Guzman v. Top Finance CA2/8

Filed 1/2/15 Guzman v. Top Finance CA2/8
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for
publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication
or ordered published for purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT

DIVISION EIGHT

JOSE GUZMAN, B252068

Plaintiff and Respondent, (Los Angeles County
Super. Ct. No. BC497748)
v.

TOP FINANCE CO. et al.,

Defendant and Appellant.

APPEAL from an order of the Superior Court of Los Angeles County.
Kenneth R. Freeman, Judge. Reversed.

Foell & Elder, and William N. Elder Jr. for Defendant and Appellant.

Law Offices of Robert B. Mobasseri, Robert B. Mobasseri and Amy L. Hajduk for
Plaintiff and Respondent.

____________________________________
 Top Finance Company, Inc. appeals from the trial court’s denial of its motion to
compel arbitration. Because we find the contract was not unconscionable, we reverse.
FACTS
On December 19, 2012, Jose Guzman filed a complaint, alleging fraud and the
violation of various consumer protection laws in connection with his purchase of a 2005
Volkswagen Toureg from 605 Auto. Guzman alleged he saw the car advertised as a
certified pre-owned car for $14,995 with 12.99 percent APR financing. When Guzman
and his wife went to see the car, they were informed they did not qualify for the
advertised price and finance rate due to their poor credit. They negotiated a sales price of
$15,995 with an APR of 23.99 percent and a $3,000 down payment. The Guzmans
signed a retail installment sales contract, which contained an arbitration clause. Soon
after their purchase, the Guzmans began to experience difficulty with the car. The middle
rear seatbelt was not functional and various warning lights became illuminated.
Guzman’s wife experienced trouble with the brakes and sudden acceleration while
driving on the freeway. On a separate occasion, she crashed into a neighbor’s gate when
the brakes failed. Guzman further alleged the car did not comply with California’s smog
and safety pre-sale requirements. Guzman attempted to have the car repaired multiple
times under the 30 day warranty with no success.
The complaint alleged individual claims as well as class claims on behalf of:
1) persons who purchased a certified pre-owned vehicle from 605 Auto without receiving
a completed inspection report indicating all the components inspected; 2) persons who
purchased a vehicle from 605 Auto who paid a price higher than that advertised;
3) persons who purchased a vehicle from 605 Auto who received a warranty different
from that advertised. 605 Auto assigned the sales contract to Top Finance on December
19, 2011. Thus, the complaint was alleged against 605 Auto Sales, Top Finance Co.,
Travelers Casualty and Surety Company of America, and the three individuals involved
in selling the car to the Guzmans.

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 Top Finance filed a petition to compel arbitration on July 26, 2013. 605 Auto and
the individually named defendants joined in Top Finance’s petition to compel. Travelers
opposed arbitration on the ground it was not a party to the sales contract. It alleged its
sole involvement in the transaction arose from issuing a surety bond for $50,000 on
behalf of 605 Auto Sales. After extensive briefing and oral argument, the trial court
denied Top Finance’s petition. The trial court found the arbitration agreement was
procedurally unconscionable because the provision was presented on a “take it or leave
it” basis with no opportunity for Guzman to negotiate the provision; Guzman had no
meaningful choice. The trial court also found the fee arrangement in the arbitration
provision to be substantively unconscionable because no fee waiver was allowed and fees
were reimbursed at the arbitrator’s discretion. Additionally, there was no provision
requiring a written decision from the arbitrator or any reference to the rules applicable to
the arbitration, including discovery rights. The trial court also found problematic the
provision relating to an appeal to a three judge panel because there was no indication that
was even allowed by the arbitration association. It also found inadequate mutuality
because the arbitration provision allowed Top Finance to retain its rights to self-help
remedies, including repossession, while buyers were forced to surrender their rights to
recovery through the courts. Top Finance timely appealed.
DISCUSSION
On appeal, Top Finance challenges the trial court’s findings regarding the
enforceability of the arbitration clause. Top Finance contends the trial court took an
overly hostile view of arbitration agreements by applying an “entirely different and
improperly stringent test to find arbitration agreements unconscionable which is not
applied to other contracts.” We disagree. The trial court applied the correct test to
determine unconscionability. However, we conclude the contract is not sufficiently
substantively unconscionable to render it unenforceable. Thus, we reverse the trial
court’s denial of the motion to compel arbitration.

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I. The Arbitration Clause
The sales contract is printed on a single sheet of paper1 with text on both sides of
the page. The buyer signs in eight places on the front page. Above the last signature line
is this statement in all capital letters and in bold-faced type: “You agree to the terms of
this contract. You confirm that before you signed this contract, we gave it to you, and
you were free to take it and review it. You acknowledge that you have read both sides of
this contract, including the arbitration clause on the reverse side, before signing below.
You confirm that you received a completely filled-in copy when you signed it.” The font
size in the box is not noticeably bigger than the text surrounding it, most of which is also
in bold and some of which is italicized. The back page of the contract is also dense with
text. The buyer is not required to sign the back page. It contains a number of standard
contract terms, such as provisions relating to late payment, seller’s right to cancel,
warranties, finance charges and payments, and claims procedures. Some of these
provisions are outlined by a box, including the arbitration clause, which is located at the
bottom of the page. It reads:

1
The contract is form no. 553-CA-ARB (Rev. 1/10), printed by the Reynolds and
Reynolds Company, and is apparently commonly used by car dealers. It is described in
other decisions involving car dealers and manufacturers to be approximately 26 inches
long. Numerous opinions address the enforceability of the arbitration clause found in
form no. 553-CA-ARB. These cases are currently before the California Supreme Court
and include: Vargas v. SAI Monrovia B., Inc. (2013) 216 Cal.App.4th 1269, review
granted Aug. 21, 2013, No. S212033; Vasquez v. Greene Motors, Inc. (2013) 214
Cal.App.4th 1172, review granted June 26, 2013, No. S210439; Natalini v. Import
Motors, Inc. (2013) 213 Cal.App.4th 587, review granted May 1, 2013, No. S209324;
Flores v. West Covina Auto Group, LLC (2013) 212 Cal.App.4th 895, review granted
Aug. 27, 2014, No. S208716; Goodridge v. KDF Automotive Group, Inc. (2012) 209
Cal.App.4th 325, review granted December 19, 2012, No. S206153. The California
Supreme Court has suspended briefing on each of these cases pending a decision in
Sanchez v. Valencia Holding Co., LLC (2011) 201 Cal.App.4th 74, review granted March
21, 2012, No. S199119.

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 “ARBITRATION CLAUSE
“PLEASE REVIEW – IMPORTANT – AFFECTS YOUR LEGAL
RIGHTS
“1. EITHER YOU OR WE MAY CHOOSE TO HAVE ANY DISPUTE
BETWEEN US DECIDED BY ARBITRATION AND NOT IN COURT
OR BY JURY TRIAL.
“2. IF A DISPUTE IS ARBITRATED, YOU WILL GIVE UP YOUR
RIGHT TO PARTICIPATE AS A CLASS REPRESENTATIVE OR
CLASS MEMBER ON ANY CLASS CLAIM YOU MAY HAVE
AGAINST US INCLUDING ANY RIGHT TO CLASS ARBITRATION
OR ANY CONSOLIDATION OF INDIVIDUAL ARBITRATIONS.
“3. DISCOVERY AND RIGHTS TO APPEAL IN ARBITRATION
ARE GENERALLY MORE LIMITED THAN IN A LAWSUIT, AND
OTHER RIGHTS THAT YOU AND WE WOULD HAVE IN COURT
MAY NOT BE AVAILABLE IN ARBITRATION.
“Any claim or dispute, whether in contract, tort, statute or otherwise
(including the interpretation and scope of this Arbitration Clause, and the
arbitrability of the claim or dispute), between you and us or our employees,
agents, successors or assigns, which arises out of or relates to your credit
application, purchase or condition of this vehicle, this contract or any
resulting transaction or relationship (including any such relationship with
third parties who do not sign this contract) shall, at your or our election, be
resolved by neutral, binding arbitration and not by a court action. If federal
law provides that a claim or dispute is not subject to binding arbitration,
this Arbitration Clause shall not apply to such claim or dispute. Any claim
or dispute is to be arbitrated by a single arbitrator on an individual basis and
not as a class action. You expressly waive any right you may have to
arbitrate a class action. You may choose one of the following arbitration
organizations and its applicable rules: the National Arbitration Forum, Box

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50191, Minneapolis, MN 55405-0191 (www.arbforum.com), the American
Arbitration Association, 335 Madison Ave, Floor 10, New York, NY
10017-4605 (www.adr.org), or any other organization that you may choose
subject to our approval. You may get a copy of the rules of these
organizations by contacting the arbitration organization or visiting its
website.
“Arbitrators shall be attorneys or retired judges and shall be selected
pursuant to the applicable rules. The arbitrator shall apply governing
substantive law in making an award. The arbitration hearing shall be
conducted in the federal district in which you reside unless the Creditor-
Seller is a party to the claim or dispute, in which case the hearing will be
held in the federal district where this contract was executed. We will
advance your filing, administration, service or case management fee and
your arbitrator or hearing fee all up to a maximum of $2500, which may be
reimbursed by decision of the arbitrator at the arbitrator’s discretion. Each
party shall be responsible for its own attorney, expert and other fees, unless
awarded by the arbitrator under applicable law. If the chosen arbitration
organization’s rules conflict with this Arbitration Clause, then the
provisions of this Arbitration Clause shall control. The arbitrator’s award
shall be final and binding on all parties, except that in the event the
arbitrator’s award for a party is $0 or against a party is in excess of
$100,000, or includes an award of injunctive relief against a party, that
party may request a new arbitration under the rules of the arbitration
organization by a three-arbitrator panel. The appealing party requesting
new arbitration shall be responsible for the filing fee and other arbitration
costs subject to a final determination by the arbitrators of a fair
apportionment of costs. Any arbitration under this Arbitration Clause shall
be governed by the Federal Arbitration Act (9 U.S.C. § 1 et. seq.) and not
by any state law concerning arbitration.

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 “You and we retain any rights to self-help remedies, such as
repossession. You and we retain the right to seek remedies in small claims
court for disputes or claims within the court’s jurisdiction, unless such
action is transferred, removed or appealed in a different court. Neither you
nor we waive the right to arbitrate by using self-help remedies or filing suit.
Any court having jurisdiction may enter judgment on the arbitrator’s award.
This Arbitration Clause shall survive any termination, payoff or transfer of
this contract. If any part of this Arbitration Clause, other than waivers of
class action rights, is deemed or found to be unenforceable for any reason,
the remainder shall remain enforceable. If a waiver of class action rights is
deemed or found to be unenforceable for any reason in a case in which
class action allegations have been made, the remainder of this Arbitration
Clause shall be unenforceable.”
II. The Law Regarding Enforceability of Arbitration Agreements
Both federal and California law express a strong public policy preference for
arbitration. (Moses H. Cone Memorial Hospital v. Mercury Construction Corp. (1983)
460 U.S. 1, 24-25; Moncharsh v. Heily & Blase (1992) 3 Cal.4th 1, 9.) Thus, any doubt
regarding the enforceability of an arbitration agreement is generally resolved in favor of
arbitration. (Coast Plaza Doctors Hospital v. Blue Cross of California (2000) 83
Cal.App.4th 677, 686.) However, standard contract defenses still apply to invalidate an
arbitration agreement. (AT&T Mobility LLC v. Concepcion (2011) 131 S.Ct. 1740, 1746
(Concepcion).) The FAA makes clear that arbitration agreements are “valid, irrevocable,
and enforceable, save upon such grounds as exist at law or in equity for the revocation of
any contract.” (9 U.S.C. § 2.) California Code of Civil Procedure, section 1281 similarly
provides: “A written agreement to submit to arbitration an existing controversy or a
controversy thereafter arising is valid, enforceable and irrevocable, save upon such
grounds as exist for the revocation of any contract.” Accordingly, unconscionability
remains a valid defense to a petition to compel arbitration, along with other contract
defenses such as fraud, mistake, or duress. (Concepcion, supra, 131 S.Ct. at p. 1746.)

7
Top Finance acknowledges that an arbitration clause may be unenforceable under the
FAA if it is found to be unconscionable.
The unconscionability doctrine seeks to invalidate contracts which are
“unreasonably favorable to the more powerful party” (8 Williston on Contracts (4th ed.
2010) § 18:10, p. 91). To that end, contracts, particularly contracts of adhesion, may not
impose terms that are “overly harsh,” “unduly oppressive, ” “so one-sided as to ‘shock
the conscience,’” or “unfairly one-sided.” (Sonic-Calabasas A, Inc. v. Moreno (2013) 57
Cal.4th 1109, 1145, citations omitted.) A court applying the unconscionability doctrine
must determine whether both procedural and substantive unconscionability exist in the
agreement. These elements are applied on a sliding scale: “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.”
(Armendariz v. Foundation Health Psychcare Services, Inc. (2000) 24 Cal.4th 83, 114.)
“Unconscionability is ultimately a question of law, which we review de novo
when no meaningful factual disputes exist as to the evidence. [Citation.] We review the
court’s resolution of disputed facts for substantial evidence. [Citation.] When the trial
court makes no express findings, we infer that it made every implied factual finding
necessary to support its order and review those implied findings for substantial evidence.
[Citation.]” (Chin v. Advanced Fresh Concepts Franchise Corp. (2011) 194 Cal.App.4th
704, 708 (Chin).) “ ‘[W]here an unconscionability determination “is based upon the trial
court’s resolution of conflicts in the evidence, or on the factual inferences which may
be drawn therefrom, we consider the evidence in the light most favorable to the court’s
determination and review those aspects of the determination for substantial
evidence.” . . . [Citations.]’ ” (Ontiveros v. DHL Express (USA), Inc. (2008)
164 Cal.App.4th 494, 502.)
III. Procedural Unconscionability
“The procedural element addresses the circumstances of contract negotiation and
formation, focusing on oppression or surprise due to unequal bargaining power.”
(Pinnacle Museum Tower Assn. v. Pinnacle Market Development (US), LLC (2012) 55

8
Cal.4th 223, 246 (Pinnacle).) “ ‘ “Oppression occurs where a contract involves lack of
negotiation and meaningful choice, surprise where the allegedly unconscionable
provision is hidden within a prolix printed form.” ’ ” (Id. at p. 247.) Even in adhesion
contracts, courts will enforce provisions that are conspicuous, plain, and clear, and that
do not “operate to defeat the reasonable expectations of the parties.” (Madden v. Kaiser
Foundation Hospitals (1976) 17 Cal.3d 699, 710.)
Here, the trial court found that Guzman was presented with a take-it-or-leave-it
proposition and lacked any meaningful choice, fulfilling the oppression prong of
procedural unconscionability. It further found the arbitration agreement was written in
small font on the back of the agreement and at the very end of the contract, which it
determined were characteristics indicative of surprise.
As a preliminary matter, we note the trial court failed to cite to any evidence in the
record to support a finding of oppression, appearing to rely only on the allegations in the
complaint and on the contract. Allegations contained in an unverified complaint are not
evidence. (See Code Civ. Proc., § 128.7, subd. (b)(3).) While the sales contract is pre-
printed and standardized, that, by itself, does not prove Guzman was presented with a
take-it-or-leave-it contract. “To describe a contract as adhesive in character is not to
indicate its legal effect. It is, rather, ‘the beginning and not the end of the analysis insofar
as enforceability of its terms is concerned.’ [Citation.] Thus, a contract of adhesion is
fully enforceable according to its terms [citations] unless certain other factors are present
which, under established legal rules – legislative or judicial – operate to render it
otherwise.” (Graham v. Scissor-Tail, Inc. (1981) 28 Cal.3d 807, 819-820, fns. omitted;
see also Peng v. First Republic Bank (2013) 219 Cal.App.4th 1462, 1470 [use of
nonnegotiable contract, standing alone, insufficient to support a finding of procedural
unconscionability].)
The record does not include a declaration or other evidence to establish Guzman
lacked any meaningful choice. The only declarations contained in the record are ones by
counsel for Top Finance and its custodian of records. Further, Top Finance opted not to
include the reporter’s transcript in this record and thus, we are unable to determine if any

9
evidence was presented at the hearing. It, however, is Guzman’s burden to prove any
defense to enforcement of the arbitration provision. (Chin, supra, 194 Cal.App.4th at
p. 708.) Guzman has not identified any evidence of oppression other than by citation to
the terms of the contract.
Even if we accept the trial court’s finding that the arbitration clause was
oppressive, though, we find the arbitration provision lacking in surprise. Arbitration is
and has been a common means of dispute resolution and an arbitration provision in a
consumer contract cannot fairly be said to defeat the reasonable expectations of
consumers. (Patterson v. ITT Consumer Financial Corp. (1993) 14 Cal.App.4th 1659,
1665 [recognizing arbitration is within the reasonable expectation of most consumers].)
In evaluating the contract, the arbitration clause cannot fairly be described as hidden or
inconspicuous within a prolix form.2 There is no contention that it does not conform to
state law, which requires at least 6-point type. (Civ. Code, § 2981.9 [“Every conditional
sale contract subject to this chapter shall be in writing and, if printed, shall be printed in
type no smaller than 6-point, and shall contain in a single document all of the agreements
of the buyer and seller with respect to the total cost and the terms of payment for the
motor vehicle, including any promissory notes or any other evidences of indebtedness”].)
The contract itself is only one page with two sides. The form points out the existence of
the arbitration clause on the front side in all capital letters, above the signature line for the
buyer. The arbitration clause is also highlighted on the back in that it is outlined with a
large box, by far the largest of the three boxed-in provisions on the page. The provision’s
boldface, all capital heading further highlights it. Surprise is also lacking in that Guzman
does not contend he was denied an opportunity to read the contract before signing it.

2
Because a copy of the contract is contained in the record, there is no meaningful
factual dispute as to its placement, size, and depiction relative to the entire contract.
Thus, we review the arbitration clause de novo.

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IV. Substantive Unconscionability
Given the lack of surprise and assuming some amount of oppression, the
arbitration clause contains, at most, a low degree of procedural unconscionability.
Under the sliding scale articulated in Armendariz, a substantial degree of substantive
unconscionability would be required to defeat enforcement of the clause. (Armendariz,
supra, 24 Cal.4th at p. 114.) “Substantive unconscionability pertains to the fairness of an
agreement’s actual terms and to assessments of whether they are overly harsh or one-
sided. [Citations.] A contract term is not substantively unconscionable when it merely
gives one side a greater benefit; rather, the term must be ‘so one-sided as to “shock the
conscience.” ’ ” (Pinnacle, supra, 55 Cal.4th at p. 246.)
Guzman argues the trial court’s finding of substantive unconscionability should
not be disturbed because Top Finance cannot attack the trial court’s order by raising new
factual and legal issues on appeal. In short, Guzman contends Top Finance has forfeited
this issue as well. Not so. Top Finance addressed whether the arbitration agreement was
unconscionable in its motion to compel arbitration, anticipating Guzman’s opposition.
That is sufficient for our purposes. To the extent Top Finance introduces facts outside of
the record, we will disregard those facts.
Following argument and briefing, the trial court found substantive
unconscionability was present because: 1) there was no provision requiring a written
decision from the arbitrator; 2) there was no reference to any discovery rights; 3) there
was no reference to the rules of the arbitral forum to be used; 4) the arbitration fee
provisions were problematic; 5) there was no provision for an appeal to a three-judge
panel; and 6) there was no mutuality of remedies. We conclude none of these provisions
are sufficient to render the arbitration provision substantively unconscionable.
A. Absence of Provisions Requiring a Written Decision and Discovery Rights
The trial court found the absence of a provision requiring a written decision or one
referencing discovery rights to be indicative of substantive unconscionability. The
absence of these provisions is not overly harsh. Nothing in the arbitration clause
precludes a written decision or discovery during the arbitration. Indeed, Code of Civil

11
Procedure section 1283.4 requires the award to be in writing. As a result, “the absence of
express provisions requiring a written arbitration award and allowing discovery does not
render the arbitration agreement unconscionable. Rather, those terms are implied as a
matter of law as part of the agreement.” (Sanchez v. Western Pizza Enterprises, Inc.
(2009) 172 Cal.App.4th 154, 177, discussed on a different issue in Iskanian v. CLS
Transportation Los Angeles, LLC (2014) 59 Cal.4th 348, 366.)
B. Rules of Arbitration
Under the arbitration clause, a buyer has the choice of conducting the arbitration
with the National Arbitration Forum (NAF), the American Arbitration Association
(AAA), or “any other organization that [buyer] may choose subject to [seller’s]
approval.” The buyer is then directed to “get a copy of the rules of these organizations by
contacting the arbitration organization or visiting its website.” The websites of the NAF
and AAA are listed in the provision. The trial court found unconscionable the
provision’s failure to reference the rules of these arbitration organizations.
Under these circumstances, we fail to see how this is substantively
unconscionable. The arbitration provision allows the buyer a choice of arbitral forums,
including ones which are not listed. It further references the rules for the NAF and AAA
by directing the buyer to those organizations’ websites. Given the widespread
availability of the internet, this contract term does not “shock the conscience,”
particularly when the buyer can choose a forum other than the NAF or AAA. Further,
there is no indication the rules of the NAF or the AAA are themselves substantively
unconscionable. The mere act of referencing the rules of an arbitral organization by
directing a buyer to a website is insufficient to sustain a finding of substantive
unconscionability. (See Lane v. Francis Capital Management LLC (2014) 224
Cal.App.4th 676, 692 [permissible to incorporate by reference AAA rules].)
1. Arbitration Fees
The trial court next took issue with the apportionment of fees between the parties.
The arbitration clause provides that the seller will advance “[the buyer’s] filing,
administration, service or case management fee and [the buyer’s] arbitrator or hearing fee

12
all up to a maximum of $2500, which may be reimbursed by decision of the arbitrator at
the arbitrator’s discretion.” Each party is responsible for his or her own attorney, expert,
and other fees, unless awarded by the arbitrator under applicable law.
The trial court found this cost provision to be unconscionable because “[a]ssuming
arguendo that the cost of the arbitration exceeds $2,500, and the Plaintiff were to prevail,
then Plaintiff would not necessarily be reimbursed for the arbitration costs exceeding that
amount. There is no way of determining how much these arbitration fees would be.
Moreover, there is no potential for a fee waiver under the terms of the arbitration
provision, as is allowed for indigent plaintiffs for cases filed in court.”
We do not agree that the provision is unduly harsh and one sided. In shifting the
first $2,500 of costs to the seller, the provision helps buyers. That buyers may be
responsible for their own costs above that amount does not seem unfair on its face. A
“determination that arbitral fees in consumer cases are unreasonable should be made on a
case-by-case basis, with the consumer carrying the burden of proof.” (Gutierrez v.
Autowest, Inc. (2003) 114 Cal.App.4th 77, 97 (Gutierrez).) In Gutierrez, the plaintiffs
presented substantial evidence in the trial court that the arbitration administrative fees
they would be required to pay exceeded their ability to pay. (Id. at pp. 90-91.) They
provided the court with a copy of the AAA rules in effect at the time the defendants
moved to compel arbitration and a declaration from a AAA administrator describing how
costs were to be calculated under those rules. In addition, the plaintiffs submitted a
declaration setting forth their income, expenses, and savings to show that the required
fees exceeded their ability to pay. (Ibid.) The plaintiffs’ arbitration agreement provided
no effective procedure for them to obtain a fee waiver or reduction. (Id. at p. 91.)
Here, there is no evidence, much less substantial evidence, that the arbitration fees
would be prohibitively high. It is telling that the trial court noted “[t]here is no way of
determining how much these arbitration fees would be.” Gutierrez ably illustrates how to
prove whether arbitration fees are unduly harsh or one sided. The trial court’s comment
suggests no evidence was presented on this issue.

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 As to the trial court’s remark that there is no potential for a fee waiver for indigent
parties, Code of Civil Procedure section 1284.3, subdivision (b)(1) requires all fees and
costs charged upon a consumer by a private arbitration company, exclusive of arbitrator
fees, to be waived for an indigent consumer. Given the arbitration provision’s silence on
this subject, subdivision (b) is implied as part of the contract. (See Sanchez v. Western
Pizza Enterprises, Inc., supra, 172 Cal.App.4th at p. 177.) We note also that the provision
for initial round costs does not on its face violate Code of Civil Procedure section 1284.3,
which prohibits nonprevailing consumers from being responsible for the opposing party's
costs. (Code Civ. Proc., § 1284.3, subd. (a).) The contractual provision does not say that
buyers will be responsible for the seller’s costs, only the buyers’ own costs.
2. Appeal to a Three-Member Panel
The trial court further found the provision allowing an appeal to a three-member
panel to be problematic as there is nothing to indicate the rules of the NAF or AAA
permitted such appeals. We decline to find this provision unconscionable for that reason.
There is no indication the NAF or AAA does not permit such appeals. Further, the
arbitration clause allows the parties to agree on an arbitral forum that is not the NAF or
AAA. Thus, the parties are free to select one which does allow an appeal to a three-
member panel. In any case, even if we assume this provision is substantively
unconscionable, it alone does not render the provision unconscionable under the sliding
scale articulated in Armendariz.
3. Mutuality of Remedies
The trial court devoted the majority of its ruling on this issue to a finding that the
arbitration clause inadequately provided a mutuality of remedies. Under the arbitration
clause, “[the buyer] and [the seller] retain any rights to self-help remedies, such as
repossession. [The buyer] and [the seller] retain the right to seek remedies in small
claims court for disputes or claims within that court’s jurisdiction, unless such action is
transferred, removed or appealed to a different court. Neither [The buyer] nor [the seller]
waive the right to arbitrate by using self-help remedies or filing suit.”

14
 The trial court found this provision unconscionable because: “It is totally unclear
how Plaintiff would have a ‘repossession’ remedy here; it is likely that remedy would
apply only to the Defendants. It also is unclear what other ‘self-help’ remedies Plaintiff
(and other consumers signing the [contract]) would have, outside of the required
arbitration.” The trial court found this provision resulted in a lack of mutuality. That is,
the provision exempts from arbitration the seller’s most likely claims – repossession of
vehicles for nonpayment of vehicle loans and small claims suits for nonpayment – while
buyers’ claims will always fall within the arbitration clause. We disagree.
To say this provision is unduly harsh and one sided because it exempts the self-
help remedy of repossession is unpersuasive. Self-help remedies are, by definition,
outside the judicial system. Top Finance’s right to repossess derives from the sales
contract, which provides that it may repossess a vehicle if the buyer defaults.
Repossession does not require court action. It would defy logic to require the dealership
to invoke the quasi-judicial process of arbitration to accomplish something that does not
normally require the judicial process. In other words, there is nothing harsh or one sided
about exempting repossession from arbitration when it is exempt from the judicial
process as part of the status quo. Moreover, the notion that the buyer has no
corresponding self-help remedies that would be exempt is not a consequence of the
arbitration agreement. If there is a disparity in remedies, this is true whether the buyer is
compelled to arbitration or is free to file suit in court.
The trial court found this provision analogous to the one in Abramson v. Juniper
Networks, Inc. (2004) 115 Cal.App.4th 638. Abramson is distinguishable. There, an
employment agreement required the parties to arbitrate all claims, except those relating to
trade secrets, confidential information and other intellectual property. (Id. at pp. 664-
665.) Thus, it exempted from arbitration certain types of legal disputes requiring the
judicial process, not extrajudicial, self-help remedies as in this case.
The exemption of small claims court disputes likewise does not seem unduly harsh
or one sided. The provision is neutral and applies to any party’s small claims dispute.
Buyers could have a small claims dispute against the dealership – for example, for the

15
cost to repair a defective condition of the vehicle—and it would be exempt from
arbitration. They benefit from this provision just as much as the dealership.
DISPOSITION
The trial court’s order denying Top Finance’s motion to compel arbitration is
reversed. Top Finance to recover its costs on appeal.

BIGELOW, P.J.
We concur:

RUBIN, J.

GRIMES, J.

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