Court Opinion

ID: 9838603
Source: CourtListenerOpinion
Date Created: 2023-09-06 23:03:10.776195+00
Date Added: 2024-06-11T08:16:59.511260
License: Public Domain

Filed 9/6/23
                        CERTIFIED FOR PUBLICATION

        IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

                         FIRST APPELLATE DISTRICT

                                   DIVISION FOUR

 JAQUELYN YEH et al.,
         Petitioners,
                                             A166537
 v.
 THE SUPERIOR COURT OF                       (Contra Costa County
 CONTRA COSTA COUNTY,                        Super. Ct. No. MSC22-
                                             00170)
         Respondent;
 MERCEDES-BENZ USA, LLC,
         Real Party in Interest.

       Petitioners Jaquelyn Yeh and David Chin seek a writ of mandate
compelling the superior court to reverse its order compelling to arbitration
their action under the Song-Beverly Consumer Warranty Act (the Act)
against real party in interest Mercedes-Benz USA, LLC (MBUSA). They
contend that the trial court improperly compelled arbitration because
MBUSA is not a party to their agreements with the vehicle dealer and their
claims against MBUSA are not intertwined with those agreements. We agree
and shall direct the superior court to deny the motion to compel arbitration.
                                    Background
       Petitioners, husband and wife, allege that in October 2017, they leased
a Mercedes-Benz B250E from Mercedes-Benz of Walnut Creek (the dealer),
and in May 2020 at the end of the lease, signed a Retail Installment Sales
Contract (RISC) with the dealer to finance the purchase of the vehicle. Both

                                         1
the lease and the RISC contained arbitration agreements.1
      Petitioners allege that MBUSA, as the manufacturer or distributor of
the vehicle, provided them with two express warranties and a separate
implied warranty of merchantability, which warranties we set out below.
Petitioners allege the vehicle had undisclosed defects covered by the
warranties, including “defective windshield wipers, steering column,
electrical issues, defective software, vehicle shuts off.” They took the vehicle
to the dealer, which was authorized by MBUSA for repairs, but despite
multiple attempts, the vehicle could not be fixed.
      Petitioners filed suit naming only MBUSA and Does as defendants and
alleging claims solely under the Act.2 Specifically, they assert causes of action
for violation of the Act based on breach of an express warranty, “Failure To
Commence Repairs Within A Reasonable Time And To Complete The[m]
Within 30 Days in violation of Civil Code section 1793.2(b)” based upon the
warranties, and “Breach of the Implied Warranty of Merchantability” based
on Civil Code section 1794. They seek statutory repurchase, recission of the
purchase agreement, damages, including incidental and consequential
damages, pre-judgment interest, and attorneys’ fees and costs.
      MBUSA moved to compel arbitration arguing that (1) it had standing
to compel arbitration as a third-party beneficiary of both the lease and the
RISC, and (2) petitioners should be compelled to arbitration under the

      1 The parties do not distinguish between the two agreements, and, for

purposes of this opinion, we also make no distinction.
      2 The Act, codified at Civil Code sections 1790 et seq., also known as the

“lemon law,” is a consumer protection statute created to encourage consumers
to vindicate their rights when they have defective vehicles or other products.
(Murillo v. Fleetwood Enterprises, Inc. (1998) 17 Cal.4th 985, 992.)

                                        2
doctrine of equitable estoppel.3 MBUSA attached the agreements containing
the arbitration provisions to its motion.
      The arbitration provision in the lease agreement provides:

                      Important Arbitration Disclosures

      The following arbitration provisions significantly affect your rights in
      any dispute with us. Please read the following disclosures and the
      arbitration provision that follows carefully before you sign the contract.

      1. If either you or we choose, any dispute between you and us will be
      decided by arbitration and not in court. . . . [¶] . . . [¶] . . .

             Any claim or dispute, whether in contract, tort or otherwise
      (including any dispute over the interpretation, scope, or validity of this
      lease, arbitration section or the arbitrability of any issue), between you
      and us or any of our employees, agents, successors or assigns, which
      arises out of or relates to a credit application, this lease, or any
      resulting transaction or relationship arising out of this lease shall, at
      the election of either you or us, or our successors or assigns, be resolved
      by a neutral, binding arbitration and not by a court action. . . .

      The arbitration agreement in the RISC provides: “EITHER YOU OR
WE MAY CHOOSE TO HAVE ANY DISPUTE BETWEEN US DECIDED BY
ARBITRATION AND NOT IN COURT OR BY JURY TRIAL.” The agreement
further provides:
      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. . . .

      3 David Chin is not a signatory to the agreements, but he does not

claim that he is not bound by the agreements.

                                       3
      Petitioners opposed the motion to compel arbitration. The trial court
granted the motion. While the court rejected MBUSA’s argument that it was
a third-party beneficiary of the agreements, it agreed with MBUSA’s
equitable estoppel argument, relying on what was then the only California
appellate opinion on the issue, Felisilda v. FCA US LLC (2020) 53
Cal.App.5th 486 (Felisilda).
      Petitioners filed a petition for writ of mandate with our court
challenging the order compelling arbitration. We solicited preliminary
briefing and then issued an order to show cause.
                                 Discussion
      Petitioners challenge the trial court’s ruling that they are equitably
estopped from refusing to arbitrate their claims against MBUSA. MBUSA
asserts the equitable estoppel doctrine applies because the warranties upon
which petitioners sue are an integral part of petitioners’ contracts with the
dealer that contain the agreements to arbitrate.4
      We review the trial court’s decision to compel arbitration de novo
because it presents a question of law based upon undisputed facts. (Pinnacle
Museum Tower Assn. v. Pinnacle Market Development (US), LLC (2012) 55
Cal.4th 223, 236 (Pinnacle Museum); Ford Motor Warranty Cases (2023) 89
Cal.App.5th 1324, review granted July 19, 2023, No. S279969 (Ford
Warranty).) As the party seeking to compel arbitration, MBUSA has the
burden to prove it “is a party to the arbitration agreement covering the

      4 While MBUSA states that petitioners allege an agency relationship in

paragraph 12 of the complaint, and references the third-party beneficiary
exception, it does not discuss, much less explain with analysis and citation to
authority, why the agency or third-party beneficiary exceptions would apply
in this case. Accordingly, we deem any argument regarding agency and third-
party beneficiaries waived.

                                       4
dispute.” (Jones v. Jacobson (2011) 195 Cal.App.4th 1, 15, citing Code Civ.
Proc., § 1281.2.)
      Below, the parties disagreed about which law governed the arbitration
agreements, with petitioners arguing that California law applies and
MBUSA arguing that the Federal Arbitration Act (FAA) applies. 5 The
parties have not addressed the issue here, and we have no need to resolve it
because even if the FAA applies, “[s]tate law determines whether a non-
signatory to an agreement containing an arbitration clause may compel
arbitration.” (Ngo v. BMW of North America, LLC (9th Cir. 2022) 23 F.4th
942, 946 (Ngo); Ford Warranty, supra, 89 Cal.App.5th at p. 1332 [“Under
certain circumstances, a nonsignatory to an arbitration agreement may seek
to enforce it against a signatory. Whether such enforcement is permissible is
a question of state law.”].)
      Under the doctrine of equitable estoppel, “applied in ‘both federal and
California decisional authority, a nonsignatory defendant may invoke an
arbitration clause to compel a signatory plaintiff to arbitrate its claims when
the causes of action against the nonsignatory are “intimately founded in and
intertwined” with the underlying contract obligations.’ ” (JSM Tuscany v.
Superior Court (2011) 193 Cal.App.4th 1222, 1237 (JSM Tuscany).) “ ‘By
relying on contract terms in a claim against a nonsignatory defendant, even if
not exclusively, a plaintiff may be equitably estopped from repudiating the
arbitration clause contained in that agreement.’ [Citations.] ‘The rule applies
to prevent parties from trifling with their contractual obligations.’ ” (Ibid.,
footnote omitted.)
      Until recently, there were no California appellate cases deciding
whether a nonsignatory vehicle manufacturer could compel arbitration based

      5 The arbitration agreement provides that the FAA applies.

                                        5
upon the equitable estoppel theory. The first California appellate decision to
address the issue was Felisilda, supra, 53 Cal.App.5th 486, where the Third
Appellate District held the vehicle owner was equitably estopped from
refusing to arbitrate with the nonsignatory manufacturer. (Id. at p. 497.) The
manufacturer relied on an arbitration provision in a sales contract between
the owner and dealer that is identical to the arbitration provision in the
agreements here. The Felisilda court explained: “Based on language in the
sales contract and the nature of the Felisildas’ claim against FCA [the
defendant], we conclude the trial court correctly ordered that the entire
matter be submitted to arbitration. In signing the sales contract, the
Felisildas agreed that ‘[a]ny claim or dispute, whether in contract, tort,
statute or otherwise . . . between you and us . . . which arises out of or relates
to . . . [the] condition of this vehicle . . . shall . . . be resolved by neutral,
binding arbitration and not by a court action.’ Here, the Felisildas’ claim
against FCA relates directly to the condition of the vehicle.” (Id. at p. 496.)
Based upon the allegations of the complaint that “ ‘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 court
concluded “the sales contract was the source of the warranties at the heart of
this case.” (Ibid.)
      Earlier this year, after we issued an order to show cause in this case,
the Division Eight of the Second Appellate District decided Ford Warranty,
supra, 89 Cal.App.5th 1324, where the court reached the opposite conclusion
from Felisilda and affirmed the trial court’s denial of the petition to compel
arbitration in a coordinated action with multiple plaintiffs whose arbitration
agreements with defendant Ford Motor Company (FMC) were similar. (Id. at

                                            6
pp. 1329, 1335.) The court rejected defendants’ arguments that equitable
estoppel, third party beneficiary, or agency applied. (Id. at pp. 1329, 1332–
1343.) Relevant here, the court held: “Equitable estoppel does not apply
because, contrary to FMC’s arguments, plaintiffs’ claims against it in no way
rely on the agreements.” (Id. at p. 1329.)
      The Ford Warranty court declined to follow Felisilda, disagreeing with
Felisilda’s interpretation that the sales contract was the source of the
warranties and broadly called for arbitration of claims against third-party
nonsignatories. (Ford Warranty, supra, 89 Cal.App.5th at p. 1334.) It rejected
the manufacturer’s argument that “plaintiffs’ claims are ‘intimately founded
in and intertwined with the underlying obligations of the sale[ ] contracts’
because the sale contracts between plaintiffs and the dealers gave plaintiffs
certain contractual rights they now sue on—warranty claims against the
manufacturer.” (Id. at pp. 1333–1334.) Instead, the court held that the
buyer’s claims were not founded in the sales contracts because the sales
contracts included no warranties, and disagreed with the manufacturer that
California law treats “manufacturer warranties imposed outside the four
corners of a retail sales contract as part of the sales contract.” (Ford
Warranty, supra, 89 Cal.App.5th at pp. 1335–1336 citing Greenman v. Yuba
Power Products, Inc. (1963) 59 Cal.2d 57; 60 (Greenman) & Corporation of
Presiding Bishop of Church of Jesus Christ of Latter Day Saints v.
Cavanaugh (1963) 217 Cal.App.2d 492, 514 (Cavanaugh).)
      After this case was fully briefed, Division Seven of the Second
Appellate District decided Montemayor v. Ford Motor Co. (2023) 92
Cal.App.5th 959 (Montemayor). Like their colleagues in Ford Warranty, the
court in Montemayor declined to follow Felisilda and affirmed the trial court’s
order denying arbitration. (Id. at pp. 968, 975.) The court explained that “the

                                        7
Montemayors allege as part of each cause of action against Ford [the
manufacturer] at issue on appeal that Ford’s obligations arose out of its
express written warranty, not the sales contract.” (Id. at p. 970.) “[T]he fact
the Montemayors purchased the defective vehicle from [the dealer] pursuant
to the sales contract, and as a result of their purchase they received separate
express warranties from Ford, does not mean their causes of action against
Ford based on those express warranties are founded in the sales contract.”
(Id. at p. 971.) Similarly, the Third Appellate District, the same district that
decided Felisilda, joined Ford Warranty and Montemayor in disagreeing with
Felisilda that the sales contract was the source of the warranties, and the
court concluded that equitable estoppel did not apply to compel arbitration.
(Kielar v. Superior Court (Aug. 16, 2023, C096773) __ Cal.App.5th___
(Kielar).)
      Petitioners argue that we should follow Ford Warranty, Montemayor,
and Kielar, while MBUSA contends that we should follow Felisilda.6 As we
explain, we agree with the conclusions reached by Ford Warranty,
Montemayor, and Kielar and hold that MBUSA cannot compel arbitration
with petitioners.
      We analyze the equitable estoppel issue as it applies to this case based
upon the facts of the operative complaint. (Ford Warranty, supra, 89
Cal.App.5th at p. 1333; Felisilda, supra, 53 Cal.App.5th at pp. 495–496.) We
must decide whether the causes of action are “ ‘intimately founded in and

      6 Petitioners also urge us to follow the Ninth Circuit case of Ngo, supra,

23 F.4th 942. We find it unnecessary to analyze Ngo, which has only
persuasive value, because Ford Warranty, Montemayor, and Kielar cite the
same California cases to support their conclusions that equitable estoppel
does not apply, and the federal cases Ngo cites are not relevant to this
analysis. (Ford Warranty, supra, 89 Cal.App.5th at pp. 1335–1336, Ngo,
supra, 23 F.4th 942, 949–950.)

                                        8
intertwined’ with the underlying contract obligations.” (JSM Tuscany, supra,
193 Cal.App.4th at p. 1237.)
      Goldman v. KPMG, LLP (2009) 173 Cal.App.4th 209 is instructive in
how we determine if the allegations in the complaint are intimately founded
in and intertwined with the underlying contract obligations. In Goldman,
plaintiffs sued accountants and lawyers—with whom they did not have
arbitration agreements—arising out of a fraudulent tax shelter scheme based
on claims that that these defendants aided and abetted the fraudulent
scheme. (Id. at pp. 213, 216.) The operating agreements of the limited
liability companies (set up by the investment advisors to facilitate the
investments) contained an arbitration clause. (Id. at p. 217.) The
nonsignatory defendants moved to compel arbitration arguing that the
plaintiffs’ claims presupposed the existence of the operating agreements as
the vehicle in which the fraudulent tax scheme was carried out and,
therefore, plaintiffs were equitably estopped from refusing to arbitrate
pursuant to the arbitration clause in the operating agreements. (Id. at p.
218.) The court disagreed and affirmed the denial of the motion compelling
arbitration. The court noted that the complaints did not “rely on or use any
terms or obligations of the operating agreements as a foundation for their
claims.” (Ibid.) The court explained that the inequity the doctrine seeks to
address arises when a plaintiff relies on the substantive terms of the
agreement to assert a claim against a nonsignatory defendant, and at the
same time seeks to disavow the arbitration clauses of those very agreements.
(Id. at p. 221.) The operating agreements “were merely incidental to the
scheme” and “none of the terms in those agreements are alleged to have been
violated or otherwise to form any part of the [plaintiffs’] complaints,” and
therefore no inequity would result in denying arbitration. (Id. at p. 233.) The

                                       9
court concluded that despite broader language that could be “cherry-pick[ed],”
the “underlying principle, stated in all the cases” was “actual reliance on the
terms of the agreement to impose liability on the nonsignatory.” (Id. at p.
231.)
        In this case, petitioners allege that MBUSA, as the manufacturer or
distributor of the vehicle, provided them with two express warranties and a
separate implied warranty of merchantability. Specifically, the complaint
describes these warranties as follows: “Defendant MBUSA manufactured or
distributed the Vehicle. MBUSA provided a 4 year/50,000 mi[le] basic
warranty and, a 4 year/50,000 mile powertrain warranty.” “MBUSA also
provided plaintiffs with a separate implied warranty of
merchantability. . . . [¶] . . . [¶] . . . MBUSA’s express and implied warranties
accompanied the sale of the Vehicle to Plaintiffs. Manufacturer expressly
warranted that the Vehicle was a fully inspected, certified without defects in
compliance with all certification standards.” “In connection with the
purchase, Plaintiffs received an express written warranty in which
Defendants undertook to preserve or maintain the utility or performance of
the Vehicle or to provide compensation if there is a failure in utility or
performance for a specified period of time. The warranty provided, in relevant
part, that in the event a defect developed with the Vehicle during the
warranty period, Plaintiffs could deliver the Vehicle for repair services to
Defendant or Defendant’s representative and the Vehicle would be repaired.”
        Like the complaint in Goldman, petitioners’ complaint does not
reference either of the two agreements with the dealer and does not allege
that MBUSA breached obligations based on those agreements. MBUSA is not
mentioned in the agreements and does not have any obligations arising out of
the agreements. Petitioners’ claims are thus not “intimately founded and

                                       10
intertwined” with the agreements (JSM Tuscany, supra, 193 Cal.App.4th at
p. 1237), but instead arise from a statutory scheme separate and apart from
the contracts.
      MBUSA disagrees with this analysis. It argues that “Under the
California Uniform Commercial Code both express and implied warranties
are part of the contractual bargain and are considered to be supplemental
terms to a sales contract.”
      We disagree. “California law does not treat manufacturer warranties
imposed outside the four corners of a retail sale contract as part of the sale
contract.”7 (Ford Warranty, supra, 89 Cal.App.5th at pp. 1335–1336 citing
Greenman, supra, 59 Cal.2d at pp. 60–61; see also Cavanaugh, supra, 217
Cal.App.2d at p. 514 [“[T]he express warranty herein involved was not part of
a contract of sale between the manufacturer and the plaintiff.”]; Burr v.
Sherwin Williams Co. (1954) 42 Cal.2d 682, 696 [discussing exception to
general rule requiring privity when manufacturer makes representations in
labels or advertising and citing cases]; 4 Witkin, Summary of Cal. Law (11th
ed. 2023) Sales, § 100 [citing cases].)8

      7 Express independent warranties can be created, for example, when a

consumer relies on a manufacturer’s labels or advertising materials even if
there is not privity of contract. (Fundin v. Chicago Pneumatic Tool Co. (1984)
152 Cal.App.3d 951, 957.)
      8 As noted by a law review article published prior to the adoption of the

Uniform Commercial Code in California, the Uniform Commercial Code does
not attempt to resolve problems of “diagonal privity,” e.g., between consumer
and manufacturer. (Ezer, The Impact of the Uniform Commercial Code on the
California Law of Sales Warranties (1961) 8 U.C.L.A. L. Rev. 281, 324–325 &
fn. 267; see Franklin, When Worlds Collide: Liability Theories and
Disclaimers In Defective-Product Cases (1996) 18 Stan. L. Rev. 974, 1016
[“The Code has avoided most of the controversial questions of extending
warranties in the absence of privity and has left this to state law.”].)

                                           11
      In Greenman, the plaintiff sued the retailer and manufacturer of a
power drill that injured him. He failed to provide notice to the defendants
until ten-and-one-half months after his injury. (Greenman, supra, 59 Cal.2d
at p. 59.) At trial, the jury found the retailer was not liable but the
manufacturer was liable for negligence and breach of express warranties (the
warranties were based on statements in the manufacturer’s brochures). (Id.
at p. 60.) On appeal, the manufacturer argued that the plaintiff’s action was
barred because he failed to provide reasonable notice pursuant to then
existing Civil Code section 1769, a provision of the former Uniform Sales Act
providing that, absent an agreement to the contrary, a buyer who accepts
goods does not discharge the seller from liability if the buyer provides notice
within a reasonable time of the breach. (Id. at pp. 60–61.) The Supreme Court
held that the statute, which dealt with “the rights of the parties to a contract
of sale or a sale . . . does not provide that notice must be given of the breach of
a warranty that arises independently of a contract of sale between the
parties. Such warranties are not imposed by the sales act but are the product
of common-law decisions that have recognized them in a variety of
situations.” (Id. at p. 61.) The court continued: “It is true that in many of
these situations the court has invoked the sales act definitions of warranties
[citations] in defining the defendant’s liability, but it has done so, not because
the statutes so required, but because they provided appropriate standards for
the court to adopt under the circumstances presented.” (Id. at pp. 60–61.)
      The court in Cavanaugh, supra, 217 Cal.App.2d 492, answering the
question of whether notice under the Uniform Sales Act had to be provided to
a manufacturer sued for a defective product, reached the same conclusion as
Greenman that the express warranty was not part of the contract of sale
between the manufacture and plaintiff. (Id. at p. 514.) Similarly, the court in

                                        12
Gherna v. Ford Motor Co. (1966) 246 Cal.App.2d 639, also applying the
Uniform Sales Act and Greenman, held that the warranty that usually comes
through the dealer to the buyer is applicable to both the manufacturer and
dealer, and also that advertisements by the manufacturer that constitute
warranties are independent of the contract. (Id. at pp. 652–653.)
      MBUSA, like FMC in Ford Warranty, supra, 89 Cal.App.5th at pages
1335–1336, criticizes reliance on Greenman and Cavanaugh on the basis that
they were decided under the Uniform Sales Act, the predecessor to the
California Uniform Commercial Code. Contrary to MBUSA’s argument, the
enactment of the California Uniform Commercial Code did not change
existing law that manufacturer warranties can exist separate from a sales
contract. The California Uniform Commercial Code Comment to the Section
2313 states: “Although this section is limited in its scope and direct purpose
to warranties made by the seller to the buyer as part of a contract for sale,
the warranty sections of this Article are not designed in any way to disturb
those lines of case law growth which have recognized that warranties need not
be confined either to sales contracts or to the direct parties to such a contract.
They may arise in other appropriate circumstances such as in the case of
bailments for hire, whether such bailment is itself the main contract or is
merely a supplying of containers under a contract for the sale of their
contents. The provisions of Section 2-318 on third party beneficiaries
expressly recognize this case law development within one particular area.
Beyond that, the matter is left to the case law with the intention that the
policies of this Act may offer useful guidance in dealing with further cases as
they arise.” (Cal. U. Com. Code, com. 2 to § 2213, italics added.)
      In addition, the Supreme Court in Hauter v. Zogarts (1975) 14 Cal.3d
104 (Hauter) explained that the California Uniform Commercial Code

                                        13
expands rather than limits liability under the Uniform Sales Act. (Id. at p.
115, fn. 10 [“Thus the California Uniform Commercial Code expands sellers’
liability beyond the former Uniform Sales Act (former Civ. Code, §§ 1732–
1736) . . . .”]; Klein v. Asgrow Seed Co. (1966) 246 Cal.App.2d 87, 102–103
[“As we view it, however, the Commercial Code does not curtail, in any
respect we have noted, liability imposed by its predecessor (the Uniform
Sales Act) upon sellers for breaches of warranty nor extend their power to
disclaim or limit liability for such breaches.”].) Further, both Greenman and
Cavanaugh rely on sections of the Uniform Sales Act that have been adopted
by the California Uniform Commercial Code. (Greenman, supra, 59 Cal.2d at
pp. 60–62 citing Civil Code §§ 1732, 1735; Cavanaugh, supra, 217 Cal.App.2d
at pp. 504, 509, 514 citing Civil Code §§ 1732–1735, 1721–1800.)9 Thus,
MBUSA’s argument that Greenman and Cavanaugh are “not on point” is
incorrect.
      We disagree with MBUSA that Hauter, supra, 14 Cal.3d 104 supports
its position. MBUSA relies on language from Hauter that “ ‘[t]he basis of the
bargain requirement represents a significant change in the law of
warranties.’ ” (Id. at p. 115.) This language, however, pertains to the issue of
whether a buyer needs to rely on the seller’s affirmation, not whether
manufacturer warranties are incorporated into a separate contract. (Ibid.
[“Whereas plaintiffs in the past have had to prove their reliance upon specific
promises made by the seller [citation], the Uniform Commercial Code
requires no such proof.”].)

      9 The comparable section from current section 2313 to the Uniform

Sales Act are former Civil Code sections 1732, 1734, 1736. (Cal. U. Com.
Code, § Disp Table.) The comparable section from current section 2314 was
former Civil Code section 1735. (Ibid.)

                                       14
      Hauter is also distinguishable on its facts. In Hauter, the plaintiff who
was injured by a training device for unskilled golfers sued the seller and
manufacturer. (Hauter, supra, 14 Cal.3d at p. 108, fn. 1.) The container
stated: “Completely Safe Ball Will Not Hit Player,” which the Supreme Court
held was an express warranty by the manufacturer and seller. (Id. at pp. 109,
114–115.) The distinguishing feature of Hauter from the facts of this case is
that in Hauter, the seller and manufacturer provided the same warranty.
(See id. at pp. 108–109, 114, 118.) The court had no need to address the
established law that applies when a manufacturer provides an independent
warranty, the situation presented here. Hauter in no way changed the
holding of Greenman, supra, 59 Cal.2d 57 or the cases preceding it. We also
find A. A. Baxter Corp. v. Colt Industries, Inc. (1970) 10 Cal.App.3d 144, 153,
relied upon by MBUSA, distinguishable because similar to Hauter, there was
only one warranty provided collectively by the maker, lessor, and a third
defendant. (Id. at p. 148.)
      We are not persuaded by MBUSA’s assertion that the Act “makes
express warranties an integral part of the sales contract.” The purpose of the
Act is to provide greater consumer protection than previously existed (Mexia
v. Rinker Boat Co., Inc. (2009) 174 Cal.App.4th 1297, 1303–1304), and its
remedies are cumulative. (Civ. Code, § 1790.4; see also id., § 1790.3 [“The
provisions of this chapter shall not affect the rights and obligations of parties
determined by reference to the Commercial Code except that, where the
provisions of the Commercial Code conflict with the rights guaranteed to
buyers of consumer goods under the provisions of this chapter, the provisions
of this chapter shall prevail.”].) The Act defines an “express warranty” as “a
written statement arising out of a sale to the consumer of a consumer good
pursuant to which the manufacturer, distributor, or retailer undertakes to

                                       15
preserve or maintain the utility or performance of the consumer good or
provide compensation if there is a failure in utility or performance.” (Civ.
Code, § 1791.2, subd. (a)(1).) Based upon a plain reading of the language of
the statute, an express warranty arises out of a sale rather than the
underlying contracts.
      We are also unpersuaded by MBUSA’s citation to Gavaldon v.
DaimlerChrysler Corp. (2004) 32 Cal.4th 1246 for the proposition that the
Legislature, in enacting the Act, intended for an express warranty to become
part of a purchase agreement. The Supreme Court in Gavaldon considered
whether a service agreement was part of an express warranty, concluding
that the two were different: “[T]he Legislature apparently conceived of an
express warranty as being part of the purchase of a consumer product, and a
representation of the fitness of that product that has particular meaning for
consumers. In contrast, it apparently thought of the purchase of a service
contract as distinct from the purchase of the product, and not as a
representation of fitness but only an agreement to provide repair services, a
kind of insurance. Hence, one difference between express warranties and
service contracts is that the latter is generally purchased ‘for an additional
cost.’ ” (Id. at p. 1258.) Nothing in the court’s holding suggests that the
manufacturer’s express warranty is part of the sales contract.
      In this case, although the parties do not provide MBUSA’s express
warranties, it is undisputed that they are separate from the lease agreement
and RISC because the language of the express warranties, as described by
the complaint, is not part of the lease agreement or RISC. Moreover, the
dealer in the RISC expressly disclaims any warranties, which provides
further evidence that the warranties are independent: “The Seller makes no
warranties, expressed or implied on the vehicle . . . .[¶] This provision does

                                        16
not affect any warranties covering the vehicle that the vehicle manufacturer
may provide.” Accordingly, MBUSA’s warranties are not part of the sales
contract. (Ford Warranty, supra, 89 Cal.App.5th at pp. 1335–1336;
Montemayor, supra, 92 Cal.App.5th at pp. 970–971, Kielar, supra, at p. 3)
      We also reject MBUSA’s reliance on the portion of the arbitration
provision in the RISC stating it applies to any claim “between you and us . . .
which arises out of or relates to . . . [the] 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).” We agree with
Ford Warranty that this language does not show “consent by the purchaser to
arbitrate claims with third party nonsignatories. Rather, we read it as a
further delineation of the subject matter of claims the purchasers and dealers
agreed to arbitrate. They agreed to arbitrate disputes ‘between’ themselves—
‘ “you and us——arising out of or relating to ‘relationship[s],’ including
‘ “relationship[s] with third parties who [did] not sign th[e] [sale]
contract[s],” ’ resulting from the ‘ “purchase, or condition of th[e] vehicle, [or]
th[e] [sale] contract.” ’ ” (Ford Warranty, supra, 89 Cal.App.5th at pp. 1334–
1335.) Like the claims of plaintiffs in Ford Warranty, petitioners’ claims are
not founded on the agreements because, as discussed, they did not allege
violations of the lease agreement or RISC or sue on any warranties in the
agreements, but instead seek to recover based upon MBUSA’s statutory
obligations. (Id. at p. 1335.)
      MBUSA does not provide any separate analysis for the breach of
implied warranty claim. Thus, we apply the same analysis to petitioners’
claims for breach of implied warranty as applied to their express warranty
claim. Petitioners allege in their third cause of action that: “41. Pursuant to
Civil Code sections 1792 and 1791.1, the sale of the Vehicle was accompanied

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by Defendants’ implied warranty of merchantability. The duration of the
implied warranty is coextensive in duration with the duration of the express
written warranty provided by Defendant. [¶] 42. The implied warranty of
merchantability means and includes that the Vehicle will comply with each of
the following requirements: (1) The Vehicle will pass without objection in the
trade under the contract description; (2) The Vehicle is fit for the ordinary
purposes for which such goods are used; (3) The Vehicle is adequately
contained, packaged and labeled; and (4) The Vehicle will conform to the
promises or affirmations of fact made on the container or label.” Like the
express warranty claim, the complaint does not reference either of the two
agreements with the dealer and does not allege that MBUSA breached
obligations based on the agreements with the dealer, but instead the claim is
based upon an independent statutory scheme. Accordingly, petitioner’s
implied warranty claim is not “ ‘intimately founded and intertwined’ ” with
the dealer agreements such that petitioners are equitably estopped from
refusing to arbitrate with MBUSA. (JSM Tuscany, supra, 193 Cal.App.4th at
p. 1237.)
                                  Disposition
      Let a peremptory writ of mandate be issued directing the respondent
superior court to vacate its August 12, 2022 order compelling arbitration and
enter a new and different order denying the motion to compel arbitration.
Petitioners shall recover their costs in this proceeding. (Cal. Rules of Court,
rule 8.493(a).)

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                                           _________________________
                                           Fineman, J.*

WE CONCUR:

_________________________
Brown, P. J.

_________________________
Goldman, J.

      * Judge of the Superior Court of California, County of San Mateo,

assigned by the Chief Justice pursuant to article VI, section 6 of the
California Constitution.

                                      19
Yeh v. SuperiorCourt
(A166537)

Trial Court: Contra Costa County

Trial Judge: Hon. Barry Baskin

Attorneys:
Rosner, Barry & Babbitt, Christopher P. Barry, Arlyn L. Escalante; Auto
Fraud Legal Center, Michelle A. Cook for Plaintiff and Petitioner.

Nixon Peabody, Jennifer A. Kuenster, Leon V. Roubinian; Law Office of
David Tennant and David H. Tennant, Kathy L. Eldrige
for Defendants and Real Party in Interest.

Theta Law Firm, Soheyl Tahsildoost, Ali Ameripour for Real Party in
Interest.

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