APPEAL from the Superior Court of Riverside County. Mac R. Fisher, Judge. Affirmed. (Super. Ct. No. RIC505227).
The opinion of the court was delivered by: Richli J.
CERTIFIED FOR PUBLICATION
Defendant DCH Temecula Imports LLC (DCH) appeals the denial of its petition to compel arbitration. The trial court found that an arbitration clause in a retail installment sales contract (RISC) for the sale of a car to plaintiff Amberlee Fisher, which included a waiver of the right to bring a class action lawsuit or request classwide arbitration, was unenforceable.
Fisher presented several theories to the trial court in opposition to the enforcement of the arbitration clause, including that the arbitration clause required her to waive an unwaivable statutory right to bring a class action lawsuit under the California Legal Remedies Act (the CLRA) and that the arbitration agreement was both procedurally and substantively unconscionable.
We uphold the trial court's denial of the petition to compel arbitration.
I. FACTUAL AND PROCEDURAL BACKGROUND
On July 29, 2008, Fisher filed her complaint for injunctive relief, restitution, rescission, and damages both on her own behalf and as a class action lawsuit. Fisher defined the class as those who purchased a vehicle from DCH from July 28, 2003, to then present, and (1) after signing an RISC, DCH rescinded the original RISC and had the consumer sign a subsequent RISC for the same vehicle, but the new contract was dated the date of the original purchase contract and involved financing at an annual percentage rate greater than 0.00%, and/or (2) who executed an RISC for the purchase of a vehicle for personal use where registration and licensing fees were not properly disclosed on a separate line in the contract as required.
As for Fisher's individual claims, she alleged that in August 2007 she agreed to purchase a used 2004 Dodge Neon from DCH. She was advised the vehicle had been through a thorough inspection and was a safe vehicle. It was not disclosed that it had previously been used as a daily rental vehicle. She further alleged that her RISC did not separately itemize the license and registration fees.
According to the allegations in the complaint, Fisher began having problems with the vehicle. In the meantime, she was contacted by DCH and informed she had to sign a new RISC. Fisher refused, but DCH threatened to repossess her vehicle if she did not. She signed a new RISC, which provided for a new finance company. The contract she signed on August 14, 2007, was backdated to August 7, 2007.
Fisher listed six causes of action for the class, including violation of the CLRA and Civil Code sections 1750 and 1780, subdivision (a)(2) for backdating contracts; violation of the CLRA and Civil Code sections 1750, subdivision (a) and 1770, subdivision (a) for improperly designating license and registration fees; violation of the Automobile Sales Finance Act (the ASFA) and Civil Code section 2981 for backdating the second sales contract; violation of the ASFA and Civil Code section 2981 for improperly designating license and registration fees; commission of unlawful, unfair, and/or fraudulent business practices and violation of Business and Professions Code section 17200 for backdating the second sales contracts; and commission of unlawful, unfair, and/or fraudulent business practices and violation of Business and Professions Code section 17200 for failing to properly designate license and registration fees.
Fisher listed four additional individual causes of action, including negligent misrepresentation of the condition and inspection of the Neon; intentional misrepresentation of the condition of the Neon, the terms of the contract, and repossession rights; violation of the CLRA and Civil Code section 1750 for misrepresentation of the Neon's condition and inspections; and violation of the Song-Beverly Consumer Warranty Act and Civil Code section 1790 for delivering a vehicle with serious defects and non-conformities with warranties.
In her prayer for relief, Fisher requested, among other amounts, rescission and/or restitution on of all monies required to be expended by her and the class, plus injunctive relief on the individual and class claims.
B. DCH's Petition for Order Compelling Arbitration
On December 1, 2008, DCH filed its notice of petition and petition for orders compelling binding contractual arbitration, severing injunctive relief claims if inarbitrable, staying or dismissing proceedings pending arbitration, and staying injunctive relief claims pending arbitration if inarbitrable (petition to compel arbitration). According to the petition to compel arbitration, DCH had demanded that Fisher enter into binding arbitration prior to filing the complaint, but she had refused.
The binding arbitration clause appeared in a box on the back of the agreement in both the first and second RISC that Fisher signed. The page on which it appeared was neither signed nor initialed. In bold letters it stated, "ARBITRATION CLAUSE PLEASE REVIEW - IMPORTANT - AFFECTS YOUR LEGAL RIGHTS." It stated: "Either you or we may choose to have any dispute between us decided by arbitration and not in court or by jury trial." (Capitalization omitted.) It also stated, "If a dispute is arbitrated, you will give up your right to participate as a class representative or class member on any class claim you may have against us including any right to class arbitration or any consolidation of individual arbitrations." (Capitalization omitted.) It further stated, "You expressly waive any right you may have to arbitrate a class action." Finally, it included language that, if the waiver of class action lawsuits or classwide arbitration was found unenforceable, the entire arbitration clause was unenforceable.
The petition to compel arbitration requested that the court find Fisher's claims of injunctive relief under the CLRA to be amenable to arbitration; if it found they were not, the court should sever them from the arbitrable claims. DCH contended the arbitration clause in the RISC signed by Fisher was governed by title 9 United States Code section 2 of the Federal Arbitration Act (the FAA). The FAA preempted any California laws. Further, the petition to compel arbitration was governed by Code of Civil Procedure section 1281 except where application of that section would frustrate section 2 of the FAA. The sale of the Neon involved interstate commerce because the vehicle was manufactured outside of California and transported to California on interstate highways; accordingly, the FAA applied. DCH also claimed that the class action waiver was enforceable due to the fact that the dispute in this case involved large amounts of money and did not warrant class action.
Attached to the petition to compel arbitration were declarations from DCH employees. David Pavlik was a finance and insurance manager with DCH. He was responsible for having customers sign the RISC. It was his practice to explain the documents to the customer at the time they were signed. On August 7, 2007, Fisher signed an RISC for the purchase of the Neon. On August 14, 2007, Fisher signed a rewritten RISC.
DCH requested a stay of the lawsuit pending the resolution of whether arbitration would be ordered. That request was granted by the trial court.
C. Fisher's Opposition to the Petition to Compel Arbitration
Fisher opposed the petition to compel arbitration, contending that the CLRA claims seeking injunctive relief could not be arbitrated. Fisher additionally argued that the FAA did not preempt California law. Fisher claimed that she had a right under the CLRA to file a class action lawsuit and could not be asked to waive that right. She also argued that the arbitration clause was both procedurally and substantively unconscionable.
Fisher pointed out in her opposition that the arbitration clause contained a "poison pill": It stated that, if the classwide arbitration and class action lawsuit waivers were found to be unenforceable, the entire arbitration clause was unenforceable. Based on the language in the RISC, the inarbitrable claims could not be severed, and the entire arbitration clause could not be enforced.
In a declaration filed with her opposition, Fisher claimed that on August 7, 2007, when she signed the RISC, she was given a large stack of documents and told to sign them; they were not explained to her. She did not know she could negotiate the terms. She was never told about the arbitration clause on the back side of the RISC, and she did not see it. ...