Judge: Gail Killefer, Case: 24STCV09843, Date: 2024-12-12 Tentative Ruling

Case Number: 24STCV09843    Hearing Date: December 12, 2024    Dept: 37

HEARING DATE:                 Thursday, December 12, 2024

CASE NUMBER:                   24STCV09843

CASE NAME:                        Donald F. Ramos, et al. v. General Motors, LLC., et al.

MOVING PARTY:                 Defendant General Motors, LLC

OPPOSING PARTY:             Plaintiffs Donal F. Ramos and Katrina Ramos

TRIAL DATE:                        Not set.

PROOF OF SERVICE:           OK

PROCEEDING:                      Demurrer with Motion to Strike

OPPOSITION:                        13 November 2024

REPLY:                                  19 November 2024

TENTATIVE:                         Defendant GM’s demurrer is overruled and the motion to strike is denied. Defendant GM must file an Answer by December 23, 2024. An OSC Re: Filing of Answer is set for January 10, 2025, at 8:30 a.m. and the Case Management Conference is also continued to that date and time.  Defendant to give notice.

Background

On April 19, 2024, Donald Ramos and Katrina Ramos (“Plaintiffs”) filed a Complaint against General Motors (“Defendant” or “GM”) for violations of the Song-Beverly Act.

On August 1, 2024, Plaintiffs filed the operative First Amended Complaint (“FAC”) alleging five causes of action: 1) Violation of Civ. Code § 1793.2; 2) Violation of Civ. Code § 1793.2(B); 3) Violation of Civ. Code § 1793.2(A)(3); 4) Breach of the Implied Warranty of Merchantability (Civ. Code, §§ 1791.1, 1794, 1795.5.); and 5) Fraudulent Inducement – Concealment.

Defendant GM now demurs to the fifth cause of action. Plaintiffs oppose the Motion. The matter is now before the court.

LEGAL STANDARDS

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.)¿¿¿ 

Demurrer[1]

            A.        Fifth Cause of Action - Fraudulent Inducement – Concealment

Fraud based on concealment requires that “(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.)¿ Less specificity is required to plead fraud by concealment.¿ (Ibid.)¿“Even 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.”¿ (Alfaro v. Community Housing Improvement System & Planning Assn., Inc. (2009) 171 Cal.App.4th 1256, 1384.)¿

Defendant GM demurs to the fifth cause of action on the basis that the fraud claim is not pled with the requisite specificity and fails to allege a transactional relation between GM and Plaintiff that gives rise to a duty to disclose. “Under California law, a plaintiff may assert a cause of action for fraudulent concealment based on conduct occurring in the course of a contractual relationship, if the elements of the claim can be established independently of the parties' contractual rights and obligations and the tortious conduct exposes the plaintiff to a risk of harm beyond the reasonable contemplation of the parties when they entered into the contract.” (Rattagan v. Uber Technologies, Inc. (2024) 17 Cal.5th 1, 45.)

Here, the FAC alleges Defendant GM, “through sources not available to consumers such as Plaintiffs, including but not limited to pre-production and post-production testing data; early consumer complaints about the Transmission Defect made directly to Defendant GM and its network of dealers; aggregate warranty data compiled from Defendant GM’s network of dealers; testing conducted by Defendant GM in response to these complaints; as well as warranty repair and part replacements data received by Defendant GM from Defendant GM’s network of dealers, amongst other sources of internal information” knew about the transmission defect in the Subject Vehicle and the safety risk it posed. (FAC, ¶¶ 63, 71.)

The transmission defect posed a safety hazard due to “1) the battery dying, 2) sudden automatic braking repeatedly, 3) warning lights and sensors going off repeatedly.” (Id., ¶ 24.) The transmission defect “can suddenly and unexpectedly cause the driver to be unable to control the speed and acceleration/deceleration of the vehicle” exposing Plaintiffs and their passengers (along with other drivers who share the road or garage with Plaintiffs) to a serious risk of accident and injury.” (Id., ¶ 62.) Defendant GM “concealed information about the defects in Defendant’s Vehicles prior to and at the time of sale and thereafter” and “continued to conceal the Transmission Defect from consumers, including in its marketing materials, and advised any complaining customers that poor shifts were ‘normal.’” (Id., ¶¶ 30, 65.)

Defendant GM maintains that Plaintiffs’ fraud claim lacks specificity because the FAC fails to state “(i) the identity of the individuals at GM who purportedly concealed material facts or made untrue representations about their Colorado, (ii) their authority to speak and act on behalf of GM, (iii) GM’s knowledge about alleged defects in Plaintiffs’ Colorado at the time of purchase, (iv) any interactions with GM before or during the purchase of the Colorado, or (v) GM’s intent to induce reliance by Plaintiff to purchase the specific Colorado at issue.” (Motion, at p. 9:7-12.)

The rule of specificity of pleading is intended to apply only to affirmative representations and not to fraud by concealment. (See Alfaro, supra, 171 Cal.App.4th at 1384.) As the Alfaro court 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?’” (Ibid.; see Jones v. ConocoPhillips (2011) 198 Cal.App.4th 1187, 1200 [concealment is sufficiently pled when the complaint as a whole provides sufficient notice of the claims against defendants].)¿¿ 

Here, the FAC sufficiently alleges that Defendant GM “authorized or ratified by GM’s officers, directors or managing agents, including approving GM’s marketing materials and product disclosures which failed to disclose the Transmission Defect and which were relied upon by Plaintiffs, thereby inducing them into purchasing Subject Vehicle.” (FAC, ¶ 75.) This is sufficient to put Defendant GM on notice of the basis for Plaintiff’s fraud allegations and the fact that Plaintiff believes “Defendant (and its agents, representatives, officers, directors, employees, affiliates, and/or dealerships) concealed the defects, minimized the scope, cause, and dangers of the defects with inadequate TSBs and/or Recalls, and refused to investigate, address, and remedy the defects as it pertains to all affected vehicles[.]” (Id., ¶ 36.)

Moreover, the specific information as to who allegedly authorized or ratified the concealment of the transmission defect is information that lies with Defendant GM and not Plaintiffs. “We acknowledge that the requirement of specificity is relaxed when the allegations indicate that ‘the defendant must necessarily possess full information concerning the facts of the controversy’ [citation] or ‘when the facts lie more in the knowledge of the opposite party[.]’ [Citation.]” (Tarmann v. State Farm Mut. Auto. Ins. Co.¿(1991) 2 Cal.App.4th 153, 158.) Accordingly, the court finds that the fraud claim is adequately pled.

Second, the FAC alleges a buyer-manufacturer/distributor relationship between Plaintiffs and Defendant GM that gives rise to a duty to disclose.

In Rattagan v. Uber Technologies, Inc. (2024) 17 Cal.5th 1, the California Supreme Court recognized that manufacturers owe a duty to disclose when “(3) the material facts are known or accessible only to defendant, and defendant knows those facts are not known or reasonably discoverable by plaintiff (i.e., exclusive knowledge); (4) the defendant makes representations but fails to disclose other facts that materially qualify the facts disclosed or render the disclosure misleading (i.e., partial concealment); or (5) defendant actively conceals discovery of material fact from plaintiff (i.e., active concealment).” (Id. at p. 40.)

Here, the FAC alleges that Defendant GM had superior knowledge about the transmission defect and actively concealed the defect by telling consumers that the poor shifts were “normal” and “purporting to be able to fix the symptoms of the defects and/or that such symptoms were not the result of a defect.” (FAC, ¶¶ 31, 65.) Defendant GM fails to cite case law supporting the finding that a manufacturer of a consumer vehicle owes no duty to the end consumers of their products, even if they did not directly sell the vehicle to the buyer.

The demurrer to the fifth cause of action is overruled.

Motion to Strike

Defendant GM moves to strike the request for punitive damages in the FAC. Defendant GM asserts “punitive damages claim must be stricken because Plaintiffs have not pled a viable fraud claim or any other cause of action that can support a claim for punitive damages.” (Motion, at p. 1:6-8.) As the demurrer to the fifth cause of action is overruled, Plaintiffs can seek punitive damages based on their fraud claim.

Second, Defendant GM asserts that the FAC fails to allege facts to show that GM acted with malice, fraud, or oppression sufficient to support a claim for punitive damages. (Civ. Code, § 3294(c)(3).) As the court has overruled the fraud cause of action, the allegations relating to fraud are sufficient to withstand the pleading requirements for punitive damages. The FAC sufficiently alleges that “[a]ll acts of corporate employees as alleged herein, were authorized or ratified by GM’s officers, directors or managing agents, including approving GM’s marketing materials and product disclosures which failed to disclose the Transmission Defect and which were relied upon by Plaintiffs, thereby inducing them into purchasing Subject Vehicle.” (FAC, ¶ 75.)

The motion to strike is denied.

Conclusion

Defendant GM’s demurrer is overruled and the motion to strike is denied. Defendant GM must

file an Answer by December 23, 2024. An OSC Re: Filing of Answer is set for January 10, 2025,

at 8:30 a.m. and the Case Management Conference is also continued to that date and time. 

Defendant to give notice.