Judge: Gary I. Micon, Case: 23CHCV02190, Date: 2024-10-07 Tentative Ruling
Case Number: 23CHCV02190 Hearing Date: October 7, 2024 Dept: F43
Dept. F43
Date: 10-7-24
Case #23CHCV02190 , John
Pule Rodriguez, et al. vs. Ford Motor Company, et al.
Trial Date: N/A
DEMURRER TO FIRST AMENDED COMPLAINT
MOVING PARTY: Defendant Ford Motor Company
RESPONDING PARTY: Plaintiffs John Pule Rodriguez and Juan
Pule Lopez
RELIEF REQUESTED
Demurrer to the First Amended Complaint
·
4th Cause of Action: Fraudulent
Inducement – Concealment
RULING: Demurred is sustained with leave to amend.
SUMMARY OF ACTION
On October 10, 2018, Plaintiffs John Pule Rodriguez and
Juan Pule Lopez (Plaintiff) purchased a 2018 Ford Mustang. Plaintiffs received
various warranties in connection with the purchase of the vehicle from
Defendant Ford Motor Company (Defendant). Plaintiffs allege that there was a
serious transmission defect with the vehicle.
Plaintiffs allege that Defendant knew of the vehicle’s
transmission defects prior to Plaintiffs purchasing the vehicle. Plaintiffs allege that the Transmission
Defect makes the vehicle unsafe. Plaintiffs allege that Defendant issued
several service bulletins related to the Transmission Defect.
On July 25, 2023, Plaintiffs filed their initial complaint
against Defendant. On July 25, 2024, the Court granted Plaintiffs’ motion to
file a First Amended Complaint (FAC). Plaintiffs filed their FAC on July 29,
2024. On August 28, 2024, Defendant filed its demurrer to Plaintiffs’ FAC. Plaintiffs
oppose Defendant’s demurrer.
ANALYSIS
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.)
Fourth Cause of Action for Fraudulent Inducement - Concealment
Defendant brings a demurrer for the Fourth Cause of Action
for Fraudulent Inducement – Concealment. Defendant contends the challenged
cause of action fails to state sufficient facts alleging fraud.
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.)
In this case, Plaintiffs have alleged that there was a
defect with the transmission; that Defendant knew of the defect and its
hazards; that Defendant has exclusive knowledge of the transmission defect and
intentionally concealed and failed to disclose that information; that Defendant
intended to deceive Plaintiffs by concealing the known defect; that Plaintiffs
would not have purchased the car if he had known of the defects; and that
Plaintiffs suffered damages. (FAC, ¶¶ 21-55, 126, 131, 136.) While Plaintiffs
state that they “reviewed marketing brochures, viewed television commercials
and/or heard radio commercials about the qualities of the FORD F-150” (though
it should be noted that Plaintiffs’ vehicle is a Mustang, not a Ford F-150) and
that they reviewed other marketing materials written by Ford prior to
purchasing the vehicle (FAC, ¶ 63), they do not say what those marketing
materials were, what they said about Plaintiffs’ 2018 Mustang, or if they made
any representations about the transmission that were untrue.
When pleading a cause of action for fraudulent concealment,
it is sufficient for a plaintiff to allege that there was a defect; that the
car manufacturer knew of the defect and its hazards; that the car manufacturer
had exclusive knowledge of the defect and intentionally concealed and failed to
disclose that information; that the car manufacturer intended to deceive the
plaintiff by concealing the known defect; that plaintiffs would not have
purchased the car if they had known of the defects; and that plaintiff suffered
damages in the form of money paid to purchase the car. (See Dhital v. Nissan
North America, Inc. (2022) 84 Cal.App.5th 828, 844 [certified to the
California Supreme Court on a separate issue concerning the economic loss rule;
review granted February 1, 2023; citable for persuasive value pursuant to Cal.
Rules of Court Rule 8.1115];
While Plaintiffs’ FAC contains most of the needed
allegations to constitute a cause of action for fraudulent concealment, their FAC
does not state what Defendant’s marketing materials said about the transmission,
other than to say that they did not mention the defect. (FAC, ¶ 63.) Plaintiffs’
allegations for fraudulent concealment are insufficient in this regard. (Morgan
v. AT&T Wireless Services, Inc. (2009) 177 Cal.App.4th 1235, 1262 [it
is sufficient for a plaintiff to provide a representative selection of the
advertisements or other statements upon which they relied and which indicate
the language upon which the implied misrepresentations are based].)
Defendant also argues that Plaintiffs’ cause of action for
fraudulent inducement would be barred because of the economic loss rule. 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.)
In its reply, Defendant cites a recent California Supreme
Court decision in support of its contention that Plaintiffs’ cause of action is
barred by the economic loss rule: Rattagan v. Uber Technologies, Inc.
(2024) 324 Cal.Rptr.3d 433. In that case, the Court found that “When evaluating
whether the parties' expectations and risk allocations bar tort recovery, the
court must consider the alleged facts. First, applying standard contract
principles, it must ascertain the full scope of the parties’ contractual agreement,
including the rights created or reserved, the obligations assumed or declined,
and the provided remedies for breach. Second, it must determine whether
there is an independent tort duty to refrain from the alleged conduct. Third,
if an independent duty exists, the court must consider whether the plaintiff
can establish all elements of the tort independently of the rights and duties
assumed by the parties under the contract.” (Id. at 450-451.)
The part of the Rattagan decision that is most
instructive on the Court’s reasoning and the application of the decision is
this:
“The guiding and distinguishing
principle is this. If the alleged breach is based on a failure to perform as
the contract provides, and the parties reasonably anticipated and allocated the
risks associated with the breach, the cause of action will generally sound only
in contract because a breach deprives an injured party of a benefit it
bargained for. However, if the contract reveals the consequences were not
reasonably contemplated when the contract was entered and the duty to avoid
causing such a harm has an independent statutory or public policy basis,
exclusive of the contract, tort liability may lie.”
(Id. at 451.)
In Lemon Law cases such as this, a party purchasing a
vehicle does not bargain with the expectation that the car manufacturer is
concealing known material defects from them. The risks of such a concealment
are not allocated within the warranty. There are also public policy reasons,
exclusive of the contract, for not wanting a car manufacturer to withhold
information on such defects, including safety. As noted by the Rattagan
Court, public policy has viewed fraudulent concealment on equal footing with
affirmative misrepresentations. (Id. at 462.) These public policy reasons
are exclusive of the contract, and therefore tort liability would exist in such
instances of fraudulent concealment.
However, as previously discussed, Plaintiffs have not met
all of the elements for a cause of action for fraudulent inducement –
concealment because Plaintiffs have not stated what the marketing materials
that they viewed said. Otherwise, Plaintiffs’ cause of action would not barred
by the economic loss rule under Rattagan.
Accordingly, Plaintiffs have not pled facts sufficient to
maintain a cause of action for fraudulent inducement – concealment. Defendant’s
demurrer to Plaintiffs’ Fourth Cause of Action is sustained with leave to
amend.
Conclusion
Defendant’s
demurrer to Plaintiffs’ Fourth Cause of Action is sustained with leave to
amend.
Moving party to give notice.