Judge: Joel L. Lofton, Case: 22AHCV00600, Date: 2023-01-23 Tentative Ruling
Case Number: 22AHCV00600 Hearing Date: January 23, 2023 Dept: X
Tentative Ruling
Judge Joel L. Lofton,
Department X
HEARING DATE: January
23, 2023 TRIAL DATE: No date set.
CASE: ROBERT BARON v.
AMERICAN HONDA MOTOR CO., INC., a California corporation, and DOES 1 through
10, inclusive.
CASE NO.: 22AHCV00600
DEMURRER
WITH MOTION TO STRIKE
MOVING PARTY: Defendant American Honda Motor Co.
RESPONDING PARTY: Plaintiff
Robert Baron
SERVICE: Filed October 14, 2022
OPPOSITION: Filed January 9, 2023
REPLY: Filed January 13, 2023
RELIEF
REQUESTED
Defendant demurrers to Plaintiff’s third cause of act ion for fraudulent
inducement – concealment.
Defendant moves to
strike Plaintiff’s prayer for punitive damages.
BACKGROUND
This case arises out of Plaintiff Robert
Baron’s (“Plaintiff”) lemon law claim for a new 2018 Honda Accord, VIN
1HGCV1F48JA249058 (“Subject Vehicle”), that Plaintiff purchased on October 26,
2018. Plaintiff also alleges that Defendant American Honda Motors Co., Inc.
(“Defendant”) was aware of and concealed defects in the safety systems in their
vehicle, such as the Honda Sensing system and the Collision Mitigation Braking
System (“CMBS”).
Plaintiff filed this complaint on
August 23, 2022, alleging three causes of action for (1) violation of the
Song-Beverly Act – Breach of Express Warranty, (2) violation of the
Song-Beverly Act – Breach of Implied Warranty, and (3) Fraudulent Inducement –
Concealment.
TENTATIVE RULING
Defendant’s
demurrer to Plaintiff’s third cause of action for fraudulent inducement –
concealment is OVERRULED.
Defendant’s
motion to strike Plaintiff’s prayer for punitive damages is DENIED.
LEGAL STANDARD
Demurrer
A general
demurrer may be taken to a complaint where “[t]he pleading does not state facts sufficient to
constitute a cause of action.” (Code of Civ. Proc. § 430.10(e).) A demurrer for sufficiency tests whether the
complaint states a cause of action. (Hahn
v. Mirda (2007) 147 Cal. App. 4th 740, 747.) In a demurrer proceeding, the
defects must be apparent on the face of the pleading or by proper judicial
notice. (Code Civ. Proc. section
430.30(a).) A demurrer tests the pleadings alone and not the evidence or
other extrinsic matters. (SKF Farms v. Superior Court (1984) 153
Cal. App. 3d 902, 905.) The only issue involved in a demurrer hearing is
whether the complaint, as it stands, unconnected with extraneous matters,
states a cause of action. (Hahn v.
Mirda, supra, 147 Cal.App.4th 740, 747.)
Additionally, a
special demurrer to a complaint may be brought on the ground the pleading is
uncertain, ambiguous, or unintelligible. Code Civ. Proc section 430.10(f); Beresford Neighborhood Assn. v. City of
San Mateo (1989) 207 Cal.App.3d 1180, 1191.) A demurrer based
on uncertainty is disfavored and will be strictly construed even when the
pleading is uncertain in some respects. (Khoury v. Maly's of California, Inc. (1993) 14
Cal.App.4th 612, 616.) A demurrers based on uncertainty are “granted only if
the pleading is so incomprehensible that a defendant cannot reasonably
respond.” (Lickiss v. Financial Industry Regulatory Authority (2012) 208
Cal.App.4th 1125, 1135.)
Motion to Strike
Any party, within the time allowed to respond to a pleading
may serve and file a notice of motion to strike a pleading or any part
thereof. (Code Civ. Proc., § 435, subd. (b)(1).) The
court may, upon a motion, or at any time in its discretion, and upon terms
it deems proper, strike any irrelevant, false, or improper matter inserted in
any pleading. (Code Civ. Proc., § 436, subd. (a).) The court may
also strike all or any part of any pleading not drawn or filed in conformity
with California law, a court rule, or an order of the court. (Code Civ.
Proc., § 436, subd. (b).) An immaterial or irrelevant allegation is one
that is not essential to the statement of a claim or defense; is neither
pertinent to nor supported by an otherwise sufficient claim or defense; or a
demand for judgment requesting relief not supported by the allegations of the
complaint. (Code Civ. Proc., 431.10, subd. (b).) The grounds for
moving to strike must appear on the face of the pleading or by way of judicial
notice. (Code Civ. Proc., § 437.)
DISCUSSION
Demurrer
Defendant objects to Plaintiff’s third cause
of action for fraudulent inducement by concealment.
“The elements of fraud, which give
rise to the tort action for deceit, are (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.” (Beckwith v. Dahl (2012) 205
Cal.App.4th 1039, 1060, citations omitted.
“[F]raud may consist of a
suppression of a material fact in circumstances under which the defendant has a
legal duty of disclosure.” (Hoffman v. 162 North Wolfe LLC (2014)
228 Cal.App.4th 1178, 1186, internal citations omitted.) “[W]here material
facts are known to one party and not to the other, failure to disclose them is
not actionable fraud unless there is some relationship between
the parties which gives rise to a duty to disclose such known facts. A
relationship between the parties is present if there is “some sort of transaction between the parties.” (Id. at
p. 1187.) “Thus, a duty to disclose may arise from the relationship between
seller and buyer, employer and prospective employee, doctor and patient, or
parties entering into any kind of contractual agreement.” (Ibid.)
Economic Loss Rule
Defendant
argues that the economic loss rule bars Plaintiff’s third cause of action.
However, Defendant’s demurrer was filed before Dhital v. Nissan
North America, Inc. (2022) 84 Cal.App.5th 828, 840 (“Dhital”), was published, where the Court held that a “claim for
fraudulent inducement by concealment is not subject to demurrer on the ground
it is barred by the economic loss rule.” Defendant’s arguments are rejected in
light of the holding in Dhital.
Whether
Plaintiff’s Allegations are Sufficient
Defendant also argues
that Plaintiff failed to allege a contrary material fact or a duty to disclose.
In opposition, Plaintiff primarily argues that Defendant did have a duty to
disclose the defects of Honda Sensing and CMBS.
“There are ‘four circumstances in
which nondisclosure or concealment may constitute actionable fraud: (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. [Citation.]’ ” (LiMandri v. Judkins (1997) 52 Cal.App.4th
326, 336.)
“These
[latter] three circumstances, however, ‘presuppose[ ] the existence of some
other relationship between the plaintiff and defendant in which a duty to
disclose can arise.’ ” (Bigler-Engler v. Breg, Inc. (2017) 7 Cal.App.5th
276, 311.) “Such a transaction must necessarily arise from direct dealings
between the plaintiff and the defendant; it cannot arise between the defendant
and the public at large.” (Id. at p. 312.) Additionally “[f]raud,
including concealment, must be pleaded with specificity.” (Dhital, supra, 84
Cal.App.5th at pp. 843-44.)
Plaintiff
argues he has pled that Defendant had exclusive knowledge of the Sensing
Defect. (Id. ¶ 164.) Plaintiff
alleges Defendant was aware of issues relating to the sensing system used in
its vehicles but only disclosed that information to its dealership. (Complaint ¶ 68.) Plaintiff alleges Defendant did not
publish this information or instruct its dealership to warn potential buyers of
the problems. (Id. ¶ 69.)
Defendant argues that Plaintiff’s allegations contrast
the claim that Defendant had exclusive knowledge because Plaintiff alleges that
consumers complained to the National Highway Traffic Safety Administration
(“NHTSA”) (Complaint ¶ 54). However, Plaintiff’s allegations regarding consumer
complaints do not contradict Plaintiff’s allegations that Defendant had
exclusive knowledge. Plaintiff’s allegations can be read as claiming that
consumers had pieces of information based on issues in their own vehicles, but
Defendant had exclusive knowledge of the full range of defects in its sensing
system.
Further, in Dhital, supra, 84 Cal.App.5th at
p. 844, the Court held that similar allegations to the ones presented here were
sufficient to allege a cause of action for fraudulent inducement. Here,
Plaintiff alleges that Defendant’s vehicles suffered from malfunctions
(Complaint ¶¶ 23-26), Defendant was aware
of the defects (id. ¶ 29), Defendant concealed the defects (id. ¶
31), Plaintiff relied on Defendant’s agent’s statements (id. ¶ 87), and
he suffered damages (id. ¶ 144).
The Court in Dhital also held that the plaintiffs’
allegations were sufficient to allege a buyer-seller relationship by alleging
that they bought the vehicle from the manufacturers’ dealership, that the
manufacturer backed the sale with an express warranty, and that the dealership
was an agent for the purposes of the sale. (Dhital, supra, 84 Cal.App.5th at
p. 844.) Similarly, here, Plaintiff alleges he purchased the vehicle from a
Honda dealership (Complaint ¶ 85), Defendant provided an express warranty (id. ¶ 134),
and the dealership was Defendant’s agent (id. ¶¶ 88-89; 109). The Court also held the
allegations were pled with sufficient specificity. (Dhital, supra, 84 Cal.App.5th at
p. 844.)
“In ruling on the demurrer, the trial court had to
accept as true all material facts properly pleaded in plaintiff's petition,
disregarding only conclusions of law and allegations contrary to judicially
noticed facts.” (Burt v. County of Orange (2004) 120 Cal.App.4th 273,
277.) Here, Plaintiff has alleged facts that were sufficient to state a claim
for fraudulent inducement by concealment.
Defendant’s
demurrer is overruled.
Motion to Strike
Defendant
also moves to strike Plaintiff’s prayer for punitive damages. Defendant
argues that Plaintiff’s claim for punitive damages must fail because Plaintiff
failed to allege a cause of action for fraud and because Plaintiff has failed
to allege corporate ratification.
Punitive
damages may be imposed where it is proven by clear and convincing evidence that
the defendant has been guilty of oppression, fraud, or malice. (Civ.
Code, § 3294, subd. (a). A plaintiff seeking punitive damages “must include
specific factual allegations showing that defendant's conduct was oppressive,
fraudulent, or malicious to support a claim for punitive damages. [Citation.]
Punitive damages my not be pleaded generally.” (Today’s IV, Inc. v. Los
Angeles County Metropolitan Transportation Authority (2022) 83 Cal.App.5th
1137, 1193.)
“When the
defendant is a corporation, “[a]n award of punitive damages against a
corporation ... must rest on the malice of the corporation's employees. [¶] But
the law does not impute every employee's malice to the corporation.” [Citation.]
Instead,
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 Co. (2015) 234
Cal.App.4th 123, 164.)
As
previously stated, Plaintiff has sufficiently pled a cause of action for
fraudulent inducement by concealment. Further, Plaintiff alleges that corporate
employee acts were authorized or ratified by an officer, director, or managing
agent of the corporate employer. (Complaint ¶ 6.) Defendant’s motion to strike
is denied.
CONCLUSION
Defendant’s
demurrer to Plaintiff’s third cause of action for fraudulent inducement –
concealment is OVERRULED.
Defendant’s
motion to strike Plaintiff’s prayer for punitive damages is DENIED.
Dated: January 23,
2023 ___________________________________
Joel
L. Lofton
Judge
of the Superior Court