Rebecca Hernandez v. Culver City Auto Mall, LLC, et al.

(Stanley Mosk Courthouse: Dept. 517) September 8, 2026 DEPARTMENT 517 LAW AND MOTION RULINGS

tentative ruling on SEG's demurrer to Plaintiff's Second Amended Complaint. The Court has questions for both sides. Case Number: 26STCV08844 Hearing Date: September 8, 2026 Dept: 517 Introduction and Overview Plaintiff Rebecca Hernandez ("Hernandez") sued Defendants Culver City Auto Mall, LLC dba Chevrolet of Culver City ("the Dealer"), General Motors, LLC ("GM"), Ally Bank ("Ally"), and Merchants Bonding Company ("Merchants") in connection with Hernandez's purchase from the Dealer of a 2023 Chevrolet Bolt ("the Subject Vehicle") that GM manufactured and distributed.

Hernandez's Complaint alleges that the Subject Vehicle was a "lemon law buyback," i.e., that GM repurchased the Subject Vehicle from a prior owner who made a claim to GM that the Subject Vehicle was a lemon. Hernandez's Complaint further alleges that both GM and the Dealer failed to notify Hernandez that the Subject Vehicle was a lemon law buyback and that she would not have purchased the Subject Vehicle from the Dealer had she known that it was a lemon law buyback. Hernandez asserts claims against the Dealer and GM for violations of the Consumer Legal Remedies Act; fraud and deceit; negligent misrepresentation; and unlawful and unfair business practices in violation of Business and Professions Code section 17200.

Hernandez also alleges in the Complaint that the Dealer assigned its rights under the Retail Installment Sale Contract ("the RISC") between Hernandez and Dealer for the Subject Vehicle to Ally, which makes Ally liable on all of Hernandez's claims against the Dealer. Hernandez further alleges that Merchants issued a surety bond to the Dealer as required for the Dealer to obtain from the California Department of Motor Vehicles a license to sell automobiles, which renders Merchants liable to Hernandez on the bond under Vehicle Code section 11711.

For its part, Merchants has initiated an interpleader action against Hernandez, Freeway Trucks & Vans, Inc., and Alejandro Odeh-Lara through a Cross-Complaint in which it alleges that it has received competing clams on the bond that it issued to the Dealer. The Dealer has moved to compel arbitration of Hernandez's claims against the Dealer before the American Arbitration Association and to stay the entire litigation in this Court pending the completion of that arbitration. The Dealer's motion is based on an arbitration provision in the RISC ("the Arbitration Provision").

Ally has joined in the Dealer's motion. Merchants had partially joined in it. Also pending before the Court is GM's demurrer to the claim for fraud and deceit against it in Hernandez's Complaint. The Court is granting the Dealer's motion to compel arbitration of Hernandez's claims against the Dealer. With one exception, the Court is staying the rest of the litigation in this Court pending completion of the arbitration between Hernandez and the Dealer. As a result of this stay, the Court is declining at this time to rule on GM's demurrer to the fraud claim against it in Hernandez's Complaint.

The one exception to the stay is to allow Merchants to name in its Cross-Complaint for interpleader additional Cross-Defendants who have claims on the bond Merchants issued to the Dealer. The Court is setting a case

management conference on the Cross-Complaint and a hearing on the status of the arbitration for June 8, 2027 at 8:30.

Discussion

The RISC refers to Hernandez as "YOU" and the Dealer as "WE." The Arbitration Provision is located at page 5 of the RISC. It states as follows: 1. EITHER YOU OR WE MAY CHOOSE TO HAVE ANY DISPUTE BETWEEN YOU AND US DECIDED BY ARBITRATION AND NOT IN COURT OR BY JURY TRIAL.

2. IF A DISPUTE IS ARBITRATED, YOU WILL GIVE UP YOUR RIGHT TO PARTICIPATE AS A CLASS REPRESENTATIVE OR CLASS MEMBER ON ANY CLASS CLAIM YOU MAY. HAVE AGAINST US INCLUDING ANY RIGHT TO CLASS ARBITRATION OR ANY CONSOLIDATION OF INDIVIDUAL ARBITRATIONS.

3. DISCOVERY AND RIGHTS TO APPEAL IN ARBITRATION ARE GENERALLY MORE LIMITED THAN IN A LAWSUIT, AND OTHER RIGHTS THAT YOU AND WEWOULD HAVE IN COURT MAY NOT BE AVAILABLE IN ARBITRATION. (Baratian Decl., P. 2, Exhibit 1, p. 5.) While paragraph 7 of the RISC says that "[f]ederal law and California apply to this contract," the Arbitration Provision says that "[a]ny arbitration under this Arbitration Provision shall be governed by the Federal Arbitration Act (9 U.S.C. Sec.Sec. 1 et seq.) and not by any state law concerning arbitration." (Ibid.)

At the end of the Arbitration Provision is a line that appears to bear Hernandez's signature. Hernandez does not contend otherwise in her opposition to the Dealer's motion to compel arbitration. Nor does Hernandez's opposition deny that the breadth of the Arbitration Provision encompasses the claims that she has asserted against the Dealer in her Complaint. And Hernandez does not argue in the opposition that the Arbitration Provision is unconscionable and thus unenforceable. The only argument that Hernandez advances in her opposition to the Dealer's motion is that compelling arbitration of her claims against the Dealer would create the possibility of conflicting rulings of law and fact and that under Code of Civil Procedure section 1281.2, subdivision (c), the Court has discretion to deny the Dealer's motion to avoid that possibility. [1] Hernandez's argument overlooks that Arbitration Provision in the RISC is governed by Federal Arbitration Act ("the FAA") "and not by any state law concerning arbitration."

This means that section 1281.2 subdivision (c)'s grant of discretion is inapplicable to the Dealer's motion to compel arbitration of Hernandez's claims against it. As explained by the Court of Appeal in Rodriguez v. American Technologies, Inc. (2006) 136 Cal.App.4th 1110 [Rodriguez], "when a party to an arbitration agreement is also a party to a pending court action with a third party, and there is a possibility of conflicting rulings on a common issue of law or fact, the court has several options [under section 1281.2, subdivision (c).]

It may refuse to compel arbitration, or it may stay either the arbitration or the court proceeding pending completion of the proceedings in the other forum. . . . Under

[the FAA], the court's only option in these circumstances is to stay the court proceeding and compel the arbitration." (Id. at 1114.) In Rodriguez, the arbitration provision at issue was governed by the FAA. The Court of Appeal reversed an order denying, based on section 1281.2, subdivision (c), a motion to compel arbitration. (Id. at pp 1116, 1122.) Rodriguez controls here and defeats Hernandez's argument under section 1281.2, subdivision (c). Because the FAA constrains judicial discretion in a way that that section 1281.2, subdivision (c) would not were it applicable, the Court has no choice but to grant the Dealer's motion to compel arbitration of Hernandez's claims against the Dealer.

But what about Hernandez's claims against GM and Ally, which overlap to a tee with her claims against the Dealer, and her claims against Merchants. None of those Defendants is a party to the Arbitration Provision in the RISC. Should Hernandez's claims against them be stayed as well? The Court of Appeal decision in Rodriguez provides guidance for answering this question. In Rodriguez, the plaintiff sued not just the party that moved to compel arbitration, but also a third party that was not subject to the arbitration provision at issue.

Under circumstances like those, the Court of Appeal in Rodriguez stated that California law is applicable and that trial courts thus have "discretion under section 1281.2(c) to stay the action as to [third parties] pending the outcome of the arbitration." (Rodriguez, supra, 136 Cal.App.4th at p. 1122.) Of course, trial courts also have discretion under section 1281.2, subdivision (c) not to stay the action as to third parties. Here in this case, however, the Court has decided to stay the litigation between Hernandez on the one hand, and GM and Ally, on the other hand, pending the outcome of the arbitration between Hernandez and the Dealer.

The Court is taking this tack so that it will have the benefit of the arbitrator's ruling on the claims against the Dealer before the onset of the litigation against GM and Ally on those identical claims. The Court also is staying the litigation between Hernandez and Merchants pending the outcome of the arbitration, except that Merchants will be allowed to name additional Cross-Defendants on its Cross-Complaint for interpleader so that other parties may assert claims against the Dealer on Merchant's bond.

The Court is persuaded by Merchant's argument in support of this course. [1] Section 1281.2, subdivision (c) authorizes a court to deny a motion to compel arbitration if the court concludes that "[a] party to the arbitration agreement is also a party to a pending court action or special proceeding with a third party, arising out of the same transaction or series of related transactions and there is a possibility of conflicting rulings on a common issue of law or fact. " (Code of Civ. Proc. Sec. 1281.2 subd.(c).) | Home -->)" -->