Judge: Andrew E. Cooper, Case: 23CHCV03908, Date: 2024-11-07 Tentative Ruling

Case Number: 23CHCV03908    Hearing Date: November 7, 2024    Dept: F51

DEMURRER WITH MOTION TO STRIKE

Demurrer with Motion to Strike Filed: 7/25/24

MOVING PARTY: Defendant General Motors LLC (“Defendant”)

RESPONDING PARTY: Plaintiff Jose Napoles (“Plaintiff”)

NOTICE: NOT OK(misstates the Plaintiff’s name as Adam Mermel)

RELIEF REQUESTED: Defendant demurs to the fifth cause of action in Plaintiff’s first amended complaint (“FAC”). Defendant also seeks an order striking Plaintiff’s prayer for punitive damages.

TENTATIVE RULING: The demurrer is overruled, and the motion to strike is denied. Defendant shall file and serve an answer to Plaintiff’s FAC within 30 days.

BACKGROUND 

On 1/28/22, Plaintiff allegedly purchased a vehicle manufactured by Defendant, and now brings this action under the Song-Beverly Consumer Warranty Act (Civil Code § 1790 et seq.), alleging, inter alia, that Defendant had actual knowledge of a transmission defect in the vehicle model while concealing such knowledge. (FAC ¶¶ 63–81.) Plaintiff alleges that he later discovered the transmission defects, but Defendant was unable to repair the issues or offer to repurchase or replace the vehicle. (Id. at ¶ 14.)

On 12/27/23, Plaintiff filed his original complaint against Defendant, alleging the following causes of action: (1) Violation of Civil Code Section 1793.2(d); (2) Violation of Civil Code Section 1793.2(b); (3) Violation of Civil Code Section 1793.2(a)(3); (4) Breach of the Implied Warranty of Merchantability; and (5) Fraudulent Inducement – Concealment. On 6/20/24, Plaintiff filed his FAC, alleging against Defendant the same causes of action.

On 7/25/24, Defendant filed and served the instant demurrer and motion to strike. On 10/17/24, Plaintiff filed his oppositions thereto. On 10/23/24, Defendant filed its replies.

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DEMURRER

As a general matter, a party may respond to a pleading against it by demurrer on the basis of any single or combination of eight enumerated grounds, including that “the pleading does not state facts sufficient to constitute a cause of action.” (Code Civ. Proc., § 430.10, subd. (e).) In a demurrer proceeding, the defects must be apparent on the face of the pleading or via proper judicial notice.¿(Donabedian v. Mercury Ins. Co. (2004) 116 Cal.App.4th 968, 994.)¿

“A demurrer tests the pleading alone, and not the evidence or facts alleged.” (E-Fab, Inc. v. Accountants, Inc. Servs. (2007) 153 Cal.App.4th 1308, 1315.) As such, the court assumes the truth of the complaint’s properly pleaded or implied factual allegations. (Ibid.) The only issue a demurrer is concerned with is whether the complaint, as it stands, states a cause of action. (Hahn v. Mirda (2007) 147 Cal.App.4th 740, 747.) 

Here, Defendant¿demurs to Plaintiff’s fifth cause of action on the basis that the FAC fails¿to allege facts sufficient to¿state¿a cause of action for fraudulent concealment.

A.    Meet-and-Confer 

Before filing its demurrer, “the demurring party shall meet and confer in person or by telephone with the party who filed the pleading that is subject to demurrer for the purpose of determining whether an agreement can be reached that would resolve the objections to be raised in the demurrer.” (Code Civ. Proc. § 430.41, subd. (a).) The demurring party must file and serve a meet and confer declaration stating either: “(A) The means by which the demurring party met and conferred with the party who filed the pleading subject to demurrer, and that the parties did not reach an agreement resolving the objections raised in the demurrer;” or “(B) That the party who filed the pleading subject to demurrer failed to respond to the meet and confer request of the demurring party or otherwise failed to meet and confer in good faith.” (Id. at subd. (a)(3).)

Here, Defendant’s counsel declares that on an unspecified date, he met and conferred telephonically with Plaintiff’s counsel regarding the issues raised in the instant demurrer and motion to strike, but the parties were unable to come to a resolution. (Decl. of Ryan Kay ¶ 3.) Therefore, counsel has satisfied the preliminary meet and confer requirements of Code of Civil Procedure section 430.41, subdivision (a).

B.     Fraudulent Inducement – Concealment

Plaintiff’s fifth cause of action alleges Fraudulent Inducement – Concealment against Defendant. “The required elements for fraudulent concealment are (1) concealment or suppression of a material fact; (2) by a defendant with a duty to disclose the fact to the plaintiff; (3) the defendant intended to defraud the plaintiff by intentionally concealing or suppressing the fact; (4) the plaintiff was unaware of the fact and would not have acted as he or she did if he or she had known of the concealed or suppressed fact; and (5) plaintiff sustained damage as a result of the concealment or suppression of the fact.” (Hambrick v. Healthcare Partners Medical Group, Inc. (2015) 238 Cal.App.4th 124, 162.)

1.      Particularity

Fairness requires that allegations of fraud be pled “with particularity” so that the court can weed out nonmeritorious actions before a defendant is required to answer. (Small v. Fritz Companies, Inc. (2003) 30 Cal.4th 167, 184.) The particularity requirement typically necessitates pleading facts that “show how, when, where, to whom, and by what means the representations were tendered.” (Lazar v. Superior Court (1996) 12 Cal.4th 631, 645.)

In the FAC, Plaintiff alleges that Defendant had actual knowledge of the transmission defect through prior consumer complaints, and issued a number service bulletins acknowledging the subject transmission defect. (FAC ¶¶ 68–71.) Despite this knowledge, “Defendant GM and its directors, officers, employees, affiliates, and/or agents nevertheless concealed and failed to disclose the defective nature of the Vehicle, its 8- speed transmission to Plaintiff prior to and at the time of sale.” (Id. at ¶ 72.)

Here, Defendant argues that Plaintiff fails to meet the particularity requirement for pleading a fraud cause of action. Specifically, Defendant argues that “Plaintiff failed to allege (i) the identity of the individuals at GM who purportedly concealed material facts or made untrue representations about the Colorado, (ii) their authority to speak and act on behalf of GM, (iii) GM’s knowledge about alleged defects in Plaintiff’s Colorado at the time of purchase, (iv) any interactions with GM before or during the purchase of the Colorado, or (v) GM’s intent to induce reliance by Plaintiff to purchase the specific Colorado at issue.” (Dem. 8:12–17.)

“Less specificity should be required of fraud claims when it appears from the nature of the allegations that the defendant must necessarily possess full information concerning the facts of the controversy; even under the strict rules of common law pleading, one of the canons was that less particularity is required when the facts lie more in the knowledge of the opposite party.” (Alfaro v. Community Housing Improvement & Planning Assn., Inc. (2009) 171 Cal.App.4th 1356, 1384 [internal quotations and citations omitted].) In Alfaro, the Court of Appeal found that plaintiffs home purchasers in a housing development were sufficiently specific in pleading fraud based on the defendant vendors' alleged nondisclosure of deed restrictions, even though plaintiffs did not allege that the nondisclosure occurred by a certain means or at a certain time or place, because the defendants possessed the records of their dealings with plaintiffs. (Id. at 1385.)

Plaintiff argues in opposition that the particularity requirement is relaxed when, as here, a plaintiff brings a cause of action for fraudulent concealment as opposed to fraud. (Pl.’s Opp. 8:3–4, citing Alfaro, 171 Cal.App.4th at 1384 [“it is not practical to allege facts showing how, when and by what means something did not happen.”].) Here, as Plaintiff alleges, Defendant has access to “sources not available to consumers such as Plaintiff, including but not limited to pre-production and postproduction testing data; early consumer complaints about the Transmission Defect made directly to Defendant GM and its network of dealers; aggregate warranty data compiled from Defendant GM’s network of dealers; testing conducted by Defendant GM in response to these complaints; as well as warranty repair and part replacements data received by Defendant GM from Defendant GM’s network of dealers, amongst other sources of internal information.” (FAC ¶ 67.)

Based on the foregoing allegations, the Court finds that the particularity requirement for pleading a fraud cause of action is relaxed at this stage, and Plaintiff has sufficiently alleged facts to meet the relaxed standard.

2.      Duty to Disclose

“Fraudulent concealment requires the ‘suppression of a fact, by one who is bound to disclose it.’” (Huy Fong Foods, Inc. v. Underwood Ranches, LP (2021) 66 Cal.App.5th 1112, 1121, quoting Civ. Code § 1710, subd. 3.)  “Although, typically, a duty to disclose arises when a defendant owes a fiduciary duty to a plaintiff …, a duty to disclose may also arise when a defendant possesses or exerts control over material facts not readily available to the plaintiff.” (Jones v. ConocoPhillips Co. (2011) 198 Cal.App.4th 1187, 1199.)

Here, Defendant further argues that Plaintiff does not allege any direct dealings with Defendant, and therefore has not alleged that Defendant had any requisite duty to disclose. (Dem. 9:3–6.) Defendant argues that no duty to disclose exists where, as here, a plaintiff brings its claims against a manufacturer from which it did not directly obtain the product in question. (Id. at 9:24–10:14, citing Bigler-Engler v. Breg, Inc. (2017) 7 Cal.App.5th 276, 311.)

In Bigler-Engler, the Court of Appeal found that the defendant manufacturer of a medical device owed the plaintiff patient no duty to disclose where there was insufficient evidence that the parties transacted in any way. (7 Cal.App.5th at 314.) Here, as Defendant argues, “the FAC does not allege that Plaintiff purchased his Colorado directly from GM,” thus no transactional relationship exists between the parties. (Dem. 10:9–10.)

Notwithstanding Defendant’s argument, the Court, as previously discussed, finds that Plaintiff has sufficiently alleged that Defendant, as the manufacturer, “was in a superior position from various internal sources to know (or should have known) the true state of facts about the material defects contained in vehicles equipped with the 8-speed transmission.” (FAC ¶ 75.) Absent a fiduciary relationship between the parties, Defendant may nevertheless have a duty to disclose based on such control over the material facts underlying the action. (Jones, 198 Cal.App.4th at 1199.)

Based on the foregoing, the Court finds that Plaintiff has alleged facts sufficient to support a finding that Defendant had the requisite duty to disclose, giving rise to a fraudulent concealment cause of action. Accordingly, Defendant’s demurrer to Plaintiff’s fifth cause of action is overruled.

MOTION TO STRIKE

The court may, upon a motion, or at any time in its discretion, and upon terms it deems proper, strike any irrelevant, false, or improper matter inserted in any pleading. (Code Civ. Proc., § 436, subd. (a).) The court may also strike all or any part of any pleading not drawn or filed in conformity with the laws of this state, a court rule, or an order of the court. (Id., § 436, subd. (b).) The grounds for moving to strike must appear on the face of the pleading or by way of judicial notice. (Id., § 437.) Here, Defendant moves to strike Plaintiff’s prayer for punitive damages.

A.    Meet and Confer

“Before filing a motion to strike pursuant to this chapter, the moving party shall meet and confer in person or by telephone with the party who filed the pleading that is subject to the motion to strike for the purpose of determining if an agreement can be reached that resolves the objections to be raised in the motion to strike.” (Code Civ. Proc. § 435.5, subd. (a).)

Here, as previously mentioned, Defendant’s counsel declares that on an unspecified date, he met and conferred telephonically with Plaintiff’s counsel regarding the issues raised in the instant demurrer and motion to strike, but the parties were unable to come to a resolution. (Kay Decl. ¶ 3.) Therefore, counsel has satisfied the preliminary meet and confer requirements of Code of Civil Procedure section 435.5, subdivision (a).

B.     Punitive Damages

Punitive damages may be recovered upon a proper showing of malice, fraud, or oppression by clear and convincing evidence. (Civ. Code § 3294, subd. (a).) “Malice” is defined as conduct intended to cause injury to a person or despicable conduct carried on with a willful and conscious disregard for the rights or safety of others. (Id. at subd. (c); Turman v. Turning Point of Cent. Cal., Inc. (2010) 191 Cal.App.4th 53, 63.) “Oppression” means despicable conduct subjecting a person to cruel and unjust hardship, in conscious disregard of the person’s rights. (Ibid.) “Fraud” is an intentional misrepresentation, deceit, or concealment of a material fact known by defendant, with intent to deprive a person of property, rights or otherwise cause injury. (Ibid.)

Punitive damages must be supported by factual allegations. Conclusory allegations, devoid of any factual assertions, are insufficient to support a conclusion that parties acted with oppression, fraud or malice. (Smith v. Superior Court (1992) 10 Cal.App.4th 1033, 1042; Anschutz Entertainment Group, Inc. v. Snepp (2009) 171 Cal.App.4th 598, 643.)

1.      Song-Beverly Claims

As a preliminary matter, the parties dispute whether punitive damages are recoverable under the Song-Beverly Act. Defendant asserts that “punitive damages are not available under the Song-Beverly Act,” while Plaintiff argues that “courts have repeatedly held that the Song-Beverly provides for recovery of punitive damages in cases of willful breach.” (MTS 2:27; MTS Opp. 4:21–22.)

Defendant maintains that “Plaintiff cannot demand both a civil penalty under Song-Beverly and punitive damages.” (MTS 3:10–11, citing Troensegaard v. Silvercrest Industries, Inc. (1985) 175 Cal.App.3d 218, 228.) The Court agrees with Defendant inasmuch as Plaintiff seeks to recover punitive damages related to his Song-Beverly claims. However, to the extent that Plaintiff seeks to recover punitive damages related to his pre-sale fraudulent concealment claims, a request for such relief is permitted. (Anderson v. Ford Motor Co. (2022) 74 Cal.App.5th 946, 962–973.)

In Anderson, the Court of Appeal distinguished the case from that in Troensegaard, finding that unlike in Troensegaard, “the punitive damages and statutory penalties were based on different conduct that took place at different times. The punitive damages were based on conduct underlying the fraud/CLRA causes of action and took place before the sale. The civil penalty was based on defendant's post-sale failure to comply with its Song-Beverly Act obligations to replace the vehicle or make restitution when reasonable attempts to repair had failed.” (74 Cal.App.5th at 966.)

The Anderson Court ultimately found that the trial court’s award of both punitive damages and civil penalties was proper where “plaintiffs’ fraud/CLRA claims, and the punitive damages attached to them, were necessarily based on Ford’s conduct leading up to and at the time of plaintiffs’ purchase of the truck. The theory of liability was that Ford concealed the known substantial defects of the 6.0 liter Navistar diesel engine from them. Plaintiffs’ resulting harm stemmed from that deception.” (Id. at 967, 973.)

Here, as in Anderson, Plaintiff’s fraudulent inducement allegations against Defendant are distinct and separate from his post-sale Song-Beverly claims against Defendant. (MTS Opp. 3:14–15.) Therefore, the Court finds that Plaintiff may seek to recover punitive damages stemming from his fifth cause of action.

2.      Malice, Fraud, Oppression

Defendant further argues that Plaintiff has failed to allege facts with sufficient particularity as to show Defendant’s “malice, fraud, or oppression by clear and convincing evidence.” (Civ. Code § 3294, subd. (a).) “Plaintiff fail[s] to allege what specific representation(s), if any, were made about the Subject Vehicle and its transmission system, and whether the person making those representation(s), if any, was an agent of GM.” (MTS 4:23–25.)

As Plaintiff argues, and as outlined above, the Court finds that Plaintiff has pled his fraudulent concealment cause of action with sufficient specificity. As such, the Court finds that Plaintiff has sufficiently alleged facts to support his prayer for punitive damages under the “fraud” prong of Civil Code section 3294. The issue of Defendant’s intent to defraud is a question of fact that the Court declines to address at the demurrer stage. (Beckwith v. Dahl (2012) 205 Cal.App.4th 1039, 1061.) Based on the foregoing, the motion to strike Plaintiff’s prayer for punitive damages is denied.

CONCLUSION 

The demurrer is overruled, and the motion to strike is denied. Defendant shall file and serve an answer to Plaintiff’s FAC within 30 days.