The Security Agreement Included An Arbitration Clause, But The Purchase Agreement Did Not.
It is not unusual for a consumer to execute more than one agreement at the time of purchase, only one of which contains an arbitration clause. Such was the case in Fuentes v. TMCSF, Inc., E066242 (4/2 8/23/18) (Ramirez, Slough, Fields). Fuentes, who bought a Harley-Davidson motorcycle, and Riverside Harley-Davidson (Riverside) were parties to a purchase agreement without an arbitration clause. Fuentes and Eaglemark Savings Bank (Eaglemark) were parties to a simultaneously executed Security Agreement that did contain an arbitration clause. When Fuentes sued Riverside in a putative class action, Riverside petitioned to compel arbitration.
Cases like this present a standard set of questions: are the two agreements to be interpreted as a single agreement? Is the party seeking arbitration (Riverside here) an agent of the party (Eaglemark) to the contract with the arbitration provision? Does the party seeking arbitration have standing as a third-party beneficiary of the contract with the arbitration provision? Is the non-signatory plaintiff equitably estopped from refusing to arbitrate because he asserts claims "inextricably intertwined with" the underlying contractual obligations of the agreement containing the arbitration clause? To which the Court of Appeal answered, no, no, no, and no. AFFIRMED.
We suspect that in the future some drafting changes will be made by Riverside to its sales documents.
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