Judge: Gary I. Micon, Case: 23CHCV01449, Date: 2024-04-16 Tentative Ruling
Case Number: 23CHCV01449 Hearing Date: April 16, 2024 Dept: F43
Dept. F43
Date: 4-16-24
Case #23CHCV01449, Jacob Alvarado vs. American Honda
Motor Co., Inc.
Trial Date: N/A
DEMURRER WITH MOTION TO STRIKE
MOVING PARTY: Defendant American Honda Motor Co., Inc.
RESPONDING PARTY: Plaintiff Jacob Alvarado
RELIEF REQUESTED
Demurrer to the Complaint
·
2nd Cause of Action: Fraudulent
Inducement – Concealment
Motion to Strike
·
Prayer for Punitive Damages [Comp., p. 27, line
9, subpart 6]
RULING: Demurrer is sustained with leave to amend;
motion to strike granted
SUMMARY OF ACTION
On March 13, 2022, Plaintiff Jacob Alvarado (Plaintiff)
purchased a new 2022 Honda Insight. (Comp., ¶ 8.) Plaintiff received a New Vehicle Limited
Warranty in connection with the purchase of the vehicle from Defendant American
Honda Motor Co., Inc. (Defendant). (Comp., ¶ 9.) Plaintiff alleges that the vehicle was equipped
with a defective computerized driver-assistance safety system called “Honda
Sensing”. (Comp., ¶
11.) Plaintiff alleges that Defendant failed to disclose that normal, everyday
driving conditions can cause problems with Honda Sensing. (Comp., ¶¶ 20-21.) Plaintiff
further alleges that Honda knew or should have known about the defects with
Honda Sensing, yet Honda sold the vehicles anyways. (Comp., ¶¶ 22-26.)
Plaintiff alleges that Defendant knew of the Honda
Sensing defect since at least 2016 and knowingly sold a dangerously defective
vehicle to Plaintiff. (Comp., ¶¶
27-64.) Plaintiff further alleges that Defendant did not disclose and has
actively concealed the Honda Sensing defect (Comp., ¶¶ 71-83.) Plaintiff also alleges that he would not have
purchased the vehicle had he known about the defect (Comp., ¶ 80.) Further,
Plaintiff alleges that Defendant markets its vehicle as particularly reliable
when compared to the competition. (Comp., ¶ 81.) Finally, Plaintiff alleges
that Defendant and its representatives at the dealership where Plaintiff bought
his vehicle did not disclose the defect to Plaintiff. (Comp., ¶ 87.)
On May 16, 2023, Plaintiff filed his complaint with two causes
of action for (1) Violation of Song-Beverly Act – Breach of Express Warranty; and
(2) Fraudulent Inducement – Concealment.
Defendant filed its demurer with motion to strike on June
21, 2023. Plaintiff filed his opposition to Defendant’s demurrer and motion to
strike on January 2, 2024. Defendant filed its reply on January 16, 2024.
Plaintiff’s Request for Judicial Notice: Pursuant to
Evidence Code §§
452(d) and 453, Plaintiff requests that the Court take judicial notice of a
Second Amended Complaint filed in a lemon law case in Alameda County. Defendant
opposes Plaintiff’s request on the basis that Plaintiff did not acknowledge
that review is pending in that case. Defendant also argues that the case can be
used for persuasive value only. The Court denies Plaintiff’s request for
judicial notice.
ANALYSIS
Defendant brings a demurrer to the Second Cause of Action
for Fraudulent Inducement – Concealment. Defendant contends the challenged
cause of action fails to state facts sufficient to constitute a cause of action
against it.
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.) “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.) 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 applying these standards, the court liberally
construes the complaint to determine whether a cause of action has been stated.
(Picton v. Anderson Union High School
Dist. (1996) 50 Cal.App.4th 726, 733.)
A fraud cause of action requires a Plaintiff to plead and
prove: “(a) [a] misrepresentation (false representation, concealment, or
nondisclosure); (b) knowledge of falsity (or “scienter”); (c) intent to
defraud, i.e., to induce reliance; (d) justifiable reliance; and (e) resulting
damage.” (Lazar v. Superior Court (1996) 12 Cal 4th 631, 638.) Fraud
causes of action must be pled with specificity. “…This particularity
requirement necessitates pleading facts which ‘show how, when, where, to whom
and by what means the representations were tendered.’” (Stansfield v.
Starkey (1990) 220 Cal.App.3d 59, 73, quoting Hills Trans. Co. v.
Southwest (1968) 266 Cal.App.2d 702, 707.)
Fraud claims against a corporation must “allege the names of
the persons who made the allegedly fraudulent 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.)
Plaintiff’s complaint alleges that Defendant and its agents
“actively concealed the nature and existence of the Honda Sensing Defect from
Plaintiff at the time of purchase, repair, and thereafter.” (Comp., ¶ 71.)
However, his complaint does not allege that any specific misrepresentations
were made to him about the Honda Sensing system.
Plaintiff’s allegations are not enough to satisfy the
pleading requirements for fraud. While Plaintiff alleges that the Honda Sensing
defect was not disclosed to him, he does not plead any facts indicating that people
with whom Plaintiff spoke at the dealership had knowledge of or should have had
knowledge of the defect. He also has not pled whether, if the representatives
at the dealership did have knowledge of the defect, they intended to defraud
Plaintiff.
Plaintiff has also failed to plead the requisite specificity
required for fraud actions. He has not pled how, when, where, and by what means
the misrepresentations (or nondisclosures, in this case) were tendered. Without
the specific details regarding the misrepresentations and nondisclosure,
Plaintiff cannot maintain a cause of action for fraud. Plaintiff was also
required to allege the names of persons who made the fraudulent statement,
their authority to speak, and what they said. Plaintiff did not do so.
Furthermore, Plaintiff primarily makes conclusory
allegations about the misrepresentations made by Defendant. (See Comp., ¶¶ 23,
44.) Conclusory allegations are not sufficient for fraud causes of action.
Plaintiff argues in his opposition that he sufficiently
alleged that Defendant had a duty to disclose the defect. The duty to disclose
arises in four ways: “(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.” (Heliotis v. Schuman
(1986) 181 Cal.App.3d 646, 651, quoting 4 Witkin, Summary of Cal. Law (8th ed.
1974) Torts, §§ 459-464.)
Plaintiff argues that Defendant had a duty to disclose the
concealed facts because it had exclusive knowledge of material facts that were
not known to Plaintiff about the defect. While Plaintiff’s complaint does, in
fact, allege that Defendant had this knowledge (See Comp., ¶¶ 23-26, 28, 35,
37-43, et al.), that is not sufficient by itself to constitute allegations of
fraud. Plaintiff also argues that he alleges specific facts sufficient to
demonstrate concealment. Once again, that is not sufficient to maintain a fraud
cause of action without the requisite specificity.
Next, Plaintiff argues that his complaint contains the specificity
required of fraud actions. He argues that in situations where the actual person
who authorized the false documents is not known to Plaintiff, then he is not
required to identify the person because “[t]he requirement of specificity is
relaxed when the allegations indicate that the defendant must necessarily
possess full information concerning the facts of the controversy or when the
facts lie more in the knowledge of the opposite party.” (Tarmann v. State
Farm Mutual Auto-Mobile Ins. Co. (1992) 2 Cal.App.4th 153, 158.) Plaintiff
argues that his allegations that he viewed promotional materials and spoke to agents
at the dealership are sufficient for his fraudulent concealment cause of
action. However, Plaintiff does not allege that these materials said anything
about the Honda Sensing system, or that he relied on any particular
representations made about the system. Without reliance, Plaintiff cannot
maintain a cause of action for fraud on this issue.
Defendant also argues that Plaintiff’s cause of action for
fraudulent inducement would be barred because of the economic loss rule.
Despite Defendant’s arguments to the contrary, a fraudulent inducement cause of
action would not be barred by the economic loss rule. It is a long-standing
principle in California law that a party may recover for both breach of
contract and fraud. (See Lazar v. Superior Court (1996) 12 Cal.4th 631,
645; see also Freeman & Mills, Inc. v. Belcher Oil Co. (1995) 11
Cal.4th 85, 108 (Plaintiffs permitted to recover exemplary damages in cases
where the breached contract was induced through promissory fraud).) “Although
punitive damages may not be awarded where defendant merely breaches a contract…such
damages may be awarded where defendant fraudulently induces Plaintiffs to enter
into a contract. Fraudulent inducement to enter into a contract constitutes a
tort.” (Kuchta v. Allied Builders Corp. (1971) 21 Cal.App.3d 541, 549;
see also Walker v. Signal Companies, Inc. (1978) 84 Cal.App.3d 982,
996.)
While Plaintiff has not alleged sufficient allegations to
maintain a cause of action for fraudulent inducement, pleading that cause of
action is not barred by the economic loss rule.
Defendant’s demurrer to Plaintiff’s Second Cause of Action
is sustained with leave to amend
Motion to Strike
Defendant has moved to strike Plaintiff’s request for
punitive damages on the basis that Plaintiff has not sufficiently pled that
Defendant acted with oppression, fraud, or malice.
This Court may strike from the complaint any irrelevant,
false, or improper matter. Under CCP § 435, “[a]ny 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.” Under CCP § 436(a), “[t]he court may,
upon a motion made pursuant to Section 435, or at any time in its discretion,
and upon terms it deems proper . . . [s]trike out any irrelevant, false, or
improper matter inserted in any pleading.”
Punitive damages are governed by Civ. Code § 3294: “In an
action for the breach of an obligation not arising from contract, where it is
proven by clear and convincing evidence that the defendant has been guilty of
oppression, fraud, or malice, the plaintiff, in addition to the actual damages,
may recover damages for the sake of example and by way of punishing the
defendant.” (Civ. Code § 3294(a).)
No punitive damages are available under the Song-Beverly
Act. Recovery under that statute is limited to a refund of the purchase price
paid and payable (or replacement of the subject vehicle), plus a civil penalty,
where applicable, not to exceed two times Plaintiff’s actual damages (Civ. Code
§ 1794.)
The Court has sustained Defendant’s demurrer to Plaintiff’s
fraudulent inducement cause of action. Because punitive damages are not
allowable under the Song-Beverly Act, punitive damages are not available for Plaintiff’s
other cause of action. If Plaintiff is able to sufficiently amend his fraudulent
cause of action, then punitive damages may be requested. For now, Defendant’s
motion to strike Plaintiff’s request for punitive damages is granted.
CONCLUSION
Defendant’s demurrer to Plaintiff’s Second Cause of Action
is sustained with leave to amend.
Defendant’s motion to strike Plaintiff’s request for
punitive damages is granted.
Plaintiff is given 30 days leave to amend.
Moving party to give notice to all parties.