Judge: Daniel S. Murphy, Case: 23STCV12180, Date: 2023-09-15 Tentative Ruling

Case Number: 23STCV12180    Hearing Date: September 15, 2023    Dept: 32

BACKGROUND

            On May 31, 2023, Plaintiff Raul Marquez filed this lemon law action against Defendant Ford Motor Company, alleging breach of warranty in violation of the Song-Beverly Act, fraud by omission, and negligent repair.

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.)

Any party, within the time allowed to respond to a pleading, may serve and file a notice of motion to strike the whole or any part of that pleading. (Code Civ. Proc., § 435, subd. (b).) The court may, upon a motion, or at any time in its discretion, and upon terms it deems proper, strike (1) any irrelevant, false, or improper matter inserted in any pleading and (2) all or any part of any pleading not drawn or filed in conformity with the laws of this state, a court rule, or an order of the court. (Id., § 436.) The grounds for moving to strike must appear on the face of the pleading or by way of judicial notice. (Id., § 437.)

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.  

DISCUSSION

I. 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.) The economic loss rule exists to prevent “the law of contract and the law of tort from dissolving one into the other.” (Ibid.)

“[T]he economic loss rule is not a defense to a cause of action. Rather, the existence of damages other than purely economic loss is an element of a plaintiff’s common law cause of action.” (Greystone Homes, Inc. v. Midtec, Inc. (2008) 168 Cal.App.4th 1194, 1215.) “Under the economic loss rule, appreciable, nonspeculative, present injury is an essential element of a tort cause of action.” (Rosen v. State Farm General Ins. Co. (2003) 30 Cal.4th 1070, 1079.) In this case, Plaintiff has not alleged that she suffered any physical injury or that there was any physical damage to property other than to the vehicle itself. Plaintiff has alleged only economic loss. The speculative risk associated with an engine defect is not a present injury sufficient to overcome the rule. Additionally, Robinson Helicopter limited the fraudulent inducement exception to instances of affirmative representation. (See Robinson Helicopter, supra, 34 Cal.4th at p. 993.) For this reason, Plaintiff’s fraudulent concealment claim is barred by the economic loss rule.

The weight of authority within the Ninth Circuit concurs with this result. (See, e.g., Sloan v. General Motors LLC (N.D. Cal., Apr. 23, 2020, No. 16-CV-07244-EMC) 2020 WL 1955643, at *23-*24 (Judge Chen) (collecting cases); Mosqueda v. American Honda Motor Company, Inc. (C.D. Cal., Mar. 6, 2020, No. SACV19839MWFMAAX) 2020 WL 1698710, at *13; Hsieh v. FCA US LLC (S.D. Cal., Feb. 20, 2020, No. 19-CV-01691 W (AHG)) 2020 WL 835310, at *3; Zagarian v. BMW of North America, LLC (C.D. Cal., Oct. 23, 2019, No. CV 18-4857-RSWLPLA) 2019 WL 6111731, at *3; Thompson v. BMW of North America, LLC (C.D. Cal., Jan. 10, 2019, No. SACV 17-01912-CJC-KS) 2019 WL 988694, at *5.)

Although Dhital v. Nissan North America, Inc. (2022) 84 Cal.App.5th 828 held otherwise, it has since been placed under review by the Supreme Court. Pending review and filing of the Supreme Court's opinion, unless otherwise ordered by the Supreme Court, a published opinion of a Court of Appeal in the matter has no binding or precedential effect, and may be cited for potentially persuasive value only. (See, Cal. Rules of Ct., rule 3.1115(e)(1).) Because Dhital is not binding, this Cour declines to follow it. 

The demurrer to the fraud claim and negligent repair is sustained.

CONCLUSION

            Defendant’s demurrer to the second and third causes of action are SUSTAINED without leave to amend.

Plaintiff may seek leave to amend the complaint if the Supreme Court upholds the ruling in Dhital.