Lacayo v. BMW of North America LLC
- Vince Chhabria
- 3:19-cv-08369
- U.S. District Court · Northern District of California
- 2
In Lacayo v. BMW, Judge Chhabria granted BMW’s motion to compel arbitration and dismissed the case without prejudice because Lacayo’s warranty claim was covered by her purchase agreement.
Maria Lacayo and BMW of North America LLC; the case was dismissed without prejudice so the dispute could proceed in arbitration.
What happened
In Lacayo v. BMW of North America LLC, Maria Lacayo sued BMW of North America for breach of warranty related to the sale and condition of her car. When she bought the car, she signed a purchase agreement requiring arbitration of disputes related to the car’s purchase or condition.
BMW of North America was not a signatory to the agreement, but the court found that it could enforce the arbitration clause as an intended third-party beneficiary. The court also found that Lacayo’s warranty claim fell within the clause’s scope.
Judge Vince Chhabria granted BMW’s motion to compel arbitration and dismissed the case without prejudice because all of Lacayo’s claims were subject to arbitration.
The detailed version
- Lacayo v. BMW of North America LLC · No. 3:19-cv-08369
- Vince Chhabria
- July 13, 2020
Background
Maria Lacayo sued BMW of North America LLC on one claim for breach of warranty associated with the sale of her car. When Lacayo bought the car, she signed a purchase agreement containing a broad arbitration clause covering claims, disputes, and controversies related to the vehicle’s purchase or condition, the contract, or resulting transactions or relationships, including relationships with certain third parties.
The agreement defined “me” as the buyer and “you” and “your” as the seller or the seller’s assignee. The seller, MINI of San Francisco, assigned its rights under the contract to BMW Financial Services NA. Lacayo sued BMW of North America, not MINI of San Francisco or BMW Financial Services.
Analysis
BMW of North America was not a party to the purchase agreement. The court nevertheless ruled that BMW of North America could enforce the arbitration clause as an intended third-party beneficiary. The court relied on BMW of North America’s ownership of BMW Financial Services and the clause’s express reference to affiliates of BMW Financial Services.
The court further ruled that Lacayo’s claim was within the scope of the arbitration clause because the claim concerned a warranty associated with the car’s sale and therefore arose out of or related to the car’s purchase or condition.
Ruling
Judge Vince Chhabria granted BMW’s motion to compel arbitration. Because all claims in the case were subject to arbitration, the court dismissed the case without prejudice. The opinion states that a district court may either stay the action or dismiss it outright in those circumstances.
Read the full 2-page opinion on CourtListener, the free public archive maintained by the Free Law Project.