Judge Christian R. Gullon, Case Number: 24PSCV01645, Date: 2024-08-14 Tentative Ruling

Judge: Christian R. Gullon, Case: 24PSCV01645, Date: 2024-08-14 Tentative Ruling

DEFENDANTS’ DEMURRER TO PLAINTIFF’S COMPLAINT is OVERRULED in part (i.e., 1^st-3^rd COAs because express warranty claims are not patently time-barred) and SUSTAINED in part with leave to amend (i.e., as to 4^th COA (implied warranty of merchantability does not have prospective application) and 5^th COA (fails to allege damages).

On June 21, 2024, Plaintiff SERGIO SALDIVAR filed suit against Defendants Ford Motor Company and Ford of Upland arising from defects with his November 16, 2016 purchase of a 2017 Ford Explorer.

Defendant demurs to the complaint “on the grounds that the first through fourth causes of action for violations of the Song-Beverly Act are time-barred and therefore fail to plead facts sufficient to state a cause of action pursuant to Section 430.10(e) of the Code of Civil Procedure” (Demurrer p. 2:5-9; see also Demurrer p. 8:11-12 [SBA COAs are “time-barred by the four-year statute of limitations”])[1] and the fifth COA fails “to plead essential elements to state the claim” and is otherwise barred by the economic loss rule. (Demurrer pp. 3-4; see also p. 8:21-22; p. 9:3-4.)

1. Whether Express Warranty Claims (1^st-3^rd COAs) are Time-Barred? (Demurrer p. 10)

A plaintiff can bring a breach of express warranty claim within four years from the claim’s accrual date. (See Krieger v. Nick Alexander Imports, Inc. (1991) 234 Cal.App.3d 205, 213-214; Cal. Com. Code, § 2725, subds. (1)-(2).) For express warranties, “Song-Beverly claims accrue when the plaintiff discovers or reasonably should have discovered the breach of warranty, and such claims may accrue before an express warranty expires.” (Galvez v. Ford Motor Co., No. 2:17-cv-02250-KJM-KJN, 2018 WL 4700001, at *4 (E.D. Cal. Sep. 30, 2018).)[2]

Here, Defendant focus on the date of the first repair presentation dated January 13, 2017. (Complaint ¶24 [no repairs were made that day].) But, as noted by Plaintiff in opposition, a buyer cannot know of the breach until after (1) the buyer provides the defendant with a reasonable number of repair attempts and (2) the defect manifests again outside of the warranty period, thereby establishing that the defendant's repairs did not conform the vehicle to warranty. (Opp. p. 3, citing Donlen v. Ford Motor Co. (2013) 217 Cal.App.4th 138, 148-49.) Effectively, when Ford’s authorized repair facilities supposedly fixed the complained of issues, representing to Plaintiff that the Vehicle and the complained of defects had been repaired (Complaint, ¶24-30), Plaintiff did not have reason to know of any defects.

Even if the date of discovery of defects is unclear from the face of the complaint, the legal standard on a demurrer would ultimately resolve the issue in favor of Plaintiff. First, on a demurrer when the SOL is raised, it must be explicitly evident from the pleading itself, without requiring additional facts, that the SOL has indeed expired. (Coalition for Clean Air v. City of Visalia (2012) 209 Cal.App.4th 408; Guardian North Bay, Inc. v. Superior Court (2001) 94 Cal.4th 963.) Here, Defendant itself maintains that there are insufficient facts, making sustaining the demurrer improper. (See Reply p. 1:22-23 [“However, Plaintiff does not include a single fact regarding when they discovered this breach of warranty.”].) Additionally, on a demurrer, the allegations are liberally construed such that the court draws inferences favorable to the plaintiff, not the defendant. (Perez v. Golden Empire Transit Dist. (2012) 209 Cal.App.4th 1228, 1238.) Here, considering that repairs were first conducted on 2/1/2017 and thereafter on 3/22/2017, 4/13/2017, 5/5/2017, and 5/16/2023 (Complaint pp. 3-4), the inferences drawn in favor of Plaintiff do not suggest that Plaintiff first discovered the defect on 1/13/2017 as there were continuing problems.

Therefore, as Defendant only demurs on the grounds that the claims are time barred, the court OVERRULES the demurrer as to the 1^st through 3^rd COAs for breach of express warranties.

Under Civil Code section 1792, every consumer good sold in California is covered by an implied warranty that the goods are “merchantable.” A claim for breach of implied warranty accrues upon tender of delivery. (Cal. Comm. Code § 2725, subds. (1), (2), emphasis added.) “That warranty is of limited duration; “[t]he duration of the implied warranty of merchantability ... shall be coextensive in duration with an express warranty which accompanies the consumer goods, provided the duration of the express warranty is reasonable; but in no event shall such implied warranty have a duration of … more than one year following the sale of new consumer goods to a retail buyer.” (Civ.Code, § 1791.1, subd. (c), emphasis added; see Atkinson v. Elk Corporation of Texas (2006) 142 Cal.App.4th 212, 231.) Because an implied warranty is one that arises by operation of law rather than by an express agreement of the parties, courts have consistently held it is not a warranty that explicitly extends to future performance of the goods[.]” (Demurrer p. 11, quoting Cardinal Health 301, Inc. v. Tyco Electronics Corp. (2008) 169 Cal.App.4th at 134, emphasis added.)[3] For this reason, “[t]he delayed discovery doctrine does not apply to implied warranty claims.” (Demurrer p. 11, quoting Nguyen v. Nissan North America, Inc., 487 F.Supp.3d 845, 854 n.3 (2020).) California, implied warranty claims are subject to a four-year statute of limitations. (Montoya v. Ford Motor Co., (2020) 46 Cal.App.5th 493, 495.)

Here, with a purchase date of 11/16/2016, a claim for breach of implied warranty would have finalized by 11/16/2017, requiring suit by 11/16/2021 (4-year SOL). In opposition, Plaintiff heavily focuses on Mexia v. Rinker Boat Co. (2009) 174 Cal.App.4th 1297 wherein the court effectively expanded consumer rights by allowing for an implied warranty COA where a latent defect is discovered after tender of delivery and within a reasonable time of notifying the seller of the breach. (Id. at pp. 1310-1311.) Though Plaintiff maintains that “[m]any federal courts have been persuaded by Mexia,” (Opp p. 4:16-17), not necessarily. As noted in Reply (and as stated on WestLaw), the court in Marchante v. Sony Corp. of America, Inc. 801 F. Supp.2d 1013 (S.D. Cal. 2011) found that the plaintiff’s reliance on Mexia “unconvincing.” (Marchante, supra, at p. 1022.) In doing so, the court reasoned the following:

Significant to the analysis is the character of the latent defect. Mexia concerns latent defects that render the product unmerchantable from the outset. This distinction can be drawn from Mexia's reliance on Moore v. Hubbard & Johnson Lumber Co., 149 Cal.App.2d 236, 308 P.2d 794 (1957). In Moore a defendant sold lumber to a contractor for construction purposes. The lumber was infested with beetles that would eat their way out of the wood, leaving holes in the wood. And in such a situation, the latent defect, whether or not it was discovered, rendered the lumber unmerchantable from the outset. It is this distinction that renders Mexia inapplicable. Plaintiffs here do not allege that the televisions failed to work properly from the outset. They instead allege issues arising after several years of use. In relying on Mexia, Plaintiffs request this Court accept that televisions that may manifest issues after several years of use are comparably unmerchantable-from-the-outset as building lumber infested with beetles. The comparison is unconvincing. (Id. at pp. 1021-1022, emphasis added.)

Here, similarly, Plaintiff does not allege that the vehicle was defective from the outset. Even if Mexia were not limited to items that are unmerchantable from the outset, the court in Marchante also spoke to that. “[Mexia] renders meaningless any durational limits on implied warranties. Every defect that arises could conceivably be tied to an imperfection existing during the implied warranty period. And in that vein, Mexia enjoys the limelight as a case ‘contrary to established California case law with respect to the duration of the implied warranty of merchantability.’” (Id. at p. 1022, emphasis added, quoting Hovsepian v. Apple, Inc., 2009 WL 2591445, at *8 n. 7 (N.D.Cal. Aug. 21, 2009).) Thus, echoing the Marchante court, the court determines that Plaintiff’s reliance on Mexia unconvincing because there is no indication that the vehicle was unmerchantable from the outset, and even if it was unmerchantable form the outset, Mexia is an outlier of a case.

Therefore, the court SUSTAINS the demurrer as to the 4^th COA for breach of implied warranty with leave to amend.[4]

3. Whether the Negligent Repair COA Fails to State Sufficient Facts Re: Damages?

To state a cause of action for negligence, the plaintiff must allege facts demonstrating the existence of a duty, breach of that duty, causation, and damages. (Seo v. All-Makes Overhead Doors (2002) 97 Cal.App.4th 1193, 1202.)

Defendant demurs on two grounds: claim is barred by economic loss rule[5] and the COA fails to state sufficient facts. The court for purposes of this demurrer will focus on the latter argument.

Here, the court agrees with Defendant that Plaintiff has failed to plead damages. (See Complaint ¶68 [“Defendant UPLAND's negligent breach of its duties owed to Plaintiff was a proximate cause of Plaintiff's damages.”].) While Plaintiff maintains that he need not plead whether he paid out-of-pocket for any repairs performed by Upland, that may be true, but damages (e.g., out-of-pocket expenses, or any other monetary losses or property damage he may have sustained), in whatever form, must still be pled. To the extent that Plaintiff argues that pleading of such facts are not required because they are within the control of Upland (Opp. p. 6:13-15), it is unclear why Plaintiff would not be the one to know of how he was damaged.

Therefore, the court SUSTAINS the demurrer as to the 5^th COA with leave to amend.

Based on the foregoing, the demurrer as to the 1^st-3^rd COAs is OVERRULED; 4^th COA is sustained with leave to amend; and 5^th COA is sustained with leave to amend.

[1] The court emphasizes that the warranty claims are only demurred to on the grounds that they are barred by the SOL, not that they alternatively generally fail to state sufficient facts, which may have otherwise warranted sustaining the demurrer with leave to amend. (See also Table of Contents [focusing on SOL].)

[2] Both parties cite to Krieger and Galvez.

[3] Without more, Plaintiff argues that these facts don’t consider the policy considerations expressed in Cardinal Health 301. (Opp. 4:7-8.)

[4] Should Defendant demur to the COA again, the court requests the parties to adequately the binding cases that address the issue of whether implied warranties of merchantability have prospective application.

[5] Under the economic loss rule, “[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.” (Robinson Helicopter Co., Inc. v. Dana Corp. (2004) 34 Cal.4th 979, 988 (Robinson Helicopter), quotation marks omitted.) However, tort damages may be permitted when the breach of contract is accompanied by a tort such as fraud. (Id. at pp. 989-990.) To plead around the economic loss rule, a party must plead the existence of a duty that arises independent of any contractual duty and independent injury, other than economic loss, that arises from the breach of that duty. (Id. at pp. 988-991.) Here, briefly, the complaint expressly alleges that Plaintiff’s COAs are predicated upon warranty obligations, suggesting that the complaint does not allege a duty independent of the warranty agreement/underlying contract(s).