Judge: Ashfaq G. Chowdhury, Case: 23GDCV01018, Date: 2023-09-29 Tentative Ruling

Case Number: 23GDCV01018    Hearing Date: September 29, 2023    Dept: E

Case No: 23GDCV01018
Hearing Date: 09/29/2023 – 10:00am

Trial Date: UNSET

Case Name: LEONOR VAZQUEZ v. AMERICAN HONDA MOTOR CO., INC., a California Corporations, and DOES 1-10, inclusive

[TENTATIVE RULING ON DEMURRER]

RELIEF REQUESTED
Defendant American Honda Motor Co., Inc. ("AHM") will demur and hereby does demur to the Second Cause of Action for Fraudulent Inducement-Concealment asserted by Plaintiff Leonor Vazquez (”Plaintiff”) against AHM in Plaintiff’s Complaint.

Pursuant to Cal. Civ. Proc. Code §430.10(e) (West), Plaintiff’s Second Cause of Action fails to state facts sufficient to constitute a fraud cause of action against AHM. Therefore, even if all the facts alleged in Plaintiff’s Complaint are true, this cause of action against AHM must fail as a matter of law.

For the reasons set out below, the demurrer is OVERRULED.

PROCEDURAL

Moving Party: Defendant, American Honda Motor (AHM or Defendant)

Responding Party: Plaintiff, Leonor Vazquez

BACKGROUND
On 5/16/2023, Plaintiff, Leonor Vazquez, filed a Complaint against Defendant, American Honda Motor Co., Inc. alleging two causes of action for: (1) Violation of Song-Beverly Act-Breach of Express Warranty and (2) Fraudulent Inducement – Concealment.

Defendant’s demurrer pertains to the second cause of action.

LEGAL STANDARDS FOR DEMURRERS
Demurrer – Sufficiency
A demurrer for sufficiency tests whether the complaint states a cause of action.  (Hahn v. Mirda, (2007) 147 Cal.App.4th 740, 747.)  When considering demurrers, courts read the allegations liberally and in context.  (Taylor v. City of Los Angeles Dept. of Water and Power (2006) 144 Cal.App.4th 1216, 1228.)  The court “treat[s] the demurrer as admitting all material facts properly pleaded, but not contentions, deductions or conclusions of fact or law ….”  (Berkley v. Dowds (2007) 152 Cal.App.4th 518, 525.)  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 pleadings alone and not the evidence or other extrinsic matters; therefore, it lies only where the defects appear on the face of the pleading or are judicially noticed.  (Code Civ. Proc., §§ 430.30, 430.70.)  The only issue involved in a demurrer hearing is whether the complaint, as it stands, unconnected with extraneous matters, states a cause of action. (Hahn, supra, 147 Cal.App.4th at 747.) 

The general rule is that the plaintiff need only allege ultimate facts, not evidentiary facts.  (Doe v. City of Los Angeles (2007) 42 Cal.4th 531, 550.)  “All that is required of a plaintiff, as a matter of pleading … is that his complaint set forth the essential facts of the case with reasonable precision and with sufficient particularity to acquaint the defendant with the nature, source and extent of his cause of action.”  (Rannard v. Lockheed Aircraft Corp. (1945) 26 Cal.2d 149, 156-157.) 

On demurrer, a trial court has an independent duty to “determine whether or not the … complaint alleges facts sufficient to state a cause of action under any legal theory.”  (Das v. Bank of America, N.A. (2010) 186 Cal.App.4th 727, 734.)  Demurrers do not lie as to only parts of causes of action, where some valid claim is alleged but “must dispose of an entire cause of action to be sustained.”  (Poizner v. Fremont General Corp. (2007) 148 Cal.App.4th 97, 119.)  “Generally it is an abuse of discretion to sustain a demurrer without leave to amend if there is any reasonable possibility that the defect can be cured by amendment.”  (Goodman v. Kennedy (1976) 18 Cal.3d 335, 349.)

Demurrer – Uncertainty
A special demurrer for uncertainty, CCP section 430.10(f), is disfavored and will only be sustained where the pleading is so bad that defendant cannot reasonably respond—i.e., cannot reasonably determine what issues must be admitted or denied, or what counts or claims are directed against him/her.  (Khoury v. Maly’s of Calif., Inc. (1993) 14 Cal.App.4th 612, 616.)  Moreover, even if the pleading is somewhat vague, “ambiguities can be clarified under modern discovery procedures.” (Ibid.)

ANALYSIS
As a preliminary matter, this Court notes that both Defendant’s and Plaintiff’s papers are often confusingly written.

Second Cause of Action – Fraudulent Inducement-Concealment

Economic-Loss Rule
Before the Court will address Defendant’s arguments that Plaintiff did not sufficiently allege sufficient facts to allege fraudulent inducement-concealment, the Court will first address Defendant’s argument on the second cause of action being barred by the economic-loss rule.

Defendant argues that Plaintiff’s second cause of action is barred based on Robinson Helicopter Co., Inc. v. Dana Corp. (2004) 34 Cal.4th 979 (Robinson) and several federal cases.

Here, the Court does not find Defendant’s argument persuasive.

In part, Opposition cites to Dhital v. Nissan North America, Inc. (2022) 84 Cal.App.4th 828, rev. granted, (Dhital, rev. grant.,) as a basis to overrule the demurrer.

The Court notes that review has been granted in Dhital. As noted in CRC 8.115(e)(1), “Pending review and filing of the Supreme Court's opinion, unless otherwise ordered by the Supreme Court under (3), a published opinion of a Court of Appeal in the matter has no binding or precedential effect, and may be cited for potentially persuasive value only. Any citation to the Court of Appeal opinion must also note the grant of review and any subsequent action by the Supreme Court.” Further, as noted in CRC 8.115(e)(3), “At any time after granting review or after decision on review, the Supreme Court may order that all or part of an opinion covered by (1) or (2) is not citable or has a binding or precedential effect different from that specified in (1) or (2).”

Further, the Court notes that Defendant states in Reply that Dhital, rev. grant. is not binding authority and is also not potentially persuasive. Based on CRC 8.115(e)(1), the Court understands how Dhital, rev. grant. is not binding, but the Court fails to see how it cannot be cited for potentially persuasive value.

Defendant argues that the economic-loss rule bars the second cause of action because of numerous federal court cases. Here, the Court does not find that argument availing because those cases are federal cases.

Defendant appears to argue that under Robinson, the Supreme Court has carved out an exception to the economic-loss rule when Plaintiff alleges fraud or deceit if plaintiff can establish an independent duty arising from tort law. Defendant appears to argue that Robinson applied only to fraud-intentional misrepresentation and not fraud-inducement-concealment.

Here, the Court does read Robinson as narrowly as Defendant and interprets Robinson in a fashion similar to Dhital, rev. grant.

Robinson stated, “We hold the economic loss rule does not bar Robinson’s fraud and intentional misrepresentation claims because they were independent of Dana’s breach of contract.” (Robinson at 991.) Further, Robinson stated, “Our holding today is narrow in scope and limited to a defendant's affirmative misrepresentations on which a plaintiff relies and which expose a plaintiff to liability for personal damages independent of the plaintiff's economic loss.” (Robinson at 993.)

Although Defendant may be arguing that the exception to the economic-loss rule only applies to fraud-intentional misrepresentation, this Court, as in Dhital, rev. grant. finds that Robinson left undecided whether concealment-based claims are barred by the economic-loss rule. (Dhital, rev. grant. at 840.) 

Therefore, Defendant’s argument that Plaintiff’s second cause of action is barred because of the economic-loss rule is unavailing.

Fraudulent Inducement – Concealment
“’[T]he elements of an action for fraud and deceit based on concealment are: (1) the defendant must have concealed or suppressed a material fact, (2) the defendant must have been under a duty to disclose the fact to the plaintiff, (3) the defendant must have intentionally concealed or suppressed the fact with the intent to defraud the plaintiff, (4) the plaintiff must have been unaware of the fact and would not have acted as he did if he had known of the concealed or suppressed fact, and (5) as a result of the concealment or suppression of the fact, the plaintiff must have sustained damage.’” (Boschma v. Home Loan Center, Inc. (2011) 198 Cal.App.4th 230, 248 citing Hahn v. Mirda (2007) 147 Cal.App.4th 740,748.) “Fraud must be pleaded with specificity rather than with “’general and conclusory’” allegations.” (Boschma, supra, at 248 citing Small v. Fritz Companies, Inc. (2003) 30 Cal.4th 167, 184.)

Here, Plaintiff appears to have alleged each element of a fraudulent inducement-concealment cause of action. In fact, Plaintiff points the Court to allegations in the Complaint for each element.

As indicated by Plaintiff’s Opposition at page 2: (1) Defendant concealed or suppressed a material fact (COMPLAINT, 67, 71, 98-99, 131); (2) Defendant had a duty to disclose the fact to Plaintiff (COMPLAINT, ¶¶ 67, 97-98); (3) Defendant intentionally concealed or suppressed the fact with the intent to defraud Plaintiff (COMPLAINT, ¶¶ 133); (4) Plaintiff was unaware of the fact and would not have acted as he did had they known of the concealed or suppressed fact (COMPLAINT, ¶¶ 66, 80, 87, 134, 138-139); and (5) Plaintiff was damaged as a result of the concealment (COMPLAINT, ¶¶ 138-140)

The Opposition’s reference to the paragraphs in the Complaint satisfying each element appear sufficient to this Court at this stage to state a cause of action for fraudulent inducement-concealment.

The Court finds Defendant’s arguments as to the particularity requirements about how, when, where, to whom, and by what means the representations were tendered, and the corporate-employer argument asserted by Defendant unavailing because the two cases that Defendant cites refer to fraudulent misrepresentations, and this case is about fraudulent concealment.  The Court does not see how those specificity requirements for fraudulent misrepresentation would be applicable when Plaintiff is not bringing a cause of action based on misrepresentations but instead on concealment

The Court fails to see how Plaintiff could allege things such as how, when, to whom, and by what means the representations were tendered when the concealment cause of action is based on a lack of representations.

Defendant also argues that Defendant failed to plead that Plaintiff concealed or suppressed a material fact. The Court does not find Defendant’s argument availing. Defendant quoted a portion Daugherty v. Am. Honda Motor Co. (2006) 144 Cal.App.4th 824, 835 which pertained to the Consumer Legal Remedies Act which appears inapposite.

Defendant also argues that Plaintiff failed to establish a duty to disclose.

As stated in Defendant’s demurrer:

The duty to disclose arises in four ways: “(1) when the defendant is in a fiduciary relationship with the plaintiff, (2) when the defendant had exclusive knowledge of material facts not known to the plaintiff, (3) when the defendant actively conceals a material fact from the plaintiff and (4) when the defendant makes partial representations but also suppresses some material facts.” (Heliotis v. Schuman, 181 Cal. App. 3d 646, 651, 226 Cal. Rptr. 509 (Ct. App. 1986), quoting 4 Witkin, Summary of Cal. Law (8th ed. 1974) Torts, §§ 459-464.)

(Demurrer, p. 11.)

Defendant argues that no fiduciary relationship exists, Defendant did not have exclusive knowledge nor engage in active concealment, and Defendant did not make partial representations to Plaintiff while suppressing facts.

Here, Defendant’s arguments are unavailing. Plaintiff has appeared to allege a duty arising in at the very least, one of the four ways mentioned by Defendant. As to a fiduciary relationship existing, Dhital, rev. grant. at 844 addresses this issue. Further, to the extend that Dhital, rev. grant. is not binding, Plaintiff alleged that Defendant actively concealed a material fact.

Statute of Limitations
Defendant argues that since fraud has a three-year statute of limitations, the action is barred because the timing began on October 5, 2019 when Plaintiff purchased the subject vehicle. Defendant does not state when the instant Complaint was filed, but the Court notes that it was filed on 5/16/2023.

Here, the Court does not find Defendant’s argument availing.

The general rule for defining the accrual of a cause of action sets the date as the time when, under the substantive law, the wrongful act is done, or the wrongful result occurs, and the consequent liability arises. (Norgart v. Upjohn Co. (1999) 21 Cal.4th 383, 397.) An exception to the general rule for defining the accrual of a cause of action is the discovery rule. (Id.) That exception postpones accrual of a cause of action until the plaintiff discovers, or has reason to discover, the cause of action. (Id.) The plaintiff discovers the cause of action when he at least suspects a factual basis, as opposed to a legal theory, for its elements, even if he lacks knowledge thereof, when, simply put, he at least suspects that someone has done something wrong to him. (Id.) In order to rely on the discovery rule for delayed accrual of a cause of action, a plaintiff whose complaint shows on its face that his claim would be barred without the benefit of the discovery rule 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.)

Here, Plaintiff alleged, “On or around February 25, 2022, was the earliest date that Plaintiff discovered or could have reasonably discovered the facts that give rise to Plaintiff’s fraud cause of action. On or around that date, Plaintiff brought the Subject Vehicle to an authorized repair facility for a repair attempt concerning the vehicle braking on its own and having delayed braking. AMERICAN HONDA did not disclose any information regarding the Honda Sensing Defect or the repairs it necessitated prior to the sale of the Subject Vehicle to Plaintiff or at any earlier date during ownership. Accordingly, Plaintiff could not have discovered Plaintiff’s fraud claims prior to February 25, 2022. Plaintiff could not, even with reasonable and diligent investigation, have discovered Plaintiff’s claims on an earlier date because of AMERICAN HONDA’s concealment of the defects in Plaintiff’s vehicle, as previously alleged above, and because of the repeated false assurances from AMERICAN HONDA and its service dealership agents to Plaintiff, on which Plaintiff reasonably relied, that AMERICAN HONDA had and would repair any problems with the Honda Sensing system in the Subject Vehicle that occurred during the applicable warranty periods.” (Compl. ¶102.)

Therefore, Plaintiff adequately pled the delayed discovery rule.

TENTATIVE RULING DEMURRER
Defendant’s demurrer to the second cause of action for Fraudulent Inducement – Concealment is OVERRULED.

Opposition requested judicial notice of a conformed copy of the second amended complaint filed in Dhital v Nissan North America, Inc., No. RG19009260 in Alameda County is attached as Exhibit 1.

Plaintiff in its Reply argued that judicial notice of the complaint was not proper at the time.

Here, the Court failed to understand the Reply’s argument as to why judicial notice could not be granted.

Defendant’s request for judicial notice is granted.

TENTATIVE RULING ON MOTION TO STRIKE

RELIEF REQUESTED
Defendant American Honda Motor Co., Inc. ("AHM") will and does hereby move this Court to strike portions of Plaintiff’s Complaint as follows:

1. Plaintiff’s prayer "[f]or punitive damages" as set forth on page 30, line 9, subpart 6 of the Prayer for Relief in the Complaint.

This Motion is made pursuant to Code of Civil Procedure §§ 435 and 436 and Civil Code section 3294 et seq. on the followings grounds: (1) Plaintiff fails to plead with the requisite specificity facts showing AHM engaged in conduct rising to the level of malice, oppression, fraud, and therefore fails to allege sufficient facts to state a claim for punitive damages; and (2) Plaintiff fails to allege AHM's officers, directors, or managing agents engaged in or otherwise ratified the conduct Plaintiff contends is wrongful.

For the reasons set out below, the motion to strike is DENIED.

PROCEDURAL

Moving Party: Defendant, American Honda Motor Co., Inc. (AHM or Defendant)

Responding Party: Plaintiff, Leonor Vazquez

Legal Standard 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(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. (Code Civ. Proc. § 436(b).)  A motion to strike cannot be based upon the grounds that a complaint fails to state facts sufficient to constitute a cause of action, but instead is properly based on grounds of superfluous or abusive allegations, or improprieties in form or procedure.  (Ferraro v. Camarlinghi (2008) 161 Cal.App.4th 509, 528-29.)   

The grounds for moving to strike must appear on the face of the pleading or by way of judicial notice. (Code. Civ. Proc. § 437; Turman v. Turning Point of Central California, Inc. (2010) 191 Cal.App.4th 53, 63 [“judges read allegations of a pleading subject to a motion to strike as a whole, all parts in their context, and assume their truth”].)   

Further, CCP §431.10(a)-(c) states as follows:

(a) A material allegation in a pleading is one essential to the claim or defense and which could not be stricken from the pleading without leaving it insufficient as to that claim or defense.

(b) An immaterial allegation in a pleading is any of the following:

(1) An allegation that is not essential to the statement of a claim or defense.

(2) An allegation that is neither pertinent to nor supported by an otherwise sufficient claim or defense.

(3) A demand for judgment requesting relief not supported by the allegations of the complaint or cross-complaint.

(c) An “immaterial allegation” means “irrelevant matter” as that term is used in Section 436.

(CCP §431.10(a)-(c).)

ANALYSIS
Defendant argues that the prayer for punitive damages should be struck because the Complaint fails to tie the prayer for punitive damages to any specific cause of action or alleged conduct of Defendant.

The Court does not find Defendant’s argument on this issue availing. Defendant cited no legal support for this proposition.

Punitive Damages
In an action for the breach of an obligation not arising from contract, where it is proven by clear and convincing evidence that the defendant has been guilty of oppression, fraud, or malice, the plaintiff, in addition to the actual damages, may recover damages for the sake of example by way of punishing the defendant. (Cal. Civ. Code §3294(a).) “‘Malice’ means conduct which is intended by the defendant to cause injury to the plaintiff or despicable conduct which is carried on by the defendant with a willful and conscious disregard of the rights or safety of others.” (CCP §3294(c)(1).) “‘Oppression’ means despicable conduct that subjects a person to cruel and unjust hardship in conscious disregard of that person’s rights. (CCP §3294(c)(2).) “‘Fraud’ means an intentional misrepresentation, deceit, or concealment of a material fact known to the defendant with the intention on the part of the defendant of thereby depriving a person of property or legal rights or otherwise causing injury. (CCP §3294(c)(3).)

“In order to survive a motion to strike an allegation of punitive damages, the ultimate facts showing an entitlement to such relief must be pled by a plaintiff.”  (Clauson v. Superior Court (1998) 67 Cal. App. 4th 1253, 1255.) Conclusory allegations, devoid of any factual assertions, are insufficient to support a conclusion that parties acted with oppression, fraud or malice. (Smith v. Sup. Ct. (1992) 10 Cal. App. 4th 1033, 1042.) 

Further as stated in Monge v. Superior Court, which helps explain the case law behind alleging punitive damages:

In determining whether a complaint states facts sufficient to sustain punitive damages, the challenged allegations must be read in context with the other facts alleged in the complaint. Further, even though certain language pleads ultimate facts or conclusions of law, such language when read in context with the facts alleged as to defendants' conduct may adequately plead the evil motive requisite to recovery of punitive damages. (Perkins v. Superior Court (1981) 117 Cal.App.3d 1, 6–7, 172 Cal.Rptr. 427.)

Perkins provides the highly pertinent example of this standard in the context of a motion to strike punitive damage allegations. There the complaint alleged that defendants “wrongfully and intentionally” invaded plaintiff's privacy and terminated his telephone service “in retaliation” for prior complaints lodged by plaintiff. The complaint also generally alleged that defendants were guilty of “oppression, fraud and malice.” Perkins read the complaint as a whole and held that the alleged conclusions of fact or law considered in the context of alleged wrongful conduct “in retaliation” pleaded an evil injurious motive sufficient **68 to establish malice and sustain a plea for punitive damages.

In G.D. Searle & Co. v. Superior Court (1975) 49 Cal.App.3d 22, 27–32, 122 Cal.Rptr. 218, it was pointed out that there exists an uncertainty in the case law as to just what terms adequately describe the necessary elements of “oppression, fraud or malice” under Civil Code section 3294. Searle suggests that different types of injurious conduct allow different formulations in pleading oppression or malice, but that the critical element is an “evil motive” of the defendant. (Id., at pp. 29–31, 122 Cal.Rptr. 218.)

*511 The meanings of “oppression” and “malice” with regard to Civil Code section 3294 are explained in Richardson v. Employers Liab. Assur. Corp. (1972) 25 Cal.App.3d 232, 245–246, 102 Cal.Rptr. 547. “Malice” means a wrongful intent to vex or annoy. “Oppression” means “subjecting a person to cruel and unjust hardship in conscious disregard of his rights.” Malice and oppression may be inferred from the circumstances of a defendant's conduct.

(Monge v. Superior Court (1986) 176 Cal.App.3d 503, 510-11.)

Defendant argues that Plaintiff failed to plead facts showing oppression, fraud, or malice. The Court finds this argument unavailing as Plaintiff successfully alleged a fraud cause of action.

Defendant also argues that Plaintiff’s claim for punitive damages against AHM is insufficient because Plaintiff has not alleged that an officer, director or managing agent of AHM authorized, ratified or personally engaged in any oppressive, malicious or fraudulent conduct, as required by Civil Code § 3294(b).

Here, the Court does not find this argument availing as Plaintiff alleged in ¶7 of the Complaint, “All acts of corporate employees as alleged were authorized or ratified by an officer, director or managing agent of the corporate employer.”

Defendant argues that Plaintiff cannot recover punitive damages for violation of the Song-Beverly Act. The Court finds that even if this is true, the prayer does not state which cause of action punitive damages applies to. Since fraud was sufficiently alleged, Plaintiff can attempt to seek punitive damages.

TENTATIVE RULING
Defendant’s motion to strike is DENIED.