Judge Bruce G. Iwasaki, Case Number: 25STCV01143, Date: 2025-03-17 Tentative Ruling

Tentative Ruling: The Demurrer to the fifth and sixth causes of action in the Complaint is sustained. The Motion to Strike is granted.

This is a Song-Beverly Consumer Warranty Act action. On January 16, 2025, Plaintiff sued Defendants Jaguar Land Rover North America, LLC (Jaguar) and Jaguar Land Rover of Santa Monica (Santa Monica) (jointly, Defendants). The Complaint contains causes of action for breach of warranty claims under the Song-Beverly Act, negligence and fraud.

Defendants now demur to the fifth and sixth causes of action. Defendants also move 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.

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.)

Defendant Jaguar demurs to the negligence cause of action on the grounds that this claim is barred by the economic loss rule.

The economic loss rule provides that, “[i]n general, there is no recovery in tort for negligently inflicted ‘purely economic losses,’ meaning financial harm unaccompanied by physical or property damage.” (Sheen v. Wells Fargo Bank, N.A. (2022) 12 Cal.5th 905, 922.) For claims arising from alleged product defects, “[e]conomic loss consists of ‘ “ ‘ “damages for inadequate value, costs of repair and replacement of the defective product or consequent loss of profits—without any claim of personal injury or damages to other property ... .” ’ ” ’ ” (Robinson Helicopter Co., Inc. v. Dana Corp. (2004) 34 Cal.4th 979, 988.)

The Sheen court noted the economic loss rule “has been applied in various contexts. First, it carries force when courts are concerned about imposing ‘ “liability in an indeterminate amount for an indeterminate time to an indeterminate class.” ’ ” (Sheen, supra, 12 Cal.5th at p. 922, [quoting Southern California Gas Leak Cases (2019) 7 Cal.5th 391, 414].) Second, “[i]n another recurring set of circumstances, the rule functions to bar claims in negligence for pure economic losses in deference to a contract between litigating parties.” (Sheen, supra, 12 Cal.5th at p. 922.)

The Restatement states this form of the economic loss rule as follows: “[T]here is no liability in tort for economic loss caused by negligence in the performance or negotiation of a contract between the parties.” (Rest.3d Torts, Liability for Economic Harm, § 3; see Sheen, supra, at p. 923.) The Robinson court explained: “ ‘ “ ‘[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.’ ”...’ [Citation.] 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.’ ” (Robinson, supra, 34 Cal.4th at p. 988.)

The Robinson court also described instances where tort damages are permitted in contract cases. “’Tort damages have been permitted in contract cases where a breach of duty directly causes physical injury [citation]; for breach of the covenant of good faith and fair dealing in insurance contracts [citation]; for wrongful discharge in violation of fundamental public policy [citation]; or where the contract was fraudulently induced. [Citation.]’ [Citation.] ‘[I]n each of these cases, the duty that gives rise to tort liability is either completely independent of the contract or arises from conduct which is both intentional and intended to harm.’ ” (Robinson, supra, 34 Cal.4th at pp. 989–990.)

In opposition, Plaintiff argues he has properly stated a claim for negligent repairs. Specifically, he has alleged the repair facility, Defendant Santa Monica, “ (1) owed a duty to use ordinary care and skill, (2) breached its duty, (3) caused damage to the plaintiff, and (4) that this was causation of damages.” (Opp., 13:18-20 [citing Lytle v. Ford Motor Co. (E.D.Cal. 2018) 2018 WL 4793800].)

Plaintiff further argues that the demurrer to this cause of action fails because the Complaint does not “affirmatively disclose that the damages alleged are only economic losses such as prospective economic advantage, and not other damages such as property damage (i.e., to the car itself).” (Opp. 14:9-11.)

However, the Complaint does allege solely economic damages: the diminution of value of the Vehicle. (Compl. ¶¶ 13-14, 60.) Because Plaintiff alleges only economic damages, but not noneconomic damages, the economic loss doctrine applies.

Defendant Jaguar argues that the fraudulent concealment claims contained within the sixth cause of action fails to state a claim. Defendant argues that the Complaint does not state a claim because Plaintiff has not alleged fraud with the requisite specificity, the allegations are insufficient to demonstrate a duty to disclose, and the claim is barred by the economic loss rule.

Defendant contends that the Complaint is devoid of the names of the people who made any representations on behalf of Defendant Jaguar to Plaintiff, what specifically they said or wrote to Plaintiff, or when the representation was made. (Dem., 11:24-27.)

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 a material fact: the defective engine. (Compl., ¶ 52, 59 [“If Plaintiff knew about these defects at the time of sale, Plaintiff would not have purchased the Subject Vehicle.”].) Based on this material fact, the allegation claiming Defendant intended to induce reliance and to defraud are adequate. (Compl., ¶¶ 60, 71.)

Also, Defendant Jaguar’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.

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.

Defendant argues that the Complaint 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 Jaguar argues there are no facts alleged that would support a duty to disclose. The Complaint contains no allegations of any direct dealing with Defendant Jaguar. Instead, the Complaint alleges, on August 12, 2020, Plaintiff entered into a warranty contract with Defendant Jaguar regarding a 2020 Land Rover Defender 110, which was manufactured by Defendant Jaguar; there are no allegations pertaining to from whom Plaintiff purchased the Vehicle, or any interactions with any Jaguar agent at the time of the sale. (Compl., ¶ 7.)

In opposition, Plaintiff argues that Defendant Jaguar had exclusive knowledge of the Defective Engine. In support, Plaintiff argues that the dealer’s warranty agreement with JAGUAR create a sufficient transactional relationship, citing Dhital v. Nissan North America, Inc. (2022) 84 Cal.App.5th 828, 844. (Opp. 4:27-5:27.)

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, as noted above, Plaintiff does not allege that he bought the Vehicle from Jaguar. (Compl., ¶ 7.) In fact, there are no allegations regarding the circumstances of the Vehicle’s purchase.

Further, the Complaint does not adequately allege Jaguar’s exclusive knowledge of the Engine Defect in the Vehicle that Plaintiff purchased. Although Plaintiff cites Paragraphs 61 to 64 -- these citations do not contain factual allegations – as opposed to conclusory statements – to support Defendant’s exclusive knowledge about an Engine Defect in Plaintiff’s specific Vehicle. (Compl., ¶¶ 61-64.)

Similarly, Plaintiff’s argument that the allegations show active concealment of material facts by Defendant is not well taken. (Opp. 7:23.) Like Plaintiff’s other allegations, these allegations are entirely conclusory and lacking ultimate facts. (Compl., ¶ 56.)

Thus, Plaintiff has not pled a transactional relationship giving rise to a duty to disclose. This is a ground for sustaining the demurrer to the sixth cause of action.[1]

“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).)

Defendants move to strike the request for punitive damages in the Complaint. Defendants argue, based on its demurrer arguments, Plaintiff lacks any viable claims to support the punitive damage request. Further, even with the negligence and fraud claims, Defendants argue the allegations in the Complaint 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 fifth and sixth 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.

The demurrer to the fifth and sixth cause 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 April 17, 2025.

[1] Defendant also argues that the fraud claim is barred by the economic loss rule, citing Robinson Helicopter and Rattagan v. Uber Technologies, Inc. (2024) 17 Cal.5th 1. Previously, in Robinson Helicopter v. Dana Corp. (2004) 34 Cal.4th 979, the Supreme Court provided a “narrow in scope” exception to the economic loss rule. Specifically, under Robinson, a party could sue for a fraudulent breach of contract in California, if they plead and prove (1) an affirmative misrepresentation of fact (as opposed to concealment or a negligent misrepresentation), and (2) resulting personal injury (as opposed to lost money or other economic harm). Then, in 2022, the California Court of Appeal’s decision in Dhital v. Nissan N. Am., Inc. (2022) 84 Cal. App. 5th 828, 844, review granted, 304 Cal.Rptr.3d 82 (2023) stated that “[t]he reasoning in Robinson affirmatively places fraudulent inducement by concealment outside the coverage of the economic loss rule.” (Id. at 840-841.) In Rattagan v. Uber Technologies, Inc. (2024) 17 Cal.5th 1, the California Supreme Court, in response to a certified question by the United States Court of Appeals for the Ninth Circuit, concluded as a matter of first impression that under certain circumstances, parties can be sued for committing fraudulent concealment during the course of an ongoing contractual relationship. Specifically, the Court held that a plaintiff can assert a fraudulent concealment claim based on conduct occurring during a contractual relationship if: (1) “the elements of the claim can be established independently of the parties’ contractual rights and obligations,” and (2) “the tortious conduct exposes the plaintiff to a risk of harm beyond the reasonable contemplation of the parties when they entered into the contract.” Given the Court’s ruling on the issue of a duty to disclose, the Court need not determine whether the economic loss rule applies to the Complaint’s fraudulent concealment allegations after the Supreme Court’s ruling in Rattagan.

Judge Bruce G. Iwasaki

Department 58