Case Name:         Miguel Velasquez v. Wholesale Motor Group, et al.

Case Number:      1-11-cv-265262

Defendant Gateway One Lending & Finance, LLC’s (“Gateway”) motion to compel arbitration and dismiss, or alternatively, stay action, in which defendant Wholesale Motor Group (“Wholesale”) (collectively, “Moving Defendants”) joins, is GRANTED.

As a preliminary matter, Moving Defendants have shown the existence of an arbitration agreement that encompasses the claims herein.  There is no dispute that Moving Defendants have requested arbitration and that Plaintiff has refused.

Plaintiff Miguel Velasquez (“Plaintiff”) first argues that the motion to compel should be denied on the basis that Gateway lacks standing due to its status as an assignee that was not a party to the subject retail installment sale contract.  (Plt.’s Opp. Memo of Ps & As, p. 3:13-14 [“The contract mentions assignees but only gives the permissive right to select arbitration to the signing parties.]”.)  Wholesale, one of the moving parties herein, is a signatory to the contract.  Thus, Plaintiff’s argument is unavailing.  Plaintiff also agues that the arbitration agreement at issue here is void for unconscionability.

“The prevailing view is that [procedural and substantive unconscionability] must both be present in order for a court to exercise its discretion to refuse to enforce a contract or clause under the doctrine of unconscionability.”   (Armendariz v. Foundation Health Psychcare Services [“Armendariz”] (2000) 24 Cal.4th 83, 114 [internal citation and quotation marks omitted].)  “Essentially a sliding scale is invoked which disregards the regularity of the procedural process of the contract formation, that creates the terms, in proportion to the greater harshness or unreasonableness of the substantive terms themselves.”  (Ibid.)  “In other words, the more substantively oppressive the contract term, the less evidence of procedural unconscionability is required to come to the conclusion that the term is unenforceable, and vice versa.”  (Ibid.)

Here, the adhesive nature of the arbitration agreement establishes at least a modicum of procedural unconscionability.  The element of “surprise,” however, is lacking.  The arbitration provisions are conspicuously stated within the body of the contract and are set forth in bolded, capitalized text.  In addition to signing the contract containing the arbitration provisions, Plaintiff also signed a separate “arbitration addendum.”1   The arbitration addendum is a one-page document that pertains solely to arbitration and is signed by Plaintiff at the foot of the page.  Plaintiff’s separate execution of this document further negates any element of surprise.  Moreover, while Plaintiff may have felt some pressure to sign the contract on the spot, there is no evidence that he was required to do so or that any attempt was made to conceal the arbitration provisions from him.

With regard to substantive unconscionability, Plaintiff has not shown that the arbitration agreement is overly harsh or so one-sided as to tilt the scales towards a determination that it is void for unconscionability—particularly in light of the relatively weak showing of procedural

1.  The arbitration addendums were signed in both Spanish and English.

unconscionability.  (See Armendariz at p. 114; see also AT&T Mobility LLC v. Concepcion  (2011) 131 S.Ct. 1740, 1747.)  For these reasons, the Court finds that the arbitration agreement is enforceable.

The action shall be stayed pending arbitration.  The currently-scheduled case management conference (9-9-14 at 3:45 p.m.) is VACATED.  The action is set for arbitration status review on February 15, 2015 at 10:30 a.m. in Department 5.