Judge: Jon R. Takasugi, Case: 20STCV39520, Date: 2022-08-09 Tentative Ruling

Case Number: 20STCV39520    Hearing Date: August 9, 2022    Dept: 17

Superior Court of California

County of Los Angeles

DEPARTMENT 17

TENTATIVE RULING

Defendant’s motion for summary adjudication is GRANTED.

On 10/14/2020, Plaintiffs Miguel Alhuay Paucar and Maria Patino Aguirre (collectively, Plaintiffs) filed suit against American Honda Motor Co., Inc., alleging: (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 section 1793.2; and (4) fraudulent concealment.

            Now, Defendant moves for summary adjudication as to the fourth cause of action and Plaintiffs’ prayer for punitive damages.

Procedural Issue

Plaintiffs argues that Defendant’s motion must be denied as Defendant provided insufficient notice, and this deficiency was not timely cured. Under CCP section 437c, subdivision (a)(2), notice of a motion for summary judgment should be provided 75 days before the hearing date and a motion must be heard no later than 30 days before trial.

            Here, this motion was noticed on 4/15/2022 for a hearing on 8/9/2022. At the time of notice, trial was set for 8/1/2022.  As such, at the time this motion was initially noticed, the motion was set to be heard within 30 days of trial. However, on 7/15/2022, trial was continued to 10/24/2022.

In support of their contention that Defendant’s motion is procedurally defective, and has not been cured, Plaintiffs cited Robinson v. Woods (2008) 168 Cal.App. 4th 1258, 1268. Based on Robinson, Plaintiffs argue that Defendant was required to first obtain a determination of good cause from the court before noticing a MSJ/A with a hearing date within 30 days of trial, or in this case, a date after trial. 

            In Robinson, plaintiffs argued that defendants’ motion for summary judgment was untimely because the hearing was set for 76 days after mailing, and only eighteen 18 days before trial. The trial court continued the hearing for four days in an attempt to resolve the service issue by making the hearing date 80 days after service to reflect the required seventy five days plus five days for mailing. The court also allowed defendant to file a supplemental declaration to establish why the motion should be heard within thirty days of trial. (Id. at p. 1261.) The court ultimately granted summary judgment for Defendant. (Ibid.) The appellate court overturned this decision, finding that the 76 day notice given by Defendant was invalid, the trial court had no authority to continue the hearing for a mere four days, and Defendants’ notice of a motion with a hearing date within 30 days of trial without permission of the Court prior to filing the motion was invalid. As for the latter point, the court wrote:

Defendants noticed their motion for hearing within 30 days of the trial date without first obtaining a determination of good cause from the trial court. Unless and until the trial court found good cause, the notice of the hearing was invalid. The party opposing a summary judgment motion should not be under an obligation to respond on the merits—and risk wasting its resources—given that the trial court may ultimately decide that good cause does not exist. Nevertheless, as it turned out here, the trial court did eventually find good cause but not until April 16, 2007—when the parties returned to court as instructed. The court proceeded to hear the summary judgment motion at the same hearing. Thus, April 16 did not legally become the hearing date on the motion until that very day. Plaintiffs had no time to prepare an opposition on the merits after the court granted the defendants' request to hear the motion within 30 days of the trial date—another due process violation and abuse of discretion. 

Finally, we see no reason why plaintiffs should be forced to seek a continuance of the trial to remedy defendants' mistake in setting the hearing within 30 days of the trial date absent prior court permission.

            (Robinson, supra, 168 Cal.App.4th at p. 1268, original emphasis.)

            As such, Robinson clearly establishes that a motion for summary judgment set within 30 days of trial is invalid unless and until the trial court makes a determination of good cause. Here, the Court has made no such determination of good cause, and, indeed, has not been asked to make any such determination. However, on 7/15/2022, the trial was continued for reasons having nothing to do with issues of notice. Thus, as of that date, there was no longer a violation of CCP section 437c, subdivision (a)(2), a determination of good cause was no longer required, and the motion for summary adjudication became valid. In Robinson, there had been no continuance of the trial, the motion was, in fact, heard within 30 days of trial, and the Court determined good cause on the same day of the motion, thereby denying plaintiff any opportunity to oppose the motion on the merits.

Here, by contrast, trial has already been continued, the motion is not being heard within 30 days of trial, there is no longer a need to determine good cause, and Plaintiffs’ ability to substantively oppose the motion in time is evinced by the fact that they did, in fact, file a substantive opposition to the motion. As such, the Court finds that the same concerns about due process that existed in Robinson do not exist here. Moreover, in the days following the trial continuance, Plaintiffs applied ex parte to have the motion for summary adjudication either vacated or continued on the basis that they wished for their motion for leave to amend to be heard prior to adjudication of the motion. As such, Plaintiffs provided every indication that they regarded the pending motion to be valid, and intended to oppose it on the merits.

In sum, Robinson is readily distinguishable from the facts here, and there is no indication that by hearing this motion on the merits, Plaintiffs have been denied due process or have suffered any prejudice.

Discussion

            Defendant argues that Plaintiffs’ fraud claim fails because: (1) it is premised on the wrong transmission; (2) the claim is barred by the economic loss doctrine; and (3) the parties do not share a special or transactional relationship.

            As to the first issue, Plaintiffs concede in opposition that they allege the wrong transmission. However, Plaintiffs argue that they would be prejudiced if summary adjudication was granted on this basis, given that they have a pending motion for leave to amend to correct this pleading error. The Court agrees, and thus turns to the remaining arguments raised by Defendant.

As to the second argument, Defendant argues that Plaintiffs have not submitted evidence to show any damages beyond economic loss. Rather, the only harm alleged by Plaintiffs is that they were “induced to enter into the sale [sic] of a vehicle that [they] would not have otherwise leased.” (Compl. ¶ 112.)

In opposition, Plaintiff argues that the economic loss rule does not bar recovery where a defendant fraudulently induces a party to enter into a contract.

The economic loss doctrine precludes recovery in tort where a plaintiff’s damages consist solely of alleged economic losses. (Seely v. White Motor Co. (1965) 63 Cal.2d 9, 17-18.) The rule “prevents the law of contract and the law of tort from dissolving one into the other” by preventing recovery in tort for the breach of a contract when there has not been the breach of a duty other than the duties arising from the contractual obligations. (Robinson Helicopter Co., Inc. v. Dana Corp. (2004) 34 Cal.4th 979, 988.) Examples of damages that go beyond economic loss – and to which the economic loss rule therefore does not apply – include personal injuries and damage to other property that result from the defective product. (Sacramento Regional Transit Dist. v. Grumman Flxible (1984) 158 Cal.App.3d 289, 295.) However, consequential damages such as lost profits or income that flow from the damage to the product itself are considered economic losses, and a plaintiff therefore cannot recover for them in tort. (East River Steamship Corporation v. Transamerica Delaval, Inc. (1986) 476 U.S. 858, 872-873.) 

As to an independent duty, fraudulent inducement of the contract is one means by which California law recognizes the existence of a duty independent of the duties imposed by the contract. (See Erlich v. Menezes (1999) 21 Cal.4th 543, 551-52.) Fraud in the inducement occurs where a party’s assent to a contract is obtained through “conscious misrepresentation, or concealment, or non-disclosure of a material fact which induces the innocent party to enter the contract.” (Odorizzi v. Bloomfield School Dist. (1966) 246 Cal.App.2d 123, 128; see also Civ. Code, § 1572.) 

For the following reasons, the Court concludes that Plaintiff’s fraud claim is barred by the economic loss rule.  

First, Plaintiff’s argument that the economic loss rule does not apply where a Song-Beverly Act violation is asserted rather than a breach of contract cause of action is unavailing. “The [economic loss] doctrine hinges on a distinction drawn between transactions involving the sale of goods for commercial purposes where economic expectations are protected by commercial and contract law, and those involving the sale of defective products to individual consumers who are injured in a manner which has traditionally been remedied by resort to the law of torts.” (Robinson Helicopter Co., Inc., supra, 34 Cal.4th at 988.) Accordingly, the economic loss rule applies where there are transactions involving the sale of goods for commercial purposes where economic expectations are protected by commercial and contract law. Song-Beverly Act causes of action are statutory in nature and are thus protected by commercial law. 

Second, Plaintiffs have not submitted evidence of damages sufficient to take their causes of action outside of the economic loss rule. Plaintiffs do not provide any evidence of harm actually suffered concerning injury to property or other person, and “damages which are speculative, remote, imaginary, contingent, or merely possible cannot serve as a legal basis for recovery.” (Food Safety Net Services v. Eco Safe Systems USA, Inc.  (2012) 209 Cal.App.4th 1118, 1132.) Moreover, to take itself out of the economic loss rule, a plaintiff must “demonstrate harm above and beyond a broken contractual promise.” (Id. at p. 1130 (emphasis added).) “[U]nder the economic loss rule, ‘appreciable, nonspeculative, present injury is an essential element of a tort cause of action.’ [Citation.]” (Rosen v. State Farm General Ins. Co. (2003) 30 Cal.4th 1072, 1079.) Here, Plaintiffs have failed to provide evidence of any appreciable, nonspeculative, present injury or damages which have “traditionally been remedied by resort to the law of torts.” (Robinson Helicopter Co., Inc., supra, 34 Cal.4th at p. 988.) 

Third, Plaintiffs have not submitted evidence to show a triable issue exists as to whether or not Defendant violated a duty to disclose and thus fraudulently induced Plaintiffs to enter into a contract. Absent a fiduciary relationship between the parties (which is not alleged here), a duty to disclose can arise in three circumstances: (1) the defendant had exclusive knowledge of the material fact; (2) the defendant actively concealed the material fact; or (3) the defendant made partial representations while also suppressing the material fact. (LiMandri v. Judkins (1997) 52 Cal.App.4th 326, 336.)

In Hoffman v. 162 N. Wolfe LLC (2014) 228 Cal.App.4th 1178, 1187, the Court of Appeal explained that the second and third ways of establishing a duty to disclose “presuppose[] the existence of some other relationship between the plaintiff and defendant in which a duty to disclose can arise . . . .” For example, a retail consumer can sue the retail seller of a product for fraud if that seller conceals material information about the product in connection with the sale. This is because the direct sales transaction (contract for sale) between the consumer and the seller constitutes the “some other relationship” described by the Court of Appeal in Hoffman. 

Thus, as clarified by the Hoffman court, for the second or third prong to apply, there must be a direct relationship, such as a contractual relationship or some other economic or legal relationship, between the parties, that creates the need for the defendant to disclose its exclusive knowledge to the plaintiff.

When, like here, an action is based solely on fraud by omission, the mere fact that the manufacturer is the entity that manufactured the product that the consumer ultimately bought from a downstream retailer is insufficient to create a duty of disclosure in the manufacturer. Defendant’s extension of a warranty is still not a two-way relationship because, in receiving the warranty, Plaintiffs never engaged in any sort of exchange of communications, currency, or obligations with Defendant, as contemplated by LiMandri.

In Bigler– Engler v. Breg, Inc. (2017) 7 Cal.App.5th 276, 310–311, the Court of Appeal reversed a verdict for fraudulent concealment against the manufacturer of a medical device because the manufacturer and the plaintiff (who was allegedly injured using the device) did not have the required direct transactional relationship. The patient did not obtain the device directly from the manufacturer but rather from a medical group that sold and leased the devices. (Id. at 287, 314.) The court found that, “[w]here, as here, a sufficient relationship or transaction does not exist, no duty to disclose arises even when the defendant speaks.” (Id. at 312.) The court cited a critical distinction between an action for concealment and a product-liability action for failure to warn about product hazards, finding that “[p]roducts liability law involves a set of circumstances, elements, and doctrines that are independent from, and not directly applicable to, fraud. The duties underlying each cannot simply be applied to the other.” (Id.)

Here, similarly, Plaintiffs leased the subject vehicle from an independent third-party dealer, and lacked a direct transactional relationship with Defendant. Without the requisite relationship, Defendant does not owe Plaintiffs a duty to disclose, despite that it manufacturers the vehicle leased to Plaintiffs.

In sum, the Court concludes that Plaintiffs have not met their burden to show a duty to disclose, and thus have not shown that their claim falls within a fraudulent inducement exception to the economic loss rule.

            Given this conclusion, the Court also finds that Plaintiffs have not met their burden with respect to their punitive damages prayer, which was based on Plaintiffs’ allegations of fraud. 

Based on the foregoing, Defendant’s motion for summary adjudication is granted.

It is so ordered.

Dated:  August    , 2022

   Hon. Jon R. Takasugi
   Judge of the Superior Court

Parties who intend to submit on this tentative must send an email to the court at smcdept17@lacourt.org by 4 p.m. the day prior as directed by the instructions provided on the court website at www.lacourt.org.  If a party submits on the tentative, the party’s email must include the case number and must identify the party submitting on the tentative.  If all parties to a motion submit, the court will adopt this tentative as the final order.  If the department does not receive an email indicating the parties are submitting on the tentative and there are no appearances at the hearing, the motion may be placed off calendar. 

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