Judge: Elaine Lu, Case: 22STCV17983, Date: 2023-03-13 Tentative Ruling

Case Number: 22STCV17983    Hearing Date: March 13, 2023    Dept: 26

Superior Court of California

County of Los Angeles

Department 26

Procedural Background

On June 1, 2022, Plaintiff Jennifer Cotone Gossett (“Plaintiff”) filed the instant action against Defendant American Honda Motor Co., Inc. (“Defendant”) arising out of the purchase of a 2018 Honda Odyssey.  On October 18, 2022, Plaintiff filed the operative First Amended Complaint (“FAC”) against Defendant.  The FAC asserts five causes of action for (1) Violation of Civil Code § 1793.2(d); (2) Violation of Civil Code § 1793.2(b); (3) Violation of Civil Code § 1793.2(a)(3); (4) Breach of the Implied Warranty of Merchantability, and (5) Fraudulent Inducement – Concealment.

On November 16, 2022, Defendant filed the instant demurrer and motion to strike portions of the FAC.  On December 22, 2022, Plaintiff filed an opposition to the demurrer and motion to strike.  On March 6, 2023, Defendant filed replies to the oppositions.

Allegations of the Operative Complaint

            The FAC alleges in relevant part:

On January 14, 2018, Plaintiff purchased a 2018 Honda Odyssey (“Subject Vehicle”) that was manufactured and/or distributed by Defendant.  (FAC ¶ 10.)  In purchasing the Subject Vehicle, Plaintiff relied on statements Defendant made regarding the Subject Vehicle through ads and sales representatives.  (FAC ¶¶ 11-12.)  Plaintiff chose to purchase the Subject Vehicle “specifically because of its infotainment system, among others, and because Defendant represented that the Subject Vehicle was technologically advanced, driven, and safe.”  (FAC ¶ 13.)  Defendant never disclosed to Plaintiff any defect with the infotainment system in 2018 Honda Odyssey vehicles.  (FAC ¶¶ 14-15.)

The Subject Vehicle came with various express warranties including the bumper-bumper warranty, powertrain warranty, and emission warranty.  (FAC ¶ 16, Exh. A.)  “Defects and nonconformities to warranty manifested themselves within the applicable express warranty period, including but not limited to, the electrical, transmission, and/or engine systems, among other defects and non-conformities.”  (FAC ¶ 19.)

Legal Standard

Demurrer Standard 

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. (Blank v. Kirwan (1985) 39 Cal 3d 311, 318.) No other extrinsic evidence can be considered (i.e., no “speaking demurrers”). (Ion Equipment Corp. v. Nelson (1980) 110 Cal.App.3d 868, 881.)

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 “give the complaint a reasonable interpretation, and read it in context.”  (Schifando v. City of Los Angeles (2003) 31 Cal.4th 1074, 1081.)  In a demurrer proceeding, the defects must be apparent on the face of the pleading or via proper judicial notice.  (Donabedian v. Mercury Ins. Co. (2004) 116 Cal. App. 4th 968, 994.)  “A demurrer tests the pleadings alone and not the evidence or other extrinsic matters.  Therefor’e, it lies only where the defects appear on the face of the pleading or are judicially noticed.”  (SKF Farms v. Superior Ct. (1984) 153 Cal. App. 3d 902, 905.)  “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.) 

Motion to Strike Standard

Motions to strike are used to reach defects or objections to pleadings that are not challengeable by demurrer (i.e., words, phrases, prayer for damages, etc.).  (See CCP §§ 435-437.)  A party may file a motion to strike in whole or in part within the time allowed to respond to a pleading.  However, if a party serves and files a motion to strike without demurring to the complaint, the time to answer is extended.  (CCP §§ 435(b)(1), 435(c).)

A motion to strike lies only where the pleading has irrelevant, false, or improper matter, or has not been drawn or filed in conformity with laws.  (CCP § 436.)  The grounds for moving to strike must appear on the face of the pleadings or by way of judicial notice.  (CCP § 437.)

Meet and Confer Requirement

Code of Civil Procedure § 430.41, subdivision (a) requires that “[b]efore filing a demurrer pursuant to this chapter, the demurring 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.” The parties are to meet and confer at least five days before the date the responsive pleading is due and if they are unable to meet the demurring party shall be granted an automatic 30-day extension.  (CCP § 430.41(a)(2).)  The demurring party must also file and serve a declaration detailing the meet and confer efforts.  (Id.¿at (a)(3).)¿ If an amended pleading is filed, the parties must meet and confer again before a demurrer may be filed to the amended pleading.  (Id.¿at (a).)  There is a similar meet and confer requirement for motions to strike.  (CCP § 435.5.)

Defendant has fulfilled the meet and confer requirement.  (Chaffin Decl. ¶¶ 2-3, Exh. A.) [1]

Discussion – Demurrer

Fifth Cause of Action: Fraudulent Inducement – Concealment

            Defendant contends that the fifth of action for fraudulent inducement – concealment fails because (1) it is barred by the economic loss rule, and (2) the FAC fails to sufficiently allege fraudulent concealment.

Economic Loss Rule

“[T]he economic loss rule provides: [W]here a purchaser’s expectations in a sale are frustrated because the product he bought is not working properly, his remedy is said to be in contract alone, for he has suffered only ‘economic’ losses.” (Robinson Helicopter Co., Inc. v. Dana Corp. (2004) 34 Cal.4th 979, 988 (Robinson). Accordingly, under these circumstances, the economic loss rule precludes recovery of tort damages for a purely economic harm. However, there are exceptions to the rule:

“Generally, outside the insurance context, ‘a tortious breach of contract . . . may be found when (1) the breach is accompanied by a traditional common law tort, such as fraud or conversion; (2) the means used to breach the contract are tortious, involving deceit or undue coercion; or (3) one party intentionally breaches the contract intending or knowing that such a breach will cause severe, unmitigable harm in the form of mental anguish, personal hardship, or substantial consequential damages.’ [Citation.] (Id. at p. 990 [quoting Erlich v. Menezes (1999) 21 Cal.4th 543,  553–554].)

The court in Robinson noted that the focus on intentional conduct served to preserve the statutory distinction between tort and contract remedies. (Robinson, supra, 34 Cal.4th at p. 990) A tort claim for fraud must be sufficiently independent from a breach of contract claim for which the plaintiff suffered economic loss. (Id. at p. 991). However, “[t]ort damages have been permitted in contract cases where a breach of duty directly causes physical injury [Citation]; for breach of the covenant of good faith and fair dealing in insurance contracts [Citation}; for wrongful discharge in violation of fundamental public policy [Citation]; or where the contract was fraudulently induced. [Citation.] In each of these cases, the duty that gives rise to tort liability is either completely independent of the contract or arises from conduct which is both intentional and intended to harm.” [Erlich v. Menezes (1999) 21 Cal.4th 543, 551–552.) Thus, in order to plead around the economic loss rule, a party must plead (1) the existence of a duty that arises independent of any contractual duty and (2) independent injury, other than economic loss, that arises from the breach of that duty. (Robinson, supra, 34 Cal.4th at pp. 988–991.)

As to an independent duty, fraudulent inducement of the contract is one means by which California law recognizes the existence of a duty independent of the duties imposed by the contract. (See Erlich, supra, 21 Cal.4th at pp. 551–552.) Fraud in the inducement occurs where a party’s assent to a contract is obtained through “conscious misrepresentation, or concealment, or non-disclosure of a material fact which induces the innocent party to enter the contract.” (Odorizzi v. Bloomfield School Dist. (1966) 246 Cal.App.2d 123, 128; see also Civ. Code, § 1572.)

As to an independent injury, “[e]conomic 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, supra, 34 Cal.4th at p. 988 [quoting Jimenez v. Superior Court (2002) 29 Cal.4th 473, 482].) However, where a party is fraudulently induced to a contract, allegations that as a result of the fraudulent inducement the induced party was exposed to potential liability may be sufficiently independent to avoid being barred by the economic loss rule. (See Robinson, supra, 34 Cal.4th at p. 993.)

In Robinson, the plaintiff manufactured helicopters, and defendant manufactured a “sprag clutch,” a helicopter safety mechanism, for plaintiff. (Id. at p. 985.) As an aircraft manufacturer, plaintiff was required to obtain a “type certification” from the Federal Aviation Administration. (Ibid.) This freezes the design as the date it was issued and requires that any aircraft made under that certificate must be produced exactly in accordance with that certificate; any changes must be first submitted and approved by the Federal Aviation Administration. (Ibid.) Pursuant to the type certification that the plaintiff had obtained from the Federal Aviation Administration, the sprag clutch had to be a specific hardness. (Ibid.) For twelve years, the defendant produced the sprag clutches at the required hardness but in July of 1996 changed the process to a higher level of hardness. (Ibid.) However, the defendant continued to provide written certificates to plaintiff with every delivery of the sprag clutch that the clutches had been manufactured in conformance with the plaintiff’s written specifications, which prohibited unapproved changes in the manufacturing process. (Id. at p.986.) This resulted in a significantly higher rate of failure of the sprag clutch. (Ibid.) “Fortunately, these clutch failures did not result in any helicopter accident and there were no incidents of injury or property damage that were caused by any clutch defect or failure, nor did any of the defective clutches cause any damage to other parts of the helicopters in which they had been installed.”  (Ibid.)  However, the plaintiff was ultimately required by the Federal Aviation Administration and its British equivalent to recall and replace all of the faulty clutch assembles, which were made in part by the faulty sprag clutches with the higher hardness.  (Ibid.)

At the trial court, the jury found in favor of the plaintiff for its claim of breach of contract and fraud and awarded punitive damages.  (Id. at p.987.)  The Court Appeal affirmed the breach of contract action but found that the fraud claim was barred by the economic loss rule and reversed the punitive award damages.  (Id. at p.988.)  On certiorari, the Supreme Court disagreed, reversing the Court of Appeal and affirming the trial court and found that the economic loss rule did not bar Plaintiff’s claim for damages.  (Id. at p.994.) The Court concluded that both an independent duty and an independent injury existed.

By issuing false certificates of conformance, [the defendant] unquestionably made affirmative representations that [the plaintiff] justifiably relied on to its detriment. But for [the defendant’s] affirmative misrepresentations by supplying the false certificates of conformance, [the plaintiff] would not have accepted delivery and used the nonconforming clutches over the course of several years, nor would it have incurred the cost of investigating the cause of the faulty clutches. Accordingly, [the defendant’s] tortious conduct was separate from the breach itself, which involved [the defendant’s] provision of the nonconforming clutches. In addition, [the defendant’s] provision of faulty clutches exposed [the plaintiff] to liability for personal damages if a helicopter crashed and to disciplinary action by the FAA. Thus, [the defendant’s] fraud is a tort independent of the breach. (Robinson, 34 Cal.4th at 991 [emphasis added].)

The Supreme Court clarified that “[its] holding [was] narrow in scope and limited to a defendant’s affirmative misrepresentations on which a plaintiff relies and which expose a plaintiff to liability for personal damages independent of the plaintiff’s economic loss.” (Id. at p. 993.)

Here, Defendant alleges that Plaintiff fails on both counts, arguing that Defendant did not make any affirmative misrepresentations and that Plaintiff has not been exposed to personal damages. Defendant notes that “[t]he express language of [Robinson] does not cover omissions . . . absent allegations of the additional, intentional, post-sale acts, a fraud claim fails to meet the first requirement of the Robinson exception.” (Memo p.19:7–9.) However, the Court does not read Robinson to hold that the economic loss rule bars claims for fraudulent inducement in the absence of an affirmative misrepresentation. Robinson did not involve an action for fraudulent inducement but rather a claim for fraud in the performance of the contract, which must be based on affirmative misrepresentations. Robinson expressly stated that fraudulent inducement was a noted exception to the economic loss rule. (Robinson, supra, 34 Cal.4th at pp.989-990, [“Tort damages have been permitted in contract cases where a breach of duty directly causes physical injury [citation]; for breach of the covenant of good faith and fair dealing in insurance contracts [citation]; for wrongful discharge in violation of fundamental public policy [citation]; or where the contract was fraudulently induced. [Citation.]”, [bold added].)  Thus, Robinson created a new exception to the economic loss rule for affirmative misrepresentations made in fraudulent performance of a contract; it did not disturb the precedents on the existing exception for fraudulent inducement. (Robinson, supra, 34 Cal.4th at p. 990-991.)

            More recently, the Court of Appeal expressly concluded that this interpretation of Robinson was correct.  (Dhital v. Nissan North America, Inc. (2022) 84 Cal.App.5th 828, 839 [“the Robinson court affirmed that tort damages are available in contract cases where the contract was fraudulently induced.”].)  Thus, “under California law, the economic loss rule does not bar plaintiffs’ claim here for fraudulent inducement by concealment.”  (Dhital, supra, 84 Cal.App.5th at p.843.)

Binding authority has clearly and unequivocally held that the economic loss rule is inapplicable to fraud in the inducement claims such as the one here.  Accordingly, Defendant’s demurrer to the fifth cause of action for fraudulent inducement – concealment based on the economic loss rule is OVERRULED.

            Sufficiency of the Allegations

            “[T]he elements of an action for fraud and deceit based on concealment are: (1) the defendant must have concealed or suppressed a material fact, (2) the defendant must have been under a duty to disclose the fact to the plaintiff, (3) the defendant must have intentionally concealed or suppressed the fact with the intent to defraud the plaintiff, (4) the plaintiff must have been unaware of the fact and would not have acted as he did if he had known of the concealed or suppressed fact, and (5) as a result of the concealment or suppression of the fact, the plaintiff must have sustained damage.”  (Boschma v. Home Loan Ctr., Inc. (2011) 198 Cal. App. 4th 230, 248, [internal citations omitted].)

Specificity

“Fraud allegations ‘involve a serious attack on character’ and therefore are pleaded with specificity.  [Citation.]  General and conclusory allegations are insufficient.  [Citation.]  The particularity requirement demands that a plaintiff plead facts which ‘‘‘show how, when, where, to whom, and by what means the representations were tendered.’’’  [Citation.]”  (Cansino v. Bank of America (2014) 224 Cal.App.4th 1462, 1469.)  “[E]ach element must be pleaded with specificity.  [Citations.]”  (Daniels v. Select Portfolio Servicing, Inc. (2016) 246 Cal.App.4th 1150, 1166 disapproved of on other grounds by Sheen v. Wells Fargo Bank, N.A. (2022) 12 Cal.5th 905.)  However, “[a]s one court has aptly observed, “it is harder to apply [the requirement of specificity] 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?’ ”  (Jones v. ConocoPhillips Co. (2011) 198 Cal.App.4th 1187, 1199 [citing Alfaro v. Community Housing Improvement System & Planning Assn., Inc. (2009) 171 Cal.App.4th 1356, 1384 and Committee on Children's Television, Inc. v. General Foods Corp. (1983) 35 Cal.3d 197, 217, [“ ‘[e]ven under the strict rules of common law pleading, one of the canons was that less particularity is required when the facts lie more in the knowledge of the opposite party ...’ ”].)

However, when the claim is “based upon numerous misrepresentations, such as an advertising campaign that is alleged to be misleading, plaintiffs need not allege the specific advertisements the individual plaintiffs relied upon; it is sufficient for the plaintiff to provide a representative selection of the advertisements or other statements to indicate the language upon which the implied misrepresentations are based.”  (Morgan v. AT&T Wireless Servs., Inc. (2009) 177 Cal. App. 4th 1235, 1262.) 

Moreover, as to claims of concealment – as in the instant action – less particularity is required as to how, when, where, to whom, and by what means representations were not made.  (Jones v. ConocoPhillips Co., 198 Cal.App.4th at 1199.)  Thus, the failure to include such allegations is not fatal.

Moreover, Plaintiff has alleged concealment with some specificity.  The FAC clearly describes the Infotainment Defect as the infotainment system (e.g., the navigation system, audio system, backup camera, Bluetooth, Apple CarPlay) that malfunctioned and froze or crashed causing any system connected to it to not work.  (FAC ¶¶ 49-54.)  The FAC alleges that Defendant had exclusive knowledge of the infotainment defect due to its internal testing and internal complaint systems.  (FAC ¶¶ 55-72.)  Moreover, the FAC alleges that the Subject Vehicle was affected by the Infotainment Defect.  (FAC ¶ 73.)  The FAC further alleges that Defendant failed to disclose the infotainment defect to Plaintiff prior to her purchase of the Subject Vehicle.  (FAC ¶¶ 11-12.)  Moreover, Plaintiff alleges that one of her primary reasons in purchasing the Subject Vehicle was the infotainment system and that Plaintiff would not have purchased the vehicle had she been informed of said defect.  (FAC ¶¶ 13-15.)  Finally, Plaintiff alleges that this failure to disclose was intentional.  (FAC ¶ 86.)  Thus, the FAC specifically alleges (1) concealment, (3) intentional concealment with the intent to deceive Plaintiff, (4) Plaintiff’s reliance on Defendant’s silence in purchasing, and (5) the harm that Plaintiff suffered from the purchase of the Subject Vehicle, which was affected by the infotainment defect.  Accordingly, the Court turns to the final element – a duty to disclose.

Duty to Disclose Material facts

“In considering a fraudulent concealment claim, ‘[the Court] begin[s] with the threshold question of duty. [Citation.]’  [Citation.]”  (Hoffman v. 162 North Wolfe LLC (2014) 228 Cal.App.4th 1178, 1193.) “[T]o establish fraud through nondisclosure or concealment of facts, it is necessary to show the defendant ‘was under a legal duty to disclose them.’  [Citation.]”  (OCM Principal Opportunities Fund, L.P.  v. CIBC World Markets Corp. (2007) 157 Cal.App.4th 835, 845; see also Los Angeles Memorial Coliseum Com. v. Insomniac, Inc. (2015) 233 Cal.App.4th 803, 831.)

“ ‘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.  [Citation.]’  [Citation.]’  [Citation.]  As the [Court of Appeal has] explained further, other than the first instance, in which there must be a fiduciary relationship between the parties, ‘the other three circumstances in which nondisclosure may be actionable presuppose[ ] the existence of some other relationship between the plaintiff and defendant in which a duty to disclose can arise . . . .  A relationship between the parties is present if there is ‘some sort of transaction between the parties.  [Citations.]  Thus, a duty to disclose may arise from the relationship between seller and buyer, employer and prospective employee, doctor and patient, or parties entering into any kind of contractual agreement.’  [Citations.]”  (Hoffman, supra, 228 Cal.App.4th at 1186-1187.)  “[S]everal cases have rejected fraud claims founded on nondisclosure where there was an absence of a relationship between the plaintiff and the defendant.”  (Id. at 1187.)

            Distinguishing between the duty to warn consumers of a product’s hazards in a product liability claim and the duty to disclose under a fraud claim, the court in Bigler-Engler v. Breg, Inc. (2017) 7 Cal.App.5th 276, explained:

Our Supreme Court has described the necessary relationship giving rise to a duty to disclose as a “transaction” between the plaintiff and defendant: “In transactions which do not involve fiduciary or confidential relations, a cause of action for non-disclosure of material facts may arise in at least three instances: (1) the defendant makes representations but does not disclose facts which materially qualify the facts disclosed, or which render his disclosure likely to mislead; (2) the facts are known or accessible only to defendant, and defendant knows they are not known to or reasonably discoverable by the plaintiff; (3) the defendant actively conceals discovery from the plaintiff.”  [Citation.]  Other cases have described the requisite relationship with the same term. (See, e.g., Hoffman v. 162 North Wolfe LLC (2014) 228 Cal.App.4th 1178, 1187, 175 Cal.Rptr.3d 820 (Hoffman); LiMandri, supra, 52 Cal.App.4th at p. 337, 60 Cal.Rptr.2d 539 [“As a matter of common sense, such a relationship can only come into being as a result of some sort of transaction between the parties.”].)  Such a transaction must necessarily arise from direct dealings between the plaintiff and the defendant; it cannot arise between the defendant and the public at large.

By contrast, as Bigler-Engler points out, other doctrines impose liability even without evidence of a transaction between the plaintiff and the defendant.  Bigler-Engler relies on the general principle that a manufacturer has a duty to warn consumers of a product’s hazards and faults.  [Citations.]  Bigler-Engler argues that this duty applies here as well and the violation of that duty gives rise to a cause of action for fraud under a theory of concealment.  The authorities Bigler-Engler cites, however, involve strict products liability, not fraud.  Bigler-Engler has not provided any reason to apply this duty to the fraud cause of action here, and we are aware of none.  Products liability law involves a set of circumstances, elements, and doctrines that are independent from, and not directly applicable to, fraud.  The duties underlying each cannot simply be applied to the other.  [Citation.]

(Bigler-Engler, supra, 7 Cal.App.5th at pp.311-312, [original italics].)

The Bigler-Engler court further explained that as to the duty to speak that may arise when necessary to clarify misleading “half-truths,” “a duty to disclose arises in this context only where there is already a sufficient relationship or transaction between the parties.  [Citations.]”  (Bigler-Engler, supra, 7 Cal.App.5th at p.312.)  With respect to the manufacturer, the Bigler-Engler court found that “[w]here, as here, a sufficient relationship or transaction does not exist, no duty to disclose arises even when the defendant speaks.  [Citation.]”  (Id.)  Ultimately, the Bigler-Engler court vacated the jury verdict in the plaintiff’s favor because there was no evidence of a relationship between the plaintiff and the manufacturer sufficient to give rise to a duty to disclose.  The manufacturer did not transact with the plaintiff in any way.  The plaintiff had obtained the medical device from her physician’s practice group, based on a prescription written by her physician, all without the manufacturer’s involvement.  (Id. at p.314.)  Finally, there was no evidence that the manufacturer “directly advertised its products to consumers such as” the patient.  (Id. at p.314.)

Pursuant to Bigler-Engler, there must be some transactional relationship between Plaintiff and Defendant, defining the scope of the relationship.  Here, the FAC alleges that Defendant is the manufacturer and/or the distributer of the Subject Vehicle.  (FAC ¶ 10.)  The FAC further alleges that Defendant directly marketed automobiles to consumers, providing a sufficient transactional relationship and distinguishing this case from Bigler.  (FAC ¶¶ 12-13.)

As there is no fiduciary relationship, a duty to disclose may only arise under the three remaining theories – that Defendant had exclusive knowledge of material facts not known to Plaintiffs, that Defendant actively concealed discovery of the facts from Plaintiffs, or that Defendant made partial representations while suppressing some material facts necessary to make the partial representations not misleading.  The court will address the adequacy of each of these theories in turn.

Partial Representations Coupled with Suppression of Material Facts

The duty to disclose may arise “when the defendant makes partial representations but also suppresses some material facts.”  (Hoffman v. 162 North Wolfe LLC (2014) 228 Cal.App.4th 1178, 1186-1187.)  “‘[W]here one does speak he must speak the whole truth to the end that he does not conceal any facts which materially qualify those stated.  [Citation.]  One who is asked for or volunteers information must be truthful, and the telling of a half-truth calculated to deceive is fraud.’’  [Citation.]”  (Bigler-Engler, supra, 7 Cal.App.5th at 312.)  “The duty arises upon the utterances of the half-truths; whether the plaintiff was misled is a question of reliance.  [Citation.]”  (Boeken v. Philip Morris, Inc. (2005) 127 Cal.App.4th 1640, 1660.)  Thus, in order to trigger Defendant’s duty to disclose under this theory, Plaintiffs must allege facts to show that Defendant uttered half-truths prior to Plaintiffs’ purchase of the Subject Vehicle.

In Bigler-Engler, the court found that even viewing the evidence in the light most favorable to the jury’s verdict, the record did not support the jury’s finding that the manufacturer made any statements that were so misleading as to give rise to a fraud cause of action.  (Bigler-Engler, supra, 7 Cal.App.5th at 313.)  In doing so, the court first noted that the manufacturer did not make any statements at all directly to the plaintiffs.  Nor did the plaintiffs receive any statements directly from the manufacturer.  (Id.)  With respect to the manufacturer’s warning label and instructions that accompanied the medical device, the manufacturer had no knowledge that this medical device and its associated outdated warnings and directions had been provided to the plaintiff.  (Id.)  Finally, even assuming that the warnings and directions on the medical device could be considered affirmative statements to the plaintiffs, the Bigler-Engler court found that they were not so misleading as to give rise to a duty to disclose in the absence of an otherwise sufficient relationship or transaction.  (Id.)  Thus, the court concluded that while a reasonable jury could and did find the warnings at issue inadequate for product liability purposes given the manufacturer’s knowledge of the risk, the statements were not “misleading ‘half-truths’” so as to give rise to a duty to disclose in the absence of an otherwise sufficient relationship or transaction.  As noted by the court, “[t]o hold otherwise would unduly conflate two distinct areas of law, products liability and fraud, and transform every instance of inadequate product warning into a potential claim for fraud.”  (Id. at 313-314.)

Here, the FAC fails to specify any representation made by either Defendant.  Because “[t]he duty arises upon the utterances of the half-truths,” (Boeken, supra, 127 Cal.App.4th at p.1660), Defendant had no duty to disclose if there was no utterance of a half-truth to Plaintiffs at or before the time Plaintiffs purchased the Subject Vehicle. 

Active Concealment

            Apart from a conclusory allegation that Defendant “actively” concealed the Infotainment System from Plaintiffs, the FAC is devoid of any factual allegations demonstrating affirmative acts of concealment by Defendant. (See FAC ¶ 73.)  Bare allegations that Defendant actively concealed the Infotainment Defect are plainly insufficient in the absence of any allegation of how Defendant actively concealed the Infotainment Defect. 

Defendant’s Exclusive or Superior Knowledge

As the Court of Appeal explained in Jones v. ConocoPhillips Co. (2011) 198 Cal.App.4th 1187, claims of fraudulent concealment based on exclusive knowledge must be supported by some specific factual allegations. In Jones, the Joneses sued 19 manufacturers of 34 chemical products, alleging each product identified in the complaint contained toxins that were a substantial factor in causing the plaintiff Carlos’s illness and death.  (Jones, supra, 198 Cal.App.4th at 1191.)  The Joneses sought to establish the manufacturers’ duty to disclose based on the theories of exclusive knowledge and partial representation.  In the operative amended complaint, the Joneses alleged that the defendants were “aware of the toxic nature of their products” and “owed a duty to disclose the toxic properties of their products to [the plaintiff] because [they] alone had knowledge of material facts, to wit the toxic properties of their products, which were not available to [the plaintiff].”  (Id. at 1199-1200.)  The amended complaint also alleged that the defendants owed a duty to disclose because they “made representations regarding their products, but failed to disclose additional facts which materially qualify the facts disclosed, and/or which rendered the disclosures made likely to mislead [the plaintiff].”  (Id. at 1200.) 

The Jones court noted that these “conclusory allegations” were supplemented with respect to the single compound, “dimethylformamide (DMF), contained in a Dow Chemical product marketed under the name of Polymide 2080–D/DHV, [and] the amended complaint cite[d] pathology studies identifying the hepatotoxic, nephrotoxic and cardiotoxic effects of DMF.”  (Jones, supra, 198 Cal.App.4th at 1193, 1200.)  Dow Chemical was the only one of the manufacturers in Jones that manufactured Polymide 2080–D/DHV with DMF.  (Id. at 1193, 1200.)  Based on this, the Jones court found that “[a]t a minimum, the amended complaint state[d] a viable claim for fraudulent concealment against Dow Chemical, the manufacturer of the product Polymide 2080–D/DHV, which allegedly contained DMF.”  (Id. at 1200.)  The plaintiffs had alleged that DMF was known to be hazardous as early as 1969, and Dow Chemical concealed the toxic properties of their product.  (Id.)

Turning to the remaining defendants, the Jones court found that it was a closer question whether the allegations in the amended complaint as a whole sufficiently alleged a fraudulent concealment claim against the other defendants.  (Jones, supra, 198 Cal.App.4th at 1200.)  Unlike for Dow Chemical, for whom the conclusory allegations were supplemented with respect to the single compound DMF, the allegations as to the other defendants were more general and did not reference specific studies attesting to the toxicity of the chemicals in the other defendants’ products.  (Id.)  Nonetheless, the Jones court concluded that “the amended complaint [did] provide adequate notice to the remaining defendants of the material facts they allegedly concealed from [the plaintiff]” because “each defendant ha[d] received notice of the particular product it made that was used at the Goodyear and Upjohn plants at which [the plaintiff] worked,” and the amended complaint “further allege[d] these products ‘contained significant concentrations of organic solvents . . . and other toxic chemicals’ and ‘[t]he toxicity of various organic solvents to the liver and kidney ha[d] long been recognized.’”  (Id.)  The Jones court affirmed that “[a]lthough sparse, nothing more [was] required at this early stage of the litigation.”  (Id.)

Here, Plaintiff provides sufficient allegations of Defendant’s superior knowledge of the Infotainment Defect.  As to exclusive knowledge, the FAC alleges that “[Defendant] has long known or should have known of the Honda Vehicles’ infotainment system problems from multiple sources. These sources include pre-release design, manufacturing, and testing data; warranty claims data; consumer complaints made directly to Honda, collected by the National Highway Transportation Safety Administration (‘NHTSA’), and/or posted on public online forums; testing done in response to those complaints; aggregate data and complaints from authorized dealers; and other sources.”  (FAC ¶ 56.)  Further, “Defendant regularly compiles and analyzes detailed warranty service information regarding repairs performed under warranty at its network of dealerships. Indeed, Defendant requires dealers to maintain detailed and meticulous records for any warranty repairs performed and routinely refuses to pay for warranty repairs made where the nature and cause of the malfunction is insufficiently described.”  (FAC ¶ 63.)  “[T]hese dealer service records and warranty data reflect an abnormally large spike in infotainment system failures immediately following the launch of [the 2018 Honda Odyssey and Honda Pilot vehicles].”  (FAC ¶ 64.)  Further, the FAC lists multiple technical service bulletins indicating infotainment system issues in 2018 Honda Odyssey and Honda Pilot vehicles.  (See e.g., FAC ¶ 72.) 

Accordingly, the FAC provides some specificity as to Defendant’s superior knowledge of the Cooling System Defect before Plaintiff’s purchase of the subject vehicle.  Moreover, the FAC alleges that the information was not publicly available because the information which contained most of the critical information are not publicly available and are only available internally.  (FAC ¶ 72.)  While “sparse, nothing more is required at this early stage of the litigation.”  (Jones, supra, 198 Cal.App.4th at 1200.)  Thus, the FAC sufficiently alleges a duty based on Defendant’s exclusive knowledge.

            In sum, Plaintiff alleges the fifth cause of action with sufficient specificity and alleges a duty owed by Defendant.  Accordingly, Defendant’s demurrer to the fifth cause of action based on the sufficiency of the allegations is OVERRULED.

Discussion – Motion to Strike

Defendant moves to strike the prayer for punitive damages.

Punitive Damages

California Civil Code section 3294, subdivision (a), provides: “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.”  “‘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. at (c)(1).) “‘Oppression’ means despicable conduct that subjects a person to cruel and unjust hardship in conscious disregard of that person’s rights.” (Id. at (c)(2).) “‘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.” (Id. at (c)(3).) Punitive damages thus require more than the mere commission of a tort. (See Taylor v. Superior Court (1979) 24 Cal.3d 890, 894-95.)

Moreover, a demand for punitive damages for the commission of any tort requires more than the mere conclusory allegations of “oppression, fraud, and malice.”  (Civ. Code § 3294; see Perkins v. Superior Court (1981) 117 Cal. App.3d 1, 6-7.)

Here, as the FAC sufficiently alleges fraud, there is a sufficient basis for punitive damages.  Accordingly, Defendant’s motion to strike the prayer for punitive damages is DENIED.

CONCLUSION AND ORDER

Based on the foregoing, Defendant American Honda Motor Co., Inc.’s demurrer to the First Amended Complaint is OVERRULED. 

Defendant American Honda Motor Co., Inc.’s motion to strike is DENIED.

Defendant American Honda Motor Co., Inc. is to file an answer to the First Amended Complaint within fifteen (15) days of notice of this order.

The case management conference is continued to April 12, 2023 at 8:30 am.

            Moving Party is to give notice and file proof of service of such.

DATED:  March 13, 2023                                                      ___________________________

Elaine Lu

                                                                                          Judge of the Superior Court