Judge Daniel M. Crowley, Case Number: 24STCV07047, Date: 2024-10-04 Tentative Ruling

Defendant Ford Motor Company’s demurrer to Plaintiff Shlomi S. Harush’s first amended complaint is sustained as to the 5th cause of action with 20 days leave to amend.

Defendant Ford Motor Company (“Ford”) (“Defendant”) demurs to Plaintiff Shlomi S. Harush’s (“Harush”) (“Plaintiff”) first amended complaint (“FAC”) on the grounds that pursuant to C.C.P. §430.10(e), Plaintiff cannot state his fifth cause of action for fraudulent inducement – concealment against Ford as a matter of law because the claim fails to plead essential elements to state the claim and is barred by the economic loss rule. (Notice of Demurrer, pg. 1.)

Before filing a demurrer, the moving party must meet and confer in person, by telephone, or by video conference with the party who filed the pleading to attempt to reach an agreement that would resolve the objections to the pleading and obviate the need for filing the demurrer. (C.C.P. §430.41, emphasis added.)

Defendant’s counsel declares that on June 18, 2024, the parties met and conferred via video conference, and the parties were unable to reach an agreement. (See Decl. of Liu ¶3.) Defendant’s counsel’s declaration is sufficient under C.C.P. §430.41. Accordingly, the Court will consider Defendant’s demurrer.

Plaintiff filed his initial Complaint on March 20, 2024, against Defendant and Fox Hills Auto, dba Airport Marina Ford. On May 28, 2024, this Court sustained Defendant’s demurrer with leave to amend. (See 5/28/24 Minute Order.) On June 17, 2024, Plaintiff filed the operative FAC against Defendant alleging five causes of action: (1) violation of the Song-Beverly Consumer Warranty Act (“Song-Beverly”) Civil Code §1793.2(D); (2) violation of Civil Code §1793.2(B); (3) violation of Civil Code §1793.2(A)(3); (4) breach of implied warranty of merchantability (Civ. Code §§1791.1, 1794, 1795.5); and (5) fraudulent inducement- concealment. Plaintiff’s causes of action arise from his entry into a warranty contract with Ford on September 23, 2020, regarding the purchase of a Certified Pre-Owned 2019 Ford F-150 (“Subject Vehicle”). (See FAC.)

Defendant filed the instant demurrer on July 25, 2024. Plaintiff filed his opposition on September 20, 2024. Defendant filed its reply on September 26, 2024.

Defendant demurs to the 5th cause of action for fraudulent inducement-concealment on the basis the claim fails to plead essential elements to state claims and is barred by the economic loss rule. (Demurrer, pg. 2; C.C.P. §430.10(e).)

“[A] demurrer tests the legal sufficiency of the allegations in a complaint.” (Lewis v. Safeway, Inc. (2015) 235 Cal.App.4th 385, 388.) A demurrer can be used only to challenge defects that appear on the face of the pleading under attack or from matters outside the pleading that are judicially noticeable. (See Donabedian v. Mercury Insurance Co. (2004) 116 Cal.App.4th 968, 994 [in ruling on a demurrer, a court may not consider declarations, matters not subject to judicial notice, or documents not accepted for the truth of their contents].) For purposes of ruling on a demurrer, all facts pleaded in a complaint are assumed to be true, but the reviewing court does not assume the truth of conclusions of law. (Aubry v. Tri-City Hospital District (1992) 2 Cal.4th 962, 967.)

The required elements for fraudulent concealment are: “(1) concealment or suppression of a material fact; (2) by a defendant with a duty to disclose the fact to the plaintiff; (3) the defendant intended to defraud the plaintiff by intentionally concealing or suppressing the fact; (4) the plaintiff was unaware of the fact and would not have acted as he or she did if he or she had known of the concealed or suppressed fact; and (5) plaintiff sustained damage as a result of the concealment or suppression of the fact.” (See Bank of America Corp. v. Superior Court (2011) 198 Cal.App.4th 862, 870; Civ. Code §1710(3); CACI 1901.) The rule of specificity of pleading is only intended for affirmative fraud cases not fraud by concealment. (See Alfaro v. Community Housing Improvement Systems & Planning Association, Inc. (2009) 171 Cal.App.4th 1356, 1384.)

Plaintiff failed to plead with sufficient particularity the defect Ford allegedly concealed. The FAC merely describes a list of ways in which Ford F-150 transmissions may be defective – e.g. “hesitation and/or delayed acceleration, harsh and/or hard shifting, jerking, shuddering, and/or juddering (“Transmission Defect”)” and hazardous driving conditions relating generally to the purported transmission defect in technical service bulletins (“TSBs”). (FAC ¶¶37-45). Plaintiff does not allege what the defect is, let alone the defect in the Subject Vehicle, which is insufficient to establish Plaintiff’s fraud claim. (See Santana v. FCA US LLC (2020) 56 Cal.App.5th 334, 345 [“The very existence of a warranty presupposes that some defects may occur. Thus, the occurrence of a few defects that . . . mostly involved vehicles Santana did not own, is not enough to demonstrate an intent to conceal a defect.”].)

Further, Plaintiff fails to allege what representations Ford made to this particular Plaintiff regarding the Transmission Defect that these Plaintiff relied on in purchasing the Subject Vehicle. Plaintiff does not plead that Ford made any specific representations directly to Plaintiff. Plaintiffs do not allege any direct contact with Ford before purchasing the Subject Vehicle where representations regarding the Transmission Defect at issue should or could have been revealed. Merely alleging that Ford omitted facts about an alleged Transmission Defect in TSBs is not sufficient to establish: (1) knowledge of a particular defect in a particular vehicle, or (2) intent to conceal this particular knowledge from this particular Plaintiff. (See Tenzer v. Superscope, Inc. (1985) 39 Cal. 3d 18, 30 [“something more than nonperformance is required to prove the defendant’s intent not to perform his promise”]; American Honda Motor Co., Inc. v. Superior Court (2011) 199 Cal.App.4th 1367, 1378 [“A TSB is not and cannot fairly be construed by a trial court as an admission of a design or other defect, because TSBs are routinely issued to dealers to help diagnose and repair typical complaints.”].)

Plaintiff has also failed to show Ford had a duty to disclose to Plaintiff. (LiMandri v. Judkins (1997) 52 Cal.App.4th 326, 336 [“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.’”].) Plaintiff fails to allege a transactional relationship with Ford that would invoke a duty on the part of Ford to disclose to Plaintiff. (Id. at pgs. 336-337.)

Further, Plaintiff fails to allege that Ford had exclusive knowledge of the purported transmission defect at the time of sale to trigger a duty to disclose. (Id. at pg. 337 [stating duty to disclose may exist “when the defendant had exclusive knowledge of material facts not known to the Plaintiff”]; see FAC ¶76.) First, Plaintiff’s allegation regarding “pre-production testing data” is insufficient to allege what the testing revealed or tie it to the alleged defects at issue here. Second, Plaintiff’s conclusory allegations regarding consumer complaints fail to allege any connection between the issues raised in those unspecified consumer complaints and Plaintiff’s experiences with the Subject Vehicle. Finally, assuming Ford’s knowledge of each consumer complaint relating to the Ford F-150 transmission, it does not follow that Ford knew the Subject Vehicle’s transmission was defective, much less that there was any supposed common defect.

Further, the economic loss rule bars Plaintiffs’ fraud claim. The California Supreme Court in Robinson Helicopter Co., Inc. v. Dana Corp. limited its holding permitting fraud claims to proceed in contract actions to “a defendant’s affirmative misrepresentations on which Plaintiffs rely, and which expose Plaintiffs to liability for personal damages independent of the Plaintiffs’ economic loss.” (Robinson Helicopter Co., Inc. v. Dana Corp. (2004) 34 Cal.4th 979, 993.)

Here, Plaintiff’s fraud claim is based on an alleged fraudulent omission rather than affirmative misrepresentation, seeks purely economic losses, and derives from Ford’s alleged breach of warranty. There are no allegations of physical damage to Plaintiffs’ property beyond the defective vehicle itself, or that personal injury accompanied such losses. There are no allegations of intentional acts by Ford to fit within Robinson’s narrow exception to the economic loss rule for intentional acts. (Robinson, 34 Cal.4th at pg. 993.)

Even if fraudulent inducement based on concealment claims are excepted from the economic loss rule, the Complaint fails to plead fraudulent inducement to fall within Robinson’s fraudulent inducement exception as there is no allegation that Ford did not intend to honor its warranty obligations when Plaintiff purchased the vehicle. (See id. at pgs. 989-990 [limiting four exceptions to the traditional contract remedy restrictions including where the contract was fraudulently induced]; Food Safety Services v. Eco Safe Systems USA, Inc. (2012) 209 Cal.App.4th 1118, 1131 [stating to establish a claim of fraudulent inducement, one must show that the defendant did not intend to honor its contractual promises when they were made].)

Here, there is no allegation that Ford “did not intend to honor its contractual promises” when Plaintiff entered into the warranty contract to state an inducement claim. The FAC reflects that the gravamen of Plaintiff’s fraud claim is one and the same as their breach of warranty claim as it admits that Plaintiff’s fraud claim is based on Ford’s alleged non-performance under the warranty contract as Plaintiff “discovered Defendants’ wrongful conduct . . . as the Vehicle continued to exhibit symptoms of defects following [Ford]’s unsuccessful repair attempts to repair them.” (Complaint ¶8.) Therefore, Plaintiff’s fraud claim is barred by the economic loss rule.

Accordingly, Defendant’s demurrer to Plaintiff’s 5th cause of action is sustained with 20 days leave to amend.

Defendant’s demurrer to Plaintiff’s 5th cause of action is sustained with 20 days leave to amend.

Hon. Daniel M. Crowley

Judge of the Superior Court