Motion to Compel Arbitration
CASE NUMBER: 25CV-0209036 This matter is on calendar for hearing on Hyundai Motor America’s (“HMA”) Motion to Compel Arbitration, filed January 8, 2026. The Motion was originally set for hearing on April 20, 2026. The Court continued the hearing date to May 26, 2026 due to notice defects, and to permit supplemental briefing regarding the Court’s evaluation of this matter under CCP 1281.2(c).
On April 23, 2026, HMA and Plaintiff submitted a Joint Stipulation Regarding Arbitration. The Court declined to execute the proposed order on the joint stipulation, without prejudice, because the parties did not file proof of service as to all parties who have appeared in this action (Lithia Motors, Inc. dba Lithia Chevrolet of Redding, Santander Consumer USA, and Safe-Guard International, LLC).
In light of HMA and Plaintiff’s clear intention to vacate hearing on MMA’s Motion to Compel Arbitration, the Court will not reach the merits at this time. However, the parties must resubmit their stipulation and proposed order, along with proper proof of service, before the Court will execute the proposed order. The parties are ordered to appear today to confirm the status of this matter. Failure to appear will result in the issuance of an Order to Show Cause to HMA and Plaintiff.
MONROE VS. LITHIA CIMR, INC., ET AL. CASE NUMBER: 25CV-0209036 Tentative Ruling on Motion to Compel Arbitration: Defendant Safe-Guard Products International, LLC (“Safe-Guard”) moves pursuant to California Code of Civil Procedure §§ 1281 and 1281.2 to compel arbitration of all claims asserted against it by Plaintiff Kalah Monroe ("Plaintiff") and to stay proceedings pending resolution of arbitration. The Motion has been properly noticed and is unopposed.
Background and Applicable Law: Plaintiff’s Complaint alleges eight causes of action against five 1
Defendants. The named Defendants are: Lithia Motors, Inc., Litha Chevrolet of Redding, Hyundai Motor America, Safe-Guard Products International, LLC, and Santander Consumer USA, Inc. All allegations arise out of Plaintiff’s January 22, 2025 purchase of a 2020 Hyundai Kona from Litha Chevrolet of Redding. The vehicle was sold with approximately 43,800 miles and was covered by Hyundai’s 5-year/60,000-mile vehicle limited warranty and Safe-Guard’s Nomad 3- year/36,000-mile service agreement.
At the time of purchase, Plaintiff entered into a Safe-Guard Nomad extended service agreement ("Agreement") covering the vehicle for three years or 36,000 miles. The Agreement contains a California-specific arbitration clause in Section 12, requiring that all individual claims or disputes arising from or relating to the Agreement be resolved through impartial arbitration under the California Arbitration Act ("CAA"), Code of Civil Procedure § 1280 et seq.
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Following a series of alleged mechanical failures and disputes over repair authorizations, Plaintiff filed the instant action on October 27, 2025. Safe-Guard notified Plaintiff of its intent to arbitrate on January 27, 2026. Plaintiff did not respond. Safe-Guard now moves to enforce the Agreement's arbitration provision. The California Arbitration Act governs the Agreement. The Agreement states, in relevant part: “Any arbitration proceedings arising under the Agreement will proceed under procedures outlined in the California Arbitration Act. Such procedures can be found in the California Code of Civil Procedure section 1280.” (Agreement pp. 12-13, Section 5.)
Merits: The CAA mandates that a court order arbitration upon a showing that (1) a written agreement to arbitrate exists, and (2) the opposing party refuses to arbitrate. (Code Civ. Proc. § 1281.2.) “Under California law, as under federal law, an arbitration agreement may only be invalidated for the same reasons as other contracts. That policy favors the enforcement of arbitration agreements as it favors the enforcement of any other contract; it requires courts to “place arbitration agreements on an equal footing with other contracts, [citation], and enforce them according to their terms. (AT&T Mobility LLC v.
Concepcion (2011) 563 U.S. 333, 339 [179 L. Ed. 2d 742, 131 S. Ct. 1740].)” Quach v. California Commerce Club, Inc. (2024) 16 Cal.5th 562, 578. A party opposing arbitration bears the burden of establishing grounds for revocation, including unconscionability. Engalla v. Permanente Medical Group, Inc. (1997) 15 Cal.4th 951, 972.
The Agreement, executed by Plaintiff on January 22, 2025, contains an express and conspicuous California-specific arbitration provision. The existence and authenticity of the Agreement are established by the Declaration of Ches Graham. Plaintiff does not dispute that she signed the Agreement. All eight of Plaintiff's causes of action — for breach of express warranty, breach of implied warranty, violation of the Magnuson-Moss Warranty Act, negligent repair, conversion, breach of bailment, breach of contract and the covenant of good faith and fair dealing, and unfair business practices — arise from or relate to the Agreement and therefore fall within the scope of the arbitration clause.
Procedural and Substantive Unconscionability: To defeat a motion to compel arbitration on unconscionability grounds, a party must establish both procedural and substantive unconscionability. Armendariz, 24 Cal.4th at 114. Plaintiff has not opposed the Motion and therefore has not met that burden here. The Agreement is not procedurally unconscionable. The arbitration provision is prominently identified, clearly labeled, and bolded. While the Agreement may qualify as a contract of adhesion, adhesion alone does not render an arbitration provision 2
unconscionable. Graham v. Scissor-Tail, Inc. (1981) 28 Cal.3d 807, 817–820; Harper v. Ultimo (2003) 113 Cal.App.4th 1402, 1409.
The Agreement is not substantively unconscionable. Its terms follow CAA procedures, provide each party the right to conduct reasonable discovery, require a written arbitral award, and mandate equal cost sharing. (Code Civ. Proc. §§ 1283.05, 1283.4, 1281.97, 1281.98.) The terms are bilateral and balanced. Nothing in the Agreement shocks the conscience or operates in an impermissibly one-sided manner.
Third-Party Litigation Exception: The Court previously identified in its April 20, 2026 Order a potential issue under Code of Civil Procedure § 1281.2(c), which grants the Court discretion to deny or stay arbitration where a party to the arbitration agreement is also a party to pending litigation with non-signatories arising from the same transaction, and conflicting rulings on a common issue of law or fact are possible.
The Court is satisfied that the third-party litigation exception does not bar arbitration here. While the first two statutory conditions are met — the non-signatory defendants (Hyundai Motor America, Lithia, and Santander) are parties to this action and the claims arise from the same underlying transaction — there is little risk of conflicting rulings on a common determinative issue. The arbitration will address solely Safe-Guard's contractual and statutory obligations to Plaintiff under the Safe-Guard Agreement.
The Court also notes that Hyundai and Plaintiff have submitted a joint stipulation and proposed order to arbitrate their dispute. The court proceedings, as to the remaining defendants, will address the independent legal duties of the dealer and the lender — duties that are distinct in both source and substance from those at issue in arbitration. Shared factual background does not, without more, create the risk of incompatible results that § 1281.2(c) is designed to prevent.
Because all of Plaintiff's claims against Safe-Guard are subject to arbitration, a stay of those claims is mandatory. CCP § 1281.4. The Court further finds that a stay of the entire proceeding as to all defendants is appropriate pending the outcome of arbitration. Safe-Guard’s Motion to Compel Arbitration is GRANTED. This action is stayed pending the outcome of arbitration. The matter is set for review regarding status of arbitration on Monday, November 23, 2026 at 9:00 a.m. in Department 64. Safe-Guard and Plaintiff are ordered to file a status statement at least five court days prior to the review hearing.
****************************************************************************** 9:00 a.m. Review Hearings ****************************************************************************** BARLEY REAL ESTATE INVESTMENTS LLC VS. KRAUSE