Judge: Daniel S. Murphy, Case: 21STCV20077, Date: 2023-05-05 Tentative Ruling

Case Number: 21STCV20077    Hearing Date: May 5, 2023    Dept: 32

BACKGROUND

            Plaintiff Luzhou Wang initiated this lemon law action on May 27, 2021. The operative First Amended Complaint, filed January 10, 2023, alleges Song-Beverly violations against Defendant FCA USA, LLC (FCA) and negligent repair against Defendant Bravo Chrysler Dodge Jeep Ram of Alhambra (Bravo).

            On March 10, 2023, Defendants filed their demurrers to the FAC. FCA argues that the Song-Beverly claims are time-barred, while Bravo argues that the negligent repair claim is barred by the economic loss rule.

LEGAL STANDARD

A demurrer for sufficiency tests whether the complaint states a cause of action. (Hahn v. Mirda (2007) 147 Cal.App.4th 740, 747.) When considering demurrers, courts read the allegations liberally and in context. (Taylor v. City of Los Angeles Dept. of Water and Power (2006) 144 Cal.App.4th 1216, 1228.) In a demurrer proceeding, the defects must be apparent on the face of the pleading or by proper judicial notice. (Code Civ. Proc., § 430.30, subd. (a).) A demurrer tests the pleadings alone and not the evidence or other extrinsic matters. (SKF Farms v. Superior Court (1984) 153 Cal.App.3d 902, 905.) Therefore, it lies only where the defects appear on the face of the pleading or are judicially noticed. (Ibid.) The only issue involved in a demurrer hearing is whether the complaint, as it stands, unconnected with extraneous matters, states a cause of action. (Hahn, supra, 147 Cal.App.4th at 747.) A complaint will survive demurrer if it sufficiently apprises the defendant of the issues, and specificity is not required where discovery will clarify the ambiguities. (See Ludgate Ins. Co. v. Lockheed Martin Corp. (2000) 82 Cal.App.4th 592, 608.) All reasonable inferences are drawn in favor of the complaint. (Kruss v. Booth (2010) 185 Cal.App.4th 699, 713.)

MEET AND CONFER

Before filing a demurrer or a motion to strike, the demurring or moving party is required to meet and confer with the party who filed the pleading demurred to or the pleading that is subject to the motion to strike for the purposes of determining whether an agreement can be reached through a filing of an amended pleading that would resolve the objections to be raised in the demurrer. (Code Civ. Proc., §§ 430.41, 435.5.) The Court notes that Defendant has complied with the meet and confer requirement. (See Rogerson Decl.)

DISCUSSION

I. Statute of Limitations

            The four-year statute of limitations for breach of warranty enumerated in Uniform Commercial Code section 2725 also governs warranty claims arising from the Song-Beverly Act. (Krieger v. Nick Alexander Imports, Inc. (1991) 234 Cal.App.3d 205, 213-15.) “Under that statute, a cause of action for breach of warranty accrues, at the earliest, upon tender of delivery.” (Mexia v. Rinker Boat Co., Inc. (2009) 174 Cal.App.4th 1297, 1306.) However, “[a]n important exception to the general rule of accrual is the ‘discovery rule,’ which postpones accrual of a cause of action until the plaintiff discovers, or has reason to discover, the cause of action.” (Fox v. Ethicon Endo-Surgery, Inc. (2005) 35 Cal.4th 797, 807.) “In order to rely on the discovery rule for delayed accrual of a cause of action, a plaintiff whose complaint shows on its face that his claim would be barred without the benefit of the discovery rule must specifically plead facts to show (1) the time and manner of discovery and (2) the inability to have made earlier discovery despite reasonable diligence.” (Id. at p. 808.)

            Plaintiff purchased the vehicle in January 2015 and presented it for repairs on at least the following dates: November 14, 2015, January 17, 2017, September 5, 2017, September 11, 2017, and October 16, 2017. (FAC ¶¶ 10, 34-39.) FCA argues that the warranty claims accrued beginning January 2015 upon purchase, or at the latest, the second repair attempt in January 2017. Plaintiff argues that he did not discover the defects until shortly before filing this action because FCA concealed the defects and represented that the vehicle had been repaired. (FAC ¶¶ 29-33.) Plaintiff alleges that he did not discover FCA’s wrongdoing until “the Vehicle continued to exhibit symptoms of defects following Defendant FCA’s unsuccessful attempts to repair them.” (Id., ¶ 33.)

            In Krieger, the plaintiff presented his car for repair five times between January 1984 and May 1984. (Krieger, supra, 234 Cal.App.3d at p. 218.) Applying the discovery rule, the court held that the warranty claims were not time-barred because “a reasonable trier of fact could conclude that the cause of action accrued in May 1984,” the date of the last repair. (Ibid.) Without legal support, FCA arbitrarily selects the second repair date of January 2017 as the latest date that Plaintiff should have realized the vehicle was defective. However, Plaintiff was still attempting to have the vehicle repaired as late as October 2017 and alleges that he did not realize the vehicle was defective until FCA’s multiple unsuccessful attempts at repair. Under Krieger, the same case FCA relies on, a reasonable trier of fact may find that the cause of action did not accrue until October 2017, in which case Plaintiff’s filing in May 2021 would have been timely.

FCA points out that there is a distinction between a claim based on a defect existing at the time of sale and a claim based on failure to repair after the sale takes place. FCA contends that because the claims here are based on the allegation that the vehicle was defective at the time of sale, the date of repair is irrelevant, and the claim should accrue upon the date of sale. However, FCA relies on nonbinding federal authority for this proposition. (See McDonald v. Ford Motor Co., 37 F.Supp.3d 1087, 1199 (N.D. Cal. 2014).) By contrast, Krieger is binding California authority and unambiguously applies the discovery rule using the last date of repair. On a demurrer, all reasonable inferences must be drawn in Plaintiff’s favor, and it may be reasonably inferred that Plaintiff did not realize the defects with the vehicle until the last time that FCA failed to repair it.

FCA also argues that Plaintiff fails to plead delayed discovery with the specificity required under Fox. The Court disagrees. Plaintiff alleges that he did not realize the defects until after FCA’s multiple failed attempts at repair, which lasted until October 2017, after which the vehicle continued to present issues. (FAC ¶¶ 33, 38.) This sufficiently establishes time and manner of discovery. Plaintiff additionally alleges that FCA concealed the defects and represented that the vehicle had been repaired. (Id., ¶¶ 30, 32.) This sufficiently explains Plaintiff’s inability to discover the defects earlier. FCA only relies on nonbinding authority for the proposition that these allegations do not support delayed discovery. (See Finney v. Ford Motor Co. (N.D. Cal., No. 17-cv-06183-JST, Jan. 2, 2019) 2019 WL 79033, at *3.) At the pleading stage, there are enough facts to infer delayed discovery and place FCA on notice of the nature of the claim. Any remaining ambiguities may be resolved in discovery. (See Ludgate, supra, 82 Cal.App.4th at p. 608.)

II. Economic Loss Rule

            Economic loss consists of “damages for inadequate value, costs of repair and replacement of the defective product or consequent loss of profits—without any claim of personal injury or damages to other property.” (Robinson Helicopter Co., Inc. v. Dana Corp. (2004) 34 Cal.4th 979, 988.) The economic loss rule requires a purchaser to recover in contract for purely economic loss due to disappointed expectations, unless the purchaser “can demonstrate harm above and beyond a broken contractual promise,” such as some form of personal injury or damage to property other than the defective product itself. (Ibid.)

            However, economic losses arising from a contract of sale are distinct from economic losses arising from negligent performance of services. (See North American Chemical Co. v. Superior Court (1997) 59 Cal.App.4th 764, 777.) The economic loss rule does not apply “when the commercial relationship of the parties does not involve the sale of goods or products, nor the rules developed under the law merchant and the Uniform Commercial Code, but rather relates only to the performance of services.” (Id. at pp. 780-81.) Because “every person is responsible for the injuries caused by his or her lack of ordinary care . . . [there is] no reason to distinguish between different types of damage.” (Id. at p. 783.) Civil Code section 1714 “does not distinguish among injuries to one's person, one's property or one's financial interests.” (Ibid.) “Recovery for injury to one's economic interests, where it is the foreseeable result of another's want of ordinary care, should not be foreclosed simply because it is the only injury that occurs.” (Ibid.) Therefore, Plaintiff’s negligent repair claim against Bravo is not barred by the economic loss rule.

            The elements of negligence have otherwise been adequately alleged, and ambiguities may be resolved in discovery. Plaintiff cannot be expected to know at this stage precisely how Bravo negligently repaired the vehicle.

CONCLUSION

            Defendants’ demurrers are OVERRULED.