Lee vs. Hyundai Motor America

Legal standard The FAA authorizes enforcement of arbitration agreement unless grounds exist in law or equity for the revocation of any contract. (9 U.S.C. § 2.) The court’s role in considering a petition to compel arbitration under the FAA 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.) Under the CAA, a party to an arbitration agreement may move to compel arbitration if another party to the agreement refuses to arbitrate. (Code Civ. Proc., § 1281.2).

Subject arbitration agreement HMA moves to compel arbitration pursuant to the (1) Owner’s Handbook & Warranty Information (Warranty) and (2) Blue Link Connected Services Agreement (CSA). Both the Warranty and the CSA provide the agreement to arbitrate will be governed by the FAA. Specifically, the arbitration provision contained in the Warranty states: “This agreement evidences a transaction involving interstate commerce and shall be governed by the Federal Arbitration Act, 9 U.S.C. §§ 1-16.” (Goel Decl., ¶ 7, Ex. E at p. 14.) Similarly, the arbitration provision in the CSA states that “These Terms and Conditions evidences a transaction in interstate commerce, and thus the Federal Arbitration Act governs the

interpretation and enforcement of this Arbitration Agreement.” (Rao Decl., ¶ 20, Ex. B at ¶ 23.14.1.) Plaintiff does not dispute the application of the FAA.

Existence of an agreement to arbitrate Plaintiff’s claim When a party move to compel arbitration, it “must allege the existence of an agreement to arbitrate the controversy (§ 1281.2); facts necessary for a determination of its enforceability are proven by affidavits or declarations.” (Condee v. Longwood Management Corp. (2001) 88 Cal.App.4th 215, 218 [citation omitted].) The relevant provisions of the arbitration agreement must be set forth verbatim in the petition to compel or a copy of the agreement must be attached to the petition and incorporated by reference. (Ibid. [citing Cal.

Rules of Court, rule 371 (now rule 3.1330)].) “The party seeking arbitration bears the burden of proving the existence of an arbitration agreement, and the party opposing arbitration bears the burden of proving any defense, such as unconscionability.” (Pinnacle Museum Tower Assn. v. Pinnacle Market Development (US), LLC (2012) 55 Cal.4th 223, 236.) If the opposing party disputes the agreement, it bears the burden of proof of producing evidence to challenge the authenticity of the agreement. (Gamboa v.

Northeast Community Clinic (2021) 72 Cal.App.5th 158, 165.) If the opposing party meets its burden, then “the moving party must establish with admissible evidence a valid arbitration agreement between the parties. The burden of proving the agreement by a preponderance of the evidence remains with the moving party.” (Id. at pp. 165-66, citation omitted.)

Owner’s Handbook & Warranty Information HMA attaches a copy of the Owner’s Handbook & Warranty Information (Warranty) to the motion. (Goel Decl., ¶ 7, Ex. E.) Section 4 of the Warranty states, in part: If you purchased or leased your Hyundai vehicle in the State of California, you and we, Hyundai Motor America, each agree that any claim or disputes between us (including between you and any of our affiliated companies) related to or arising out of your vehicle purchase, advertising for the vehicle, use of your vehicle, the performance of the vehicle, any service related to the vehicle, the vehicle warranty, representations in the warranty, or the duties

contemplated under the warranty, including without limitation claims related to false or misleading advertising, unfair competition, breach of contract or warranty, the failure to conform a vehicle to warranty, failure to repurchase or replace your vehicle, or claims for a refund or partial refund of your vehicle’s purchase price (excluding personal injury claims), but excluding claims brought under the Magnuson-Moss Warranty Act, shall be resolved by binding arbitration at either your or our election, even if the claim is initially filed in a court of law. If either you or we elect to resolve our dispute via arbitration (as opposed to in a court of law), such binding arbitration shall be administered by and through the American Arbitration Association (AAA) under its Consumer Arbitration Rules. (Goel Decl., ¶ 7, Ex. E at p. 12.)

The Warranty further states: IF YOU PURCHASED OR LEASED YOUR VEHICLE IN CALIFORNIA, YOUR WARRANTY IS MADE SUBJECT TO THE TERMS OF THIS BINDING ARBITRATION PROVISION. BY USING THE VEHICLE, OR REQUESTING OR ACCEPTING BENEFITS UNDER THIS WARRANTY, INCLUDING HAVING ANY REPAIRS PERFORMED UNDER WARRANTY, YOU AGREE TO BE BOUND BY THESE TERMS. IF YOU DO NOT AGREE WITH THESE TERMS, PLEASE CONTACT US AT OPT-OUT@HMAUSA.COM WITHIN THIRTY (30) DAYS OF YOUR PURCHASE OR LEASE TO OPT- OUT OF THIS ARBITRATION PROVISION. (Goel Decl., ¶ 3, Ex. E at p. 14.)

Plaintiff contends HMA fails to prove the existence of an enforceable arbitration clause as Plaintiff did not and cannot agree to arbitrate by unknowingly receiving Defendant’s arbitration terms nor made any outward manifestation or expression that can reasonably be inferred to be assent to Defendant’s warranty booklet arbitration clause. (Opp. at 4:15-22.) HMA contends the 2024 Hyundai Owner’s Handbook and Warranty Information containing the Warranty was provided to Plaintiff as part of the glovebox materials provided to Plaintiff at the time of purchase and is also available online. (Goel Decl., ¶¶ 5-7.)

Under California law, mutual assent of the parties is essential to the existence of a contract. (Herzog v. Superior Court (2024) 101 Cal.App.5th 1280, 1293.) “Mutual assent is determined under an objective standard applied to the outward manifestations or expressions of the parties, i.e., the reasonable meaning of their words and acts, and not their unexpressed intentions or understandings. The parties’ outward manifestations must show that the parties all agreed upon the same thing in the same sense. If there is no evidence establishing a manifestation of assent to the ‘same thing’ by both parties, then there is no mutual consent to contract and no contract formation.” (Id., at pp. 1293-1294 [cleaned up].)

While the Warranty does not require a signature, it is not the presence or absence of a signature [on an agreement] which is dispositive; it is the presence or absence of evidence of an agreement to arbitrate which matters. Evidence confirming the existence of an agreement to arbitrate, despite an unsigned agreement, can be based, for example, on ‘conduct from which one could imply either ratification or implied acceptance of such a provision.’” (Serafin v. Balco Properties Ltd., LLC (2015) 235 Cal.App.4th 165, 176 [cleaned up, emphasis in original].) “[N]otice—actual, inquiry, or constructive—is the touchstone for assent to a contract.” (Stover v.

Experian Holdings, Inc. (2020) 978 F.3d 1082, 1986 [citation omitted].) In the absence of actual notice, a manifestation of assent may be inferred actions indicating the parties’ assent to the same thing, which occurs only when the consumer is put on constructive notice of the contractual terms.” (B.D. v. Blizzard Entertainment, Inc. (2022) 76 Cal.App.5th 931, 944 [citations omitted].) “[W]hether the terms appear on a physical piece of paper or a computer screen, ‘California law is clear—‘an offeree, regardless of apparent manifestation of his consent, is not bound by inconspicuous contractual provisions of which he was unaware, contained in a document whose contractual nature is not obvious.’” (Seller v.

JustAnswer LLC (2021) 73 Cal.App.5th 444, 461 [citations omitted].)

The Warranty states: “By using the vehicle, or requesting or accepting benefits under this warranty . . . you agree to be bound by these terms.” (Goel Decl., ¶ 7, Ex. E at p. 14.) Plaintiff’s use of the vehicle or his request for benefits under the Warranty does not demonstrate, however, that Plaintiff agreed to an arbitration agreement contained in an owner’s handbook in the glovebox of the vehicle (Goel Decl., ¶ 7) nor that he did so prior to his purchase of the vehicle. Nor has HMA demonstrated Plaintiff knew or had occasion to know the handbook also included an arbitration agreement that would automatically apply from his use of the vehicle.

HMA further contends Plaintiff is equitably estopped from claiming the arbitration agreement is unenforceable as Plaintiff relies on the express warranty containing the arbitration provision. “When a plaintiff brings a claim which relies on contract terms against a defendant, the plaintiff may be equitably estopped from repudiating the arbitration clause contained in that agreement. There is no reason why this doctrine should not be equally applicable to a nonsignatory plaintiff. When that plaintiff is suing on a contract—on the basis that, even though the plaintiff was not a party to the contract, the plaintiff is nonetheless entitled to recover for its breach, the plaintiff should be equitably estopped from repudiating the contract’s arbitration clause.” (JSM Tuscany, LLC v.

Superior Court (2011) 193 Cal.App.4th 1222, 1239–40 [citations omitted, emphasis in original]; see also Boucher v. Alliance Title Co., Inc. (2005) 127 Cal.App.4th 262, 269 [“A nonsignatory is estopped from refusing to comply with an arbitration clause ‘when it receives a ‘direct benefit’ from a contract containing an arbitration clause.’”])

At issue here, however, is not the enforcement of the arbitration provision against a nonsignatory based on an agreement between other parties. There is no dispute the warranty at issue was issued by HMA to Plaintiff or that HMA and Plaintiff are parties to that warranty. “[W]hile doubts concerning the scope of an arbitration clause should be resolved in favor of arbitration, the presumption does not apply to disputes concerning whether an agreement to

arbitrate has been made.” (Johnson v. Walmart Inc. (9th Cir. 2023) 57 F.4th 677, 680–681 [citations omitted].) The Court finds an agreement to arbitrate Plaintiff’s claims does not exist based on the Warranty.

Connected Services Agreement HMA attaches a copy of the Blue Link Connected Services Agreement (CSA) to its motion. (Rao Decl., ¶ 20, Ex. B.) The first paragraph of the CSA provides, in part: Connected Services. Your Hyundai or Genesis vehicle (“Vehicle” or “vehicle”) may be equipped with a Connected Services System (as defined in Section 1.1) which enables you to access and subscribe to certain connected services (“Hyundai Bluelink” for your Hyundai vehicle or “Genesis Connected Services” for your Genesis vehicle, collectively “Connected Services”).

You are choosing to enroll in a Connected Services service plan (“Service Plan”). This Connected Service Agreement Terms and Conditions (this “Agreement” or these “Terms and Conditions”) govern your access to and use of the Connected Services, services we may provide that use or interact with the Connected Services System, and the activities and your obligations contemplated under this Agreement. (Rao Decl., ¶ 20, Ex. B at ¶ 1.1.)

As such, the CSA is regarding Plaintiff’s “Connected Services,” which is provided using an embedded telematics device installed in the vehicle that receives GPS signals and communicates with the Connected Services Customer Care Center.” (Rao Decl., ¶ 20, Ex. B at ¶ 10.3.) The arbitration agreement in the CSA covers disputes which is defined as “any legal claim or controversy arising out of, or relating to, these Terms and Conditions or breach of the New Vehicle Limited Warranty, as well as any claim or controversy regarding the applicability, enforceability, or validity of any provision of these Terms and Conditions and the New Vehicle Limited Warranty. (Rao Decl., ¶ 20, Ex. B at ¶ 23.4.1.)

While the arbitration agreement purports to cover any disputes between the parties regarding the New Vehicle Limited Warranty

the scope of an arbitration clause “turns on whether the . . . claims are ‘rooted’ in the contractual relationship between the parties . . .” (Ahern v. Asset Management Consultants, Inc. (2022) 74 Cal.App.5th 675, 692 [citation omitted].) “[E]ven under a very broad arbitration provision, such as ‘any controversy or claim arising out of or relating to this agreement,’ claims ‘must have their roots in the relationship between the parties which was created by the contract’ before they can be deemed to fall within the scope of the arbitration provision.” (Rice v. Downs (2016) 248 Cal.App.4th 175, 188 [citations omitted].)

The CSA governs the provision of the wireless technology and services received as part of the enrollment in a Bluelink Connected Services subscription. Plaintiff’s complaint alleges the vehicle contained defective components and that HMA installed remanufactured and/or reconditioned components that were not of the same quality as the original equipment manufacturer components. (Compl. ¶ 38.) Plaintiff further alleges Defendant installed components which it knew were defective and would not correct the mechanical issues exhibited in the vehicle. (Compl. ¶ 38.) As such, the Connected Services are not at issue in this action, and Plaintiff’s claims do not arise out of nor have their roots in the relationship created by the CSA. As such, the arbitration agreement in the CSA does not encompass Plaintiff’s claims.

Tentative Ruling: The Court DENIES Defendant Hyundai Motor America’s motion to compel arbitration. Plaintiff to give notice.

13 Melchor vs. Kia America, Inc.

2025-01493559 1. Demurrer to Complaint 2. Case Management Conference

The Demurrer was filed on 11/12/25 and Plaintiff’s opposition was filed on 5/19/26. As of 5/27/26, Defendant has not filed its reply brief, which was due on 5/22/26. Therefore, it is unclear whether Defendant is maintaining the motion. No later than 6/5/26, counsel for the parties are ordered to meet and confer via telephone or videoconference regarding whether this motion should remain on calendar. No later than 6/8/26,