Judge Blaine K. Bowman, Case Number: 37-2023-00048286-CU-BC-CTL, Date: 2024-04-26 Tentative Ruling

Judge: Blaine K. Bowman, Case: 37-2023-00048286-CU-BC-CTL, Date: 2024-04-26 Tentative Ruling

SUPERIOR COURT OF CALIFORNIA,

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HALL OF JUSTICE

TENTATIVE RULINGS - April 25, 2024

04/26/2024 08:30:00 AM C-74 COUNTY OF SAN DIEGO

JUDICIAL OFFICER:Blaine K. Bowman

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Civil - Unlimited Breach of Contract/Warranty Demurrer / Motion to Strike 37-2023-00048286-CU-BC-CTL AMAYA VA FORD MOTOR COMPANY [IMAGED] CAUSAL DOCUMENT/DATE FILED:

Defendant Ford Motor Company's demurrer to the fifth cause of action for fraudulent inducement - concealment is SUSTAINED WITHOUT LEAVE TO AMEND. Defendant Sedano Ford's demurrer to the sixth cause of action for negligent repair is OVERRULED.

Fifth Cause of Action: Fraudulent Inducement – Concealment (against Defendant Ford) Although Ford raises arguments as to the specificity of the pleading and as to the issue of duty, the court addresses only Ford's argument that the fraudulent inducement - concealment cause of action is barred by the economic loss rule. The court finds this issue dispositive.

The court is persuaded by the analysis of the economic loss rule in In re Ford Motor Co. DPS6 Powershift Transmission Products Liability Litigation (C.D. Cal. 2020) 483 F.Supp.3d 838.

Ford also argues that the fraudulent omission claims are barred by the economic loss rule. '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.' Robinson Helicopter Co., Inc. v. Dana Corp., 34 Cal.4th 979, 988, 22 Cal.Rptr.3d 352, 102 P.3d 268 (2004) (internal quotation omitted). '[T]he economic loss rule provides [that] where 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.' Id. (internal quotation omitted). The rule 'bar[s] a plaintiff's tort recovery of economic damages unless such damages are accompanied by some form of physical harm (i.e., personal injury or property damage).' North American Chemical Co. v. Superior Court, 59 Cal.App.4th 764, 777, 69 Cal.Rptr.2d 466 (1997). Thus, 'in actions arising from the sale or purchase of a defective product, plaintiffs seeking economic losses must be able to demonstrate that either physical damage to property (other than the defective product itself) or personal injury accompanied such losses; if they cannot, then they would be precluded from any tort recovery in strict liability or negligence.' Ladore v. Sony Computer Entertainment America, LLC, 75 F.Supp.3d 1065, 1075 (N.D. Cal. 2014) (quoting North American Chemical Co., 59 Cal.App.4th at 780, 69 Cal.Rptr.2d 466.) Accordingly, a plaintiff cannot assert tort claims based on a product not performing as promised-that is simply an economic loss recoverable in a contract-based action. The purpose of this rule is to 'prevent[ ] the law of contract and the law of tort from dissolving into the other.' Robinson Helicopter, 34 Cal.4th at 988, 22 Cal.Rptr.3d 352, 102 P.3d 268 (internal quotation omitted).

Here, Plaintiff's harm is purely economic and derives from Ford's alleged breach of its warranty Calendar No.: Event ID: TENTATIVE RULINGS

3100543 8 CASE NUMBER: CASE TITLE: AMAYA VA FORD MOTOR COMPANY [IMAGED] 37-2023-00048286-CU-BC-CTL obligation to fix or replace the vehicle if it is defective. Stated differently, the foundation of Plaintiff's claim is that his expectations about the vehicle were frustrated because it did not work properly as Ford promised it would. Thus, it appears that the economic loss rule applies. But Plaintiff argues it does not.

The crux of the parties' dispute about the application of the economic loss rule concerns the scope of an exception to it set forth in Robinson Helicopter. Ford acknowledges that Robinson Helicopter and its predecessor cases hold that fraud claims based on misrepresentations may not be subject to the economic loss rule, so Ford does not seek judgment on the fraudulent misrepresentation claims based on the economic loss rule. However, Ford argues that fraudulent inducement claims based on omissions are subject to the economic loss rule.

In re Ford, 483 F.Supp.3d at 847–848.

After providing a summary of Robinson Helicopter, In re Ford concludes, . . . Robinson Helicopter provides that a claim for fraud by affirmative misrepresentation may avoid the economic loss rule, but it does not establish any other exception, such as a for a claim for fraud by omission, as Plaintiff argues for in this case. The Court therefore rejects Plaintiff's broad interpretation of the Robinson Helicopter exception.

In re Ford, 483 F.Supp.3d at 849.

Similar to the complaint at issue in In re Ford, Plaintiffs' complaint in this case alleges: . . . .

58. Defendant FMC 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.

. . . .

66. The facts concealed or not disclosed by Defendant FMC to Plaintiffs are material in that a reasonable person would have considered them to be important in deciding whether or not to purchase the Subject Vehicle. Had Plaintiffs known that the Subject Vehicle and its transmissions were defective at the time of sale, they would not have purchased the Subject Vehicle.

. . . .

69. As a result of Defendant FMC's misconduct, Plaintiffs have suffered and will continue to suffer actual damages.

70. Plaintiffs were harmed by purchasing a vehicle that Plaintiffs would not have leased and/or purchased had Plaintiffs known the true facts about the Transmission Defect. Furthermore, Plaintiffs unknowingly exposed themselves to the risk of liability, accident and injury as a result of Defendant's fraudulent concealment of the Transmission Defect.

71. Plaintiffs were harmed by purchasing a vehicle that Plaintiffs would not have leased and/or purchased had Plaintiffs known the true facts about the Transmission Defect. Furthermore, Plaintiffs unknowingly exposed themselves to the risk of liability, accident and injury as a result of Defendant's fraudulent concealment of the Transmission Defect.

. . . .

Thus, as in In re Ford, Plaintiffs rely, not on allegations of an affirmative representation, but on Calendar No.: Event ID: TENTATIVE RULINGS

3100543 8 CASE NUMBER: CASE TITLE: AMAYA VA FORD MOTOR COMPANY [IMAGED] 37-2023-00048286-CU-BC-CTL allegations of omissions. Also as in In re Ford, Plaintiffs' alleged damages are purely economic. As such, under the analysis of In re Ford, the fraudulent inducement - concealment cause of action is barred by the economic loss rule. See also, Kelsey v. Nissan North America (C.D. Cal. 2020) 2020 WL 4592744 and the cases cited therein. The court is also persuaded by the analysis of almost identical allegations in Catherine Petersen v. FCA US LLC (C.D. Cal. 2021) 2021 WL 3207960. After an analysis of In re Ford, Catherine Peterson concludes, [t]hat reasoning applies here and bars Petersen's fraudulent omission claim. Petersen's claimed injury is that she 'would not have purchased or leased the Vehicle or would have paid less for it had Plaintiff known of the Stalling Defect, given the unsafe nature of the Stalling Defect. Furthermore, Plaintiff unknowingly exposed themselves to the risk of accident, injury, and/or liability to others as a result of the nature or the Stalling Defect which can lead to loss of power while driving at highway speeds, stalling, loss of control, and other impairments to driveability.' TAC ¶ 26. Like the driver in In re Ford Motor Co., Petersen's injury is based on a fraudulent omission rather than affirmative misrepresentation, is purely economic, and derives from FCA's alleged breach of warranty. The claim is therefore barred by the economic loss rule.

Catherine Petersen, 2021 WL 3207960, at *5. The same analysis applies to the allegations at issue on this demurrer.

The court is not persuaded by Plaintiffs' reliance on Dhital v. Nissan North America, Inc. (2022) 84 Cal.App.5th 828, review granted, Dhital v. Nissan North America (Cal. 2023) 304 Cal.Rptr.3d 82. Both In re Ford Motor Co. and Dhital recognize that Robinson does not address the issue of whether concealment-based claims are barred by the economic loss rule. Absent Robinson Helicopter addressing this issue, the court declines to extend the exception of Robinson Helicopter beyond affirmative representations to concealment-based claims. Moreover, even if Plaintiff could overcome the affirmative representation issue, the complaint fails to allege facts sufficient to support a finding that Plaintiffs sustained damages independent of Plaintiffs' alleged economic loss as required under Robinson Helicopter. Dhital recognizes that such circumstances would support application of the economic loss rule. See, Dhital, 84 Cal.App.5th at 828, fn. 5.

Although Plaintiffs seek leave to amend, Plaintiffs fail to proffer any facts to cure this pleading deficiency.

Therefore, the court finds Plaintiffs fail to demonstrate a reasonable probability the complaint can be amended to plead a basis for liability against Defendant Ford under a concealment-based cause of action. Accordingly, Defendant Ford's demurrer is SUSTAINED WITHOUT LEAVE TO AMEND as to this cause of action. Doe v. United States Youth Soccer Assn., Inc. (2017) 8 Cal.App.5th 1118, 1143 citing Titus v. Canyon Lake Property Owners Assn. (2004) 118 Cal.App.4th 906, 917. See also, Goodman v. Kennedy (1976) 18 Cal.3d 335, 349; Ruinello v. Murray (1951) 36 Cal.2d 687, 690.

Sixth Cause of Action: Negligent Repair (against Defendant Sedano) The first argument Sedano raises is based on the economic loss rule. However, none of the authorities Sedano relies on apply the economic loss rule to preclude a claim for negligent repair against a dealer.

Pilgrim v. General Motors Company (C.D. Cal. 2020) 2020 WL 7222098 discusses causes of action for negligence and negligent failure to recall against a manufacturer, not a dealer. Similarly, Seely v. White Motor Co. (1965) 63 Cal.2d 9, discusses only claims against a manufacturer. The other cases Sedano relies on do not involve Lemon Law claims or negligent repair causes of action. The court is not persuaded by Sedano's argument that Plaintiffs' negligent repair claim 'arises from, and is not independent of, the warranty contract.' Sedano's argument ignores that, as pled, the warranty contract is between Plaintiffs and Defendant Ford [Cplt. ¶ 9], not between Plaintiff and Sedano. Absent on point authority from Sedano, the court is persuaded by Velasco v. Ford Motor Company (S.D. Cal. 2022) 2022 WL 2287258, which allows for negligent repair claims against dealers. See also, Sabicer v. Ford Motor Company (C.D. Cal. 2019) 362 F.Supp.3d 837.

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3100543 8 CASE NUMBER: CASE TITLE: AMAYA VA FORD MOTOR COMPANY [IMAGED] 37-2023-00048286-CU-BC-CTL Sedano also raises the issue of the adequacy of the damages allegations. The court finds the allegations of ¶ 23 ['Plaintiff suffered damages in a sum to be proven at trial in an amount that is not less than $25,001.00.'] and ¶ 76 ['Defendant SEDANO's negligent breach of its duties owed to Plaintiffs was a proximate cause of Plaintiffs' damages.'] sufficient to support the element of damages on Plaintiffs' negligent repair cause of action against Sedano.

Defendants shall answer within 10 days of this ruling.

If this tentative ruling is confirmed the Minute Order will be the final order of the court and the parties shall not submit any further order on this motion.

Unless the ruling(s) above indicate that an appearance is necessary, parties who wish to submit, who are satisfied with the above tentative ruling(s), and/or who do not otherwise wish to argue the motion(s) are encouraged to give notice to the Court and each other of their intention not to appear.

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