Judge: H. Jay Ford, III, Case: 23SMCV03238, Date: 2024-06-27 Tentative Ruling

Case Number: 23SMCV03238    Hearing Date: June 27, 2024    Dept: O

Case Name:  Scott v. Santa Monica CDJR, Inc., et al.

SUBJECT:                 DEMURRER WITH MOTION TO STRIKE

MOVING PARTY:   Defendant Santa Monica CDJR, Inc.

RESP. PARTY:         Plaintiff David Scott

TENTATIVE RULING

            Defendant Santa Monica CDJR, Inc.’s Demurrer is OVERRULED in its entirety, and Motion to Strike is DENIED. Plaintiff alleges all the required elements of the 2^nd, 3^rd, 4^th, and 9^th causes of action within the FAC. Plaintiff’s causes of action are not unnecessarily duplicative. Punitive damages are allowed under a properly plead claim for a fraud-based cause of action pursuant to Civ. Code § 3294(a).

I.                Demurrer to 2^nd, 3^rd and 4^th Cause of Actions for Intentional Misrepresentation, Concealment and Negligent Misrepresentation—OVERRULED

            The elements of an intentional misrepresentation claim are: “(1) the defendant represented to the plaintiff that an important fact was true; (2) that representation was false; (3) the defendant knew that the representation was false when the defendant made it, or the defendant made the representation recklessly and without regard for its truth; (4) the defendant intended that the plaintiff rely on the representation; (5) the plaintiff reasonably relied on the representation; (6) the plaintiff was harmed; and (7) the plaintiff's reliance on the defendant's representation was a substantial factor in causing that harm to the plaintiff.” (Manderville v. PCG&S Group, Inc. (2007) 146 Cal.App.4th 1486, 1498.)

            “[T]he elements of a cause of action for fraud based on concealment 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.” (Bigler-Engler v. Breg, Inc. (2017) 7 Cal.App.5th 276, 310–311, citations omitted; see also CACI 1901)

            “In transactions which do not involve fiduciary or confidential relations,” a duty to disclose the fact to the plaintiff “may arise in at least three instances: (1) the defendant makes representations but does not disclose facts which materially qualify the facts disclosed, or which render his disclosure likely to mislead;⁵ (2) the facts are known or accessible only to defendant, and defendant knows they are not known to or reasonably discoverable by the plaintiff;⁶ (3) the defendant actively conceals discovery from the plaintiff.” (Warner Constr. Corp. v. City of Los Angeles (1970) 2 Cal.3d 285, 294.)

            The elements of negligent misrepresentation are “(1) the misrepresentation of a past or existing material fact, (2) without reasonable ground for believing it to be true, (3) with intent to induce another's reliance on the fact misrepresented, (4) justifiable reliance on the misrepresentation, and (5) resulting damage. “(National Union Fire Ins. Co. of Pittsburgh, PA v. Cambridge Integrated Services Group, Inc. (2009) 171 Cal.App.4th 35, 50.) “The essential elements of a count for negligent misrepresentation are the same [intentional misprepresentation] 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.” (Chapman v. Skype Inc. (2013) 220 Cal.App.4th 217, 231.)

            “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.” (Ibid.)

            Defendant Santa Monica CDJR, Inc. (“CDJR”) appears to combine all fraud-based claims, the 2^nd through 4^th causes of action, under the lone argument that the causes of action are not plead with sufficient particularity as required to plead a cause of action for fraud. (See Demurrer, pp. 4–5.)

            Plaintiff David Scott (“Scott”) pleads the following facts within the FAC:

(1) “Specifically, Dealer represented the following facts were true: (1) the Vehicle was “new;” the Vehicle was under the manufacturer’s full warranty; and (3) the Vehicle had never had a prior owner.” (FAC, ¶ 38.)

(2) “The representations of material fact made by Dealer were false. The representations were made by Dealer’s authorized representatives, whose identities are known to Dealer or which can be ascertained from a review of Dealer’s records. The representations were both oral and written.” (Id., ¶ 39.)

(3) “Dealer knew the representations were false when it made them or made the representations and omissions of material fact recklessly and without regard for their truth.” (Id., ¶ 40)

(4) CDJR made the representations or omissions of fact for the purpose of inducing Mr. Scott to rely upon them and purchase a “new” vehicle (Id., ¶¶ 37-42)

(5) “Plaintiff was unaware of the falsity of the representations or omissions and reasonably relied upon the truth of those representations by purchasing the Vehicle.” (Id., ¶ 43.)

(6) “Plaintiff discovered the Vehicle was not new and had been previously sold. He contacted Dealer about this issue. Dealer told Plaintiff to contact the Manufacturer. Manufacturer confirmed the Vehicle had been previously owned, as Plaintiff was not listed as the current owner in the Manufacturer’s system. In addition, Manufacturer confirmed the warranty in service date for the Vehicle was December 28, 2021. Thus, the three year/36,000-mile bumper to bumper warranty expires on December 28, 2024, while the 5 year/60,000-mile powertrain warranty expires on December 28, 2026. Plaintiff asked what could be done about this. Manufacturer told Plaintiff to contact Dealer.” (Id., ¶ 20.)

(7) Scott’s reliance on CDJR’s representations “was a substantial factor in causing” his harm (Id., ¶ 44)

(8) “As a direct and proximate result of Dealer’s misrepresentations or omissions of material facts, Plaintiff suffered damages, including actual, consequential, and/or incidental damages, according to proof of trial.” (Id., ¶ 45

            Scott’s FAC includes enough factual allegations to plead all necessary elements, and heightened pleading standards, of the fraud-based causes of action. Additionally, Scott has plead facts with sufficient particularity to give notice of the issues sufficient to enable preparation of a defense,” given that CJDR is likely to have greater knowledge of the facts. (Okun v. Superior Court (1981) 29 Cal.3d 442, 458.)

            Accordingly, the Demurrer to the 2^nd, 3^rd and 4^th causes of action is OVERRULED.

II.             Demurrer to 9^th cause of action for Violation of Unfair Competition law—OVERRULED

            “To bring a UCL claim, a plaintiff must show either an (1) unlawful, unfair, or fraudulent business act or practice, or (2) unfair, deceptive, untrue or misleading advertising. [citation] Because the UCL is written in the disjunctive, it establishes three varieties of unfair competition—acts or practices which are unlawful, or unfair, or fraudulent.” [citation] (Adhav v. Midway Rent A Car, Inc. (2019) 37 Cal.App.5th 954, 970.)

            The UCL defines “unfair competition” to include “any unlawful, unfair or fraudulent business act or practice.” (De La Torre v. CashCall, Inc. (2018) 5 Cal.5th 966, 974.) “Because Business and Professions Code section 17200 is written in the disjunctive, it establishes three varieties of unfair competition—acts or practices which are unlawful, or unfair, or fraudulent.”

(Beasley v. Tootsie Roll Industries, Inc. (2022) 85 Cal.App.5th 901, 911, review denied (Mar. 15, 2023).) “To prevail on a claim under the unlawful prong of the unfair competition law, the plaintiff must show that a challenged advertisement or practice violates any federal or California ‘statute or regulation.” (Id., at p. 912.)

            “[A]ny person who has suffered injury in fact and has lost money or property as a result of the unfair competition” has standing to bring a UCL claim.” (In re Tobacco II Cases (2009) 46 Cal.4th 298, 320.) It is rare to sustain a demurrer to a § 17200 “unfairness” claim because a determination of whether a practice is unfair requires a full factual record. (Motors, Inc. v. Times Mirror Co. (1980) 102 Cal. App. 3d 735, 740.)

            Alleged violations of Civ. Code § 1770 are sufficient to satisfy the unlawful practice prong of the UCL. (See Hale v. Sharp Healthcare (2010) 183 Cal.App.4th 1373, 1383–1384.) When stating a UCL claim based on fraud there is an “actual reliance” pleading requirement. (Id., at p. 1384 [“[R]eliance is proved by showing that the defendant's misrepresentation or nondisclosure was “an immediate cause” of the plaintiff's injury-producing conduct.”].)

            CDJR does not provide any argument regarding which specific facts are not properly alleged in Scott’s UCL claim. In the FAC, Scott alleges multiple violations of the Civ. Code § 1770 including:

(1) misrepresenting the Vehicle’s status as new or used; (2) misrepresenting the terms of the warranty; (3) representing the Vehicle was “new” when it was not; (4) representing the Vehicle was under the manufacturer’s full warranty, when it was not; (5) representing the Vehicle had never had a prior owner, when it had;

(6) concealing the Vehicle’s status as new or used; (7) concealing the terms of the warranty”

(FAC, ¶ 110.)

            Scott incorporates the previous allegations in the cause of action which include allegations of reliance “upon the truth those representations by purchasing the vehicle.” (FAC, ¶¶ 43, 69, 70.) Furthermore, the demurrer appears to be attacking only the fraud based UCL claims, but the cause of action contains numerous bases for a UCL claim including violating “(9) violating the Automobile Sales Finance Act; (10), violating the Song-Beverly Act; (11) violating 16 C.F.R § 455; and (12) violating the Vehicle Code.” (FAC, ¶ 110.) “A demurrer does not lie to a portion of a cause of action,” and thus the demurrer to the 9^th cause of action is overruled on this issue alone. (PH II, Inc. v. Superior Court (1995) 33 Cal.App.4th 1680, 1682.)

            Thus, Scott states the necessary factual elements to allege a UCL claim within the FAC. The Demurrer to the 9^th cause of action is OVERRULED.

III.           Causes of action in the FAC are not duplicative - OVERRULED

            CDJR argues the 2^nd, 3^rd, 4^th, and 9^th cause of action are duplicative of the 1^st, 5^th and 8^th causes of action and thus should eliminated as it “adds nothing to this claim and only serve[s] to delay its resolution.” (Demurrer, p. 2–4.) 

            The Court finds this argument unavailing. The CLRA states, “The provisions of this title are not exclusive. The remedies provided herein for violation of any section of this title or for conduct proscribed by any section of this title shall be in addition to any other procedures or remedies for any violation or conduct provided for in any other law.” (Civ. Code, § 1752; see Flores v. Southcoast Automotive Liquidators, Inc. (2017) 17 Cal.App.5th 841, 852 [“the remedies of the CLRA are cumulative and the consumer may assert other common law or statutory causes of action under the procedures and with the remedies provided for in those laws.”]

            Additionally, “[w]here the exact nature of the facts is in doubt, or where the exact legal nature of plaintiff's right and defendant's liability depend on facts not well known to the plaintiff, the pleading may properly set forth alternative theories in varied and inconsistent counts.” (Rader Co. v. Stone (1986) 178 Cal.App.3d 10, 29, citing 4 Witkin, Cal. Procedure (3d ed. 1985) Pleading, § 356, p. 411.)

            Thus, Scott is allowed to plead different causes of action under the same core set of facts. (See Klein v. Chevron U.S.A., Inc. (2012) 202 Cal.App.4th 1342, 1382, as modified on denial of reh'g (Feb. 24, 2012) [“The allegations underlying plaintiffs' CLRA claim [were] essentially identical to those pleaded in support of their UCL claim.”]

            The Demurrer to the 2^nd, 3^rd, 4^th, and 9^th causes of action as duplicative is OVERRULED.

IV.           Motion to Strike Punitives

            CC § 3294(a) provides, “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.” (Cal Civ. Code § 3294, subd. (a).)

            “A fraud cause seeking punitive damages need not include an allegation that the fraud was motivated by the malicious desire to inflict injury upon the victim. The pleading of fraud is sufficient.” (Stevens v. Superior Court (1986) 180 Cal.App.3d 605, 610.)

            CDJR moves to strike Scott’s claim for punitive damages based on Scott’s claims being to conclusory and do not include substantial damages. (See MTS, pp. 2–4.) However, Scott’s fraud claims, the 2^nd through 4^th causes of action, are properly plead, thus Scott has successfully stated a claim for fraud. Fraud claims provide for possible punitive damages under CC 3294(a). When a fraud claim survives demurrer punitive damages are allowed. (See Stevens, supra, 180 Cal.App.3d at p. 610.)

            Thus, CDJR’s motion to strike punitive damages is DENIED.