Judge: Armen Tamzarian, Case: 22STCV33429, Date: 2023-04-11 Tentative Ruling
Case Number: 22STCV33429 Hearing Date: April 11, 2023 Dept: 52
Tentative Ruling:
Defendant
General Motors, LLC’s Demurrer and Motion to Strike Portions of First Amended
Complaint
Demurrer
Defendant General Motors, LLC (GM) demurs
to plaintiff Darrin Ferrick Ross, Jr.’s fourth cause of action for fraudulent
inducement – concealment.
Timeliness
GM argues the three-year statute of
limitations bars this cause of action. A
demurrer should be sustained where “the complaint shows on its face that the
statute [of limitations] bars the action.”
(E-Fab, Inc. v. Accountants, Inc.
Services (2007) 153 Cal.App.4th 1308, 1315.) “[T]he defect must clearly and affirmatively
appear on the face of the complaint; it is not enough that the complaint shows
merely that the action may be barred.” (Id.
at p. 1316.) On demurrer, the court must
determine: (1) which statute of limitations applies; and (2) when the claim
accrued. (Ibid.)
Fraud has a three-year statute of
limitations, which begins running when the plaintiff discovers the facts
constituting the fraud. (CCP §
338(d).) This provision “effectively
codifies the delayed discovery rule in connection with actions for fraud,
providing that a cause of action for fraud ‘is not to be deemed to have accrued
until the discovery, by the aggrieved party, of the facts constituting the
fraud or mistake.’” (Brandon G. v. Gray (2003) 111
Cal.App.4th 29, 35.)
To rely on the discovery rule, the
plaintiff “must specifically plead facts to show (1) the time and manner of
discovery and (2) the inability to have made earlier discovery despite
reasonable diligence.” (Fox v. Ethicon Endo-Surgery, Inc. (2005)
35 Cal. 4th 797, 808.) “When a plaintiff
reasonably should have discovered facts for purposes of the accrual of a cause
of action or application of the delayed discovery rule is generally a question
of fact, properly decided as a matter of law only if [the record] can support
only one reasonable conclusion.” (Stella
v. Asset Management Consultants, Inc. (2017) 8 Cal.App.5th 181, 193.)
Plaintiff sufficiently alleges the time
and manner of discovery of the necessary facts and that he was not able to
discover the facts earlier. The first
amended complaint alleges that, when plaintiff presented the vehicle for
repairs, GM’s “authorized dealership performed a transmission fluid exchange
and informed the Plaintiff that the vehicle was repaired.” (FAC, ¶ 63.)
Plaintiff further alleges he “relied on statements from [the] authorized
repair facility that the Subject Vehicle had no defects and that it was
performing normally.” (¶ 64.) The “authorized repair facilities continued
to assure Plaintif that the Subject Vehicle was operating as designed and had
no defects.” (¶ 77.)
The first amended complaint also alleges,
“It was not until Plaintiff filed this Complaint that Plaintiff learned of
Defendant’s deception and once the Transmission Defect manifested and could not
be repaired by Defendant and its representative.” (FAC, ¶ 66.)
GM issued “various service bulletins and recalls purporting to fix
symptoms of the underlying defect and/or that such symptoms were not the result
of any defect.” (¶ 71.)
GM’s assurances and bulletins stating the
defect could be repaired would reasonably impede a consumer’s ability to
discover the transmission’s purported design defect. Plaintiff’s first amended complaint alleges
sufficient facts to show that the cause of action for fraudulent inducement accrued
within three years of filing his complaint.
Sufficient
Factual Allegations
Plaintiff alleges sufficient facts for
this cause of action. Fraud by
concealment requires that: (1) defendant omitted or concealed a material fact;
(2) defendant had a duty to disclose the fact to plaintiff; (3) defendant
intentionally omitted or concealed the fact with intent to defraud plaintiff;
(4) plaintiff must have been unaware of the fact and would have acted otherwise
if he had known of the concealed fact; and (5) the omission caused
damages. (Boschma v. Home Loan
Center, Inc. (2011) 198 Cal.App.4th 230, 248.)
First,
plaintiff alleges GM omitted or concealed a material fact. The first amended complaint alleges, “As early
as September 2014, GM knew or should have known that the 8L90 and 8L45
transmissions were defective and that the Transmission Defect would adversely
affect the drivability of vehicles with the 8L90 and 8L45 transmissions and
cause safety hazards.” (FAC, ¶ 34.) Plaintiff further alleges GM “actively concealed and failed to disclose
this defect to Plaintiff at the time of purchase or lease and thereafter.” (¶ 35.)
Plaintiff also alleges GM “concealed, suppressed, and/or omitted
material facts including the standard, quality or grade of the the GM’s 8L90
and 8L45 transmissions were defective and susceptible to sudden and premature
failure, exposing drivers, occupants, and members of the public to safety risks.” (¶ 120.)
Plaintiff
also alleges facts showing the omission was material. Facts regarding unreasonable safety risks are material. (See Daugherty
v. American Honda Motor Co., Inc. (2006) 144 Cal.App.4th 824, 835-836;
Falk v. General Motors Corp. (N.D. Cal. 2007) 496 F.Supp.2d 1088, 1096.) Plaintiff alleges the vehicle’s transmission defect
causes symptoms such as the “vehicle suddenly
lurching forward, sudden acceleration, delayed acceleration, and sudden loss of
forward propulsion.” (FAC, ¶ 32.) “These conditions present a safety hazard
because they severely affect the driver’s ability to control the car’s speed, acceleration,
and deceleration.” (Ibid.) The alleged defect “can cause the vehicle to
delay downshifting and decelerating when the brakes are depressed.” (Ibid.)
Second, plaintiff alleges sufficient facts
showing defendant had a duty to disclose.
The duty to disclose does not require an affirmative misrepresentation
or a direct transaction. (Heliotis v. Schuman (1986) 181
Cal.App.3d 646, 651.) A defendant can be
liable for fraud by omission “when the defendant had exclusive knowledge of
material facts not known to the plaintiff.”
(Ibid.; accord LiMandri v. Judkins (1997) 52 Cal.App.4th
326, 336.)
Plaintiff
alleges defendant had exclusive knowledge of a safety defect in his 2017
Chevrolet Camaro. He alleges, “GM
acquired its knowledge of the Transmission Defect… prior to plaintiff acquiring
the Subject Vehicle, through sources not available to the consumer such as
plaintiff, including but not limited to pre-production testing, early consumer
complaints about the Transmission Defect made directly to Defendant and its
network of dealers, aggregate warranty data compiled from Defendant’s network
of dealers, testing conducted by Defendant in response to these complaints, as
well as warranty repair and part replacements data received by Defendant from
Defendant’s network of dealers, amongst other sources of internal information.” (FAC, ¶ 125.d.)
Third,
plaintiff sufficiently alleges intent to defraud. “[T]he only intent by a defendant necessary
to prove a case of fraud is the intent to induce reliance. Moreover,
liability is affixed not only where the plaintiff's reliance is intended by
the defendant but also where it is reasonably expected to
occur.” (Lovejoy v. AT&T Corp. (2001)
92 Cal.App.4th 85, 93.) “It may be
inferred that [defendant] concealed [a material fact] with fraudulent intent,
for the purpose of making a profit; it may also be inferred that plaintiff, who
was unaware of the [fact], would have acted differently had he known of the
suppressed fact.” (Id. p. 96.)
The
first amended complaint alleges GM “and its agents intentionally and knowingly
falsely concealed, suppressed, and/or omitted material facts including the
standard, quality or grade of … GM’s 8L90 and 8L45 transmissions were defective
and susceptible to sudden and premature failure, exposing drivers, occupants,
and members of the public to safety risks with the intent that Plaintiff rely
on [GM’s] omissions.” (FAC, ¶ 120.) “Had
Plaintiff known about the Transmission defects [he] would not have purchased the
Subject Vehicle.” (¶ 138.)
GM
reasonably would have expected potential purchasers to rely on its
nondisclosure of the alleged transmission defect. The first amended complaint alleges
sufficient facts to infer GM concealed the defect for the purpose of
profit.
Fourth,
plaintiff alleges he was unaware of the transmission defect and relied on GM’s
omission in that he would not bought the vehicle if he knew about the
defect. (FAC, ¶¶ 12, 124, 133.)
Finally,
plaintiff alleges he suffered damages resulting from his reliance. The first amended complaint alleges, “Plaintiff’s
vehicle hesitates when attempting to pick up speed after slowing down, and when
taking off from a stop. This hesitation
is sometimes accompanied by excessive revving in which the rpm meter moves, but
the vehicle does not accelerate commensurately, followed by a jerk or judder
when the vehicle does engage. In
addition, Plaintiff’s transmission slips when driven at highway speeds.” (FAC, ¶ 13.)
He “experienced repeated
problems with the Transmission Defect in his Vehicle.” (¶ 131.)
GM argues plaintiff did not specifically
allege fraud’s elements as required.
Generally, “[e]very element of the cause of action for fraud must be
alleged in the proper manner and the facts constituting the fraud must be
alleged with sufficient specificity to allow defendant to understand fully the
nature of the charge made.” (Tarmann
v. State Farm Mut. Auto. Ins. Co. (1991) 2 Cal.App.4th 153, 157,
internal quotes omitted.) That
requirement, however, is relaxed in claims of fraud by omission because one
cannot “show ‘how’ and ‘by what means’ something didn’t happen, or ‘when’
it never happened, or ‘where’ it never happened.” (Alfaro v. Community Housing Improvement
System & Planning Assn., Inc. (2009) 171 Cal.App.4th 1356, 1384.) The first amended complaint sufficiently
alleges fraud by concealment.
Motion to Strike
Defendant GM moves to strike plaintiff’s
prayer for punitive damages. A motion to strike a prayer for punitive
damages must be granted when punitive damages are unavailable as a matter of
law or where the facts alleged fail to constitute oppression, fraud, or
malice. (Grieves v. Superior Court (1984) 157 Cal.App.3d 159, 164; see
Civ. Code, § 3294(a).)
Plaintiff may
recover punitive damages for fraud. He
alleges GM engaged in malicious or fraudulent conduct sufficient for punitive
damages. The first amended complaint alleges
GM concealed a defect in plaintiff’s vehicle that can cause “a safety hazard”
because its symptoms “severely affect the driver’s ability to control the car’s
speed, acceleration, and deceleration.”
(FAC, ¶ 32.) That allegation suffices
for despicable conduct done with a willful and conscious disregard for
plaintiff’s safety. (Civ. Code, §
3294(c)(1).)
Disposition
Defendant
General Motors, LLC’s demurrer is overruled. Defendant General Motors, LLC’s motion to
strike is denied. Defendant is ordered
to answer within 20 days.