DAMIEN T. DAVIS et al. v. NISSAN NORTH AMERICA, INC., et al.
D083006
COURT OF APPEAL, FOURTH APPELLATE DISTRICT DIVISION ONE STATE OF CALIFORNIA
Filed 3/15/24
CERTIFIED FOR PUBLICATION; (Super. Ct. No. CVRI2203733)
Shook Hardy & Bacon, Amir M. Nassihi, Nalani L. Crisologo and Andrew L. Chang for Defendants and Appellants.
The Lemon Pros, Arash Khorsandi, Michael Saeedian and Christopher Urner for Plaintiffs and Respondents.
Defendants Nissan North America, Inc., a vehicle manufacturer, and Nissan of San Bernardino, an authorized vehicle repair facility
FACTUAL AND PROCEDURAL BACKGROUND
A. Sale Contract and Warranty
Plaintiffs signed a retail installment sale contract to buy a new Nissan Altima from Riverside Nissan, a vehicle dealership not a party to this lawsuit. The contract identified the plaintiffs as “Buyer” and “you” and identified Riverside Nissan as “Seller,” “we,” and “us.” The sale contract was on a standard form created by the Reynolds and Reynolds Company and designated as Form No. 553-CA-ARB. The Nissan defendants were not parties to the sale contract.
The contract contained the following provision about warranties:
“If you do not get a written warranty, and the Seller does not enter into a service contract within 90 days from the date of this contract, the Seller makes no warranties, express or implied on the vehicle, and there will be 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. If the Seller has sold you a certified used vehicle, the warranty of merchantability is not disclaimed.”
The contract also contained the following arbitration provision:
“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 this 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.”
Defendant Nissan North America, Inc. manufactured the car plaintiffs bought and provided a written manufacturer‘s warranty.1 Nissan North America, Inc. authorizes certain facilities, including defendant Nissan of San Bernardino, to repair defects in its vehicles that arise during the warranty period, provides training to such facilities on how to make repairs, and reimburses those facilities for the repair costs.
Plaintiffs’ complaint alleges that Nissan‘s warranty was “attached to the vehicle itself . . . at the time of manufacturing and/or distribution,” it did “not arise out of the Purchase of the vehicle,” and its benefits apply “to any registered owner of the vehicle regardless of whether the vehicle is
purchased, leased, or provided as a gift to the owner and irrespective of any terms of the Purchase contract.”
B. Vehicle Defects and Repair Attempts
Plaintiffs repeatedly experienced a lack of power and acceleration while driving their Altima and took it four times to Nissan of San Bernardino for repairs. On the first three occasions, plaintiffs were told no defects were found, but on the last, they were told the transmission was defective and needed to be replaced.
C. Complaint
Based on the Altima‘s defective transmission, plaintiffs sued the Nissan defendants, but not the dealership. They asserted the following three claims against Nissan North America, Inc. for violations of the Song-Beverly Consumer Warranty Act (Song-Beverly Act or Act;
D. Motion to Compel Arbitration
The Nissan defendants moved to compel arbitration and stay the action. (
Plaintiffs opposed the motion. In relevant part, they argued that the doctrine of equitable estoppel did not apply because their claims did not arise out of or depend on the sale contract, and the Nissan defendants were not third-party beneficiaries entitled to enforce the arbitration clause of the sale contract.
The trial court denied the motion to compel arbitration. Relying on the Ninth Circuit‘s decision in Ngo v. BMW of North America, LLC (9th Cir. 2022) 23 F.4th 942 (Ngo), the court ruled that Felisilda did not apply “where the dealership is not a party to the action.” The court also found Ngo “to be the better reasoned opinion based on the fact that the manufacturer‘s duty relating to the warranty is independent to the sales contract.” The court further noted that the sale contract expressly disclaimed any seller warranties, while also stating that the disclaimer did not affect any warranties “‘the vehicle manufacturer may provide.‘” The court concluded that the sale contract thus “treats warranties as a separate provision.” The court also ruled that the Nissan defendants were not third-party beneficiaries of the sale contract.
DISCUSSION
Nissan has expressly abandoned its third-party beneficiary theory on appeal, but argues that the trial court erred by declining to apply Felisilda and refusing to compel arbitration based on equitable estoppel. Plaintiffs contend that the trial court‘s equitable estoppel ruling was correct and urge us to
A. Standard of Review
Because the material facts are undisputed, we review de novo whether the trial court correctly applied the doctrine of equitable estoppel in denying Nissan‘s motion to compel arbitration. (Goldman v. KPMG, LLP (2009) 173 Cal.App.4th 209, 226, fn. 9 (Goldman).)
B. Governing Law on Equitable Estoppel
Although there is a strong public policy in favor of arbitration, there is no policy compelling anyone to accept arbitration of controversies which they have not agreed to arbitrate. (Victoria v. Superior Court (1985) 40 Cal.3d 734, 744.) Because arbitration is a matter of contract, the basic rule is that one must be a party to an arbitration agreement to be bound by it or invoke it—with limited exceptions. (DMS Services, LLC v. Superior Court (2012) 205 Cal.App.4th 1346, 1352.)
One such exception is the doctrine of equitable estoppel. Equitable estoppel precludes a party from asserting rights they otherwise would have had against another when their own conduct renders assertion of those rights inequitable. (Goldman, supra, 173 Cal.App.4th at p. 220.) As applied in the arbitration context, “if a plaintiff relies on the terms of an agreement to assert his or her claims against a nonsignatory defendant, the plaintiff may be equitably estopped from repudiating the arbitration clause of that very agreement. In other words, a signatory to an agreement with an arbitration clause cannot ‘have it both ways‘; the signatory ‘cannot, on the one hand, seek
to hold the non-signatory liable pursuant to duties imposed by the agreement, which contains an arbitration provision, but, on the other hand, deny arbitration‘s applicability because the defendant is a non-signatory.‘” (Ibid., internal quotation marks omitted.)
“[T]he sine qua non for application of equitable estoppel as the basis for allowing a nonsignatory to enforce an arbitration clause is that the claims the plaintiff asserts against the nonsignatory must be dependent upon, or founded in and inextricably intertwined with, the underlying contractual obligations of the agreement containing the arbitration clause.” (Goldman, supra, 173 Cal.App.4th at pp. 217–218.) “‘[T]he plaintiff‘s actual dependence on the underlying contract in making out the claim against the nonsignatory . . . is . . . always the sine qua non of an appropriate situation for applying equitable estoppel.‘” (Fuentes v. TMCSF, Inc. (2018) 26 Cal.App.5th 541, 552, internal quotation marks omitted.) “This requirement comports with, and indeed derives from, the very purposes of the doctrine: 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.” (Goldman, at p. 221.)
The mere fact that the plaintiff‘s complaint makes reference to an agreement with an arbitration clause is not enough to establish equitable estoppel. (Goldman, supra, 173 Cal.App.4th at p. 218.) Nor is it sufficient that the plaintiff‘s complaint presumes the existence of a contract that contains an arbitration clause. (Id. at p. 231.) The “underlying principle” in all cases is that there must be ”actual reliance on the terms of the agreement to impose liability on the nonsignatory.” (Ibid., italics added.) Actual reliance in this context means that the plaintiff‘s substantive claims against
the non-signatory must be “founded in and inextricably bound up with the obligations imposed by the agreement containing the arbitration clause.”3 (Id. at p. 219.)
C. Analysis of Equitable Estoppel Issue
Nissan is not a party to either the vehicle sale contract or the arbitration provision contained within it. By its terms, the sale contract is solely between “you” (the plaintiffs) and “us” (the dealership) and its arbitration provision applies only to disputes “between you and us or our employees, agents, successors or assigns.” Nissan concedes that it is not a party to the contract or its arbitration clause—but argues that it is nevertheless entitled to compel arbitration under the Third District‘s 2020 decision on equitable estoppel in Felisilda.
experienced mechanical problems, the plaintiffs sued both the dealership and the manufacturer, asserting a single claim for violation of the Song-Beverly Act based on express warranties. (Id. at pp. 490–491.)
Invoking the arbitration clause of the sale contract, the dealership moved to compel arbitration of the entire matter, including the claim against the nonsignatory manufacturer. (Felisilda, supra, 53 Cal.App.5th at p. 491.) The manufacturer filed a notice of non-opposition. (Ibid.) After the trial court compelled arbitration of the claims against both the dealership and the manufacturer, the plaintiffs eventually appealed from a judgment confirming the arbitration award, arguing that the trial court had erred by compelling arbitration of the claim against the manufacturer. (Id. at pp. 489, 492.)
Applying the doctrine of equitable estoppel, the Third District ruled that the trial court had correctly compelled arbitration of the claim against the nonsignatory manufacturer. (Felisilda, supra, 53 Cal.App.5th at pp. 495–499.) The court relied heavily on the language of the arbitration clause requiring arbitration of disputes between the plaintiffs and the dealership arising out of or relating 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) . . . .” (Felisilda, at pp. 490, 496–498.) The court concluded: “Because the [plaintiffs] expressly agreed to arbitrate claims arising out of the condition of the vehicle — even against third party nonsignatories to the sales contract — they are estopped from refusing to arbitrate their claim against [the manufacturer].” (Id. at p. 497; see also ibid. [“the arbitration provision in this case provides for arbitration of disputes that include third parties so long as the dispute pertains to the condition of the vehicle“]; id. at p. 498 [stating that the arbitration provision included “an express extension of arbitration to claims involving third parties
that relate to the vehicle‘s condition“]; ibid. [stating that plaintiffs’ “agreement to the sales contract constituted express consent to arbitrate their claims regarding vehicle condition even against third parties“].)
As noted, the trial court here declined to apply Felisilda. Since the trial court‘s decision, four published California Court of Appeal decisions (including one from another panel of the Third District) have rejected the holding of Felisilda and the Supreme Court has granted review to resolve the conflict. (Ford Motor Warranty Cases (2023) 89 Cal.App.5th 1324, review granted July 19, 2023, S279969 (Ford Motor); Montemayor v. Ford Motor Co. (2023) 92 Cal.App.5th 958, review
We agree with the holdings of these recent cases and adopt their reasoning as our own. “Equitable estoppel would apply if the plaintiffs had sued [Nissan] based on the terms of the sale contract yet denied [Nissan] could enforce the arbitration clause in that contract.” (Ford Motor, supra, 89 Cal.App.5th at p. 1334, review granted.) But equitable estoppel does not apply here because plaintiffs are not relying on the terms of the sale contract to impose liability on Nissan. (Id. at pp. 1335–1336.) Plaintiffs’ complaint does not allege that Nissan breached any obligations under the sale contract between them and the dealership. Rather, the complaint alleges violations of manufacturer warranties under the Song-Beverly Act and a related tort
claim. Under California law, manufacturer warranties that accompany the sale of a vehicle without regard to the substantive terms of the sale contract between the buyer and the dealer are independent of the sale contract. (Ford Motor, at pp. 1334–1336; Montemayor, supra, 92 Cal.App.5th at p. 969, review granted; Kielar, supra, 94 Cal.App.5th at pp. 620–621, review granted; Yeh, supra, 95 Cal.App.5th at p. 274, review granted.)
As in each of these recent cases, the sale contract between plaintiffs and the dealership includes “no warranty, nor any assurance regarding the quality of the vehicle sold, nor any promise of repairs or other remedies in the event problems arise.” (Ford Motor, supra, 89 Cal.App.5th at p. 1335, review granted.) “To the contrary, the sale contract[] disclaim[s] any warranty on the part of the dealer[], while acknowledging no effect on ‘any warranties covering the vehicle that the vehicle manufacturer may provide.‘” (Ibid.) “This differentiation . . . demonstrates an intent to distinguish and distance the dealership‘s purchase agreement from any warranty that [Nissan] ‘may’ provide.” (Jurosky v. BMW of N. Am. (S.D.Cal. 2020) 441 F.Supp.3d 963, 970 [construing identical disclaimer language under California law]; see also Kramer v. Toyota Motor Corp. (9th Cir. 2013) 705 F.3d 1122, 1131 (Kramer) [same under California law]; Caine v. BMW of N. Am., LLC (S.D.Cal. 2021) 596 F.Supp.3d 1244, 1251 [same under California law].)
Nissan nevertheless contends that equitable estoppel applies because manufacturer warranties are considered part of a retail sale contract under Division
supra, 95 Cal.App.5th at p. 275 [holding that “the enactment of the California Uniform Commercial Code did not change existing law that manufacturer warranties can exist separate from a sales contract“], review granted.) We do as well.
Division 2 of the UCC governs the relationship of the parties to a sale, and its warranty provisions are limited to warranties given directly by the seller to the buyer. The UCC‘s express warranty provision by its terms applies only to “[e]xpress warranties by the seller . . . .” (
As the court noted in Yeh, supra, 95 Cal.App.5th at page 275 (review granted), the official UCC comment to the express warranty provision explicitly 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 . . . . [T]he 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 § 2313; see also
This comment makes clear that although the UCC‘s express warranty provision applies only to a seller in privity with the buyer, the UCC does not disturb non-UCC case law allowing a buyer to sue a manufacturer for breach
of express warranty even in the absence of
Such manufacturer warranties “arise[] independently of a contract of sale between the parties” and “are the product of common-law decisions that have recognized them in a variety of situations.” (Greenman v. Yuba Power Products, Inc. (1963) 59 Cal.2d 57, 61 (Greenman);
accord, Corporation of Presiding Bishop of Church of Jesus Christ of Latter Day Saints v. Cavanaugh (1963) 217 Cal.App.2d 492, 514 (Cavanaugh); see also Seely v. White Motor Co. (1965) 63 Cal.2d 9, 14 (Seely) [“no privity of contract was required” for express warranty claim]; Smith v. Gates Rubber Co. Sales Division, Inc. (1965) 237 Cal.App.2d 766, 768 [same].)
The implied warranty provisions of the UCC also apply only to a merchant or seller in privity with the buyer. (
We find unpersuasive Nissan‘s argument that a manufacturer warranty is part of the sale contract because the UCC defines a “contract” to mean “the total legal obligation that results from the parties’ agreement as determined by this code and as supplemented by any other applicable laws.” (
contract. Like its predecessor, Division 2 of the UCC (
We have no quarrel with Nissan‘s argument that a seller‘s warranty to a buyer is treated as part of the parties’ sale contract under the UCC, even if it is not included as part of the written contract. (See, e.g., A&M Produce Co. v. FMC Corp. (1982) 135 Cal.App.3d 473, 495 [seller‘s warranty to buyer was part of contract thus supporting award of attorney fees under
in the UCC suggests that this automatically makes the manufacturer‘s warranty a part of the sale contract between the buyer and the dealership.
Though not cited by Nissan, the dissent contends that the Supreme Court in Seely treated a vehicle manufacturer‘s warranty as part of the buyer‘s sale contract with the dealership. We disagree. The primary holding in Seely was that damages for lost profits and the purchase price of the vehicle were recoverable in an action for breach of express warranty against the manufacturer. (Seely, supra, 63 Cal.2d at pp. 13–14.) In deciding this damages issue, the court noted that language appearing on the printed purchase order form—stating that the manufacturer warranted the vehicle to be free from defects—met the statutory definition of an express warranty under the former Uniform Sales Act. (Id. at p. 13.) The court also concluded that it made no difference whether the consumer was aware that the warranty was made by the manufacturer, rather than the dealer. (Id. at pp. 13–14.) We do not read Chief Justice Traynor‘s opinion in Seely as suggesting that a manufacturer‘s warranty is part of the sale contract with a dealership. It seems unlikely the Supreme Court would have arrived at such a conclusion without mentioning its own statement from two years earlier (in a unanimous decision also authored by then-Justice Traynor) that manufacturer warranties “arise[] independently of a contract of sale between the parties.”7 (Greenman, supra, 59 Cal.2d at p. 61.)
The substantive claims asserted in plaintiffs’ complaint arise under the Song-Beverly Act, not the UCC. The Song-Beverly Act, which applies to sales of consumer goods, was enacted in 1970 “to provide greater protections and
remedies for consumers” than the UCC because the UCC had “proved [to be] ‘limited in providing effective recourse to a consumer dissatisfied with a purchase.‘” (Mexia v. Rinker Boat Co., Inc. (2009) 174 Cal.App.4th 1297, 1303.) Specifically, the Act “was enacted to address the difficulties faced by consumers in enforcing express warranties . . . . The Act protects purchasers of consumer goods by requiring specified implied warranties, placing strict limitations on how and when a manufacturer may disclaim those implied warranties, and providing
In contrast to the UCC, the Song-Beverly Act explicitly governs manufacturer warranties. (
The Act provides that every retail sale of consumer goods shall be accompanied by a manufacturer‘s implied warranty of merchantability unless properly disclaimed. (
manufacturer‘s failure to comply with any obligation under the statute or under an implied or express warranty.8 (
Plaintiffs’ claims against Nissan under these provisions of the Song-Beverly Act (and their related negligent repair claim) are not privity-based warranty claims arising under the UCC. Their Song-Beverly claims are not founded on any term of the dealership sale agreement, “but instead seek to recover based upon [Nissan]‘s statutory obligations.” (Yeh, supra, 95 Cal.App.5th at p. 278, review granted.) The mere fact that Nissan “provided an express warranty to [plaintiffs] as a result of the sale . . . does not mean [its] obligation to provide a nondefective vehicle under its separate express warranty is in any way founded on an
is not the basis for the claims against the non-signatory.“].) Because plaintiffs are not relying on any substantive term of the sale agreement to establish Nissan‘s liability, the inequities that the doctrine of equitable estoppel was designed to address are not present.
Like the court in Felisilda, Nissan relies on the parenthetical language of the arbitration clause referring to nonsignatory third parties. As written, however, this parenthetical appears as part of the identification of the types of disputes “between you [the buyers] and us [the dealership]” that are subject to arbitration. It includes within its scope any such dispute “between you and us” that arises out of the sale “or any resulting transaction or relationship (including any such relationship with third parties who do not sign this contract).” (Italics added.) Based on its plain meaning, we agree with the Ford Motor line of cases “that this language does not show ‘consent by the purchaser to arbitrate claims with third party nonsignatories‘” and instead describes “the subject matter of claims the purchasers and dealers agreed to arbitrate.” (Yeh, supra, 95 Cal.App.5th at p. 278, review granted, quoting Ford Motor, supra, 89 Cal.App.5th at pp. 1334–1335, review granted; accord, Montemayor, supra, 92 Cal.App.5th at p. 971, review granted; Kielar, supra, 94 Cal.App.5th at p. 621, review granted.)
Even if we were to accept Nissan‘s interpretation of this parenthetical language, however, it would still only be relevant to a third-party beneficiary theory, which Nissan has expressly disclaimed on appeal. Nissan does not explain how this language logically supports an equitable estoppel theory—and neither did Felisilda. These are separate and distinct theories for enforcement of an arbitration clause by someone who is not a party to the contract containing it. The legal requirements for equitable estoppel have nothing to do with third-party beneficiaries. (See, e.g., Jarboe v. Hanlees
Auto Group (2020) 53 Cal.App.5th 539, 550–555 [separately analyzing the two distinct theories].) In our view, the Felisilda court conflated the two by injecting third-party beneficiary principles into its equitable estoppel analysis.
This issue will ultimately be decided by our Supreme Court. There is little more we can add to what other appellate courts have already said about it. We see no inequity in allowing the plaintiffs to pursue their Song-Beverly and tort claims in court. Ultimately, we are persuaded by the more recent decisions holding that a vehicle manufacturer who is not a party to the
dealership sale contract containing an arbitration clause may not compel arbitration under an equitable estoppel theory in these circumstances.
DISPOSITION
The order denying the motion to compel arbitration is affirmed. Respondents are entitled to recover their costs on appeal.
BUCHANAN, J.
I CONCUR:
DO, J.
IRION, Acting P. J., Dissenting.
I disagree with the majority‘s resolution of this appeal. In my view, a buyer who obtains a manufacturer‘s warranty as part of the sale of a new car by a dealer and sues the manufacturer and an authorized repair facility for breaching the warranty is equitably estopped to refuse to arbitrate with the manufacturer and facility when the sale contract between the buyer and the dealer contains a provision that would require arbitration had the buyer sued the dealer instead. I would therefore reverse the challenged order.
I adopt the majority‘s summary of the facts and procedure of the case, with the following additional information relevant to my analysis of the equitable estoppel issue.
The manufacturer‘s warranty that came with the 2018 Nissan Altima respondents bought is not in the record. The warranty information booklet applicable to its 2018 models is available at Nissan North America, Inc.‘s Web site. The booklet states on page 5 that Nissan North America, Inc. “warrants all parts of your 2018 Nissan vehicle supplied by Nissan, except for those listed elsewhere under the caption ‘WHAT IS NOT COVERED.’ ” On page 6, it states that “[t]he basic coverage period is 36 months or 36,000 miles, whichever comes first,” and the warranty “covers any repairs needed to correct defects in materials or workmanship of all parts and components of each new Nissan vehicle supplied by Nissan” subject to specified exceptions.1
Respondents also bought an optional service contract with a term of 6 years or 100,000 miles when they purchased the 2018 Altima.
II
Before I reach the equitable estoppel issue, I must address two alternative grounds for affirmance raised by respondents. Neither has merit.
A
Respondents argue appellants forfeited their claims of error by omitting unfavorable facts from the opening brief. An appellant‘s opening brief must contain a fair summary of the significant facts, including those unfavorable to appellant. (
B
Respondents argue the arbitration provision of the sale contract was not clear enough to waive their constitutional right to proceed in court with an action for damages under the
III
In resolving the equitable estoppel issue presented by this appeal, I first describe the doctrine as it applies generally to enforcement of an arbitration agreement. I then analyze the nature of respondents’ claims against appellants. And, finally, I explain why, in my view, those claims fall within the scope of the equitable estoppel doctrine and permit appellants to enforce the arbitration provision of the sale contract against respondents.
An exception to the general rule that “only a party to an arbitration agreement is bound by or may enforce the agreement” (Thomas v. Westlake (2012) 204 Cal.App.4th 605, 613, fn. omitted) is the doctrine of equitable estoppel, which allows a nonsignatory to a contract to enforce its arbitration clause against a signatory who asserts contract-related claims against the nonsignatory (Victrola 89, LLC v. Jaman Properties 8 LLC (2020) 46 Cal.App.5th 337, 353; Rowe v. Exline (2007) 153 Cal.App.4th 1276, 1287 (Rowe); Boucher v. Alliance Title Co., Inc. (2005) 127 Cal.App.4th 262, 271 (Boucher)). The doctrine is based on the maxim that one “who takes the benefit must bear the burden.” (
B
In their complaint, respondents asserted three counts for violations of the
The gist of the complaint is that the Altima respondents bought was defective and appellants did not timely repair it to make it comply with the warranties that came with the Altima as part of the sale; and, based on the breaches of the warranties, respondents want to cancel the sale and get their money back. All counts of the complaint “rely upon, make reference to, presume the existence of, and are intertwined with the [warranties].” (Rowe, supra, 153 Cal.App.4th at p. 1287.) Therefore, under the doctrine of equitable estoppel appellants may enforce the arbitration clause against respondents if the warranties were part of the sale contract.
C
Appellants contend that under the
California‘s version of the
“A present sale,” such as that involved in this case, is “a sale which is accomplished by the making of the contract.” (
The total legal obligation that resulted from the sale of the Altima to respondents included the obligations Nissan North America, Inc. assumed in the express warranty respondents alleged “accompanied” their purchase of the Altima. Obligations that make up a contract under the
Consistent with these principles, the Supreme Court of California treated a vehicle manufacturer‘s warranty as part of a sale contract in Seely v. White Motor Co. (1965) 63 Cal.2d 9, 12 (Seely), where the buyer contracted with Southern Truck Sales to buy a truck manufactured by White Motor Company. The manufacturer “included the following promise in the printed form of the purchase order signed by [the buyer]: ‘The White Motor Company hereby warrants each new motor vehicle sold by it to be free from defects in material and workmanship under normal use and service, its obligation under the warranty being limited to making good at its factory any part or parts thereof. . . . ’ ” (Id. at p. 13.) Even though the manufacturer, not the seller, made the promise, the Supreme Court held the “promise meets the statutory requirement for an express warranty: ‘Any affirmation of fact or any promise by the seller relating to the goods is an express warranty if the natural tendency of such affirmation or promise is to induce the buyer to purchase the goods, and if the buyer purchases the goods relying thereon.’ (
Subsequent Court of Appeal decisions have cited Seely in support of holdings that a vehicle manufacturer‘s warranty to repair or replace defective parts for a certain number of years or miles, given to a buyer of a new
The total legal obligation that made up the sale contract also included the implied warranty of merchantability, which respondents alleged in their complaint “accompanied” the sale of the Altima. Such a warranty “arises by operation of law” (Hauter, supra, 14 Cal.3d at p. 117) and guarantees the goods sold are “merchantable,” i.e., “fit for the ordinary purposes for which such goods are used.” (
The sale contract itself acknowledges the existence of these warranties by negative implication. The contract addresses the subject of warranties, under the heading “WARRANTIES SELLER DISCLAIMS,” as follows: “If you do not get a written warranty, and the Seller does not enter into a service contract within 90 days from the date of this contract, the Seller makes no warranties, express or implied, on the vehicle, and there will be 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.” (Boldface omitted; italics added.) “Because a disclaimer . . . is inconsistent with an express warranty, words of disclaimer . . . give way to words of warranty unless some clear agreement between the parties dictates the contrary relationship.” (Hauter, supra, 14 Cal.3d at p. 119; see Weinstat v. Dentsply Internat., Inc. (2010) 180 Cal.App.4th 1213, 1229 (Weinstat) [“Any affirmation, once made, is part of the agreement unless there is ‘clear affirmative proof
Respondents’ claims against appellants assume the warranties arose out of the sale contract. The
The claims rely on the sale contract in other ways as well. Respondents will need the contract to establish their Altima was new and purchased from a
In sum, “the sale[] contract was the source of the warranties at the heart of this case” (Felisilda, supra, 53 Cal.App.5th at p. 496), and all of respondents’ claims against appellants “are ‘intimately founded in and intertwined’ with the underlying contract obligations” (Boucher, supra, 127 Cal.App.4th at p. 271). “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.” (Id. at p. 272.) “ ‘Where the equitable estoppel doctrine applies, the nonsignatory has a right to enforce the arbitration agreement.’ ” (Felisilda, at p. 496.) In my view, therefore, appellants may enforce the arbitration clause of the sale contract against respondents.
In reaching the opposite conclusion, the majority follows Ford Motor Warranty Cases (2023) 89 Cal.App.5th 1324, review granted July 19, 2023, S279969 (Ford Motor), and other recent Court of Appeal decisions that hold equitable estoppel does not apply in circumstances substantially similar to those of this case.6 I find unpersuasive the reasoning of those cases and that of the majority in this case.
A
The primary reason the Ford Motor court gave for rejecting application of equitable estoppel was that “California law does not treat manufacturer warranties imposed outside the four corners of a retail sale contract as part of the sale contract.” (Ford Motor, supra, 89 Cal.App.5th at p. 1335, review granted.) The cases following Ford Motor agreed with that reason (Yeh, supra, 95 Cal.App.5th at p. 274, review granted; Kielar, supra, 94 Cal.App.5th at p. 621, review granted; Montemayor, supra, 92 Cal.App.5th at pp. 968, 972, review granted), and so does the majority in this case (maj. opn., ante, pp. 13–14). I disagree.
Under the
The two decisions Ford Motor cited for its conclusion that the manufacturer‘s warranty was not part of the sale contract in that case—Greenman v. Yuba Power Products, Inc. (1963) 59 Cal.2d 57 and Corporation of Presiding Bishop of Church of Jesus Christ of Latter Day Saints v. Cavanaugh (1963) 217 Cal.App.2d 492 (Ford Motor, supra, 89 Cal.App.5th at p. 1336, review granted)—do not support that conclusion. Those decisions concerned claims by plaintiffs for breach of an express warranty that a product manufacturer had given to, respectively, a retailer or a contractor who installed the product. (Greenman, at pp. 59–60 & fn. 1; Cavanaugh, at pp. 496, 512–513.) Each court held the plaintiff was not required to notify the manufacturer of the breach under the now-repealed Uniform Sales Act (
B
I disagree with the majority‘s assertions that: (1) the warranty provisions of the
C
I am not persuaded that the
D
I also disagree with those courts that have refused to apply equitable estoppel to require a buyer to arbitrate
E
Finally, I reject a related contention, unaddressed by the majority, by which respondents attempt to put even more distance between the sale contract and the warranties. They rely on the following allegation of their complaint:
“The warranty obligations of NISSAN NORTH AMERICA, INC. are attached to the vehicle by Defendant NISSAN NORTH AMERICA, INC. at the time of manufacturing and/or distribution and do not arise out of the [p]urchase of the vehicle. The benefits of the warranty to cover the costs of repairs will automatically inure to any registered owner of the vehicle regardless of whether the vehicle is purchased, leased, or provided as a gift to the owner and irrespective of any terms in a [p]urchase contract.” (Italics added.)
The quoted allegation is a mere conclusion of law, which I need not, and do not, accept in deciding whether respondents’ claims arise out of the sale contract, especially since it flatly contradicts their allegations the express and implied warranties “accompanied” their purchase of the Altima. (See McBride v. Smith (2018) 18 Cal.App.5th 1160, 1182 [court does not accept as true legal conclusion in pleading]; Williamson v. Pacific Greyhound Lines (1944) 67 Cal.App.2d 250, 253 [court ascertains nature of action by considering pleading as a whole].) Moreover, the allegation is, in my view, false. Although the warranties pertain to the Altima, the obligations to repair or replace defective parts did not arise until respondents bought it. A “sale is an essential element to impose liability under warranties.” (Shepard v. Alexian Brothers Hosp. (1973) 33 Cal.App.3d 606, 614; see Fogo v. Cutter Laboratories, Inc. (1977) 68 Cal.App.3d 744, 759 [“a sale is ordinarily an essential element of any warranty, express or implied”].) Respondents may enforce the warranty obligations only because they signed a sale contract to buy the Altima and received the warranties as part of the sale. (See
I disregard respondents’ contrary allegation for another reason. The allegation, like respondents’ decision not to sue the dealership with which they signed the contract to buy the Altima, seems designed to avoid their contractual obligation to arbitrate. (Cf. Grigson v. Creative Artists Agency (5th Cir. 2000) 210 F.3d 524, 530 [plaintiff‘s commencement of action against nonsignatories after voluntary dismissal of action against signatory that moved to compel arbitration was “a quite obvious, if not blatant, attempt to bypass the agreement‘s arbitration clause”].) “No person can be permitted to adopt that part of an entire transaction which is beneficial to him/her, and then reject its burdens.” (Halperin v. Raville (1986) 176 Cal.App.3d 765, 772.) “To allow respondent[s] to assert rights and benefits
V
In summary, I would treat the warranties at issue in this case as what they are: obligations arising out of the contract by which respondents bought the allegedly defective Altima. “An express warranty for a new automobile is not provided gratuitously by the manufacturer or seller. The cost of the warranty is included in the cost of the product. The consumer has purchased the warranty along with the car. It is ‘part of the benefit of the bargain.’ ” (Ford Motor Credit Company, LLC v. Mendola (N.J.App.Div. 2012) 48 A.3d 366, 376.) Because respondents assert the benefit of the bargain by seeking to hold appellants liable for breaching the warranty obligations, I would hold them to the burden of the same bargain by equitably estopping them from refusing to arbitrate their claims under the arbitration provision of the sale contract. (
IRION, Acting P. J.