Judge Bruce G. Iwasaki, Case 22STCV12206 2022-12-12 Tentative Ruling

Tentative Ruling: The demurrer to the third cause of action is sustained without leave to amend. The motion to strike is moot.

This is an action under the Song-Beverly Act. Gabriela Gonzalez (Plaintiff or Gonzalez) sues American Honda Motor, Co. (Defendant or Honda) for breach of express and implied warranties as to a 2020 Honda Pilot (Vehicle).

The Complaint alleges a defect in the Vehicle’s computerized driver-assistance and collision mitigation braking system. This disrupts the Vehicle’s ability to regulate its highway speed when cruise control is set and to intermittently apply the brakes even if there is no obstruction. The warning messages may also distract the driver and create safety concerns.

In September 2022, the Court granted Plaintiff’s request for leave to file her First Amended Complaint (Complaint) to allege a claim for fraudulent inducement. The new allegations in the third cause of action assert that Honda was aware of the defect in various other models and had recalled those vehicles. Plaintiff alleges that Honda knew about the defects as early as 2016 and did not disclose the defect when she leased the vehicle. (Complaint, ¶ 67.) Instead, Honda merely issued a series of technical service bulletins to address the issues. (Id. at ¶¶ 25-26.) The Complaint also summarizes a list of consumer complaints that were transmitted to the National Highway Traffic Safety Administration as to the defect. (Id. at ¶¶ 49-50.)

A demurrer is an objection to a pleading, the grounds for which are apparent from either the face of the complaint or a matter of which the court may take judicial notice. (Code Civ. Proc., § 430.30, subd. (a); see also Blank v. Kirwan (1985) 39 Cal.3d 311, 318.) The purpose of a demurrer is to challenge the sufficiency of a pleading “by raising questions of law.” (Postley v. Harvey (1984) 153 Cal.App.3d 280, 286.) “In the construction of a pleading, for the purpose of determining its effect, its allegations must be liberally construed, with a view to substantial justice between the parties.” (Code Civ. Proc., § 452.) 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.)

Defendant contends that this claim fails for four reasons: (1) failure to plead duty, (2) the Technical Service Bulletins and recalls do not apply to the Vehicle, (3) insufficient facts, and (4) failure to allege damages. The Court is persuaded by the first, second, and third reason and does not reach the damages issue in light of the recent ruling by the Court of Appeal in Dhital v. Nissan North America, Inc. (2022) 84 Cal.App.5th 828, 843 (Dhital).)

The Complaint does not sufficiently plead duty and Honda’s knowledge of the defect.

“ ‘ [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.’ ” (Hahn v. Mirda (2007) 147 Cal.App.4th 740, 748.) Fraud must be pled specifically, not with “general and conclusory allegations.” (Small v. Fritz Companies, Inc. (2003) 30 Cal.4th 167, 184.) “Suppression of a material fact is actionable when there is a duty of disclosure, which may arise from a relationship between the parties, such as a buyer-seller relationship.” (Dhital, supra, 84 Cal.App.5th at p. 843, italics added.)

Defendant argues there is no duty alleged. The Court agrees. The Complaint does not allege that Defendant had any duty to disclose a material fact. Plaintiffs cite the “ ‘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.)

Plaintiff argues that Honda had exclusive knowledge of material facts regarding the function and safety of the Sensing Defect. Her opposition also argues that the dealership is the agent for “purposes of selling the vehicle thereby creating a direct transaction.” But the Complaint fails to plead such a relationship between the dealer and Honda. Plaintiff does not allege that Honda’s authorized dealership is its agent for purposes of sales transaction of Honda vehicles to the consumer. (Dhital, supra, 84 Cal.App.5th at p. 844.) The closest she gets is alleging that Honda and its agents failed to disclose facts, but nothing is pled connecting the dealership to Honda. (See Complaint, ¶ 139.)

Contrary to Plaintiff’s argument, Amended Complaint paragraphs 67, 139, and 144-145 do not plead that Honda’s dealerships are its agents. Paragraphs 67 and 139 merely state that Honda “and its agents actively concealed the existence and nature” of the defect; Paragraph 144 states Honda “knew of the specific issues affecting the Vehicle” including the defect; and Paragraph 145 states that Plaintiff did not know of the problem because Honda “and its agents repeatedly represented that it was able to fix the Subject Vehicle.” Nowhere is it alleged that the dealership is an agent of Honda. Thus, Plaintiff failed to plead her relationship with Honda. This error is magnified because it is unclear who the dealership is, whether Plaintiff leased or purchased the Vehicle, and the date of the transaction. (Compare Complaint ¶ 29 [“Subject Vehicle was leased to Plaintiff on September 2, 2018”] with ¶ 81 [“On March 16, 2020, Plaintiff entered into a warranty contract with AMERICAN HONDA”].) The demurrer is sustained on this ground.

Second, the Complaint inadequately alleges that Honda had exclusive knowledge of the defect. Plaintiff points to Paragraphs 29 through 66 of the Complaint in opposition.

In those paragraphs, Plaintiff alleges that numerous Technical Service Bulletins (TSBs), recalls, and complaints were issued against Honda. However, these describe a litany of other vehicles, but not the model and year of the vehicle at issue here. Plaintiff pleads that Honda had exclusive knowledge of the defect in the “2018 Honda Accord before it was sold to Plaintiff.” (Complaint, ¶ 30.) Later, the Complaint alleges that the subject Vehicle is a 2020 Honda Pilot. (Id. at ¶ 81.) In opposing the demurrer, Plaintiff insists that the subject vehicle is a 2020 Honda Pilot. If so, nothing in the Amended Complaint indicates a defect known to Honda regarding that model. For example, Plaintiff alleges that Honda issued multiple recalls on “2014-2015 Acura MDX and RLX vehicles” and “2013-2015 Accords and 2014-2015 CR-Vs.” (Id. at ¶¶ 34-35.) Later, Paragraph 50 describes consumer complaints on a 2016 Honda Accord, 2017 CRV, 2016 Honda Civic Touring, 2018 Honda Accord, and a 2020 Honda Accord. Paragraphs 52 through 65 alleges that Honda issued a series of Technical Service Bulletins as to “Class Vehicles,” but this is never defined in the Complaint. Finally, Paragraph 66 concludes by discussing a safety recall for “2018-2020 Accord and Accord Hybrid vehicles along with 2019-2020 Insight vehicles.”

Plaintiff’s allegation of myriad recalls and bulletins issued on a variety of different models and years creates uncertainty as to what is alleged against Defendant. While it is true that recalls and TSBs across a line of vehicles may give rise to knowledge, Plaintiff has failed to show how her allegations of defects in other models apply to her specific Vehicle. (Dhital, supra, 84 Cal.App.5th at p. 844 [“plaintiffs alleged the CVT installed in numerous Nissan vehicles (including the one plaintiffs purchased) were defective”].) She has not indicated how defects in unrelated vehicle models gives rise to Honda’s knowledge that the defect is also present in this model, the 2020 Honda Pilot. It is too vague to allege that knowledge of defects in other vehicle models is sufficient to show knowledge of the defect in all models, including the subject Vehicle.

Plaintiff relies on non-binding, federal authorities for the proposition that simply having “superior” knowledge of a defect imposes a duty. This is unpersuasive. For example, two of the cited cases, Falk v. GMC (N.D. 2007) 496 F.Supp.2d 1088, 1091, and In re Toyota Motor Corp. Unintended Acceleration Marketing, Sales Practices, and Products Liability Litigation (C.D. 2010) 754 F.Supp.2d 1145, 1174, were in the context of a putative class action. (See also (Daniel v. Ford Motor Co. (9th Cir. 2015) 806 F.3d 1217, 1220.) And unlike in Daniel, Plaintiff here does not plead that she obtained information from the dealership or that the manufacturer communicated indirectly through its authorized dealership.[1] (806 F.3d at p. 1227.) Therefore, the allegations of the recalls and complaints of unrelated models are insufficient to establish that Honda had knowledge of the defect for purposes of its duty to disclose.

The Court recognizes recent law holding that the economic loss rule does not bar fraud claims in Song-Beverly actions. In Dhital, the trial court sustained a demurrer based on Robinson Helicopter Co., Inc. v. Dana Corp. (2004) 34 Cal.4th 979 that the plaintiff did not suffer “personal injury or any damage to property other than the car.” (84 Cal.App.5th at pp. 835-836.) The Court of Appeal rejected this argument, finding that the Robinson case “did not hold that any claims for fraudulent inducement are barred by the economic loss rule.” (Id. at p. 839.) Rather, the Robinson Court dealt only with the narrow issue in its case, which was for affirmative misrepresentation. Thus, Robinson “left undecided whether concealment-based claims are barred by the economic loss rule.” (Id. at p. 840.) Applying the reasoning and public policy in Robinson, the Court of Appeal in Dhital found that a “defendant’s conduct in fraudulently inducing someone to enter a contract is separate from the defendant’s later breach of the contract or warranty provisions that were agreed to.” (Id. at p. 841.) Thus, because the Dhital plaintiff alleged presale concealment, this constituted “fraudulent conduct that is independent of Nissan’s alleged warranty breaches.” (Id. at p. 843.)

Given the above independent reasons for sustaining the demurrer, the Court does not reach the economic loss rule and makes no finding as to whether it applies here.

After a court sustains a demurrer, the burden is on the plaintiff to show how the complaint can be amended and the legal effect of the amendment on the pleading. (Goodman v. Kennedy (1976) 18 Cal.3d 335, 349.)

Plaintiff provides no indication that the same sensing defect is present in the same or other model years of the Honda Pilot, the subject Vehicle. Thus, she fails to meet her burden.

Moreover, the Court previously warned Plaintiff when she first moved to amend her initial Complaint that the proposed amendments contained inconsistent allegations. (Order, Sept. 19, 2022, p. 4.) Indeed, the problematic paragraphs in the Complaint were individually pointed out and the Court noted it would be “within its authority to deny” leave because of those uncertainties. (Ibid.) The Court cautioned against what Justice Cardozo termed the “tonsorial or agglutinative” writing method. Plaintiff chose to ignore the warning; the Amended Complaint retains the inconsistent and ambiguous allegations. Thus, leave to amend is denied.

The demurrer to the third cause of action is sustained without leave to amend. The fraudulent inducement-concealment cause of action is dismissed. The motion to strike is moot.

[1] Plaintiff’s opposition compounds the confusion by arguing that Honda “issued marketing material that Plaintiff relied upon.” No such allegations are pled in the Complaint.

Judge Bruce G. Iwasaki

Department 58