Judge: Frank M. Tavelman, Case: 23BBCV02702, Date: 2024-08-16 Tentative Ruling

Case Number: 23BBCV02702    Hearing Date: August 16, 2024    Dept: A

LOS ANGELES SUPERIOR COURT

NORTH CENTRAL DISTRICT - BURBANK

DEPARTMENT A

DEMURRER & MOTION TO STRIKE

MP:     General Motors, LLC (Defendant)                

RP:     Bernard Crowden (Plaintiff)

NOTICE:

The Court is not requesting oral argument on this matter.  The Court is guided by California Rules of Court, Rule 3.1308(a)(1) whereby notice of intent to appear is requested.  Unless the Court directs argument in the Tentative Ruling, no argument is requested and any party seeking argument should notify all other parties and the court by 4:00 p.m. on the court day before the hearing of the party’s intention to appear and argue.  The tentative ruling will become the ruling of the court if no argument is received.  

Notice may be given either by email at BurDeptA@LACourt.org or by telephone at (818) 260-8412.

ALLEGATIONS:

Bernard Crowden (Plaintiff) brings this action against General Motors, LLC (GM) after his purchase of a 2021 Chevrolet Bolt (the Bolt). Plaintiff alleges that GM sold him the Bolt despite knowing that it suffered from issues with its lithium-ion battery. Plaintiff states causes of action for (1) Violation Of Song-Beverly Act - Breach Of Express Warranty, (2) Violation Of Song-Beverly Act - Breach Of Implied Warranty, (3) Violation Of Song-Beverly Act - Section 1793.2, (4) Fraud - Affirmative Misrepresentation/Concealment, and (5) Violation Of Business & Professions Code § 17200.

GM now demurs to the fourth and fifth causes of action (Fraud-Affirmative Misrepresentation/Concealment, and Violation Of Business & Professions Code § 17200). GM also moves to strike Plaintiff’s request for punitive damages in the Prayer for Relief. Plaintiff opposes the demurrer and the motion to strike, GM has filed no reply.

ANALYSIS:

I.                    LEGAL STANDARDS

Demurrer

The grounds for a demurrer must appear on the face of the pleading or from judicially noticeable matters. (C.C.P. § 430.30(a); Blank v. Kirwan (1985) 39 Cal. 3d 311, 318.) A demurrer for sufficiency tests whether the complaint states a cause of action. (Hahn v. Mirda (2007) 147 Cal.App.4th 740, 747.) The only issue involved in a demurrer hearing is whether the complaint states a cause of action. (Id.)

A demurrer assumes the truth of all factual, material allegations properly pled in the challenged pleading. (Blank v. Kirwan, supra, 39 Cal. 3d at p. 318.) No matter how unlikely or improbable, the plaintiff’s allegations must be accepted as true for the purpose of ruling on the demurrer. (Del E. Webb Corp. v. Structural Materials Co. (1981) 123 Cal.  App. 3d 593, 604.) But this does not include contentions; deductions; conclusions of fact or law alleged in the complaint; facts impossible in law; or allegations contrary to facts of which a court may take judicial notice.  (Blank, supra, 39 Cal. 3d at 318.)

Pursuant to C.C.P. §§ 430.10(e) and (f), the party against whom a complaint has been filed may demur to the pleading on the grounds that the pleading does not state facts sufficient to constitute a cause of action, or that the pleading is uncertain, ambiguous and/or unintelligible. It is an abuse of discretion to sustain a demurrer without leave to amend if there is a reasonable probability that the defect can be cured by amendment. (Schifando v. City of Los Angeles (2003) 31 Cal. 4th 1074, 1082.)

Motion to Strike

Motions to strike are used to reach defects or objections to pleadings that are not challengeable by demurrer, such as words, phrases, and prayers for damages. (See C.C.P. §§ 435, 436, and 437.) The proper procedure to attack false allegations in a pleading is a motion to strike. (C.C.P. § 436(a).) In granting a motion to strike made under C.C.P. § 435, “[t]he court may, upon a motion made pursuant to Section 435 [notice of motion to strike whole or part of complaint], or at any time in its discretion, and upon terms it deems proper: (a) Strike out any irrelevant, false, or improper matter inserted in any pleading.” (C.C.P. § 436(a).) Irrelevant matters include immaterial allegations that are not essential to the claim or those not pertinent to or supported by an otherwise sufficient claim. (C.C.P. § 431.10.)

The court may also “[s]trike out 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.” (C.C.P. § 436 (b).)

II.                 MERITS

Meet and Confer

C.C.P. §§ 430.41(a) and 435.5(a) requires that the moving party meet and confer with the party who filed the pleading that is subject to the demurrer and/or motion to strike. Upon review the Court finds the meet and confer requirements were met. (Park Decl. ¶ 1.)

Fourth COA – Fraud (Affirmative Misrepresentation/ Concealment) – Overruled

The elements of a fraud claim 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.” (Bigler-Engler v. Breg, Inc. (2017) 7 Cal.App.5th 276, 310-311 [“Bigler-Engler”].)

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.” (Id. at 311.) If a fiduciary relationship does not exist, but the latter three circumstances are present, Plaintiff must still show “the existence of some other relationship between the plaintiff and defendant from which a duty to disclose can arise.” (Id.)

GM argues that Plaintiff has (1) pled the facts of the alleged fraud with insufficient particularity, (2) has not sufficiently alleged GM’s prior knowledge of the defect, and (3) has not pled a transactional relationship between himself and GM. The Court addresses each of these arguments in turn.

Specificity of Pleading

GM argues Plaintiff does not allege a material misrepresentation with sufficient specificity. GM cites Linear Tech. Corp. v. Applied Materials, Inc. (2007) 152 Cal. App.4th 115, 132 which held “[M]ere conclusionary allegations that the omissions are intentional and for the purpose of defrauding and deceiving plaintiff and bringing about the purchase … and that plaintiff relied on the omissions in making such purchase are insufficient [to show fraud by concealment].”

GM alleges Plaintiff failed to plead “(1) the identity of the GM employee that made the representations to, or concealed the facts from, Plaintiff, (2) the employee’s authority to speak and act on behalf of GM, (3) GM’s knowledge about alleged defects in the Bolt at the time of Plaintiff’s purchase, (4) what specific GM representations were reviewed and relied upon in purchasing the Subject Vehicle, (5) how long prior to purchasing the Subject Vehicle the representations were reviewed, if even reviewed pre-purchase, and which representation therein was relied upon, and (6) whether those materials were prepared by GM or someone else.” (Dem. pg. 13.)

The Court finds the allegations of the Complaint are pleaded with the requisite specificity for an action for fraud sounding in concealment. Rules of specifically pleading how, when, where, to whom, and by what means, misrepresentations were communicated, are intended to apply to affirmative misrepresentations, and not to concealment. (See Alfaro v. Community Housing Improvement System & Planning Assn., Inc. (2009) 171 Cal. App. 4th 1356, 1384.)

Here, Plaintiff alleges that GM specifically marketed the Bolt as possessing a long-lasting lithium-ion battery suitable for long distances. (Compl. ¶¶ 26, 35.) Plaintiff alleges these features were held out to the public in various marketing materials by GM. (Id.) Plaintiff also alleges that in October 2019, GM employee Adam Piper was made available by GM to answer questions regarding the Bolt’s battery at an event hosted by GM. (Compl. ¶ 24.) Plaintiff alleges that Adam Piper represented that the battery of the Bolt was designed to be fully charged, despite GM’s knowledge that the battery was unsafe at full charge. (Id.)

The Court finds these allegations are sufficiently particular to sustain a cause of action based on concealment of material fact. While it is not clear to whom Adam Piper’s statements were made, it is clear the statements were made with the purpose of inducing the public to purchase the Bolt. Further, the allegations indicate that the knowledge of any defect would have likely been exclusively within GM’s knowledge at the time the Bolt was being marketed and sold. As Alfaro makes clear, the usually stringent requirements in pleading fraud are relaxed when the facts appear to lie more within the exclusive knowledge of the defendant. (Alfaro supra, 171 Cal.App.4th at 1384.)

Prior Knowledge

GM also argues Plaintiff has failed to plead that GM was aware of any defect prior to making these representations. The Court finds this argument unpersuasive.

Plaintiff alleges that in December 2016, GM first became aware of issues with the battery in the Bolt and instituted a Battery Exchange and Internal Parts Process to replace defective batteries. (Compl. ¶ 16.) Plaintiff further alleges that GM continued to experience issues with the Bolt’s battery throughout 2018. (Compl. ¶ 20.) Plaintiff further alleges that, in March 2019, GM became aware of the first battery fire involving the Bolt. (Compl. ¶ 23.) All of these factual allegations are sufficient to support Plaintiff’s claim that GM knew of the defective battery but continued to sell the Bolt to the general public.

GM’s argument that the allegations in the Complaint refer to a previous model year of the Bolt is unpersuasive. Whether Plaintiff’s Bolt actually suffered the issues that GM was aware of is a matter not resolvable on demurrer. This demurrer is merely concerned with whether Plaintiff has pled ultimate facts as to GM’s knowledge of a battery defect. The Court finds Plaintiff has done so.

Transactional Relationship & Duty to Disclose

GM lastly argues Plaintiff has not alleged a relationship between them sufficient to establish GM’s duty to disclose. GM relies primarily on the decision in Bigler-Engler which held the following:

“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].

A duty to disclose may arise as a result of a transaction between the parties. However, the transaction “…must necessarily arise from direct dealings between the plaintiff and the defendant; it cannot arise between the defendant and the public at large.”

(Bigler-Engler supra, 7 Cal.App.5th 276 at 311-312.)

The Court notes this issue was addressed by the decision in Dhital v. Nissan North America, Inc., wherein the plaintiffs sued Nissan North America, Inc. alleging a transmission defect. The plaintiffs alleged claims under the Song-Beverly Consumer Warranty Act and a common law fraud claim alleging that Nissan fraudulently concealed the defects and induced them to purchase a car. (Dhital v. Nissan North America, Inc. (2022) 84 Cal.App.5th 828, 838). The California Supreme Court granted review of Dhital on February 1, 2023, however, the request to depublish was denied. Since review is pending and the Supreme Court did not otherwise order, Dhital does not have binding effect, however, “it may be cited for potentially persuasive value only.” (CRC, Rule 8.1115 (e)(1).)

Although Dhital is currently on review and has no binding precedential value, the Court finds its analysis persuasive. The Dhital court held plaintiffs sufficiently alleged a transactional relationship because they alleged that they bought the car from a Nissan dealership, that the car was backed by Nissan warranty, and that Nissan dealerships are authorized agents. (Dhital supra, 84 Cal.App.5th 828 at 844.)

Plaintiff is not required to allege evidentiary facts supporting the existence of an agency relationship, only allegations of ultimate fact. (Quelimane Co. v. Stewart Title Guaranty Co. (1998) 19 Cal. 4th 26, 47). An allegation of agency is an allegation of ultimate fact that must be accepted as true for purposes of ruling on a demurrer. (Dones v. Life Ins. Co. of North America (2020) 55 Cal.App.5th 665, 685.)

Here, Plaintiff alleges the dealership, Community Chevrolet Company (the dealership), is “an authorized retail dealer and agent of” GM. (Compl. ¶ 6.) Plaintiff alleges that GM holds out its dealerships online without disclaiming that they are not agents of GM. (Id.) Plaintiff alleges the dealership personnel were represented to him the Bolt range was safe and long-range capable. (Compl. ¶ 26.) The Court finds Plaintiff has sufficiently pleaded the ultimate fact that the dealership was an agent of GM such that a transactional relationship between Plaintiff and GM existed.

In short, the Court finds Plaintiff has sufficiently pled his cause of action for fraudulent concealment. Accordingly, the demurrer to the fourth cause of action is OVERRULED.

Fifth COA – Violations of the UCL – Overruled

GM demurrers to this cause of action on grounds that Plaintiff has not pled any unlawful or fraudulent activity within the meaning of the UCL. GM further demurs on grounds that Plaintiff has not pled the availability of injunctive relief.

“California Business and Professions Code §§ 17000, et seq…states…that unfair competition shall mean and include unlawful, unfair or fraudulent business practices…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, 618-619.) The Court notes that “[b]ecause Business and Professions Code section 17200 is written in the disjunctive, it establishes three varieties of unfair competition-acts or practices which are unlawful, or unfair, or fraudulent. An act can be alleged to violate any or all of the three prongs of the UCL-unlawful, unfair, or fraudulent.” (Berryman v. Merit Property Management, Inc. (2007) 152 Cal.App.4th 1544, 1554 [internal quotation marks and citation omitted].)

Here, the Court finds that Plaintiff has adequately alleged unlawful behavior in the form of Song Beverly Violations as well as its Fraud Causes of action. “By proscribing any unlawful business practice, section 17200 borrows’ violations of other laws and treats them as unlawful practices that the unfair competition law makes independently actionable. Thus, a violation of another law is a predicate for stating a cause of action under the UCL’s unlawful prong.” (Rubenstein v. The Gap, Inc. (2017) 14 Cal.App.5th 870, 879-880 [internal quotation marks and citations omitted].) Given that Plaintiff has adequately pled unlawful behavior, GM’s argument as to the lack of unfair behavior is moot.

GM further argues that Plaintiff has not pled the existence of an equitable remedy. The UCL provides only two remedies to redress its violations: (1) injunctive relief to prevent’ practices of unfair competition and (2) restitution to restore to any person in interest any money or property acquired through unfair practices. (Korea Supply Co. v. Lockheed Martin Corp., (2003) 29 Cal. 4th 1134, 1147). GM argues that Plaintiff must show the unavailability of a legal remedy to be entitled to a remedy under the UCL. (Knox v. Phoenix Leasing, Inc. (1994) 29 Cal. App.4th1357, 1368.) Whether Plaintiff can demonstrate the unavailability of a legal remedy is a matter not suited for resolution on demurrer. A demurrer is purely concerned with the sufficiency of the pleadings. As outlined below Plaintiff has sufficiently pled an equitable remedy.

Here, Plaintiff has pled no basis for equitable relief by way of injunction. Indeed, Plaintiff specifically alleges that GM has already acknowledged the Battery Defect in Bolt vehicles and issued a recall such that injunctions would be without purpose. (Compl. ¶ 30.) Regardless, Plaintiff has still specifically pled that they are entitled to restitution in the amount paid for the vehicle. (Compl. ¶¶ 49, 53, 56, 132.) GM’s demurrer does not address the availability of restitution at all, simply concluding that the cause of action must fail because an injunction is not available. As Plaintiff has pled entitlement to restitution, their claim for violation of the UCL survives.

Accordingly, the demurrer to the fifth cause of action is OVERRULED.

Motion to Strike

Here, GM bases its Motion to Strike Plaintiff’s prayer for Punitive Damages on the argument that Plaintiff has not pleaded the fraud cause of action with the specificity required. Plaintiff’s prayer for punitive damages, and GM’s argument against it, are intrinsically intertwined with the fraudulent concealment cause of action, and as such, the Court’s ruling as to the Motion to Strike is determined by the Court’s ruling of the demurrer. As such, the Motion to Strike is DENIED.

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RULING:

In the event the parties submit on this tentative ruling, or a party requests a signed order or the Court in its discretion elects to sign a formal order, the following form will be either electronically signed or signed in hard copy and entered into the Court’s records.

ORDER

General Motors, LLC’ s Demurrer and Motion to Strike came on regularly for hearing on August 16, 2024, with appearances/submissions as noted in the minute order for said hearing, and the Court, being fully advised in the premises, did then and there rule as follows:

THE DEMURRER TO THE FOURTH CAUSE OF ACTION IS OVERRULED.

THE DEMURRER TO THE FIFTH CAUSE OF ACTION IS OVERRULED.

THE MOTION TO STRIKE IS DENIED.

UNLESS ALL PARTIES WAIVE NOTICE, GM TO GIVE NOTICE.