar PAGE 34 Judge: HONORABLE NANCY L. FINEMAN, Department 04 ________________________________________________________________________ and method of selection of arbitrators help the Montoyas. In the case relied upon by them on this point, the fact that the practical effect of the contract always permitted the drafting party to select the individual arbitrator was found to be unfair. (Chavarria v. Ralphs Grocery Co. (9th Cir. 2013) 733 F.3d 916, 924–926.) Specifically, it was “the preclusion of institutional arbitration administrators, namely AAA or JAMS, which have established rules and procedures to select a neutral arbitrator,” that was found overly one-sided. (Id., at p. 923.)

A fortiori, the fact that the present arbitration agreement provides for arbitration by AAA and its rules permitting for the selection of a neutral arbitrator weighs against a finding of substantive unconscionability. Courts have approved AAA as a neutral arbitrator. (Roman v. Super. Court (Flo-Kem, Inc.) (2009) 172 Cal.App.4th 1462, 1476 [AAA Rules provided “no meaningful difference” from the discovery approved by the Court in Armendariz]; Craig v. Brown & Root, Inc. (2000) 84 Cal.App.4th 416, 419 [finding employer using AAA had neutral arbitrator].)

Thus, even were the Montoyas not estopped from objecting to the relative inconspicuousness of the arbitration agreement to show a degree of procedural unconscionability, they have not shown the agreement is substantively unconscionable to the degree necessary to render the arbitration agreement unenforceable.

Accordingly, the motion is GRANTED and the case stayed pending the resolution of arbitration. The court sets a case management conference for February 2, 2027 at 9:30 a.m. with a joint case management statement due five court days before the conference. If the parties want to advance or continue the conference, they shall jointly email Department 4 and propose a new date (a Tuesday at 9:30 a.m.).

If the tentative ruling is uncontested, it shall become the order of the court. Thereafter, counsel for defendant shall prepare a written order consistent with the court’s ruling for the court’s signature, pursuant to California Rules of Court, rule 3.1312, and provide written notice of the ruling to all parties who have appeared in the action, as required by law and the California Rules of Court.