Young v. Garden Grove HY LLC

On a motion to compel arbitration, the moving party bears the burden of proving the existence of an applicable agreement and the party opposing arbitration bears the burden of proving any defense. (See Engalla v. Permanente Medical Group, Inc. (1997) 15 Cal.4th

951, 972 (California Arbitration Act); see also Installit, Inc. v. Carpenters 46 Northern California Counties Conference Board (N.D. Cal. 2016) 214 F.Supp.3d 855, 859 (Federal Arbitration Act).)

The arbitration provision is contained in the Retail Installment Sale Contract (Contract) between Plaintiff and defendant Garden Grove HY LLC (Dealer). (See Sumpter Decl., Ex. A, p. 5.) The arbitration provision is broad form agreement that clearly covers the claims at issue as it covers “any claim or dispute” arising out of the purchase of the subject vehicle. Plaintiff does not dispute he signed the Contract or that his claims fall within the scope of the arbitration provision.

Plaintiff also does not dispute that defendant Ally Bank, as assignee of the Contract, may enforce the arbitration provision. Plaintiff does, however, dispute that non-signatory defendant Great American Insurance Company (Surety) may enforce the arbitration provision.

The Court finds Surety may invoke the arbitration clause in this matter. The cause of action asserted against Surety is “intimately founded in and intertwined” with the underlying Contract such that Surety may enforce the arbitration clause under a theory of equitable estoppel. (Molecular Analytical Systems v. Ciphergen Biosystems, Inc. (2010) 186 Cal.App.4th 696, 714-715; Goldman v. KPMG, LLP (2009) 173 Cal.App.4th at 209, 219.) Plaintiff’s reliance on Ford Motor Warranty Cases (2025) 17 Cal.5th 1122 is misplaced as the California Supreme Court in that matter found the plaintiffs’ claims against the non-signatory manufacturer were separate and apart from and were not intertwined with the contract containing the arbitration provision. (See Id., p. 1130-1131.)

By contrast, here, Plaintiff’s claims against Surety are dependent upon and inextricably intertwined with the Contract as Plaintiff alleges Surety is liable to Plaintiff on the bond based on Dealer’s misrepresentation of the terms of the Contract to Plaintiff.

Accordingly, Defendants met their burden of establishing a valid arbitration agreement between the parties that covers the instant dispute. The burden thus shifted to Plaintiff to prove any defense to enforceability.

Plaintiff contends the arbitration provision is enforceable because it is unconscionable. To be unenforceable, a contract must be both procedurally and substantively unconscionable, but the elements need not be present in the same degree. (Armendariz v. Foundation Health Psychcare Services, Inc. (2000) 24 Cal.4th 83, 114; Mercuro v. Superior Court (2002) 96 Cal.App.4th 167, 174-75.)

In this case, the adhesive nature of the contract provides some degree of procedural unconscionability. However, for the arbitration agreement to be unenforceable, Plaintiff must also show the agreement is substantively unconscionable. (Harper v. Ultimo (2003) 113 Cal.App.4th 1402, 1406.)

“Substantive unconscionability focuses on the one-sidedness or overly harsh effect of the contract term or clause.” (Harper, 113

Cal.App.4th at 1406- 1407.) Plaintiff contends the arbitration agreement is substantively unconscionable because AAA does not provide for adequate discovery, Plaintiff is not entitled to subpoena third parties in AAA, and AAA’s consumer arbitration rules do not provide for adequate evidentiary safeguards at the arbitration hearings. Initially, pursuant to the terms of the arbitration clause, Plaintiff may choose National Arbitration and Mediation instead of AAA or the parties may agree to a different organization. Plaintiff makes no argument suggesting discovery rules for National Arbitration and Mediation would be inadequate and he proposes no alternative arbitration organizations.

In terms of discovery, the arbitration agreement itself does not contain an express discovery provision. However, the AAA Consumer Arbitration Rules, which both parties discuss and which are included in Plaintiff’s Compendium of Exhibits, state the arbitrator “shall manage any necessary exchange of information among the parties, including depositions, interrogatories, document production, or by other means, with a view to achieving an efficient and economical resolution of the dispute while, at the same time, promoting equality of treatment and safeguarding each party’s opportunity to fairly present its claims and defenses.” (Plaintiff’s COE, Ex. 2, Rule 20(a).)

The AAA rules also state “on application of a party or on the arbitrator’s own initiative,” the arbitrator may “require such other forms of information exchange as the arbitrator deems necessary.” (Plaintiff’s COE, Ex. 2, Rule 20(c).)

These discovery provisions are “sufficient to adequately arbitrate [Plaintiff’s] claim, including access to essential documents and witnesses, as determined by the arbitrator” and is thus not substantively unconscionable. (See Armendariz v. Foundation Health Psychcare Services, Inc. (2000) 24 Cal.4th 83, 106; see also, Lane v. Francis Capital Mgmt. (2014) 224 Cal.App.4th 676, 693 (finding “the lack of an express provision for discovery did not render the arbitration agreement substantively unconscionable” where the AAA rules were expressly referenced).)

Plaintiff’s cited cases, Davis v. Kozak (2020) 53 Cal.App.5th 897 and Fitz v. NCR Corp. (2004) 118 Cal.App.4th 702, are distinguishable. Here, the arbitration provision contains no express limits on discovery, and as stated, the AAA rules grant the arbitrator discretion to manage exchange of information “with a view to achieving an efficient and economical resolution of the dispute while, at the same time, promoting equality of treatment and safeguarding each party’s opportunity to fairly present its claims and defenses.” (Plaintiff’s COE, Ex. 2, Rule 20(a).)

In terms of subpoenas, Rule 32(d) of the AAA Consumer Rules provides that the “[a]rbitrator or other person authorized by law to subpoena witnesses or documents may do so at the request of any party.” (Plaintiff’s COE, Ex. 2, Rule 32(d).) Plaintiff has not shown that the arbitrator would deny any request to subpoena witnesses in this matter.

Plaintiff’s argument that AAA’s rules do not provide for adequate evidentiary safeguards at arbitration hearings also fails. AAA’s rules provide that the arbitrator shall “determine what evidence will be admitted, what evidence is relevant, and what evidence is material to the case,” and that “[f]ollowing the legal rules of evidence shall not be necessary.” (Plaintiff’s COE, Ex. 2, Rule 32.) As Defendants argue, such rules comply with the Code of Civil Procedure. (See Code Civ. Proc., § 1282.2(c), (d).) Plaintiff failed to show how these provisions render the arbitration agreement unconscionable.

Accordingly, Plaintiff failed to meet his burden of demonstrating substantive unconscionability.

The motion is thus GRANTED. The parties are ordered to arbitration pursuant to the terms and conditions of the arbitration clause contained in the Contract.

This entire matter is STAYED pending completion of arbitration.

A Status Conference re: Status of Arbitration is scheduled for September 4, 2026, at 2:00 p.m.

Defendants shall give notice. 4 Objective Before the Court is a motion to disqualify counsel filed by Standard plaintiff/cross-defendant Objective Standard Institute (Plaintiff or Institute v. OSI). Specifically, OSI seeks an order 1) disqualifying the Law Barney et. al. Offices of Day, Day & Brown (DDB) from continuing to represent defendants and/or cross-complainants Carl B. Barney (Barney), Prometheus Foundation (Prometheus), Center for Excellence in Higher Education (CEHE)(collectively, Defendants); and 2) requiring Defendants and DDB to turnover to OSI’s counsel and thereafter destroying all evidence of privilege communications and refrain from further dissemination and use of privileged communications. For the reasons set forth below, the motion is GRANTED.

As an initial matter, the Court recognizes Defendants filed substitutions of attorney replacing DDB with new counsel. OSI asks the Court to issue an order for disqualification to ensure DDB does not serve as counsel at a later date, based on DDB’s reservation of rights to do so. The Court finds the motion is not moot. The Court also notes that OSI has withdrawn its request for monetary sanctions.

The court has inherent power “to control in furtherance of justice, the conduct of its ministerial officers, and of all other persons in any manner connected with a judicial proceeding before it, in every manner pertaining thereto.” (Code Civ. Proc. § 128, subd.(a)(5).) This includes the power to disqualify counsel in appropriate cases. (In re Complex Asbestos Litig. (1991) 232 Cal. App. 3d 572, 585.) Deciding a motion to disqualify requires the court to weigh the following variables, including: 1) the party’s right to counsel of choice; 2) the attorney’s interest in representing a client; 3) the financial burden on a client of changing counsel; 4) any tactical abuse underlying a disqualification motion; and 5) the principle that