Judge: Christopher K. Lui, Case: 24STCV09996, Date: 2024-07-03 Tentative Ruling
Case Number: 24STCV09996 Hearing Date: July 3, 2024 Dept: 76
Plaintiff alleges that Defendant has failed to repair the subject vehicle to conform to applicable warranties and concealed the existence of a Defective Transmission..
Defendant General Motors LLC. demurs to the Fist Amended Complaint and moves to strike portions thereof.
TENTATIVE RULING
Defendant General Motors LLC’s demurrer to
the First Amended Complaint is OVERRULED as to the third cause of action
SUSTAINED with 30 days’ leave to amend as to the fourth cause of action. The
motion to strike is DENIED as to Complaint, Prayer for Relief E at 36:10 (punitive damages).
ANALYSIS
Demurrer
Meet and Confer
The Declaration of Sandra Habib reflects that Defendant’s counsel satisfied the meet and confer requirement set forth in Civ. Proc. Code, § 430.41.
Discussion
Defendant General Motors LLC. demurs to the First Amended Complaint as follows:
1. Third Cause of Action (Fraudulent Inducement – Concealment).
A. Re: Failure To Plead With Requisite Specificity.
Defendant argues that the fraud claim is insufficiently pled.
Fraud causes of action must be pled
with specificity. (Hills Transportation
Co. v. Southwest Forest Ind., Inc. (1968) 266 Cal.App.2d 702, 707.) The complaint must allege facts
as to “‘how, when, where, to whom, and by what means the representations were
tendered.’” (Stansfield v. Starkey
(1990) 220 Cal.App.3d 59, 73.) “The requirement of specificity in a
fraud action against a corporation requires the plaintiff to allege the names
of the persons who made the allegedly fraudulent representations, their
authority to speak, to whom they spoke, what they said or wrote, and when it
was said or written. (Citations omitted.)” (Tarmann
v. State Farm Mut. Auto. Ins. Co. (1991) 2 Cal.App.4th 153,
157.)
Less
specificity is required to plead fraud by concealment. (Jones
v. ConocoPhillips Co. (2011) 198 Cal.App.4th 1187, 1199.) However, “[i]f a fraud
claim is based upon failure to disclose, and ‘the duty to disclose arises from
the making of representations that were misleading or false, then those
allegations should be described.’ (Citation omitted.)” (Morgan v. AT&T Wireless
Services, Inc. (2009) 177
Cal.App.4th 1235, 1262.)
Civil Code
§ 1710(3)(deceit is defined to include “[t]he
suppression of a fact, by one who is bound to disclose it, or who gives information of other facts
which are likely to mislead for want of communication of that fact. . .
.”)(bold emphasis added).
In a misleading half-truth situation, where the defendant undertakes to provide some information, the defendant is “obliged to disclose all other facts which ‘materially qualify’ the limited facts disclosed. (Citations omitted.)” (Randi W. v. Muroc Joint Unified School Dist. (1997) 14 Cal.4th 1066, 1082.)
[T]he elements of a cause of action for fraud based on concealment are: “ ‘(1) the defendant must have concealed or suppressed a material fact, (2) the defendant must have been under a duty to disclose the fact to the plaintiff, (3) the defendant must have intentionally concealed or suppressed the fact with the intent to defraud the plaintiff, (4) the plaintiff must have been 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. [Citation.]’ [Citation.]” (Citation omitted.)
(Kaldenbach v. Mutual of Omaha Life Ins. Co. (2009) 178 Cal.App.4th 830, 850.)
Here, Plaintiff alleges as follows:
62. In its marketing brochures for the 2023 Yukon,
Defendants informed consumers, including Plaintiff, that, "[t]he 2023
Yukon delivers premium accommodations, our latest available technologies and
robust capability." In addition, the marketing brochures promote the
Defective Transmission as follows: "10-speed automatic transmission, it
gives you 460 lb-ft of torque so going big is always on the table."
Notwithstanding Defendants knowledge of the dangers caused by the Defective
Transmission, Defendants' website continues to tout the Silverado's superiority
among its competitors and tells consumers that, "[t]his powerful full-size
SUV is the epitome of GMC performance, advanced technology and first-class
design, [including a] Key Feature [of] the 10- Speed Automatic Transmission."
63. Based upon the national, multimedia marketing campaign positioning Defendants as a premier American automobile company, other representations in Defendants' marketing materials as well as the recommendations of the dealer salesperson assisting the Plaintiff, the Vehicle was purchased by Plaintiff. More important than what Defendants told consumers (including Plaintiff) about the Vehicle, however, is what Defendants intentionally and knowingly concealed about the Vehicle. Defendants and their authorized dealer sales staff and other personnel never publicly or privately disclosed to Plaintiff any information about the persistent and dangerous concerns that plagued the Defective Transmission, including the Vehicle. Not prior to Plaintiff's purchase of the Vehicle. Not during the Plaintiff's research, test drive or sales process of the Vehicle. Not at any point during the numerous times the Vehicle was presented to Defendants for repair for the very known defects that plague the Defective Transmission.
(1AC, ¶¶ 62, 63 [bold emphasis added].)
The foregoing is sufficient to allege a specific representation pertaining to the transmission in the subject vehicle which may be found by a jury to be a half-truth upon which Plaintiff relied in purchasing the vehicle. The details may be ascertained in discovery.
This ground for demurrer is not persuasive.
B. Re: No Transactional Relationship Giving Rise To A Duty To Disclose and Concealment Allegations are Insufficient.
Defendant argues that no transactional relationship between GM and Plaintiff is alleged which gives rise to a duty to disclose.
“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. [Citation.]’ ” (Citations omitted.) Where, as here, there is no fiduciary relationship, the duty to disclose generally presupposes a relationship grounded in “some sort of transaction between the parties. [Citations.] Thus, a duty to disclose may arise from the relationship between seller and buyer, employer and prospective employee, doctor and patient, or parties entering into any kind of contractual agreement. [Citation.]” (Citation omitted.)
(OCM Principal Opportunities Fund, L.P. v. CIBC World Markets Corp. (2007) 157 Cal.App.4th 835, 859 [bold emphasis added].)
Plaintiff has sufficiently pled that Defendant had exclusive knowledge of the alleged Transmission Defect (1AC, ¶¶ 40 – 59), and actively concealed that material fact despite having made partial representations about the transmission in the marketing materials but suppressed the material fact of the defect. This gives rise to a duty to disclose the material fact of the Transmission Defect.
The relationship between the manufacturer of medical devices in Bigler-Engler v. Breg, Inc. (2017) 7 Cal.App.5th 276, cited by Defendant for the proposition that there is an insufficient transactional relationship, is different than the relationship between a car manufacturer and a car buyer. In Bigler-Engler, the evidence did not show that the manufacturer directly advertised its products to consumers, nor that it derived any monetary benefit directly from the consumer’s rental of the medical device. (Id. at 314.)
This ground for demurrer is not persuasive.
C. Re: Omission/Concealment Cannot Be Based Upon Puffery.
(Furla v. Jon Douglas Co. (1998) 65 Cal.App.4th 1069, 1081.)
Here, the allegations at ¶ 62 are sufficiently pled as factual representations regarding the 10-speed automatic transmission, such that the allegations are sufficient to survive demurrer.
This ground for demurrer is not persuasive.
The demurrer to the third cause of action is OVERRULED.
2. Fourth Cause of Action (Violation of the CLRA).
A. Re: Failure To Provide Adequate Notice.
Defendant argues that Plaintiff has admitted that she did not provide the 30-day notice required by Civil Code, § 1782 prior to filing this action.
However, the § 1782 notice must be sent at least 30 days before the filing of the operative complaint seeking damages, which may be an amended complaint. (Morgan v. AT&T Wireless Services, Inc. (2009)177 Cal. App. 4th 1235, 1259-61.) Here, the original Complaint was filed on April 19, 2024, and 1AC—filed on May 20, 2024—alleges at ¶ 123 as follows:
123. Plaintiff complied with the notice
provisions of Civ. Code § 1782 by notifying Defendants on April 19, 2024, of
the particular alleged violations of Civ. Code § 1770 and demanding that it
correct, repair, replace, or otherwise rectify the goods or services alleged to
be in
violation of Civ. Code§ 1770. The
notice was given in writing and was sent by certified mail, return receipt
requested, to Defendants. Defendants have failed, within thirty (30) days of
receipt, to respond to Plaintiffs demand and/or provide Plaintiff with an
appropriate correction, repair,
replacement, relief, cure or any other remedy.
The foregoing allegations are sufficient to plead compliance with Civil Code § 1782, given the timeline of the complaints filed.
This
ground for demurrer is not persuasive.
B. Re: Failure to State Viable Claim and
Failure to Plead Fraud With The Required Specificity.
61. As early as 2017, Defendants marketed and sold the then new Defective Transmission 2 as having "advanced design, GM control system support capability, enhanced efficiency" rivaling top performance vehicles, lightning-fast and smooth shifting, along with improved fuel efficiency, among other representations. According to Defendants 2016 press release, "[t]he 10-speed is an all-new design - and the first-ever application in a car- with a wider, 7.39 overall gear ratio spread, that enables [vehicles equipped with the Defective Transmission] to remain at optimal engine speeds during upshifts."5 Dan Nicholson, vice-president of GM Global Propulsion Systems, said "[w]ith world-class shift times on par with the world's best dual-clutch transmissions and the refinement that comes only from a true automatic, the 10-speed delivers incomparable performance on and off the track. It also leverages the experience of our other multispeed transmissions to deliver that performance with greater efficiency as its use expands into other vehicles. " Defendants went on to tell consumers that the Defective Transmission's "wider overall ratio enables a lower numerical top gear ratio - an attribute that reduces engine speed on the highway, which contributes to greater fuel efficiency than a comparable eight-speed transmission. Improvements in spin loss complement the optimized gearing, further enhancing efficiency. "
62. In its marketing brochures for the 2023 Yukon,
Defendants informed consumers, including Plaintiff, that, "[t]he 2023
Yukon delivers premium accommodations, our latest available technologies and
robust capability." In addition, the marketing brochures promote the
Defective Transmission as follows: "10-speed automatic transmission, it
gives you 460 lb-ft of torque so going big is always on the table."
Notwithstanding Defendants knowledge of the dangers caused by the Defective
Transmission, Defendants' website continues to tout the Silverado's superiority
among its competitors and tells consumers that, "[t]his powerful full-size
SUV is the epitome of GMC performance, advanced technology and first-class
design, [including a] Key Feature [of] the 10- Speed Automatic
Transmission."
63. Based upon the national, multimedia marketing campaign positioning Defendants as a premier American automobile company, other representations in Defendants' marketing materials as well as the recommendations of the dealer salesperson assisting the Plaintiff, the Vehicle was purchased by Plaintiff. More important than what Defendants told consumers (including Plaintiff) about the Vehicle, however, is what Defendants intentionally and knowingly concealed about the Vehicle. Defendants and their authorized dealer sales staff and other personnel never publicly or privately disclosed to Plaintiff any information about the persistent and dangerous concerns that plagued the Defective Transmission, including the Vehicle. Not prior to Plaintiff's purchase of the Vehicle. Not during the Plaintiff's research, test drive or sales process of the Vehicle. Not at any point during the numerous times the Vehicle was presented to Defendants for repair for the very known defects that plague the Defective Transmission.
(1AC, ¶¶ 61 – 63 [bold emphasis added].)
The CLRA cause of action is specifically based upon the following representations:
118. Defendants represented to
Plaintiff and other consumers that the Defective Transmission as having "advanced
design, GM control system support capability, enhanced efficiency" and
"the first-ever application in a car -with a wider, 7.39 overall gear
ratio spread, that enables [vehicles
equipped with the Defective Transmission] to remain at optimal engine speeds
during upshifts." Defendants went on to tell consumers that the
Defective Transmission's "wider overall ratio enables a lower numerical
top gear ratio - an attribute that reduces engine speed on the highway, which
contributes to greater fuel efficiency than a comparable eight-speed
transmission. Improvements in spin loss complement the optimized gearing,
further enhancing efficiency." Defendants knew when they made these
representations that the root incessant problem with the Defective Transmission
remained unknown making a permanent fix impossible. Defendants falsely
represented that the Vehicle was of a particular standard, quality, or grade in
direct violation of the CLRA.
(1AC, ¶ 118 [bold emphasis added].)
These alleged representations were made in a 2016 press release. However, Plaintiff does not allege that she relied upon these representations in deciding to purchase the subject vehicle. The alleged representations upon which she relied are alleged in ¶ 62, but are not contained in ¶ 118. As such, Plaintiff has not pled the element of actual reliance upon the misrepresentation causing her harm.
“Under the CLRA, plaintiffs must show actual reliance on the misrepresentation and harm. (§ 1780, subd. (a); Buckland v. Threshold Enterprises, Ltd. (2007) 155 Cal.App.4th 798, 809–810 [66 Cal.Rptr.3d 543].)” (Nelson v. Pearson Ford Co. (2010) 186 Cal.App.4th 983, 1022, overruled on other grounds in Raceway Ford Cases (2016) 2 Cal.5th 161, 180.]
The demurrer to the fourth cause of action is SUSTAINED with leave to amend.
Plaintiff is given 30 days’ leave to amend.
Motion To Strike
Meet and Confer
The
Declaration of Arash Yaraghchian reflects that Defendant satisfied the meet and
confer requirement set forth in Civ. Proc. Code, § 435.5.
Discussion
Defendant moves to strike the following
portions of Plaintiff’s 1AC.
u Complaint, Prayer for Relief E at 36:10
(punitive damages): DENIED.
As
discussed above re: the demurrer, Plaintiff has sufficiently pled fraud by
concealment, sufficient to constitute fraud for purposes of punitive damages as
that term is defined in Civil Code, § 3294(c)(3) as follows:
(3) “Fraud” means an intentional misrepresentation,
deceit, or concealment of a material fact known to the defendant with the
intention on the part of the defendant of thereby depriving a person of
property or legal rights or otherwise causing injury.
(Civ. Code § 3294(c)(3).)