Judge: Daniel S. Murphy, Case: 25STCV04888, Date: 2025-06-09 Tentative Ruling

Case Number: 25STCV04888    Hearing Date: June 9, 2025    Dept: 32

BACKGROUND

            On February 21, 2025, Plaintiff Makaila Latrice Arguello filed this “lemon law” action against Defendants FCA US, LLC and Los Angeles Chrysler Dodge Jeep Ram. The complaint asserts causes of action for violations of the Song-Beverly Act, negligent repair, and fraudulent concealment.

            On May 12, 2025, Defendant FCA US, LLC filed the instant demurrer and motion to strike. Plaintiff filed an opposition on May 27, 2025. Defendant filed a reply on June 2, 2025.

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 finds that Defendant has satisfied the meet and confer requirement. (See Kalland Decl.)

DISCUSSION

I. Demurrer

            a. Elements

“The elements of fraud that will give rise to a tort action for deceit are: ‘(a) misrepresentation (false representation, concealment, or nondisclosure); (b) knowledge of falsity (or ‘scienter’); (c) intent to defraud, i.e., to induce reliance; (d) justifiable reliance; and (e) resulting damage.’” (Engalla v. Permanente Medical Group, Inc. (1997) 15 Cal.4th 951, 974, quoting Lazar v. Superior Court (1996) 12 Cal.4th 631, 638.)

Here, Plaintiff alleges that Defendant sold the subject vehicle to Plaintiff without disclosing the defects with the vehicle’s 2.4L engine, which include loss of power, stalling, and misfiring. (Compl. ¶ 65.) These defects can allegedly lead to sudden loss of control or fire. (Ibid.) Defendant allegedly knew of these defects prior to selling the vehicle to Plaintiff. (Id., ¶¶ 66-67.) Plaintiff alleges that she would not have purchased the vehicle had she known of these defects. (Id., ¶¶ 69-70.) These allegations satisfy the elements of fraudulent concealment.

b. Specificity

Defendant argues that the complaint fails to allege fraud with specificity. However, the rule of specificity “is intended to apply to affirmative misrepresentations.” (Alfaro v. Community Housing Improvement System & Planning Assn., Inc. (2009) 171 Cal.App.4th 1356, 1384.) “[I]t is harder to apply this rule to a case of simple nondisclosure. How does one show ‘how’ and ‘by what means’ something didn't happen, or ‘when’ it never happened, or ‘where’ it never happened?” (Ibid.) “Less specificity should be required of fraud claims when it appears from the nature of the allegations that the defendant must necessarily possess full information concerning the facts of the controversy.” (Ibid.)

Defendant argues that Plaintiff fails to allege any specific statement by Defendant. But the fraud claim is based on concealment, i.e., the failure to speak. Thus, the lack of a statement is not fatal to the claim. Defendant also argues that Plaintiff fails to allege any defect with the specific engine in the subject vehicle. However, Plaintiff alleges that vehicles equipped with the 2.4L engine, including the subject vehicle, suffer from the abovementioned defects. (Compl. ¶ 16.) Plaintiff also alleges that “[d]efects and nonconformities to warranty manifested themselves within the applicable express warranty period, including but not limited to, engine defects . . . .” (Id., ¶ 12.) These constitute allegations that the subject vehicle suffered from engine defects. Thus, the complaint alleges fraud with the requisite specificity.

c. Duty to Disclose

“To state a cause of action for fraudulent concealment, the defendant must have been under a duty to disclose some fact to the plaintiff.” (Hahn, supra, 147 Cal.App.4th at p. 745.) “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.” (Bigler-Engler v. Breg, Inc. (2017) 7 Cal.App.5th 276, 311, internal citations omitted.) In the absence of a fiduciary relationship, the latter three circumstances still “presuppose the existence of some other relationship between the plaintiff and defendant.” (Ibid.) “[S]uch a relationship can only come into being as a result of some sort of transaction between the parties . . . from direct dealings between the plaintiff and the defendant; it cannot arise between the defendant and the public at large.” (Id. at pp. 311-312.)

“[A] vendor has a duty to disclose material facts not only to immediate purchasers, but also to subsequent purchasers when the vendor has reason to expect that the item will be resold.” (OCM Principal Opportunities Fund, L.P. v. CIBC World Markets Corp. (2007) 157 Cal.App.4th 835, 859.) As a vehicle manufacturer, Defendant knows that its vehicles are sold by dealerships to consumers, and cannot escape the duty to disclose simply because it did not directly sell the vehicle to Plaintiff. Additionally, the complaint alleges that Plaintiff and Defendant entered into a warranty contract. (Compl. ¶ 7.) Defendant’s own reply acknowledges that “examples of relationship that give rise to a duty to disclose include . . . parties entering into any kind of contractual arrangement.” (Reply 4:12-14.) Thus, Plaintiff has sufficiently alleged a transactional relationship giving rise to a duty to disclose.

The complaint otherwise alleges that Defendant had exclusive knowledge of the engine defects through internal information not available to consumers, such as testing data, consumer complaints, warranty data, and repair data. (Compl. ¶ 67.) The complaint alleges that Defendant actively concealed this information. (Id., ¶ 68.) This satisfies the conditions for imposing a duty to disclose. (See Bigler-Engler, supra, 7 Cal.App.5th at p. 311.) Defendant argues that the data refers to other vehicles, not the subject vehicle. This is a matter of proof beyond the purview of a demurrer. For pleading purposes, it may be reasonably inferred that the referenced data put Defendant on notice of defects in all vehicles with the 2.4L engine, including the subject vehicle.       

In sum, the fraudulent concealment claim does not fail for the reasons stated in the demurrer.

II. Motion to Strike

            a. Punitive Damages

            “In an action for the breach of an obligation not arising from contract, where it is proven by clear and convincing evidence that the defendant has been guilty of oppression, fraud, or malice, the plaintiff, in addition to the actual damages, may recover damages for the sake of example and by way of punishing the defendant.” (Civ. Code, § 3294(a).) “‘Malice’ means conduct which is intended by the defendant to cause injury to the plaintiff or despicable conduct which is carried on by the defendant with a willful and conscious disregard of the rights or safety of others.” (Id., subd. (c)(1).) “‘Oppression’ means despicable conduct that subjects a person to cruel and unjust hardship in conscious disregard of that person’s rights.” (Id., subd. (c)(2).) Fraud is “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.” (Id., subd. (c)(3).)

            As discussed above, Plaintiff has adequately pled fraudulent concealment. Fraud is an independent basis for punitive damages. Additionally, knowingly distributing a vehicle with dangerous engine defects may be considered a conscious disregard of Plaintiff’s rights and safety, as well as imposing unjust hardship.

            Defendant also argues that the complaint fails to allege corporate ratification. (See Civ. Code, § 3294(b).) However, this is a matter of proof, not pleading. At the pleading stage, Plaintiff cannot be expected to know the identity of Defendant’s corporate managing agents or their precise role in the alleged misconduct. For pleading purposes, it may be reasonably inferred that the alleged misconduct was ratified by an officer or managing agent.     

In sum, the complaint adequately pleads a basis for punitive damages.

            b. Other Allegations

            Defendant seeks to strike paragraph 67 of the complaint for referencing unrelated vehicles. However, paragraph 67 explains how Defendant has knowledge of the alleged defects in its 2.4L engine, including the one in the subject vehicle. Defendant had exclusive knowledge of the engine defects through internal information not available to consumers, such as testing data, consumer complaints, warranty data, and repair data. (Compl. ¶ 67.) Thus, paragraph 67 consists of relevant contextual information and is properly included in the complaint.    

CONCLUSION

            Defendant’s demurrer is OVERRULED. The motion to strike is DENIED.