Judge Bruce G. Iwasaki, Case 22STCV12206 2022-09-19 Tentative Ruling

Department 58

Tentative Ruling: The Motion for Leave to File the First Amended Complaint is granted. Plaintiff is ordered to file her First Amended Complaint within 20 days.

This is an action under the Song-Beverly Act in which Gabriela Gonzalez (Plaintiff or Gonzalez) alleges defects in a 2020 Honda Pilot. The Complaint filed April 11, 2022, asserts claims for breach of express and implied warranties against American Honda Motor, Co. (Defendant or Honda).

Gonzalez moves for leave to file her First Amended Complaint. She indicates that after further review of the repair orders, the “electrical” issues delineated on the invoices were actually regarding defects in the vehicle’s autonomous braking or “Sensing” system. Thus, Gonzalez seeks to amend the Complaint to allege an additional cause of action for fraudulent inducement to enter into a contract through concealment of these defects.

Honda opposes the motion for leave to amend the Complaint. It argues that Gonzalez failed to show diligence because she possessed the repair orders since before filing the initial complaint. It also contends that the fraud claim fails because Plaintiff has not pled sufficient facts and the economic loss rule applies.

Gonzalez replies that she only recently discovered that the “electrical” notes in the repair orders were attributed to the defective “Sensing” system and that she has sufficiently alleged facts for fraudulent concealment.

Given the law’s liberality in allowing amendment, the early stage of this case, and Defendant’s failure to show any prejudice, the Court grants Plaintiff’s motion for leave to file the First Amended Complaint. It is premature to rule on the sufficiency of the new cause of action.

The court may, in furtherance of justice, allow a party to amend any pleading upon any terms as may be proper. (Code Civ. Proc., §§ 473, subd. (a), 576.) Courts liberally grant leave to amend in light of a strong policy favoring resolution of all disputes between parties in the same action. (Nestle v. Santa Monica (1972) 6 Cal.3d 920, 939; Morgan v. Superior Court (1959) 172 Cal.App.2d 527, 530.) Accordingly, requests for leave to amend generally will be granted unless the party seeking to amend has been dilatory in bringing the proposed amendment, and the delay in seeking leave to amend will cause prejudice to the opposing party if leave to amend is permitted. (Hirsa v. Superior Court (1981) 118 Cal.App.3d 486, 490; see also Armenta ex rel. City of Burbank (2006) 142 Cal.App.4th 636, 642 [“instances justifying the court’s denial of leave to amend are rare.”].) Absent prejudice, delay alone is insufficient to deny leave to amend. (Higgins v. Del Faro (1981) 123 Cal.App.3d 558, 564-565.)

A party requesting leave to amend must state what allegations in the previous pleading are proposed to be deleted and added, as well as specify where, by page, paragraph, and line number, the changes are located. (Cal. Rules of Court, rule 3.1324(a)(1)-(3).) The moving party must also attach the proposed amended pleading with a declaration by counsel, describing (1) the effect of the amendment; (2) why the amendment is necessary and proper; (3) when the facts giving rise to the amended allegations were discovered; and (4) why the request was not made earlier. (Cal. Rules of Court, rule 3.1324(b)(1)-(4).)

Plaintiff complied with the Rules of Court. The motion for leave attaches a copy of the proposed First Amended Complaint, along with bolded edits that signify the additions. (Dreblow Decl., Ex. 3.) Counsel avers that he recently discovered “electrical” notations on the repair orders were referring to problems with the autonomous braking system. (Id. at ¶ 6.) These defects are alleged to be the “source of numerous other technical and safety hazards.” (Id. at ¶ 7.) Plaintiff seeks to add allegations of fraudulent concealment that Defendant knew of these defects but concealed them “to induce Plaintiff into leasing the Subject Vehicle.” (Id. at ¶¶ 14-16.) The effect of the amendment would allow for a prayer for punitive damages.

Defendant has not shown dilatory conduct by Plaintiff in moving to amend her Complaint

Defendant Honda argues that Plaintiff did not show diligence because the repair orders listing the “electrical” repairs were always in her possession since the beginning of the case. While the information on which Plaintiff base her amendment may have been in the repair order before she filed the Complaint, this does not necessarily mean that she was aware of the meaning of that information on that date. That is, Defendant’s argument ignores Plaintiff’s contention that she was unaware of these defects because the autonomous braking issues were labeled as “electrical repairs” because of a “technical misunderstanding.” A delay from April 2022, when the Complaint was filed, until August 2022, when this motion was filed, does not reflect litigation indolence.

Even if a four-month delay were considered unreasonable, this alone is insufficient to deny leave to amend if Honda suffers no prejudice. (See Kittredge Sports Co. v. Superior Court (1989) 213 Cal.App.3d 1045, 1048 [“Even if [there was unreasonable delay], it is an abuse of discretion to deny leave to amend where the opposing party was not misled or prejudiced by the amendment”]; Morgan v. Superior Court of Los Angeles County, supra, 172 Cal.App.2d at p. 530 [“If the motion to amend is timely made and the granting of the motion will not prejudice the opposing party, it is error to refuse permission to amend and where the refusal also results in a party being deprived of the right to assert a meritorious cause of action or a meritorious defense, it is not only error but an abuse of discretion”].)

Defendant has not shown any prejudice if Plaintiff is permitted leave to amend her Complaint.

Defendant Honda argues that amendment is futile because Plaintiff cannot show that Honda owed her a duty to disclose the defect and the economic loss rule bars the claim.

Prejudice may exist if amendment would result in, among other things, necessitating a continuance to allow the defendant to depose new witnesses, a delay of trial, a loss of critical evidence, added costs of preparation, or increased burden of discovery. (Magpali v. Farmers Group, Inc. (1996) 48 Cal.App.4th 471, 486-488.)

A court may also deny leave to amend the complaint if the proposed amendment “ ‘is insufficient to state a cause of action.’ ” (Congleton v. National Union Fire Insurance Co. (1987) 189 Cal.App.3d 51, 62 [quoting Witkin].) However, such denial is proper only if the insufficiency cannot be cured by further amendment, e.g., if the statute of limitations has expired, or the “insufficiency of the proposed amend is established by controlling precedent.” (California Casualty General Insurance Co. v. Superior Court (1985) 173 Cal.App.3d 274, 280-281, disapproved on other grounds in Kransco v. American Empire Surplus Lines Insurance Co. (2000) 23 Cal.4th 390; Foxborough v. Van Atta (1984) 26 Cal.App.4th 217, 231 [“amendment would have been futile because it was barred by the statute of limitations”].) Otherwise, a court ordinarily should not consider the merits of the proposed amendment and “the preferable practice would be to permit the amendment and allow the parties to test its legal sufficiency by demurrer, motion for judgment on the pleadings or other appropriate proceedings.” (Kittredge Sports Co. v. Superior Court, supra, 213 Cal.App.3d at p. 1048.)

Here, Honda does not argue it would suffer prejudice if the motion for leave to amend the complaint is granted. It does not argue that the statute of limitations for fraud has expired; nor does it provide controlling case law to establish the insufficiency of the proposed amendment. Judgments for fraudulent concealment liability related to Song-Beverly claims have been affirmed. (See, e.g., Anderson v. Ford Motor Co. (2022) 74 Cal.App.5th 946, 950; Bowser v. Ford Motor Co. (2022) 78 Cal.App.5th 587, 607.) Thus, the Court considers it premature to pass on the merits of Plaintiff’s fraudulent concealment cause of action.[1]

Defendant failed to show any prejudice. This case was filed less than half a year ago. A trial date has not been set nor has meaningful discovery begun. Any prejudice is minimal.

However, the Court notes several ambiguities with the proposed amended complaint. Plaintiff appears to allege that the warranties are as to two separate vehicles: Paragraph 29 of the proposed First Amended Complaint indicates that Plaintiff leased the vehicle on September 2, 2018; Paragraph 81 then indicates that she leased the vehicle on March 16, 2020. Furthermore, there are references throughout the proposed amended complaint that the subject vehicle is a 2018 Honda Accord, as opposed to a 2020 Honda Pilot. (See, e.g., Dreblow Decl., Ex. 3, ¶¶ 24, 25, 27, 30, 67.)

In addition, the fraud allegations relate to “all model year 2017-2020 Honda CR-V Vehicles and the 2016-2020 Honda Accord.” (Id. at ¶¶ 16, 27, 35, 71.) The proposed Complaint groups these vehicles as “Class Vehicles” and describes the corresponding recalls and complaints. (Id. at ¶¶ 21, 36, 37, 51, 52, 64, 65, 70.) Assuming that Plaintiff’s vehicle is a 2020 Honda Pilot as it was alleged in the original Complaint, then this Court is dubious as to how alleged defects in different models and years may indicate fraud as to Plaintiff’s specific vehicle.

While the Court would be within its authority to deny Plaintiff’s motion to amend because of the uncertainties revealed in the proposed amended pleading, the more efficient course is to grant the motion, caution Plaintiff of the perils of what Justice Cardozo called the “tonsorial or agglutinative” method of legal writing, and consider any challenge to the amended pleading in the regular fashion.

With the above caveats, the Court grants Plaintiff’s Motion for Leave to Amend the Complaint. Plaintiff is ordered to file her First Amended Complaint within 20 days of this hearing.

[1] Fraudulent concealment claims in Song-Beverly cases have been repeatedly rejected by California federal courts under the economic loss rule. Kelsey v. Nissan North America (C.D.Cal. July 15, 2020, No. CV 20-4835 MRW) [2020 U.S.Dist. Lexis 145411; 2020 WL 4592744] *4 [collecting cases].)