Judge: Katherine Chilton, Case: 21STLC02852, Date: 2022-09-07 Tentative Ruling

Case Number: 21STLC02852     Hearing Date: September 7, 2022    Dept: 25

PROCEEDINGS:      DEMURRER

MOVING PARTY:   Plaintiff/Cross-Defendant Eli’s Collision Repair of South Bay, Inc.

RESP. PARTY:         Defendant/Cross-Complainant Gannon Brown

DEMURRER

(CCP §§ 430.10)

TENTATIVE RULING:

Plaintiff/Cross-Defendant Eli’s Collision Repair’s Demurrer to the First Amended Cross-Complaint’s cause of action for violation of the Magnuson-Moss Warranty Act is SUSTAINED with 20 DAYS LEAVE TO AMEND.

The hearing on Plaintiff/Cross-Defendant Eli’s Demurrer to the third and fourth causes of action is CONTINUED TO OCTOBER 10, 2022 at 10:00 a.m. in Department 25 at the SPRING STREET COURTHOUSE.  At least 16 court days before the continued hearing, Plaintiff/Cross-Defendant must file and serve supplemental papers as requested herein.  Failure to do so will result in the Motion being placed off calendar or denied.

SERVICE: 

[ X ] Proof of Service Timely Filed (CRC, rule 3.1300)                 OK

[ X ] Correct Address (CCP §§ 1013, 1013a)                                     OK

[ X ] 16/21 Court Days Lapsed (CCP §§ 12c, 1005(b))                     OK

OPPOSITION:          Filed on August 24, 2022.                                    [   ] Late                      [   ] None

REPLY:                     Filed on August 30, 2022.                                    [   ] Late                      [   ] None

ANALYSIS:

I.                Background

On April 12, 2021, Plaintiff Eli’s Collision Repair of South Bay, Inc., also known as Eli’s Collision Repair III, a California Corporation (“Plaintiff” or “Eli’s”) filed an action against Gannon Brown (“Brown”) and USAA Casualty Insurance Company, a Texas Corporation (“USAA”), (collectively “Defendants”) for (1) civil damages for theft, (2) conversion, (3) claim and delivery, (4) restitution (unjust enrichment), (5) breach of contract, (6) fraud (intentional misrepresentation), and (7) negligence.

On December 8, 2021, the Court denied Defendant Brown’s Motion to Quash Service of Summons and ordered him to file and serve a responsive pleading within 20 days of the order.      (12-8-21 Minute Order.)

On December 28, 2021, Defendant Brown filed a Demurrer to the first and third causes of action in Plaintiff’s Complaint.  On February 14, 2022, the Court overruled Defendant Brown’s Demurrer.  (2-14-22 Minute Order.)

On February 17, 2022, Defendant Brown filed an Answer to the Complaint and a Cross-Complaint against Plaintiff/Cross-Defendant Eli’s.  On March 22, 2022, Defendant/Cross-Complainant Brown filed a First Amended Cross-Complaint (“FACC”) against Plaintiff/Cross-Defendant Eli’s for (1) violation of the Magnuson-Moss Warranty Act, (2) breach of common law warranty, (3) promissory fraud, and (4) breach of contract.  Plaintiff/Cross-Defendant sought an automatic 30-day extension to file a demurrer to the First Amended Cross-Complaint.

On June 24, 2022, Plaintiff/Cross-Defendant Eli’s filed the instant Demurrer to the First Amended Cross-Complaint’s first, third, and fourth causes of action.  On August 24, 2022, Defendant/Cross-Complainant Brown filed an Opposition to the Demurrer, and on August 30, 2022, Plaintiff/Cross-Defendant Eli’s filed a Reply to the Opposition.

II.              Legal Standard

A demurrer is a pleading that may be used to test the legal sufficiency of the factual allegations in the complaint.  (Code of Civ. Proc. § 430.10.)  There are two types of demurrers – general demurrers and special demurrers.  (See McKenney v. Purepac Pharmaceutical Co. (2008) 167 Cal.App.4th 72, 77.)

General demurrers can be used to attack pleadings for failure to state facts sufficient to constitute a cause of action or for lack of subject matter jurisdiction.  (Code Civ. Proc. § 430.10(e); McKenney, 167 Cal.App.4th at 77.)  Such demurrers can be used only to challenge defects that appear on the face of the pleading or from matters outside the pleading that are judicially noticeable; evidence or extrinsic matters are not considered.  (Code of Civ. Proc. §§ 430.30, 430.70; Blank v. Kirwan (1985) 39 Cal.3d 311, 318; Donabedian v. Mercury Ins. Co. (2004) 116 Cal.App.4th 968, 994.)  For the purpose of testing the sufficiency of the cause of action, the Court admits “all material facts properly pleaded” and “matters which may be judicially noticed,” but does not consider contentions, deductions, or conclusions of fact or law. [Citation].”  (Blank, 39 Cal.3d at 318.)  It gives these facts “a reasonable interpretation, reading it as a whole and its parts in their context.”  (Ibid.). At the pleading stage, a plaintiff need only allege ultimate facts sufficient to apprise the defendant of the factual basis for the claim against him.  (Semole v. Sansoucie (1972) 28 Cal. App. 3d 714, 721.)  The face of the complaint includes exhibits attached to the complaint.  (Frantz v. Blackwell (1987) 189 Cal.App.3d 91, 94.)  "If facts appearing in the exhibits contradict those alleged, the facts in the exhibits take precedence."  (Holland v. Morse Diesel Intern., Inc. (2001) 86 Cal.App.4th 1443, 1447.)

Special demurrers can be used to attack the pleadings on grounds that the pleading is uncertain, ambiguous, and unintelligible, or in a contract case, for failure to allege whether a contract is oral or written.  (Code Civ. Proc., § 430.10(f).)  However, special demurrers are not allowed in limited jurisdiction civil actions and any grounds for special demurrers must be raised as affirmative defenses in the answer.  (Code Civ. Proc., § 92(c).)

Moreover, Code of Civil Procedure § 430.41 requires that “[b]efore filing a demurrer pursuant to this chapter, the demurring party shall meet and confer in person or by telephone with the party who filed the pleading that is subject to demurrer for the purpose of determining whether an agreement can be reached that would resolve the objections to be raised in the demurrer.” (Code Civ. Proc., § 430.41(a).)  The parties are to meet and confer at least five days before the date the responsive pleading is due.  (Code Civ. Proc., § 430.41(a)(2).)  Thereafter, the demurring party shall file and serve a declaration detailing their meet and confer efforts.  (Code Civ. Proc., § 430.41(a)(3).)

III.            Discussion

A.    Meet and Confer Requirement

Eli’s counsel has filed a declaration stating that on April 25, 2022, counsel for Eli’s and Brown met and conferred regarding a potential demurrer.  (Thomas Decl. ¶ 2.)  Eli’s Counsel states that the attorneys discussed “Eli’s Collision’s position with respect to the defects in the First Amended Cross-Complaint, and specifically the defects in the First Cause of Action for violation of the federal Magnuson-Moss Warranty Act under 15 U.S.C. §§ 2301-2312.”  (Ibid.)  However, the attorneys did not come to an agreement.  (Ibid.)

Defendant/Cross-Complainant Brown’s counsel does not contest that meet and confer efforts took place.  (Butler Decl. ¶¶ 2-3.)  However, he states that the only issues discussed were Brown’s first cause of action for violation of the Magnuson-Moss Warranty Act, the second cause of action, and the claim for punitive damages for the third cause of action.  (Ibid.)

Pursuant to Code of Civil Procedure § 430.41(a)(1), “[a]s part of the meet and confer process, the demurring party shall identify all of the specific causes of action that it believes are subject to demurrer and identify with legal support the basis of the deficiencies.”

Given that the parties agree that meet and confer efforts took place regarding the first cause of action, the Court finds the declarations sufficient to satisfy the meet and confer requirement for this issue.

The Court orders Plaintiff/Cross-Defendant to submit supplemental proof that it identified the third and fourth causes of action as being subject to demurrer during the meet and confer process.

B.    First Cause of Action – Violation of the Magnuson-Moss Warranty Act

a.     Defendant/Cross-Complainant Brown’s Allegations

In December 2018, the exterior paint of Defendant/Cross-Complainant Brown’s 2017 Porsche 911 Carrera was scratched in two places, so he took his vehicle to Plaintiff/Cross-Defendant Eli’s Collision Repair (“Eli’s”).  (FACC ¶¶ 6-8.)  Brown alleges that he asked an employee of Eli’s whether the original paint could be matched exactly and was told by the employee that the paint could be matched.  (Ibid. at ¶ 8.)  When the vehicle was returned to Brown in February 2019, he saw that the shade of red that Eli’s used on the car “was noticeably different from the Guard’s Red that the vehicle was originally painted.”  (Ibid. at ¶ 9.)  Brown gave Eli’s an opportunity to repaint the vehicle and match the original color; however, the color once again did not match.  (Ibid. at ¶¶ 10-11.)  Brown requested that Eli’s either repaint the entire vehicle in a single color or provide a refund, but Eli’s refused both requests.  (Ibid. at ¶ 11.)  Brown disputed the charge with the credit card company and was provided with a refund.  (Ibid. at ¶ 13.)

The FACC alleges that Eli’s violated the Magnuson-Moss Warranty Act because it provided an express warranty that it would repair the scratches on Brown’s vehicle and that the paint used would “precisely match the Guard Red color” of the vehicle.  (Ibid. at ¶ 15.)  The Final Bill[1], purportedly attached to the FACC, “warrants against defects in materials and workmanship for as long as the original customer owns the vehicle.”  (Ibid. at ¶ 16.)  Eli’s breached the express warranty because it did not “repair the damage to the paint job on Brown’s car using paint that matched the original color, and by failing to take reasonable required steps to remedy its poor workmanship.”  (Ibid. at ¶ 17.)  As a result, Brown has been harmed and has incurred damages.  (Ibid. at ¶ 18.)

Brown also alleges that Eli’s warranty failed to comply with the requirements of the Magnuson-Moss Warranty Act because it failed to (1) “designate its warranty as full or limited, in violation of 15 U.S.C. § 2303(a),” (2) “identify the parties who could enforce the warranty, in violation of 16 C.F.R. §701.3(a)(1),” (3) “specify the point in time on which the warranty period commenced, in violation of 16 C.F.C. §701.3(a)(4),” and (4) “include the statement required by 16 C.F.R. §701.3(a)(7).”  (Ibid. at ¶ 19.)  Thus, Brown is entitled to actual damages, attorney’s fees, and costs.  (Ibid. at ¶ 20.)

b.     Plaintiff/Cross-Defendant Eli’s Collision Repair’s Demurrer

Eli’s demurs to Brown’s violation of Magnuson-Moss Warranty Act (“MMWA”) cause of action for failure to state facts sufficient to constitute a cause of action.  (Demurrer p. 2.)  First, Eli’s states that the cause of action for MMWA should be dismissed because the Act does not apply to a violation of an express warranty on service.  (Oppos. pp. 5-7.)  Second, if the automobile paint, and not the service, was alleged to be defective, the cause of action should be dismissed since “commercial automotive paint is not a ‘consumer product’ because such automobile paint is “not customarily produced or distributed for sale to, or use or consumption by, or enjoyment of, a consumer” Consumer Product Safety Act, 15 U.S.C. § 2052(a)(1).”  (Ibid. at pp. 5, 7-11.)  Furthermore, Brown does not allege that Eli’s sold commercial automotive paint to Brown, but rather used it in its service of repairing the vehicle.  (Ibid. at pp. 8-9.)  Eli’s also argues that the MMWA does not apply to oral warranties.  (Ibid. at p. 7.)

c.      Defendant/Cross-Complainant Brown’s Opposition to Demurrer

In its Opposition to the Demurrer, Brown states that “Eli’s argument regarding the application of Magnuson-Moss is inconsistent with Eli’s own contentions, fallacious, and legally unsound.”  (Oppos. p. 2.)  Brown states that Eli’s Complaint has a cause of action for conversion, “an alleged theft of ‘products’” and the Final Bill attached to the complaint, has a charge for “Material, Paint” in the amount of $490.50.  (Ibid. at p. 3.)  Furthermore, page 6 of the Final Bill states that Eli’s “‘warrants against defects on materials and workmanship…’”  (Ibid.)  Thus, MMWA applies in this case.  (Ibid.)

Brown also states that even though it did not purchase a “barrel of commercial automotive paint,” Eli’s applied the paint to the vehicle and “[t]hat quantity of paint became part of a consumer transaction.”  (Ibid. at p. 4.)

d.     Plaintiff/Cross-Defendant Eli’s Collision Repair’s Reply to Opposition to Demurrer

In its Reply to the Opposition, Eli’s states that Brown fails to address the defects discussed in the Demurrer, which means that Brown concedes these points.  (Reply p. 2.)  Eli’s reiterates that “as a matter of law the MMWA has no application to a claim over a violation of ‘warranties of service.’  16 C.F.R. § 700.1(h).”  (Ibid.)  Eli’s argues that “[i]t is irrelevant that a sale of a good was also involved; Brown impliedly concedes the paint itself is not alleged to be defective.”  (Ibid. at p. 3.)  Since the FACC “only alleges a defect in workmanship…it thus falls outside of the coverage of the MMWA.”  (Ibid. at p. 3.)  Eli’s also states that Brown’s argument that pursuant to 16 C.F.R. § 700.1(h), MMWA applies to a claim of “warranty of service if there is also a warranty of a product in the same warranty” fails because this application is restricted to replacement part warranties “where the replacement part is defective or does not function properly.”  (Ibid. at pp. 3-4.)  The FACC does not contain any allegations of a defect in the paint or any replacement part.  (Ibid.)  Even though Brown paid $490.50 for the paint and supplies, Brown did not allege that the paint itself was defective, so MMWA does not apply.  (Ibid. at p. 4.)

Eli’s also reiterates its arguments regarding the fact that commercial automotive paint is not a consumer product and “it is unlawful for a consumer to use such paint in the County of Los Angeles absent a licensed painting booth and professional equipment” regardless of the quantity of paint.  (Ibid. at pp. 5-6.)  Thus, the MMWA cannot apply.  (Ibid. at pp. 5-6.) 

e.      Analysis

The Magnuson-Moss Warranty Act is a federal law that governs consumer product warranties.  “Except in the specific instances in which Magnuson-Moss expressly prescribes a regulating rule, the Act calls for the application of state written and implied warranty law, not the creation of additional federal law.”  (Walsh v. Ford Motor Co. (D.C. Cir. 1986) 807 F.2d 1000, 1012.)  Brown’s FACC is premised on an oral promise provided by Eli’s employee as well as the “Final Bill” which is alleged to contain an express written warranty.

First, the MMWA only applies to written warranties.  (16 C.F.R. § 700.1(a).)  Second, the Court cannot discern the full terms of the written warranty provided by Eli’s to Brown.  Although Brown states that the “Final Bill” attached to the FACC contains the language of the express warranty, Brown has not attached any documents to the FACC.  (FACC ¶¶ 15-16.)  Brown only provides a reference to an excerpt from the express warranty that is not sufficient to determine all the terms prescribed by the alleged express warranty.  Without determining what written warranties were made by Eli’s, it would be futile to address whether these warranties are covered by the MMWA.

Therefore, Plaintiff/Cross-Defendant Eli’s Demurrer to the FACC’s cause of action for violation of the Magnuson-Moss Warranty Act is SUSTAINED.

C.    Third Cause of Action – Promissory Fraud

a.     Defendant/Cross-Complainant Brown’s Allegations

Relying on the same facts as described above, the FACC alleges a cause of action for promissory fraud.  It states that Eli’s “expressly represented” that if Brown used their services, they would repair the scratches using paint that “would precisely match the Guard’s Red color.”  (Ibid. at ¶ 26.)  Brown states that Eli’s employee “knew – or in the exercise of reasonable diligence should have known – that the representation was false” because Eli’s paint vendor did not have the precise shade of red that would match the vehicle.  (Ibid. at ¶ 27.)  Given that Eli’s “appeared to have a decent reputation, and its employees exuded considerable confidence in their ability to match the paint already on Brown’s Porsche,” Brown was justified in relying on the representation.  (Ibid. at ¶ 28.)  As a result of Brown’s reliance on the representation, the vehicle has been damaged and thus, has decreased in value, and “Brown’s pleasure from owning the vehicle has been diminished.”  (Ibid. at ¶ 29.)  Brown also alleges that Eli’s “conduct was wanton, willful and oppressive, thus entitling Brown to punitive and/or exemplary damages.”  (Ibid. at ¶ 31.)

b.     Plaintiff/Cross-Defendant Eli’s Collision Repair’s Demurrer

Eli’s demurs to Brown’s promissory fraud cause of action for failure to state facts sufficient to constitute a cause of action.  (Demurrer p. 2.)  Eli’s states that Brown must make factual allegations showing that Eli’s “intended not to perform its promise to match the paint color when the supposed promise was made” and “do so with specificity and not with the general and conclusory allegations in ¶¶ 26-27.”  (Ibid. at p. 12.)  Eli’s argues that Brown’s cause of action for promissory fraud “does not contain the requisite detailed and specific factual allegations to state a cause of action – let alone against a corporate defendant,” which requires further specificity regarding the circumstances of the alleged fraudulent representation.  (Ibid. at p. 13.)

Eli’s also contests Brown’s allegations for punitive damages.  (Ibid.)  It argues that “Brown is also required to ‘specifically’ plead factual allegations showing (a) ratification or authorization of the purported false promise by a managerial agent of Cross-Eli’s Collision.”  (Ibid. at pp. 13-14.)  However, “the purported false promise is not pled with the necessary particularity and is fatally devoid of any factual allegations necessary to support a claim for punitive damages against a corporate entity.”  (Ibid. at p. 14.)

c.      Defendant/Cross-Complainant Brown’s Opposition to Demurrer

In its Opposition to the Demurrer, Brown states that parties did not meet and confer “with regard to any cause of action other than the first.”  (Oppos. p. 4.)  Brown contends that the email communications only addressed the Magnuson-Moss claim and punitive damages for the third cause of action.  (Ibid. at p. 5.)  However, there was no motion to strike the request for punitive damages.  (Ibid. at p. 5.)

Brown adds that he did plead sufficient facts for the heightened standard of pleading for promissory fraud by making allegations regarding the date of the representations, the name of the employee who made the allegations, the harm suffered, and Brown’s reliance on the representations.  (Ibid. at p. 5.)

d.     Plaintiff/Cross-Defendant Eli’s Collision Repair’s Reply to Opposition to Demurrer

In its Reply to the Opposition, Eli’s reiterates that Brown had to allege facts showing intentional conduct and had to plead such facts with specificity.  (Reply pp. 6-7.)  However, “the allegations in the FACC completely fail in this regard.”  (Ibid. at p. 7.)  Brown’s statement that he met the heightened pleading standards “by alleging the date of the representations, the name of the employee who made them, the harm, justifiable reliance, etc. … is not sufficient to state a cause of action for promissory fraud.”  (Ibid. at p. 7.)

Eli’s also states that it is not seeking to strike the cause of action for punitive damages, but rather demurring to the cause of action because the facts alleged are “insufficient to state a cause of action for punitive damages against a corporate employer.”  (Ibid. at p. 7.)  There are no facts stating that an alleged false promise was ratified or authorized by a managerial agent or was made by an employee acting in a managerial capacity.  (Ibid. at p. 8.)

Eli’s argues that the Brown’s reference to the meet and confer letter does not make any difference because Brown “refused to amend the other causes of action” as well.  (Ibid. at p. 7.)

e.      Analysis

As discussed in the “Meet and Confer Requirement” section, the parties’ declarations are inconsistent regarding meet and confer efforts for any issues, except the first cause of action.  Brown argues that the email communication that constituted the meet and confer efforts did not address the third cause of action.  The Court cannot determine if the meet and confer requirement has been met and thus orders Eli’s to submit additional proof that a demurrer to the third and fourth causes of action was discussed as required by the Code of Civil Procedure § 430.41(a)(1).  Since the allegations for punitive damages depend on the third cause of action, the Court will analyze these allegations after determining whether the meet and confer requirement has been satisfied as to the third cause of action.

Therefore, the hearing on Plaintiff/Cross-Defendant Eli’s Demurrer to the Cross-Complaint’s third cause of action is CONTINUED.

D.    Fourth Cause of Action – Breach of Contract

a.     Defendant/Cross-Complainant Brown’s Allegations

Again relying on the same facts as set forth above, the FACC alleges that “Brown and Eli’s entered into a contact whereby Brown agreed to pay a certain sum of money to Eli’s, and Eli’s agreed to repair Brown’s vehicle.”  (Ibid. at ¶ 33.)  Brown performed his obligations under the agreement, while Eli’s “failed and refused to provide the repair services Brown bargained for.”  (Ibid. at ¶ 35.)  “As a direct and proximate result of Eli’s breach, Brown has been harmed in an amount subject to proof at the time of trial.”  (Ibid.  at ¶ 36.)

b.     Plaintiff/Cross-Defendant Eli’s Collision Repair’s Demurrer

Eli’s demurs to Brown’s breach of contract cause of action for failure to state facts sufficient to constitute a cause of action.  (Demurrer p. 2.)  Eli’s argues that the FACC does not set out the material terms of the alleged contract verbatim nor attach a copy of the written agreement.  (Ibid. at p. 15.)  It also fails to state whether the contract was written or oral.  (Ibid.)

c.      Defendant/Cross-Complainant Brown’s Opposition to Demurrer

In its Opposition to the Demurrer, Brown states that parties did not meet and confer “with regard to any cause of action other than the first.”  (Oppos. p. 4.)  Brown contends that the email communications only addressed the Magnuson-Moss claim and punitive damages for the third cause of action.  (Ibid. at p. 5.)

d.     Plaintiff/Cross-Defendant Eli’s Collision Repair’s Reply to Opposition to Demurrer

In its Reply to the Opposition, Eli’s states that Brown never addresses the demurrer to the cause of action for breach of contract and thus, “concedes the merits of the Demurrer to this cause of action.”  (Ibid. at p. 8.)

e.      Analysis

As with the third cause of action, the Court orders Eli’s to submit additional proof that a demurrer to the fourth cause of action was discussed during the meet and confer efforts, as required by the Code of Civil Procedure § 430.41(a)(1).

Thus, the hearing on the Demurrer as to the fourth cause of action is CONTINUED.

E.    Leave to Amend

When a demurrer is sustained, the Court determines whether there is a reasonable possibility that the defect can be cured by amendment.  (Blank v. Kirwan (1985) 39 Cal.3d 311, 318.)  When a plaintiff “has pleaded the general set of facts upon which his cause of action is based,” the court should give the plaintiff an opportunity to amend his complaint, since plaintiff should not “be deprived of his right to maintain his action on the ground that his pleadings were defective for lack of particulars.”  (Reed v. Norman (1957) 152 Cal.App.2d 892, 900.)  Generally, the court will allow leave to amend on at least the first try, unless there is absolutely no possibility of overcoming the issue.  (See Angie M. v. Superior Court (1995) 37 Cal.App.4th 1217, 1227 ("Denial of leave to amend constitutes an abuse of discretion unless the complaint shows on its face it is incapable of amendment.  [Citation.]  Liberality in permitting amendment is the rule, if a fair opportunity to correct any defect has not been given.").)

            Here, the Demurrer as to the first cause of action for violation of the Magnuson-Moss Warranty Act is sustained.  However, there is a reasonable possibility that an amendment may cure the defect in the allegations as to the first cause of action.  Therefore, Plaintiff/Cross-Defendant Eli’s Demurrer to the First Amended Cross-Complaint’s first cause of action is SUSTAINED with 20 DAYS LEAVE TO AMEND.

IV.           Conclusion & Order

For the foregoing reasons,

Plaintiff/Cross-Defendant Eli’s Collision Repair’s Demurrer to the First Amended Cross Complaint’s cause of action for violation of the Magnuson-Moss Warranty Act is SUSTAINED with 20 DAYS LEAVE TO AMEND.

The hearing on Plaintiff/Cross-Defendant Eli’s Demurrer to the third and fourth causes of action is CONTINUED TO OCTOBER 10, 2022 at 10:00 a.m. in Department 25 at the SPRING STREET COURTHOUSE.  At least 16 court days before the continued hearing, Plaintiff/Cross-Defendant must file and serve supplemental papers as requested herein.  Failure to do so will result in the Motion being placed off calendar or denied.

Moving party is ordered to give notice.