Judge: Elaine Lu, Case: 23STCV19135, Date: 2024-02-16 Tentative Ruling
Case Number: 23STCV19135 Hearing Date: February 16, 2024 Dept: 26
|
WILLIAM LEMKE, Plaintiff, vs. general motors llc; et al., Defendants. |
Case No.: 23STCV19135 Hearing Date: February 16, 2024 [TENTATIVE] order RE: DEFENDANT’S Demurrer and motion to
strike portions of THE complaint |
Procedural
Background
On August
10, 2023, Plaintiff William Lemke (“Plaintiff”) filed the instant action
against Defendant General Motors LLC (“Defendant”) arising out of the lease of
a 2020 Chevrolet Bolt EV. The Complaint
asserts six causes of action for (1) Fraudulent Concealment and
Misrepresentation, (2) Negligent Misrepresentation, (3) violation of Business
& Professions Code § 17200, (4) Song-Beverly Consumer Warranty Act – Breach
of Express Warranty, (5) Song-Beverly Consumer Warranty Act – Breach of Implied
Warranty, and (6) Song-Beverly Consumer Warranty Act – Civil Code § 1793.2(b).
On September 14, 2023, Defendant filed the instant
demurrer and motion to strike portions of the complaint. On February 1, 2024, Plaintiff filed an
opposition to the demurrer and motion to strike. On February 7, 2024, Defendant filed its
respective replies. On February 9, 2024,
the Court continued the instant motion to February 16, 2024.
Allegations of the Operative Complaint
The
complaint alleges in relevant part:
“On or about
December 30, 2020, Plaintiff travelled to Martin Chevrolet in Torrance,
California to acquire a safe and reliable electric vehicle that would be able
to go at least 250 miles per charge and that did not have any defects with its
battery. When Plaintiff arrived at the dealership, he met with the salesperson
and asked him to show him a 2020 Chevrolet Bolt EV because he had researched
the Vehicle and it seemed like a good fit for his specific needs and that it
was not subject to any battery recalls or known defects. The salesperson spoke
to Plaintiff about the Vehicle, how far it could drive on a single charge, and
all of its features. He also assured Plaintiff that there were no problems with
the battery in the 2020 Chevrolet Bolts. Due to the lack of extensive EV
infrastructure and Plaintiff’s driving needs, it was vitally important to
Plaintiff that the Vehicle could go at least 250 miles on a single charge. Once
Plaintiff was satisfied by the representations made by the salesperson and by
Defendant Manufacturer through its advertisements and publications that the
Vehicle’s range on a single charge was 259 miles and that there were no
problems with the vehicle’s battery, he decided to lease the Vehicle. Plaintiff
executed the lease on December 30, 2020.”
(Complaint ¶ 8.)
“All owners and
lessees of 2020 General Motors vehicles receive multiple express warranties
directly from [Defendant] for periods of up to 8 years or 100,000 miles.” (Id. ¶ 9.) “The Vehicle was delivered to Plaintiff with
serious defects and nonconformities to warranty and developed other serious
defects and nonconformities to warranty including, but not limited to the EV
battery module, potential high voltage battery fire, front seatbelt
pretensioner, and other defects.” (Id.
¶ 10.)
“Unbeknownst to
Plaintiff, the battery that [Defendant] installed in the Vehicle can start a
fire and this resulted in [Defendant] issuing numerous recalls, reducing the
charge capacity, reducing the distance the vehicle can be driven on a single
charge, and Manufacturer advising owners of the Vehicle not to charge the
Vehicle in their garages due to the risk of fire.” (Id. ¶ 11.) “Plaintiff never would have leased the
Vehicle had he been advised that he could not drive 259 miles on a single
charge, or had he been advised that the Vehicle could catch on fire and burn
down his home.” (Id. ¶ 12.)
Defendant had
been aware of the defective batteries in Chevrolet Bolt vehicles as early as
2017 due to various system updates, claims from consumers, and recalls in 2018,
2020, 2021, and 2022. (Id. ¶¶ 13-23.) “To date, despite Plaintiff’s repeated
presentations of the Vehicle to [Defendant]’s authorized repair facilities,
[Defendant] has been unable to conform the Vehicle to its express warranties
and it remains in a defective condition.”
(Id. ¶ 24.)
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.
Therefore, 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.
(Yaraghchian Decl. ¶ 2.)
Discussion
– Demurrer
First
Cause of Action: Fraudulent Concealment and Misrepresentation
Defendant contends that the first
cause of action for fraudulent concealment and misrepresentation fails because
(1) Plaintiff fails to identify any affirmative misrepresentation by Defendant,
and (2) Plaintiff fails to sufficiently allege concealment.
As an initial matter, the Court
finds that Plaintiff has improperly combined two distinct claims – fraudulent
misrepresentation and fraudulent concealment – in one cause of action. The two are distinct and include distinct
elements. The Court will address each in
turn.
Fraudulent Misrepresentations
“The elements of fraud are (a) a
misrepresentation (false representation, concealment, or nondisclosure); (b)
scienter or knowledge of its falsity; (c) intent to induce reliance; (d)
justifiable reliance; and (e) resulting damage.” (Hinesley v. Oakshade Town Center
(2005) 135 Cal.App.4th 289, 294.)
“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.) Moreover,
“[e]ach element of a fraud count must be pleaded with particularity so as to
apprise the defendant of the specific grounds for the charge and enable the
court to determine whether there is any basis for the cause of action[.]” (Chapman v. Skype Inc. (2013) 220
Cal.App.4th 217, 231.)
Here, the complaint alleges that “[o]n
or about December 30, 2020, Plaintiff travelled to Martin Chevrolet in
Torrance, California to acquire a safe and reliable electric vehicle that would
be able to go at least 250 miles per charge and that did not have any defects
with its battery. When Plaintiff arrived at the dealership, he met with the
salesperson and asked him to show him a 2020 Chevrolet Bolt EV because he had
researched the Vehicle and it seemed like a good fit for his specific needs and
that it was not subject to any battery recalls or known defects. The
salesperson spoke to Plaintiff about the Vehicle, how far it could drive on a
single charge, and all of its features. He also assured Plaintiff that there
were no problems with the battery in the 2020 Chevrolet Bolts. Due to the lack
of extensive EV infrastructure and Plaintiff’s driving needs, it was vitally
important to Plaintiff that the Vehicle could go at least 250 miles on a single
charge. Once Plaintiff was satisfied by the representations made by the salesperson
and by Defendant Manufacturer through its advertisements and publications that
the Vehicle’s range on a single charge was 259 miles and that there were no
problems with the vehicle’s battery, he decided to lease the Vehicle. Plaintiff
executed the lease on December 30, 2020.”
(Complaint ¶ 8.) This allegation
is insufficient to state a claim for fraud based on affirmative
misrepresentations.
There is no allegation as to the
unidentified salesperson’s relationship with Defendant such that Defendant
would be liable and responsible for said salesperson's misrepresentations to
Plaintiff. As set forth in the
complaint, the unidentified salesperson appears to have worked for Martin
Chevrolet. Thus, the complaint fails to
set forth any basis that any statement by the unidentified salesperson should
be attributed to Defendant.
Rather, the only specific allegation of an
affirmative misrepresentation by Defendant is that Defendant had made “advertisements
and publications that the Vehicle’s range on a single charge was 259 miles and
that there were no problems with the vehicle’s battery[.]” (Complaint ¶ 8.) These allegations of the complaint imply that
Plaintiff may have relied on numerous advertisements in purchasing the Vehicle. However, there is no indication which
advertisements or publications Plaintiff read.
The specificity requirement for fraud requires more than a general
reference to unidentified advertisements.
As the Court of Appeal has explained, 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, [bold and italics added].) Here, Plaintiff has failed to provide any
representative selection of the advertisements or statements to support the intentional
misrepresentation claim. Thus,
Plaintiff’s claim for fraud based on affirmative misrepresentations is not pled
with the required specificity.
In sum,
Plaintiff alleges the fraudulent misrepresentation claim with sufficient
specificity. To the extent that the first cause of action asserts a fraudulent misrepresentation
claim, Defendant’s demurrer to the first cause of action is SUSTAINED.
Fraudulent
Concealment
“[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.)
As a fraud claim, fraudulent
concealment must also be pled with specificity.
(Ibid.) 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 ...’ ”].)
Here,
apart from the element of duty to disclose, the Complaint alleges all elements of
a fraudulent concealment claim with sufficient specificity. The Complaint clearly describes that the 2020
Chevrolet Bolt EV was presented as having a 259-mile charge range and that
there were no problems with the vehicle’s battery. (Complaint ¶ 8.) However, the EV battery in Plaintiff’s
vehicle in fact had defects. (Id.
¶ 10.) Moreover, the 2020 Chevrolet Bolt
EV’s battery could potentially cause houses to catch on fire, and recalls
caused a reduction of the 259-mile range of the battery. (Id. ¶ 11.) The Complaint further alleges that due to its
internal testing and internal complaint systems, Defendant had exclusive
knowledge of a defect in the Subject Vehicle’s infotainment system. (Id ¶¶ 13-23.) Defendant failed to disclose the infotainment
defect to Plaintiff prior to his purchase of the Subject Vehicle. (Id. ¶ 31.) Moreover, Plaintiff alleges that one of his primary
reasons in purchasing the Subject Vehicle was the infotainment system and that
Plaintiff would not have purchased the vehicle had he been informed of said
defect. (Id. ¶ 12.) Finally, Plaintiff alleges that Defendant’s
failure to disclose this defect was intentional. (Id. ¶ 31.) Thus, the FAC specifically alleges (1)
concealment, (3) intentional concealment with the intent to deceive Plaintiff,
(4) Plaintiff’s reliance on Defendant’s non-disclosure in leasing the Subject
Vehicle, and (5) harm, specifically, Plaintiff’s 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 complaint
alleges that Defendant is the manufacturer and/or the distributor of the
Subject Vehicle. (Complaint ¶ 7.) The complaint further alleges that Defendant
directly marketed automobiles to consumers, providing a sufficient
transactional relationship and distinguishing this case from Bigler. (Id. ¶ 8.)
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 Plaintiff, that Defendant actively concealed discovery of the
facts from Plaintiff, or that Defendant made partial representations while suppressing
some material facts necessary to make the partial representations not
misleading. The Court addresses 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.) In order to trigger Defendant’s duty to
disclose under this theory, Plaintiff must allege facts to show that Defendant
uttered half-truths prior to Plaintiff’s 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 the court noted, “[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 – as discussed above – the complaint
fails to specify any affirmative representation Defendant made. 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 Plaintiff at or before the time
Plaintiff purchased the Subject Vehicle.
Active
Concealment
Apart
from a conclusory allegation that Defendant “actively” concealed the Infotainment
System from Plaintiff, the FAC is devoid of any factual allegations
demonstrating affirmative acts of concealment by Defendant. (See
Complaint ¶ 35.) A bare allegation that
Defendant actively concealed the defect with the battery
in Chevrolet Bolt vehicles is plainly insufficient in the absence of any allegation
of how Defendant actively concealed the 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
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 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, the
Complaint includes sufficiently specific allegations of Defendant’s superior
knowledge of the defect battery in Chevrolet Bolt vehicles. For example, the complaint alleges that “[f]rom
July 20, 2020 to August 26, 2020, [Defendant] received at least four claims
alleging that the battery pack in Chevrolet Bolt vehicles had caused a fire.
Indeed, [Defendant] has now identified at least a dozen battery-related
allegations of fire involving 2017-2019 Bolt vehicles, and its internal
investigations (spanning from August-November 2020, according to [Defendant])
have revealed that in at least five of those cases the fire was related to the
battery. In four such cases, the fire occurred when the battery was highly
charged just before the fire occurred.”
(Complaint ¶ 16.) Accordingly, the complaint
provides some specificity as to Defendant’s superior knowledge of the defect
with the battery in Chevrolet Bolt
vehicles before Plaintiff’s purchase of the subject vehicle. Moreover, the complaint alleges that the
information was not publicly available because Defendant only provided the
information to authorized dealerships on November 13, 2020 and not the general
population at large. (Id. ¶
17.) While “sparse, nothing more
is required at this early stage of the litigation.” (Jones,
supra, 198 Cal.App.4th at 1200.) Thus,
the complaint sufficiently alleges a duty based on Defendant’s exclusive
knowledge.
In
sum, Plaintiff alleges the fraudulent concealment claim with sufficient
specificity and sufficiently alleges a duty owed by Defendant. Accordingly, to the extent that the first
cause of action asserts a fraudulent concealment claim, Defendant’s demurrer to
the first cause of action is OVERRULED.
Second Cause of Action:
Negligent Misrepresentation
Defendant asserts that the second cause of action fails
as Plaintiff fails to sufficiently allege a specific misrepresentation.
“The elements of negligent misrepresentation are similar
to intentional fraud except for the requirement of scienter; in a claim for
negligent misrepresentation, the plaintiff need not allege that the defendant
made an intentionally false statement, but simply one as to which he or she
lacked any reasonable ground for believing the statement to be true.” (Bains
v. Moores (2009) 172 Cal.App.4th 445, 454 [internal citations
omitted].) “Under California law,
negligent misrepresentation is a species of actual fraud and a form of
deceit.” (Wong v. Stoler (2015)
237 Cal.App.4th 1375, 1388.) Both a claim for fraud and a claim for negligent
misrepresentation must be pleaded with specificity rather than with general and
conclusory allegations. (Small v.
Fritz Companies, Inc. (2003) 30 Cal.4th 167, 184.)
As
discussed above, the only affirmative misleading statements attributed to
Defendant are unspecified advertisements and publications. (Complaint ¶ 8.) However, Plaintiff has failed to provide a representative
sample of said advertisements. (Morgan,
supra, 177 Cal. App. 4th at p.1262.)
Accordingly, for the reasons discussed above for the first cause of
action, the complaint fails to allege a negligent misrepresentation with the
required specificity. Therefore, Defendant’s
demurrer to the second cause of action is SUSTAINED.
Third Cause of
Action: Business & Professions Code § 17200
Defendant contends that the third cause of action fails because (1) there
is no allegation of unlawful, unfair, or fraudulent business practices and (2)
the remedy sought is improper.
The purpose of California’s Unfair Competition Law (“UCL”) “is to
protect both consumers and competitors by promoting fair competition in
commercial markets for goods and services. [Citation.]” (Kasky v. Nike,
Inc. (2002) 27 Cal.4th 939, 949.)
Thus, the UCL prohibits unlawful, unfair or fraudulent business acts or
practices. (Bus. & Prof. Code, § 17200.) “The Legislature
intended this ‘sweeping language’ to include ‘anything that can properly be
called a business practice and that at the same time is forbidden by law.’” (Bank
of the West v. Sup. Ct. (1992) 2 Cal.4th 1254, 1266.) “A plaintiff alleging unfair business
practices under these statutes must state with reasonable particularity the
facts supporting the statutory elements of the violation.” (Khoury v. Maly's
of California, Inc. (1993) 14 Cal.App.4th 612, 619.)
“Because the statute is framed in the disjunctive, a business practice
need only meet one of the three criteria to be considered unfair
competition.” (Durell v. Sharp
Healthcare (2010) 183 Cal.App.4th 1350, 1359.) Section 17200’s “unlawful” prong “borrows
violations of other laws ... and makes those unlawful practices actionable
under the UCL.” (Klein v. Chevron
U.S.A., Inc. (2012) 202 Cal.App.4th 1342, 1383.) “[V]irtually any law or regulation—federal or
state, statutory or common law—can serve as [a] predicate for a ... [section]
17200 ‘unlawful’ violation.’ ” (Ibid.) “A business practice is “fraudulent” within
the meaning of section 17200 if it is “likely to deceive the public.” (Id. at p.1380.) “‘A business practice
is unfair within the meaning of the UCL if it violates established public
policy or if it is immoral, unethical, oppressive or unscrupulous and causes
injury to consumers which outweighs its benefits.’ [Citation.]” (Nolte v. Cedars-Sinai Medical Center
(2015) 236 Cal.App.4th 1401, 1407–1408.)
The determination of whether a business practice is unfair involves an
examination of that practice’s impact on its alleged victim, balanced against
the reasons, justifications, and motives of the alleged wrongdoer. (Ibid.) In brief, the court must weigh the utility of
the defendant's conduct against the gravity of the harm to the alleged
victim. (Nolte, Supra, 236
Cal.App.4th at pp. 1407–1408; Cf. Durell v. Sharp Healthcare, supra, 183
Cal.App.4th at 1365 [“[u]nfair” business practices are those which offend an
“established public policy” that is tethered to “specific constitutional,
statutory, or regulatory provisions”]; Morgan v. AT & T Wireless
Services, Inc. (2009) 177 Cal.App.4th 1235, 1254–1255.)
Here, the complaint alleges
various violations of the Song-Beverly Act – i.e., the fourth through sixth
causes of action – which Plaintiff identifies as the basis for the UCL claim. (Complaint ¶ 46.) Defendant does not challenge the allegations
of said violations as insufficient.
Accordingly, the Complaint’s allegations plainly satisfy the unlawful
prong of the UCL claim.
Defendant’s further contend that Plaintiff’s prayer for injunctive
relief under the UCL is improper.
However, “a demurrer tests the sufficiency of the factual allegations of
the complaint rather than the relief suggested in the prayer of the complaint.” (Venice Town Council, Inc. v. City of Los
Angeles (1996) 47 Cal.App.4th 1547, 1562.) Thus, an improper prayer for relief is not a
proper basis for a demurrer.
Accordingly, Defendant’s
demurrer to the third cause of action 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.)
For the reasons
identified above, the Court has found that the complaint sufficiently alleges
fraudulent concealment, which is a sufficient basis for punitive damages. Accordingly, Defendant’s motion to strike the
prayer for punitive damages is DENIED.
Leave to Amend
Leave to amend
must be allowed where there is a reasonable possibility of successful
amendment. (Goodman v. Kennedy (1976) 18 Cal.3d 335, 348.) The burden is
on the plaintiff to show the court that a pleading can be amended successfully.
(Goodman v. Kennedy, supra, 18 Cal.3d at p.348; Lewis v. YouTube, LLC
(2015) 244 Cal.App.4th 118, 226.)
As this is the
first time that the court has sustained a demurrer
to the complaint on these grounds, the
court finds it is proper to allow Plaintiff an opportunity to cure the defects identified
above as to Plaintiff’s fraudulent misrepresentation claim and fraudulent concealment claim. (See Goodman v. Kennedy (1976) 18
Cal.3d 335, 349; Kong v. City of Hawaiian Gardens Redevelopment Agency
(2002) 108 Cal.App.4th 1028, 1037.)
In
the amended
complaint, Plaintiff should separate the fraudulent misrepresentation claim
from the fraudulent concealment claim as distinct and separate causes of
action.
CONCLUSION AND ORDER
Based
on the foregoing, Defendant General Motors LLC’s demurrer to the Complaint is SUSTAINED
as to the second cause of action in its entirety and as to the fraudulent
misrepresentation claim embedded within the first cause of action. Defendant General Motors LLC’s demurrer to
the Complaint is otherwise OVERRULED.
Defendant General
Motors LLC’s motion to strike is DENIED.
Plaintiff
is to file an amended complaint within thirty (30) days of notice of this
order. The amended complaint should
separate the fraudulent misrepresentation claim from the fraudulent concealment
claim as distinct and separate causes of action.
The
case management conference is continued to May 1, 2024 at 8:30 am.
Moving Party is to give notice and
file proof of service of such.
DATED:
February ___, 2024 ___________________________
Elaine Lu
Judge of the Superior Court