Judge: Jon R. Takasugi, Case: 24STCV32856, Date: 2025-05-02 Tentative Ruling

Case Number: 24STCV32856    Hearing Date: May 2, 2025    Dept: 17

Superior Court of California

County of Los Angeles

DEPARTMENT 17

TENTATIVE RULING

Defendant’s demurrer is SUSTAINED, WITHOUT LEAVE TO AMEND, as to the fifth cause of action. 

            On 12/12/2024, Plaintiff Raymond Kim (Plaintiff) filed suit against FCA US, LLC and Cerritos Dodge Chrysler Jeep Ram, alleging violations of statutory obligations.

            On 2/19/2025, Defendant FCA US, LLC (Defendant or FCA) demurred to Plaintiff’s fifth cause of action for fraud.

Discussion

            Defendant argues that Plaintiff has failed to sufficiently allege a fraud cause of action. Moreover, Defendant argues that Plaintiff’s claim is barred by the economic loss rule.

            As for the contention that Plaintiff’s claim for concealment is insufficiently pled, the Court disagrees.

Here, Plaintiff alleges that:

Plaintiff is informed, believes, and thereon alleges that Defendant FCA acquired its knowledge of the Transmission Defect prior to Plaintiff acquiring the Vehicle, through sources not available to consumers such as Plaintiff, including but not limited to pre-production and postproduction testing data; early consumer complaints about the Transmission Defect made directly to Defendant FCA and its network of dealers; aggregate warranty data compiled from Defendant FCA's network of dealers; testing conducted by Defendant FCA in response to these complaints; as well as warranty repair and part replacements data received by Defendant FCA from Defendant FCA's network of dealers, amongst other sources of internal information.

…while Defendant FCA knew about the Transmission Defect, and its safety risks since prior to Plaintiff purchasing the Subject Vehicle, Defendant FCA nevertheless concealed and failed to disclose the defective nature of the Vehicle and its Transmission Defect to its sales representatives and Plaintiff at the time of sale and thereafter. Defendant FCA omitted mention of the Transmission Defect to its consumers

            (Complaint ¶¶ 19-20.)

As such, Plaintiff alleges specific facts which could show Defendant knew that the 2020 Chrysler Pacifica vehicles equipped with a 9-speed transmission are defective, and contained one or more defects to the transmission which may result in hesitation on acceleration, loss of power, hard and/or harsh shifts, and/or jerking. Despite this knowledge, Plaintiff alleges that Defendant knowingly concealed this information.

While Defendant contends that Plaintiff has not sufficiently alleged facts of the identities of the individuals who allegedly concealed this information, or which could establish Defendant’s knowledge of defects at the time of purchase, access to this specific information is clearly contemplated by the discovery process. Indeed, it is nearly impossible to imagine how Plaintiff could have access to those facts without the benefit of discovery. Rather, it is sufficient that Plaintiff has alleged facts which, accepted as true, could state a claim for concealment.

Moreover, the Court finds sufficient facts have been alleged to show a duty to disclose. A duty to disclose can arise from 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. (BiglerEngler v. Breg, Inc. (2017) 7 Cal.App.5th 276, 311; LiMandri v. Judkins (1997) 52 Cal.App.4th 326, 336.) However, “[t]hese three circumstances, however, ‘presuppose[ ] the existence of [a] relationship between the plaintiff and defendant in which a duty to disclose can arise.’” (Bigler-Engler, supra, 7 Cal. App.5th at 311.0

“Such a transaction must necessarily arise from direct dealings between the plaintiff and defendant; it cannot arise between the defendant and the public at large.” (Bigler-Engler, supra, 7 Cal.App.5th at 311, emphases added.)

Here, Defendant manufactured the Vehicle purchased by Plaintiff, provided warranties to Plaintiff on behalf of that Vehicle, and attempted repair on Plaintiff’s vehicle pursuant those warranties. As such, the Court finds direct dealings between Plaintiff and Defendant sufficient to give rise to a duty to disclose.

However, the Court agrees that Plaintiff’s claim is barred by the economic loss doctrine, as Plaintiff seeks purely economic damages allegedly sustained from the purchase of the Subject Vehicle. In other words, Plaintiff alleges she would not have purchased the vehicle or would have paid significantly less for it. (Complaint, ¶¶ 21, 24, 69-71.)

The California Supreme Court’s recent decision in Rattagan v. Uber Techs., Inc. (2024) 17 Cal.5th 1, 553 P.3d 1213 clarifies that fraudulent concealment claims are permissible only where the concealed information exposes plaintiffs to risks or harms beyond the reasonable contemplation of the contractual relationship. (Id. at 13, 31.) For example, the Rattagan plaintiff alleged reputational and personal harm, including arrest and public vilification, resulting from Uber’s intentional concealment during their contractual relationship—harms that extended far beyond economic loss tied to the contract. By contrast, Plaintiff here alleges no such independent harm. Plaintiff’s allegations relate solely to contractual grievances about vehicle performance and warranty obligations.

The California Supreme Court’s recent dismissals of Dhital v. Nissan North America, Inc. and Kia America, Inc. v. Superior Court (Kia) on December 18, 2024 further reinforce the application of the ELD to bar claims like Plaintiff’s. In Dhital, the plaintiffs alleged fraudulent concealment based on the manufacturer’s pre-sale knowledge of vehicle defects obtained through consumer complaints, warranty data and other sources. Similarly, Kia involved allegations of presale concealment where plaintiffs claimed the automaker failed to disclose known defects in its vehicles. The dismissals of these cases suggest that the California Supreme Court did not find unresolved or novel legal issues warranting further review, particularly in light of its recent decision in Rattagan, which clarified the application of the ELD to fraudulent concealment claims. Together, these dismissals reinforce Rattagan as the paramount authority governing the economic loss doctrine.

Based on the foregoing, Defendant’s demurrer is sustained, without leave to amend, as to the fifth cause of action. 

It is so ordered.

Dated:  April    , 2025

   Hon. Jon R. Takasugi
   Judge of the Superior Court

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