Gonzalez v. Metro Nissan of Redlands

MARIA GONZALEZ et al., Plaintiffs and Respondents, v. METRO NISSAN OF REDLANDS et al., Defendants and Appellants.

E056160

COURT OF APPEAL OF THE STATE OF CALIFORNIA FOURTH APPELLATE DISTRICT DIVISION TWO

Filed: September 12, 2013

NOT TO BE PUBLISHED IN OFFICIAL REPORTS

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

(Super.Ct.No. CIVDS1105056)

OPINION

APPEAL from the Superior Court of San Bernardino County. David Cohn, Judge. Reversed.

Manning Leaver Bruder & Berberich, Robert D. Daniels, and Crystal S. Yagoobian for Defendants and Appellants Metro Nissan of Redlands and Federated Mutual Insurance Company.

Severson & Werson, Jan T. Chilton, Duane M. Geck, and Kerry W. Franich for Defendant and Appellant Nissan Motor Acceptance Corporation.

Rosner, Barry & Babbitt, Hallen D. Rosner, Christopher P. Barry, and Angela J. Patrick for Plaintiffs and Respondents.

Apparently many new car dealers in California use a form purchase and sale contract, which includes a form arbitration clause. The question of whether this form arbitration clause is unconscionable or not has produced no fewer than five published appellate opinions so far: Vargas v. SAI Monrovia B, Inc. (2013) 216 Cal.App.4th 1269 (unconscionable), review granted, August 21, 2013, S212033; Vasquez v. Greene Motors, Inc. (2013) 214 Cal.App.4th 1172 (not unconscionable), review granted June 26, 2013, S210439; Natalini v. Import Motors, Inc. (2013) 213 Cal.App.4th 587 (unconscionable), review granted, May 1, 2013, S209324; Flores v. West Covina Auto Group (2013) 212 Cal.App.4th 895 (not unconscionable), review granted, April 10, 2013, S208716; Goodridge v. KDF Automotive Group, Inc. (2012) 209 Cal.App.4th 325 (unconscionable), review granted, December 19, 2012, S206153; Sanchez v. Valencia Holding Co., LLC (2011) 201 Cal.App.4th 74 (unconscionable), review granted, March 21, 2012, S199119. As noted, the California Supreme Court has granted review in all these cases; however, it has not yet decided any.

Because we have no guidance from the Supreme Court, and because we cannot rely on the decisions of our sister courts, we are forced to analyze the issue independently. Obviously, no matter which side we come down on, reasonable minds could differ; the Supreme Court will have the final word. Nevertheless, we explain ourreasons, as we are constitutionally required to do (Cal. Const., art. VI, § 14), in the hope of contributing to the grand dialectical process of the common law.

Ultimately, we conclude that the arbitration clause is enforceable and not unconscionable.

I

FACTUAL BACKGROUND¹

On July 25, 2010, Maria Gonzalez and her adult son Jesus Gonzalez bought a new Sentra from Metro Nissan of Redlands (Metro).

Metro prepared a written contract. It consisted of a seven-page preprinted form with blanks for matters such as price and payment terms. The preprinted terms were nonnegotiable — if the Gonzalezes wanted to buy the car, they had to sign the form contract.

After filling in the blanks, Metro printed out a "review copy." It gave the Gonzalezes an opportunity to read the review copy, then asked them if they had any questions. They did not. They then executed the contract by signing an electronic signature pad.

The contract included the following arbitration clause:

"ARBITRATION CLAUSE

"PLEASE REVIEW - IMPORTANT - AFFECTS YOUR LEGAL RIGHTS

"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 Clause, 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 your credit application, purchase or 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 clause shall notapply 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. You expressly waive any right you may have to arbitrate a class action. You may choose one of the following arbitration organizations and its applicable rules: the National Arbitration Forum, Box 50191, Minneapolis, MN 55405-0191 (www.arb-forum.com), the American Arbitration Association, 335 Madison Ave., Floor 10, New York, NY 10017-4605 (www.adr.org), or any other organization that you may choose subject to our approval. You may get a copy of the rules of these organizations by contacting the arbitration organization or visiting its website.

"Arbitrators shall be attorneys or retired judges and shall be selected pursuant to the applicable rules. The arbitrator shall apply governing substantive law in making an award. The arbitration hearing shall be conducted in the federal district in which you reside unless the Creditor-Seller is a party to the claim or dispute, in which case the hearing will be held in the federal district where this contract was executed. We will advance your filing, administration, service or case management fee and your arbitrator or hearing fee all up to a maximum of $2500, which may be reimbursed by decision of the arbitrator at the arbitrator's discretion. Each party shall be responsible for its own attorney, expert and other fees, unless awarded by the arbitrator under applicable law. If the chosen arbitration organization's rules conflict with this Arbitration Clause, then the provisions of this Arbitration Clause shall control. The arbitrator's award shall be final and binding on all parties, except that in the event the arbitrator's award for a party is $0or against a party is in excess of $100,000, or includes an award of injunctive relief against a party, that party may request a new arbitration under the rules of the arbitration organization by a three-arbitrator panel. The appealing party requesting new arbitration shall be responsible for the filing fee and other arbitration costs subject to a final determination by the arbitrators of a fair apportionment of costs. Any arbitration under this Arbitration Clause shall be governed by the Federal Arbitration Act (9 U.S.C. § 1 et seq.) and not by any state law concerning arbitration.

"You and we retain any rights to self-help remedies, such as repossession. You and we retain the right to seek remedies in small claims court for disputes or claims within that court's jurisdiction, unless such action is transferred, removed or appealed to a different court. Neither you nor we waive the right to arbitrate by using self-help or filing suit. . . . If any part of this Arbitration Clause, other than waivers of class action rights, is deemed or found to be unenforceable for any reason, the remainder shall remain enforceable. If a waiver of class action rights is deemed or found to be unenforceable for any reason in a case in which class action allegations have been made, the remainder of this Arbitration Clause shall be unenforceable." (Italics added.)

The arbitration clause took up the entire last page of the contract. The Gonzalezes did not separately sign that page. However, they did separately sign the preceding page, underneath the following wording:

"YOU CONFIRM THAT BEFORE YOU SIGNED THIS CONTRACT, WE GAVE IT TO YOU, AND YOU WERE FREE TO TAKE IT AND REVIEW IT. YOU

ACKNOWLEDGE THAT YOU HAVE READ ALL PAGES OF THIS CONTRACT, INCLUDING THE ARBITRATION CLAUSE ON PAGE 7, BEFORE SIGNING BELOW. YOU CONFIRM THAT YOU RECEIVED A COMPLETELY FILLED-IN COPY WHEN YOU SIGNED IT."

The Gonzalezes testified that they were not subjectively aware of the arbitration clause when they signed the contract. They were not provided with a copy of the relevant arbitration rules or with access to a computer so they could review the rules online.

II

PROCEDURAL BACKGROUND

The Gonzalezes filed this action in April 2011. The defendants included Metro; Nissan Motor Acceptance Corporation (Acceptance), to which Metro allegedly assigned the contract; and Federated Mutual Insurance Company (Federated), which allegedly bonded Metro against fraud. (See Veh. Code, § 17710.)²

The operative complaint asserted five causes of action — the first four asserted against Metro and Acceptance, and the fifth asserted solely against Federated:

1. Violation of the Song-Beverly Consumer Warranty Act (Civ. Code, § 1790 et seq.).

2. Violation of the Magnuson-Moss Warranty Act (15 U.S.C. § 2301 et seq.).

3. Violation of the Consumers Legal Remedies Act (Civ. Code, § 1770, subd. (a)).

4. Violation of the Automobile Sales Finance Act (Civ. Code, § 2981 et seq.).

5. Liability on a statutorily required surety bond (Veh. Code, § 11710).

In June 2011, Metro and Federated filed a motion to compel arbitration. In August 2011, the trial court granted the motion; at the time, it specifically found that the arbitration clause was not unconscionable.

In October 2011, however, Sanchez v. Valencia Holding Co., LLC, supra, 201 Cal.App.4th 74 held that an arbitration clause identical...