Judge: Elaine W. Mandel, Case: 24SMCV01906, Date: 2024-09-11 Tentative Ruling
Case Number: 24SMCV01906 Hearing Date: September 11, 2024 Dept: P
Tentative Ruling
James v. Ford
Motor Company, et al. Case No. 24SMCV01906
Hearing Date:
September 11, 2024
Defendants Ford Motor Company and Peyton
Cramer Ford’s Demurrer to the Complaint
James brings Song-Beverly claims against defendants
Ford and Cramer Ford, who demur and argue the third and fourth causes of action
are barred under the economic loss rule.
The economic loss rule provides “[i]n general, there is no recovery in tort
for negligently inflicted 'purely economic losses,' meaning financial harm
unaccompanied by physical or property damage.” Sheen v. Wells Fargo Bank,
N.A. (2022) 12 Cal. 5th 905, 922. The Supreme Court rejected the argument
that the economic loss rule bars a fraud claim, reasoning that parties cannot,
and should not, be expected to anticipate fraud and dishonesty in every
transaction. Robinson Helicopter Co., Inc. v. Dana Corp. (2004) 34
Cal.4th 979, 993. Doing so would require increased certainty in contractual
relationships that run contrary to public policy. Id. James alleges fraud
in the inducement; thus, the economic loss rule does not apply to the third
cause of action.
The economic
loss rule does not apply to the negligent repair claim because James alleges
defendants’ negligent performance of repair services caused further damages to
his vehicle, which is an exception to the rule. KB Home v. Superior Court
(2003) 112 Cal.App.4th 1076, 1079, as modified on denial of reh'g (Nov. 19,
2003). James asserts he left his car for repairs, but defendants failed to
repair it properly. Compl. ¶¶ 60-62. Th rule does not apply to the negligent
repair claim.
Defendants contend the complaint fails to allege facts
with specificity to support its claim or fraudulent inducement. The elements of
fraud, including a cause of action for fraudulent inducement, “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 Ctr. (2005) 135 Cal.App.4th 289, 294. The
facts constituting the alleged fraud must be alleged specifically as to every
element of fraud. Lazar v. Superior Court
(1996) 12 Cal.4th 631, 645. To allege fraud against a corporation,
plaintiffs must plead the names of persons allegedly making the false
representations, their authority to speak, to whom they spoke, what they said
or wrote and when it was said or written. Tarmann
v. State Farm Mut. Auto. Ins. Co. (1991) 2 Cal.App.4th 153, 157.
The complaint alleges the 10R80 transmissions
installed in numerous Ford vehicles, including the one purchased by the
plaintiffs, were defective. Compl. ¶¶12-15. Ford is alleged to be aware of the
defects and the hazards they posed, allegedly having exclusive knowledge of them,
but are also alleged to have intentionally concealed and failed to disclose
that information. Id. ¶¶16-17, 95. It is also alleged that Ford intended
to deceive James by concealing known transmission problems, and that he would
not have purchased the car had the defects been known. Id. ¶¶96-99. The
plaintiffs allegedly suffered damages from money paid to buy the car. Id.
¶102. This is enough to have alleged a cause of action at the pleading stage.
Defendants assert the negligent repair claims fail to allege
damages because it does not plead facts that AutoNation Ford’s conduct resulted
in damages. In opposition, James argues he noticed the vehicle was experiencing
the same problems complained about previously and towed the car back to Sunrise
Ford. The complaint alleges AutoNation Ford’s breach was the proximate cause of
James’s damages, to be determined according to proof. Compl. ¶112. At the
pleadings stage, this is sufficient to state a cause of action. OVERRULED.
Defendants must answer within ten days.