DANIEL DE LA CERDA vs FORD MOTOR COMPANY et al

Plaintiff filed a sole cause of action for negligent repair against Defendant Swanson Fahrney Ford Sales. Defendant moves to compel arbitration of this action pursuant to the Ford Arbitration Agreement (“the Agreement”). Defendant argues the Agreement is governed by the Federal Arbitration Act (“FAA”) and California Arbitration Act (“CAA”). Defendant maintains it has not waived its right to arbitrate and no other grounds exist for revocation of the agreement. Having reviewed the language of the Agreement and the circumstances of its execution, the Court concludes that the motion should be granted.

II. LEGAL STANDARD

Defendant maintains that the FAA governs the Agreement based on the language itself and because the Agreement affects interstate commerce. (Mtn. to Compel Arbitration at p. 6:6- 8.) The Agreement states “[t]hese issues, the Agreement, and arbitration-related proceedings shall be governed by the Federal Arbitration Act (9 U.S.C. § 1 et seq.) and federal common law, and not by any state’s law or procedures regarding arbitration.” (Declaration of Trina M. Clayton [“Clayton Decl.”], Ex. B.) Under the FAA, the court’s role is limited to determining “(1) whether a valid agreement to arbitrate exists, and if it does (2) whether the agreement encompasses the dispute at issue.” (Chiron Corp. v.

Ortho Diagnostic Systems, Inc. (9th Cir. 2000) 207 F.3d 1126, 1130.) To determine “whether a valid contract to arbitrate exists,” courts apply “ordinary state law principles that govern contract formation.” (Davis v. Nordstrom, Inc. (9th Cir. 2014) 755 F.3d 1089, 1093 [citations omitted]; see also Ingle v. Circuit City Stores, Inc. (9th Cir. 2003) 328 F.3d 1165, 1170.)

Alternatively, the CAA governs the Agreement. Code of Civil Procedure section 1281.2 provides:

On petition of a party to an arbitration agreement alleging the existence of a written agreement to arbitrate a controversy in that a party thereto refuses to arbitrate such controversy, the court shall order the petitioner and respondent to arbitrate the controversy if it determines that an agreement to arbitrate the controversy exists, unless it determines that: [¶] The right to compel arbitration has been waived by the petitioner; or [¶] (b) Grounds exist for rescission of the agreement . . . .

In determining the threshold question of whether an arbitration agreement exists between the parties, the court employs a three-step burden shifting analysis. (Iyere v. Wise Auto Group (2023) 87 Cal.App.5th 747, 755 (Iyere); see also Espejo v. Southern California Permanente Medical Group (2016) 246 Cal.App.4th 1047, 1060.) The party seeking to compel arbitration bears the initial burden of showing an agreement to arbitrate. If that burden is met, the burden shifts to the opposing party to show a factual dispute regarding the agreement’s existence.

If the opposing party does so, then the burden shifts back to the proponent of arbitration to show the existence of a valid agreement by a preponderance of the evidence. (Iyere, supra, 87 Cal.App.5th at p. 755.)

III. ANALYSIS

A valid agreement to arbitrate exists between the parties. The Ford Arbitration Agreement provides “[y]ou, Ford, and the selling dealer further agree that all remaining disputes will be addressed in binding arbitration rather than in court litigation. If one party files a court action instead of arbitration, all court proceedings will be stayed until resolution of any proceedings to compel arbitration, including appeals.” (Clayton Decl., Ex. B.) Plaintiffs signed the agreement on March 7, 2025. (Ibid.) Plaintiffs’ signature evinces the fact that he assented to the Agreement. (See Mendoza v. Trans Valley Transport (2022) 75 Cal.App.5th 748, 777 [“A party’s acceptance of an agreement to arbitrate may be express, as where a party signs the agreement.”].)

The scope of the agreement is covered by Plaintiff’s claims. The Agreement provides “[c]laims subject to arbitration pursuant to this Agreement include warranty disputes and claims related to statements about Ford’s products before you signed the Agreement.” (Clayton Decl., Ex. B.) Plaintiff’s Complaint concerns defects and nonconformities to warranty including but not limited to transmission defects, engine defects, and electrical defects. Plaintiff has sued Defendant for the breach of express and implied warranties under the Song Beverely Act. Thus, Plaintiff’s claims are included within the scope of the Agreement. The Court next considers whether Defendant has waived its right to arbitration and whether any other grounds for revocation exist.

Waiver

The California Supreme Court has identified various factors that are “relevant and properly considered in assessing waiver claims.” (St. Agnes Medical Center v. Pacific Care of California (2003) 31 Cal.4th 1187, 1195-1196.) Those factors are:

(1) whether the party’s actions are inconsistent with the right to arbitrate; (2) whether ‘the litigation machinery has been substantially invoked’ and the parties ‘were well into preparation of a lawsuit’ before the party notified the opposing party of an intent to arbitrate; (3) whether a party either requested arbitration enforcement close to the trial date or delayed for a long period before seeking a stay; (4) whether a defendant seeking arbitration filed a counterclaim without asking for a stay of the proceedings; (5) whether important intervening steps [e.g. taking advantage of judicial discovery procedures not available in arbitration] had taken place; and (6) whether the delay affected, misled, or prejudiced the opposing party. (Sobremonte v.

Superior Court (1998) 61 Cal.App.4th 980, 992 [internal citations and quotations omitted; St. Agnes, supra, 31 Cal.4th at p. 1196.) The prejudice requirement under the sixth factor has been abrogated by the California Supreme Court. (Quach v. California Commerce Club, Inc. (2024) 16 Cal.5th 562 (Quach).) The sixth factor regarding prejudice was based on federal cases that “applied an arbitration-specific rule that required a showing of prejudice to establish waiver.” (Quach, supra, 16 Cal.5th at p. 569.) “To establish waiver, there is no requirement that the party opposing enforcement of the contractual right demonstrate prejudice or otherwise show harm from the waiving party’s conduct.” (Id. at p. 585.)

The multifactor test is not “a mechanical process in which each factor is assessed and the side with the greater number of favorable factors prevails,” nor is the list of factors exclusive: rather, the factors reflect the principles that should guide courts in determining whether a party has waived its right to demand arbitration. (Zamora v. Lehman (2010) 186 Cal.App.4th 1, 15 [internal quotation marks and citation omitted].) “The waiver inquiry is exclusively focused on the waiving party’s conduct; neither the effect of that conduct on the party seeking to avoid enforcement nor that party’s subjective evaluation of the waiving party’s intent is relevant.” (Quach, supra, 16 Cal.5th at p. 585.)

The facts here do not demonstrate that Defendant has waived its right to arbitration. Defendant has not filed an answer in this action. (Clayton Decl. at ¶ 5 Defendant has not propounded or responded to any discovery in this matter. (Id. at ¶¶ 6, 7.) Thus, Defendant has not engaged in litigation-related conduct. No trial date has been set in these proceedings. (Id. at ¶ 8.) Accordingly, no waiver has occurred, and Defendant may move to arbitrate these claims.

Other Grounds for Revocation

As an initial matter, Plaintiff asserts a claim for fraudulent inducement against Defendant. Plaintiff alleges “Defendant FORD committed fraud by allowing the Vehicle to be sold to Plaintiff without disclosing that the Vehicle and its 1-speed Transmission were defective and susceptible to sudden and premature failure.” (Complaint at ¶ 53.) Plaintiff maintains he was harmed “by purchasing a vehicle that Plaintiff would not have leased and/or purchased had Plaintiff known the true facts about the Transmission Defect.” (Id. at ¶ 64.) The allegations here pertain to the fraudulent inducement of the lease agreement.

“Both federal and California law now hold that, in the absence of a specific attack on an arbitration agreement, such agreement generally must be enforced even if one party asserts the invalidity of the contract that contains it.” (St. Agnes, supra, 31 Cal.4th at p. 1198.) Plaintiff has not specifically attacked the Ford Arbitration Agreement, which is a standalone document separate from the lease agreement. “By entering into the arbitration agreement, the parties established their intent that disputes coming within the agreement’s scope be determined by an arbitrator rather than a court; this contractual intent must be respected even with regard to claims of fraud in the inducement of the contract generally.” (Rosenthal v.

Great Western Fin. Securities Corp. (1996) 14 Cal.4th 394, 416.) Thus, even though Plaintiff has asserted a claim for fraudulent inducement, the contractual intent to arbitrate must be respected.

The Court next considers whether the Ford Arbitration Agreement is unconscionable. The party challenging a contractual arbitration provision bears the burden of proving that it is both procedurally and substantively unconscionable. (OTO, L.L.C. v. Kho (2019) 8 Cal.5th 111, 126 (OTO).) This may be done on a sliding scale, where the more substantively oppressive the contract term, the less evidence of procedural unconscionability is required, and vice versa. (Id. at pp. 125-126.) Nevertheless, both must be shown. Procedural Unconscionability focuses on oppression or surprise to the “weaker” party based on unequal bargaining power, whereas substantive unconscionability focuses on the terms of the agreement and whether they are overly harsh or one-sided. (OTO, supra, 8 Cal.5th at pp. 125- 129.)

Here the Agreement is not procedurally unconscionable. The Arbitration Agreement is a single-paged stand-alone document and conveys its relevant terms through bold font. (Clayton Decl., Ex. B.) (See cf. Higgins v. Superior Court (2006) 140 Cal.App.4th 1238, 1250-1251 [noting that procedural unconscionability has been found where the presence of an arbitration provision has not been distinguished through bold lettering, larger font, or capitalization].) The Court also does not find the Agreement to be substantively unconscionable as the arbitration is subject to the rules of the American Arbitration Association (“AAA”) or New Era ADR. (Clayton Decl., Ex.

B.) In addition, the Agreement shifts majority of the costs to Defendant and provides “[y]ou will be responsible for no more than a maximum of $275 in costs imposed by the arbitration provider.” (Ibid.) The Agreement also includes an opt-out provision whereby a party must provide written notice of opting-out within 30 days after signing. (Ibid.) “[A]n arbitration agreement is not adhesive if there is an opportunity to

opt out of it.” (Mohamed v. Uber Technologies, Inc. (9th Cir. 2016) 848 F.3d 1201, 1211.) In the absence of procedural or substantive unconscionability, the Ford Arbitration Agreement is enforceable.

Plaintiff does not object to these arguments. In fact, as noted above, Plaintiff has not filed any opposition whatsoever. (See Notice of Non-Opposition.) The failure to timely file an opposition is a basis for the Court to grant the motion, as the Court may construe such nonopposition as a concession that the motion is meritorious. (See D.I. Chadbourne, Inc. v. Super. Ct. (1964) 60 Cal.2d 723, 728, fn. 4; see also Cal. Rule of Court 8.54, subd. (c) [appellate rule stating that “[a] failure to oppose a motion may be deemed consent to the granting of the motion”].)

For these reasons, the Court GRANTS the Motion to Compel Arbitration. This action is hereby STAYED pending the outcome of arbitration. (Code Civ. Proc. § 1281.4; 9 U.S.C. § 3.)

IV. CONCLUSION

The Motion to Compel Arbitration is GRANTED. The entire action is STAYED pending the outcome of arbitration.

The July 23, 2026 Case Management Conference is VACATED.

The matter shall be set for a Status Hearing re: Arbitration on January 29, 2027, at 11:00 a.m. in Department 13.

Moving party shall prepare and submit the final order, accompanied by the necessary Form EFS-020 within 10 days of the date of the hearing.

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