Judge Bruce G. Iwasaki

Department 58

Hearing Date: January 12, 2023

Case Name: Marlene Soria v. General Motors, LLC

Case No.: 22STCV19051

Matter: Demurrer

Moving Party: Defendant General Motors LLC

Responding Party: Plaintiff Marlene Soria

Tentative Ruling: The demurrer is sustained with 20 days leave to amend. The motion to strike is moot.

This is an action under the Song-Beverly Act in which Marlene Soria (Plaintiff or Soria) alleged defects in her 2014 Chevrolet Cruze (Vehicle) against General Motors LLC (Defendant or GM). The original Complaint alleged breach of warranty claims. In June 2022, Plaintiff amended the Complaint to add in a claim for fraudulent inducement by concealment and for violation of the Consumer Legal Remedies Act (CLRA).

The Complaint alleges that the Vehicle suffered from a cooling system defect in which engine coolant would leak from the water pump, causing performance issues, engine overheating, odor, reduced power, stalling, and total engine failure. Soria alleges that the leaking was caused by a mechanical defect within Chevrolet vehicles and creates a safety hazard.

GM now demurs to the amended causes of action for fraud and violation of the CLRA under statute of limitations grounds, insufficient facts, and that the Economic Loss Rule bars such claims. Soria opposes the demurrer, asserting that the statute of limitations does not appear on the face of the Complaint, the allegations are sufficient, and the Economic Loss Rule does not apply. GM reiterated its moving arguments in reply. GM also seeks to strike the punitive damages request in the Complaint’s Prayer for Relief.

Defendant’s counsel was unsuccessful in the meet-and-confer efforts with Plaintiff’s counsel. (Pappas Decl., ¶ 2.)

Legal Standard

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.)

Discussion

Statute of limitations

To raise a statute of limitations defense on demurrer, “‘“the defect must clearly and affirmatively appear on the face of the complaint; it is not enough that the complaint shows that the action may be barred.”’” (Committee for Green Foothills v. Santa Clara County Bd. of Supervisors (2010) 48 Cal.4th 32, 42.) Generally, a statute of limitations begins to run “when the cause of action is complete with all of its elements.” (Norgart v. Upjohn Co. (1999) 21 Cal.4th 383, 389.)

For fraud, a plaintiff must file suit within three years. (Civ. Code, § 338, subd. (d).) However, fraud “is not deemed to have accrued until the discovery, by the aggrieved party, of the facts constituting the fraud or mistake.” (Ibid.) Under this delayed discovery rule, “a cause of action accrues and the statute of limitations begins to run when the plaintiff has reason to suspect an injury and some wrongful cause, unless the plaintiff pleads and proves that a reasonable investigation at that time would not have revealed a factual basis for that particular cause of action. In that case, the statute of limitations for that cause of action will be tolled until such time as a reasonable investigation would have revealed its factual basis.” (Fox v. Ethicon Endo-Surgery, Inc. (2005) 35 Cal. 4th 797, 803.)

“In order to rely on the discovery rule for delayed accrual of a cause of action, ‘[a] plaintiff whose complaint shows on its face that his claim would be barred without the benefit of the discovery rule must specifically plead facts to show (1) the time and manner of discovery and (2) the inability to have made earlier discovery despite reasonable diligence.’ ” (Id. at p. 808.) “In order to adequately allege facts supporting a theory of delayed discovery, the plaintiff must plead that, despite diligent investigation of the circumstances of the injury, he or she could not have reasonably discovered facts supporting the cause of action within the applicable statute of limitations period.” (Id. at p. 809.)

Here, Defendant first contends that the fraud cause of action accrued on the date of purchase of the Vehicle, September 12, 2014. Initially, the Court is dubious that the fraud cause of action accrued at the time of purchase because Plaintiff was not necessarily damaged at that time, which is an element of fraud. (Hahn v. Mirda (2007) 147 Cal.App.4th 740, 748.)

However, even assuming that the purchase date was the date of accrual of the fraud claim, Plaintiff pleads sufficient facts to show the delayed discovery rule applies. Paragraphs 40-43 allege that Plaintiff brought the Vehicle in for repairs on at least three separate occasions: January 9, 2020, May 2, 2020, and September 16, 2020. During those visits, the Vehicle was repaired as to the cooling system and engine issues. (Complaint, ¶¶ 40-42.) The Complaint alleges Plaintiff’s inability to discover the facts earlier because GM “actively concealed the existence and nature of the alleged defect” during multiple repairs. (Complaint, ¶¶ 31, 37.) There are no alleged facts between 2014 and 2020 indicating that Plaintiff knew or should have known that on the date that she purchased the vehicle that she was deceived. A reasonable person in Plaintiff’s position may not have known or suspected Defendant’s alleged wrongdoing until they had taken their vehicle in multiple times for the same or related problems. Nonetheless, even if Plaintiff should have suspected some wrongdoing at the first repair visit on January 9, 2020, and because this suit was filed on June 10, 2022, the fraud claims are timely or, at the least, a question of fact arises that is not appropriately decided on demurrer. (Broberg v. The Guardian Life Insurance Co. of America (2009) 171 Cal.App.4th 912, 921 [“When a plaintiff reasonably should have discovered facts for purposes of the accrual of a cause of action or application of the delayed discovery rule is generally a question of fact, properly decided as a matter of law only if the evidence (or, in this case, the allegations in the complaint and facts properly subject to judicial notice) can support only one reasonable conclusion”].)

Defendant argues that the rule does not apply because Plaintiff alleged in Paragraphs 1 and 71 that “[a]t the time of purchase, or within one-year thereafter, the Vehicle contained or developed the defects.” But discovery of the defect does not mean that Plaintiff was aware of Defendant’s concealment at that time, especially since she alleges that Defendant actively concealed the defect. (Complaint, ¶¶ 31, 37.) Additionally, this fails to address Plaintiff’s argument that the fraud also arose from the repair visits and Defendant continued to actively conceal the defect. (Id. at ¶ 80.) Accordingly, Plaintiff states sufficient facts regarding his discovery of the alleged fraud to plead tolling under the discovery rule.

As the delayed discovery rule may apply, it is unnecessary to reach the arguments on equitable estoppel, the fraudulent concealment rule, repair rule, and class action tolling.

Sufficiency of facts

Fifth cause of action – fraudulent inducement – concealment

GM argues that Plaintiff failed to allege the identity of the individuals who purportedly concealed the material facts and their authority to act on behalf of Defendant, GM’s knowledge of the alleged defects at the time of sale, and GM’s intent to induce reliance to purchase the specific Vehicle. Plaintiff argues that there is a transactional relationship because GM issued the warranty, less specificity is needed for a concealment claim, and there are sufficient facts.

The elements of intentional misrepresentation are “(a) misrepresentation (false representation, concealment, or nondisclosure); (b) knowledge of falsity (or ‘scienter’); (c) intent to defraud, i.e., to induce reliance; (d) justifiable reliance; and (e) resulting damage.” (Lazar v. Superior Court (1996) 12 Cal.4th 631, 638.) If the alleged misrepresentation is concealment, the element of “scienter” is replaced by the defendant’s duty to disclose the concealed fact to the plaintiff. (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; Stansfield v. Starkey (1990) 220 Cal.App.3d 59, 73 [“This particularity requirement necessitates pleading facts which ‘show how, when, where, to whom, and by what means the representations were tendered.”) Less specificity is required to plead fraud by concealment. (Jones v. ConocoPhillips Co. (2011) 198 Cal.App.4th 1187, 1199; but see Goodman v. Kennedy (1976) 18 Cal.3d 335, 347 [“mere conclusionary allegations that the omissions were intentional and for the purpose of defrauding and deceiving plaintiffs and bringing about the purchase . . . are insufficient [to show fraud by concealment”].) However, “[i]f a fraud claim is based upon failure to disclose, and ‘the duty to disclose arises from the making of representations that were misleading or false, then those allegations should be described.’” (Morgan v. AT&T Wireless Services, Inc. (2009) 177 Cal.App.4th 1235, 1262.)

Defendant’s arguments as to knowledge and intent are unavailing. Plaintiff pleads knowledge of the defect by GM prior to the sale of the Vehicle. (Complaint, ¶¶ 26-30.) The intent to defraud element may also be met where a defendant has reason to believe the concealment will induce reliance and this can be inferred from the facts alleged. (Lovejoy v. AT&T Corp. (2001) 92 Cal.App.4th 85, 93.) Here, Plaintiff alleges that GM knew of the defects but failed to disclose them. (Complaint, ¶ 26.) There is a reasonable inference of GM’s intent to make a profit. (See Lovejoy, supra, 92 Cal.App.4th at p. 96.) Finally, Plaintiff alleges that she would not have purchased the vehicle if GM disclosed the defect to them prior to purchase. (Complaint, ¶ 32.) This is sufficient to allege intent to induce reliance.

However, the Court agrees with Defendant that Plaintiff failed to allege the individual that allegedly concealed the facts. Plaintiff fails to provide their name and their authority to speak on behalf of GM. The opposition merely contends that “GM” concealed facts, but this is not enough. (Tarmann v. State Farm Mutual Automobile Insurance Co. (1991) 2 Cal.App.4th 153, 157 [“The requirement of specificity in a fraud action against a corporation requires the plaintiff to allege the names of the persons who made the allegedly fraudulent representations, their authority to speak, to whom they spoke, what they said or wrote, and when it was said or written”].) Since Plaintiff presumably purchased the Vehicle from a dealership, she would be in an equal position as Defendant to possess such information but has failed to so allege.

As to the relationship between Soria and GM for purposes of a duty to disclose, the Court agrees that a buyer-seller relationship is enough. (Dhital v. Nissan North America (2022) 84 Cal.App.5th 828, 843.) But Plaintiff did not plead where she purchased the Vehicle. Assuming it was at a dealership, she also fails to plead the relationship between the dealership and the manufacturer, i.e., G.M. (See Id. at p. 844 [finding allegations that manufacturer’s authorized dealerships are its agents for purposes of the sale of [manufacturer’s] vehicles to consumers” to be sufficient].) For those reasons, the demurrer is sustained.

Sixth cause of action – violation of the Consumer Legal Remedies Act

The CLRA prohibits “unfair methods of competition and unfair or deceptive acts or practices . . . undertaken by any person in a transaction intended to result or that results in the sale or lease of goods or services to any consumer.” (Civ. Code, § 1770, subd. (a).) The statute prohibits 28 separate “unfair or deceptive acts or practices” that may constitute a violation of the act. (Id. at subds. (a)(1)–(28).)

The elements of a CLRA claim are: (i) a consumer; (ii) who suffers any damage; (iii) because of the use or employment by any person of a method, act, or practice declared to be unlawful by Civil Code section 1770. (Civ. Code, § 1780(a).) A CLRA claim may arise from fraudulent concealment or omission, but to be actionable, “the omission must be contrary to a representation actually made by the defendant, or an omission of fact the defendant was obliged to disclose.” (Daughtery v. American Honda Motor Co., Inc. (2006) 144 Cal.App.4th 824, 835; Gutierrez v. Carmax Auto Superstores Cal. (2018) 19 Cal.App.5th 1234, 1258.)

When claims under CLRA are based on allegations of fraudulent concealment or omissions, they “must be stated with reasonable particularity, which is a more lenient pleading standard than is applied to common law fraud claims.” (Gutierrez, supra, 19 Cal.App.5th at p. 1261.) Specifically, a plaintiff must plead with reasonable particularity the facts supporting the elements of the violation. (See Khoury v. Maly's of Cal., Inc. (1993) 14 Cal.App.4th 612, 619.)

Here, Plaintiff’s CLRA claim is based on the omission of the cooling defect. (Complaint, ¶ 94.) The Complaint alleges that Civil Code sections 1770, subdivisions (a)(5) and (a)(7) were violated. Those sections state:

(5) Representing that goods or services have sponsorship, approval, characteristics, ingredients, uses, benefits, or quantities that they do not have or that a person has a sponsorship, approval, status, affiliation, or connection that the person does not have.

(7) Representing that goods or services are of a particular standard, quality, or grade, or that goods are of a particular style or model, if they are of another.

The Complaint does not allege that GM made any representations under those two subdivisions. It does not allege, for example, that GM represented that its vehicles were safe and had no engine defects. Even under a less strict pleading standard, the allegations are insufficient. Moreover, to the extent that Plaintiff tethers her CLRA claim based on fraudulent concealment, the demurrer to the fraud cause of action is sustained. Accordingly, the demurrer to this cause of action is also sustained.

Economic Loss Rule

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.)

Defendant acknowledges the Dhital decision and, in its reply, makes no further argument to the Economic Loss Rule. Given that the demurrer is sustained based on insufficient facts, the Court does not reach the merits of the Economic Loss Rule argument. (People v. Contreras (2018) 4 Cal.5th 349, 381 [“ ‘a cardinal principle of judicial restraint–if it is not necessary to decide more, it is necessary not to decide more’ ”].)

Motion to Strike

As the demurrer is sustained to the fraud cause of action, the motion to strike punitive damages is moot. Plaintiff’s argument that her Song-Beverly claims allow for punitive damages is unavailing based on her citation of non-binding federal cases analogizing the statutory penalties to punitive damages. (Romo v. FFG Insurance Co. (C.D. 2005) 397 F.Supp.2d 1237, 1240.) Her only cited California case is Clauson v. Superior Court (1998) 67 Cal.App.4th 1253, 1256, which did not involve the Song-Beverly Act, but unlawful wiretapping under Penal Code section 637.2. Accordingly, she cites no legal authority that punitive damages are separately allowed under the Song-Beverly statute.

Conclusion

The Court sustains the demurrer on the fifth and sixth causes of action for fraudulent inducement by omission and violation of the Consumer Legal Remedies Act, with 20 days leave to amend. The motion to strike is moot.