Judge: Gail Killefer, Case: 22STCV19072, Date: 2023-02-16 Tentative Ruling
Case Number: 22STCV19072 Hearing Date: February 16, 2023 Dept: 37
HEARING DATE: February 16, 2023
CASE NUMBER: 22STCV19072
CASE NAME: Enrique Valencia v. General Motors, LLC
MOVING PARTY: Defendant General Motors, LLC
OPPOSING PARTY: Plaintiff, Enrique Valencia
TRIAL DATE: Not Set
PROOF OF SERVICE: OK
PROCEEDING: Defendant’s Demurrer to
First Amended Complaint and Motion to Strike Portions of the First Amended
Complaint
OPPOSITION: February 2, 2023
REPLY: February
8, 2023
TENTATIVE: Defendant’s
demurrer is sustained. Defendant’s motion to strike is granted. Plaintiff is
granted 20 days leave to amend. Defendant is to give notice.
This is a lemon law action arising out of the purchase by Enrique
Valencia (“Plaintiff”) of a 2014 Chevrolet Cruze (“Subject Vehicle”) on or
about July 16, 2016, manufactured by Defendant General Motors, LLC (“GM”).
Plaintiff alleges that in connection with his purchase of
the Subject Vehicle, he received an express written warranty and
subsequently received an extended warranty, which together allegedly covered
the Subject Vehicle’s engine, transmission, water pump and related cooling
system. Plaintiff alleges that the Subject Vehicle developed a litany of
defects during the warranty period, including but not limited to defects with the
cooling system, transmission, engine. Further, and according to Plaintiff, the
Subject Vehicle was presented to Defendant or its representatives on many
occasions but failed to be repaired of its various defects.
Plaintiff’s Complaint alleged causes of action as follows:
(1) violation of Civil Code § 1793.2(d) against GM, (2) violation of Civil Code
§ 1793.2(b) against GM, (3) violation of Civil Code § 1793.2(A)(3) against GM,
(4) breach of the implied warranty of merchantability against GM, (5) fraudulent
inducement, (6) violation of Consumer Legal Remedies Act, and (7) violation of
the Magnuson-Moss Warranty Act.
On October 19, 2022, Plaintiff filed their First Amended
Complaint (“FAC”). The FAC alleges identical causes of action.
GM now demurrers to the fifth cause of action of the FAC for
fraudulent concealment on the grounds that it fails to plead facts sufficient
to state a cause of action against GM. GM alternatively demurrers to the fifth
cause of action on the grounds that it is barred by the Economic Loss Rule, or,
alternatively, barred by the applicable Statute of Limitations. GM also moves
to strike the FAC’s request for punitive damages.
A
demurrer is an objection to a pleading, the grounds for which are apparent from
either the face of the complaint or a matter of which the court may take judicial
notice. (CCP § 430.30(a); see also Blank v. Kirwan (1985) 39
Cal.3d 311, 318.) The purpose of a demurrer is to challenge the
sufficiency of a pleading “by raising questions of law.” (Postley v.
Harvey (1984) 153 Cal.App.3d 280, 286.) The court “treat[s] the
demurrer as admitting all material facts properly pleaded, but not contentions,
deductions or conclusions of fact or law. . . .” (Berkley v. Dowds
(2007) 152 Cal.App.4th 518, 525.) “In the construction of a pleading, for
the purpose of determining its effect, its allegations must be liberally
construed, with a view to substantial justice between the parties.” (CCP §
452; see also Stevens v. Sup. Ct. (1999) 75 Cal.App.4th 594, 601.)
“When a court evaluates a complaint, the plaintiff is entitled to reasonable
inferences from the facts pled.” (Duval v. Board of Trustees
(2001) 93 Cal.App.4th 902, 906.)
The
general rule is that the plaintiff need only allege ultimate facts, not
evidentiary facts. (Doe v. City of Los Angeles (2007) 42 Cal.4th
531, 550.) “All that is required of a plaintiff, as a matter of pleading,
even as against a special demurrer, is that his complaint set forth the
essential facts of the case with reasonable precision and with sufficient
particularity to acquaint the defendant with the nature, source and extent of
his cause of action.” (Rannard v. Lockheed Aircraft Corp. (1945)
26 Cal.2d 149, 156-157.) “[D]emurrers for uncertainty are disfavored and
are granted only if the pleading is so incomprehensible that a defendant cannot
reasonably respond.” (Mahan v. Charles W. Chan Ins. Agency, Inc. (2017)
14 Cal.App.5th 841, 848, fn. 3, citing Lickiss v. Fin. Indus. Regulatory
Auth. (2012) 208 Cal.App.4th 1125, 1135.) In addition, even where a
complaint is in some respects uncertain, courts strictly construe a demurrer
for uncertainty “because ambiguities can be clarified under modern discovery
procedures.” (Khoury v. Maly’s of California, Inc. (1993) 14
Cal.App.4th 612, 616.)
Demurrers
do not lie as to only parts of causes of action where some valid claim is
alleged but “must dispose of an entire cause of action to be sustained.”
(Poizner v. Fremont General Corp. (2007) 148 Cal.App.4th 97, 119.)
“Generally it is an abuse of discretion to sustain a demurrer without leave to
amend if there is any reasonable possibility that the defect can be cured by
amendment.” (Goodman v. Kennedy (1976) 18 Cal.3d 335,
349.)
III. Analysis
The
elements of an action for fraud based on an omission 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 Center, Inc.
(2011) 198 Cal.App.4th 230, 248 [quoting Han v. Mirda (2007) 147
Cal.App.4th 740, 748.].)
Fraud
must be pled in the complaint specifically. General and conclusory allegations
are not sufficient. (Nagy v. Nagy (1989) 210 Cal.App.3d 1262, 1268.)
Unlike most causes of action where the “the policy of liberal construction of
the pleadings,” fraud requires particularity, that is, “pleading facts which
show how, when, where, to whom, and by what means the representations were
tendered.” (Lazar v. Superior Court (1996) 12 Cal.4th 631, 645.) Every
element of a fraud cause of action must be alleged both factually and
specifically. (Hall v. Department of Adoptions (1975) 47 Cal.App.3d 898,
904; Cooper v. Equity General Insurance (1990) 219 Cal.App.3d 1252,
1262.)
The economic loss rule requires plaintiff to recover in
contract for purely economic loss due to disappointed contractual expectations
unless he can demonstrate harm above and beyond a broken contractual promise.¿
(Robinson Helicopter Co. v. Dana Corp. (2004) 34 Cal.4th 979, 988.) An “economic loss” consists of damages for
inadequate value, costs of repair, and replacement, or consequent loss of
profits, without any claim of personal injury or damages to other property. (Robinson,
supra, 34 Cal.4th at 988; see also Jimenez v. Superior Court (2002)
29 Cal.4th 473.)¿ “A
person may not ordinarily recover in tort for the breach of duties that merely
restate contractual obligations. Instead, ‘[c]ourts will generally enforce the
breach of a contractual promise through contract law, except when the actions
that constitute the breach violate a social policy that merits the imposition
of tort remedies.’ [Citations.]” (Stop Loss Ins. Brokers, Inc. v. Brown &
Toland Medical Group (2006) 143 Cal.App.4th 1036, 1041.)¿“ “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.]” (Robinson, supra, 34 Cal.4th at 989-990, [quoting Erlich
v. Menezes (1999) 21 Cal.4th 543, 551.)
Defendant contends that Plaintiff’s fifth cause of action of
the FAC fails as a matter of law since it is untimely due to the three-year
statute of limitations for fraud claims. (Dem., 7-8; CCP § 338(d).) Defendant
further contends no tolling of this period can be applied here as the delayed
discovery rule cannot apply because Plaintiff has conceded that the “defects
and nonconformities” “manifested themselves” during the “express warranty
period.” (Id.)
“[W]hile Plaintiff
states that he did not discover the defect until shortly prior to filing this
action, he pleads no facts relating to how the alleged defects were discovered
and why they could not have been discovered earlier with reasonable diligence.
... Plaintiff affirmatively pleads that the Subject Vehicle experienced the
alleged defects and that the Plaintiff sought repair of those defects as early
as May 9, 2019...” (Id., citing FAC ¶¶ 11, 40-44.)
Defendant also contends the fifth cause of action fails because
it is not pled with the required specificity (Demurrer, 9-10); specifically,
Plaintiff failed to allege a duty to disclose by GM. (Dem., 11-12.) Defendant contends
the fifth cause of action fails “because Plaintiff failed to allege (i) the
identity of the individuals at GM who purportedly concealed material facts or
made untrue representations about his Cruze, (ii) their authority to speak and
act on behalf of GM, (iii) GM’s knowledge about alleged defects in Plaintiff’s
Cruze at the time of purchase, (iv) any interactions with GM before or during
the lease of his Cruze, or (v) GM’s intent to induce reliance by Plaintiff to
lease the specific Cruze at issue.” (Dem., 10-11.) Defendant asserts the FAC
fails to provide factual support for his claims, and “merely provided
conclusions that lack the foundation and specificity required to pursue a
viable fraud claim.” (Demurrer, 11.)
Lastly, Defendant contends the fifth cause of action fails to
sufficiently allege a transactional relationship which would impose a duty to
disclose onto GM. (Demurrer, 11-12; citing Bigler-Engler v. Breg,
Inc. (2017) 7 Cal.App.5th 276, 311; Warner Construction Corp. v. City of
Los Angeles (1970) 2 Cal.3d 285, 294; Hoffman v. 162 North Wolfe LLC
(2014) 228 Cal.App.4th 1178, 1187–89.) “The
FAC does not allege that Plaintiff purchased his [Vehicle] directly from GM.
Thus, any alleged concealment by GM did not arise in a direct transaction
between Plaintiff and GM.” (Dem., 12.)
In opposition, Plaintiff claims
the fifth cause of action is sufficiently pled and is timely since “Plaintiff
alleges that GM’s fraudulent inducement-concealment occurred, not only at the
time of sale, but every time that Plaintiff presented the Subject Vehicle to
GM’s dealership(s) with concerns related to the Cooling System Defect and up
through the time that Plaintiff filed their Complaint.” (Opp., 3-4.) As such,
“Plaintiff alleges that the fraudulent inducement-concealment continued
throughout various repair visits to GM’s authorized repair facilities and/or
dealerships...” (Id.; citing FAC ¶¶ 40-46, 51-54.) Plaintiff therefore
contends that under the delayed discovery rule, “a fraudulent
inducement-concealment cause of action does not accrue until discovery of all
of the elements of the cause of action, including GM’s utter and deceptive
failure to disclose a material safety defect to Plaintiff at the time of
purchase and thereafter.” (Opp., 4.) Plaintiff further contends the statute of
limitations was similarly tolled alternatively through equitable estoppel from
GM’s fraudulent conduct, and under section 1793.1(a)(2)’s repair doctrine for
“various unsuccessful attempts to repair the vehicle.” (Opp., 5-6; citing Aced
v. Hobbs–Sesack Plumbing Co., (1961) 55 Cal.2d 573, 585.)
Next, Plaintiff contends the fifth
cause of action is sufficiently pled and pleads a duty to disclose since “there
is a transactional relationship because Defendant issued the warranty to Plaintiffs
[sic] on the Subject Vehicle.” (Opp., 6-7.) Plaintiff asserts the claim
is based on “both superior knowledge ... and knowing and intentional
concealment.” (Id., citing FAC ¶¶26-38, 82, 85.)
“In sum, Plaintiffs [sic] allege the ‘who’ (GM), the
‘what’ (concealing material facts regarding a known Defect that poses a safety
risk), the ‘when’ (at the time of purchase and thereafter), the ‘how’ (failing
to disclose the existence of the Defect at the time of purchase and during
subsequent repair visits), and the ‘where’ (at GM's authorized repair
facilities and during direct calls to GM).” (Opp., 8.)
Plaintiff then contends Dhital
v. Nissan North America, Inc. (2022) 84 Cal.App.5th 828, 843-844 is
instructive here with the level of specificity required at the pleading stage.
(Opp., 9-10.)
In relevant part, Dhital provides:
“Plaintiffs alleged the above elements of fraud in the SAC.
As we have discussed, plaintiffs alleged the CVT installed in numerous Nissan
vehicles (including the one plaintiffs purchased) were defective; Nissan knew
of the defects and the hazards they posed; Nissan had exclusive knowledge of
the defects but intentionally concealed and failed to disclose that
information; Nissan intended to deceive plaintiffs by concealing known
transmission problems; plaintiffs would not have purchased the car if they had
known of the defects; and plaintiffs suffered damages in the form of money paid
to purchase the car.
In its short argument on this point in its appellate brief,
Nissan argues plaintiffs did not adequately plead the existence of a
buyer-seller relationship between the parties, because plaintiffs bought the
car from a Nissan dealership (not from Nissan itself). At the pleading stage
(and in the absence of a more developed argument by Nissan on this point), we
conclude plaintiffs' allegations are sufficient. Plaintiffs alleged that they
bought the car from a Nissan dealership, that Nissan backed the car with an
express warranty, and that Nissan's authorized dealerships are its agents for
purposes of the sale of Nissan vehicles to consumers. In light of these
allegations, we decline to hold plaintiffs' claim is barred on the ground there
was no relationship requiring Nissan to disclose known defects.
Nissan also contends plaintiffs did not provide specifics
about what Nissan should have disclosed. But plaintiffs alleged the CVT were
defective in that they caused such problems as hesitation, shaking, jerking,
and failure to function. The SAC also alleged Nissan was aware of the defects
as a result of premarket testing and consumer complaints that were made both to
National Highway Traffic Safety Administration and to Nissan and its dealers.
It is not clear what additional information Nissan believes should have been
included. We decline to hold (again in the absence of a more developed argument
on this point) that plaintiffs were required to include in the SAC more
detailed allegations about the alleged defects in the CVT. We conclude
plaintiffs' fraud claim was adequately pleaded.” (Dhital, supra, 84
Cal.App.5th at 844.)
In comparison, Plaintiff’s FAC
fails to provide a comparable level of factual allegation regarding GM’s
awareness of a defect, simply concluding:
“a. Defendant GM acquired its knowledge of the Cooling System
Defect and its potential consequences prior to Plaintiff acquiring the subject
vehicle, though sources not available to consumers such as Plaintiff, including
but not limited to preproduction testing data, early consumer complaints about
the Cooling System Defect made directly to GM and its network of dealers,
aggregate warranty data compiled from GM’s network of dealers, testing
conducted by GM in response to these complaints, as well as warranty repair and
part replacements data received by GM from GM’s network of dealers, amongst
other sources of internal information;
b. Defendant GM was in a superior position from various
internal sources to know (or should have known) the true state of facts about
the material defects contained in vehicles equipped with the Cooling System.”
(FAC ¶ 84.)
In
reply, GM reiterates the claims are time-barred as the alleged defects date
back to 2010 and “Plaintiff fails to explain why he was not on notice based on
the public ‘communications’ he claims GM made in 2014 and 2017 relating to the
cooling system of the Subject Vehicle.” (Reply, 1; citing FAC ¶¶ 21, 33-37.) GM
contends Plaintiff cannot therefore contend he did not discover the defects
until much later as “Plaintiff affirmatively cites to publicly available
information pre-dating his purchase of the Subject Vehicle...” (Reply, 2.) GM also contends Plaintiff’s FAC fails to meet
the heightened pleading standard by not alleging the how, when, what means, and
other “essential elements” here. (Reply, 5.) GM lastly reiterates Plaintiff has
failed to allege specific factual details regarding GM’s knowledge of the
alleged defect, specific concealment on the part of GM’s authorized
representatives, and damages as a result of any alleged fraudulent concealment.
(Reply, 6.)
The court agrees with GM again that the fifth
cause of action fails to plead fraud with the required specificity.
Specifically, it is unclear from the FAC that GM knew or actively concealed that
the Vehicle had defects prior to Plaintiff’s purchase of the Vehicle, which
individuals authorized to speak on behalf of GM made the omissions and/or
misrepresentations, and alternatively, if GM had superior knowledge of any
alleged defects, how such public knowledge would not then bar Plaintiff’s fraud
claims pursuant to the statute of limitations. Instead, the FAC alleges
generally that Defendant knew of defects in GM vehicles generally. “The very
existence of a warranty presupposes that some defects may occur.” (Santana
v. FCA US, LLC (2020) 56 Cal.App.5th 334, 344.) Thus, the existence of
defects which involved vehicles Plaintiff did not own are not, by themselves,
enough to demonstrate that a defendant vehicle manufacturer fraudulently
concealed a defect from Plaintiffs. (Id.)
For
these reasons, Defendant’s demurrer is sustained.
Conclusion
Defendant’s demurrer is sustained. Plaintiff is granted 20
days leave to amend. Defendant is to give notice.
MOTION TO STRIKE
Defendant moves to strike all of the
following from the Complaint:
1. On page 22, line 7,
Plaintiff’s prayer (h) “[f]or punitive damages
Discussion
Pursuant to CCP § 436, “the court may,
upon a motion made pursuant to Section 435, 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. (b) Strike 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.” The grounds for a motion to strike must
“appear on the face of the challenged pleading or from any matter of which the
court is required to take judicial notice.” (CCP §
437.)
Motions to strike are used to challenge
defects in the pleadings not subject to demurrer.
(Ferraro v. Camarlinghi (2008) 161 Cal.App.4th 509, 529 [recognizing
that an objection that the complaint failed to state facts sufficient to
constitute a cause of action is ground for a general demurrer, not a motion to
strike.].) Any party may move to strike the whole or any part of a
pleading within the time allotted to respond to the pleading. (CCP § 435(b)(1).)
The allegations of a complaint “must be liberally construed, with a view to
substantial justice between the parties.” (CCP § 452.) The court
“read[s] allegations of a pleading subject to a motion to strike as a whole,
all parts in their context, and assume[s] their truth.” (Clauson v.
Sup. Ct. (1998) 67 Cal.App.4th 1253, 1255 (Clauson).)
Defendant contends that Plaintiff’s
Song-Beverly Act claims are insufficient to support a prayer for civil
penalties and punitive damages simultaneously as the civil penalty under section
1794(c) is “akin to punitive damages.” (Motion, 5-6; citing Kwan v.
Mercedes-Benz of N. America (1994) 23 Cal.App.4th 174, 184.)
Specifically, Defendant cites Troensegaard v. Silvercrest Industries,
Inc. (1985) 175 Cal.App.3d 218, 228 to contend Plaintiff
is seeking a “double recovery,” both “punitive damages and a ‘civil penalty’
under Civil Code § 1794, which he cannot do.”
The Troensegaard court
stated, in relevant part:
“We are of the opinion that had the Legislature, by Civil
Code sections 3294 (permitting punitive damages) and 1794
(permitting a civil penalty), intended a double recovery of
punitive and penal damages for the same willful, oppressive, malicious, and
oppressive acts, it would in some appropriate manner have said so. And we
believe that by seeking a ‘civil penalty’ and also attorney's fees and all
reasonable expenses as allowed by Civil Code section 1794, plaintiff had in
effect elected to waive punitive damages under section 3294.” (Id.)
Defendant thus contends that as the
fraud claim cannot support a punitive damages claim for being insufficiently
pled, and the claims under the Act cannot support a claim for concern of double
recovery, the FAC fails to plead sufficient allegations to support a claim for
punitive damages. (Motion, 6-8.)
In opposition, Plaintiff cites to only
persuasive authorities finding a recovery of punitive damages in cases of
“willful breach.” (Opp., 3-4.) Plaintiff then contends the FAC “alleges that GM
willfully violated Song-Beverly. Accordingly, Plaintiff may seek punitive
damages through Song-Beverly.” (Opp., 4.) However, Plaintiff fails to explain
or point to authority to show how the FAC’s allegations, if taken as true,
establish GM’s willful breach of the Act.
In reply, Defendant again contends that
punitive damages are not available under Song-Beverly because recovery of both
civil penalties and punitive damages constitutes a double recovery and thus the
request for punitive damages must be stricken. (Reply, 2-3.) Defendant further
contends Plaintiff has failed to allege sufficient facts to make a showing of
oppression, malice, or fraud under section 3294. (Reply, 1-2.)
Upon review of the FAC, the court
agrees with Defendant regarding the concern for double recovery and the lack of
sufficient allegations in the FAC to show either a willful breach of the Act or
oppression, malice, or fraud, as would allow recovery of punitive damages under
some of the FAC’s claims.
Therefore, Defendant’s motion to strike
is also granted.
Conclusion
Defendant’s motion is granted.
Plaintiff is granted 20 days leave to amend. Defendant is to give
notice.