1

Filed 2/10/21

CERTIFIED FOR PUBLICATION

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

FIRST APPELLATE DISTRICT

DIVISION TWO

SUBARU OF AMERICA, INC.,

Plaintiff and Respondent,

v.

PUTNAM AUTOMOTIVE, INC., 

Defendant and Appellant,

 A159686

 (San Francisco County Super. Ct.

 No. CPF-18-516093)

Putnam Automotive Inc., doing business as Putnam Subaru 

(Putnam), a Subaru dealer, appeals from the trial court’s judgment

confirming an arbitration award in favor of Subaru of America, Inc. 

(Subaru), a new motor vehicle distributor. In his final award, the 

arbitrator found that Subaru had good cause for terminating an 

agreement with Putnam to operate a satellite service-only facility in 

San Francisco. On appeal, Putnam contends the judgment should be 

reversed and the arbitrator’s final award vacated because (1) the

arbitrator lacked jurisdiction to make a good cause determination under 

both federal and state law; (2) enforcement of the arbitration provision in 

the agreement was illegal under the Vehicle Code; (3) the public policy 

underlying California’s New Motor Vehicle Board Act precluded the 

arbitrator from making a good cause determination; (4) the arbitrator’s

award cannot be corrected without affecting the merits of the decision; 

and (5) Putnam’s due process rights were violated when Subaru failed to 
2

provide it with the required notice of the reasons for terminating the 

agreement. We shall affirm the judgment. 

FACTUAL AND PROCEDURAL BACKGROUND

In February 2008, after Putnam purchased a service-only Subaru 

facility (Satellite Service Facility) in downtown San Francisco from a 

former Subaru dealer, Subaru and Putnam entered into a temporary

Subaru “Dealer Candidate Satellite Service Facility Agreement,” which 

permitted Putnam to provide Subaru warranty repairs at the Satellite 

Service Facility, pending Subaru’s approval of Putnam’s application to 

establish an authorized Subaru dealership at a proposed location in 

Burlingame. Putnam operated the Satellite Service Facility under the 

temporary agreement until issues related to the establishment of the 

Burlingame dealership were resolved in March 2009.

On March 25, 2009, Subaru and Putnam entered into a “Subaru 

Dealer and Standard Provisions Agreement” (Burlingame Dealer 

Agreement) for the sale and service of motor vehicles at the Burlingame 

dealership, as well as the operative Subaru Dealer Satellite Service 

Facility Agreement (Satellite Service Agreement) for service operations 

only at the Satellite Service Facility in San Francisco. 

The Satellite Service Agreement, which was operative for an 

initial term of five years, contained an arbitration provision, which 

stated: “The parties agree that the enforcement, interpretation or any 

disputes arising out of this Agreement shall be exclusively resolved 

through arbitration in Camden County, New Jersey, conducted under 

the Commercial Arbitration Rules of the American Arbitration 

Association and shall be governed by the laws of the State of New 

Jersey.” (Satellite Service Agreement, § 10.6.)
3

In a September 23, 2013 letter, Subaru informed Putnam that it 

was exercising its right to extend the 2009 Satellite Service Agreement

for another five-year period, beginning on March 25, 2014, with “[a]ll 

provisions of that Agreement remain[ing] in full force and effect.”

Thereafter, Putnam attempted to engage with Subaru regarding 

relocating the Satellite Service Facility, but in a November 6, 2017 

letter to Putnam, Subaru stated that it would not approve Putnam’s 

proposed relocation of the Satellite Service Facility and would not 

renew the Satellite Service Agreement when it expired in 2019.

On November 13, 2017, Putnam filed two administrative protests 

with the New Motor Vehicle Board (Board)—a termination protest 

under Vehicle Code section 3060, subdivision (a)1 and a modification 

protest under section 3060, subdivision (b)—arguing that Subaru did 

not have good cause for refusing to approve the proposed relocation of 

the Satellite Service Facility and terminating Putnam’s right to 

continue to operate that facility upon expiration of the Satellite Service 

Agreement. 

On March 14, 2018, Subaru filed a petition to compel arbitration 

of Putnam’s claims, pursuant to the arbitration provision in the 

Satellite Service Agreement. 

On June 22, 2018, the trial court entered an order granting the 

petition to compel arbitration in part and denying it in part. The court 

first found that the Satellite Service Agreement did not come within

the Motor Vehicle Franchise Contract Arbitration Fairness Act 

(Fairness Act) (15 U.S.C. § 1226), a narrow exception to the Federal 

1 All statutory references are to the Vehicle Code unless 

otherwise indicated. 
4

Arbitration Act (FAA) (9 U.S.C. § 1 et seq.), and Putnam was therefore 

compelled to arbitrate its claims arising from that agreement. The 

court, however, denied Subaru’s request to compel Putnam to dismiss 

its Board protests because discontinuing the Satellite Service 

Agreement might be found to modify the Burlingame Dealer 

Agreement, an agreement that would come within the Fairness Act’s 

exception to arbitration. The court encouraged the parties to agree to

stay either the arbitration or the Board proceedings, and the parties 

ultimately agreed to stay the Board protests pending completion of the 

arbitration proceedings. 

On April 25, 2019, following a preliminary arbitration proceeding 

on choice of law, the arbitrator found that the Satellite Service 

Agreement was a franchise under section 331, that California law 

applied to the dispute, and that Subaru would be required to show good 

cause for termination of the agreement, pursuant to sections 3060 and 

3061, in a subsequent arbitration proceeding. 

Putnam then unsuccessfully sought summary judgment based on 

Subaru’s alleged failure to provide notice of its reasons for terminating 

the Satellite Service Agreement, as required under the Vehicle Code.2 

On October 1, 2019, following the second arbitration proceeding 

on the question of good cause, the arbitrator issued his final award, in 

which he found that Subaru had carried its burden to show good cause 

for terminating the Satellite Service Agreement. 

2 At the subsequent good cause hearing, the arbitrator did, 

however, limit Subaru’s good cause argument to the grounds for 

termination previously communicated to Putnam. 
5

Subaru subsequently filed a petition to confirm the arbitrator’s 

final award, and Putnam filed an opposition and a request for the trial 

court to vacate the award. 

On November 15, 2019, the court entered an order granting 

Subaru’s petition to confirm the arbitration award, and on December

18, the court entered a judgment confirming the award.

On January 8, 2020, Putnam filed a notice of appeal from the 

judgment confirming the arbitration award and denying Putnam’s 

request to vacate the award.

DISCUSSION

In Moncharsh v. Heily & Blase (1992) 3 Cal.4th 1, 6, the 

California Supreme Court discussed the appropriate standard for

judicial review of arbitration awards, explaining that with limited 

exceptions, “an arbitrator’s decision is not generally reviewable for 

errors of fact or law, whether or not such error appears on the face of 

the award and causes substantial injustice to the parties.” The merits 

of the controversy are not subject to judicial review, including the 

validity of the arbitrator’s reasoning and the sufficiency of the evidence

supporting the award. (Id. at p. 11.) Instead, the grounds for vacating 

an arbitration award are generally limited to those set forth in Code of 

Civil Procedure section 1286.2. (Moncharsh, at p. 28.) 

Here, Putnam states that its challenge to the arbitrator’s final 

award was permissible because its arguments are based on two of the 

grounds for vacating an arbitration award in Code of Civil Procedure 

section 1286.2. Specifically, Putnam asserts that the award must be 

vacated because the arbitrator “exceeded [his] powers and the award 

cannot be corrected without affecting the merits of the decision upon 
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the controversy submitted” (Code Civ. Proc., § 1286.2, subd. (a)(4)) and 

because its rights “were substantially prejudiced . . . by other conduct of 

the arbitrator[] contrary to the provisions of this title.” (Code Civ.

Proc., § 1286.2, subd. (a)(5).) 

Most of Putnam’s contentions require interpretation of state and 

federal statutes. Such questions of statutory interpretation are subject 

to our independent review. (Lopez v. Sony Electronics, Inc. (2018) 

5 Cal.5th 627, 633.) In interpreting a statute, “ ‘[o]ur fundamental task 

is to determine the Legislature’s intent and give effect to the law’s 

purpose. [Citation.] We begin by examining the statute’s words 

“ ‘because they generally provide the most reliable indicator of 

legislative intent.’ [Citation.] If the statutory language is clear and 

unambiguous our inquiry ends.” ’ [Citation.] In that case, the plain 

meaning of the statute is controlling, and ‘ “resort to extrinsic sources 

to determine the Legislature’s intent is unnecessary.” ’ [Citation.]” (Id.

at pp. 633–634.) 

I. The Arbitrator’s Jurisdiction to Make 

a Good Cause Determination

“The United States Supreme Court has recognized that the 

‘disparity in bargaining power between automobile manufacturers and 

their dealers prompted Congress and some 25 States to enact 

legislation to protect retail car dealers from perceived abusive and 

oppressive acts by the manufacturers.’ [Citation.]” (Powerhouse 

Motorsports Group, Inc. v. Yamaha Motor Corp. (2013) 221 Cal.App.4th 

867, 877–878, quoting New Motor Vehicle Bd. v. Orrin W. Fox Co.

(1978) 439 U.S. 96, 100–101.) 

Putnam first contends the judgment must be reversed and the 

arbitrator’s final award vacated because the arbitrator exceeded his 
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powers under Code of Civil Procedure section 1286.2, subdivision (a)(4), 

in that he lacked subject matter jurisdiction to make a good cause 

determination under both federal and state law relating to agreements 

between motor vehicle manufacturers or distributors and dealers. (See

Jordan v. Department of Motor Vehicles (2002) 100 Cal.App.4th 431, 

443 [“An arbitrator exceeds his powers when he acts without subject 

matter jurisdiction”]; accord, O’Flaherty v. Belgum (2004) 115 

Cal.App.4th 1044, 1055 (O’Flaherty.) In particular, Putnam claims the 

arbitrator lacked jurisdiction to make a good cause determination 

because the Fairness Act (15 U.S.C. § 1226) and California’s New Motor 

Vehicle Board Act (§ 3000 et seq.) applied to the Satellite Service 

Agreement, as an exception to arbitration. 

A. Jurisdiction to Arbitrate Under Federal Law

The federal statute at issue here is the Fairness Act, title 15 of 

the United States Code section 1226.3 The Senate Judiciary

Committee’s Report describing the purpose of the legislation explained: 

“The Motor Vehicle Franchise Contract Arbitration Fairness Act, S. 

1140, is a targeted amendment to the Federal Arbitration Act which 

requires that whenever a motor vehicle franchise contract provides for 

the use of arbitration to resolve a controversy arising out of or relating 

to the contract, arbitration may be used to settle the controversy only if 

both parties consent in writing after such controversy arises. This 

legislation would allow motor vehicle dealers the option of either going 

to arbitration or utilizing procedures and remedies available under 

State law such as those involving State-established administrative 

3 Title 15 of the United States Code section 1226(a) applies to 

contracts entered into after November 2, 2002. (15 U.S.C. § 1226(b).) 
8

boards specifically created and uniquely equipped to resolve disputes 

between motor vehicle dealers and manufacturers. This legislation is 

intended to ensure that motor vehicle dealers are not required to forfeit 

important rights and remedies afforded by State law as a condition of 

obtaining or renewing a motor vehicle franchise contract.” (Sen.Rep. 

No. 107-266, 2d sess. (2002).) 

Title 15 of the United States Code section 1226(a) provides in 

relevant part: 

“(a) Election of arbitration

“(1) Definitions. For purposes of this subsection—[¶] . . . [¶]

“(B) the term ‘motor vehicle franchise contract’ means a contract 

under which a motor vehicle manufacturer, importer, or distributor 

sells motor vehicles to any other person for resale to an ultimate 

purchaser and authorizes such other person to repair and service the 

manufacturer’s motor vehicles.

“(2) Consent required. Notwithstanding any other provision of 

law, whenever a motor vehicle franchise contract provides for the use of 

arbitration to resolve a controversy arising out of or relating to such 

contract, arbitration may be used to settle such controversy only if after 

such controversy arises all parties to such controversy consent in 

writing to use arbitration to settle such controversy.” 

Here, in granting Subaru’s petition to compel arbitration, the 

trial court found that the Satellite Service Agreement did not come 

within the narrow exception to arbitration provided by the Fairness Act

because it did not come within the definition of “motor vehicle franchise 

contract” in title 15 of the United States Code section 1226(a)(1)(B), i.e.,
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“it is not a contract under which motor vehicles are both serviced and 

sold.” 

Putnam does not argue that, standing alone, the Satellite Service 

Agreement falls within the Fairness Act’s exception to arbitration, in 

light of the definition of a motor vehicle franchise contract in title 15 of 

the United States Code section 1226(a)(1)(B) and the fact that the 

Satellite Service Agreement is a contract under which Putnam services, 

but does not sell, motor vehicles. Putnam’s claim is that the Satellite 

Service Agreement “cannot be viewed in isolation” and must be 

considered in conjunction with the Burlingame Dealer Agreement,

under which motor vehicles are both serviced and sold, pursuant to 

Civil Code section 1642.

Civil Code section 1642 provides: “Several contracts relating to 

the same matters between the same parties, and made as parts of 

substantially one transaction, are to be taken together.” Even where 

Civil Code section 1642 applies, however, whether two agreements 

constitute a single contract depends on the circumstances and intent of 

the parties: “ ‘ “While it is the rule that several contracts relating to 

the same matters are to be construed together [citation], it does not 

follow that for all purposes they constitute one contract.” ’ [Citation.] 

The rule is simply a particular application of the more general principle 

that ‘[w]e construe [a] contract in light of the circumstances under 

which it was made . . . . [Citation.]’ [Citation.]” (Fuentes v. TMCSF, 

Inc. (2018) 26 Cal.App.5th 541, 548 (Fuentes).) Moreover, even if two 

contracts could be considered one transaction, this fact “is not 

dispositive. Rather, just as when any issue turns on contractual 

interpretation, we must look to the mutual intent of the parties. (Civ. 
10

Code, § 1636;

[4]

[citation].) ‘ “Such intent is to be inferred, if possible, 

solely from the written provisions of the contract.” [Citations.] “If 

contractual language is clear and explicit, it governs.” [Citation.]’ 

[Citation.]” (Fuentes, at p. 549; accord, Versaci v. Superior Court (2005) 

127 Cal.App.4th 805, 814 [“The parties’ intent must, in the first 

instance, be ascertained objectively from the contract language”].) 

According to Putnam, the undisputed evidence in the record 

demonstrates that the Satellite Service Agreement should be taken 

together with the Burlingame Dealer Agreement to constitute a single

contract “under which a motor vehicle manufacturer . . . or distributor

sells motor vehicles to any other person for resale to an ultimate 

purchaser and authorizes such other person to repair and service the 

manufacturer’s motor vehicles,” which would satisfy the Fairness Act’s 

narrow exemption from the FAA. (15 U.S.C. § 1226(a)(1)(B), italics 

added.) 

The trial court did not explicitly address whether Civil Code 

section 1642 or relevant authority related to ascertaining the parties’ 

intent applied to the Satellite Service Agreement and the Burlingame 

Dealer Agreement, but it’s conclusion that the Satellite Service 

Agreement was not a contract under which vehicles are both serviced 

and sold makes clear that it did not find that the two agreements 

should be treated as one. (See, e.g., City of Brentwood v. Department of 

Finance (2020) 54 Cal.App.5th 418, 429 [where record is silent as to

4 Civil Code section 1636 provides: “A contract must be so 

interpreted as to give effect to the mutual intention of the parties as it 

existed at the time of contracting, so far as the same is ascertainable 

and lawful.” 
11

trial court’s findings on applicability of Civil Code section 1642, “we 

presume the court found all facts necessary to support the order”].)5 

Putnam acknowledges that the Burlingame Dealer Agreement 

does not mention the Satellite Service Agreement, but cites certain

passages in the Satellite Service Agreement that refer to the 

Burlingame Dealer Agreement or the Burlingame dealership. For 

example, the Satellite Service Agreement requires “that the same 

business entity that owns Dealer [i.e., Putnam] shall, for the term of 

this Agreement, wholly own the Satellite Service Facility” and that “[if] 

Dealer should sell . . any of its ownership interest in the Primary 

Dealership, or in the Satellite Service Facility, all rights under the 

Agreement shall be null and void and the operation of the Satellite 

Service Facility shall immediately cease.” (Satellite Service 

Agreement, §§ 3, 4.4.) The Satellite Service Agreement also states that 

the Satellite Service Facility “is subject to the same requirements for 

service operations applicable to authorized Subaru dealers as set forth 

in the Dealer Agreement,” that “Dealer must maintain, in full force 

5 The parties disagree about the applicable standard of review of 

this issue, with Putnam arguing that de novo review is appropriate and 

Subaru claiming that our review should be under the substantial 

evidence standard. (Compare City of Brentwood v. Department of 

Finance, supra, 54 Cal.App.5th at p. 429 [“Whether Civil Code section 

1642 applies is a question of fact for resolution by the trial court, which 

we review under the substantial evidence standard”]; id. at p. 428 

[“ ‘ “[W]here the issue is one of statutory construction or contract 

interpretation, and the evidence is not in dispute, the de novo standard 

of review applies [citation]” ’ ”].) We need not resolve this question 

because, in the circumstances of this case, the result would be the same 

under either standard. We do observe, however, that Putnam does cite 

to the testimony of a witness at the first arbitration hearing in arguing 

that the two agreements should be considered together. 
12

effect, a current and executed Dealer Agreement and be in full 

compliance with [that agreement],” and that the Satellite Service 

Facility would terminate upon, inter alia, “[t]he termination, 

expiration, or cancellation for any reason of the Dealer Agreement . . . .” 

(Satellite Service Agreement, §§ 5.1, 7.1, 9.1(A); see also § 5.8.)

This language reflects the parties’ understanding that the 

Satellite Service Facility could not exist on its own, without there also 

being a primary dealership, and that Putnam must abide by the same 

requirements applicable to all Subaru dealers’ service operations. The 

Satellite Service Agreement, however, contains numerous additional 

terms applicable only to the Satellite Service Facility, including, inter 

alia, Putnam’s specific obligations related to that facility; its service 

and parts operations; financial requirements; and grounds for 

termination of the agreement. 

In addition, while the two agreements were first entered into on 

the same date, March 25, 2009, they were subject to different terms for 

renewal. Specifically, the 2009 Satellite Service Agreement was 

extended after its initial five-year term, and therefore remained in 

effect for the Satellite Service Facility. On the other hand, the parties 

repeatedly entered into new Burlingame Dealer Agreements for the 

Burlingame Facility, most recently (according to the record on appeal) 

for a three-year term starting in 2017, approximately eight years after 

the parties entered into the operative Satellite Service Agreement.

It is also significant that the Burlingame Dealer Agreement, 

unlike the Satellite Service Agreement, contains relatively few 

individualized provisions. Instead, it incorporates by reference 

Subaru’s “Standard Provisions,” consisting of 25 pages of detailed 
13

requirements and procedures for dealership operations that are

applicable to all Subaru dealerships.6

Most importantly, in pointing to provisions in the Satellite 

Service Agreement that purportedly demonstrate the parties’ intent to 

treat the two agreements as one, Putnam ignores language in the first 

section of the Satellite Service Agreement that explicitly contradicts its 

claim. Under the heading, “Purpose,” the Satellite Service Agreement 

states: “This Agreement states the rights and responsibilities of Dealer 

and Distributor with respect to the Satellite Service Facility to be 

operated by Dealer in Downtown San Francisco. Pursuant to the 

Subaru Dealer Agreement . . . , Dealer currently operates an authorized 

Subaru dealership located [in Burlingame]. Dealer now seeks to 

operate an additional Subaru service facility in Downtown San 

Francisco . . . . Distributor hereby approves Dealer’s operation of the 

Satellite Service Facility pursuant to the terms of this Agreement. In 

consideration for Distributor’s approval of the Satellite Service Facility, 

and provided Dealer, at all times during the term of this Agreement, 

satisfies the terms and conditions of this Agreement, Distributor shall 

consent to Dealer’s continued operation of the Satellite Service 

Facility. . . . 

6 The first term of the Standard Provisions portion of the 

Burlingame Dealer Agreement provides in relevant part: “The 

following Standard Provisions are a part of, and are incorporated by 

reference into the Subaru Dealer Agreement between Dealer and 

Distributor . . . and shall apply to and govern the transactions, 

dealings, and relations between Distributor and Dealer . . . . The 

Agreement and these Standard Provisions were developed for use by all 

Subaru dealers to ensure a degree of nationwide uniformity in Subaru 

operations. . . .” (Burlingame Dealer Agreement, Standard Provisions, 

§ 1.1.) 
14

“Neither this Agreement, nor the termination of this Agreement, 

modify (modifies) the [Burlingame] Dealer Agreement entered into by 

[Subaru and Putnam] . . . . The parties agree that this Agreement is a 

separate, negotiated contract apart from the [Burlingame] Dealer 

Agreement, and is supported by consideration separate and apart from 

the [Burlingame] Dealer Agreement.” (Satellite Service Agreement, § 1, 

italics added.)

This language in the “Purpose” portion of the Satellite Service 

Agreement “clear[ly] and explicit[ly]” reflects “the mutual intent of the 

parties” for the Satellite Service Agreement to be a separate contract

from the Burlingame Dealer Agreement. (Fuentes, supra, 26 

Cal.App.5th at p. 549; see Civ. Code, §§ 1636, 1642; cf. Hartford 

Accident & Indem. Co. v. Sequoia Ins. Co. (1989) 211 Cal.App.3d 1285, 

1300 [“Civil Code section 1642 is simply one of the rules referred to in 

Civil Code section 1637[7]for aiding in the interpretation of a contract 

when the intent of the parties is ‘otherwise doubtful’ ”].) 

Putnam nevertheless points to statements in the arbitrator’s

choice of law order that supposedly demonstrate the arbitrator’s belief 

that the Satellite Service Agreement and the Burlingame Dealer 

Agreement were not separate contracts. The arbitrator did find, as 

Putnam observes, an “express, contractual connection between the 

Dealer Satellite Service Agreement and the Dealer Agreement” which

“establishes that Subaru entered into the Dealer Satellite Service 

Agreement with Putnam in Putnam’s capacity as a Subaru franchisee.” 

7 Civil Code section 1637 provides: “For the purpose of 

ascertaining the intention of the parties to a contract, if otherwise 

doubtful, the rules given in this chapter are to be applied.” 
15

It is apparent, however, that in making this statement the 

arbitrator was not addressing whether the Satellite Service Agreement 

and the Burlingame Dealer Agreement were separate contracts. 

Rather, he was determining “whether there can be a separate warranty 

service franchise agreement” under section 331, which was a necessary 

precondition to his ultimate conclusion that Putnam had “entered into 

the Dealer Satellite Service Agreement in its capacity as an authorized 

Subaru new motor vehicle dealer,” which meant, “as a matter of choice 

of law,” that “section 3060 and its good cause requirement apply to any 

attempt by [Subaru] to terminate the Dealer Satellite Service 

Agreement.”8(Italics added.) 

8 As the arbitrator explained, to constitute a franchise under the 

Vehicle Code, “the warranty service agreement can be a contract 

separate and apart from a motor vehicle dealership franchise 

agreement, but the warranty repair facility provided for in the 

warranty service agreement must have been entered into in that 

person’s capacity as a new motor vehicle franchisee of the same 

manufacturer or distributor.”

Under section 331, subdivision (a)(2), a “franchise” is a written 

agreement in which, inter alia, “[t]he franchisee is granted the right to 

offer for sale or lease, or to sell or lease at retail new motor vehicles . . . 

manufactured or distributed by the franchisor or the right to perform 

authorized warranty repairs and service, or the right to perform any 

combination of these activities,” which differs from the definition of 

“motor vehicle franchise contract” in the Fairness Act. (See 15 U.S.C. 

§ 1226(a)(1)(B) [“the term ‘motor vehicle franchise contract’ means a 

contract under which a motor vehicle manufacturer, importer, or 

distributor sells motor vehicles to any other person for resale to an 

ultimate purchaser and authorizes such other person to repair and 

service the manufacturer’s motor vehicles”].) Thus, when the arbitrator 

found that the Satellite Service Agreement was a franchise under 

California law, he was referring to that term as it is defined in the 

Vehicle Code only. 
16

Putnam also ignores additional statements in the choice of law 

order that contradict its assertion that the arbitrator found that the 

two agreements were not separate. For example, the arbitrator 

acknowledged that the trial court had “ruled implicitly if not explicitly 

that the . . . Satellite Service Agreement is a separate agreement from 

the Burlingame dealership agreement because it ordered this matter to 

arbitration” and that, “[h]ad the court considered the Dealer Satellite 

Service Agreement to be a part of the Burlingame dealership 

agreement (as is the warranty service facility operated at the location 

of the Burlingame dealership), the exception to arbitration under the 

Federal Arbitration Act and the California Vehicle Code would have 

applied to prevent arbitration of this matter.” 

In sum, based on the language of both the Satellite Service 

Agreement as whole—including the unambiguous statement in the 

“Purpose” section of the agreement that it was “a separate, negotiated 

contract apart from the Dealer Agreement”—and the Burlingame 

Dealer Agreement, we find that the two agreements were not intended 

to constitute a single contract. They therefore cannot be considered 

together for purposes of the Fairness Act’s narrow exception to the 

FAA. (See Fuentes, supra, 26 Cal.App.5th at pp. 548–549; Hartford 

Accident & Indem. Co. v. Sequoia Ins. Co., supra, 211 Cal.App.3d at 

p. 1300; §§ Civ. Code, 1636, 1637, 1642.)9 We agree with the trial 

9 Putnam cites several cases from other jurisdictions for their 

recognition of “the principle of law that agreements can be taken 

together for purposes of the [Fairness Act].” While this is a correct 

general principle, these cited cases simply looked to the various terms 

of the agreements at issue to determine the parties’ intent, just as we 

have done in this case. (See Arciniaga v. General Motors Corp. (2d Cir. 

2006) 460 F.3d 231; Pride v. Ford Motor Co. (N.D.Miss. 2004) 341 
17

court’s implicit finding that the Satellite Service Agreement is a 

separate contract, on which it based its finding that the agreement does

not come within the Fairness Act’s definition of a motor vehicle 

franchise contract because it is not a contract under which motor 

vehicles are both serviced and sold. (See 15 U.S.C. § 1226(a)(1)(B) & 

(a)(2).)10

B. Jurisdiction to Arbitrate Under California Law

Putnam next points to California law, specifically sections 3060

and 11713.3, in support of its claim that the Board, not the arbitrator 

had jurisdiction over its dispute with Subaru. 

“Section 3000 et seq. and section 11700 et seq. establish a 

statutory scheme regulating the franchise relationship between vehicle 

manufacturers and distributors, and their dealers. [Citation.] The 

purpose of this scheme is ‘ “to avoid undue control of the independent 

new motor vehicle dealer by the vehicle manufacturer or distributor 

F.Supp.2d 617; see also General Motors, LLC v. Hall Chevrolet, LLC

(E.D.Va. 2015) 2015 WL 6830309 at p. *6 [parties intended an 

exclusivity contract to be separate from a dealer agreement to which 

exclusivity contract made multiple references and relied on for some 

terms, based in part on facts that exclusivity contract was a separately 

negotiated contract for which separate consideration was paid and each 

contract was for a separate term of years, with dealer agreement 

requiring frequent renegotiation].) 

10 In its order on Subaru’s motion to compel arbitration, the court 

found that the Burlingame Dealer Agreement, by contrast, was covered 

by the Fairness Act’s exception to arbitration, since it “regards the sale 

and service of motor vehicles,” i.e., is a motor vehicle franchise contract. 

(See 15 U.S.C. § 1226(a)(1)(B), (a)(2).) The court therefore denied 

Subaru’s request to “compel Putnam to dismiss its New Motor Vehicle 

Board protests, because discontinuing the service agreement might be 

found to modify—and/or, less plausibly, terminate—the dealer 

agreement,” over which the Board would have jurisdiction.
18

and to insure that dealers fulfill their obligations under their 

franchises and provide adequate and sufficient service to consumers 

generally.” ’ (Historical and Statutory Notes, 65B West’s Ann. Veh. 

Code (2000 ed.) foll. § 3000, p. 371; citation.)” (Powerhouse Motorsports 

Group, Inc. v. Yamaha Motor Corp., supra, 221 Cal.App.4th at p. 877.) 

The relevant statutes include section 331, which defines a 

“franchise” as “a written agreement between two or more persons 

[meeting certain listed] conditions”; section 331.1, which defines a

“franchisee” as “any person who, pursuant to a franchise, receives new 

motor vehicles . . . from the franchisor and who offers for sale or lease, 

or sells or leases the vehicles at retail or is granted the right to perform 

authorized warranty repairs and service, or the right to perform any 

combination of these activities”; and section 331.2, which defines a 

“franchisor” as “any person who manufactures, assembles, or

distributes new motor vehicles . . . and who grants a franchise.”

In addition, section 3050, subdivision (c), states that the Board 

shall, inter alia, “[h]ear and decide, within the limitations and in 

accordance with the procedure provided, a protest presented by a 

franchisee pursuant to Section 3060 . . . .” Section 3060 prohibits a

franchisor from terminating a franchise unless it gives the franchisee 

and the Board written notice of the proposed termination, establishes 

“good cause” for the termination, and gives the franchisee the right to 

file a protest. (§ 3060, subds. (a)(1), (2).) In addition, after a protest 

has been filed with the Board, “the franchisor may not terminate or 

refuse to continue until the [B]oard makes its findings.” (§ 3060, subd. 

(a)(2).) Section 3061 sets forth a list of nonexclusive factors for the 
19

Board to consider when determining whether a franchisor has 

established good cause for terminating a franchise. 

Finally, section 11713.3 sets forth a list of acts that are unlawful 

when committed by a vehicle manufacturer or distributor against a 

dealer, including termination of “a franchise in violation of Article 4 

(commencing with Section 3060) . . . of Chapter 6 of Division 2.” 

(§ 11713.3, subd. (l).) 

Putnam again contends the arbitrator lacked subject matter 

jurisdiction under state law to determine whether Subaru had good 

cause for terminating the Satellite Service Agreement because all such

determinations must be made by the Board, pursuant to the New Motor 

Vehicle Board Act, as reflected in the language of section 3060, 

subdivision (a)(2), which provides for a franchisee to file a protest with 

the Board and precludes a franchisor from terminating a franchise 

until the Board determines whether the franchisor had good cause to do 

so, following a hearing. Moreover, according to Putnam, the trial court 

wrongly found that section 11713.3, subdivision (g) permitted 

arbitration of Putnam’s protest, notwithstanding the language in 

section 3060. 

In its order granting Subaru’s petition to confirm the final 

arbitration award, the trial court stated: “Putnam says the arbitrator 

should have stopped arbitrating after his April 2019 [choice of law] 

order, because the New Motor Vehicle Board has ‘exclusive jurisdiction’ 

to adjudicate whether good cause exists not to continue a franchise 

agreement. However, the very statutory subdivision Putnam cites—

[section 11713.3, subdivision (g)]—provided to the contrary: ‘This 

subdivision does not, however, prohibit arbitration before an 
20

independent arbitrator.’ ” The court noted that “[t]his law applied to 

‘any contract entered into on or before December 31, 2011’ [§ 11713.3, 

subd. (g)(3)(D)], and the Agreement was entered in 2009.” 

We agree with the trial court’s conclusion. Putnam’s claim that

the Board had exclusive jurisdiction over its termination protest and 

that subdivision (g) of section 11713.3 prohibited enforcement of the 

arbitration provision is based on a complete misreading of that 

subdivision. 

First, as the trial court stated, the version of section 11713.3, 

subdivision (g) that was in effect when the parties entered into the 

Satellite Service Agreement in 2009, and which was still the operative 

agreement when this dispute arose, provided in relevant part: 

“It is unlawful and a violation of this code for any manufacturer 

. . . licensed under this code to do any of the following: [¶] . . . [¶]

“(g) To require . . . any controversy between a dealer and a 

manufacturer [or distributor] to be referred to any person other than 

the board, if the referral would be binding on the dealer. This 

subdivision does not, however, prohibit arbitration before an 

independent arbitrator.” (Former § 11713.3, subd. (g), italics added.) 

Thus, the applicable version of the statute expressly excepts an 

agreement to arbitrate from the prohibition against any controversies 

between dealers and manufacturers or distributors being referred to 

anyone other than the Board. The applicability of former section 

11713.3, subdivision (g) to the 2009 Satellite Service Agreement is also 

reflected in language of the current version of the statute, which 

provides in relevant part: 
21

“It is unlawful and a violation of this code for any manufacturer 

[or distributor] licensed pursuant to this code to do . . . any of the 

following: [¶] . . . [¶]

“(g)(1) Except as provided in paragraph 3, to obtain from a dealer 

or enforce against a dealer an agreement [or] provision . . . that does 

any of the following: [¶] . . . [¶]

“(D) Requires a controversy between a manufacturer [or a 

distributor] and a dealer to be referred to a person for a binding 

determination. . . .”

“(3) This subdivision does not do any of the following: [¶] . . . [¶] 

“(D) Affect the enforceability of a provision in any contract entered 

into on or before December 31, 2011.” (§ 11713.3, subds. (g)(1)(D) & 

(g)(3)(D), italics added.)11 

Thus, the current statute makes clear that arbitration provisions 

in contracts entered into before 2012 are governed by former section 

11713.3, which expressly “does not . . . prohibit arbitration before an 

independent arbitrator” in any circumstances. (Former § 11713.3, 

subd. (g).)12 

11 The language in current section 11713.3, subdivision (g) was 

added in an amendment, with an effective date of January 1, 2012 (see 

Stats. 2011, ch. 342, § 3). Former section 17313.3, subdivision (g) was 

in effect when the parties entered into the Satellite Service Agreement

(see Stats. 2006, ch. 353, § 1). 

12 Putnam asserts that because the Satellite Service Agreement 

was extended in 2014, subdivision (g)(3)(D) of current section 11713.3 is 

inapplicable. It is apparent from the record, however, that the parties, 

the trial court, and the arbitrator considered the 2009 Satellite Service 

Agreement—which was extended but never replaced—the operative 

agreement. Putnam also asserts that because Subaru sought to enforce 

the arbitration provision in the Satellite Service Agreement against

Putnam after December 31, 2011, “even if obtaining the agreement 
22

Second, the provision in the current version of section 17313.3, 

subdivision (g), on which Putnam relies, also fails to support its claim

that the Board had sole jurisdiction to resolve the present dispute. 

Subdivision (g)(1)(D) of section 11713.3 provides that, except as 

provided in subdivision (g)(3), it is unlawful for a vehicle manufacturer 

or distributor to enforce an agreement that requires a controversy with 

“a dealer to be referred to a person for a binding determination.” 

(§ 11713.3, subd. (g)(1)(D).) Importantly, this provision then states: 

“However, this subparagraph does not prohibit arbitration before an 

independent arbitrator, provided that whenever a motor vehicle 

franchise contract provides for the use of arbitration to resolve a 

controversy arising out of, or relating to, that contract, arbitration may 

be used to settle the controversy only if, after the controversy arises, all 

parties to the controversy consent in writing to use arbitration to settle 

the controversy. For the purpose of this subparagraph, the terms ‘motor 

vehicle’ and ‘motor vehicle franchise contract’ shall have the same 

meanings as defined in Section 1226 of Title 15 of the United States 

Code. . . .” (§ 11713.3, subd. (g)(1)(D), italics added.) 

Subdivision 11713.3 thus tracks the language of the Fairness Act, 

providing a limited exception to enforcement of arbitration agreements 

for motor vehicle franchise contracts, as that phrase is defined in that 

Act. (See 15 U.S.C. § 1226(a)(1)(B).) In addition, just as the Fairness 

Act permits arbitration to resolve a controversy relating to a motor 

prior to December 31, 2011 was considered lawful, attempting to 

enforce the agreement after December 31, 2011, is a separate unlawful 

act.” Putnam disregards the plain language of the statute, which, 

again, provides that subdivision (g) does not “[a]ffect the enforceability

of a provision in any contract entered into on or before December 31, 

2011.” (§ 11713.3, subd. (g)(3)(D), italics added.) 
23

vehicle franchise contract “only if after such controversy arises all 

parties to such controversy consent in writing to use arbitration to 

settle such controversy” (15 U.S.C. § 1226(a)(2)), subdivision (g)(1)(D) of 

Vehicle Code section 11713.3 uses nearly identical language, 

permitting arbitration to settle a controversy arising from a “motor 

vehicle franchise contract” “only if, after the controversy arises, all 

parties to the controversy consent in writing to use arbitration to settle 

the controversy.” 

Thus, by including in section 11713.3, subdivision (g) virtually 

the same language as that in the Fairness Act’s narrow exception to 

arbitration of motor vehicle related disputes, the Legislature avoided 

conflict with the FAA, since any broader categorical attempt to reserve

otherwise arbitrable disputes for resolution by a state-established 

administrative board would necessarily be subject to preemption by the 

FAA. (See AT&T Mobility LLC v. Concepcion (2011) 563 U.S. 333, 351

(Concepcion) [“States cannot require a procedure that is inconsistent 

with the FAA, even if it is desirable for unrelated reasons”]; see also 

Preston v. Ferrer (2008) 552 U.S. 346, 356 [California Labor Code 

section giving Labor Commissioner exclusive original jurisdiction over 

certain disputes “conflict[ed] with the FAA’s dispute resolution regime” 

by “grant[ing] the Labor Commissioner exclusive jurisdiction to decide 

an issue that the parties agree to arbitrate”]; Sonic-Calabasas A, Inc. v. 

Moreno (2013) 57 Cal.4th 1109, 1124 [holding, in light of Concepcion, 

that FAA preempted a state law rule categorically prohibiting waiver of 

a “Berman hearing” (i.e., “a dispute resolution forum established by the 
24

Legislature to assist employees in recovering wages owed”) in a 

predispute arbitration agreement].)13 

We have already determined, in part I.A., ante, that the Satellite 

Service Agreement is not a motor vehicle franchise contract covered by 

the Fairness Act’s exception to arbitration because it is not a contract 

under which vehicles are serviced and sold. Likewise, the nearly 

identical prohibition against involuntary arbitration of disputes 

contained in subdivision (g)(1)(D) of section 11713.3 is inapplicable to 

the Satellite Service Agreement. The portion of subparagraph (D) that 

would be applicable to the Satellite Service Agreement (were the 

agreement not excepted from the requirements of current subdivision 

(g)(1)(D)) provides that “this subparagraph does not prohibit 

arbitration before an independent arbitrator . . . .” (§ 11713.3, 

subd. (g)(1)(D).) 

In short, notwithstanding the language Putnam cites in section 

3060 regarding the Board’s authority to make good cause 

determinations, under both former and current section 11713.3, 

subdivision (g), the arbitration provision in the Satellite Service 

Agreement controls. 

II. Legality of the Arbitration Provision Under Section 11713.3

Putnam next contends that, regardless of whether the parties’ 

agreement to arbitrate in the Satellite Service Agreement was 

otherwise valid, the arbitrator exceeded his powers “by rendering an 

award where the underlying agreement to arbitrate is illegal.” (See 

13 As the arbitrator noted in his final award, “[t]he obvious 

purpose of Section 11713.3[, subdivision] (g) is to limit the exception 

from pre-dispute arbitration agreements to the statutory exemption 

provided in 15 U.S.C. [section] 1226.” 
25

Loving & Evans v. Blick (1949) 33 Cal.2d 604, 610 [cited by Putnam, in 

which Supreme Court stated: “[I]t is generally held that ‘a claim 

arising out of an illegal transaction is not a proper subject matter for 

submission to arbitration, and that an award springing out of an illegal 

contract, which no court can enforce, cannot stand on any higher 

ground than the contract itself’ ”]; see also Concepcion, supra, 563 U.S. 

at p. 339 [FAA contains a savings clause that “permits arbitration 

agreements to be declared unenforceable ‘upon such grounds as exist at 

law or in equity for the revocation of any contract’ ”]; O’Flaherty, supra,

115 Cal.App.4th at pp. 1055–1056 [“ ‘An arbitrator exceeds his powers 

when he . . . upholds an illegal contract’ ”].) 

According to Putnam, the arbitration provision in the Satellite 

Service Agreement was illegal under two terms of current section 

11713.3 that do not specifically target arbitration, but instead “prohibit 

any interference with Putnam’s rights to pursue the protests before the 

Board and make unlawful agreements requiring Putnam to terminate 

its franchise.” These two subparagraphs make it unlawful for a vehicle 

manufacturer or distributor to enforce against a dealer an agreement 

that “[l]imits or constrains the right of a dealer to file, pursue, or 

submit evidence in connection with a protest before the board” 

(§ 11713.3, subd. (g)(1)(B)) or that “[r]equires a dealer to terminate a 

franchise” (§ 11713.3, subd. (g)(1)(C)). 

In its order confirming the final arbitration award, the trial court 

addressed this contention, as follows: “Putnam belatedly argues that 

two other [section 11713.3, subdivision (g)] provisions rendered the 

Agreement’s arbitration clauses ‘illegal.’ One bars a manufacturer 

from limiting a dealer’s evidence if there is ‘a protest before the board.’ 
26

(Id. at (1)(B).) The other keeps a manufacturer from requiring a dealer 

‘to terminate a franchise,’ which clearly means terminate without legal 

process. (Id. at (1)(C).) Neither provision bars arbitration.” We agree 

with the trial court’s interpretation of these two provisions. 

First, considering our conclusion that arbitration is permitted 

under both the current and former versions of section 11713.3 (see 

pt. I.B., ante), it would be absurd to then construe subdivision (g)(1)(B) 

in isolation as forbidding arbitration and requiring that all protests be 

heard solely by the Board. (See, e.g., Star Athletica, L.L.C. v. Varsity 

Brands, Inc. (2017) 137 S.Ct. 1002, 1010 (Star Athletica)

[“ ‘[I]nterpretation of a phrase of uncertain reach is not confined to a 

single sentence when the text of the whole statute gives instruction as 

to its meaning’ ”]; Satele v. Superior Court (2019) 7 Cal.5th 852, 858

(Satele) [“We consider [statutory] language in the context of the entire 

statute and the statutory scheme of which it is a part”].) In context, the 

provision precludes a manufacturer or distributor from limiting a 

dealer’s right to submit evidence “in connection with a protest,” if that 

protest is “before the Board.” (§ 11713.3, subd. (g)(1)(B); see also Star 

Athletica, at p. 1010; Satele, at p. 858.) 

As to subdivision (g)(1)(C) of section 11713.3, this provision 

obviously is not a blanket prohibition against a manufacturer or 

distributor “[r]equir[ing] a dealer to terminate a franchise.” As the 

trial court stated, the provision bars such a termination “without legal 

process.” Putnam’s argument that this provision makes it illegal to 

require a dealer to submit a dispute to arbitration, through which it 

might be required to terminate a franchise, ignores both common sense 

and the context of this provision within the statute as a whole, which 
27

allows disputes to be resolved by arbitration in circumstances that we 

have found applicable here. (See § 11713.3, subd. (g)(1)(D), (3)(D); see 

also Star Athletica, supra, 137 S.Ct. at p. 1010; Satele, supra, 7 Cal.5th 

at p. 858.) 

Accordingly, considering these provisions in the context of the 

entire statute, neither one makes illegal the enforcement of the parties’ 

agreement to arbitrate their disputes. 

III. Arbitrator’s Good Cause Determination and Public Policy

Putnam contends the arbitrator exceeded his powers when he

made a good cause determination in his final award, contrary to the 

public policy underlying the New Motor Vehicle Board Act and the 

Fairness Act. (See Code Civ. Proc., § 1286.2, subd. (a)(4); O’Flaherty, 

supra, 115 Cal.App.4th at pp. 1055–1056 [“ ‘An arbitrator exceeds his 

powers when he . . . issues an award that violates a well-defined public 

policy’ ”].) 

Putnam cites to the purpose of both the Fairness Act and the 

New Motor Vehicle Board Act, maintaining that permitting arbitration 

of the parties’ dispute undermines the intent of both Acts, which were 

created to protect motor vehicle dealers from unfair trade practices by 

manufacturers or distributors and to ensure that dealers have the 

opportunity to exercise their rights before specialized state boards. 

(See Sen.Rep. No. 107-266, 2d sess. (2002); see also Ri-Joyce, Inc. v. 

New Motor Vehicle Board (1992) 2 Cal.App.4th 445, 456, fn. 4 [New 

Motor Vehicle Board Act “was intended to protect new motor vehicle 

dealers against unfair or oppressive trade practices”].) 

As we have explained, however, both the Fairness Act and 

Vehicle Code exceptions to arbitration, by their terms, apply only to 
28

motor vehicle franchise contracts as defined in title 15 of the United 

States Code section 1226(a)(1)(B), and the Satellite Service Agreement 

is not such a contract. (See pt. I., ante; see also Lopez v. Sony 

Electronics, Inc., supra, 5 Cal.5th at pp. 633–634 [if statutory language 

is unambiguous, plain meaning of statute controls, and resort to 

Legislature’s intent is unnecessary].) 

Putnam nonetheless asserts that “[i]f the award is not vacated, it 

will be the first and only termination of a franchise in California since 

the enactment of [section] 11713.3[, subdivision] (g) where the 

franchisor was not required to prove good cause before the Board,” and 

that this “will set a dangerous precedent of allowing manufacturers to 

separate sales and service agreements and circumvent the Board’s 

jurisdiction by seeking to terminate the service portions of those 

agreements by way of arbitration and not before the Board.” But 

Subaru was not attempting to terminate the “service portion[]” of a 

larger dealer agreement. We have found that the Satellite Service 

Agreement and the Burlingame Dealer Agreement are separate 

contracts, and that only the Burlingame Dealer Agreement comes 

within the Fairness Act and section 11713.3’s narrow exception to 

arbitration, because it is a contract under which vehicles are both 

serviced and sold. (See 15 U.S.C. § 1226(a)(1)(B); Veh. Code, § 11713.3, 

subd. (g)(1)(D); see also pt. I., ante.) We are not permitted to secondguess Congress’s decision to create the Fairness Act’s narrow exception 

to the FAA, which by its terms does not apply to the Satellite Service 

Agreement. (See Concepcion, supra, 563 U.S. at p. 351; Preston v. 

Ferrer, supra, 552 U.S. at p. 356; Sonic-Calabasas A, Inc. v. Moreno, 

supra, 57 Cal.4th at p. 1124.) 
29

Finally, Putnam questions the basis for the arbitrator’s finding of 

good cause, asserting that the finding “is disconnected from how the 

Board views good cause” and that the arbitrator “bases a central 

portion of his decision on the idea [that Subaru] can deny Putnam’s 

request to relocate to a larger facility, but then use Putnam’s inability 

to relocate to a larger facility as a basis for finding good cause to 

terminate.” This argument is essentially an attempt to call into 

question the factual and legal findings of the arbitrator, which is 

impermissible. (See Moncharsh v. Heily & Blase, supra, 3 Cal.4th at 

p. 11.)14 

IV. Alleged Due Process Violation

Putnam contends Subaru’s failure to provide notice of the reasons 

for its nonrenewal of the Satellite Service Agreement requires that the 

final award be vacated because Putnam’s due process rights “were 

substantially prejudiced . . . by other conduct of the arbitrator[] 

contrary to the provisions of this title.” (Code Civ. Proc., § 1286.2, 

subd. (a)(5).) 

Section 3060, subdivision (a) provides that “no franchisor shall 

terminate or refuse to continue any existing franchise unless . . . [¶] (1) 

The franchisee and the board have received written notice from the 

franchisor as follows: [¶] (A) Sixty days before the effective date 

thereof setting forth the specific grounds for termination or refusal to 

continue.” (§ 3060, subd. (a)(1)(A); see American Isuzu Motors v. New 

Motor Vehicle Bd. (1986) 186 Cal.App.3d 464, 477 [“To permit a 

franchisor to later raise additional unspecified grounds at the [good 

14 We also note that the arbitrator engaged in a detailed analysis 

and weighing of the relevant factors set forth in section 3061 before

making his good cause determination, as set forth in the final award. 
30

cause] hearing would be to deny the franchisee the notice prior to 

hearing guaranteed under [section 3060, subdivision (a)]; such denial 

infringes on the franchisee’s right to procedural due process and cannot 

be allowed”].) 

A. Background

In his final award, the arbitrator included a summary of the

correspondence between the parties concerning Subaru’s decision not to 

extend the Satellite Service Agreement for an additional five years: 

“Following the September 13, 2013 extension, [Putnam] attempted to 

engage [Subaru] with regard to relocating the downtown San Francisco 

satellite service facility. However, as evidenced by [Putnam’s] letter of 

September 7, 2017, [Putnam] conditioned its proposed relocation on 

obtaining a ‘standard dealer agreement’ for the new location.

[Citation.] [Subaru] rejected [Putnam’s] proposal by letter, dated 

November 6, 2017: ‘Per our discussions regarding your recent 

proposal(s) for relocation of the Downtown Service Point, [Subaru] will 

not approve any move of the current facility, nor will [Subaru]

participate financially in the purchase or remodel of a new facility. Our

intent remains to serve-out the remainder of the service agreement 

between Putnam Automotive and [Subaru], and we will not renew our 

agreement at that time.’ [Citation.] Thereafter, on September 7, 2018, 

[Subaru] sent [Putnam] a letter confirming that ‘[Subaru] will not 

renew the Service Agreement when it expires on or about March 24, 

2019. In light of the existing circumstances in the applicable market 

area, and giving due consideration to all such circumstances, [Subaru]

has determined that not renewing the Service Agreement will better 
31

serve the brand, the retailer network and Subaru customers over the 

longer term.’ [Citation.]” 

Near the conclusion of the second arbitration hearing, the 

following exchange, referred to by the trial court in its order confirming 

the final arbitration award,

15 took place between the arbitrator and 

counsel for Putnam regarding Putnam’s notice of Subaru’s reasons for 

termination of the Satellite Service Agreement. The arbitrator first 

asked if counsel had had “a full and fair opportunity to present 

everything you wanted to support your case,” to which Putnam’s 

counsel responded, “The only written statement of why this dealership 

has ever been terminated is the expiration of the term. So we have had 

an adequate opportunity to respond to all of the evidence that was 

testified to here today.” After counsel affirmed that “we do have actual 

knowledge of what their arguments are for termination now at the 

hearing,” the arbitrator asked, “do you need something else—some 

other procedures—some other witnesses, some other time to respond to 

the reasons that you have heard?” Counsel responded, “I don’t believe 

so.”

In his final award, the arbitrator further addressed the notice 

issue, first stating that although the reasons Subaru gave for 

nonrenewal of the Satellite Service Agreement “are rather broad, 

considerable leeway should be afforded here because of the unusual 

posture of this case and the extensive back-and-forth between [Subaru] 

15 The trial court stated in its order that “Putnam also belatedly 

claims it lacked notice of Subaru’s reasons for the nonrenewal [of the 

Satellite Service Agreement]. But Putnam conceded at the arbitration 

that it had ‘actual notice’ of the reasons and ‘a full and fair opportunity 

to present everything [it] wanted to support [its] case.’ [Citation.]” 
32

and [Putnam] regarding the adequacy of the San Francisco Downtown 

service facility to accommodate customers in the market area. 

Accordingly, I have considered [Subaru’s] market/brand-based 

customer service reasons for non-renewal of the Dealer Satellite Service 

Agreement. Pursuant to my findings above, I have not considered the 

alleged breaches of the Dealer Satellite Service Agreement that were 

not specified in [Subaru’s] notice of non-renewal as support for 

[Subaru’s] decision not to renew.”16

B. Legal Analysis

Putnam now asserts that although it “gained actual knowledge of 

[Subaru’s] grounds for proposed termination during the hearing before” 

the arbitrator, “the delay in receiving notice of [Subaru’s] reasons for 

proposed termination limited Putnam’s ability to prepare for the 

hearing.” Putnam states that this is one of those “ ‘limited and 

exceptional circumstances justifying judicial review of an arbitrator’s 

decision’ ” to protect a party’s statutory rights. (Board of Education v. 

Round Valley Teachers Assn. (1996) 13 Cal.4th 269, 275; see also Code 

Civ. Proc., § 1286.2, subd. (a)(5).) 

Even assuming Putnam may now challenge the arbitrator’s 

factual finding that Putnam had received actual notice of Subaru’s 

ground for termination of the Satellite Service Agreement, the 

reporter’s transcript of the arbitration hearing belies Putnam’s claim 

that it was unable to prepare for the hearing, considering that counsel 

16 The arbitrator had earlier determined that it would not allow 

Subaru to present evidence regarding Putnam’s purported breach of 

contract due to its failure to provide Putnam with prior notice of those 

grounds for termination of the Satellite Service Agreement. (See 

American Isuzu Motors v. New Motor Vehicle Bd., supra, 186 

Cal.App.3d at p. 477.) 
33

responded in the negative to the arbitrator’s inquiry as to whether 

Putnam needed “something else—some other procedures—some other 

witnesses, some other time to respond to the reasons that you have 

heard.” Moreover, as the arbitrator pointed out in the final award, the 

parties had engaged in “extensive back-and-forth . . . regarding 

adequacy of the San Francisco Downtown service facility to 

accommodate customers in the market area,” which meant that

Putnam already had actual notice of the reasons for the termination. 

Considering the record as a whole, Putnam has not shown that its 

rights “were substantially prejudiced” by the arbitrator’s alleged failure 

to abide by section 3060’s notice requirements when it proceeded with 

the arbitration. (Code Civ. Proc., § 1286.2, subd. (a)(5).) 

In conclusion, for all of the reasons discussed in this opinion, the 

trial court correctly granted Subaru’s petition to compel arbitration and 

its subsequent petition to confirm the arbitrator’s final award.

DISPOSITION

The judgment is affirmed. Costs on appeal are awarded to 

Subaru. 
34

_________________________

Kline, P.J.

We concur:

_________________________

Stewart, J.

_________________________

Miller, J.

Subaru of America, Inc. v. Putnam Automotive, Inc. (A159686)
35

Trial Court: San Francisco County Superior Court

Trial Judge: Hon. Richard B. Ulmer

Attorneys for Appellant: Law Offices of Gavin M. Hughes

Gavin M. Hughes

Robert A. Mayville, Jr.

Attorneys for Respondent: Nelson Mullins Riley & Scarborough

Lisa M. Gibson

Crispin L. Collins