Judge Bruce G. Iwasaki, Case Number: 23STCV03672, Date: 2023-12-13 Tentative Ruling

Tentative Ruling: The Demurrer to the First Amended Complaint is sustained without leave to amend. The Motion to Strike is granted without leave to amend.

This is principally a Song-Beverly action. In July 2019, Plaintiffs Raul Reyes, Sr. and Raul Reyes, Jr. (Plaintiffs) purchased a 2019 Chevrolet Silverado (Vehicle). On January 23, 2023, Plaintiffs sued Defendant General Motors, LLC (GM) alleging two breach of warranty claims under Song-Beverly, and a cause of action for fraudulent concealment. The Complaint alleged that GM was aware of and concealed a known defect with the Vehicle’s 8-Speed Hydra-Matic transmission (Defective Transmission).

On April 21, 2023, Defendant GM demurred to the third cause of action for fraudulent concealment in the Complaint. Defendant GM also moved to strike the request for punitive damages in the Complaint. The Court sustained the demurrer with leave to amend and determined the motion to strike was moot.

On July 14, 2023, Plaintiffs filed a First Amended Complaint (FAC) alleging causes of action for breach of warranty claims under Song-Beverly and a violation of the Consumers Legal Remedies Act (CLRA; Civ. Code, § 1750, et seq.).

Defendant GM now demurs to the third cause of action for violation of the CLRA. GM also moves to strike the request for punitive damages in the FAC. Plaintiffs filed an opposition to both the demurrer and the motion to strike.[1]

The Court sustains the demurrer without leave to amend. The motion to strike is granted.

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.) In applying these standards, the court liberally construes the complaint to determine whether a cause of action has been stated. (Picton v. Anderson Union High School Dist. (1996) 50 Cal.App.4th 726, 733.)

In opposition, Plaintiffs argue that Defendant GM failed to comply with its meet and confer obligations under Code of Civil Procedure section 430.41.

Code of Civil Procedure section 430.41(a) provides as follows: “Before filing a demurrer pursuant to this chapter, the demurring party shall meet and confer in person or by telephone with the party who filed the pleading that is subject to demurrer for the purpose of determining whether an agreement can be reached that would resolve the objections to be raised in the demurrer.”

“Before filing GM’s Demurrer and Motion to Strike, this office attempted to meet and confer telephonically with Plaintiffs’ counsel in an attempt to discuss the issues we had with Plaintiffs’ First Amended Complaint, but unfortunately, were unsuccessful in our attempts. However, in my experience with Plaintiffs’ Counsel, the parties have never come to an agreement on the issues outlined in GM’s moving papers and Counsel has accordingly never dismissed a CLRA cause of action prior to hearing on GM’s demurrer.” (Kay Decl., ¶ 2.)

In opposition, Plaintiffs’ counsel disputes this evidence and contends that no effort was made by GM to meet and confer at all. (Norris Decl., ¶ 4.)

The language in the Kay declaration is notably vague. Further, no documentary evidence was submitted to substantiate this declaration and demonstrate that some meet and confer effect was made by GM. Finally, the reply does not address Plaintiffs’ opposition challenge to GM’s meet and confer efforts.

The evidence indicates Defendant GM did not comply with its obligations under Code of Civil Procedure section 430.41. However, contrary to the opposition, this failure does not provide a basis for the Court to overrule the demurrer. (Code Civ. Proc., § 430.41, subd. (a)(4) [“A determination by the court that the meet and confer process was insufficient shall not be grounds to overrule or sustain a demurrer.”].) Rather, the Court continued this matter for GM to comply with its statutory obligations under Code of Civil Procedure section 430.41. GM, however, disregarded the Court’s order. GM failed to file a supplemental declaration demonstrating compliance with Code of Civil Procedure section 430.41. The Court cautions GM against further violations of court orders.

Defendant GM argues the violation of the CLRA claim is barred by the applicable statute of limitations and the FAC fails to allege facts sufficient to state a claim under the CLRA.

The CLRA defines as unlawful certain “unfair methods of competition and unfair or deceptive acts ... undertaken by any person in a transaction intended to result or that results in the sale ... of goods or services to any consumer.” (Civ. Code, § 1770, subd. (a).)

Although Plaintiffs have alleged a different cause of action on the FAC than the fraudulent concealment claim that the Court previously found barred under the statute of limitations and defectively pled, the new claim for a violation of CLRA is based on identical fraud allegations and suffers from similar defects.

The Court first addresses the statute of limitations argument. Defendant GM contends the Code of Civil Procedure section 338, subdivision (d), applies to Plaintiffs’ statutory claim for violation of the CLRA. (Code of Civ. Proc. § 338, subd. (d).) Based on this three-year statute of limitations, Defendant argues the claim was complete and the statute began to run on July 18, 2019 – the date Plaintiffs purchased the Vehicle. (FAC ¶ 5.) Thus, to assert a CLRA claim based upon a fraudulent representations and omissions (FAC ¶ 149), Plaintiffs had to file their claim no later than July 18, 2022. Plaintiffs did not file their Complaint until January 23, 2023.

Defendant is correct that the CLRA claim was complete as of the date of the purchase. That is, all the elements of the cause of action were satisfied when Defendant’s alleged representations/omissions resulted in Plaintiffs’ detrimental reliance and injury, caused by the purchase of an allegedly defective vehicle. (FAC ¶ 5.)

However, Plaintiffs allege that the statute of limitations has been tolled because Plaintiffs could not have discovered the existence of the Defective Transmission until shortly before this litigation was commenced. (FAC ¶ 108; see also Compl., ¶ 84.) In support of this delayed discovery/tolling, Plaintiffs allege that they presented the Vehicle to Defendant for repairs for, among other things, the allegedly Defective Transmission, beginning less than two weeks after purchase, on July 30, 2019. (FAC ¶ 35.) Another repair involving the Defective Transmission occurred on September 19, 2022. (FAC ¶ 36.) After this repair, Plaintiffs were told by “repair facility authorized by Defendants” the issued had been corrected and the Vehicle was safe to drive. (FAC ¶ 36.) Plaintiffs encountered another repair issue regarding the Defective Transmission on November 21, 2022. (FAC ¶ 37.) After this repair, Plaintiffs were told by “Defendants’ authorized service technician” that the “Vehicle was then operating as intended and was safe to drive.” (FAC ¶ 37.) The FAC alleges that the Plaintiffs continued to experience “the same” issues caused by the Defective Transmission. (FAC ¶ 38.)

Plaintiffs have failed adequately to allege delayed discovery to overcome the statute of limitations.

Plaintiffs have the burden to allege facts showing delayed discovery. (Fox v. Ethicon Endo-Surgery, Inc. (2005) 35 Cal.4th 797, 808 [“Where a claim alleged in a complaint appears on its face to be barred by the applicable statute of limitations, a plaintiff relying on the theory of delayed accrual must plead facts supporting that theory.”]; see also Cansino v. Bank of America (2014) 224 Cal.App.4th 1462, 1472 [“The discovery-related facts should be pleaded in detail to allow the court to determine whether the fraud should have been discovered sooner”].)“As for the belated discovery, the complaint must allege (1) when the fraud was discovered; (2) the circumstances under which it was discovered; and (3) that the plaintiff was not at fault for failing to discover it or had no actual or presumptive knowledge of facts sufficient to put him on inquiry.” (Community Cause v. Boatwright (1981) 124 Cal.App.3d 888, 900–901 [applied to a fraudulent concealment cause of action].)

Here, Plaintiffs argue that their new allegations in the FAC demonstrate that Plaintiffs reasonably believed representations from authorized dealers that the Vehicle had been repaired and “had no reason to doubt” the representations of repair. (FAC ¶¶ 86, 102-103.) This argument is not well-taken. As noted above, days after its purchase, the Vehicle began to experience transmission problems that continued unabated throughout Plaintiffs’ ownership of the Vehicle. Plaintiff cannot now allege around these facts by stating, in a conclusory manner, that it was reasonable to believe the Vehicle had been repaired. Moreover, Plaintiffs had a duty to investigate further once they were aware of facts that would make a reasonably prudent person suspicious. (McCoy v. Gustafson (2009) 180 Cal.App.4th 56, 108.)

Plaintiffs further argue that the date of discovery of their claim was delayed by GM’s “conceal[ment] from Plaintiffs of the material fact that defective transmission had been plagued by a dangerous defect that GM had knowledge of years before Plaintiffs purchased the Vehicle.” (Opp. 8:26-28 [citing FAC ¶¶ 14-31, 32-40, 41-70.)

With respect to this argument, Plaintiffs conflate the concealment allegations that support their CLRA claim – which occurred before the injury – with their delayed discovery argument. This argument fails for two reasons. First, this concealment argument fails in the face of the numerous allegations regarding the Vehicle’s defective transmission repair attempts; these allegations are adequate to put Plaintiffs on notice of an issue to investigate. Second, as discussed below, GM had no duty to disclose the alleged defect under the circumstances here.

Based on the foregoing, Plaintiffs have failed to allege facts showing the third cause of action is not barred by the statute of limitations. Thus, the demurrer is sustained on this ground.

Defendant GM argues that the FAC does not state a claim because it does not allege fraud underlying the CLRA with the requisite specificity and the allegations are insufficient to demonstrate a duty to disclose. GM also argues that Plaintiffs failed to allege compliance with the notice requirement under the CLRA.

First, with respect to the notice requirement, the demurrer does not analyze this issue; instead, the demurrer merely concludes that the third cause of action for violation of the CLRA is barred by Plaintiff’s failure to provide proper notice, citing Civil Code section 1782. The demurrer devotes exactly one sentence to this argument. (Dem., 6:6-7.)

Strangely, the Opposition argues that “GM has spent the entirety of its demurrer attacking Plaintiffs’ Third cause of action for violation of the Consumer Legal Remedies Act (CLRA) on the basis of Plaintiffs' alleged failure to comply with the notice requirement of Civil Code § 1782(a).”

In any case, the opposition argues Plaintiffs are only seeking injunctive relief in the FAC – which does not require compliance with the notice requirement – and points to an allegation that notice was provided at the time of filing the FAC. (FAC ¶¶ 154-155.) Now, having provided notice, Plaintiffs indicate they intend to file a second amended complaint seeking damages under the CLRA. (Opp., 5:25.) As the reply does not address notice, the Court deems the notice issue waived.

Second with respect to fraudulent representations underlying the CLRA claim, GM argues that Plaintiffs did not identify when, where, or how GM misrepresented the source, sponsorship, approval, or certification of Plaintiffs’ Vehicle; nor did Plaintiffs allege facts showing that GM misrepresented anything about the source, sponsorship, approval, or certification of the Silverado.

As a preliminary matter, GM argues that fraud must be pled with the same particularity as common law fraud but does not cite any legal authority on point. The reply simply asserts the same without legal support.

In fact, the law is to the contrary. A CLRA cause of action is subject to a pleading standard that is “more lenient ... than [that] applied to common law fraud claims” but more demanding than the “general rule” requiring that the complaint merely “ ‘set forth the ultimate facts constituting the cause of action ....’ [Citation.]” (Gutierrez v. Carmax Auto Superstores California (2018) 19 Cal.App.5th 1234, 1260–1261.)

Based on the foregoing legal authority, Plaintiffs’ claim lacks the reasonable particularity required to plead a cause of action for a violation of the CLRA. That is, while the fraudulent misrepresentation underlying the CLRA claim need not be pled as to the “who, what where, when, on what authority was the representation made” level of specificity for fraud – some heightened specificity is required.

Plaintiffs apparently rely on the express warranties as the fraudulent representation. (Opp., 10:19-22 [citing FAC ¶ 152].) The express warranty may support a cause of action for breach of contract, but it does not support a claim for fraud. (See Robinson Helicopter Co., Inc. v. Dana Corp. (2004) 34 Cal.4th 979, 988 [“[T]he economic loss rule provides: ‘ “ ‘[W]here 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.’ ” ' ... The economic loss rule requires a purchaser to recover in contract for purely economic loss due to disappointed expectations, unless he can demonstrate harm above and beyond a broken contractual promise. [Citation.] Quite simply, the economic loss rule ‘prevent[s] the law of contract and the law of tort from dissolving one into the other.’ [Citation.]”]; Food Safety Net Services v. Eco Safe Systems USA, Inc. (2012) 209 Cal.App.4th 1118, 1130.)

Further, the FAC does not identify any specific representation by GM to Plaintiff as to the Vehicle and/or the Vehicle’s Transmission that would support fraudulent conduct by GM; the allegations are entirely vague. (FAC ¶ 150.) Moreover, the allegations concerning subdivisions (a)(5), (7), (9), and (14) of Civil Code section 1770 are mere conclusions of law that do not survive demurrer: Plaintiffs simply restate the statutory provisions in their FAC and provide no supporting allegations concerning the supposed representations at issue. (FAC ¶ 149.)

Nor have Plaintiffs alleged facts demonstrating a fraudulent omission to support the CLRA claim.

In Gutierrez v. Carmax Auto Superstores California (2018) 19 Cal.App.5th 1234, the court set forth the principles that (1) a failure to disclose material facts can be actionable under the CRLA; (2) not every omission or nondisclosure is actionable; and (3) in general terms, an omission is actionable under the statute if the omitted fact (a) is contrary to a material representation actually made by the defendant or (b) is a fact the defendant was obligated to disclose. (Gutierrez, supra, at p. 1258.)

In Gutierrez, the issue presented was whether the defendant was obligated to disclose (i.e., had a duty to disclose) a fact not known to the plaintiff. (Ibid.) The Gutierrez court explained that prior case law had recognized four situations where a failure to disclose a material fact constituted a deceptive practice actionable under the CLRA: (1) the defendant has a fiduciary relationship with the plaintiff; (2) “the defendant has exclusive knowledge of material facts not known or reasonably accessible to the plaintiff”; (3) the defendant actively conceals a material fact; and (4) “ ‘the defendant makes partial representations that are misleading because some other material fact has not been disclosed.’ ” (Gutierrez, supra, 19 Cal.App.5th at p. 1258.)

Further, the California Supreme Court “has described the necessary relationship giving rise to a duty to disclose as a ‘transaction’ between the plaintiff and defendant ….” (Bigler-Engler v. Breg, Inc. (2017) 7 Cal.App.5th 276, 311; Warner Construction Corp. v. City of Los Angeles (1970) 2 Cal.3d 285, 294 [“In transactions which do not involve fiduciary or confidential relations”]; Hoffman v. 162 North Wolfe LLC (2014) 228 Cal.App.4th 1178, 1187–89 [rejecting concealment claim where plaintiffs “were not involved in a transaction with the parties they claim defrauded them”]; LiMandri v. Judkins (1997) 52 Cal.App.4th 326, 337 [“such a relationship can only come into being as a result of some sort of transaction between the parties”].)

As the Court previously found on the demurrer to the Complaint, the FAC fails to allege a transaction between GM and Plaintiffs that gave rise to a duty to disclose assertedly unstated facts. Moreover, the Opposition does not even address the duty to disclose. Thus, the demurrer is also sustained for insufficiently pleaded facts.

“The court may, upon a motion made pursuant to Section 435, or at any time in its discretion, and upon terms it deems proper: (a) Strike out any irrelevant, false, or improper matter inserted in any pleading. (b) Strike out all or any part of any pleading not drawn or filed in conformity with the laws of this state, a court rule, or an order of the court.”¿(Code Civ. Proc., § 436.) “Immaterial” or “irrelevant” matters include allegations not essential to the claim, allegations neither pertinent to nor supported by an otherwise sufficient claim or a demand for judgment requesting relief not supported by the allegations of the complaint. (Code Civ. Proc., § 431.10, subds. (b)(1)-(3).)

Defendant GM moves to strike the request for punitive damages in the FAC. Defendant argues, based on its demurrer arguments, Plaintiffs lack a viable claim to support the punitive damage request. Further, even with the CLRA claim, GM argues the allegations in the FAC do not satisfy the statutory standards required to seek punitive damages.

Punitive damages are recoverable where the defendant has been guilty of oppression, fraud, or malice, express or implied. (Civ. Code § 3294.) “Something more than the mere commission of a tort is always required for punitive damages. There must be circumstances of aggravation our outrage, such as spite or malice, or a fraudulent or evil motive on the part of the defendant, or such a conscious and deliberate disregard of the interests of others that his conduct may be called willful or wanton.” (Taylor v. Superior Court (1979) 24 Cal.3d 890, 894.) Specific intent to injure is not necessary for a showing of malice—it is sufficient that the defendant’s conduct was so “wanton or so reckless as to evince malice or conscious disregard of others’ rights.” (McConnell v. Quinn (1925) 71 Cal. App. 671, 682.)

A request for punitive damages that is not supported with specific allegations of oppression, fraud, or malice is subject to a motion to strike. Conclusory allegations that defendants acted “willfully,” “maliciously,” or with “oppression, fraud, or malice” are not, without more, sufficient to give rise to a claim for punitive damages, but such language is permissible where the complaint contains sufficient factual support for the conclusions. (Perkins v. Superior Court (1981) 117 Cal.App.3d 1, 6-7.)

Based on the Court’s ruling on the demurrer to the CLRA cause of action, there is no longer a cause of action in the FAC to support a request for punitive damages. The motion to strike is granted.

Finally, Plaintiffs request the Court stay the hearing on the demurrer and all other proceedings in this action while the California Supreme Court's decision in Rodriguez, et al. v. FCA (2022) 77 Cal.App.5th 209, 215 remains pending. Plaintiffs describe the crucial issue in Rodriguez as whether “ ... a used vehicle that is still covered by the manufacturer's express warranty a ‘new motor vehicle’ within the meaning of Civil Code section 1793.22, subdivision (e)(2).” (Opp., 14:22-24.) Plaintiff argues that a California Supreme Court ruling in Rodriguez may necessitate an amendment to Plaintiffs’ pleadings.

The Court declines to stay this matter. As this case does not involve the purchase of used vehicle (FAC ¶ 6), it is unclear how a stay based on Rodriguez furthers any interest in this case. Moreover, the Court is not inclined to stay the matter where the timing of the resolution of the California Supreme Court decision is unknown, and the Court is able to rely on current case precedent to resolve the issues relevant to this case.

The demurrer is sustained. The motion to strike is granted. Plaintiff shall not have leave to amend.

[1] Plaintiff’s Opposition contends that GM violated CRC 3.1113, subd. (d), by filing an oversized brief. However, only the Opposition is oversized and in violation of the Rules of Court.

Judge Bruce G. Iwasaki

Department 58