Judge: John J. Kralik, Case: 23BBCV02059, Date: 2023-12-08 Tentative Ruling
Case Number: 23BBCV02059 Hearing Date: April 5, 2024 Dept: NCB
North Central District
MARICELA RANGEL,
Plaintiff, v.
FORD MOTOR COMPANY, et al.,
Defendants. |
Case No.: 23BBCV02059
Hearing Date: April 5, 2024 [TENTATIVE] ORDER RE: DEMURRER |
BACKGROUND
A. Allegations
Plaintiff Maricela Rangel (“Plaintiff”) allege that on February 19, 2022, Plaintiff entered into a warranty contact with Defendant Ford Motor Company (“FMC”) regarding a 2022 Ford Ranger vehicle. Plaintiff alleges that the warranty contract contained various warranties, including but not limited to the bumper-to-bumper warranty, powertrain warranty, emission warranty, etc. Plaintiff alleges that the defects and nonconformities to the warranty manifested themselves during the applicable warranty period, including but not limited to, transmission defects, infotainment defects, electrical defects, body defects, among other defects and non-conformities. Plaintiff alleges that FMC failed to replace the vehicle or make restitution.
The first amended complaint (“FAC”), filed January 4, 2024, alleges causes of action for: (1) violation of Civil Code, § 1793.2(D); (2) violation of Civil Code, § 1793.2(B); (3) violation of Civil Code, § 1793.2(A)(3); (4) breach of the implied warranty of merchantability (Civil Code, §§ 1791.1, 1794, and 1795.5); and (5) fraudulent inducement – concealment.
B. Demurrer on Calendar
On February 6, 2024, Defendant FMC filed a demurrer to the FAC.
On March 22, 2024, Plaintiff filed an opposition brief.
On March 27, 2024, FMC filed a reply brief.
DISCUSSION
FMC demur to the 5th cause of action for fraudulent inducement – concealment on the ground that it fails to state sufficient facts to constitute a cause of action against FMC and it is barred by the economic loss rule.
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 5th cause of action, Plaintiff alleges that she purchased the vehicle as manufactured with Ford’s 10-speed automatic transmission. (FAC, ¶62.) She alleges that FMC committed fraud by allowing the vehicle to be sold to her without disclosing that the vehicle and its transmission were defective and susceptible to sudden and premature failure. (Id., ¶63.) Plaintiff alleges that prior to acquiring the vehicle, FMC was aware of and knew the transmission installed in the vehicle was defective, but failed to disclose this fact to Plaintiff. (Id., ¶64.) She alleges that FMC knew vehicles equipped with the same 10-speed transmission as the subject vehicle suffered from defects that can cause the vehicles and their transmissions to experience hesitation and/or delayed acceleration, harsh/hard shifting, jerking, shuddering, and/or juddering (“Transmission Defect”). (Id., ¶65.) Plaintiff alleges that FMC acquired this knowledge of the Transmission Defect from sources not available to consumers like Plaintiff, including but not limited to pre-production and post-production testing data, early consumer complaints, aggregate warranty data, testing conducted by FMC in response to the complaints, as well as warranty repair and part replacement data. (Id., ¶66.) She alleges that though FMC knew of the Transmission Defect and its safety risks, FMC concealed and failed to disclose the defective nature of the vehicle and transmission at the time of sale and repair. (Id., ¶67.) Plaintiff alleges that FMC new that the vehicle and its transmission suffered from an inherent defect, was defective, would fail prematurely, and was not suitable for its intended use. (Id., ¶68.) Plaintiff alleges FMC was under a duty to disclose the defective nature of the subject vehicle because it acquired knowledge of the defect, it was in a superior position to know the truth of the facts, consumers complained about the defect since January 2018, and Plaintiff could not have reasonably been expected to learn or discover the defect. (Id., ¶69.) Plaintiff alleges that by failing to disclose the defects, FMC has knowingly and intentionally concealed facts and breached its duty not to do so. (Id., ¶70.) She alleges that the facts concealed by FMC are material in that a reasonable person would have considered them to be important in deciding whether to purchase the vehicle, as a reasonable consumer would not expect the transmission to fail. (Id., ¶¶71-72.)
FMC demurs to the 5th cause of action, arguing that the FAC does not allege fraud with the requisite specificity and fails to allege the purported defect, the fraud claim is the same as her breach of warranty claim, and the cause of action is barred by the economic loss rule.
First, FMC argues that Plaintiff has not alleged sufficient facts to state her claim for fraud. FMC argues that Plaintiff has not alleged a duty to disclosure such facts regarding the Transmission Defect. 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.)
As summarized above, Plaintiff alleges that the information about the transmission defect was solely in FMC’s knowledge and FMC did not make this knowledge publicly available nor did it disclose the information to Plaintiff. Plaintiff alleges that FMC has exclusive knowledge about the transmission defect since 2018 from its internal reports and technical service bulletins, yet it sold its 10-speed transmission without disclosing these facts. (Id., ¶¶28-41, 65-69.) Further, for a duty to arise from a transactional relationship, Plaintiff must allege facts showing that the transaction/direct dealing arose between Plaintiff and FMC. According to the FAC, Plaintiff entered into a warranty contract with FMC regarding the vehicle, which was manufactured and/or distributed by FMC. (FAC, ¶9.) As currently pled and taking the allegations of the FAC as true, Plaintiff has alleged facts that FMC alone possessed exclusive knowledge of the material facts at the time of sale of the vehicle to Plaintiff. (Id., ¶69(a).) The Court declines to sustain the demurrer on this basis. (The Court previously overruled the demurrer to the 5th cause of action in the initial complaint on this basis.)
Second, FMC argues that the 5th cause of action is indistinguishable from her warranty claim and is thus barred. In paragraph 12 of the FAC, Plaintiff alleges: “These causes of action arise out of the warranty obligations of FMC in connection with a motor vehicle for which FMC issued a written warranty.” (FAC, ¶12.) FMC argues that Plaintiff’s claim for fraudulent concealment amounts to FMC’s alleged non-performance under the contract, such that the fraud claim is not distinct from the warranty. While Plaintiff’s claims may arise out of the warranty, the claim for fraud is separate and distinct as it deals with Plaintiff’s claims leading up to her decision to purchase the vehicle, as opposed to when she obtained the warranty upon purchase of the vehicle.
The Court discussed this issue in the prior ruling on the demurrer to the complaint as follows:
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 vehicle here are vague and subjectively described. (See Compl., ¶60.) Moreover, the question is made vaguer still because Ford supposedly knew about similar defects from consumer complaints and TSBs regarding similar complaints about other Ford vehicles that use the same transmission. 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.
(December 15, 2023 Order at pp. 5-6.) Despite the Court’s prior ruling, which gave Plaintiff leave to amend the 5th cause of action, no further allegations have been alleged in the FAC to show that Plaintiff has a viable, separate claim for fraudulent concealment that is distinct from her warranty claims. As stated previously by the Court in its prior ruling, the fraud claim based on representation and reliance are fully contained in the warranty contract itself and both contractual and statutory remedies are available to Plaintiff.
The demurrer to the 5th cause of action is sustained without leave to amend.
CONCLUSION AND ORDER
Defendant Ford Motor Company’s demurrer to the 5th cause of action in the FAC is sustained without leave to amend.