Moradian v. Mercedes-Benz USA, LLC

exhibit to be shown to opposing parties before first reference), Rule 3.152 (requiring exhibits to be moved into evidence as soon as the evidentiary foundation for their admission has been established), Rule 3.155 (governing publication of exhibits to jurors), and Rule 3.158 (use of depositions, interrogatories, and requests for admissions). The moving parties (Plaintiffs Montes de Oca and Galvan) are directed to give notice.

USA, LLC, Case No. 25PSCV04236 ORDER ON MOTION TO COMPEL ARBITRATION Defendant Mercedes-Benz, LLC's Motion to Compel Arbitration is GRANTED. The case is ordered stayed, pending resolution of binding arbitration.

Background

This is a lemon law action. Plaintiff, Renal Moradian, allegedly entered into an agreement with car dealership Mercedes-Benz of West Covina to lease a 2023 Mercedes-Benz S500 (the "Vehicle") and received express and implied warranties related to the Vehicle. On November 25, 2025, Plaintiff filed a complaint, asserting causes of action against Mercedes-Benz USA, LLC and Does 1-100 for: (1) Breach of Implied Warranty, (2) Breach of Express Warranty, and (3) Violation of the Song Beverly Consumer Warranty Act. A Post-Mediation Status Conference/Case Management is scheduled for October 28, 2026.

Legal Standard

California law incorporates many of the basic policy objectives contained in the Federal Arbitration Act, including a presumption in favor of arbitrability. (Engalla v. Permanente Medical Group, Inc. (1997) 15 Cal.4th 951, 971-72.) Under both the FAA and California law, arbitration agreements are valid, irrevocable, and enforceable, except on such grounds that exist at law or equity for voiding a contract. (Winter v. Window Fashions Professions, Inc. (2008) 166 Cal.App.4th 943, 947.) Arbitration agreements can be invalidated by "generally applicable contract defenses, such as fraud, duress, or unconscionability." (AT&T Mobility LLC v.

Concepcion (2011) 563 U.S. 333, 339.) "California law strongly favors arbitration. Through the comprehensive provisions of the California Arbitration Act (Code Civ. Proc., Sec. 1280 et seq.), Legislature has expressed a 'strong public policy in favor of arbitration as a speedy and relatively inexpensive means of dispute resolution. As with the FAA (9 U.S.C. Sec. 1 et seq.), California law establishes a presumption in favor of arbitrability. An agreement to submit disputes to arbitration "is valid, enforceable and irrevocable, save upon such grounds as exist for the revocation of any contract." (OTO, L.L.C. v.

Kho (2019) 8 Cal.5th 111, 125 (OTO).) The petitioner bears the burden of proving the existence of a valid arbitration agreement by a preponderance of the evidence, the party opposing the petition then bears the burden of proving by a preponderance of the evidence any fact necessary to demonstrate the agreement should not be enforced, and the trial court sits as a trier of fact to reach a final determination on the issue. (Rosenthal v. Great Western Financial Securities Corp. (1996) 14 Cal.4th 394, 413.)

Discussion

Defendant moves the Court for an order compelling arbitration of all claims alleged in the complaint and staying this action in its entirety pending the completion of arbitration. As a preliminary matter, there is no dispute Plaintiff signed the Agreement, which contains an arbitration clause. There is also no dispute the Federal Arbitration Act governs the arbitration clause. The Court must decide two issues: (1) whether Defendant, as a nonsignatory to the Agreement, has standing to enforce the arbitration agreement and (2) if so, whether the Court or the arbitrator decide whether the arbitration agreement is enforceable. Because the Court determines that Defendant has standing and that there is a valid delegation clause, the Court will compel Plaintiff's claims to arbitration.

Standing

There are exceptions to the general rule that a nonsignatory to an agreement cannot be compelled to arbitrate and cannot invoke an agreement to arbitrate, without being a party to the arbitration agreement." (JSM Tuscany, LLC v. Superior Ct. (2011) 193 Cal.App.4th 1222, 1236-37.) For instance, a nonsignatory may compel arbitration as a third-party beneficiary to the arbitration agreement. (Ronay Family Ltd. Partnership v. Tweed (2013) 216 Cal.App.4th 830, 838; see also Civ. Code, Sec. 1559 (" A contract, made expressly for the benefit of a third person, may be enforced by him at any time before the parties thereto rescind it. ").]

Here, the arbitration clause in the Agreement states: "Any claim or dispute, whether in contract, tort or otherwise (including any dispute over the interpretation, scope, or validity of this lease, arbitration section or the arbitrability of any issue), between you and us or any of our employees, agents, successors, assigns, or the vehicle distributor, including Mercedes-Benz USA LLC (each a "Third Party Beneficiary"), which arises out of or relates to a credit application, this lease, or any resulting transaction or relationship arising out of this lease (including any such relationship with third parties who do not sign this contract) shall, at the election of either you, us, or a Third Party Beneficiary, be resolved by a neutral, binding arbitration and not by a court action.

Any claim or dispute is to be arbitrated on an individual basis and not as a class action. The arbitration shall be administered by the American Arbitration Association, or by any other organization that you may choose, subject to our or a Third Party Beneficiary's approval." (Agreement, p. 4, emphasis added.) Under the express terms of the Agreement, Defendant is a third-party beneficiary, and just like a signatory to the agreement, a third-party beneficiary is empowered to compel a claim arising from the transaction to arbitration as an enumerated third-party beneficiary.

Therefore, the Court finds Defendant has standing to compel the arbitration agreement.

Delegation Clause

"Although threshold questions of arbitrability are ordinarily for courts to decide in the first instance under the [Federal Arbitration Act (FAA)], the ' [p]arties to an arbitration agreement may agree to delegate to the arbitrator, instead of a court, questions regarding the enforceability of the agreement. '" (Pinela v. Neiman Marcus Group, Inc. (2015) 238 Cal.App.4th 227, 239 quoting Tiri v. Lucky Chances, Inc. (2014) 226 Cal.App.4th 231, 241.) " Just as the arbitrability of the merits of a dispute depends upon whether the parties agreed to arbitrate that dispute, . . . so the question who has the primary power to decide arbitrability turns upon what the parties agreed about that matter. " (Aanderud v.

Superior Court (2017) 13 Cal.App.5th 880, 891.) The delegation issue is a "gateway" question. (Rent-A-Center, West, Inc. v. Jackson (2010) 561 U.S. 63, 69.) "There are two prerequisites for a delegation clause to be effective. First, the language of the clause must be clear and unmistakable. Second, the delegation must not be revocable under state contract defenses such as fraud, duress, or unconscionability. The 'clear and unmistakable' test reflects a 'heightened standard of proof' that reverses the typical presumption in favor of the arbitration disputes." (Aanderud, supra, 13 Cal.App.5th at p. 892 (cleaned up).)

Thus, " [u]nless the parties clearly and unmistakably provide otherwise, the question of whether the parties agreed to arbitrate is to be decided by the court, not the arbitrator. '" (Pinela, supra, at pp. 239-40 (cleaned up).) Here, Plaintiff clearly and unmistakably agreed to commit questions of arbitrability to the arbitrator. The Agreement states, in relevant part, "Any claim or dispute, ... (including any dispute over the interpretation, scope, or validity of this lease, arbitration section or the arbitrability of any issue), between you and us or any of our employees, agents, successors, assigns, or the vehicle distributor, including Mercedes-Benz USA LLC (each a "Third Party Beneficiary"), which arises out of or relates to ..., this lease, or any resulting transaction or relationship arising out of this lease (including any such relationship with third parties who do not sign this contract) shall, at the election of either you, us, or a Third Party Beneficiary, be resolved by a neutral, binding arbitration and not by a court action." (Agreement, p. 4, emphasis added.)

The language is clear and unmistakable. The delegation clause reserves to the arbitrator the issue whether the agreement is enforceable. For this reason, the court compels Plaintiff's claims to arbitration.

Conclusion

The motion is granted. The case is ordered stayed, pending resolution of binding arbitration. | Home -->)" -->