Judge: Armen Tamzarian, Case: 24STCV13999, Date: 2024-10-02 Tentative Ruling
Case Number: 24STCV13999 Hearing Date: October 2, 2024 Dept: 52
Tentative Ruling:
Defendant
General Motors, LLC’s Demurrer and Motion to Strike Portions of First Amended
Complaint
Demurrer
Defendant General Motors, LLC demurs to the third and fourth causes of
action alleged in the first amended complaint by plaintiff Marco Rivas.
3rd
Cause of Action: Fraudulent Concealment
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 specifically alleges defendant omitted or concealed a material
fact. The first amended complaint
alleges defendant knew “that certain 2021 GMC Sierra 1500 vehicles, including
[plaintiff’s], are predisposed are to defects in the Duramax 3.0L 6 I-6 LM2
Turbo Diesel engine (the ‘Defective Engine’) that result in dangerous
functional failures and impairment of use including, but not limited to,
misfiring, extended cranking, stalling, startup failure, incessant illumination
of the ‘Check Engine’ and ‘Service Engine Soon’ warning lights, overheating,
emitting smoke, rattling/vibrating, hesitating and loss of power, premature
engine wear of internal components and total engine failure.” (¶ 15.)
Plaintiff
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 Defective Engine
presents a safety hazard to Plaintiff because when components of the Defective
Engine begin to fail the Vehicle can leave Plaintiff, and Plaintiffs passengers
in dangerous situations. For example,
when Plaintiff is driving the Defective Engine, the Defective Engine can stall,
lose power, and hesitate, especially when trying to merge, increasing the risk
of a traffic collision and be potentially fatal for Plaintiff, Plaintiff’s
passengers as well as the oncoming traffic.”
(FAC, ¶ 16.)
Defendant
contends plaintiff relies on non-actionable puffery. General
statements about quality are puffery and not actionable, unlike factual
representations. (Consumer Advocates
v. Echostar Satellite Corp. (2003) 113 Cal.App.4th 1351, 1361 [“crystal
clear” and “CD quality” are puffery].) The
authority defendant relies on, however, concerns affirmative
misrepresentations—not concealment. (Id.
at p. 1353 [puffery in “brochure”]; Osborne v. Subaru of America, Inc.
(1988) 198 Cal.App.3d 646, 660 [puffery in defendant’s “national advertising
campaign”]; Anunziato v. eMachines, Inc. (C.D. Cal. 2005) 402 F.Supp.2d
1133, 1139 [puffery in “user manual”].)
Plaintiff’s concealment claim does not allege
defendant is liable for affirmatively misrepresenting that its vehicles are
“high-quality” or other puffery.
Instead, plaintiff alleges defendant concealed actionable facts, such as
that the GMC Sierra’s “is prone to unsafe abrupt misfiring, bucking, surging,
hesitating, oil leaking and loss of power.”
(FAC, ¶ 58.)
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.) “[A] vendor has a duty to disclose material
facts not only to the immediate purchasers, but also to subsequent
purchasers when the vendor has reason to expect that the item will be
resold.” (OCM Principal Opportunities
Fund, L.P. v. CIBC World Markets Corp. (2007) 157 Cal.App.4th 835, 859.)
Plaintiff alleges defendant had “exclusive
and superior knowledge of the Defective Engine from the numerous complaints it
has received directly from consumers, information provided to authorized dealers
via Technical Service Bulletins, information received directly from Defendants’
authorized dealers, National Highway Traffic Safety Administration (‘NHTSA’)
complaints, and its own internal records (including durability testing and
failure rates), requests from Defendants’ authorized dealerships for technical
assistance regarding the Defective Engine and warranty costs outlaid due to the
Defective Engine.” (FAC, ¶ 19.)
Assuming a
duty to disclose requires a direct transaction between the parties, plaintiff
adequately alleged one. In Dhital v. Nissan North America, Inc.
(2022) 84 Cal.App.5th 828, 844 (review granted Feb. 1,
2023, No. S277568 [permitting citation
as persuasive authority]), the
court rejected the manufacturer’s argument that “plaintiffs did not adequately
plead the existence of a buyer-seller relationship between the parties, because
plaintiffs bought the car from a Nissan dealership (not from Nissan itself).” The court held, “At the pleading stage …, we
conclude plaintiffs’ allegations are sufficient. Plaintiffs alleged that they bought the car
from a Nissan dealership, that Nissan backed the car with an express warranty,
and that Nissan's authorized dealerships are its agents for purposes of the
sale of Nissan vehicles to consumers. In
light of these allegations, we decline to hold plaintiffs’ claim is barred on
the ground there was no relationship requiring Nissan to disclose known
defects.” (Ibid.)
Plaintiff similarly alleges defendant itself
provided an express “New Vehicle Limited Warranty.” (FAC, ¶ 8.)
He further alleges direct communications by defendant: “Prior to
purchasing the Vehicle, Plaintiff reviewed marketing materials and viewed
television commercials touting the quality, durability and performance of GMC
vehicles and in particular, the Sierra. … [T]he marketing materials for the Vehicle
stated in great detail the vehicle’s numerous styling attributes, durability,
fuel efficiency and impressive performance.”
(¶ 32.)
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 defendant knew the vehicle’s engine was
defective but “chose to simply ignore the problem and intentionally conceal the
truth.” (¶ 21.) Defendant reasonably would have expected
potential purchasers to rely on its nondisclosure of the alleged engine defects. The first amended complaint alleges
sufficient facts to infer defendant concealed the defect for the purpose of
profit.
Fourth,
plaintiff alleges he relied on defendant’s omission because he was unaware of
the defect and, had he known about it, he “would not have purchased the Vehicle
or would have paid substantially less for it.”
(FAC, ¶ 23.)
Finally,
plaintiff alleges he suffered damages resulting from his reliance. He alleges that in December 2023, “the
Defective Engine was causing the ‘Check Engine’ warning light to illuminate”
(FAC, ¶ 34) and in May 2024, the defect “was causing the ‘Check Engine’ warning
light to illuminate, a leakage of exhaust, reduced engine power, and power
failure upon acceleration” (¶ 35).
Defendant 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 fraudulent concealment.
4th
Cause of Action: Consumer Legal Remedies Act (CLRA)
Defendant argues plaintiff fails to
allege he sent notice of the CLRA violation before filing this action. The CLRA “contemplates that a consumer may
amend a complaint for injunctive relief to add a request for damages under the
CLRA. Indeed, the statute expressly
allows such an amendment, as long as it is done 30 days or more after filing of
the original complaint and compliance with the notice requirement.” (Morgan v. AT&T Wireless Services,
Inc. (2009) 177 Cal.App.4th 1235, 1260.)
Plaintiff’s first amended complaint alleges he complied with CLRA’s
notice provisions by sending notice to defendant “on June 5, 2024.” (FAC, ¶ 123.)
Plaintiff filed the first amended complaint on July 9, more than 30 days
later.
Defendant also argues plaintiff
fails to allege sufficient facts for this cause of action for the same reasons
as the concealment claim. The court
rejects this argument for the same reasons discussed above.
Motion
to Strike
Defendant General Motors LLC 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 fraudulent concealment. He alleges defendant
engaged in malicious or fraudulent conduct sufficient for punitive
damages. As discussed above, the first
amended complaint alleges defendant concealed a dangerous defect in plaintiff’s
vehicle. That allegation suffices for despicable
conduct done with a willful and conscious disregard for plaintiff’s
safety. (Civ. Code, § 3294(c)(1).)
Defendant also argues plaintiff cannot
recover punitive damages because that remedy is limited to “an action for the
breach of an obligation not arising from contract.” (Civ. Code, § 3294(a).) Plaintiff alleges fraudulent concealment,
which is breach of an independent tort duty.
“For fraudulent inducement” of contract, “ ‘ “the duty that gives rise
to tort liability is either completely independent of the contract or arises
from conduct which is both intentional and intended to harm.” ’ ” (Dhital v. Nissan North America, Inc.,
supra, 84 Cal.App.5th at p. 841.) “[T]hat
independence is present in the case of fraudulent inducement (whether it is
achieved by intentional concealment or by intentional affirmative
misrepresentations), because a defendant’s conduct in fraudulently inducing
someone to enter a contract is separate from the defendant’s later breach of
the contract or warranty provisions that were agreed to.” (Ibid.)
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.