Judge: Gail Killefer, Case: 23STCV25849, Date: 2024-06-10 Tentative Ruling

Case Number: 23STCV25849    Hearing Date: June 10, 2024    Dept: 37

HEARING DATE:                 Monday, June 10, 2024

CASE NUMBER:                   23STCV25849

CASE NAME:                        Daniel R. McCarthy v. General Motors LLC

MOVING PARTY:                 Defendant General Motors LLC

OPPOSING PARTY:             Plaintiff Daniel R. McCarthy

TRIAL DATE:                        Not Set

PROOF OF SERVICE:           OK

PROCEEDING:                      Demurrer with Motion to Strike Complaint.

OPPOSITION:                        28 May 2024

REPLY:                                  3 June 2024

TENTATIVE:                         Defendant GM’s demurrer is overruled. GM’s motion to strike is granted with leave to amend. Plaintiff is granted 30 days leave to amend. The court sets the OSC RE: Amended Complaint for July 17, 2024, at 8:30 a.m. Defendant GM to give notice.

Background

On October 23, 2023, Daniel M. McCarthy (“Plaintiff”) filed a Complaint against General Motors, LLC (“GM”) and Does 1 to 20.

The Complaint alleges six causes of action: (1) Fraud Concealment and Misrepresentation, (2) Negligent Misrepresentation, (3) Bus. & Prof. 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 –Civ. Code § 1793.2(b).)

Defendant GM now demurs to the Complaint and moves to strike Plaintiff’s request for punitive damages. Plaintiff opposes the Motion. The matter is now before the court.

discussion

I.         Legal Standard

A.        Demurrer 

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.)¿“To survive a demurrer, the complaint need only allege facts sufficient to state a cause of action; each evidentiary fact that might eventually form part of the plaintiff’s proof need not be alleged.”¿(C.A. v. William S. Hart Union High School Dist. (2012) 53 Cal.4th 861, 872.)¿For the purpose of testing the sufficiency of the cause of action, the demurrer admits the truth of all material facts properly pleaded.¿ (Aubry v. Tri-City Hospital Dist. (1992) 2 Cal.4th 962, 966-967.)¿A demurrer “does not admit contentions, deductions or conclusions of fact or law.”¿(Daar v. Yellow Cab Co. (1967) 67 Cal.2d 695, 713.)¿¿ 

B.        Motion to Strike 

¿Any party, within the time allowed to respond to a pleading may serve and file a notice of motion to strike the whole or any part thereof. (CCP § 435(b)(1); CRC, rule 3.1322(b).) The court may, upon a motion or at any time in its discretion and upon terms it deems proper: (1) strike out any irrelevant, false, or improper matter inserted in any pleading; or (2) strike out all or any part of any pleading not drawn or filed in conformity with the laws of California, a court rule, or an order of the court. (CCP, § 436(a)-(b); Stafford v. Shultz (1954) 42 Cal.2d 767, 782 [“Matter in a pleading which is not essential to the claim is surplusage; probative facts are surplusage and may be stricken out or disregarded”].)¿¿¿¿ 

C.        Leave to Amend 

“Where the defect raised by a motion to strike or by demurrer is reasonably capable of cure, leave to amend is routinely and liberally granted to give the plaintiff a chance to cure the defect in question.” (CLD Construction, Inc. v. City of San Ramon (2004) 120 Cal.App.4th 1141, 1146.) The burden is on the complainant to show the Court that a pleading can be amended successfully. (Goodman v. Kennedy (1976) 18 Cal.3d 335, 348.)¿¿¿ 

II.        Demurrer[1]

A.        Summary of Allegations in the Complaint

On May 2, 2021, Plaintiff leased a 2021 Chevrolet Bolt EV (the “Subject Vehicle”). (Compl., ¶ 8.) The Complaint asserts that Plaintiff relied on the representations of the salesperson authorized to speak on behalf of GM and GM’s advertisements and publication that assert that the Subject Vehicle could travel 259 miles on a single charge and, if there was any defect during the warranty period, GM would repair it at no charge to Plaintiff. (Compl., ¶¶ 2, 8, 37.) The Complaint asserts the Subject Vehicle came with serious defects regarding the battery. (Compl., ¶ 11.) The battery could start a fire, reduce the charge capacity, and reduce the distance the vehicle can be driven on a single charge.  These defects resulted in GM issuing numerous recalls and advising owners to not charge the vehicle in their garages due to the risk of fire. (Compl., ¶ 11.)

The Complaint alleges that GM was aware of the battery defect as early as 2017 and throughout 2018 issued a notice of battery defect to consumers. (Compl., ¶¶ 11-16, 20.) “From July 20, 2020 to August 26, 2020, GM received at least four claims alleging that the battery pack in Chevrolet Bolt vehicles had caused a fire.” (Compl., ¶ 16.) Despite the issues with the battery, “GM included the same type of defective batteries in the 2020, 2021, 2022, and 2023 model year Chevrolet Bolt vehicles.” (Compl., ¶ 17.) Due to the battery defect, GM issued a recall on November 13, 2020, but the recall did not apply to the 2020 and later model year Chevrolet Bolt vehicles despite the vehicles using the same defective battery. (Compl., ¶¶ 18, 19, 21, 22.) It was not until August 20, 2021, that GM issued a battery recall for all 2019 and 2020 to 2022 Bolt EV and Bolt EUV models. (Compl., ¶ 23.)

On August 20, 2021, Plaintiff presented the Subject Vehicle to an authorized Chevrolet dealership to have the defective battery replaced pursuant to GM’s express warranties. (Compl., ¶ 23.) However, the dealership advised Plaintiff that the parts were not available and there was no information as to when they would be available. (Compl., ¶ 23.) To date, GM has not been able to conform the Subject Vehicle to its express warranties and the Subject Vehicle remains in a defective condition, despite Plaintiff’s repeated presentations of the Subject Vehicle for repair at an authorized facility. (Compl., ¶ 25.)

At the time the Subject Vehicle was leased, GM knew or should have known that it was being advertised and sold with false and misleading representations regarding the range of the Vehicle and the risk of fire posed by the defective battery. (Compl., ¶¶ 27, 30.) Instead of disclosing the defect, GM concealed, suppressed and/or omitted facts about the battery defect to sell more vehicles and avoid the cost of repair or replacement. (Compl., ¶ 32.)

Defendant GM now demurs to the first, second, and third causes of action on the basis that the Complaint fails to state sufficient facts to support the causes of action alleged.

B.        First and Second Causes of Action - Fraud Concealment and Misrepresentation and Negligent Misrepresentation

“The essential elements of a count for intentional misrepresentation are (1) a misrepresentation, (2) knowledge of falsity, (3) intent to induce reliance, (4) actual and justifiable reliance, and (5) resulting damage. [Citations.] The essential elements of a count for negligent misrepresentation are the same except that it does not require knowledge of falsity but instead requires a misrepresentation of fact by a person who has no reasonable grounds for believing it to be true. [Citations.] Each 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, although less specificity is required if the defendant would likely have greater knowledge of the facts than the plaintiff. [Citation.]”  (Chapman v. Skype Inc. (2013) 220 Cal.App.4th 217, 230–231.) “In California, fraud must be pled specifically; general and conclusory allegations do not suffice.” (Lazar v. Superior Court (1996) 12 Cal.4th 631, 645.) Specificity “necessitates pleading facts which show how, when, where, to whom, and by what means the representations were tendered.” (Id. at p. 631.)

Defendant GM asserts that Plaintiff’s fraud claims fail because “Plaintiff did not identify the alleged misrepresentations with specificity, or identify who at GM made the alleged misrepresentations, or identify when GM made the alleged misrepresentations, or identify where GM made the alleged misrepresentations, or identify how GM made the alleged misrepresentations.” (Demurrer, at p. 8:1-4.)

The Complaint sufficiently alleges that Plaintiff relied on the representations made at a GM authorized dealership by the salesperson who had the authority to speak on behalf of GM.  Plaintiff also relied on GM’s advertisement and publications that the Subject Vehicle was safe and could travel 259 miles on a single charge. (Compl., ¶ 8.) However, the misrepresentations regarding the range of the vehicle were false, as were the representations regarding the safety of the Vehicle, because the defective battery posed a fire risk. (Compl., ¶ 26.)

GM owed a duty to disclose because, as the manufacturer, it had superior knowledge about the defective battery and the risks it posed. (See Heliotis v. Schuman (1986) 181 Cal.App.3d 646, 651.) “Although, typically, a duty to disclose arises when a defendant owes a fiduciary duty to a plaintiff [Citation], a duty to disclose may also arise when a defendant possesses or exerts control over material facts not readily available to the plaintiff.” (Jones v. ConocoPhillips Co. (2011) 198 Cal.App.4th 1187, 1199.) Beginning in 2018, GM issued a series of recalls related to defective batteries. (Compl., ¶¶ 11-16, 20.) Despite the battery being defective “GM included the same type of defective batteries in the 2020, 2021, 2022, and 2023 model year Chevrolet Bolt vehicles.” (Compl., ¶ 17.) On November 13, 2020, GM issued a recall related to the battery but waited until after Plaintiff had purchased the vehicle to issue a recall for the 2020 to 2022 Bolt EV and Bolt EUV models on August 20, 2021. (Compl., ¶ 23.)

The court finds, based on the facts above, that Plaintiff has sufficiently alleged that GM knew about the battery defect but concealed the defect by not repairing the battery defect in the newer models.  Instead, GM used the same defective battery and delayed a recall until more vehicles were sold. (Compl., ¶ 32.) GM knew that the 2020 to 2022  Bolt EV and Bolt EUV models contained defective batteries, but it continued to advertise the Subject Vehicle and related models as safe and being able to travel 259 miles on a single charge. (Compl., ¶ 37.) Moreover, the specificity requirement is harder to meet when the fraud cause of action is based on nondisclosures. (See Alfaro v. Community Housing Improvement System & Planning Assn., Inc. (2009) 171 Cal.App.4th 1356, 1384 [“How does one show ‘how’ and ‘by what means' something didn't happen, or ‘when’ it never happened, or ‘where’ it never happened?”].) “One of the purposes of the specificity requirement is ‘notice to the defendant, to furnish the defendant with certain definite charges which can be intelligently met.’ [Citation.]” (Id. at p. 1384 [internal quotations omitted].)

Based on the facts above, the demurrer to the first and second cause of action is overruled.

C.        Third Cause of Action -  Unfair Competition Law (Bus. & Prof. Code § 17200)

Business and Professions Code § 17200 (“UCL”) prohibits “any unlawful, unfair or fraudulent business act or practice.” (Bus. & Prof. Code, § 17200; see Clark v. Superior Court (2010) 50 Cal.4th 605, 610.) To plead this statutory claim, the pleadings 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.)

“An unlawful business practice or act is an act or practice, committed pursuant to business activity, that is at the same time forbidden by law.” (Klein v. Earth Elements, Inc. (1997) 59 Cal.App.4th 965, 969.) “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.” (McKell v. Washington Mutual, Inc. (2006) 142 Cal.App.4th 1457, 1473.) Lastly, a fraudulent business practice claim under section 17200 “is not based upon proof of the common law tort of deceit or deception, but is instead premised on whether the public is likely to be deceived.” (Pastoria v. Nationwide Ins. (2003) 112 Cal.App.4th 1490, 1499.)

Defendant GM demurs to the third cause of action on the basis that because Plaintiff intentional and negligent misrepresentations fail for lack of specificity, the UCL claim is not tethered to a violation. As stated above, the court finds that the first and second causes of action are sufficiently pled. Specifically, GM knew about the battery defect since 2018 but continued to use the same defective battery in future models.  GM waited to recall the vehicles affected so that GM could sell more vehicles and avoid the costs of repair and replacement. (Compl., ¶¶ 11-16, 18, 20-23.) Moreover, to date, GM has not repaired the defect in the Subject Vehicle. (Compl., ¶ 25.) Therefore, the court finds the Complaint sufficiently alleges that GM made representations that were unfair, unlawful, or fraudulent and violated the Song-Beverly Consumer Warranty Act. (Compl., ¶¶ 51-53.)

GM also alleges that the third cause of action fails because Plaintiff has failed to establish standing and entitlement to injunctive relief. “To satisfy the standing requirements, a party must (1) establish a loss or deprivation of money or property sufficient to qualify as injury in fact, i.e., economic injury, and (2) show that the economic injury was the result of, i.e., caused by, the unfair business practice or false advertising that is the gravamen of the claim.” (Kwikset Corp. v. Super. Ct. (2011) 51 Cal.4th 310, 322 [italics original].) The court finds that the Complaint sufficiently alleges that Plaintiff suffered an economic injury in the fact that due to GM’s concealment of the battery defect, Plaintiff leased the Subject Vehicle, which later turned out to not be safe due to the risk posed by the defective battery. (Compl., ¶¶ 33, 57.)

Because a demurrer must dispose of an entire cause of action, the fact that Plaintiff has not adequately alleged he is entitled to injunctive relief does not render the third cause of action subject to demurrer because Plaintiff has adequately alleged facts to establish standing and that he is entitled to restitution. (See Fremont Indemnity Co. v. Fremont General Corp. (2007) 148 Cal.App.4th 97, 119.)

Accordingly, the demurrer to the third cause of action is overruled. 

On reply, Defendant GM asserts that other deficiencies exist in the Complaint. The court does not consider these deficiencies. “Points raised for the first time in a reply brief will not be considered.” (Malmstrom v. Kaiser Aluminum & Chemical Corp. (1986) 187 Cal.App.3d 299, 320.)

III.      Motion to Strike

Defendant GM moves to strike Plaintiff’s request for punitive damages as requested in the Prayer for Relief in Paragraph 7. When the defendant is a¿corporation, “the oppression, fraud, or malice must be perpetrated, authorized, or knowingly ratified by an officer, director, or managing agent of the¿corporation.” (Wilson v. Southern California Edison Company (2015) 234 Cal.App.4th 123, 164; see Civ. Code, § 3294(b).)

The Complaint alleges that “All acts of corporate employees as alleged were authorized or ratified by an officer, director or managing agent of the corporate employer.” (Compl., ¶ 5.) “GM’s conduct constitutes conduct that is oppressive, fraudulent, and/or malicious, entitling Plaintiff to punitive damages under Civil Code Section 3294, and the acts of GM’s employees as alleged were authorized or ratified by an officer, director, and/or managing agent of GM.” (Compl., ¶ 42.)

The court finds that the above allegations are conclusory and devoid of any facts to show that a managing agent of GM ratified a corporate policy that was oppressive, fraudulent, or malicious to consumers or Plaintiff. The Complaint fails to allege an employee or managing agent of GM engaged or ratified GM’s conduct in concealing the existence of a battery defect. As Plaintiff’s claims for punitive damages are conclusory and devoid of facts, GM’s motion to strike is granted with leave to amend.

Conclusion

Defendant GM’s demurrer is overruled. GM’s motion to strike is granted with leave to amend. Plaintiff is granted 30 days leave to amend. The court sets the OSC RE: Amended Complaint for July 17, 2024, at 8:30 a.m. Defendant GM to give notice.