Judge: Joseph Lipner, Case: 24STCV30188, Date: 2025-02-27 Tentative Ruling

Case Number: 24STCV30188    Hearing Date: February 27, 2025    Dept: 72

SUPERIOR COURT OF CALIFORNIA

COUNTY OF LOS ANGELES

DEPARTMENT 72

TENTATIVE RULING

Defendant FCA US LLC (“FCA”) demurs to the sixth claim in the Complaint filed by Plaintiffs Alan Walls and Christopher Walls (collectively, “Plaintiffs”).

The Court OVERRULES the demurrer.

Background

            This is a Song-Beverly Act case between Plaintiff and Defendants FCA and Huntington Beach Chrysler Dodge Jeep Ram (“Huntington”) (collectively with FCA, “Defendants”).

            Plaintiffs purchased a 2022 Jeep Gladiator (the “Vehicle”) that was manufactured by FCA. Plaintiffs allege that they entered into a warranty contract with FCA on February 23, 2022, which contained several express warranties as to the Vehicle.

            Plaintiffs allege that the engine that the Vehicle was manufactured with had defects resulting in loss of power, stalling, running rough, misfires, or engine failure.

            Plaintiffs allege that FCA had knowledge of the defects prior to the sale through sources not available to Plaintiffs, including pre- and post-production testing data, early consumer complaints made to FCA and its network of dealers, aggregate warranty data compiled from FCA’s network of dealers, testing conducted by FCA in response to complaints, and warranty repair and part replacement data received by FCA from its network of dealers. (Complaint ¶¶ 22, 25, 26, 29, 66.)

            Plaintiffs allege that FCA had a duty to disclose the alleged defects but did not do so. Plaintiffs allege that they would not have purchased the Vehicle had they known of the alleged defects.

            Plaintiffs filed this action on November 15, 2024, raising claims for (1) violation of Civil Code, section 1793.2, subd. (d) (against FCA only); (2) violation of Civil Code, section 1793.2, subd. (b) (against FCA only); (3) violation of Civil Code, section 1793.2 (against FCA only); (4) breach of the implied warranty of merchantability (against FCA only); (5) negligent repair (against Huntington); and (6) fraudulent concealment (against FCA only).

            On January 21, 2025, FCA demurred to the Complaint. Plaintiff filed an opposition and FCA filed a reply.

Discussion

“[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.)

The facts constituting the alleged fraud must be alleged factually and specifically as to every element of fraud, as the policy of “liberal construction” of the pleadings will not ordinarily be invoked. (Lazar v. Superior Court (1996) 12 Cal.4th 631, 645.) The facts constituting the alleged fraud must be alleged factually and specifically as to every element of fraud, as the policy of “liberal construction” of the pleadings will not ordinarily be invoked. (Lazar v. Superior Court (1996) 12 Cal.4th 631, 645.) “[Fraud’s] particularity requirement necessitates pleading facts which ‘show how, when, where, to whom, and by what means the representations were tendered.’ [Citation.]” (Stansfield v. Starkey (1990) 220 Cal.App.3d 59, 73.)

To properly allege fraud against a corporation, the plaintiffs must plead the names of the persons allegedly making the false representations, their authority to speak, to whom they spoke, what they said or wrote, and when it was said or written. (Tarmann v. State Farm Mut. Auto. Ins. Co. (1991) 2 Cal.App.4th 153, 157.)

Duty to Disclose

FCA argues that Plaintiffs have not alleged a duty to disclose because Plaintiffs fail to plead a transactional relationship. FCA argues that Plaintiffs did not buy the Vehicle directly from FCA, and therefore did not 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.)

FCA argues that Plaintiff has not alleged FCA’s knowledge of the defects with adequate specificity. Although fraud claims require that a plaintiff specifically allege facts showing the elements of the claim, “[l]ess specificity is required when it appears from the nature of the allegations that the defendant must necessarily possess full information concerning the facts of the controversy.” (Wald v. TruSpeed Motorcars, LLC (2010) 184 Cal.App.4th 378, 394 [quotation marks omitted].)

For example, 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, review dismissed December 18, 2024.)

Here, Plaintiffs have alleged the means by which they contend FCA learned of the defects. Without access to FCA’s own records, Plaintiffs could not reasonably make more specific allegations. Plaintiffs have met their burden at the pleading stage.

The Court therefore does not rule in FCA’s favor on this issue.

Damages

FCA argues that Plaintiffs have not alleged facts showing that they were damaged by the alleged fraud. The gravamen of FCA’s argument is that Plaintiffs cannot obtain a double recovery for the purchase price of the vehicle under both their statutory claims and their fraud claim. This is true, but is not a reason why Plaintiffs cannot advance this alternate legal theory for recovery.

The Court overrules the demurrer.