Cardona v. Exclusive Auto Group LLC et al

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WO
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF ARIZONA
Before the Court is Defendant Carvana LLC’s (“Defendant Carvana”) Motion to
Compel Arbitration and Stay Action (Doc. 18), Plaintiff Morayma Cardona’s Response
(Doc. 24), and Defendant Carvana’s Reply (Doc. 27). For the following reasons, the Court
will grant the Motion.
I. BACKGROUND
On May 28, 2025, Plaintiff filed a Complaint against four Defendants: (1) Exclusive
Auto Group, LLC, (2) Sebastian Miranda Sandoval, (3) Carvana LLC, and (4) Western
Funding Incorporated. (Doc. 1.) Plaintiff brings claims for violation of the Federal
Odometer Fraud Act, violation of the Arizona Consumer Fraud Act, and Breach of
Contract. (Id. at 9–12.) Plaintiff seeks damages because she purchased a used vehicle and
learned years later that the number on the vehicle’s odometer had been altered to reflect a
lower mileage. (See id.)
In June 2023, Plaintiff purchased the used vehicle (“the Vehicle”) from Defendant
Exclusive Auto Group, LLC (“Exclusive Auto”) by entering into a Retail Installment
Morayma Guadalupe Cardona,
Plaintiff,
vs.
Exclusive Auto Group LLC et al.,
Defendants.
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No. CV-25-01843-PHX-SPL
ORDER
Case 2:25-cv-01843-SPL Document 29 Filed 12/11/25 Page 1 of 7

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Contract and Security Agreement (“the Purchase Agreement”). (Id. at 6, ¶¶ 43–48.) The
Purchase Agreement contained an arbitration provision. (Doc. 18 at 2.) At the time of the
purchase, Defendant Exclusive Auto represented that the odometer reading on the Vehicle
was 114,325 miles. (Doc. 1 at 6–7, ¶¶ 46–55.) Later, when Plaintiff attempted to trade in
the vehicle, she learned that the mileage on the odometer had been rolled back. (Doc. 1 at
7, ¶ 58.) A “CarFax report . . . showed 22 event records where the odometer was recorded
with mileage in excess of 114, 325 miles beginning on June 8, 2018 with 118,086 miles
and ending on December 30, 2021 with 279,555 miles.” (Id. ¶ 59.) Plaintiff now alleges
that the “representations . . . concerning the odometer reading or mileage on [the Vehicle]
were false, and [Defendants] knew, or should have known, that the representations were
false.” (Id. at 8, ¶ 61.)
Plaintiff is suing several entities who owned the Vehicle at various points in time
prior to her purchase. First, Defendant Carvana purchased the Vehicle from its original
owner in 2023 and sold it to Barter Holdings Incorporated,1 which later sold the vehicle to
Exclusive Auto. (Id. at 4–5, ¶¶ 25, 29, 40.) Then, Plaintiff purchased the Vehicle from
Defendant Exclusive Auto (id. at 6, ¶¶ 48–49) and the dealership’s owner, Defendant
Sandoval. (Id. at 3, ¶¶ 12–13.) Defendant Exclusive Auto “assigned or sold [the Purchase
Agreement] to [Defendant] Western Funding” (id. at 3, ¶ 21), which is “a subprime auto
lender who purchases Retail Installment Sales contracts from auto dealerships, including
Exclusive Auto.” (Id. at 12, ¶ 98.)
On July 2, 2025, Plaintiff and Defendant Western Funding filed a Stipulation to Stay
Case Against Defendants Exclusive Auto, Sandoval, and Western Funding and Proceed in
Arbitration in accordance with the arbitration provision in the Purchase Agreement. (Doc.
15 at 2.) Plaintiff indicated that she would continue litigation against Defendant Carvana,
which was not party to the Purchase Agreement. (Id.) The Court granted the stipulation
and stayed the case as to Defendants Exclusive Auto, Sandoval, and Western Funding.
1 Barter Holdings, Inc. is not a party to this action.
Case 2:25-cv-01843-SPL Document 29 Filed 12/11/25 Page 2 of 7

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(Doc. 16.) Now, Defendant Carvana moves to compel arbitration, even though it was not
a signatory to the Purchase Agreement. (Doc. 18 at 2.)
II. LEGAL STANDARD
The Federal Arbitration Act (“FAA”) “leaves no place for the exercise of discretion
by a district court, but instead mandates that district courts shall direct the parties to proceed
to arbitration on issues as to which an arbitration agreement has been signed.” Dean Witter
Reynolds, Inc. v. Byrd, 470 U.S. 213, 218 (1985) (citing 9 U.S.C. §§ 3, 4). “The court’s
role under the [FAA] is therefore limited to determining (1) whether a valid agreement to
arbitrate exists and, if it does, (2) whether the agreement encompasses the dispute at issue.”
Chiron Corp. v. Ortho Diagnostic Sys., Inc., 207 F.3d 1126, 1130 (9th Cir. 2000). If a
district court finds that an “arbitration agreement is valid and enforceable, then it should
stay or dismiss the action pending arbitration proceedings to allow the arbitrator to decide
the remaining claims, including those relating to the contract as a whole.” Nagrampa v.
MailCoups, Inc., 469 F.3d 1257, 1276–77 (9th Cir. 2006).
“The United States Supreme Court has held that a litigant who is not a party to an
arbitration agreement may invoke arbitration under the FAA if the relevant state contract
law allows the litigant to enforce the agreement.” Kramer v. Toyota Motor Corp., 705 F.3d
1122, 1128 (9th Cir. 2013) (citing Arthur Andersen LLP v. Carlisle, 556 U.S. 624, 632
(2009)). Arizona law allows a non-signatory to “compel arbitration with a signatory to an
arbitration agreement if the claims at issue are ‘intimately founded in and intertwined with
the underlying contract obligations.’” Tradeline Enters. Pvt. Ltd. v. Jess Smith & Sons
Cotton, LLC, 772 Fed. App’x 585, 586 (9th Cir. 2019) (citing Sun Valley Ranch 308 Ltd.
P’ship v. Robson, 294 P.3d 125, 135 (Ariz. Ct. App. 2012)). The law identifies two specific
scenarios in which a nonsignatory may compel arbitration. First, “when the relationship
between the signatory and nonsignatory defendants is sufficiently close that only by
permitting the nonsignatory to invoke arbitration may evisceration of the underlying
arbitration agreement between the signatories be avoided.” Sun Valley Ranch, 294 P.3d at
134. At issue here is the second scenario which occurs when:
Case 2:25-cv-01843-SPL Document 29 Filed 12/11/25 Page 3 of 7

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[T]he signatory to a written agreement containing an
arbitration clause must rely on the terms of the written
agreement in asserting [its] claims against the nonsignatory.
When each of a signatory’s claims against a nonsignatory
makes reference to or presumes the existence of the written
agreement, the signatory’s claims arise out of and relate
directly to the written agreement, and arbitration is appropriate.
Id. at 135. In those circumstances, a party may compel arbitration, even if they were not
party to the agreement containing an arbitration clause.
III. DISCUSSION
The Court must determine whether Defendant Carvana, a nonsignatory to the
Purchase Agreement, may compel arbitration. Plaintiff brings one claim against Defendant
Carvana for violation of the Federal Odometer Fraud Act (the “Act”),2 which Plaintiff also
brings against Defendants Exclusive Auto Group and Sandoval. (Doc. 1 at 9, ¶¶ 71–75.)
Plaintiff alleges that Defendants violated the Act “by providing false representations
regarding the odometer reading and mileage on the [Vehicle], which they knew or should
have known where false.” (Id. ¶ 73.) Specifically, Plaintiff alleges that Defendant Carvana
“certified the odometer reading to be 114,197 actual miles, which was false,” after
Defendant Carvana purchased the Vehicle from the original owner. (Id. at 4, ¶¶ 26–30.)
Further, Plaintiff alleges that at the time, Defendant Carvana had a policy of obtaining a
CarFax report on a vehicle before purchasing or selling a vehicle. (Id. at 4–5, ¶¶ 33–35.)
Plaintiff also alleges that Defendants Carvana, Exclusive Auto, and Sandoval “fail[ed] to
disclose that the [Vehicle] had more miles on it than were reflected on the odometer when
they sold the [Vehicle], which Plaintiff ultimately purchased.” (Id. at 9, ¶ 74.)
Defendant Carvana argues that “Plaintiff’s damages are based on the [c]ontract price
of the Vehicle,” and that “Plaintiff would have no claim against Carvana if she had not
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
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
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
by the transferee and may be liable for . . . damages.” Id.
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entered into the [Purchase Agreement] with Exclusive Auto.” (Doc. 18 at 4.) Thus,
Defendant Carvana asserts that Plaintiff’s claim against it “necessarily presumes the
existence of” the Purchase Agreement and should therefore be arbitrated. (Id.) On the other
hand, Plaintiff argues that Defendant “Carvana’s liability stems from its own independent
acts of odometer fraud, which occurred prior to the vehicle’s transfer to Exclusive Auto
and Plaintiff’s subsequent purchase.” (Doc. 24 at 2.)
In Kramer v. Toyota Motor Corp., the Ninth Circuit addressed a similar request to
compel arbitration by a nonsignatory. 705 F.3d 1122, 1128–31 (9th Cir. 2013). In that case,
the plaintiffs sued Toyota for violations of California law after they “experienced defects
in [the] antilock brake systems” of their Toyota Prius vehicles. Id. at 1124. Toyota moved
to compel arbitration based on the plaintiffs’ purchase agreements with the dealerships
where they bought their vehicles. Id. at 1124–25. Toyota argued that it should have been
able to compel arbitration because the plaintiff’s claims “rel[ied] on the existence of [the
plaintiffs’] vehicle purchase transactions” and because the damages request was based on
the “price term” of the purchase agreements. Id. at 1130–32. The Court rejected both
arguments, determining that none of the claims against Toyota actually relied on the
purchase agreements. Id. The Court emphasized that “[u]nder California law, mere
reference to a term of the Purchase Agreement is not enough” to compel arbitration based
on that agreement. Id. at 1132.
A different conclusion results under Arizona contract law. Arizona law provides
that when a claim “makes reference to or presumes the existence of the written agreement,
the signatory’s claims arise out of and relate directly to the written agreement, and
arbitration is appropriate.” Sun Valley Ranch, 294 P.3d at 135. Plaintiff’s claim against
Defendants Exclusive Auto, Sandoval, and Carvana references the fact that “Plaintiff
ultimately purchased” the vehicle. (Doc. 1 at 9, ¶ 74.) Plaintiff asserts that Defendants’
“false representations regarding the odometer reading and mileage” and “fail[ure] to
disclose that the [Vehicle] had more miles on it than were reflected on the odometer when
they sold [it]” caused her to purchase the Vehicle. (Id. ¶¶ 72–75.) Though the claim does
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not arise out of any of the terms of the Purchase Agreement, it references the Purchase
Agreement and relates to it. Therefore, Defendant Carvana may compel arbitration.
Moreover, Defendant Carvana’s alleged misrepresentations may need to be
considered alongside those of Defendants Exclusive Auto and Sandoval. Plaintiff alleges
that Defendants’ misrepresentations and omissions, at various points throughout the chain
of title, led her to purchase the Vehicle believing that the mileage was lower than it was in
reality. (Id. ¶ 74.) Although Defendant Carvana did not act in concert with Defendants
Exclusive Auto Group and Sandoval, the alleged misrepresentations and failures to
disclose accurate mileage are related. For that reason, it is possible the Court would be
required to consider the Purchase Agreement in resolving the claim against Defendant
Carvana. See Sun Valley, 294 P.3d at 135 (“[T]he trier of fact will be required to consider
the [agreement] and the [contract] in resolving plaintiffs’ claims.”).
Having found that the claims against Defendant Carvana relate to the Purchase
Agreement and are intertwined with the contract obligations, the Court will grant
Defendant Carvana’s Motion to Compel Arbitration. See id. (holding that a nonsignatory
defendant could compel arbitration in part because “[his] conduct is intertwined with that
of the other defendants who signed [the agreement]”); see also Tradeline Enters., 772 Fed.
App’x at 586 (allowing for arbitration under Arizona law because the non-signatory’s
claims were “intimately founded in an intertwined with the underlying contract
obligations”) (citation omitted). Thus, the Court will stay the case as to Defendant Carvana.
Accordingly,
IT IS ORDERED that Defendant Carvana’s Motion to Compel Arbitration and
Stay Action (Doc. 18) is granted.
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IT IS FURTHER ORDERED that this case is stayed as to Defendant Carvana.
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
(Doc. 16).
Dated this 11th day of December, 2025.
Honorable Steven P. Logan
United States District Judge
Case 2:25-cv-01843-SPL Document 29 Filed 12/11/25 Page 7 of 7