Pursell v. FRTO, LLC

(48)

Tentative Ruling

Re: Pursell v. FRTO, LLC Superior Court Case No. 25CECG04990

Hearing Date: August 26, 2026 (Dept. 503)

Motion: By Defendant to Compel Arbitration

Tentative Ruling:

To grant defendant FRTO, LLS’s motion to compel arbitration. To stay this action pending the completion of arbitration.

Explanation:

In moving to compel arbitration, defendants must prove by a preponderance of evidence the existence of the arbitration agreement and that the dispute is covered by the agreement. The party opposing the motion must then prove by a preponderance of evidence that a ground for denial of the motion exists (e.g., fraud, unconscionability, etc.). (Rosenthal v. Great Western Fin'l Securities Corp. (1996) 14 Cal.4th 394, 413-414; Hotels Nevada v. L.A. Pacific Ctr., Inc. (2006) 144 Cal.App.4th 754, 758; Villacreses v. Molinari (2005) 132 Cal.App.4th 1223, 1230.) There is a strong policy in favor of arbitration. (AT&T Mobility LLC v. Concepcion (2011) 563 U.S. 333, 339.) Courts are to enforce valid arbitration agreements according to their terms. (Ibid.)

Defendant has met its burden of presenting evidence that shows there was an agreement to arbitrate all claims or disputes. Defendant presents a copy of the Retail Installment Sale Contract – Simple Finance Charge (With Arbitration Provision) (“RISC”), which contains an arbitration provision that requires the parties to arbitrate claims or disputes in contract arising out of the credit application or purchase of the vehicle. (Feldman Decl., Ex. A, p. 4, 8.)

Here, Plaintiff disputes that the arbitration agreement covers her cause of action seeking injunctive relief. Plaintiff points to the language addressing injunctive relief that states, “The arbitrator may not preside over a consolidated, representative, class, collective, injunctive, or private attorney general action.” (Ibid.) In construing a contract, words are to be taken in their ordinary meaning. (Civ. Code, § 1644.) Specific provisions prevail over those that are general if the two are inconsistent. (Jackson v. Donovan (1963) 215 Cal.App.2d 685, 691; See Civ. Code, § 1652.) It is also a rule of contract interpretation to construe the language of a contract in a way that is consistent with the other terms of the contract, if possible.

The language quoted above refers to consolidated, representative, class, or other causes of action that involve multiple plaintiffs. The plain meaning of the sentence, taken in context, does not address individual injunctive relief. Furthermore, Plaintiff’s argument contradicts language in the same agreement stating the parties are not giving up their 12

right to arbitrate causes of action seeking individual injunctive relief. The court finds arbitration of causes of action seeking individual injunctive relief falls within the scope of the arbitration clause.

Unconscionability

“The party resisting arbitration bears the burden of proving unconscionability. Both procedural unconscionability and substantive unconscionability must be shown, but ‘they need not be present in the same degree’ and are evaluated on ‘“a sliding scale.”’ ‘[T]he more substantively oppressive the contract term, the less evidence of procedural unconscionability is required to come to the conclusion that the term is unenforceable, and vice versa.’” (Pinnacle Museum Tower Assn. v. Pinnacle Market Development (US), LLC (2012) 55 Cal.4th 223, 247, internal citations omitted.)

Procedural Unconscionability

Procedural unconscionability has to do with the manner in which the contract was negotiated and the parties’ circumstances at that time, and focuses on the factors of oppression or surprise. (Kinney v. United HealthCare Services, Inc. (1999) 70 Cal.App.4th 1322, 1327; Martinez v. Master Protection Corp. (2004) 118 Cal.App.4th 107, 113.) Oppression “arises from an inequality of bargaining power of the parties to the contract and an absence of real negotiation or a meaningful choice on the part of the weaker party.” (Kinney v. United HealthCare Services, Inc., supra, 70 Cal.App.4th at p. 1329.) “Surprise” involves the extent to which the supposedly agreed-upon terms are buried in an overly complex form; it deals with “the disappointed reasonable expectations of the weaker party. (Harper v. Ultimo (2003) 113 Cal.App.4th 1402, 1406.)

An agreement may be unconscionable where it is adhesive. An agreement is adhesive where a standardized contract, drafted and imposed by the party with superior bargaining strength, gives the other party only an opportunity to adhere to the terms or to reject them. (Armendariz v. Foundation Health Psychcare Services, Inc., (2000), 24 Cal.4th 83, 113 (“Armendariz”.)

Here, Plaintiff asserts that the arbitration provision has some degree of procedurally unconscionability because the provision is incorporated into the sales contract on a take-it-or-leave-it basis. Even so, adhesion does not per se render the arbitration agreement unenforceable, since such contracts “are an inevitable fact of life for all citizens, businessman and consumer alike.” (Graham v. Scissor-Tail, Inc. (1981) 28 Cal.3d 807, 817-818.) The Supreme Court has stated this is the reason for "the various intensifiers in our formulations: ‘overly harsh,’ ‘unduly oppressive,’ ‘unreasonably favorable.’” (Baltazar v.

Forever 21, Inc., (2016) 62 Cal.4th 1237, 1245 (emphasis in the original).) A finding of procedural unconscionability “does not mean that a contract will not be enforced, but rather that courts will scrutinize the substantive terms of the contract to ensure they are not manifestly unfair or one-sided.” (Id. at p. 1244.) Thus, the court finds that there is some degree of procedural unconscionability of the arbitration clause.

Plaintiff also alleges that the arbitration clause was procedurally unconscionable due to “surprise” because the text was dense and materially unclear on core rights. The

format or presentation of the arbitration does not constitute a surprise in the RISC, and is thus is not procedurally unconscionable on these grounds.

Substantive Unconscionability

Substantive unconscionability exists if the terms of the agreement are overly harsh or one-sided, provisions which shock the conscience, are unduly oppressive, or unreasonably favorable to the party seeking to compel arbitration. (Sanchez, supra 61 Cal.4th 899, 909.) With substantive unconscionability, the “paramount consideration” is the mutuality of obligation to arbitrate. (Nyulassy v. Lockheed Martin Corp. (2004) 120 Cal.App.4th 1267, 1286.) To find substantive unconscionability, the court must find a significant degree of unfairness. A simple “bad bargain” does not qualify. (Baltazar v. Forever 21, Inc., supra, 62 Cal.4th at pp. 1244-1245.) Of “paramount consideration” is the mutuality of obligation to arbitrate. (Nyulassy v. Lockheed Martin Corp., supra, 120 Cal.App.4th at p. 1286.)

Agreements can provide a “margin of safety” to the party with superior bargaining power where that party has a legitimate commercial need, but the legitimate commercial need must be explained in the agreement. (Armendariz, supra, 24 Cal.4th 83, 117.) Courts have consistently required a “modicum of bilaterality” in arbitration agreements and where such agreements are one-sided, unconscionability is found not just for the lack of mutuality, but for the failure to justify the lack of mutuality. (Ibid.) The court in Armendariz noted that “the lack of mutuality can be manifested as much by what the agreement does not provide as by what it does.” (Id. at p. 120.)

Plaintiff argues the discovery limitations, the arbitrator selection procedure, the costs of arbitration, the remedies to Defendant, and the inclusion of third parties make the arbitration provision substantively unconscionable. Plaintiff has failed to demonstrate these arguments are more than hypothetical and lack factual or evidentiary support.

Plaintiff then argues that the terms of the arbitration clause are unreasonably onesided because Defendant may pursue self-help remedies without waiving arbitration while Plaintiff must arbitrate her claims. Substantive terms of the contract that are manifestly unfair or one sided are substantively unconscionable. (Sanchez, supra, 61 Cal.4th 899, 915.) In Sanchez, exempting the self-help remedy of repossession from arbitration was not unconscionable because, although it is favorable to the drafting party, it is expressly authorized by statute and is integral to selling automobiles on credit. (Id., at p. 922.) While favorable to Defendant, these terms are not overly harsh, unduly oppressive, or unreasonably favorable such that the provision would be considered unconscionable. (Baltazar v. Forever 21, Inc., supra, 62 Cal.4th at p. 1245.)

Defendant’s motion is granted. This action is stayed pending the completion of arbitration.

Pursuant to California Rules of Court, rule 3.1312(a), and Code of Civil Procedure section 1019.5, subdivision (a), no further written order is necessary. The minute order

adopting this tentative ruling will serve as the order of the court and service by the clerk will constitute notice of the order.

Tentative Ruling

Issued By: JS on 8/24/2026. (Judge’s initials) (Date)

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