Judge: Barbara M. Scheper, Case: 23STCV21662, Date: 2023-12-13 Tentative Ruling

Case Number: 23STCV21662    Hearing Date: December 13, 2023    Dept: 30

Dept. 30

Calendar No.

Mendoza, et. al. vs. Ford Motor Co., et. al., Case No. 23STCV21662

Tentative Ruling re:  Defendant’s Demurrer to Complaint

Defendant Ford Motor Co. (Defendant) demurs to the third and fifth causes of action in the Complaint of Plaintiffs Aurelio Mendoza and Marnia Mendoza (collectively, Plaintiffs). The demurrer is overruled.

In reviewing the legal sufficiency of a complaint against a demurrer, a court will treat the demurrer as admitting all material facts properly pleaded, but not contentions, deductions, or conclusions of law. (Blank v. Kirwan (1985) 39 Cal.3d 311, 318 (Blank); C & H Foods Co. v. Hartford Ins. Co. (1984) 163 Cal.App.3d 1055, 1062.) It is well settled that a “demurrer lies only for defects appearing on the face of the complaint[.]” (Stevens v. Superior Court (1999) 75 Cal.App.4th 594, 601.) “The rules by which the sufficiency of a complaint is tested against a general demurrer are well settled. We not only treat the demurrer as admitting all material facts properly pleaded, but also give the complaint a reasonable interpretation, reading it as a whole and its parts in their context.” (Guclimane Co. v. Stewart Title Guaranty Co. (1998) 19 Cal.4th 26, 38 (internal quotes omitted).) For purposes of ruling on a demurrer, the complaint must be construed liberally by drawing reasonable inferences from the facts pleaded. (Wilner v. Sunset Life Ins. Co. (2000) 78 Cal.App.4th 952, 958.)

When ruling on a demurrer, the Court may only consider the complaint’s allegations or matters which may be judicially noticed. (Blank, supra, 39 Cal.3d at p. 318.) The Court may not consider any other extrinsic evidence or judge the credibility of the allegations plead or the difficulty a plaintiff may have in proving his allegations. (Ion Equip. Corp. v. Nelson (1980) 110 Cal.App.3d 868, 881.) A demurrer is properly sustained only when the complaint, liberally construed, fails to state facts sufficient to constitute any cause of action. (Kramer v. Intuit Inc. (2004) 121 Cal.App.4th 574, 578.)

In this lemon law action, Plaintiffs allege that they purchased a defective 2019 Ford F150 covered by Defendant’s warranty. (Comp. ¶¶ 9-13.) Plaintiffs’ vehicle is allegedly affected by “one or more defects that can cause the vehicles and their 10-speed transmissions to experience hesitation and/or delayed acceleration; harsh and/or hard shifting; jerking, shuddering, and/or juddering.” (Comp. ¶ 25.)

Third Cause of Action for Violation of Civ. Code § 1793.2(a)(3)

Under Civ. Code § 1793.2, subd. (a)(3), every manufacturer of consumer goods sold in this state and for which the manufacturer has made an express warranty shall . . . [m]ake available to authorized service and repair facilities sufficient service literature and replacement parts to effect repairs during the express warranty period.”

            Plaintiffs’ third cause of action alleges that Defendant violated Civil Code § 1793.2, subd. (a)(3), when it “failed to make available to its authorized service and repair facilities sufficient service literature and replacement parts to effect repairs during the express warranty period.” (Comp. ¶ 49.) Defendant argues that this cause of action is pled in only conclusory terms. However, the cause of action is also supported by Plaintiffs’ allegations that Defendant has issued several technical service bulletins (TSBs) concerning the Transmission Defect affecting Plaintiffs’ vehicle but still failed to fix the issue. (Comp. ¶¶ 27-34.) In light of those supporting allegations, the Court finds that the third cause of action is sufficiently pled.

Fifth Cause of Action for Fraudulent Concealment

Defendants demur to Plaintiffs’ claim for fraudulent concealment on the grounds that (1) Plaintiffs have not pled fraud with sufficient particularity, and (2) the claim is barred by the economic loss rule.

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.” (Graham v. Bank of America, N.A. (2014) 226 Cal.App.4th 594, 606 (Graham.)

The rule of specificity of pleading is intended to apply only to affirmative representations and not to fraud by concealment. (Alfaro v. Community Housing Improvement System & Planning Assn., Inc. (2009) 171 Cal.App.4th 1356, 1384 [“This statement of the rule [of specificity] reveals that it is intended to apply to affirmative misrepresentations . . . it is harder to apply this rule to a case of simple nondisclosure. How does one show ‘how’ and ‘by what¿means’ something didn’t happen, or ‘when’ it never happened, or ‘where’ it never happened?”].) In addition, “[l]ess specificity is required when ‘it appears from the nature of the allegations that the defendant must necessarily possess full information concerning the facts of the controversy....’” (Committee on Children's Television, Inc. v. General Foods Corp. (1983) 35 Cal.3d 197, 216.)

“The general rule is that misrepresentation by passive concealment (as opposed to affirmative concealment) violates a duty to disclose only where there is a special fiduciary relationship between the parties or where ‘the defendant has special knowledge, or means of knowledge, not open to the plaintiff, and is aware that the plaintiff is acting under a misapprehension as to facts which would be of importance to him, and would probably affect his decision.’ ” (Crayton v. Superior Court (1985) 165 Cal.App.3d 443, 451 [citing Prosser on Torts (4th ed. 1971), Representation and Nondisclosure, § 106, p. 697].)

Under their fifth cause of action, Plaintiffs allege that Defendant “committed fraud by allowing the Subject Vehicle to be sold to Plaintiffs without disclosing that the Subject Vehicle and its transmission was defective and susceptible to sudden and premature failure.” (Comp. ¶ 58.) “[W]hile Defendant knew about the Transmission Defect, and its safety risks, Defendant nevertheless concealed and failed to disclose the defective nature of the Vehicle and its transmission to Plaintiffs at the time of sale, repair, and thereafter. Had Plaintiffs known that the Subject Vehicle suffered from the Transmission Defect, they would not have purchased the Subject Vehicle.” (Comp. ¶ 62.)

The Court finds these allegations sufficient to plead fraudulent concealment. Though Plaintiffs do not allege the existence of any fiduciary relationship between the parties, Plaintiffs have pled Defendant’s duty to disclose by alleging that they entered into the warranty contract with Defendant and Defendant had special knowledge of the transmission defect. (Comp. ¶ 64.) While Defendant argues that Plaintiffs have failed to plead any affirmative action taken by it, that is not a requirement for fraud based on concealment.

The Court also finds that the economic loss rule does not bar this claim. “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. [Citation.] [T]he economic loss rule provides: ‘[W]here 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.’ ” (Robinson Helicopter Co. v. Dana Corp. (2004) 34 Cal.4th 979, 988.) “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.” (Ibid.) 

One exception to the economic loss rule applies “where the contract was fraudulently induced . . . [I]n each of these cases, 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.” (Robinson Helicopter, 14 Cal.4th at 990.) Recently, the Court of Appeal in Dhital v. Nissan North America, Inc. (2022) 84 Cal.App.5th 828, found that this exception to the economic loss rule also applies to claims for fraudulent concealment, applying Robinson Helicopter. (Id. at 843.) The issue had not previously been directly addressed by California courts, and federal district courts are divided on it. (See Id. at 842-43.) On February 1, 2023, the California Supreme Court granted the petition for review of Dhital, and declined the request for depublication of the opinion. (Dhital v. Nissan North America (2023) 304 Cal.Rptr.3d 82, 83.) Consequently, while the Supreme Court’s review is pending, Dhital “has no binding or precedential effect, and may be cited for potentially persuasive value only.” (Rules of Court, rule 8.1115, subd. (e)(1).)

Though Dhital is not currently binding, the Court finds its reasoning persuasive and so follows it here. Accordingly, the economic loss rule does not apply to Plaintiffs’ fraudulent concealment claim.