Reported / Citable
Background
David Kostandian leased a 2024 Acura Integra from a dealership doing business as Acura of Los Angeles Westside. When the car developed persistent defects that five repair visits could not fix, Kostandian revoked acceptance and sued both the dealership (Standard Motor, LLC) and the manufacturer (American Honda Motor Co.) under California’s lemon law and related theories.
Two arbitration agreements were in play. The first was embedded in the lease itself, covering disputes “in contract, tort, statute or otherwise” related to the vehicle. The second appeared in the manufacturer’s warranty booklet, requiring AAA arbitration for any dispute “arising out of or relating to any aspect of the relationship” between the buyer and American Honda. Kostandian had signed a delivery receipt confirming he received the warranty information.
The trial court denied defendants’ motion to compel arbitration. It found that Standard Motor had not proved it was the entity behind the “Acura of Los Angeles Westside” name, that American Honda was not a party to the lease, and that the warranty booklet clause could not bind Kostandian because — citing Ninth Circuit decisions in Knutson v. Sirius XM Radio and Norcia v. Samsung — manufacturer warranties generally do not impose obligations on buyers.
The Court’s Holding
The Second District Court of Appeal reversed and directed the trial court to grant the motion to compel arbitration.
The court applied California’s two-step burden-shifting framework for arbitration motions. At step one, the moving party needs only to attach a copy of the arbitration agreement or recite its terms verbatim — no evidentiary showing of validity is required at the outset. Defendants satisfied this burden by attaching the lease and warranty booklet and quoting the arbitration provisions.
At step two, the burden shifted to Kostandian to challenge the agreement’s existence. He never did. He disputed arbitrability, scope, and unconscionability — but never denied that the agreements existed. That failure was fatal to his opposition.
On the dealership’s identity, the court invoked the judicial admissions doctrine: Kostandian’s own complaint alleged that Standard Motor did business as Acura of Los Angeles Westside, so he could not turn around and demand the dealership prove that same fact. On the warranty booklet, the court distinguished Knutson and Norcia, noting that Norcia itself acknowledged that a warranty-context case might come out differently. Because Kostandian affirmatively alleged warranty claims based on the booklet, signed a receipt confirming he received it, and could not credibly deny a relationship with American Honda, the booklet’s arbitration clause was enforceable.
Key Takeaways
- A party moving to compel arbitration in California need only present a copy of the agreement or recite its terms — no additional evidentiary showing is required at the initial stage.
- If the opposing party fails to challenge the existence of an arbitration agreement (as opposed to its scope or enforceability), the agreement stands.
- A plaintiff’s own complaint allegations can serve as judicial admissions, satisfying the defendant’s burden of proof on disputed facts like a business’s DBA status.
- Manufacturer warranty booklet arbitration clauses may be enforceable against consumers who allege warranty claims based on that booklet and acknowledged receiving it at delivery.
- The Ninth Circuit’s Knutson and Norcia decisions do not categorically bar enforcement of warranty booklet arbitration clauses in warranty-based disputes.
Why It Matters
This decision gives automakers and dealers a clearer path to compel arbitration in lemon law and warranty cases. By reinforcing a low threshold for the initial burden on motions to compel, the court makes it harder for consumers to resist arbitration without directly disputing the agreement’s existence. The judicial admissions ruling is especially practical: plaintiffs who allege a DBA relationship in their complaints cannot later force defendants to prove that relationship independently.
For consumer attorneys, the case is a reminder that the opposition to a motion to compel arbitration must squarely deny the agreement’s existence if that is genuinely in dispute — challenging scope or unconscionability alone is not enough. The warranty booklet holding also signals that courts may increasingly treat these manufacturer-provided arbitration clauses as binding in cases where the consumer has both received the booklet and filed warranty-based claims.