Superior Court of California 

County of Los Angeles – West District  

Beverly Hills Courthouse / Department 205 

 

 

MOVING PARTY: Defendant Santa Monica CDJR, Inc. 

 

RESPONDING PARTY: Plaintiff Olivia Scott 

 

BACKGROUND 

This action arises from the sale of a 2019 Jeep Cherokee.  Plaintiff bought a 2019 Jeep Cherokee with 12 miles on the odometer from Defendant Santa Monica CDJR, Inc. (“CDJR”).  (Compl. ¶¶1, 9.)  Plaintiff alleges the car was advertised as new with a new-car factory warranty.  (Id. ¶9.)  After purchase, Plaintiff contends the car was actually used and the new-car factory warranty would expire sooner because it was previously owned.  (Id. ¶¶ 13-16.)   

Plaintiff sued CDJR and its surety, Sentry Select Insurance Company (“Sentry”).  The operative complaint alleges claims for (1) violation of the Consumers Legal Remedies Act (“CLRA”), (2) intentional misrepresentation, (3) concealment, (4) negligent misrepresentation, (5) breach of the implied warranty of merchantability, (6) violation of the Unfair Competition Law (“UCL”) and (7) violation of Vehicle Code § 1171.  The first to sixth causes of action are alleged against CDJR while the seventh cause of action is alleged against Sentry.     

This hearing is on CDJR’s demurrer and motion to strike.  Defendant demurs to the (1) fraud, concealment and negligent misrepresentation claims on the ground that Plaintiff has failed to allege the claims with particularity, (2) breach of implied warranty of merchantability claim on the ground that the labeling of the car as “new” is not a defect that would impact the drivability of the car, and (3) fraud, concealment, negligent misrepresentation, breach of implied warranty of merchantability and UCL claims on the ground they are duplicative of the first cause of action for violation of the CLRA.  Defendant also moves to strike Plaintiff’s claim for punitive damages on the ground Plaintiff has not alleged malice, oppression or fraud.   

LEGAL STANDARD 

“[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 Ins. 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 Hosp. Dist. (1992) 2 Cal.4th 962, 967.)  

Further, the court may, upon motion, or at any time in its discretion, and upon terms it deems proper, strike any irrelevant, false, or improper matter inserted in any pleading.  (Code Civ. Proc., § 436, subd. (a).)  The court may also strike 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. (Code Civ. Proc., § 436, subd. (b).)  The grounds for a motion to strike are that the pleading has irrelevant, false, or improper matter, or has not been drawn or filed in conformity with laws.  (Code Civ. Proc., § 436.)  The grounds for moving to strike must appear on the face of the pleading or by way of judicial notice. (Code Civ. Proc., § 437.) 

Leave to amend must be allowed where there is a reasonable possibility of successful amendment. (See Goodman v. Kennedy (1976) 18 Cal.3d 335, 349 (court shall not “sustain a demurrer without leave to amend if there is any reasonable possibility that the defect can be cured by amendment”); Kong v. City of Hawaiian Gardens Redevelopment Agency (2002) 108 Cal.App.4th 1028, 1037 (“A demurrer should not be sustained without leave to amend if the complaint, liberally construed, can state a cause of action under any theory or if there is a reasonable possibility the defect can be cured by amendment.”); Vaccaro v. Kaiman (1998) 63 Cal.App.4th 761, 768 (“When the defect which justifies striking a complaint is capable of cure, the court should allow leave to amend.”).)  The burden is on the complainant to show the Court that a pleading can be amended successfully. (Blank v. Kirwan (1985) 39 Cal.3d 311, 318.) 

MEET AND CONFER 

Code Civ. Proc. §§ 430.41 and 435.5 requires that before the filing of a demurrer or motion to strike, the moving party “shall meet and confer in person or by telephone with the party who filed the pleading that is subject to demurrer for the purpose of determining whether an agreement can be reached that would resolve the objections to be raised in the demurrer.” (CCP §§ 430.41(a), 435.5(a).)  The parties are to meet and confer at least five days before the date the responsive pleading is due. (CCP §§ 430.41(a)(2), 435.5(a)(2).)  Thereafter, the moving party shall file and serve a declaration detailing their meet and confer efforts. (CCP §§  430.41(a)(3), 435.5(a)(3).)  Defendant submits the Declaration of Steven J. Pearse, which adequately shows counsel attempted to meet and confer prior to bringing this demurrer and motion to strike. 

DISCUSSION 

Fraud, Concealment, Negligent Misrepresentation 

CDJR argues that Plaintiff has failed to plead fraud, concealment and negligent misrepresentation with particularity.  The Court agrees.  

The elements of fraud are (1) misrepresentation (false representation, concealment or nondisclosure), (2) scienter or knowledge of its falsity, (3) intent to induce reliance, (4) justifiable reliance and (5) resulting damage.  (Hinesley v. Oakshade Town Ctr (2005) 135 Cal.App.4th 289, 294.)  The facts constituting the alleged fraud must be alleged specifically as to every element of the fraud.  (Lazar v. Superior Court (1996) 12 Cal.4th 631, 645.)  Moreover, to properly allege fraud against a corporation, a plaintiff must plead the names of the persons allegedly making the false representation, their authority to speak, to whom they spoke, what they said and wrote, and when it was said or written.  (Tarmann v. State Farm Mut. Auto Ins. Co. (1991) 2 Cal.App.4th 153, 157.)   

“The elements of negligent misrepresentation are the same [as the elements of fraud] except for the second element [of scienter], which for negligent misrepresentation is whether the defendant made the representation without reasonable ground for believing it to be true.” 
(West v. JPMorgan Chase Bank, N.A. (2013) 214 Cal.App.4th 780, 792.)  The requirement of¿particularity which applies to a cause of action for fraud, similarly applies to a cause of action for¿negligent misrepresentation.  (Id. at 793-794¿(applying the¿particularity pleading requirement to a cause of action for¿negligent misrepresentation); National Union Fire Ins. Co. Of Pittsburgh, PA v. Cambridge Integrated Services Group, Inc. (2009) 171 Cal.App.4th 35, 50¿(stating that the¿particularity pleading requirement applies to causes of action for¿negligent misrepresentation).)  

Here, Plaintiff has alleged CDJR misrepresented the car’s status as new, misrepresented the terms of the warranty, and misrepresented that there was no prior owner.  (Compl. ¶¶ 33, 59.)  However, Plaintiff has not alleged who made the misrepresentations, their authority to speak, and when they made the alleged misrepresentations.  Accordingly, the claims for fraud, concealment and negligent misrepresentation are not plead with particularity and are subject to demurrer.     

 

Breach of Implied Warranty of Merchantability        

CDRJ argues that Plaintiff has not stated a claim for breach of the implied warranty of merchantability because the mislabeling of the car as new is not a defect and thus the fitness and merchantability of the car are not at issue.  The Court agrees. 

¿“There exists in every contract for the sale of goods by a merchant a warranty that the goods shall be merchantable. The core test of merchantability is fitness for the ordinary purpose for which such goods are used.” (Atkinson v. Elk Corporation of Texas¿(2006) 142 Cal.App.4th 212, 228; see also¿Hauter v. Zogarts¿(1975) 14 Cal.3d 104, 117–118.)  Here, the purported breach is the mislabeling of the car as “new” instead of “used.”  Such is not a defect that would render the car unfit for its intended use.  There is nothing plead regarding any defect with the operation of the car.  Accordingly, the Court sustains the demurrer to the breach of implied warranty of merchantability claim.           

Duplicative Claims  

CDJR argues that Plaintiff’s second to sixth causes of action are duplicative of the first cause of action for violation of the CLRA.  The Court disagrees. 

Plaintiff is entitled to plead different causes of action based on the same core set of facts.  Plaintiff also seeks different relief under each cause of action.  For example, Plaintiff is entitled to punitive damages for her fraud and concealment claims, whereas these damages are not available for her other claims.     

 

 

Motion to Strike 

CDJR moves to strike Plaintiff’s claim for punitive damages.  “In order to survive a motion to strike an allegation of punitive damages, the ultimate facts showing an entitlement to such relief must be pled by a plaintiff.”¿ (Clauson v. Superior Court (1998) 67 Cal.App.4th 1253, 1255.)¿ “The mere allegation an intentional tort was committed is not sufficient to warrant an award of punitive damages.¿ Not only must there be circumstances of oppression, fraud or malice, but facts must be alleged in the pleading to support such a claim.”¿ (Grieves v. Superior Court (1984) 157 Cal.App.3d 159, 166 (citations omitted).)¿ Allegations that merely plead the statutory phraseology are wholly insufficient to state a basis for recovery of punitive damages.¿ (Smith v. Superior Court (1992) 10 Cal.App.4th 1033, 1041.)¿ Conclusory characterizations of defendant’s conduct as willful, intentional or fraudulent is a patently insufficient statement of the necessary factual grounds for punitive damages.¿ (Brousseau v. Jarrett (1977) 73 Cal.App.3d 864, 872.)¿¿¿¿¿ 

Cal. Civ. Code section 3294 provides the basis upon which punitive damages can be recovered.¿ Punitive damages may only be sought where there is clear and convincing evidence that the defendant has been guilty of malice, oppression or fraud:¿ 

(c)(1) “Malice” means conduct which is intended 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.¿ 

 

(c)(2) “Oppression” means despicable conduct that subjects a person to cruel and unjust hardship in conscious disregard of that person’s rights.¿ 

 

(c)(3) “Fraud” means an 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.¿¿ 

 

(Civ. Code §3294.)¿ 

Section 3294 was amended in 1987 to increase the burden of proof required in order to allege a punitive damages claim as well as to raise the level of misconduct necessary for an award of punitive damages.¿ The California Supreme Court has ruled that the insertion of the word “despicable” in section 3294 created a “new substantive limitation on punitive damage awards.”¿ (College Hospital Inc. v. Superior Court (1994) 8 Cal.4th 704, 725.)¿ “Despicable” means conduct that is “so vile, contemptible, miserable, wretched or loathsome that it would be looked down upon and despised by ordinary decent people.”¿ (Scott v. Phoenix Schools, Inc. (2009) 175 Cal.App.4th 702, 715.)¿ “Such conduct has been described as having the character of outrage frequently associated with [a] crime.”¿ (Id.)¿ 

Punitive damages are disfavored by public policy and are allowed only under the most extreme circumstances and in the “clearest of cases.”¿ (Woolstrum v. Mailloux (1983) 141 Cal.App.3d Supp. 1, 9.)¿ “To contain the generosity and emotionality of juries, appellate courts have set the threshold high in defining situations in which punitive damages can be given.¿ Conduct which may be characterized as unreasonable, negligent, grossly negligent or reckless does not satisfy the highly culpable state of mind warranting punitive damages.¿ Conduct which warrants punitive damages must be of such severity or shocking character [as] warrants the same treatment as accorded willful misconduct – conduct in which defendant intends to cause harm.”¿ (Id. at 10 (internal quotations and citations omitted).)¿¿ 

Here, while Plaintiff alleges fraud, she has not alleged the additional requirements to seek punitive damages against a corporate defendant.¿ When seeking punitive damages against a corporation like CDJR, the plaintiff must allege “advance knowledge and conscious disregard, authorization, ratification or act of oppression, fraud or malice … on the part of an officer, director or managing agent of the corporation.”¿ Civ. Code §3294.¿ Plaintiff has not made these allegations.¿ Plaintiff has not identified any officer, director or managing agent of the corporation who engaged in the wrongful conduct or who had “advance knowledge” and/or authorized or ratified the alleged wrongdoing.¿¿¿¿¿¿ 

Further, the acts alleged here do not rise to the level of malice, oppression or fraud.  Plaintiff bought a car with 12 miles on the odometer, which she claims was falsely advertised as new when in fact it was old.  This alleged misrepresentation, even if true, does not rise to the level of conduct “having the character of outrage frequently associated with a crime.”  (Scott, 175 Cal.App.4th at 715.)¿    

Accordingly, the Court grants the motion to strike Plaintiff’s punitive damages claim.¿¿¿ 

CONCLUSION 

Based on the foregoing, the Court SUSTAINS IN PART and OVERRULES IN PART Defendant’s demurrer.  The Court sustains the demurrer as to the second, third and fourth causes of action with 20 days’ leave to amend, and sustains the demurrer as to the fifth cause of action without leave to amend.  The Court GRANTS Defendant’s motion to strike without leave to amend.      

 

IT IS SO ORDERED. 

 

DATED: October 20, 2023 ___________________________ 

Edward B. Moreton, Jr. 

Judge of the Superior Court