Ghazzal v. Mercedes-Benz USA, LLC

• Court: District Court, E.D. California
• Decided: February 5, 2025
• Docket: 2:24-cv-02163
• Status: Unknown

Opinion

1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 EASTERN DISTRICT OF CALIFORNIA 10 ----oo0oo---- 11 12 AFSHEEN AHMED GHAZZAL FKA No. 2:24-cv-02163 WBS SCR AFSHEEN AHMED, an individual, 13 and ISRAAIL AHMED GHAZZAL FKA DEJON SMITH, an individual, 14 ORDER RE: DEFENDANT’S MOTION Plaintiffs, TO COMPEL ARBITRATION 15 v. 16 MERCEDES-BENZ USA, LLC, a 17 Delaware Limited Liability Company, and DOES 1 through 10, 18 inclusive, 19 Defendants. 20 21 ----oo0oo---- 22 Plaintiffs Afsheen Ahmed Ghazzal and Israail Ahmed 23 Ghazzal (collectively, “plaintiffs”) filed this action in 24 Sacramento County Superior Court on July 12, 2024, bringing 25 breach of express and implied warranty claims under California’s 26 Song-Beverly Act, Cal. Civ. Code § 1793.2(d)(2). (Docket No. 1- 27 1.) Defendant Mercedes-Benz USA, LLC (“defendant”) removed to 28 this court on the basis of diversity. (Docket No. 1.) Defendant 1 moves to compel the arbitration of both claims. (Docket No. 11.) 2 Plaintiffs allege that they leased a defective vehicle 3 of defendant’s make from non-party dealership Mercedes Benz of 4 Rocklin on October 14, 2023. (Declaration of Luis A. Serrano 5 ¶¶ 3-4 (Docket No. 12-1).) The lease’s “parties” clause lists 6 plaintiffs and the dealership, but it omits defendant. (Id. at 7 2.) At issue is whether defendant may enforce the lease’s 8 arbitration clause as a non-signatory third-party beneficiary. 9 The arbitration clause states that

10 Any claim or dispute, whether in contract, tort, or otherwise (including any dispute over the 11 interpretation, scope, or validity of this lease, arbitration section or the arbitrability of any 12 issue), between you and . . . the vehicle distributor, including Mercedes-Benz USA LLC (each a “Third Party 13 Beneficiary”), which arises out of or relates to a credit application, this lease, or any resulting 14 transaction or relationship arising out of this lease (including any such relationship with third parties 15 who do not sign this contract) shall, at the election of either you, us, or a Third Party Beneficiary, be 16 resolved by a neutral, binding arbitration and not by a court action. 17 18 (Docket No. 1-2 at 8 (capitalization altered).) 19 “State law determines whether a non-signatory to an 20 agreement containing an arbitration clause may compel 21 arbitration.” Ngo v. BMW of N. Am., LLC, 23 F.4th 942, 946 22 (9th Cir. 2022). Under California law, a non-signatory to a 23 contract containing an arbitration clause may compel arbitration 24 as a third-party beneficiary when it shows that “express 25 provisions of the contract” and the “relevant circumstances” 26 satisfy three factors: (1) “the third party would in fact benefit 27 from the contract,” (2) “a motivating purpose of the contracting 28 parties was to provide a benefit to the third party,” and (3) 1 “permitting the third party to enforce the contract ‘is 2 consistent with the objectives of the contract and the reasonable 3 expectations of the contracting parties.’” Id. (quoting 4 Goonewardene v. ADP, LLC, 6 Cal. 5th 817, 830 (2019)). 5 Under this test, defendant may enforce the lease’s 6 arbitration clause as a third-party beneficiary. The arbitration 7 clause benefits defendant by providing its preferred forum for 8 resolving the instant dispute. The plain text of the arbitration 9 clause also clarifies that the signatories intended to benefit 10 defendant by stating that it applied to any dispute between the 11 lessee and “the vehicle distributor, including Mercedes-Benz USA 12 LLC (each a ‘Third Party Beneficiary’).” See Hicks v. 13 Utiliquest, LLC, 736 F. Supp. 3d 849, 860-61 (E.D. Cal. 2024) 14 (Calabretta, J.) (granting third-party beneficiary’s motion to 15 compel arbitration on the same grounds). On its own terms, the 16 lease is clear that the parties contemplated defendant’s 17 enforcement of the arbitration clause, even though defendant was 18 not a party to the lease. 19 Further, the instant matter is a “dispute . . . which 20 arises out of or relates to . . . this lease, or any resulting 21 transaction or relationship arising out of this lease (including 22 any such relationship with third parties who do not sign this 23 contract).” (Docket No. 1-2 at 8.) Because plaintiffs leased 24 the vehicle at issue, which defendant made or distributed, they 25 now assert their Song-Beverly Act claim against defendant. Thus, 26 the dispute arises out of the lease and is therefore subject to 27 the lease’s arbitration clause. 28 In each case plaintiffs cite in opposition, the panel IE OIE IER IIR IRE III IIE EEE IDE IEEE I I

1 found that the arbitration clause at issue did not make express 2 reference to the defendant manufacturer. See, e.g., Montemayor 3 v. Ford Motor Co., 92 Cal. App. 5th 958, 972-74 (2nd Dist.), 4 review granted, 535 P.3d 1 (Cal. 2023); Ford Motor Warranty 5 | Cases, 89 Cal. App. 5th 1324, 1336-40 (2nd Dist.), review 6 | granted, 532 P.3d 270 (Cal. 2023). Both are distinguishable 7 because the arbitration clause here expressly names defendant as 8 a third-party beneficiary and gives it the explicit right to 9 compel binding arbitration. (Docket No. 1-2 at 8.) 10 IT IS THEREFORE ORDERED that defendant’s motion to 11 compel arbitration (Docket No. 11) be, and the same hereby is, 12 GRANTED. 13 IT IS FURTHER ORDERED that this case is STAYED pending 14 arbitration. The Clerk shall close this file administratively, 15 subject to it being reopened upon the application of either party 16 after arbitration has been fully completed. 17 | Dated: February 4, 2025 dete, . ak 2 18 WILLIAM B. SHUBB 19 UNITED STATES DISTRICT JUDGE

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