Judge: Joseph Lipner, Case: 24STCV10095, Date: 2024-07-09 Tentative Ruling
Case Number: 24STCV10095 Hearing Date: July 9, 2024 Dept: 72
SUPERIOR COURT OF CALIFORNIA
COUNTY OF LOS ANGELES
DEPARTMENT 72
TENTATIVE
RULING
|
JUAN JOSE HERNANDEZ, Plaintiff, v. FORD MOTOR COMPANY, et al., Defendants. |
Case No:
24STCV10095 Hearing Date: July 9, 2024 Calendar Number: 14 |
Defendants Ford Motor Company (“Ford”) and Galpin Motors,
Inc. dba Galpin Ford (“Galpin”) (collectively, “Defendants”) demur to the fifth
and sixth claims in the Complaint filed by Plaintiff Juan Jose Hernandez
(“Plaintiff”).
The Court OVERRULES the demurrer.
This is a Song-Beverly action. The following facts are taken
from the allegations of the Complaint, which the Court accepts as true for the
purposes of the demurrer.
On December 15, 2021, Plaintiff entered into a warranty
contract with Ford for a 2021 Ford Ranger (the “Subject Vehicle”). Plaintiff
alleges that defects and nonconformities to warranty manifested within the
warranty period. Plaintiff alleges that these defects included transmission
defects and engine defects.
Plaintiff filed this action on April 22, 2024, raising
claims for (1) violation of Civil Code, section 1793.2, subd. (d); (2)
violation of Civil Code, section 1793.2, subd. (b); (3) violation of Civil
Code, section 1793.2, subd. (a)(3); (4) breach of the implied warranty of
merchantability; (5) negligent repair; and (6) fraudulent inducement –
concealment.
Defendants demurred to the Complaint on May 22, 2024.
Plaintiff filed an opposition and Defendants filed a reply.
As a general matter, in a demurrer proceeding, the defects
must be apparent on the face of the pleading or via proper judicial
notice. (Donabedian v. Mercury Ins.
Co. (2004) 116 Cal.App.4th 968, 994.) “A demurrer tests the pleading
alone, and not the evidence or facts alleged.” (E-Fab, Inc. v. Accountants,
Inc. Servs. (2007) 153 Cal.App.4th 1308, 1315.) The court assumes the truth
of the complaint’s properly pleaded or implied factual allegations. (Ibid.) The only issue a demurrer is
concerned with is whether the complaint, as it stands, states a cause of
action. (Hahn v. Mirda (2007) 147 Cal.App.4th 740, 747.)
Where a demurrer is sustained, leave to amend must be
allowed where there is a reasonable possibility of successful amendment. (Goodman v. Kennedy (1976) 18 Cal.3d 335,
348.) The burden is on the plaintiff to show the court that a pleading can be
amended successfully. (Ibid.;
Lewis v. YouTube, LLC (2015) 244 Cal.App.4th 118, 226.) However, “[i]f
there is any reasonable possibility that the plaintiff can state a good cause
of action, it is error to sustain a demurrer without leave to amend.” (Youngman v. Nevada Irrigation Dist.
(1969) 70 Cal.2d 240, 245).
In order to state a claim for negligence, a plaintiff must
allege the elements of (1) “the existence of a legal duty of care,” (2) “breach
of that duty,” and (3) “proximate cause resulting in an injury.” (McIntyre v. Colonies-Pacific, LLC (2014)
228 Cal.App.4th 664, 671.)
Defendants argue that Plaintiff did not pay any out-of-pocket
costs for the repair attempts because they were covered under warranty, and
that, as a result, Plaintiff did not suffer any damages. However, Plaintiff
does not allege this fact. Because this fact does not appear on the face of the
Complaint, it is not a basis to sustain the demurrer.
“[A] demurrer based on an affirmative defense will be
sustained only where the face of the complaint discloses that the action is
necessarily barred by the defense.” (McKenney v. Purepac Pharmaceutical Co.
(2008) 167 Cal.App.4th 72, 79.)
Here, the Complaint does not affirmatively disclose that
Plaintiff’s damages are purely economic losses, and do not include property
damage to the car resulting from the alleged negligent repairs. “California
decisional law has long recognized that the economic loss rule does not
necessarily bar recovery in tort for damage that a defective product (e.g., a
window) causes to other portions of a larger product (e.g., a house) into which
the former has been incorporated.” (Jimenez v. Superior Court (2002) 29
Cal.4th 473, 483.)
“A demurrer does not lie to a portion of a cause of action.”
(PH II, Inc. v. Superior Court (1995) 33 Cal.App.4th 1680, 1682.)
Because the face of the Complaint does not show that Plaintiff’s losses from
the repairs were purely economical, the economic loss rule does not compel
dismissal of this claim.
The Court therefore overrules the demurrer to this claim.
“[T]he elements of an action for fraud and deceit based on
concealment are: (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.)
A duty to disclose arises when “[1] a defendant owes a
fiduciary duty to a plaintiff … [2] when the defendant has exclusive knowledge
of material facts not known to the plaintiff; [3] when the defendant actively
conceals a material fact from the plaintiff; or [4] when the defendant makes
partial representations but also suppresses some material facts.” (Jones v.
ConocoPhillips Co. (2011) 198 Cal.App.4th 1187, 1199 [internal citations
and quotation marks omitted; cleaned up].)
“Each of the [latter] three circumstances in which
nondisclosure may be actionable presupposes the existence of some other
relationship between the plaintiff and defendant in which a duty to disclose
can arise.” (LiMandri v. Judkins (1997) 52 Cal.App.4th 326, 336–337.)
“[S]uch a relationship can only come into being as a result of some sort of
transaction between the parties.” (Id. at p. 337.) “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.)
Defendants argue that Plaintiff does not specifically
identify the defects in question that Defendants allegedly concealed.
Plaintiff alleges that “Defendant [Ford] knew that vehicles
equipped with the same 10-speed transmission as the Vehicle suffered from one
or more defects that can cause the vehicles and their 10-speed transmissions to
experience hesitation and/or delayed acceleration; harsh and/or hard shifting;
jerking, shuddering, and/or juddering (‘Transmission Defect’). These conditions
present a safety hazard and are unreasonably dangerous to consumers because
they can suddenly and unexpectedly affect the driver's ability to control the
vehicle's speed, acceleration, deceleration, and/ or overall responsiveness of
the vehicle in various driving conditions.” (Complaint at p. 15:2-8.)
Plaintiff’s related allegations add further specificity to
the defects: “on September 27, 2021, Defendant issued TSB 21-2315, entitled
‘10R80 – Harsh Engagement/Harsh Shift/Delayed Shift With or Without DTCs’,
which covers 2017 – 2020 Ford vehicles, including the Subject Vehicle. The TSB
advised that ‘Some 2017-20220 F-150 … vehicles equipped with a 10R80 automatic
transmission may exhibit a harsh engagement/harsh shift/delayed shift…This may
be due to incompatibility of the adaptive calibration to adapt to hardware
wear-in over time.” (Complaint at p. 6:23-28.)
In Dhital v. Nissan North America, Inc. (2022) 84
Cal.App.5th 828 (review granted), the Court of Appeal found that the following
allegations of defect were adequate for a fraudulent inducement claim:
“The CVT is defective
in that it causes hesitation from a stop before acceleration; sudden, hard
shaking during deceleration; sudden, hard shaking and violent jerking (commonly
known as ‘juddering’ or ‘shuddering’) during acceleration; and complete failure
to function, each and all of which prevent a CVT-equipped vehicle from
operating as intended by the driver, especially during acceleration from a
complete stop.”
(Dhital v. Nissan North America,
Inc. (2022) 84 Cal.App.5th 828, 833–834, 844, review granted February
1, 2023.)
Plaintiff’s
allegations in this case are similar in their level to specificity to those
permitted in Dhital. While the California Supreme Court has granted
review in Dhital, and it is therefore not binding on the Court, it may
be considered as persuasive authority.
(Cal. R. Ct. Rules 8.1105 and 8.1115.) The Court does find it
persuasive, barring any contrary ruling by the California Supreme Court. The
Court concludes that Plaintiff has specifically alleged defects and Ford’s
knowledge thereof.
Plaintiff has specifically alleged the defects in question
and that Ford knew about them.
Defendants argue that Plaintiff has not alleged a duty to
disclose because Plaintiff fails to plead a transactional relationship.
A contractual relationship is not necessary to give rise to
a buyer-seller relationship for the purposes of establishing a duty to
disclose.
“Under California law, a vendor has a duty to disclose
material facts not only to immediate purchasers, but also to subsequent
purchasers when the vendor has reason to expect that the item will be resold.”
(OCM Principal Opportunities Fund, L.P. v. CIBC World Markets Corp.
(2007) 157 Cal.App.4th 835, 859 [emphasis in original]; see also Dhital,
supra, 84 Cal. App.5th at p. 884 [Plaintiffs’ allegations against Nissan
sufficient at pleading stage where plaintiffs alleged that they bought the car
from a Nissan dealership, that Nissan backed the car with an express warranty,
and that Nissan’s authorized dealerships are its agents for purposes of sale of
Nissan vehicles to consumers].)
“While an affirmative misrepresentation might not be
repeated … a nondisclosure must necessarily be passed on. Only Smith knew what
his soils engineers had found and it was unlikely that others would find out on
their own. …. Under these circumstances it would be anomalous if liability for
damages resulting from fraudulent concealment were to vanish simply because of
the fortuitous event of an intervening resale. Ultimately in such a case it is
the subsequent purchaser who is directly damaged by the initial nondisclosure.”
(Barnhouse v. City of Pinole (1982) 133 Cal.App.3d 171, 192.)
Here, Plaintiff alleges that he entered into a warranty
contract with Ford for the Subject Vehicle. Ford’s warranty policy issued to
Plaintiff was designed to be issued through a dealer – in other words, Ford
knew that the cars that it manufactured were to be resold from dealers to end
users. The Court therefore cannot rule in Ford’s favor on this issue at the
demurrer stage.
Defendants argue that Plaintiff fails to plead that Ford had
exclusive knowledge in order to establish a duty to disclose.
Plaintiff alleges that Ford gained knowledge of the
transmission defects through pre-production testing, pre-production design
failure mode and analysis data, production failure mode and analysis data,
early consumer complaints made exclusively to Ford, aggregate warranty data
compiled from Ford’s network of dealers, testing conducted by Ford in response
to consumer complaints, and repair order and parts data from Ford’s network of
dealers. (Complaint at p. 15:26-16:9.)
Plaintiff has adequately pled that Ford had exclusive
knowledge which Plaintiff could not have reasonably accessed. Further, in
addition to pleading ultimate facts, Plaintiff has pled evidentiary facts
showing knowledge – namely, the issuance of a technical service bulletin
relating to the transmission issue mere months after Plaintiff’s purchase. Such
a service bulletin would necessarily be preceded by the collection of
information, and the bulletin’s brief nature indicates that Ford possessed more
facts which were condensed into the bulletin. While the bulletin is not a
judicial admission, it is adequate to support an allegation of knowledge at the
pleading stage.
Defendant argues that the economic loss rule precludes
recovery in tort where a plaintiff’s damages consist solely of economic loss,
leaving a plaintiff with only contractual remedies.
“[F]raudulent inducement of contract—as the very phrase
suggests—is not a context where the traditional separation of tort and contract
law obtains. To the contrary, this area of the law traditionally has involved
both contract and tort principles and procedures. For example, it has long been
the rule that where a contract is secured by fraudulent representations, the
injured party may elect to affirm the contract and sue for the fraud.” (Lazar
v. Superior Court (1996) 12 Cal.4th 631, 645 [internal citation and
quotation marks omitted].)
“Tort damages have been permitted in contract cases … where
the contract was fraudulently induced. In each of these cases, the duty that
gives rise to tort liability is either completely independent of the contract
or arises from conduct which is both intentional and intended to harm.” (Erlich
v. Menezes (1999) 21 Cal.4th 543, 552 [internal citations omitted].)
“[C]oncealment-based claims for fraudulent inducement are
not barred by the economic loss rule.” (Dhital v. Nissan North America, Inc.
(2022) 84 Cal.App.5th 828, 840, review granted February 1, 2023
[declining to apply economic loss rule where plaintiff pled concealment of
automobile defects by manufacturer].)
Accordingly, the Court does not sustain the demurrer on the
basis of the economic loss rule at the pleading stage.
The Court therefore overrules the demurrer to this claim.