Judge: Daniel S. Murphy, Case: 24STCV34809, Date: 2025-03-17 Tentative Ruling

Case Number: 24STCV34809    Hearing Date: March 17, 2025    Dept: 32

BACKGROUND

            On December 31, 2024, Plaintiff David Cottrell filed this lemon law action against Defendant Kia America, Inc. (Kia), alleging breach of warranty in violation of the Song-Beverly Act and fraud by concealment.  Plaintiff alleges that he purchased a 2022 Kia Carnival (Vehicle) which contained or developed defects. 

            On February 13, 2024, Defendant filed the instant demurrer as to the fifth cause of action for fraudulent concealment, and motion to strike punitive damages. 

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.

In this case, Plaintiff has not alleged that he 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.  For this reason, Plaintiff’s fraudulent concealment claim is barred by the economic loss rule. 

Our California Supreme Court supports this result.  In Rattagan v. Uber (2024) 17 Cal.5^th 1, our California Supreme Court ruled that a plaintiff may assert a cause of action for fraudulent concealment based on conduct occurring in the course of a contractual relationship, if the elements of the claim can be established independently of the parties' contractual rights and obligations and the tortious conduct exposes the plaintiff to a risk of harm beyond the reasonable contemplation of the parties when they entered into the contract.

The weight of authority within the Ninth Circuit also 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.)

II. Punitive Damages

            A plaintiff may not recover statutory penalties and punitive damages for the same conduct, because that would amount to a double recovery. (Anderson v. Ford Motor Co. (2022) 74 Cal.App.5th 946, 970-71.) While a plaintiff may recover punitive damages for conduct that is distinct from the statutory violation, such as fraud, Plaintiff has not asserted a valid fraud claim. The Song-Beverly Act itself does not provide for punitive damages, only penalties. (See Imperial Merchant Services, Inc. v. Hunt (2009) 47 Cal.4th 381, 390 [“the fact that the Legislature expressly designated specific damage remedies while omitting others . . . reflects that it intended the prescribed remedies to be exclusive”]; Troensegaard v. Silvercrest Industries, Inc. (1985) 175 Cal.App.3d 218, 228 [“had the Legislature, by Civil Code sections 3294 (permitting punitive damages) and 1794 (permitting a civil penalty), intended a double recovery of punitive and penal damages for the same willful, oppressive, malicious, and oppressive acts, it would in some appropriate manner have said so”].) Therefore, punitive damages are stricken.

CONCLUSION

            Defendant’s demurrer to the fifth cause of action for fraud by concealment is SUSTAINED without leave to amend. Defendant’s motion to strike is GRANTED as to punitive damages without leave to amend.   

            Defendant shall file an answer to the complaint within 20 days of this order.