Felisilda v. Fca U.S. LLC

53 Cal.App.5th 486

266 Cal.Rptr.3d 640

Dina C. FELISILDA et al., Plaintiffs and Appellants,

v.FCA US LLC, Defendant and Respondent.

C086043

Court of Appeal, Third District, California.

Filed July 24, 2020

Rosner, Barry & Babbitt, Hallen D. Rosner, Michelle A. Cook and Arlyn L. Escalante, San Diego, for Plaintiff and Appellant.

Nixon Peabody, Jennifer A. Kuenster, San Francisco; Law Office of David Tennant and David Tennant for Defendant and Respondent.

HOCH, J.

This appeal involves a used 2011 Dodge Grand Caravan that plaintiffs Dina C. and Pastor O. Felisilda purchased from Elk Grove Auto Group, Inc., doing business as Elk Grove Dodge Chrysler Jeep (Elk Grove Dodge). After encountering problems with the vehicle, the Felisildas brought an action against Elk Grove Dodge and the manufacturer, FCA US LLC (FCA)¹ for violation of the Song-Beverly Consumer Warranty Act (Song-Beverly Act) ( Civ. Code, § 1790 et seq. ). Relying on the retail installment sales contract (sales contract) signed by the Felisildas, Elk Grove Dodge moved to compel arbitration. FCA filed a notice of nonopposition to the motion to compel. The trial court ordered the Felisildas to arbitrate their claim against both Elk Grove Dodge and FCA. In response, the Felisildas dismissed Elk Grove Dodge. The matter was submitted to arbitration, and the arbitrator found in favor of FCA. The trial court confirmed the arbitrator's decision. From the resulting judgment, the Felisildas appeal.

On appeal, the Felisildas contend (1) the trial court lacked jurisdiction to compel them to arbitrate their claim against FCA for lack of notice that the motion to compel included FCA, and (2) the trial court lacked discretion to order the Felisildas to arbitrate their claim against FCA because FCA was a nonsignatory to the sales contract.

We conclude the Felisildas forfeited their claim regarding lack of notice by arguing against FCA's participation in arbitration. We further conclude the trial court correctly determined the Felisildas’ claim against FCA was encompassed by the arbitration provision in the sales contract. Accordingly, we affirm.

FACTUAL AND PROCEDURAL HISTORY

The Sales Contract

On August 21, 2013, the Felisildas signed a preprinted sales contract for the purchase of a used 2011 Dodge Grand Caravan from Elk Grove Dodge.

The sales contract states: "You, the Buyer (and Co-Buyer, if any) may buy the vehicle below for cash or on credit. By signing this contract, you choose to buy the vehicle on credit under agreements on the front and back of this contract. You agree to pay the Seller – Creditor (sometimes ‘we’ or ‘us’ in this contract), the Amount Financed and Finance Charge in U.S. funds according to the payment schedule below." In the box listing the "Seller – Creditor," the sales contract identifies only Elk Grove Dodge.

The sales contract contains an arbitration provision that provides, in pertinent part:

"ARBITRATION PROVISION [¶] ... [¶]

"1. EITHER YOU OR WE MAY CHOOSE TO HAVE ANY DISPUTE BETWEEN US DECIDED BY ARBITRATION AND NOT IN COURT OR BY JURY TRIAL.

"2. IF A DISPUTE IS ARBITRATED, YOU WILL GIVE UP YOUR RIGHT TO PARTICIPATE AS A CLASS REPRESENTATIVE OR CLASS MEMBER ON ANY CLASS CLAIM YOU MAY HAVE AGAINST US INCLUDING ANY RIGHT TO CLASS ARBITRATION OR ANY CONSOLIDATION OF INDIVIDUAL ARBITRATIONS.

"3. DISCOVERY AND RIGHTS TO APPEAL IN ARBITRATION ARE GENERALLY MORE LIMITED THAN IN A LAWSUIT, AND OTHER RIGHTS THAT YOU AND WE WOULD HAVE IN COURT MAY NOT BE AVAILABLE IN ARBITRATION.

"Any claim or dispute, whether in contract, tort, statute or otherwise (including the interpretation and scope of this Arbitration Provision, and the arbitrability of the claim or dispute), between you and us or our employees, agents, successors or assigns, which arises out of or relates to ... condition of this vehicle , this contract or any resulting transaction or relationship (including any such relationship with third parties who do not sign this contract ) shall, at your or our election, be resolved by neutral, binding arbitration and not by a court action. If federal law provides that a claim or dispute is not subject to binding arbitration, this Arbitration Provision shall not apply to such claim or dispute. Any claim or dispute is to be arbitrated by a single arbitrator on an individual basis and not as a class action."

(Italics added.)

The Felisildas allege they experienced significant mechanical problems with the vehicle soon after the purchase. The Felisildas delivered the vehicle several times to Elk Grove Dodge, which is an authorized FCA repair facility.

FCA is a Delaware limited liability company. Elk Grove Dodge was unable to repair the vehicle "to conform to the warranties within a reasonable number of attempts." As a result, the Felisildas requested that Elk Grove Dodge repurchase or replace the vehicle. Elk Grove Dodge refused.

Complaint and Arbitration

In August 2015, the Felisildas filed a complaint against Elk Grove Dodge and FCA to assert a single cause of action for violation of the Song-Beverly Act. In pertinent part, the complaint alleged the Felisildas "purchased a used 2011 Dodge Caravan ... and express warranties accompanied the sale of the vehicle to [them] by which FCA ... undertook to preserve or maintain the utility or performance of [their] vehicle or provide compensation if there was a failure in such utility or performance. [¶] ... The vehicle was delivered to [them] with serious defects and nonconformities to warranty and developed other serious defects and conformities to warranty including, but not limited to, engine, interior, and electrical defects." As a consequence of the enduring defects in the vehicle, "FCA ... has failed to either promptly replace the new motor vehicle or promptly make restitution in accordance with the Song-Beverly Consumer Warranty Act."

In October 2015, Elk Grove Dodge moved to compel arbitration of the Felisildas’ claim. In so moving, Elk Grove Dodge argued the entire matter should be ordered to arbitration – including FCA, even though FCA was not a signatory to the sales contract. FCA filed a "notice of non-opposition" to Elk Grove Dodge. FCA did not advance any argument in support of arbitration.

The Felisildas opposed the motion to compel arbitration. In opposing the motion, they argued the arbitration provision was substantively and procedurally unconscionable. The Felisildas also argued their Song-Beverly cause of action "derives from the non-signatory manufacturer's warranty which is not subject to the arbitration agreement."

The trial court granted the motion, ordering the matter to arbitration with both Elk Grove Dodge and FCA. The trial court reasoned the arbitration provision in the sales contract included the Felisildas’ claim against FCA as a "resulting transaction or relationship" relating to the "purchase or condition" of the vehicle. Thus, the trial court determined the Felisildas’ claim against Elk Grove Dodge was so intertwined with the claim against FCA that the entirety of the matter was arbitrable under the sales contract. After the trial court ordered the matter to arbitration, the Felisildas dismissed Elk Grove Dodge from the action.

On September 8, 2016, and October 26, 2016, the Felisildas and FCA arbitrated the matter. In December 2016, the arbitrator found the Felisildas did not meet their burden of proof to show their vehicle qualified as a " ‘lemon’ " or that FCA had any responsibility under the Song-Beverly Act to repurchase or repair the vehicle.

In October 2017, the trial court entered an order for judgment and judgment confirming the arbitrator's decision. In November 2017, the Felisildas timely filed a notice of appeal.

DISCUSSION

IClaimed Lack of Notice

The Felisildas argue the trial court lacked jurisdiction to compel them to arbitrate their claim against FCA for lack of notice that the motion included FCA. We are not persuaded.

A.Opposition to the Motion to Compel Arbitration

Elk Grove Dodge filed a notice of motion to compel arbitration in which it sought "to compel arbitration of this controversy and to stay the ... action." The notice of motion was ambiguous as to whether it included FCA as a party to the arbitration. However, the accompanying motion to compel argued that "[t]his entire matter should be ordered to arbitration." The argument expressly stated FCA should be included as a party to the arbitration. In opposing Elk Grove Dodge's motion to compel arbitration, the Felisildas noted, "Elk Grove Dodge argues that California law allows the Court discretion to order FCA, as a non-signatory to the [sales contract], to arbitration along with the signatories to the contract, Elk Grove Dodge and Plaintiffs." Having noted this contention, the Felisildas developed an argument that Elk Grove Dodge could not compel them to arbitrate their case against nonsignatory FCA.

B.Opposition on the Merits

A party objecting on grounds of lack of notice forfeits the objection by appearing at a hearing to tender a substantive argument on the issue for which the lack of notice is asserted. " ‘[I]t is well settled that the appearance of a party at the hearing of a motion and his or her opposition to the motion on its merits is a waiver of any defects or irregularities in the notice of the motion. [Citations.] This rule applies even when no notice was given at all. [Citations.] Accordingly, a party who appears and contests a motion in the court below cannot object on appeal or by seeking extraordinary relief in the appellate court that he [or she] had no notice of the motion or that the notice was insufficient or defective.’ " ( Reedy v. Bussell (2007) 148 Cal.App.4th 1272, 1288, 56 Cal.Rptr.3d 216, quoting Tate v. Superior Court (1975) 45 Cal.App.3d 925, 930, 119 Cal.Rptr. 835.) Even if the issue is preserved for appeal, a party may secure a reversal only upon demonstrating prejudice due to the lack of notice. ( Reedy v. Bussell , at p. 1289, 56 Cal.Rptr.3d 216.)

C.Forfeiture

The Felisildas forfeited their...