Court Opinion

ID: 9390026
Source: CourtListenerOpinion
Date Created: 2023-04-26 18:03:04.734498+00
Date Added: 2024-06-11T17:18:31.102575
License: Public Domain

Filed 4/26/23 Lanier v. Ford Motor Co. CA2/6

   NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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has not been certified for publication or ordered published for purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

                         SECOND APPELLATE DISTRICT

                                         DIVISION SIX

 BRENDA LANIER,                                                2d Civil No. B315114
                                                           (Super. Ct. No. 21CVP-0042)
      Plaintiff and Respondent,                              (San Luis Obispo County)

 v.

 FORD MOTOR COMPANY,
 et al.,

      Defendants and Appellants.

       Brenda Lanier brought this action under the Song-Beverly
Consumer Warranty Act (Civ. Code, § 1790 et seq.), commonly
known as the “lemon law,” after repeated attempts to fix her Ford
vehicle failed. She named Ford Motor Co. (FMC) as a defendant
along with Paso Robles Ford, an authorized service center whose
technicians attempted the repairs. Lanier did not name the
selling dealer as a co-defendant.
       FMC and Paso Robles Ford moved to compel arbitration,
citing a provision contained in the sale contract signed by Lanier
and the selling dealer. The trial court denied the motion. It
rejected both theories proffered by defendants: first, that Lanier
was barred by the doctrine of equitable estoppel from arguing
that non-signatories could not enforce the arbitration provision;
and second, that defendants could enforce the provision as third-
party beneficiaries of the sale contract. We affirm.
        FACTUAL AND PROCEDURAL BACKGROUND1
       Lanier bought a new 2017 Ford Fiesta from Jim Vreeland
Ford in Buellton. She financed her purchase through the
dealership and signed a “Retail Installment Sale Contract” (sale
contract) identifying her as the “Buyer” and Jim Vreeland Ford
as the “Seller-Creditor.” Lanier received a 5-year / 60,000 mile
powertrain warranty from the manufacturer, FMC, covering the
engine and transmission. She did not buy an optional service
contract from the dealer.
       The Fiesta developed problems with its automatic
transmission during the warranty period. Lanier took the vehicle
to the factory-authorized service center at Paso Robles Ford (a
closer dealership) for repairs. She filed this action when
attempts to address the problems failed. Her complaint included
five statutory lemon law claims and one fraud claim against
FMC. She also brought a single claim for negligent repair
against Paso Robles Ford. Lanier did not name the selling dealer
as a defendant.
       FMC moved to compel arbitration pursuant to a provision
in the sale contract requiring Lanier and Jim Vreeland Ford to
resolve “any claim or dispute . . . by neutral, binding arbitration
and not by a court action.” The trial court denied the motion.
FMC and Paso Robles Ford appealed. (See Code Civ. Proc.,
§ 1294 [“An aggrieved party may appeal from: [¶] (a) An order
dismissing or denying a petition to compel arbitration”].)

      1   We source all background facts from Lanier’s complaint.

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                              DISCUSSION
                           Standard of Review
       The trial court decided the motion to compel based on the
undisputed terms of the sale contract. Whether Lanier must
arbitrate her claims is therefore a question of law reviewed de
novo. (See Mendez v. Mid-Wilshire Health Care Center (2013)
220 Cal.App.4th 534, 541 [“‘Ordinarily, we review a denial of a
petition to compel arbitration for abuse of discretion. [Citation.]
However, where the trial court’s denial of a petition to arbitrate
presents a pure question of law, we review the order de novo.’”].)
           Lanier Agreed to Arbitrate Her Claims Against
           the Selling Dealer But Not Her Claims Against
                     the Manufacturer and Servicer
       “Arbitration is . . . a matter of contract.” (Avery v.
Integrated Healthcare Holdings, Inc. (2013) 218 Cal.App.4th 50,
59.) The party seeking to compel arbitration must prove by a
preponderance of the evidence that an agreement to arbitrate
exists. (Pinnacle Museum Tower Assn. v. Pinnacle Market
Development (US), LLC (2012) 55 Cal.4th 223, 236; Mitri v. Arnel
Management Co. (2007) 157 Cal.App.4th 1164, 1169.) “‘Although
“[t]he law favors contracts for arbitration of disputes between
parties” [citation], “‘there is no policy compelling persons to
accept arbitration of controversies which they have not agreed to
arbitrate . . . .’” [Citations.]’” (Badie v. Bank of America (1998)
67 Cal.App.4th 779, 788, quoting Victoria v. Superior Court
(1985) 40 Cal.3d 734, 744.) A nonsignatory bears the burden of
establishing it should be treated as a party to the arbitration
agreement. (Jones v. Jacobson (2011) 195 Cal.App.4th 1, 15.)
       The sale contract here refers to arbitration on the second
page, where it states: “Agreement to Arbitrate: By signing
below, you agree that, pursuant to the Arbitration Provision on
the reverse side of this contract, you or we may elect to resolve

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any dispute by neutral, binding arbitration and not by a court
action. See the Arbitration Provision for additional information
concerning the agreement to arbitration.”
       The arbitration provision itself then states: “EITHER YOU
OR WE MAY CHOOSE TO HAVE ANY DISPUTE BETWEEN
US DECIDED BY ARBITRATION AND NOT IN COURT OR BY
JURY TRIAL. [¶] . . . [¶] 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
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.”
       Appellants contend Lanier must arbitrate her case because
it “arises out of or relates to” the purchase of her Fiesta and the
vehicle’s “condition,” i.e., its alleged transmission defects and
Paso Robles Ford’s attempts to repair them. While appellants
are not parties to the sale contract, they claim standing to enforce
the arbitration provision by virtue of the language above stating
the provision applies to “any . . . relationship with third parties
who do not sign this contract.” We interpret the sale contract
differently.
       The arbitration provision is limited to “[a]ny claim or
dispute . . . between you and us or our employees, agents,
successors, or assigns . . . .” (Italics added.) The sale contract
defines “you” as the buyer (Lanier) and “us” as the seller-creditor
(Jim Vreeland Ford). Jim Vreeland Ford is not a party to this
dispute and appellants are not the dealer’s “employees, agents,

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successors, or assigns.” It follows Lanier did not agree to
arbitrate any claim or dispute with appellants.
       We now turn to whether appellants may compel arbitration
in the absence of an agreement.
      Equitable Estoppel Does Not Compel Lanier to Arbitrate
                    Her Claims Against Appellants
       Appellants contend Lanier is equitably estopped from
objecting to their standing to enforce the sale contract’s
arbitration provision. (See Goldman v. KPMG, LLP (2009) 173
Cal.App.4th 209, 219, italics omitted [nonsignatory may compel
arbitration “when the claims against the nonsignatory are
founded in and inextricably bound up with the obligations
imposed by the agreement containing the arbitration clause”].)
The purpose of doctrine is “to prevent a party from using the
terms or obligations of an agreement as the basis for his claims
against a nonsignatory, while at the same time refusing to
arbitrate with the nonsignatory under another clause of that
same agreement.” (Id., at p. 221.) We examine the facts of
Lanier’s complaint to determine whether the doctrine applies
here. (Id., at pp. 229-230.)
       The first five of Lanier’s seven causes of action target
FMC’s alleged violations of state lemon law. FMC’s statutory
liabilities to Lanier as a purchaser of a Ford vehicle exist
independently of the sale contract. The dealer’s role as a
commercial conduit neither created nor limited Lanier’s statutory
remedies against the manufacturer. (See Ngo v. BMW of N. Am.,
LLC (9th Cir. 2022) 23 F.4th 942, 949, quoting Greenman v. Yuba
Power Products, Inc. (1963) 59 Cal.2d 57, 60-61 [manufacturer’s
express and implied warranties “arise ‘independently of a
contract of sale’”].) The sale contract states as much on page 4:
“WARRANTIES SELLER DISCLAIMS [¶] If you do not get a
written warranty, and the Seller does not enter into a service

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contract within 90 days from the date of this contract, the Seller
makes no warranties, express or implied, on the vehicle, and
there will not no implied warranties of merchantability or of
fitness for a particular purpose. [¶] This provision does not affect
any warranties covering the vehicle that the vehicle manufacturer
may provide.” (Italics added.) Lanier did not name Jim Vreeland
Ford as a defendant and does not allege wrongdoing on its part as
the selling dealer.
       Lanier’s sixth cause of action for fraud by omission alleges
FMC concealed known transmission defects from prospective
buyers of the Fiesta. She does not allege Jim Vreeland Ford
misrepresented any fact to Lanier in the sale contract or
otherwise participated in the fraud. Like the lemon law causes of
action, her fraud claim focuses on FMC’s obligations to Lanier as
the end user of a product it manufactured.
       Lanier’s seventh and final cause of action for negligent
repair alleges Paso Robles Ford failed “to properly store, prepare
and repair” her Fiesta. This occurred after Lanier bought the
vehicle. The complaint states Paso Robles Ford performed these
services on behalf of FMC and not the selling dealer. In addition,
the sale contract indicates Lanier declined to purchase an
optional dealer service contract at the time of purchase. Jim
Vreeland Ford’s role in Lanier’s case is non-existent.
       The trial court correctly distinguished Felisilda v. FCA US
LLC (2020) 53 Cal.App.5th 486. Plaintiffs in Felisilda signed a
form sale contract nearly identical to Lanier’s. They brought a
single Song-Beverly claim against the dealer and manufacturer
after their car experienced mechanical problems. The trial court
compelled plaintiffs to arbitrate against both defendants even
though the manufacturer did not sign the sale contract. The
reviewing court affirmed, citing language in the contract
requiring plaintiffs to arbitrate even those claims against “third

                                 6
parties who do not sign this contract.” (Id. at p. 490, italics
omitted.) Felisilda is not controlling here. Lanier did not name
the dealer-signatory as a defendant or identify the sale contract
as the source of the warranties or duties at issue. We need not
reach the question of whether her claims against FMC and Paso
Robles Ford fall within the scope of that agreement.
       Appellants May Not Enforce the Arbitration Provision
                     As Third Party Beneficiaries
       Appellants contend they may enforce the arbitration
provision as third-party beneficiaries of the sale contract. (See
Civil Code, § 1559 [“A contract, made expressly for the benefit of
a third person, may be enforced by him at any time before the
parties thereto rescind it”].) We examine “the express provisions
of the contract at issue, as well as all of the relevant
circumstances under which the contract was agreed to, in order
to determine not only (1) whether the third party would in fact
benefit from the contract, but also (2) whether a motivating
purpose of the contracting parties was to provide a benefit to the
third party, and (3) whether permitting a third party to [enforce
the contract] against a contracting party is consistent with the
objectives of the contract and the reasonable expectations of the
contracting parties.” (Goonewardene v. ADP, LLC (2019) 6
Cal.5th 817, 830.)
       The sale contract contains no language evidencing Lanier
and the dealer intended to benefit appellants. The arbitration
provision describes exactly who may invoke its terms. The initial
reference to dispute resolution states: “you [Lanier] or we [Jim
Vreeland Ford, etc.] may elect to resolve any dispute by neutral,
binding arbitration and not by a court action.” The arbitration
provision begins with nearly identical language (“EITHER YOU
OR WE MAY CHOOSE . . . .”) and reiterates that claims and
disputes “shall, at your or our election, be resolved by neutral,

                                7
binding arbitration and not by a court action.” (Italics added.)
The reference to “‘third parties who do not sign this contract’”
does not give appellants standing to compel arbitration. Read in
context, this language ensures the buyer or seller cannot
circumvent the provision by joining a non-signatory as a party to
the claim or dispute. (See In re Ford Motor Warranty Cases (Apr.
4, 2023, B312261) ___ Cal.App.5th ___ [2023 Cal.App. Lexis 255,
*22], citing Ngo v. BMW of N. Am., LLC, supra, 23 F.4th at p. 948
[reference to third party non-signatories “concerns what may be
arbitrated, not who may arbitrate”].)
                          CONCLUSION
       The order denying appellants’ motion to compel arbitration
is affirmed. Respondent shall recover her costs on appeal.
       NOT TO BE PUBLISHED

                                    GILBERT, P.J.

We concur:

     YEGAN, J.                      LUI, A.P.J.*

     * Administrative Presiding Justice of the Court of Appeal,
Second Appellate District, Division Two, assigned by the Chief
Justice pursuant to article VI, section 6 of the California
constitution.

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                    Linda D. Hurst, Judge
           Superior Court County of San Luis Obispo
               ______________________________

      Shook Hardy & Bacon, Amir Nassihi, Rodrigo E. Salas and
Andrew Chang, for Defendants and Appellants.
      Gupta Wessler, Jennifer Bennett and Linnet Davis-
Stermitz; Strategic Legal Practices, Tionna Grace Dolin, for
Plaintiff and Respondent.

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