PAULA ORDAZ v. HYUNDAI MOTOR AMERICA

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(Volt Info. Sciences, Inc. v. Board of Trustees of Leland Stanford Junior University (1989) 489 U.S. 468, 477.) Under the FAA, to compel arbitration, a finding must be made that an agreement exists for arbitration between the parties and that the agreement covers the dispute. (AT&T Technologies, Inc. v. Communications Workers of America (1986) 475 U.S. 643, 648-49.) The enforcement of an arbitration clause is a matter of ordinary state-law contract principles and should be enforced according to their terms. (AT&T Mobility LLC v.

Concepcion (2011) 563 U.S. 333, 339.) Thus, arbitration agreements can be declared unenforceable on contract defenses of fraud, duress, or unconscionability. (Id. at p. 1746.) Any doubt about the arbitrability of a dispute under the FAA is resolved in favor of arbitration. (Id. at p. 650.) California Arbitration Act (CAA). Under the CAA, a party to an arbitration agreement may move to compel arbitration if the other contractual party refuses to arbitrate, and the court shall order the parties to arbitrate if an agreement to arbitrate exists unless (a) the right to arbitration has been waived, (b) grounds exist to revoke the agreement, or (c) a party to the arbitration agreement is a party to a pending action with a third-party, arising from the same or series of related transactions, and a probability exists of conflicting rulings. (Code Civ.

Proc., § 1281.2.) The court must determine whether a written arbitration agreement exists, if any defense to its enforcement is raised, and whether the agreement is enforceable. (Rosenthal v. Great Western Fin. Sec. Corp. (1996) 14 Cal.4th 394, 413.) The petitioner bears the burden of proving the existence of the arbitration agreement by the preponderance of the evidence, while the respondent bears the burden of proving by a preponderance of the evidence any defense to enforcement. (Ibid.) The trial court’s role is to resolve these factual issues. (Id. at p. 414.)

California law favors the enforcement of valid arbitration agreements. (Ericksen, Arbuthnot, McCarthy, Kearney & Walsh, Inc. v. 100 Oak Street (1983) 35 Cal.3d 312, 320 (Erickson); In re Tobacco I (2004) 124 Cal.App.4th 1095, 1103.) Any doubts about arbitration will be resolved against the party asserting a defense to arbitration, whether the issue is the construction of contract language, waiver, delay, or any like defense to arbitrability. (Erickson, supra, 35 Cal.3d at p. 320; In re Tobacco I, supra, 124 Cal.App.4th at p. 1103.)

The party may also seek a stay of pending litigation either by itself or in conjunction with a petition to compel arbitration. (Code Civ. Proc., § 1281.4; see also 9 U.S.C. § 3.)

Defendant’s Request for Judicial Notice Hyundai requests judicial notice of the complaint and the Handbook. (Feeley Decl., Exh. 1; Goel Decl., Exh. E.) Court denies both requests.

Analysis 1. The FAA Applies. The Handbook provides that the transaction involves interstate commerce, and is governed by the FAA. (Goel Decl. Exh. E at p. 14.) Under these provisions, the FAA applies. (Cronus Investments, Inc. v. Concierge Services (2005) 35 Cal.4th 376, 394; Davis v. Shiekh Shoes, LLC (2022) 84 Cal.App.5th 956, 964.)

2. Arbitration Provision. There is no enforceable arbitration provision in the Handbook. As to the Bluelink CSA, Hyundai has not shown that Plaintiff assented or that the CSA’s arbitration provision encompasses Plaintiff’s Song-Beverly warranty claims at issue.

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Arbitration is ordered if an agreement to arbitrate the controversy exists; an agreement only needs to be found to exist, not an evidentiary determination of its validity. (Condee v. Longwood Management Corp. (2001) 88 Cal.App.4th 215, 218-19.) Arbitration agreements are governed by contract principles, including whether a party cannot be bound to or invoke arbitration. (DMS Services, LLC v. Superior Court (Zurich Services Corp.) (2012) 205 Cal.App.4th 1346, 1352.) Furthermore, to form a contract, there must be mutual consent. (Esparza v.

Sand & Sea, Inc. (2016) 2 Cal.App.5th 781, 787-88.) Arbitration is a matter of consent. (Granite Rock Co. v. International Broth. of Teamsters (2010) 561 U.S. 287, 299.) The consent to a contract must be communicated by each party to the other, and mutual consent is determined under an objective standard of outward manifestations or expressions of the parties. (Serafin v. Balco Properties Ltd., LLC (2015) 235 Cal.App.4th 165, 173.) It lies when all parties agree “on the same thing in the same sense.” (Bowers v.

Raymond J. Lucia Companies, Inc. (2012) 206 Cal.App.4th 724, 733.) Consent to a binding arbitration agreement may be expressed (e.g., the execution of an arbitration agreement) or implied in fact (e.g., the employee continues employment after notice). (Pinnacle Museum Tower Assn. v. Pinnacle Market Development (US), LLC (2012) 55 Cal.4th 223, 236; Davis v. Nordstrom, Inc. (9th Cir. 2014) 755 F.3d 1089, 1093.) However, silence or inaction generally cannot constitute consent. (Golden Eagle Ins. Co. v.

Foremost Ins. Co. (1993) 20 Cal.App.4th 1372, 1385.) Yet silence can constitute an implied acceptance when the offeree has a duty to respond and fails to or when the offeree retains the benefit. (Id. at p. 1386; Norcia v. Samsung Telecommunications America, LLC (9th Cir. 2017) 845 F.3d 1279, 1284-85 (Norcia).) However, the offeree must be aware that an offer was made: Accordingly, an offeree, knowing that an offer has been made to him but not knowing all of its terms, may be held to have accepted, by his conduct, whatever terms the offer contains. [Citations.]

However, when the offeree does not know that a proposal has been made to him this objective standard does not apply. [Citation.] Hence, an offeree, regardless of apparent manifestation of his consent, is not bound by inconspicuous contractual provisions of which he was unaware, contained in a document whose contractual nature is not obvious. [Citation.] (Windsor Mills, Inc. v. Collins & Aikman Corp. (1972) 25 Cal.App.3d 987, 992-93; see also Norcia, supra, 845 F.3d at p. 1285; Marin Storage & Trucking, Inc. v.

Benco Contracting and Engineering, Inc. (2001) 89 Cal.App.4th 1042, 1049-50 [“[W]hen the writing does not appear to be a contract and the terms are not called to the attention of the recipient... no contract is formed with respect to the undisclosed term.”] (Marin Storage).) In general, Defendant only needs to initially present an arbitration agreement. (Espejo v. Southern California Permanente Medical Group (2016) 246 Cal.App.4th 1047, 1058-60.) The burden then shifts to Plaintiff to dispute its existence. (Id. at p. 1059; Ruiz v.

Moss Bros. Auto Group, Inc. (2014) 232 Cal.App.4th 836, 846.) a. The Handbook Here, Hyundai produces the Handbook and Plaintiff does not dispute receipt of the Handbook or the warranty information booklet. However, the absence of any signed agreement or other direct evidence of assent remains significant, and Hyundai retains the ultimate burden of establishing the existence of an enforceable agreement to arbitrate. Nonetheless, in its motion, Hyundai also relies on equitable estoppel, but for reasons discussed below, that doctrine can only assist if a contract exists.

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Estoppel in this context arises when the words or conduct by the plaintiff causes the defendant to “believe the existence of a certain state of things, and induces him to act on that belief, so as to alter his own previous position....” (Feduniak v. California Coastal Com. (2007) 148 Cal.App.4th 1346, 1359; Evid. Code, § 623.) Civil Code section 1589 provides that a party who accepts the benefits of a transaction may be deemed to consent to its obligations where those obligations are known or should have been known. (Civ.

Code, § 1589.) Similarly, equitable estoppel may apply where a plaintiff seeks to enforce the benefits of a contract while avoiding its arbitration provision. (Metalclad Corp. v. Ventana Environmental Organizational Partnership (2003) 109 Cal.App.4th 1705, 1713–1714.) Some federal courts have compelled arbitration in similar circumstances. For example, Mendoza v. Hyundai Motor America (C.D. Cal. Dec. 15, 2022) 2022 U.S. Dist. LEXIS 226972, the federal district court concluded that plaintiffs could not invoke warranty benefits while avoiding the arbitration provision contained within the same warranty materials.

However, that reasoning is not persuasive here. In general, a warranty is about the seller’s affirmations, promises, and obligations, i.e., what the seller agreed to sell. (Weinstat v. Dentsply Internat., Inc. (2010) 180 Cal.App.4th 1213, 1228 (Weinstat); Keith v. Buchanan (1985) 173 Cal.App.3d 13, 20.) It may bind the seller, but it does not impose any independent obligation on the buyer. (Weinstat, supra, 180 Cal.App.4th at p. 1228; Daugherty v. American Honda Motor Co., Inc. (2006) 144 Cal.App.4th 824, 830; Norcia, supra, 845 F.3d at p. 1288; see also, Ford Warranty Cases (2025) 17 Cal.5th 1122, 1136-1137.)

The Handbook, providing general vehicle information and defining the express warranty, is not making an offer that Plaintiff needed to accept to bind Hyundai to perform the promises on warranting the vehicle. Hyundai was obligated to perform the promises because it issued the warranty regardless of any action by Plaintiff. Plaintiff’s claims arise from statutory warranty obligations under the Song-Beverly Act, not from enforcement of contractual terms within the Handbook. Accordingly, the Handbook does not constitute a contract between Plaintiff and Hyundai, and the arbitration provision within it is not binding.

The California Supreme Court recently reaffirmed that warranty obligations “are not terms of the sales contracts themselves but are imposed by statute.” (Ford Warranty Cases, supra, 17 Cal.5th at p. 1134.) Accordingly, Plaintiff is not seeking to enforce a contract while avoiding its arbitration provision. Rather, Plaintiff is asserting statutory rights independent of any contractual agreement. Because no contract exists between Plaintiff and Hyundai in relation to the Handbook, equitable estoppel does not apply.

Even if it did, there is no evidence Plaintiff knowingly accepted the arbitration provision or was on notice that warranty coverage was conditioned on arbitration. Therefore, Hyundai’s reliance on equitable estoppel is unavailing. Finally, even assuming the Handbook is a contractual agreement, Plaintiff cannot be found to have consented to arbitration when she was not aware of its existence. Plaintiff may have known that the vehicle was covered by warranties but not that the warranty would include an arbitration provision, which is something that would not necessarily be an obvious part of a document detailing the warranties covering the vehicle.

Furthermore, nothing on the face of the Handbook would imply it is proposing a contractual agreement between Hyundai and the buyer to place the buyer on notice that if they receive the benefits of the warranty, then they agree to all contractual terms within the Handbook, including the agreement to arbitrate. (See Norcia, supra, 845 F.3d at pp. 1289-1290.) Therefore, the Court finds that the Handbook did not create a contractual, binding agreement to arbitrate between Hyundai and Plaintiff. b. The Bluelink CSA

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Hyundai also contends that when a purchaser of a Hyundai vehicle enrolls into its Bluelink system, they are shown a screen where they must check the box acknowledging having read and understood the Bluelink’s Terms and Conditions, i.e., the Bluelink Connection Services Agreement, and then click complete. (Rao Decl. ¶¶ 8-11.) Plaintiff opposes and argues that (1) Hyundai has failed to establish mutual assent and (2) the Bluelink CSA does not govern Plaintiff’s warranty claims at issue. Hyundai contends Plaintiff assented to the Bluelink CSA. (Rao Decl. ¶ 7.)

However, there is no competent evidence before the Court to demonstrate that Plaintiff checked the acknowledgment box and enrolled into the Bluelink CSA system. Although Rao attests to Plaintiff’s enrollment, he does not explain the predicate basis for having such knowledge of Plaintiff activating the Bluelink system. Finally, the Court finds that Hyundai did not submit sufficient evidence in support of demonstrating Plaintiff assented to the Bluelink CSA, therefore, the Court will not consider Hyundai’s delegation clause argument.

Hyundai’s delegation argument concedes a valid agreement to arbitrate must first exist and that the threshold issue of whether an arbitration agreement was formed is for the Court to decide. (See Granite Rock Co. v. International Broth. of Teamsters (2010) 561 U.S. 287, 299-300.)

3. Reimbursement of Costs Lastly, Hyundai requests reimbursement of the costs incurred in bringing the motion, including filing and related litigation expenses. (Feeley Decl. ¶ 5.) This request lacks merit. As an initial matter, Hyundai has not identified any contractual provision expressly authorizing recovery of fees or costs incurred in compelling arbitration. The arbitration provision in the Handbook instead provides that Hyundai will bear the costs of arbitration, except for a limited initial filing fee, and is silent as to litigation costs associated with enforcing the provision. (Goel Decl. ¶ 18, Exh. E.) Hyundai cites to Code of Civil Procedure section 1293.2 as authority for reimbursement of costs. However, the Court finds that Hyundai is not the prevailing party therefore, the Court will not award costs for bringing this motion.

RULING

The Court rules as follows: 1. Denies Defendant Hyundai’s motion to compel arbitration. Grants leave for Defendant Booth to file the cross-complaint; 2. Denies Defendant Hyundai’s request for judicial notice of the complaint as unnecessary.

3. Denies Defendant Hyundai’s request for judicial notice of the Handbook as it is not a proper subject for judicial notice.

4. Denies Defendant Hyundai’s request for reimbursement of costs.

5. Orders Plaintiff as the prevailing party to give formal notice of the Court’s rulings.

Dated: May 13, 2026

____________________________ Judge Nicole Quintana Winter

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