Morayma Guadalupe Cardona v. Exclusive Auto Group LLC et al.

• Court: District Court, D. Arizona
• Decided: December 11, 2025
• Docket: 2:25-cv-01843
• Status: Unknown

Opinion

1 WO 2 3 4 5 6 IN THE UNITED STATES DISTRICT COURT 7 FOR THE DISTRICT OF ARIZONA 8

Moraym a Guadalupe Cardona, ) No. CV-25-01843-PHX-SPL ) 9 ) 10 Plaintiff, ) ORDER vs. ) ) 11 ) Exclusive Auto Group LLC et al., ) 12 ) 13 Defendants. ) ) 14 )

15 Before the Court is Defendant Carvana LLC’s (“Defendant Carvana”) Motion to 16 Compel Arbitration and Stay Action (Doc. 18), Plaintiff Morayma Cardona’s Response 17 (Doc. 24), and Defendant Carvana’s Reply (Doc. 27). For the following reasons, the Court 18 will grant the Motion. 19 I. BACKGROUND 20 On May 28, 2025, Plaintiff filed a Complaint against four Defendants: (1) Exclusive 21 Auto Group, LLC, (2) Sebastian Miranda Sandoval, (3) Carvana LLC, and (4) Western 22 Funding Incorporated. (Doc. 1.) Plaintiff brings claims for violation of the Federal 23 Odometer Fraud Act, violation of the Arizona Consumer Fraud Act, and Breach of 24 Contract. (Id. at 9–12.) Plaintiff seeks damages because she purchased a used vehicle and 25 learned years later that the number on the vehicle’s odometer had been altered to reflect a 26 lower mileage. (See id.) 27 In June 2023, Plaintiff purchased the used vehicle (“the Vehicle”) from Defendant 28 Exclusive Auto Group, LLC (“Exclusive Auto”) by entering into a Retail Installment 1 Contract and Security Agreement (“the Purchase Agreement”). (Id. at 6, ¶¶ 43–48.) The 2 Purchase Agreement contained an arbitration provision. (Doc. 18 at 2.) At the time of the 3 purchase, Defendant Exclusive Auto represented that the odometer reading on the Vehicle 4 was 114,325 miles. (Doc. 1 at 6–7, ¶¶ 46–55.) Later, when Plaintiff attempted to trade in 5 the vehicle, she learned that the mileage on the odometer had been rolled back. (Doc. 1 at 6 7, ¶ 58.) A “CarFax report . . . showed 22 event records where the odometer was recorded 7 with mileage in excess of 114, 325 miles beginning on June 8, 2018 with 118,086 miles 8 and ending on December 30, 2021 with 279,555 miles.” (Id. ¶ 59.) Plaintiff now alleges 9 that the “representations . . . concerning the odometer reading or mileage on [the Vehicle] 10 were false, and [Defendants] knew, or should have known, that the representations were 11 false.” (Id. at 8, ¶ 61.) 12 Plaintiff is suing several entities who owned the Vehicle at various points in time 13 prior to her purchase. First, Defendant Carvana purchased the Vehicle from its original 14 owner in 2023 and sold it to Barter Holdings Incorporated,1 which later sold the vehicle to 15 Exclusive Auto. (Id. at 4–5, ¶¶ 25, 29, 40.) Then, Plaintiff purchased the Vehicle from 16 Defendant Exclusive Auto (id. at 6, ¶¶ 48–49) and the dealership’s owner, Defendant 17 Sandoval. (Id. at 3, ¶¶ 12–13.) Defendant Exclusive Auto “assigned or sold [the Purchase 18 Agreement] to [Defendant] Western Funding” (id. at 3, ¶ 21), which is “a subprime auto 19 lender who purchases Retail Installment Sales contracts from auto dealerships, including 20 Exclusive Auto.” (Id. at 12, ¶ 98.) 21 On July 2, 2025, Plaintiff and Defendant Western Funding filed a Stipulation to Stay 22 Case Against Defendants Exclusive Auto, Sandoval, and Western Funding and Proceed in 23 Arbitration in accordance with the arbitration provision in the Purchase Agreement. (Doc. 24 15 at 2.) Plaintiff indicated that she would continue litigation against Defendant Carvana, 25 which was not party to the Purchase Agreement. (Id.) The Court granted the stipulation 26 and stayed the case as to Defendants Exclusive Auto, Sandoval, and Western Funding. 27 28 1 Barter Holdings, Inc. is not a party to this action. 1 (Doc. 16.) Now, Defendant Carvana moves to compel arbitration, even though it was not 2 a signatory to the Purchase Agreement. (Doc. 18 at 2.) 3 II. LEGAL STANDARD 4 The Federal Arbitration Act (“FAA”) “leaves no place for the exercise of discretion 5 by a district court, but instead mandates that district courts shall direct the parties to proceed 6 to arbitration on issues as to which an arbitration agreement has been signed.” Dean Witter 7 Reynolds, Inc. v. Byrd, 470 U.S. 213, 218 (1985) (citing 9 U.S.C. §§ 3, 4). “The court’s 8 role under the [FAA] is therefore limited to determining (1) whether a valid agreement to 9 arbitrate exists and, if it does, (2) whether the agreement encompasses the dispute at issue.” 10 Chiron Corp. v. Ortho Diagnostic Sys., Inc., 207 F.3d 1126, 1130 (9th Cir. 2000). If a 11 district court finds that an “arbitration agreement is valid and enforceable, then it should 12 stay or dismiss the action pending arbitration proceedings to allow the arbitrator to decide 13 the remaining claims, including those relating to the contract as a whole.” Nagrampa v. 14 MailCoups, Inc., 469 F.3d 1257, 1276–77 (9th Cir. 2006). 15 “The United States Supreme Court has held that a litigant who is not a party to an 16 arbitration agreement may invoke arbitration under the FAA if the relevant state contract 17 law allows the litigant to enforce the agreement.” Kramer v. Toyota Motor Corp., 705 F.3d 18 1122, 1128 (9th Cir. 2013) (citing Arthur Andersen LLP v. Carlisle, 556 U.S. 624, 632 19 (2009)). Arizona law allows a non-signatory to “compel arbitration with a signatory to an 20 arbitration agreement if the claims at issue are ‘intimately founded in and intertwined with 21 the underlying contract obligations.’” Tradeline Enters. Pvt. Ltd. v. Jess Smith & Sons 22 Cotton, LLC, 772 Fed. App’x 585, 586 (9th Cir. 2019) (citing Sun Valley Ranch 308 Ltd. 23 P’ship v. Robson, 294 P.3d 125, 135 (Ariz. Ct. App. 2012)). The law identifies two specific 24 scenarios in which a nonsignatory may compel arbitration. First, “when the relationship 25 between the signatory and nonsignatory defendants is sufficiently close that only by 26 permitting the nonsignatory to invoke arbitration may evisceration of the underlying 27 arbitration agreement between the signatories be avoided.” Sun Valley Ranch, 294 P.3d at 28 134. At issue here is the second scenario which occurs when: [T]he signatory to a written agreement containing an 1 arbitration clause must rely on the terms of the written agreement in asserting [its] claims against the nonsignatory. 2 When each of a signatory’s claims against a nonsignatory makes reference to or presumes the existence of the written 3 agreement, the signatory’s claims arise out of and relate directly to the written agreement, and arbitration is appropriate. 4 5 Id. at 135. In those circumstances, a party may compel arbitration, even if they were not 6 party to the agreement containing an arbitration clause. 7 III. DISCUSSION 8 The Court must determine whether Defendant Carvana, a nonsignatory to the 9 Purchase Agreement, may compel arbitration. Plaintiff brings one claim against Defendant 10 Carvana for violation of the Federal Odometer Fraud Act (the “Act”),2 which Plaintiff also 11 brings against Defendants Exclusive Auto Group and Sandoval. (Doc. 1 at 9, ¶¶ 71–75.) 12 Plaintiff alleges that Defendants violated the Act “by providing false representations 13 regarding the odometer reading and mileage on the [Vehicle], which they knew or should 14 have known where false.” (Id. ¶ 73.) Specifically, Plaintiff alleges that Defendant Carvana 15 “certified the odometer reading to be 114,197 actual miles, which was false,” after 16 Defendant Carvana purchased the Vehicle from the original owner. (Id. at 4, ¶¶ 26–30.) 17 Further, Plaintiff alleges that at the time, Defendant Carvana had a policy of obtaining a 18 CarFax report on a vehicle before purchasing or selling a vehicle. (Id. at 4–5, ¶¶ 33–35.) 19 Plaintiff also alleges that Defendants Carvana, Exclusive Auto, and Sandoval “fail[ed] to 20 disclose that the [Vehicle] had more miles on it than were reflected on the odometer when 21 they sold the [Vehicle], which Plaintiff ultimately purchased.” (Id. at 9, ¶ 74.) 22 Defendant Carvana argues that “Plaintiff’s damages are based on the [c]ontract price 23 of the Vehicle,” and that “Plaintiff would have no claim against Carvana if she had not 24 25 2 “The Odometer Act requires the transferor of a motor vehicle to disclose in writing either ‘the cumulative mileage registered on the [vehicle’s] odometer’ or to ‘[d]isclose that 26 the actual mileage is unknown, if the transferor knows the odometer reading is different from the number of miles the vehicle has actually traveled.’” Shaghoian v. Aghajani, 228 27 F. Supp. 2d 1107, 1111 (C.D. Cal. 2002) (citing 49 U.S.C. § 32705). “If the transferor, with intent to defraud, fails to comply with these requirements, the transferor is subject to suit 28 by the transferee and may be liable for . . . damages.” Id. 1 entered into the [Purchase Agreement] with Exclusive Auto.” (Doc. 18 at 4.) Thus, 2 Defendant Carvana asserts that Plaintiff’s claim against it “necessarily presumes the 3 existence of” the Purchase Agreement and should therefore be arbitrated. (Id.) On the other 4 hand, Plaintiff argues that Defendant “Carvana’s liability stems from its own independent 5 acts of odometer fraud, which occurred prior to the vehicle’s transfer to Exclusive Auto 6 and Plaintiff’s subsequent purchase.” (Doc. 24 at 2.) 7 In Kramer v. Toyota Motor Corp., the Ninth Circuit addressed a similar request to 8 compel arbitration by a nonsignatory. 705 F.3d 1122, 1128–31 (9th Cir. 2013). In that case, 9 the plaintiffs sued Toyota for violations of California law after they “experienced defects 10 in [the] antilock brake systems” of their Toyota Prius vehicles. Id. at 1124. Toyota moved 11 to compel arbitration based on the plaintiffs’ purchase agreements with the dealerships 12 where they bought their vehicles. Id. at 1124–25. Toyota argued that it should have been 13 able to compel arbitration because the plaintiff’s claims “rel[ied] on the existence of [the 14 plaintiffs’] vehicle purchase transactions” and because the damages request was based on 15 the “price term” of the purchase agreements. Id. at 1130–32. The Court rejected both 16 arguments, determining that none of the claims against Toyota actually relied on the 17 purchase agreements. Id. The Court emphasized that “[u]nder California law, mere 18 reference to a term of the Purchase Agreement is not enough” to compel arbitration based 19 on that agreement. Id. at 1132. 20 A different conclusion results under Arizona contract law. Arizona law provides 21 that when a claim “makes reference to or presumes the existence of the written agreement, 22 the signatory’s claims arise out of and relate directly to the written agreement, and 23 arbitration is appropriate.” Sun Valley Ranch, 294 P.3d at 135. Plaintiff’s claim against 24 Defendants Exclusive Auto, Sandoval, and Carvana references the fact that “Plaintiff 25 ultimately purchased” the vehicle. (Doc. 1 at 9, ¶ 74.) Plaintiff asserts that Defendants’ 26 “false representations regarding the odometer reading and mileage” and “fail[ure] to 27 disclose that the [Vehicle] had more miles on it than were reflected on the odometer when 28 they sold [it]” caused her to purchase the Vehicle. (Id. ¶¶ 72–75.) Though the claim does 1 not arise out of any of the terms of the Purchase Agreement, it references the Purchase 2 Agreement and relates to it. Therefore, Defendant Carvana may compel arbitration. 3 Moreover, Defendant Carvana’s alleged misrepresentations may need to be 4 considered alongside those of Defendants Exclusive Auto and Sandoval. Plaintiff alleges 5 that Defendants’ misrepresentations and omissions, at various points throughout the chain 6 of title, led her to purchase the Vehicle believing that the mileage was lower than it was in 7 reality. (Id. ¶ 74.) Although Defendant Carvana did not act in concert with Defendants 8 Exclusive Auto Group and Sandoval, the alleged misrepresentations and failures to 9 disclose accurate mileage are related. For that reason, it is possible the Court would be 10 required to consider the Purchase Agreement in resolving the claim against Defendant 11 Carvana. See Sun Valley, 294 P.3d at 135 (“[T]he trier of fact will be required to consider 12 the [agreement] and the [contract] in resolving plaintiffs’ claims.”). 13 Having found that the claims against Defendant Carvana relate to the Purchase 14 Agreement and are intertwined with the contract obligations, the Court will grant 15 Defendant Carvana’s Motion to Compel Arbitration. See id. (holding that a nonsignatory 16 defendant could compel arbitration in part because “[his] conduct is intertwined with that 17 of the other defendants who signed [the agreement]”); see also Tradeline Enters., 772 Fed. 18 App’x at 586 (allowing for arbitration under Arizona law because the non-signatory’s 19 claims were “intimately founded in an intertwined with the underlying contract 20 obligations”) (citation omitted). Thus, the Court will stay the case as to Defendant Carvana. 21 Accordingly, 22 IT IS ORDERED that Defendant Carvana’s Motion to Compel Arbitration and 23 Stay Action (Doc. 18) is granted. 24 /// 25 /// 26 /// 27 /// 28 /// 1 IT IS FURTHER ORDERED that this case is stayed as to Defendant Carvana. 2.| The action is now stayed as to all Defendants pending arbitration. The parties are instructed to continue to file joint status reports in accordance with the Court’s July 11, 2025 Order 4| (Doc. 16). 5 Dated this 11th day of December, 2025. 6

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