Judge: Cherol J. Nellon, Case: 23STCV13288, Date: 2024-01-25 Tentative Ruling


Case Number: 23STCV13288    Hearing Date: January 25, 2024    Dept: 14

Maria Carlos vs. General Motors

Case Background

 

Lemon law case involving Plaintiff’s 2015 Chevrolet Cruze.

 

On July 8, 2021, Plaintiffs filed their Complaint for (1) Breach of Implied Warranty of Merchantability, (2) Breach of Express Warranty, (3) Fraudulent Concealment, and (4) Violation of the CLRA against Defendants General Motors LLC (“GM”) and DOES 1-10.

 

No trial date has yet been set.

 

(1)        Demurrer

 

            Defendant GM now demurs, per Code of Civil Procedure § 430.10(e) to the third and fourth causes of action in the Complaint on the grounds that there are no facts sufficient to support that cause of action against Defendant GM.

 

Decision

 

The demurrer to the third cause of action is OVERRULED.

 

The demurrer to the fourth cause of action is SUSTAINED, with 20 days leave to amend.

 

Third Cause of Action: Fraudulent Concealment

 

The elements of fraudulent concealment 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).

 

Statute of Limitations

 

Based upon the dates included in the four corners of the complaint, Plaintiffs’ fraud by omission cause of action is not barred by the applicable statute of limitations.

 

Code of Civil Procedure § 338 provides in relevant part:

 

“(d) An action for relief on the ground of fraud or mistake. The cause of action in that case is not deemed to have accrued until the discovery, by the aggrieved party, of the facts constituting the fraud or mistake.”

 

Since the statute of limitations is an affirmative defense, the facts supporting it must appear affirmatively on the face of the complaint. See Arguello v. Edinger (1858) 10 Cal. 150, 157, Smith v. Hall (1861) 19 Cal. 85, 86; E-Fab, Inc. v. Accountants, Inc. Services (2007) 153 Cal.App.4th 1308, 1316.

 

Here, the dates alleged in the complaint do not affirmatively indicate when the statute started running. Plaintiffs have alleged that Defendant GM concealed the relevant transmission defect at the time of the purchase and continued to conceal it throughout various service visits up to an unspecified date. (Complaint ¶¶ 90-107). None of the other alleged facts establish that Plaintiff actually discovered (or should have discovered) the defect on any specific date that is outside the statute of limitations. There is simply no way to say as a matter of law that the complaint is time-barred.

 

Substantive Pleading

 

Plaintiff alleges that Defendant GM failed to disclose that the six-speed transmission installed in Plaintiff’s vehicle was susceptible to a significant series of malfunctions. (Complaint ¶¶ 15-16, 27-31). Plaintiff alleged that Defendant GM received extensive and specific prior warnings about the transmission (Complaint ¶¶ 45-67), but instead continued to advertise it as “smooth” and “crisp.” (Complaint ¶ 68-76).

 

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.

 

            Plaintiffs have 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, Plaintiffs have pled sufficient facts to show that Defendant GM had a duty to disclose the defect.

 

Fourth Cause of Action: CLRA

 

            Civil Code § 1770 provides in relevant part as follows:

 

“(a) The unfair methods of competition and unfair or deceptive acts or practices listed in this subdivision 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 are unlawful:

…

(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.

…

(9) Advertising goods or services with intent not to sell them as advertised.

…

(14) Representing that a transaction confers or involves rights, remedies, or obligations that it does not have or involve, or that are prohibited by law.

 

Civil Code § 1780 provides in relevant part as follows:

 

“(a) Any consumer who suffers any damage as a result of the use or employment by any person of a method, act, or practice declared to be unlawful by Section 1770 may bring an action against that person to recover or obtain any of the following:

(1) Actual damages, but in no case shall the total award of damages in a class action be less than one thousand dollars ($1,000).

(2) An order enjoining the methods, acts, or practices.

(3) Restitution of property.

(4) Punitive damages.

(5) Any other relief that the court deems proper.”

 

Statute of Limitations

 

            Civil Code § 1783 provides:

 

“Any action brought under the specific provisions of Section 1770 shall be commenced not more than three years from the date of the commission of such method, act, or practice.”

 

It is unclear whether the “Discovery Rule” applies to claims under the CLRA. See Purdum v. Holmes (2010) 187 Cal.App.4th 916, 924. However, neither party addresses this issue – both analyze the statute of limitations issue as if the exact same period and rules apply to both the third and fourth causes of action. Therefore, the court does likewise. For the reasons given above, the CLRA claim is not time-barred.

 

Notice

 

            Civil Code § 1782 requires that, before filing a lawsuit, a consumer give notice to the manufacturer or seller and allow them time to cure the issue. Notice must be given at least 30 days prior to filing a lawsuit. Civil Code § 1782(a). If the manufacturer or seller agrees to an “appropriate” curative measure within that period, the suit is barred. Civil Code § 1782(b). However, there is no need to comply with the notice procedure if the plaintiff is only seeking injunctive relief. Civil Code § 1782.

 

            Paragraph 156 of the Complaint admits that Plaintiffs have not complied with the notice period. That same paragraph simultaneously disavows “damages” and requests “restitution.” But “restitution” is a separate remedy from injunctive relief, and there is no meaningful difference between it and damages. Plaintiffs cannot seek an award of restitution without complying with the notice procedure.

 

Substantive Pleading

 

            As noted above, the ordinary rules of fraud pleading do not apply to a concealment claim. It is not entirely clear whether they apply to a claim under the CLRA. See Gutierrez v. CarMax Auto Superstores California (2018) 19 Cal.App.5th 1234, 1261. However, unlike common law fraud, a claim under the CLRA cannot be based on the simple failure to disclose; it must identify some specific representation that was contrary to, or necessarily concealed, the true facts. Daugherty v. American Honda Motor Co., Inc. (2006) 144 Cal.App.4th 824, 833-834; see e.g. Gutierrez, supra, 19 Cal.App.5th at 1261-63 (representation that a car subject to a safety recall for a brake light part had passed a 125-point inspection which included brake lights). And as a corollary, it must allege that the Plaintiffs were damaged by that representation. See Civil Code § 1780(a).

 

            The Complaint fails on this ground as well. While it lists a long series of advertising representations that Plaintiffs claim were false, it does not identify which of them were made to Plaintiffs. (Complaint ¶¶ 152-153). Nor does it allege which ones the Plaintiffs actually relied upon.

 

Conclusion

 

            Plaintiffs have properly pled a claim for fraudulent concealment because they have alleged a defect which Defendant GM did not disclose despite its exclusive knowledge. The presence or absence of a statute of limitations defense is not evident on the face of the pleadings. However, Plaintiffs have not properly pled a CLRA claim because (a) they have sought restitution without complying with the notice requirement, and (b) they have failed to identify any specific misrepresentation upon which they relied.

 

            Therefore, the demurrer to the third cause of action is OVERRULED, and the demurrer to fourth cause of action is SUSTAINED, with 20 days leave to amend.

 

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