2018-00225494-CU-PA

Victor Pana vs. Future Nissan of Folsom, Inc.

Nature of Proceeding: Petition to Compel Arbitration and Stay Proceedings

Filed By: Finn, Brandon J.

Defendant Future Nissan of Folsom, Inc.’s (FNF) petition for an order compelling arbitration and staying this civil action is GRANTED.

FNF’s request for judicial notice of court documents is GRANTED.

Plaintiff Victor Pana’s (Pana) request for an order striking FNF’s reply brief is DENIED. Although the California Arbitration Act does not expressly authorize a reply in support of a petition to compel arbitration, the court may allow it in its discretion. Pana has neither established any unfair prejudice nor requested a continuance so that he can submit a sur-reply.

This is a lemon law case. The parties’ Retail Installment Sale Contract includes an arbitration agreement covering all of Pana’s legal claims. (See Mantz Decl., Exh. A.)

Pana does not dispute that the claims in his complaint are within the arbitration agreement. Nor does he raise any defense to arbitration. Instead, he concedes the parties must arbitrate but contends he is entitled to an arbitration before JAMS, rather than the one FNF seeks before the American Arbitration Association (AAA). The dispute over the arbitration forum lies in the following provision: “You [Pana] may choose the A[AA]…or any other organization to conduct the arbitration subject to our [FNF’s] approval.” FNF construes this provision to mean that, unless Pana chooses AAA, it may withhold approval of another ADR service whether or not there is a good-faith reason to do so. Pana contends FNF may only withhold its approval for a reason founded in good faith. On this issue, Pana has the better argument. (See 300 DeHaro Street Investors v. Department of Housing & Comm. Devel. (2008) 161 Cal.App.4th 1240, 1253 [“[I]t has long been the rule in California that ‘where a contract confers on one party a discretionary power affecting the rights of the other, a duty is imposed to exercise that discretion in good faith and in accordance with fair dealing.’”].)

FNF argues a JAMS arbitration would be unduly costly. It contends AAA rules facilitate an expedited process that reduces costs and “streamlines” the arbitration. Based on the email-chain and other documents submitted with Pana’s opposition, the court concludes that FNF has good-faith concerns about costs.

For example, FNF contends AAA generally limits consumer arbitrations to one day.

AAA Rule 32 indicates arbitrations “generally will not exceed one day,” although a party may obtain additional days upon a showing of good cause. (See Cook Decl., Exh. 3.) Similarly, AAA Rule 22 governs the exchange of information and advises that “arbitration must remain a fast and economic process[.]” (Id., Exh. 4.) In addition, FNF’s counsel indicated in a recent email to PANA’s counsel that “AAA is especially useful for a case as simple as the instant matter. I said in my last email that we do not approve of JAMS given its cost and you are well aware of how expensive it is after the last case we did with your firm.” (Id., Exh. 1 at 4-5.)

The court is aware of Pana’s position that JAMS makes it easier for parties to view potential neutrals’ biographies before commencing arbitration. (See Cook Decl., ¶¶ 9-10.) The court is aware that a AAA arbitration might be required to take place outside Sacramento, whereas the JAMS website lists a location in Sacramento. (See id., ¶¶ 12-13.) And the court is aware of Pana’s concerns that the AAA rules authorize truncated discovery. But none of these concerns compel a finding that FNF lacked good faith when it refused to approve JAMS in this matter.

The court’s conclusion that FNF acted in good faith in this matter obviously says nothing about the good faith vel non of any failure to approve a future non-AAA arbitration.

Disposition

The motion is granted.

Pursuant to the terms of their arbitration agreement, the parties are directed to arbitrate their dispute before AAA. The civil action is stayed pending completion of the arbitration or further order of the court.