Judge: John J. Kralik, Case: 23BBCV00072, Date: 2023-12-01 Tentative Ruling

Case Number: 23BBCV00072    Hearing Date: December 1, 2023    Dept: NCB

Superior Court of California

County of Los Angeles

North Central District

Department B

BACKGROUND

A.    Allegations

Plaintiffs Manuel Sibrian and Julia Michelle Sibrian (“Plaintiffs”) allege that on May 20, 202, she purchased a 2020 GMC Canyon.  Plaintiffs allege that the vehicle was delivered to them with a defective Hydra-Matic 8L90 transmission and other defects and nonconformities, including transmission, electrical, and suspension system defects.  The action arises out of the warranty and repair obligations of Defendant General Motors LLC (“Defendant” or “GM”) in connection with the vehicle Plaintiffs purchased and for which Defendant issued a written warranty. 

The first amended complaint (“FAC”), filed on July 13, 2023, alleges causes of action for: (1) violation of Song-Beverly Act – breach of express warranty; (2) violation of Song-Beverly Act – breach of implied warranty; (3) violation of Song-Beverly Act § 1793.2; and (4) fraud – fraudulent inducement – concealment.

B.     Motions on Calendar

On August 14, 2023, Defendant filed a demurrer to the 4^th cause of action in the FAC and a motion to strike portions of the FAC.

On November 15, 2023, Plaintiffs filed opposition briefs.

On November 21, 2023, Defendant filed reply briefs.

DISCUSSION RE DEMURRER

            Defendant demurs to the 4^th cause of action for fraudulent inducement – concealment in the FAC, arguing that it fails to allege sufficient facts against Defendant.   

The elements for fraudulent concealment are the following: (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.  (Lovejoy v. AT&T Corp. (2004) 119 Cal. App. 4th 151, 157-158.) “As with all fraud claims, the necessary elements of a concealment/suppression claim consist of (1) misrepresentation (false representation, concealment, or nondisclosure); (2) knowledge of falsity (scienter); (3) intent to defraud (i.e., to induce reliance); (4) justifiable reliance; and (5) resulting damage. [Citations.]”  (Hoffman v. 162 North Wolfe LLC (2014) 228 Cal.App.4th 1178, 1185–1186 [internal quotation marks and citations omitted].)  This cause of action is a tort of deceit and the facts constituting each element must be alleged with particularity; the claims cannot be saved by referring to the policy favoring liberal construction of pleadings. (Committee on Children's Television, Inc. v. General Foods Corp. (1983) 35 Cal.3d 197, 216.)  Since the claim must be pleaded with particularity, the cause of action based on misrepresentations must allege facts showing how, when, where, to whom, and by what means the misrepresentations were tendered.  (Stansfield v. Starkey (1990) 220 Cal.App.3d 59, 73.)

In the 4^th cause of action, Plaintiffs allege that Defendant and its agents intentionally concealed and failed to disclose facts relating to the 8L90 and 8L45 transmission defects.  (FAC, ¶128.)  Plaintiffs allege that Defendants intentionally concealed the design defect in the transmissions because of a common architecture of the transmission that causes “harsh shifts” in lower gears.  (Id., ¶129.)  Plaintiffs allege that Defendant was the only party with knowledge of the transmission defect, which was never made publicly available nor was the information disclosed to Plaintiffs.  (Id., ¶133.)  Plaintiffs allege that Defendants were under a duty to disclose the defective nature of the vehicle, transmission defect, and repair costs and they were in a superior position to know the true state of the facts, which Plaintiff could not reasonably have been expected to learn or discover.  (Id.)  Plaintiffs allege that Defendant actively concealed information from the public and did not issue a recall, such that Plaintiffs did not know about the transmission defect at the time of sale.  (Id., ¶¶134-136.)  They allege that Defendant intended to deceive them by concealing the known issues of the transmission defect in an effort to sell the vehicle and Defendant fraudulently induced Plaintiffs to purchase the vehicle.  (Id., ¶¶137, 142.) 

            Defendant demurs to the 4^th cause of action, arguing that the FAC does not allege fraud with the requisite specificity and there was no duty to disclose facts on the part of Defendant.

            Defendant argues that Plaintiffs have not established a duty to disclose the information omitted.  There is a duty to disclose: “(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.)  To establish a duty based on a transactional relationship, “[s]uch 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.”  (Bigler-Engler v. Breg, Inc. (2017) 7 Cal.App.5th 276, 312.)  The Bigler-Engler court stated that even with respect to half-truths, “a duty to disclose arises in this context only where there is already a sufficient relationship or transaction between the parties. [Citations.] Where … a sufficient relationship or transaction does not exist, no duty to disclose arises even when the defendant speaks.”  (Id.) 

Plaintiffs allege that the information about the transmission defect was solely in the knowledge of Defendant and Defendant did not make this knowledge publicly available nor did it disclose the information to Plaintiff.  (FAC, ¶133.)  Plaintiffs allege that Defendant has exclusively known about the transmission defect since 2014-2017 from its internal reports, the National Highway Traffic Safety Administration and its own technical service bulletins, yet it marketed and sold its eight-speed automatic transmission as having “world-class performance.”   (Id., ¶¶14-16, 42-68.)  Further, for a duty to arise from a transactional relationship, Plaintiffs must allege facts showing that the transaction arose between Plaintiffs and Defendant.  According to the FAC, Plaintiffs purchased the subject vehicle from Penske Cadillac Buick GMC South Bay, which is alleged to be an authorized retail dealership, repair facility, agent, and representative of Defendant.  (FAC, ¶4.)  As currently pled and taking the allegations of the FAC as true, Plaintiffs have alleged facts that Defendant alone possessed exclusive knowledge of the material facts and that they were in a transaction relationship with Defendant through its agent and authorized dealership.  The Court declines to sustain the demurrer on this basis. 

            Next, Defendant argues that Plaintiffs have not pled fraud with specificity, such as the individuals at Defendant who purportedly concealed material information or made untrue representations about the subject vehicle (Canyon), their authority to speak on Defendant’s behalf, Defendant’s knowledge about alleged defects prior to the time of purchase, any interactions with Defendant before or during the purchase of the vehicle, or Defendant’s intent to induce reliance by Plaintiffs to purchase the vehicle. 

            While not alleged directly in the 4^th cause of action, Plaintiffs allege facts in the FAC that they communicated directly with Penske’s manager and sales consultant Kwesi Da-Costa Vroom, who represented to Plaintiffs that he was knowledgeable and authorized to address any pre-sale inquiries and yet failed to disclose any defects/nonconformities of the transmission.  (FAC, ¶5.)  Plaintiffs allege they were handed a flyer of the same model of the subject vehicle, which represented that the vehicle was equipped with a strong powertrain system and was sufficient for their needs.  (Id.)

            With respect to the intent to deceive element, Plaintiffs allege that Defendant intended to deceive them by concealing known issues regarding the transmission in an effort to sell the subject vehicle.  (FAC, ¶¶137, 142.) 

Having examined the pleading, the Court finds that despite its extraordinary length, it does not present a claim for fraud that is distinguishable from the basic claim of breach of warranty. As stated in paragraph 11 of the FAC, the alleged defects in the powertrain “are part of the warrantable nonconformities within Plaintiffs’ warranty claims against GENERAL MOTORS, LLC. . . .”  Moreover, and this undoubtedly is the important part, “Plaintiffs’ warranty and fraud claims derive from the same common nucleus of operative facts[;] they are inextricably interrelated so as to entitle Plaintiffs to fees for each claim under Civil Code Section 1794, subdivision (c).”  (FAC ¶11.)

A fraud involves a concealment or misrepresentation of a cold, hard fact: something that a judge or jury can discern to be false. The underlying defects with the vehicles here are vague and subjectively described. In conjunction with the “typical architecture,” they cause “‘harsh shifts’ in lower gears, which can feel like jerking, lurching and/or hesitations.”  (FAC ¶4.)  How these subjective complaints disprove even vaguer statements made by automobile salesmen or glossy commercials, for example to the effect that a vehicle is “equipped with a strong powertrain system” are not questions of fact. Moreover, the question is made vaguer still because GM supposedly knew about “similar defects” from consumer complaints and service bulletins regarding similar complaints about other, presumably similar, GM vehicles. These are matters that, if they can be addressed at all by the law, are best left to a determination of the warranty that was specifically bargained for and that is co-existent and co-equal with the representations themselves.

Here the parties have bargained for a warranty that the vehicle is free from defects that rise to the standard described in the warranty and the law. The legislature has provided extraordinary remedies and procedural advantages to any plaintiff alleging to have been financially damaged by any breach of such warranty. The representation and the reliance are fully contained in the contract itself, which covers the risk of defect that is a known possibility for any manufactured product. The consumer’s reliance is on the contractual promise.  She has bargained for a specific remedy and been given additional remedies by statute.  She has no extra-contractual reliance; indeed any greater reliance is unreasonable based on the transaction itself, which disclaims other promises.  Here, Plaintiff has suffered no loss that takes this case out of the ordinary commercial venue in which the parties specifically bargained for a commercial solution to an economic issue. Common law fraud is not a coterminous overlay for breach of a commercial warranty. Otherwise, contracts and torts would be the same class in law school.

            For the reasons discussed above, the demurrer to the 2^nd cause of action is sustained.

DISCUSSION RE MOTION TO STRIKE

            Defendant moves to strike the allegations for punitive damages in the prayer for damages at paragraph 6 (page 29, line 16).   

A complaint including a request for punitive damages must include allegations showing that the plaintiff is entitled to an award of punitive damages.  (Clauson v. Superior Court (1998) 67 Cal.App.4th 1253, 1255.)  A claim for punitive damages cannot be pleaded generally and allegations that a defendant acted "with oppression, fraud and malice" toward plaintiff are insufficient legal conclusions to show that the plaintiff is entitled to an award of punitive damages.  (Brousseau v. Jarrett (1977) 73 Cal.App.3d 864, 872.)  Specific factual allegations are required to support a claim for punitive damages.  (Id.)

Civil Code § 3294 authorizes a plaintiff to obtain an award of punitive damages when there is clear and convincing evidence that the defendant engaged in malice, oppression, or fraud.  Section 3294(c) defines the terms in the following manner:

(1)   "Malice" means conduct which is intended by the defendant to cause injury to the plaintiff or despicable conduct which is carried on by the defendant with a willful and conscious disregard of the rights or safety of others.

(2)   "Oppression" means despicable conduct that subjects a person to cruel and unjust hardship in conscious disregard of that person's rights.

(3)   "Fraud" means an intentional misrepresentation, deceit, or concealment of a material fact known to the defendant with the intention on the part of the defendant of thereby depriving a person of property or legal rights or otherwise causing injury. 

Further, when the punitive damages are sought against an employer, Civil Code § 3294(b) requires the plaintiff to establish the following:

(1)   the employer had advance knowledge of the unfitness of the employee and employed him or her with a conscious disregard of the rights or safety of others or

(2)   the employer authorized or ratified the wrongful conduct for which the damages are awarded, or

(3)   the employer was personally guilty of oppression, fraud, or malice.

With respect to a corporate employer, section 3294(b) requires that the advance knowledge and conscious disregard, authorization, ratification or act of oppression, fraud, or malice must be on the part of an officer, director, or managing agent of the corporation.

            The Court has reviewed the allegations of the FAC and finds that it does not reach the level of particularly required to request punitive damages based on malicious and/or oppressive behavior.  At most, Plaintiffs allege that Defendant willfully failed to comply with its responsibilities under the Act, but this allegation is insufficient to meet the requisite level of particularity for punitive damages.  (FAC, ¶100 [re 1^st cause of action].)  With respect to the causes of action for violation of the Act, allegations for punitive damages have not been adequately pled.  With respect to the 4^th cause of action, the motion to strike is moot.

            The motion to strike is granted.

CONCLUSION AND ORDER

            Defendant General Motors LLC’s demurrer to the 4^th cause of action in the FAC is sustained with 20 days leave to amend.  Defendant’s motion to strike the allegations for punitive damages is granted with 20 days leave to amend.

Warning regarding electronic appearances:  All software for remote or electronic appearances is subject to malfunction based on system weakness and human error, which can originate from any of the multiple parties participating each morning. The seamless operation of the Court’s electronic appearance software is dependent on numerous inconstant and fluctuating factors that may impact whether you, or other counsel or the Court itself can be heard in a particular case. Not all these factors are within the control of the courtroom staff. For example, at times, the system traps participants in electronic purgatories where they cannot be heard and where the courtroom staff is not aware of their presence. If you call the courtroom, please be respectful of the fact that a court hearing is going on, and that the courtroom staff is doing their best to use an imperfect system. If it is truly important to you to be heard, please show up to the courtroom in the normal way. Parking is free or reasonable in Burbank.

Defendant shall give notice of this order.