Judge: Bruce G. Iwasaki, Case: 20STCV46434, Date: 2023-02-21 Tentative Ruling

Case Number: 20STCV46434    Hearing Date: February 21, 2023    Dept: 58

Judge Bruce G. Iwasaki

Department 58

Hearing Date:             February 21, 2023

Case Name:                 Rodney Hamilton et al. v. Kia Motors America, Inc.

Case No.:                    20STCV46434

Motion:                       Motion for Summary Judgment/Adjudication

Moving Party:             Defendant Kia Motors America

Responding Party:      Plaintiffs Rodney Hamilton and Sonshara Brown

Background

This is an action under the Song-Beverly Act in which Rodney Hamilton and Sonshara Brown (Plaintiffs) allege defects in a 2016 Kia Optima (Vehicle).[1]  Plaintiffs allege six causes of action against Kia Motors America, Inc. (Defendant or Kia) for breach of express and implied warranties, failure to repair the Vehicle within a reasonable time, failure to provide sufficient service literature and replacement parts to repair facilities, and fraud by omission.  Plaintiffs leased the new Vehicle on September 16, 2016 from Car Pros Kia Glendale.  Two years later, they bought out the lease. 

           Plaintiffs brought the Vehicle into Kia’s authorized repair facility on numerous occasions.  On October 9, 2017, they brought it in to replace the motor plug.  A month later, they brought it in for repairs on the electronic and transmission control unit.  In August 2019, Plaintiffs then complained of loss of power and the “check engine light” illuminating.  The Vehicle was again brought in for repair in June 2020 due to acceleration issues.  In March 2021, the Vehicle was involved in an accident and declared a total loss.

Defendant now moves for summary judgment on all claims.  Plaintiffs filed an opposition and Defendants filed a reply.

Request for judicial notice and objections

Plaintiffs’ request for judicial notice of a ruling in a different department is granted.  (Evid. Code, § 452, subd. (d).)

           Plaintiffs object to the declaration of Ariston Crane.  The Court overrules all of the objections.

           Defendant objects to the declarations of Sonshara Brown and Matthew Pardo.  As to the Brown Declaration, the Court overrules all objections.  As to the Pardo Declaration, the Court sustains objections 3, 4, 15, 16, and 17 and overrules numbers 1, 2, 5-14, 18, and 19.

Separate statement issue

           An opposing Separate Statement must comply with the requirements of California Rule of Court 3.1350(e), (f) and (h).  Counsel must respond to “[e]ach material fact” and if it disputed, “must unequivocally state whether that fact is ‘disputed’ or ‘undisputed” on the right side of the page directly opposite the fact in dispute.  (Cal. Rules of Court, rule 3.1350(f)(1), (f)(2).)

Both parties failed to comply.  In the Separate Statement, Plaintiffs improperly inserted legal argument in their response.  In response to Plaintiff’s additional Separate Statement of Undisputed Facts, Defendant interposed legal argument and objections.  The Separate Statement is not the proper place for objections or argument and both counsel are admonished to comply with Rules of Court.

Legal Standard

A party may move for summary judgment “if it is contended that the action has no merit or that there is no defense to the action or proceeding.”  (Code Civ. Proc., § 437c,¿subd. (a).)  “[I]f all the evidence submitted, and all inferences reasonably deducible from the evidence and uncontradicted by other inferences or evidence, show that there is no triable issue as to any material fact and that the moving party is entitled to judgment as a matter of law,” the moving party will be entitled to summary judgment.  (Adler v. Manor Healthcare Corp.¿(1992) 7 Cal.App.4th 1110, 1119.)

The moving party has the initial burden of production to make¿a prima facie¿showing of the nonexistence of any triable issue of material fact, and if he does so, the burden shifts to the opposing party to make¿a prima facie¿showing of the existence of a triable issue of material fact.  (Aguilar v. Atlantic Richfield Co.¿(2001) 25 Cal.4th 826, 850; accord Code Civ. Proc., § 437c,¿subd. (p)(2).)  A Defendant moving for summary judgment may meet its initial burden by proving that for each cause of action alleged, plaintiff cannot establish at least one element of the cause of action.  (Code Civ. Proc., § 437c(p)(2).)

Discussion

First and fourth causes of action – breach of express warranty

“ ‘A plaintiff pursuing an action under the [Song-Beverly] Act has the burden to prove that (1) the vehicle had a nonconformity covered by the express warranty that substantially impaired the use, value or safety of the vehicle (the nonconformity element); (2) the vehicle was presented to an authorized representative of the manufacturer of the vehicle for repair (the presentation element); and (3) the manufacturer or his representative did not repair the nonconformity after a reasonable number of repair attempts (the failure to repair element).’ ”  (Donlen v. Ford Motor Co. (2013) 217 Cal.App.4th 138, 152.)

If the manufacturer is unable to repair the vehicle to conform to the applicable express warranty after a reasonable number of attempts, “the manufacturer shall either promptly replace the new motor vehicle in accordance with subparagraph (A) or promptly make restitution to the buyer in accordance with subparagraph (B). However, the buyer shall be free to elect restitution in lieu of replacement, and in no event shall the buyer be required by the manufacturer to accept a replacement vehicle."” (Civ. Code, § 1793.2, subd. (d)(2).)  Thus, a plaintiff must prove that “(1) his vehicle had defects that affected the use, value or safety of the vehicle that [the manufacturer] could not repair to conform to the applicable warranty after a reasonable number of repair attempts, and (2) assuming Plaintiff can prove his vehicle was not repaired after a reasonable number of repair attempts, that [the manufacturer] did not promptly offer to repurchase or replace Plaintiff's vehicle.”  (Gonzalez v. Ford Motor Co. (C.D.Cal., Oct. 23, 2019, LA CV 19-00652 PA (ASx)) 2019 U.S. Dist. Lexis 185279 at *16; See generally Civ. Code §§ 1793.2(d)(2)(A)–(C).)

Civil Code section 1793.2, subdivision (d)’s reference to “a reasonable number of repair attempts” in plural requires a plaintiff to prove the manufacturer had more than one attempt to repair the product to a conforming state. (See, e.g., Silvio v. Ford Motor Co. (2003) 109 Cal.App.4th 1205, 1208 [“The statute does not require the manufacturer to make restitution or replace a vehicle if it has had only one opportunity to repair that vehicle.”].) 

           Here, Defendant argues that the two defects that arose during the warranty period were repaired within a reasonable time.  On August 17, 2019, Plaintiffs brought in the Vehicle for a “check engine light” and power loss, which was diagnosed and repaired in 11 days.  (Statement of Undisputed Fact (SUF), Issue No. 1, 13-15.)[2]  On June 10, 2020, the repair facility “diagnosed and repaired” the check engine light and acceleration issues.  Kia argues that on all other occasions, the Vehicle was brought in for recall and product improvements “prophylactically.”  In opposition, Plaintiffs contend that the Vehicle was presented on at least two other occasions in addition to the above: on October 9, 2017 for shifting issues and CVVT motor plug replacement and on March 22, 2019 for updating the engine computer.  (Brown Decl., Exs. 4-5.)

           Kia does not dispute that two visits may constitute a “reasonable number of attempts” to repair the Vehicle to a conforming state.  Instead, it argues that each alleged defect during the August 17, 2019 and June 10, 2020 repairs are separate and distinct.  This assumption depends on a technical definition of a “defect” or “nonconformity” under the Act, which runs counter to the pro-consumer policies of the statute.  “Whether the impairment is substantial is determined by an objective test, based on what a reasonable person would understand to be a defect . . . This test is applied, however, within the specific circumstances of the buyer.”  (Lundy v. Ford Motor Co. (2001) 87 Cal.App.4th 472, 478 [finding that the word “substantial” injects an element of degree as to whether the defect impairs the value of the goods].)  Thus, whether the acceleration and loss power issues are substantial impairments is a question of fact for the jury.  In addition, given that Plaintiffs presented the Vehicle on more than one occasion, this also raises a triable issue as to whether that constitutes a reasonable number of attempts.  (Silvio, supra, 109 Cal.App.4th at p. 1207.) 

Moreover, even if the Court adopted Kia’s contentions that each defect be viewed in isolation, it is inapplicable here.  At the August 17, 2019 visit, Plaintiffs complained about issues of both acceleration and loss of power.  (Brown Decl., Ex.  6.)  This same defect was present at the June 10, 2020 repair.  (Id. at Ex. 7.)  Therefore, there is a question of fact as to whether the Vehicle was properly repaired at the August 2019 visit.

Kia also argues that the visits for repairs under the recall do not constitute an attempt to repair.  But it overlooks that issues related to the recall arose after the repair.  On March 22, 2019, the Vehicle was brought in for repair under bulletin PI1802 for an engine update.  (Brown Decl., ¶ 11, Ex. 5.)  On August 17, 2019, a similar problem arose under that same bulletin.  (Id. at ¶ 12, Ex. 6.)  While Kia characterizes these visits as prophylactic and distinct, these defects suggest a continuing series of visits for the same defect, which create a triable issue of fact.  Accordingly, summary adjudication is denied on the first and fourth causes of action.

Second and third causes of action – failure to repair

For the second cause of action, Civil Code section 1793.2, subdivision (b) states “[w]here those service and repair facilities are maintained in this state and service or repair of the goods is necessary because they do not conform with the applicable express warranties, service and repair shall be commenced within a reasonable time by the manufacturer or its representative in this state. Unless the buyer agrees in writing to the contrary, the goods shall be serviced or repaired so as to conform to the applicable warranties within 30 days. Delay caused by conditions beyond the control of the manufacturer or its representatives shall serve to extend this 30-day requirement. Where delay arises, conforming goods shall be tendered as soon as possible following termination of the condition giving rise to the delay.”

           As to the third cause of action, Civil Code section 1793.2, subdivision (a)(3) requires that a manufacturer must “[m]ake available to authorized service and repair facilities sufficient service literature and replacement parts to effect repairs during the express warranty period.” 

           Here, Defendant argues there are no visits to any dealership or repair facility that lasted more than 30 days and that all repairs were properly completed.  It cites to evidence that at most, there were four repair visits, all of which lasted one, three, or eleven days to complete.  (2UMF4, 6, 9, 11, 13, 20, 21, 22.)  Plaintiffs argue that “the evidence is incontrovertible that the Vehicle was out of service more than 30 days for a dangerous and substantially impairing engine defect.”  They cite to “Mckee & Kirk Brown Decl. ¶ 18-25, Ex. 10” (Plaintiffs’ Oppos. at p. 10: 11.), which was not provided.  In the Separate Statement, Plaintiffs also argue that their second cause of action is comprised of two separate claims: “failure to repair within 30 days and failure to timely commence repairs.”

           Plaintiffs’ argument that the Vehicle was “out of service more than 30 days” is conclusory and they cite to evidence that is non-existent.  They do not dispute that the Vehicle was in the repair facility for less than 30 days, whether those days were consecutive or cumulative.  (2SUF20.)  Nevertheless, Plaintiffs argue that this cause of action also contains a second claim for failure to commence repairs within a reasonable time.  (Complaint, ¶ 93.)  Defendant did not address this in their moving papers.  In its reply, Kia improperly shifts the burden by arguing that Plaintiffs provide no argument when it is Kia that must produce evidence.  (Hagen v. Hickenbottom (1995) 41 Cal.App.4th 168, 186 [holding that a moving defendant may not “shift the burden simply by suggesting the possibility that the plaintiff cannot prove its case”].)  

           As to the failure to provide sufficient service literature and replacement parts, Plaintiffs provide evidence that they have continued to experience issues with the Vehicle even after the last repair.  (Michel Decl., Ex.  ¶ 14, Brown Depo. at p. 88:13-22)  Furthermore, “[e]vidence that a problem was fixed for a period of time but reappears at a later date is relevant to determining whether a fundamental problem in the vehicle was ever resolved.”  (Donlen v. Ford Motor Co., supra, 217 Cal.App.4th at p. 149.)  The evidence shows that the acceleration and loss of power issue arose in both the August 17, 2019 and June 10, 2020 repair visits.  (Brown Decl., Exs. 6-7.)  This creates a triable issue regarding whether Defendant repaired the vehicle during those attempts to conform with the applicable express warranties and whether it provided sufficient parts or literature to effectuate successful repairs.  For those reasons, summary adjudication is denied as to the second and third causes of action.

Fifth cause of action – breach of implied warranty

Under Civil Code section 1791.1, subdivision (c), the duration of an implied warranty of merchantability “shall be coextensive in duration with an express warranty which accompanies the consumer goods, provided the duration of the express warranty is reasonable; but in no event shall such implied warranty have a duration of less than 60 days nor more than one year following the sale of new consumer goods to a retail buyer.” 

The Song-Beverly Act “supplements, rather than supersedes, the provisions of the California Uniform Commercial Code.”  (Krieger v. Nick Alexander Imports, Inc. (1991) 234 Cal.App.3d 205, 213.)  “The Act itself contains no express limitations period for a civil action.  Section 2725 of the California Uniform Commercial Code provides for a four-year limitations period for breach of warranty.” (Id. at pp. 213-214.)  Under this statute, “(1) An action for breach of any contract for sale must be commenced within four years after the cause of action has accrued. … [¶] (2) A cause of action accrues when the breach occurs, regardless of the aggrieved party’s lack of knowledge of the breach. A breach of warranty occurs when tender of delivery is made, except that where a warranty explicitly extends to future performance of the goods and discovery of the breach must await the time of such performance the cause of action accrues when the breach is or should have been discovered.” (Com. Code, § 2725, subds. (1), (2), italics added.)

           Defendant argues that the cause of action under the implied warranty accrued on September 16, 2016, the date of the lease, and the warranty expired on September 16, 2017. Plaintiffs did not file the case until December 4, 2020.  Kia further argues that Plaintiffs first brought the Vehicle in for repair on August 7, 2019, and therefore, no implied warranty was in effect.  (5SUF1.)  Plaintiffs assert that Defendant failed to address its allegations on delayed discovery, class action tolling, fraudulent concealment, and latent defects, which all operate to toll the statute of limitations.  Defendant did not reply to this argument.

           Defendant’s argument fails to consider that section 1791.1, subdivision (c) allows for an implied warranty of up to one year.  That is, the four-year statute of limitations begins on September 16, 2017, so that Plaintiffs had up to September 16, 2021 to file their Complaint.  The Court of Appeal held that a defect may exist during the one-year warranty period: “The implied warranty of merchantability may be breached by a latent defect undiscoverable at the time of sale. . . . In the case of a latent defect, a product is rendered unmerchantable, and the warranty of merchantability is breached, by the existence of the unseen defect, not by its subsequent discovery.”  (Mexia v. Rinker Boat Co., Inc. (2009) 174 Cal.App.4th 1297, 1304-1305, italics added (Mexia).)  “Thus, although a defect may not be discovered for months or years after a sale, merchantability is evaluated as if the defect were known.”  (Id. at p. 1305.)

It follows that if a latent defect exists at any point during the implied one-year warranty period and the lawsuit is filed within the four-year statute of limitations period (which accrues when the defect comes into existence), then the breach of implied warranty claim is timely, even if the latent defect was discovered after the one-year implied warranty period.  The Court of Appeal in Mexia held as such, by explaining that “[t]he word ‘duration’ has a clear and readily understood meaning, viz., the period of time during which something exists or lasts. (Webster's 3d New Internat. Dict. (1993) p. 703; Black’s Law Dict. (7th ed. 1999) p. 520, col. 1.) In the duration provision, the ‘something’ that has a period of existence is the implied warranty of merchantability. (Civ. Code, § 1791.1, subd. (c).) According to its plain language, the implied warranty exists for at least 60 days and at most for one year after delivery of the product; after that time, the warranty ceases to exist.  [¶] To say that a warranty exists is to say that a cause of action can arise for its breach. Defining the time period during which the implied warranty exists, therefore, also defines the time period during which the warranty can be breached. Thus, by giving the implied warranty a limited prospective existence beyond the time of delivery, the Legislature created the possibility that the implied warranty could be breached after delivery.”  (174 Cal.App.4th at p. 1309, italics added.)

           In sum, this potentially creates a five-year statute of limitations period from the date of sale, assuming the defect was in existence on the last day of the one-year period that begins on the date of sale.

Here, Defendant does not account that Plaintiffs may bring suit within the four-year statute of limitations period on allegations that the defect that made the vehicle unmerchantable existed within the one-year period, but the defect was latent and not discovered until months or years later. (See Daniel v. Ford Motor Co. (9th Cir. 2015) 806 F.3d 1217, 1223.)  Because Kia does not discuss the fact that the acceleration issue and power loss may be a latent defect, it has not met its burden to show there are no triable issues of fact.

In addition, contrary to Kia’s argument, the delayed discovery rule may apply to toll the statute of limitations.  Defendant has failed to provide legal authority to support its argument that this doctrine does not apply.  It cites only to Mexia, but that case did not discuss the delayed discovery rule.  In contrast, other courts have opined that delayed discovery may apply to toll the statute of limitations for breach of implied warranty.  ((Smith v. Ford Motor Co. (N.D.Cal. Feb. 4, 2020, No. 19-cv-05170-CRB) 2020 WL 609864,*4 [“[T]he majority of courts that have considered this issue . . . have found that the implied warranties at issue could extend to the future performance of goods and thus that California law does not ‘obviously foreclose’ the application of the ‘delayed discovery’ theory”]; Yeager v. Ford Motor Co. (N.D.Cal. Jan. 8, 2020, No. C 19-06750 WHA) 2020 WL 95645, *3.)  Finally, “ ‘[r]esolution of the statute of limitations issue is normally a question of fact.’ ”  (Paredes v. Credit Consulting Services, Inc. (2022) 82 Cal.App.5th 410, 427; Michaels v. Greenberg Traurig, LLP (2021) 62 Cal.App.5th 512, 538.)  On those bases, the Court denies summary adjudication on the fifth cause of action.

Sixth cause of action – fraud by omission

“ ‘ [T]he elements of an action for fraud and deceit based on concealment [or nondisclosure] 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.’ ”  (Hahn v. Mirda (2007) 147 Cal.App.4th 740, 748.) 

Kia argues that the fraud claim fails because (1) Plaintiff cannot establish a special or transactional relationship with Defendant; (2) Plaintiff cannot establish active concealment; (3) Plaintiff cannot establish fraud damages; and (4) the cause of action is barred by the economic loss doctrine. 

The Court finds that Plaintiffs have failed to show any sort of transactional relationship with Defendant Kia and declines to consider the other arguments.[3]

Special or transactional relationship

           There are “‘four circumstances in which nondisclosure or concealment may constitute actionable fraud: (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.’”  (LiMandri v. Judkins (1997) 52 Cal.App.4th 326, 336.)  However, unless the parties were in a fiduciary relationship, the other three circumstances “presupposes the existence of some other relationship between the plaintiff and defendant in which a duty to disclose can arise.”  (Id. at p. 337.)  “Thus, a duty to disclose may arise from the relationship between seller and buyer, employer and prospective employee, doctor and patient, or parties entering into any kind of contractual agreement.” (Ibid.)

In Bigler-Engler v. Breg, Inc. (2017), 7 Cal.App.5th 276, 314 (Bigler-Engler), the Court of Appeal held there was no seller and buyer or contractual relationship between the consumer plaintiff and manufacturer defendant.  The manufacturer defendant had no contact with the consumer plaintiff, did not know plaintiff was a potential user of its products, did not advertise to plaintiff, and did not derive any direct monetary benefit from the plaintiff’s rental of the device.  (Bigler-Engler, supra, 7 Cal.App.4th at p. 314.)  The appellate court held that a transaction creating a duty to disclose “must necessarily arise from direct dealings between the plaintiff and the defendant; it cannot arise between the defendant and the public at large.” (Id. at p. 312.)

Here, Kia argues that there was no duty to disclose additional information to Plaintiffs. Kia’s Senior Escalated Case Administrator within the Consumer Affairs department, Ariston Crane, avers that Defendant is a distributor only and distributes the vehicles to “independent third-party dealers, which sell vehicles to customers.”  (Crane Decl., ¶¶ 1, 2.)  Both Car Pros Kia Glendale (where Plaintiffs leased the Vehicle) and Kia of Carson (where Plaintiffs bought out the lease) are “independent dealerships” and not owned by Defendant Kia  (Id. at ¶¶ 5, 7, 8.)  This is sufficient for Defendant to meet its initial burden to show that the dealership was not acting as Kia’s agent when it sold the Vehicle to Plaintiffs.   This shifts the burden to Plaintiffs to offer evidence that Defendant had a duty to disclose.

Plaintiffs do not rebut Defendant’s argument that its dealerships are not an authorized agent.  (See Avalon Painting Co. v. Alert Lumber Co. (1965) 234 Cal.App.2d 178, 184 [an authorized dealer is not automatically an agent of the manufacturer “in the legal sense of that relationship”].)  Instead, they attempt to distinguish Bigler-Engler and cite various cases for the proposition that transactional privity is unnecessary for a fraudulent omission claim. 

           First, Plaintiffs’ attempt to distinguish Bigler-Engler is illogical.  They contend that the “ ‘transaction’ requirement is satisfied” if the three instances in which a cause of action for non-disclosure of material facts may arise are met, i.e., “(1) the defendant makes representations but does not disclose facts which materially qualify the facts disclosed, or which render his disclosure likely to mislead; (2) the facts are known or accessible only to defendant, and defendant knows they are not known to or reasonably discoverable by the plaintiff; (3) the defendant actively conceals discovery from the plaintiff.”  In other words, they argue that the mere fact, for example, that Defendant had exclusive knowledge of a defect and knows they are not known to Plaintiff, is sufficient in and of itself to constitute a transaction.  This is a puzzling reading of Bigler-Engler given that the Court of Appeal expressly held that a transaction “must necessarily arise from direct dealings between the plaintiff and the defendant.”  (7 Cal.App.5th at p. 312, italics added.)  Plaintiff’s interpretation would render meaningless the “direct dealings” wording.

           Second, some transactional relationship is necessary.  Plaintiff cites various cases to dispute this point.  Their first case, Geernaert v. Mitchell (1995) 31 Cal.App.4th 601, 603-604 (Geernaert) involved a real estate transaction where the original seller misrepresented the condition of the home’s foundation.  The home was then sold to the first buyer, who sold it to a second buyer, and who ultimately sold it to the plaintiff.  The Court of Appeal considered the language in the Restatement of Torts, and concluded that the “ ‘maker of the misrepresentation must have information that would lead a reasonable man to conclude that there is an especial likelihood that it will reach [third parties] and will influence their conduct.’ ”  (31 Cal.App.4th at p. 607.)  The court cautioned that “ ‘foreseeability’ ” is different than “ ‘reason to expect’ ” and it is the latter which should govern the inquiry.  (Ibid.)  Other factors to consider are “the extent of the seller’s knowledge of resale to a particular person or class of persons and (2) the likelihood that the particular misrepresentation (or concealment) would be passed on to them.”

           Geernaert is factually and procedurally distinguishable.  The defendant owner in that case made affirmative misrepresentations as well as concealments, which places the case in the fourth scenario “when the defendant makes partial representations but also suppresses some material facts.”  A predicate transactional relationship is established in such a situation.  Second, Geernaert was an appeal from a judgment on dismissal from a demurrer.  The Court of Appeal emphasized that it did not consider the “possible difficulties of proof” for indirect fraud.  (31 Cal.App.4th at pp. 608-609.)

           Plaintiffs’ other cases are also distinguishable.  In Barnhouse v. City of Pinole (1982) 133 Cal.App.3d 171, 178, a property developer concealed deficient soil conditions and several years later, the plaintiff purchased the home from the initial purchaser.  The Court of Appeal found that the “jury could have inferred that [developer] failed to make the initial disclosures with the intention that subsequent purchasers would also act in ignorance.”  (133 Cal.App.3d at p. 192.)  As both the initial and subsequent purchasers were unaware of the soil problems and the initial purchaser was unharmed, the court held it would be unjust to restrict a fraud claim because the “nondisclosure must necessarily be passed on” through the chain of purchasers. 

           A similar situation arose in Varwig v. Anderson-Behel Porsche/Audi, Inc. (1977) 74 Cal.App.3d 578.  There, plaintiff purchased a vehicle from a dealer, who had originally purchased it from a wholesaler.  (74 Cal.App.3d at p. 580.)  The vehicle was eventually repossessed because of title issues and the plaintiff sued both the dealer and wholesaler.  In reversing summary judgment in favor of the wholesaler, the Court of Appeal held that the wholesaler was “on notice that [dealer] intended resale.”  Thus, the wholesaler’s “representation to [dealer] was in law an indirect misrepresentation to plaintiff, who purchased the car in reliance upon [dealer’s] repetition of the representation.”  (Id. at p. 581.)  

In OCM Principal Opportunities Fund v. CIBC World Markets Corp. (2007) 157 Cal.App.4th 835, 859 (OCM), an investment bank, who was the initial purchaser of unregistered notes of a fragrance company, sold these notes to qualified buyers; the notes were then transformed into registered notes that were traded on the open market and eventually purchased by plaintiffs.  The investment bank also created an “offering memorandum regarding the unregistered notes,” which plaintiffs relied upon in making their purchases.  The memorandum failed to disclose the fragrance company and plaintiffs lost their investments.  (Id. at p. 846.)  The Court of Appeal relied on Barnhouse to hold that the investment bank could be liable to the plaintiffs as subsequent purchasers because it had reason to expect that the notes would be resold.  (Id. at pp. 859-860.)  As in Geernaert, the OCM defendant made partial representations through the written memorandum, which places this case in the fourth category under LiMandri “ ‘when the defendant makes partial representations but also suppresses some material facts.’ ”  (52 Cal.4th at p. 336.)  Again, this presupposes a predicate initial relationship with the initial buyers.  Additionally, nothing in OCM proposed to apply that rule to scenarios involving a manufacturer, distributor, dealership, and ultimately, a retail consumer.  To that end, Bigler-Engler is more analogous.

Notably, in all of these cases, the requisite relationship of buyer and seller existed in the first instance between the original wrongdoer and the middleman.  The fraudulent omission arising from that initial transaction was then passed on to the subsequent purchaser.

Here, in contrast to the above cases, Plaintiffs are not alleging that Kia, as distributor, committed fraud upon the dealership as an initial purchaser of the Vehicle, and that the omission from the manufacturer has now been passed on to the Plaintiff who may sue for fraud as a subsequent purchaser.  Plaintiffs do not have the transactional relationship with Kia that existed with the initial purchasers of the properties in Geernaert and Barnhouse or the wholesaler and dealer in Varwig.  These cases do not suggest that a retail purchaser possesses the requisite relationship with the distributor or manufacturer merely because the purchaser purchased a vehicle from an intermediary dealership.  Plaintiffs’ theory is too attenuated and they provide no evidence as how Kia, as the distributor, could have made disclosures to subsequent purchasers. 

           To be clear, Plaintiffs are correct that “an action for deceit does not require contractual privity.”  (Shapiro v. Sutherland (1998) 64 Cal.App.4th 1534, 1549.)  But the line of cases above suggests there must be some form of transaction or direct dealings between Kia and Plaintiffs.[4] Because no such showing is made here, summary adjudication is granted.

           As to the other elements of concealment, such as failing to disclose a material fact and intent to conceal, the evidence provided is lacking.  Plaintiffs produce substantial evidence of internal e-mails and investigations within Kia.  But despite alleging in the Complaint that these defects appear in the Vehicle (2016 Kia Optima), none of these documents directly implicate the subject Vehicle or even the model year.  Many of the e-mail communications pre-date the 2016 Kia Optima.  (See Pardo Decl., Exs. 1-8.)  And many of the other documents do not even discuss that model year.  For example, Exhibits 26 and 27 describe a “Safety Recall Campaign,” but the 2016 Kia Optima is not listed in the affected models.  (Id., Exs. 26, 27.)  Exhibit 11 contains an e-mail discussing the high engine failure rates between Kia’s executives, but these involved vehicles in model years 2012-2014.  Plaintiffs point to no evidence linking this particular Vehicle (or model year) to the alleged concealment.

Conclusion

           The motion for summary judgment is denied.  Summary adjudication is granted to Defendant Kia on the sixth cause of action, and is otherwise denied.