Judge Bruce G. Iwasaki

Department 58

Hearing Date: January 9, 2025

Case Name: Agras v. General Motors, LLC

Case No.: 24STCV16456

Matter: Demurrer to the First Amended Complaint and Motion to Strike

Moving Party: Defendant General Motors, LLC

Responding Party: Plaintiff Paulo Agras

Tentative Ruling: The Demurrer to the third and fourth causes of action in the First Amended Complaint is sustained. The Motion to Strike is granted.

On June 5, 2023, Plaintiff Paulo Agras (Plaintiff) purchased a 2023 Chevrolet Silverado (Vehicle). Plaintiff alleges that, at the time of the purchase, his Vehicle contained defects covered under the express warranty and that Defendant General Motors LLC (GM) failed to repair the Vehicle in compliance with the warranty. Plaintiff also claims that Defendant GM’s fraudulent conduct contributed to his decision to purchase the Vehicle.

On July 2, 2024, Plaintiff sued Defendant GM. The First Amended Complaint contains causes of action for breach of warranty claims under the Song-Beverly Act, a fraud claim, and a claim for violation of the Consumer Legal Remedies Act (CLRA).

Defendant GM now demurs to the third cause of action for fraud and the fourth cause of action for the violation of the CLRA. Defendant GM also moves to strike the request for punitive damages. Plaintiff opposes the demurrer and the motion to strike.

The Court sustains the demurrer with leave to amend. The motion to strike is granted.

Legal Standard for Demurrers

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.)

Analysis

Third Cause of Action for Fraud:

Defendant GM argues that the fraudulent concealment claims contained within the third cause of action fails to state a claim.

The Complaint fails to allege facts sufficient to support fraudulent concealment.

Defendant argues that the FAC does not state a claim because Plaintiff has not alleged fraud with the requisite specificity and the allegations are insufficient to demonstrate a duty to disclose.

Defendant contends that the FAC fails to allege (i) the identity of the salespersons who purportedly concealed material facts about his Vehicle, (ii) what advertisements or marketing brochures Plaintiff reviewed or relied upon in purchasing the Subject Vehicle, (iii) how long “prior to purchasing the Vehicle” he viewed them, and which representation therein he relied upon; and (iv) whether those materials, if any, were prepared by GM or someone else. (Dem., 8:18-9:6.)

To state a claim for fraudulent inducement-concealment, Plaintiffs must allege: (1) the defendant “concealed or suppressed a material fact,” (2) the defendant was “under a duty to disclose the fact to the plaintiff,” (3) the defendant “intentionally concealed or suppressed the fact with the intent to defraud the plaintiff,” (4) the plaintiff was “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.” (BiglerEngler v. Breg, Inc. (2017) 7 Cal.App.5th 276, 310-311.)

As a preliminary matter, Plaintiff adequately alleges the concealment of material fact: the defective transmission. (FAC ¶ 23 [“Had Plaintiff known about the Defective Transmission prior to or at the time of the purchase, Plaintiff would not have purchased the Vehicle or would have paid substantially less for it.”]; 112.) Based on this material fact, the allegation claiming Defendant intended to induce reliance and to defraud are adequate. (FAC ¶¶ 111-112.)

Also, Defendant GM’s argument that the concealment is not alleged with adequate specificity is also not well-taken.

The ordinary rule about pleading fraud with specificity is less demanding when the alleged fraud is concealing the truth. Ordinarily, “fraud must be pleaded specifically; general and conclusory allegations do not suffice.” (Lazar v. Superior Court (1996) 12 Cal.4th 631, 645.). “This particularity requirement necessitates pleading facts which show how, where, to whom, and by what means” the alleged fraud occurred. (Id.) The purpose of the particularity requirement is to “separate meritorious and nonmeritorious cases, if possible in advance of trial.” (Small v. Fritz Companies, Inc. (2003) 30 Cal.4th 167, 184.)

Some cases, however, conclude that this standard is less stringent when the defendant already has “ ‘full information concerning the facts of the controversy.’ ” (Committee on Children’s Television, Inc. v. General Foods Corp. (1983) 35 Cal.3d 197, 217, superseded by statute on other grounds as stated in Californians for Disability Rights v. Mervyn's, LLC (2006) 39 Cal.4th 223, 227.) Relaxation of the specificity requirement is particularly appropriate in a concealment case. Unlike intentional misrepresentation, which requires some affirmative representation or promise, a fraudulent concealment is the absence of something, the suppression of a fact. (Civ. Code § 1710.)

This distinction was recognized in Turner v. Milstein (1951) 103 Cal.App.2d 651. In rejecting a demurrer based on uncertainty, the Turner court explained that the uncertainty doctrine does not apply when the facts are known by the demurring party:

The only specification of uncertainty was that it could not be determined how, or in what manner, Milstein concealed from plaintiff the time and place of the sale of the real property. The ultimate fact is pleaded. It is an old and elemental rule of pleading that a demurrer for uncertainty does not lie if what is sought is a statement of matter already within the knowledge of the demurring party.... If, in truth, Milstein concealed from plaintiff the fact that the property was to be sold, he knows it and he knows the time and place of concealment, if there was a time and place. It would seem that concealment is negative and that it would occur without any time or place. Milstein knows the facts.

(103 Cal.App.2d at p. 658.)

Thus, based on the nature of this type of claim, a plaintiff in a fraud by omission suit will not be able to specify the time, place, and specific content of an omission as precisely as would a plaintiff in a false representation claim. Here, the Court cannot conclude that the contents of the alleged concealment was not pleaded with the adequate level of specificity.

However, Defendant also argues that the FAC does not adequately allege facts showing a duty to disclose.

Absent a fiduciary relationship between the parties (which Plaintiff does not allege here), a duty to disclose can arise in only three circumstances: (1) the defendant had exclusive knowledge of the material fact; (2) the defendant actively concealed the material fact; or (3) the defendant made partial representations while also suppressing the material fact. (BiglerEngler, supra, 7 Cal.App.5th at p. 311; LiMandri v. Judkins (1997) 52 Cal.App.4th 326, 336.) 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, supra, 7 Cal.App.5th at p. 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, supra, 52 Cal.App.4th at p. 337 [“such a relationship can only come into being as a result of some sort of transaction between the parties”].)

Defendant GM argues there are no facts alleged that would support a duty to disclose. The FAC contains no allegations of any direct dealing with GM. Instead, the FAC alleges Plaintiff visited and purchased the Vehicle from Penske Chevrolet of Cerritos in Cerritos, California. (FAC ¶ 31.)

In opposition, Plaintiff argues that GM had exclusive knowledge of the Defective Transmission. In support, Plaintiff argues that the dealer’s warranty agreement with GM and use of GM marketing materials create a sufficient transactional relationship, citing Dhital v. Nissan North America, Inc. (2022) 84 Cal.App.5th 828, 844. (Opp. 11:24-12:13.)

Dhital found that the plaintiffs’ statutory warranty claims under the Song-Beverly Act were the equivalent of contract claims for the purposes of determining whether the economic loss rule applies. This did not, however, establish a duty to disclose. (Dhital, 84 Cal. App. 5th at 838, fn. 3.) Only later in its decision did the Dhital court state that the plaintiffs’ allegations were sufficient to overcome the defendant's argument that there was no buyer-seller relationship giving rise to a duty to disclose. (Id. at 844.) The Dhital court explained that the plaintiffs sufficiently alleged that the requisite buyer-seller relationship existed because the plaintiffs had alleged that they bought the car from a Nissan dealership, Nissan backed the purchase with an express warranty, and Nissan's authorized dealerships are its agents for purposes of the sale of Nissan vehicles to customers. (Id.)

In this case, Plaintiff’s allegations are distinguishable because Plaintiff does not allege that he bought the Vehicle from a GM dealership. (FAC ¶ 31.) Thus, Plaintiff has not pled a transactional relationship giving rise to a duty to disclose.

Further, the FAC does not adequately allege GM’s exclusive knowledge of the Transmission Defect that Plaintiff purchased. Although Plaintiff cites Paragraphs 7, 12, 15-21, 32, 33, 39, 41-48, 55-67, 70-73, 105-112, these citations do not contain factual allegations – as opposed to conclusory statements – to support the exclusive knowledge about a Transmission Defect in Plaintiff’s specific Vehicle. (FAC ¶ 41.) This is a ground for sustaining the demurrer to the third cause of action.

Fourth Cause of Action for Violation of California's Consumer Legal Remedies Act (CLRA):

Defendant GM also demurs to the fourth cause of action for violation of CLRA on the grounds the claim fails to allege compliance with the notice requirement of Civil Code section 1782 and the allegations lack the requisite specificity.

The CLRA prohibits certain “unfair methods of competition and unfair or deceptive acts or practices undertaken by any person in a transaction intended to result or which results in the sale or lease of goods or services.” (Civ. Code, § 1770.) 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).)

Plaintiff alleges that GM violated the CLRA based on the same allegations as the fraud claim. (FAC ¶¶ 113-133.) Specifically, Plaintiff’s CLRA claim is based on GM’s allegedly fraudulent omission pertaining to the Vehicle’s transmission. (FAC ¶ 33.)

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.) 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.)

However, like a common law fraud claim, 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.) That is, a failure to disclose a fact constitutes a deceptive practice actionable under the CLRA “when the defendant is the plaintiff's fiduciary, when the defendant has exclusive knowledge of material facts not known or reasonably accessible to the plaintiff, and when the defendant actively conceals a material fact.” (Gutierrez v. Carmax Auto Superstores California, supra, 19 Cal.App.5th at 1258.)

Here, as noted above with respect to the fraudulent omission claim, the allegations in the FAC are conclusory and lacking in ultimate facts. Thus, these allegations are insufficient to demonstrate either superior knowledge or active concealment by GM. Additionally, Plaintiff has failed to allege facts giving rise to duty to disclose. Accordingly, on this basis, the Court sustains the demurrer to Plaintiff’s fourth cause of action on these grounds.

The demurrer also argues that Plaintiff failed to comply with Civil Code section 1782.

If a plaintiff sues for damages under the CLRA, he must send a written notice of the claim to the defendant thirty days before filing suit “by certified or registered mail, return receipt requested, to the place where the transaction occurred or to the person's principal place of business within California.” (Civ. Code, § 1782, subd. (a).) However, a claim for injunctive relief brought under Section 1770 “may be commenced without compliance with subdivision (a).” (Civ. Code, § 1782, subd. (d).) That is, the notice requirement applies only to claims for damages. (Civ. Code, § 1782, subd. (d), [“An action for injunctive relief brough under the specific provisions of Section 1770 may be commenced without compliance with subdivision (a).”].) Furthermore, “[n]ot less than 30 days after the commencement of an action for injunctive relief,” a plaintiff may amend their complaint to include a request for damages “after compliance with subdivision (a).” (Id.)

Here, the FAC alleges that “Plaintiff complied with the notice provisions of Civ. Code § 1782 by notifying Defendants on July 2, 2024.” However, the Complaint was also filed that same day. As Plaintiff seeks damages (FAC ¶ 125-126, 133), the claim is defective. (Keilholtz v. Superior Fireplace Co. (N.D. Cal., Mar. 30, 2009, No. C 08-00836 CW) 2009 WL 839076, at *2 [“The CLRA's notice requirement is not jurisdictional, but compliance with the requirement is necessary to state a claim.”].)

Thus, the demurrer may be sustained on this ground, as well. Based on the insufficiency of the allegations to state a CLRA claim, the demurrer is sustained.

Legal Standard for Motions to Strike

“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).)

Discussion

Punitive Damages Allegations

Defendant GM moves to strike the request for punitive damages in the FAC. Defendant argues, based on its demurrer arguments, Plaintiff lacks any viable fraud-based claims 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.)

Here, given the Court’s ruling sustaining the demurrer to the third and fourth causes of action, there is no underlying claim to support a request for punitive damages. The motion to strike the punitive damage allegations is granted.

Conclusion

The demurrer to the third and fourth causes of action is sustained. The motion to strike is granted. Plaintiff shall have leave to amend. An amended pleading shall be filed and served on or before February 7, 2025.