Judge: Cherol J. Nellon, Case: 213STCV11252, Date: 2023-12-07 Tentative Ruling

Case Number: 213STCV11252    Hearing Date: December 7, 2023    Dept: 14

Esquivel v. General Motors

(1)       Demurrer

 

            Defendant GM now demurs, per Code of Civil Procedure §§ 430.10(e)-(f) to the fifth cause of action in the FAC on the grounds that there are no facts sufficient to support that cause of action against Defendant GM.

 

The demurrer is OVERRULED.

 

Sixth Cause of Action: Fraud by Omission

 

The elements of fraud by omission are:

 

  1. Defendant concealed or suppressed a material fact;
  2. defendant was under a duty to disclose the fact to the plaintiff;
  3. defendant intentionally concealed or suppressed the fact with the intent to defraud the plaintiff;
  4. plaintiff was unaware of the fact and would not have acted in the same way knowing of the concealed or suppressed fact;
  5. causation;  and
  6. the plaintiff sustained damage.

 

Blickman Turkus, LP v. MF Downtown Sunnyvale, LLC (2008) 162 Cal.App.4th 858, 868.

 

The rule of specific pleading for fraud claims, including how, when, where, to whom, and by what means misrepresentations were communicated, is intended to apply to affirmative misrepresentations, and not to concealment. Alfaro v. Community Housing Improvement System & Planning Assn., Inc. (2009) 171 Cal.App.4th 1356, 1384. Concealment is sufficiently pled when the complaint as a whole provides sufficient notice of the particular claims against defendants. Jones v. ConocoPhillips (2011) 198 Cal.App.4th 1187, 1200. “There are “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 (quoting Heliotis v. Schuman (1986) 181 Cal.App.3d 646, 651).

 

Substantive Pleading

 

Plaintiff alleges that Defendant GM failed to disclose that the 8-speed transmission installed in Plaintiff’s vehicle was susceptible to sudden and premature failure. (FAC ¶¶ 65-67). Plaintiff alleged that Defendant GM received prior warning about the transmission, which it called “world class” in its advertisements and “a neck snapper” internally. (FAC ¶¶ 68-70). In fact, Plaintiff alleges that Defendant GM declined to develop a repair solution due to the cost of doing so. (FAC ¶ 71).

 

Defendant GM argues that it had no duty to disclose the alleged defect. For this proposition, Defendant GM relies on Bigler-Engler v. Breg, Inc. (2017) 7 Cal.App.5th 276. But Bigler-Engler is not on-point.

 

            In Bigler-Engler, the plaintiff rented a medical device from her doctor which she claimed caused serious injury to her knee. Bigler-Engler, supra, 7 Cal.App.5th at 286-292. Evaluating plaintiff’s claim against the device manufacturer for fraudulent concealment, the Court of Appeal referred to the above-quoted language from LiMandri v. Judkins, setting forth the four circumstances that give rise to a duty to disclose. Bigler-Engler, supra, 7 Cal.App.5th 286-292 at 311. The panel stated that in the absence of a fiduciary relationship, only the last three LiMandri categories could apply; but even those three categories presupposed the existence of some other relationship between the parties. Id. They ultimately held that because there was no transactional or other relationship between the plaintiff and the medical device manufacturer, the underpinning for applying any of the LiMandri categories was absent. Id. at 312. The Court of Appeal rejected plaintiff’s invitation to transplant the duty to disclose that exists in a products liability context into a fraud context. Id.

 

            The circumstances of buying a car are widely different from renting a medical device. Doctors are not franchisees of medical device companies, and most patients do not make physician appointments out of an eager desire to purchase the latest model of pacemaker. Most patients wouldn’t know any particular manufacturer from a hole in the ground, whereas auto makers create and operate huge brands that inspire high levels of loyalty from consumers. People go to a Chevy dealer to buy a Chevy, and they generally expect that the dealer (like most franchisees) is significantly under the control of the manufacturer. See Daniel v. Ford Motor Co. (9th Cir. 2015) 806 F.3d 1217, 1226-27 (auto manufacturers communicate with their consumers through their dealerships). While consumers are certainly aware of the difference between the maker and the dealer, the difference is more theoretical than real. In the circumstances of this case, there is at least a question of fact as to whether visiting an auto dealer creates a sufficient relationship between the consumer and the automaker itself.

 

            Plaintiff has pled that Defendant GM had exclusive knowledge of the defect. That puts this case within the second LiMandri category: a party with exclusive knowledge has a duty to share that knowledge. See Falk v. General Motors Corp. (N.D. Cal. 2007) 496 F.Supp.2d 1088, 1096-97 (that duty still exists even where the ignorant party could have discovered the information by engaging in pre-transaction research). Therefore, Plaintiff has pled sufficient facts to show that Defendant GM had a duty to disclose the defect.

 

(2)       Motion to Strike

 

            Defendant GM now moves this court, per Code of Civil Procedure §§ 435-436, for an order striking the punitive damages allegations from the FAC.

 

Decision

 

The motion is DENIED.

 

As discussed above, Plaintiff has properly pled a claim for fraud by omission, which can form the basis for recovery of punitive damages. Civil Code § 3294(a) &(c)(3).