Judge: Andrew E. Cooper, Case: 23CHCV00408, Date: 2023-11-07 Tentative Ruling

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Case Number: 23CHCV00408    Hearing Date: November 7, 2023    Dept: F51

DEMURRER

Demurrer: 9/12/23

MOVING PARTY: Defendant Galpin Motors, Inc., a California corporation dba Galpin Motors Inc. dba Galpin Ford (“Moving Defendant”)

RESPONDING PARTY: Plaintiff Miki Roberts (“Plaintiff”)

NOTICE: OK 

RELIEF REQUESTED: Moving Defendant demurs to the third cause of action in Plaintiff’s first amended complaint (“FAC”).

TENTATIVE RULING: The demurrer is sustained with 20 days leave to amend.

BACKGROUND 

On 9/12/23, Moving Defendant filed the instant demurrer to Plaintiff’s FAC. On 10/25/23, Plaintiff filed their opposition. On 10/31/23, Moving Defendant filed its reply.

ANALYSIS

Moving Defendant again¿demurs to Plaintiff’s third cause of action on the bases that Plaintiff fails¿to allege facts sufficient to¿state¿a cause of action for negligent repair, and the claim is barred by the economic loss rule.

A.    Meet-and-Confer 

Defendant’s counsel declares that on 9/12/23, she met and conferred with Plaintiff’s counsel to discuss the issues raised in the instant demurrer, but the parties were unable to come to a resolution. (Decl. of Denetta E. J. Scott, ¶ 3.) Therefore, counsel has satisfied the preliminary meet and confer requirements of Code of Civil Procedure section 430.41, subdivision (a).

B.     Negligent Repair

1.      Economic Loss Rule

“The economic loss rule provides that, in general, there is no recovery in tort for negligently inflicted ‘purely economic losses,’ meaning financial harm unaccompanied by physical or property damage. … For claims arising from alleged product defects, economic loss consists of damages for inadequate value, costs of repair and replacement of the defective product or consequent loss of profits—without any claim of personal injury or damages to other property.” (Dhital v. Nissan North America, Inc. (2022) 84 Cal.App.5th 828, 837 [internal quotations and citations omitted].)

“There is no liability in tort for economic loss caused by negligence in the performance or negotiation of a contract between the parties. …Where a purchaser's expectations in a sale are frustrated because the product he bought is not working properly, his remedy is said to be in contract alone, for he has suffered only ‘economic’ losses. … The economic loss rule requires a purchaser to recover in contract for purely economic loss due to disappointed expectations, unless he can demonstrate harm above and beyond a broken contractual promise.” (Id. at 838 [internal quotations and citations omitted].)

Here, Plaintiff has amended their complaint to allege the following language: “Defendant GALPIN FORD was unable to properly repair or diagnose the engine issues. Shortly after the repairs were completed, Plaintiff noticed that the vehicle was leaking fluid again and there was smoke in the engine compartment. Plaintiff then had the vehicle towed back to GALPIN FORD. Defendant GALPIN FORD who provided a professional automotive repair service, should have known that the negligent repair of the vehicle could cause damage to the vehicle as a whole or to other subcomponents.” (FAC ¶ 43.) As in its previous demurrer, Moving Defendant again argues that the economic loss rule applies to bar Plaintiff’s third cause of action because “the crux of Plaintiff’s claim is that Galpin Ford failed to repair Plaintiff’s vehicle to conform to warranty.” (Dem. 9:25–28.)

Plaintiff argues in opposition that “California courts have recognized an exception to the economic loss rule in cases involving negligent performance of services.” (Pl.’s Opp. 1:5–6, citing North American Chemical Co. v. Superior Court (1997) 59 Cal.App.4th 764.) “Even if Plaintiff’s damages are solely economic, they may still seek recovery because the economic loss rule does not apply in cases involving the negligent performance of services that results in foreseeable economic loss.” (Id. at 4:14–16.)

Moving Defendant argues on reply that the North American Chemical case cited by Plaintiff is “plainly inapposite” in this case because the analysis regarding foreseeability discussed therein “only applies when a plaintiff is not in privity with the defendant.” (Def.’s Reply 1:22–25.) “Plaintiff and Galpin were plainly in privity here,” therefore “the relationship between Plaintiff and Galpin does not fall within the special relationship/professional services exception to avoid the economic loss rule, nor is there any allegation of an independent tort duty apart from the warranty contract.” (Id. at 1:28–2:1, 3:11–13, citing Sheen v. Wells Fargo Bank, N.A. (2022) 12 Cal.5th 905; Erlich v. Menezes (1999) 21 Cal.4th 543.)

The Court agrees with Moving Defendant, and finds that North American Chemical is inapposite here, where the parties are in privity, to bar the application of the economic loss rule. In Sheen, the Supreme Court found that “the Biakanja factors [applied in North American Chemical] are not applicable when, as here, the litigants are in contractual privity and the plaintiff's claim is not ‘independent of the contract arising from principles of tort law.’” (12 Cal.5th at 942.)

The Court finds that here, as with their original complaint, Plaintiff’s additional allegations fall short of pleading that Moving Defendant caused Plaintiff “personal injury or damages to other property” constituting non-economic losses. Plaintiff has again failed to allege that Moving Defendant damaged any component of the vehicle beyond its allegedly defective nature.

2.      Subcomponent Defect

 “‘The economic loss rule does not necessarily bar recovery in tort for damage that a defective product (e.g., a window) causes to other portions of a larger product (e.g., a house) into which the former has been incorporated.’” (Pl.’s Opp. at 4:17–20, quoting Jimenez v. Superior Court (2002) 29 Cal.4th 473, 483.) Plaintiff argues that here, Plaintiff’s allegations bring their claim within the exception delineated in Jimenez. (Id. at 5:20–21.)

Moving Defendant argues in reply that “here, unlike Jimenez, there is no allegation in the Complaint that Galpin damaged a component of a product.” (Def.’s Reply 4:5–6.) The Court agrees. The additional factual allegations state that Moving Defendant “should have known that the negligent repair of the vehicle could cause damage to the vehicle as a whole or to other subcomponents.” (FAC ¶ 43 [emphasis added].) However, as the Court finds above, these allegations fall short of pleading that Moving Defendant caused damage to any component of the vehicle beyond its allegedly defective nature.

Based on the foregoing, the Court finds that Plaintiff’s claims against Defendant are for purely economic losses, which are barred by the economic loss rule. Accordingly, the demurrer is sustained on this ground. The Court notes the parties’ arguments regarding the sufficiency of Plaintiff’s allegations of damages but need not reach them considering the foregoing.

Leave to Amend

Where a demurrer is sustained, leave to amend must be allowed where there is a reasonable possibility of successful amendment. (Goodman v. Kennedy (1976) 18 Cal.3d 335, 348.) The burden is on the plaintiff to show the court that a pleading can be amended successfully. (Id.; Lewis v. YouTube, LLC (2015) 244 Cal.App.4th 118, 226.) However, “[i]f there is any reasonable possibility that the plaintiff can state a good cause of action, it is error to sustain a demurrer without leave to amend.” (Youngman v. Nevada Irrigation Dist. (1969) 70 Cal.2d 240, 245).c

Here, the Court notes that while Plaintiff again does not make a specific request for leave to amend in the event the Court sustains the demurrer, under the Court’s liberal policy of granting leave to amend, the Court grants Plaintiff 20 days leave to amend the complaint to cure the defects set forth above.

CONCLUSION 

The demurrer is sustained with 20 days leave to amend.