STEPANOV vs HYUNDAI MOTOR AMERICA, A CALIFORNIA CORPORATION

Once the form is signed it must be filed with the clerk. If a litigant has been granted a fee waiver and requests a court reporter, the party must submit a Request for Court Reporter by a Party with

26CV003616: STEPANOV vs HYUNDAI MOTOR AMERICA, A CALIFORNIA CORPORATION 06/08/2026 Hearing on Motion to Compel Arbitration in Department 8D

a Fee Waiver (CV/E-211) and it must be filed with the clerk at least 10 days prior to the hearing or at the time the proceeding is scheduled if less than 10 days away. Once approved, the clerk will be forward the form to the Court Reporter’s Office and an official reporter will be provided

***NOTICE: EFFECTIVE APRIL 13, 2026, THIS DEPARTMENT HAS MOVED TO THE TANI G. CANTIL-SAKAUYE COURTHOUSE LOCATED AT 500 G. ST. SACRAMENTO, CA. ALL MOTIONS NOTICED FOR DEPARTMENT 25 WILL BE HEARD IN DEPARTMENT 8D OF THE NEW COURTHOUSE. ALL PAPERS FOR THIS DEPARTMENT MUST BE FILED AT THIS NEW LOCATION AND WILL NOT BE ACCEPTED AT THE HALL OF JUSTICE. ALL HEARINGS WILL TAKE PLACE AT THIS NEW LOCATION****

TENTATIVE RULING

Defendant’s Notice of Motion does not provide notice of the Court’s tentative ruling system, as required by Local Rule 1.06(D). Defendant’s counsel is directed to contact opposing counsel forthwith to advise counsel of Local Rule 1.06 and the Court’s tentative ruling procedure. If Defendant’s counsel is unable to contact opposing counsel prior to the hearing, Defendant’s counsel shall be available at the hearing, in person or remotely (telephonically or by video conference via Zoom as stated in the introductory notice to today’s tentative rulings), in the event opposing counsel appears without following the procedures set forth in Local Rule 1.06(B).

Defendant Hyundai Motor America’s (“Defendant”) Motion to Compel Arbitration is UNOPPOSED but is DENIED, as follows.

Factual Background

This Lemon Law action arises out of Plaintiff Sergei Stepanov’s (“Plaintiff”) purchase of a 2025 Hyundai Ioniq 5, VIN 7YAKN4DA1SY001708 (the “Vehicle”) on August 15 2025. (Compl. ¶ 3.) Plaintiff commenced this action against Defendant for breach of warranty and statutory violations relative to the Vehicle.

At the time of purchase, Defendant contends Plaintiff was provided an express written warranty located in the Owner’s Handbook & Warranty Information (“Warranty Booklet”). (Ameripour Decl. ¶ 3, Ex. 3.) The Warranty Booklet contained a binding arbitration provision. (Ibid.)

SUPERIOR COURT OF CALIFORNIA COUNTY OF SACRAMENTO

26CV003616: STEPANOV vs HYUNDAI MOTOR AMERICA, A CALIFORNIA CORPORATION 06/08/2026 Hearing on Motion to Compel Arbitration in Department 8D

Defendant claims Plaintiff enrolled the Subject Vehicle in Hyundai’s connected “Bluelink” services on August 15, 2025. (Rao Decl. ¶ 5.) Enrollment would have required Plaintiff to agree to Defendant’s Connected Services Agreement (“CSA”), the terms of which contained a second binding arbitration provision. (Rao Decl., ¶¶ 5, 6, Exs. 1 and 2.)

Defendant now moves to compel arbitration and stay the present action pending the outcome of arbitration pursuant to the Federal Arbitration Act (“FAA”) and Code of Civil Procedure section 1281, on the basis that Plaintiff is bound by the arbitration clauses contained in the Warranty Booklet and the CSA. Defendant argues Plaintiff’s claims fall squarely within the scope of the arbitration clauses and, as a result, Plaintiff’s claims should be stayed pending arbitration. Defendant further argues that it may compel arbitration under the doctrine of equitable estoppel. Plaintiff has filed no opposition.

Legal Standard

Under California law, arbitration must be compelled where there is a valid, binding arbitration agreement unless the opposing party proves the agreement is unenforceable on unconscionability or other grounds. (See, e.g., Armendariz v. Foundation Health (2000) 24 Cal.4th 83, 96-100, 114; Gatton v. T-Mobile USA (2007) 152 Cal.App.4th 571, 579.) In fact, Code of Civil Procedure §1281.2 specifically provides, in pertinent part:

On petition of a party to an arbitration agreement alleging the existence of a written agreement to arbitrate a controversy and that a party thereto refuses to arbitrate such controversy, the court shall order the petitioner and the respondent to arbitrate the controversy if it determines that an agreement to arbitrate the controversy exists, unless it determines that:

(a) The right to compel arbitration has been waived by the petitioner; or (b) Grounds exist for the revocation of the agreement.

(Underline added for emphasis.)

Section 2 of the Federal Arbitration Act (“FAA”) is essentially the same:

A written provision in any contract evidencing a transaction involving commerce to settle by arbitration a controversy thereafter arising out of such contract or transaction or an agreement in writing to submit to arbitration an existing

SUPERIOR COURT OF CALIFORNIA COUNTY OF SACRAMENTO

26CV003616: STEPANOV vs HYUNDAI MOTOR AMERICA, A CALIFORNIA CORPORATION 06/08/2026 Hearing on Motion to Compel Arbitration in Department 8D

controversy shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract.

(Underline added for emphasis.) The court’s role under the FAA is limited to “determining (1) whether a valid agreement to arbitrate exists and, it if 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.)

California has a public policy which encourages arbitrations, and arbitration clauses have been repeatedly enforced. (See, e.g., Moncharsh v. Heily & Blasé (1992) 3 Cal.4th 1, 9 [the California Supreme Court stated this state has a “strong public policy in favor of arbitration as a speedy and relatively inexpensive means of dispute resolution”]; Madden v. Kaiser Foundation Hospitals (1976) 17 Cal.3d 699, 707 [California’s statutory scheme “evidence[s] a strong public policy in favor of arbitrations [as a] favored method of resolving disputes”]; Gross v. Recabaren (1988) 206 Cal.App.3d 771, 775; Berman v. Dean Witter Co. (1975) 44 Cal.App.3d 999, 1003; Greenfield v. Mosley (1988) 201 Cal.App.3d 735, 744.)

“Under both federal and state law, the threshold question presented by a petition to compel arbitration is whether there is an agreement to arbitrate.” (Sparks v. Del Mar Child and Family Svcs. (2012) 207 Cal.App.4th 1511, 1517.) “In a petition to compel arbitration, the party seeking to compel arbitration bears the burden of proving the existence of a valid arbitration agreement by a preponderance of the evidence. [Citation.] The party opposing the petition bears the burden of proving by a preponderance of the evidence any fact necessary to its defense, including that an arbitration provision is invalid or otherwise not enforceable.” (Brinkley v. Monterey Financial Servs., Inc. (2015) 242 Cal.App.4th 314, 325.)

“The burden of persuasion is always on the moving party to prove the existence of an arbitration agreement with the opposing party by a preponderance of the evidence.” (Gamboa v. Northeast Community Clinic (Gamboa) (2021) 72 Cal.App.5th 158, 164.) “However, the burden of production may shift in a three-step process.” (Id. at p. 165.) The moving party meets the initial burden by attaching to the moving papers a copy of the alleged arbitration agreement or setting forth its terms verbatim. (Ibid.; Cal.

Rules of Court, Rule 3.1330.) “For this step, ‘it is not necessary to follow the normal procedures of document authentication.’” (Ibid., quoting Candee v. Longwood Management Corp. (2001) 88 Cal.App.4th 215, 218.) Once the moving party meets its initial prima facie burden, the opposing party bears the burden of producing evidence to challenge the authenticity of the agreement. (Ibid.) If the opposing party meets its burden, the moving

SUPERIOR COURT OF CALIFORNIA COUNTY OF SACRAMENTO

26CV003616: STEPANOV vs HYUNDAI MOTOR AMERICA, A CALIFORNIA CORPORATION 06/08/2026 Hearing on Motion to Compel Arbitration in Department 8D

party must then offer admissible evidence to demonstrate the arbitration agreement is valid. (Ibid.)

Normal principles of contract interpretation apply to the interpretation of contractual arbitration provisions. Included among these is the long-accepted rule that ambiguities in an arbitration agreement, as in any other type of contract, must be interpreted against the drafting party. Interpretation of ambiguous provisions requires application of the canons of construction - such as resolving ambiguities against the drafter. (Victoria v. Superior Court (1985) 40 Cal.3d 734, 739, 745-747.)

Discussion

The Court finds that Defendant has failed to carry its initial burden of demonstrating with competent evidence of an actual agreement by Plaintiff to arbitrate the claims he asserts in his complaint against Defendant. More specifically, there is no evidence Plaintiff signed the arbitration provision or the Warranty Booklet or signed an acknowledgement of receipt of the Warranty Booklet. In fact, there is no evidence the Warranty Booklet was even presented to Plaintiff prior to, or after, his purchase of the Subject Vehicle.

Rather, Defendant simply attaches the Warranty Booklet as an exhibit to defense counsel’s declaration. There is no declaration by a representative of Defendant or a Hyundai dealership stating that the Warranty Booklet was, in fact, provided to Plaintiff, that the Warranty Booklet is provided to all Hyundai purchasers, or that the Warranty Booklet is even applicable to Plaintiff’s vehicle.

In Norcia v. Samsung Telecommunications America, LLC (9th Cir. 2017) 845 F.3d 1279, the Ninth Circuit found that an arbitration provision in Samsung’s warranty handbook with an opt out provision was not enforceable as to the plaintiff. After analyzing California law, the Court found that the plaintiff did not:

expressly assent to any agreement in the brochure. Nor did [plaintiff] sign the brochure or otherwise act in a manner that would show “his intent to use his silence, or failure to opt out, as a means of accepting the arbitration agreement.” [Citation.] Under California law, an offeree’s inaction after receipt of an offer is generally insufficient to form a contract. [Citation]. Therefore, Samsung’s offer to arbitrate all disputes with [plaintiff] “cannot be turned into an agreement because the person to whom it is made or sent makes no reply, even though the offer states that silence will be taken as consent,” [citation], unless an exception to this general rule applies.

SUPERIOR COURT OF CALIFORNIA COUNTY OF SACRAMENTO

26CV003616: STEPANOV vs HYUNDAI MOTOR AMERICA, A CALIFORNIA CORPORATION 06/08/2026 Hearing on Motion to Compel Arbitration in Department 8D

(Norica, supra, at p. 1286.) The Ninth Circuit further reasoned, “[n]or would a reasonable person understand that receiving the seller’s warranty and failing to opt out of an arbitration provision contained within the warranty constituted assent to a provision requiring arbitration of all claims against the seller, including claims not involving the warranty.” (Id. at p. 1290.)

Here, the Court finds that the analysis of the Norcia Court persuasive to the Court’s determination in this case. The Court finds that the Warranty Booklet does not operate as a contract with an enforceable arbitration agreement.

To the extent Defendant asserts that the doctrine of equitable estoppel applies, the Court disagrees. “‘Generally speaking, one must be a party to an arbitration agreement to be bound by it or invoke it.’ [Citation.]” (JSM Tuscany, LLC. v. Super. Ct. (2011) 193 Cal.App.4th 1222, 1236.) Equitable estoppel is one exception to this “general rule.” (Id. at pp. 1236-1237.) The doctrine has been used both to equitably estop a nonsignatory from refusing to be bound by an arbitration agreement between other parties and to estop a signatory to an arbitration agreement from refusing to arbitrate with a nonsignatory. (Knight, et al., Cal.

Practice Guide: Alt. Dispute Resolution (The Rutter Group 2024 Update) ¶ 5:266.10.) Both uses of equitable estoppel, however, are premised upon the existence of an agreement to arbitrate between two or more persons/entities. (See, e.g., Metaclad Corp. v. Ventana Envir. Organizational Partnership (2003) 109 Cal.App.4th 1705, 1713 [“Courts applying equitable estoppel against a signatory have looked to the relationships of the persons, wrongs and issues, in particular whether the claims that the nonsignatory sought to arbitrate were intimately founded in and intertwined with the underlying contract obligations.” (internal quotation marks and citations omitted)]; International Paper Co. v.

Schwabedissen Maschinen & Anlagen GMBH (2000) 206 F.3d 411, 418 [applying equitable estoppel to require International Paper to arbitrate its dispute with Schwabedissen when a contract between Schwabedissen and Wood “provides part of the factual foundation for every claim asserted by International Paper against Schwabedissen” and that contract contained an arbitration agreement].)

None of the authorities cited by Defendant apply the doctrine of equitable estoppel to compel arbitration absent the existence of an underlying agreement to arbitrate. And Defendant has not shown the existence of one in this case. Therefore, Defendant’s motion is also denied to the extent it is premised upon the doctrine of equitable estoppel.

To the extent that Defendant seeks to enforce the arbitration provisions of the CSA, the

SUPERIOR COURT OF CALIFORNIA COUNTY OF SACRAMENTO

26CV003616: STEPANOV vs HYUNDAI MOTOR AMERICA, A CALIFORNIA CORPORATION 06/08/2026 Hearing on Motion to Compel Arbitration in Department 8D

Court finds that the screenshots submitted by Defendant fail to show that Plaintiff assented to an agreement relating to arbitration of any and all claims relating to his vehicle by checking the button next to “I have read and agree to the Blue Link Terms & Conditions” with a hyperlink to added to the phrase “Terms & Conditions.” Indeed, the screenshot provided appears to relate to an agreement titled “Connected Services Agreement Terms and Conditions,” not conditions relating to the general warranty provisions of the vehicle. (See Exh. 2 to Rao Decl; see also Doe v. Massage Envy Franchising, LLC (2022) 87 Cal.App.5th 23 [concluding that the consumer's checking a box agreeing to the terms of use agreement did not establish an agreement to arbitrate where, inter alia, the check-in experience that led to the click process did not make it appear that she was entering into an agreement with the defendant, there was no instruction to read and review any new document in the hyperlink, and the consumer did not have a reason to expect that checking in for the current service would involve her entering into a contractual agreement to arbitrate with the defendant].)

Further, the complaint does not allege any defect or breach of warranty related to the connected services. Thus, even accepting Exhibits 1 and 2 as evidence that Plaintiff enrolled in the subject service, Defendant has not shown that the arbitration clause in the CSA applies to the claims alleged in the Complaint. While the clause does cover disputes and claims “arising out of or relating to this Agreement, Connected Services, Connected Services Systems, Service Plans, the Vehicle, use of the sites, or products, services, or programs you purchase, enroll in or seek product/service support for ” the reference to “the Vehicle” is, at best, an ambiguous reference.

“General contract law principles include that the basic goal of contract interpretation is to give effect to the parties' mutual intent at the time of contracting. . . . The words of a contract are to be understood in their ordinary and popular sense. . . . Furthermore, the whole of a contract is to be taken together, so as to give effect to every part, if reasonably practicable, each clause helping to interpret the other.” (Franco v. Greystone Ridge Condominium (2019) 39 Cal.App.5th 221, 227 [internal citations and quotations omitted].) Any ambiguities in the CSA are construed against the drafter, which is the Defendant in this case. (Victoria v. Superior Court (1985) 40 Cal.3d 734, 739, 745-747.) Here, the Court must read the reference to “the Vehicle” as having some connection to the connected services.

Since Defendant has failed to prove by a preponderance of the evidence the existence of an arbitration agreement which requires Plaintiff to submit his current claims to arbitration, this Court is without authority to compel Plaintiff to arbitrate his claims or to stay further judicial proceedings.

SUPERIOR COURT OF CALIFORNIA COUNTY OF SACRAMENTO

26CV003616: STEPANOV vs HYUNDAI MOTOR AMERICA, A CALIFORNIA CORPORATION 06/08/2026 Hearing on Motion to Compel Arbitration in Department 8D

Disposition

For the stated reasons, Defendant has failed to show that Plaintiff agreed to arbitrate his claims. Therefore, the Defendant has failed to meet its initial burden, regardless of the lack of an opposition.

Defendant’s motion to compel arbitration is DENIED.

The minute order is effective immediately. No formal order pursuant to California Rules of Court, rule 3.1312 or further notice is required.