Judge Kenneth J. Medel, Case Number: 37-2023-00006886-CU-BC-CTL, Date: 2024-04-05 Tentative Ruling

Judge: Kenneth J. Medel, Case: 37-2023-00006886-CU-BC-CTL, Date: 2024-04-05 Tentative Ruling

SUPERIOR COURT OF CALIFORNIA,

DEPT.:

EVENT DATE:

EVENT TIME:

HALL OF JUSTICE

TENTATIVE RULINGS - April 04, 2024

04/05/2024 09:30:00 AM C-66 COUNTY OF SAN DIEGO

JUDICIAL OFFICER:Kenneth J Medel

CASE NO.:

CASE CATEGORY:

EVENT TYPE:

CASE TITLE: CASE TYPE:

Civil - Unlimited Breach of Contract/Warranty Motion Hearing (Civil) 37-2023-00006886-CU-BC-CTL MORENO VS GENERAL MOTORS LLC [IMAGED] CAUSAL DOCUMENT/DATE FILED: Motion to Strike, 10/16/2023

General Motors' Demurrer to the First Amended Complaint is OVERRULED. The Motion to Strike is DENIED.

This is a 'lemon law' action arising from the Plaintiff's January 10, 2019, purchase of a Certified Pre-Owned 2016 Cadillac. The original Complaint was filed on February 16, 2023. A First Amended Complaint has been filed on September 15, 2023. The FAC alleges three statutory causes of action based upon the Song-Beverly Act as well as Breach of Implied Warranty of Merchantability; Fraudulent Inducement – Concealment; and Violations of the Consumer Legal Remedies Act and the Magnuson-Moss Warranty Act. The FAC seeks punitive damages.

This is a Demurrer to the Fraudulent Concealement and CLRA causes of action as well as a Motion to Strike Punitive Damages.

- Statute of Limitations GM argues that the three-year statute of limitations for fraud bars Count V of Plaintiff's FAC, and the three-year statute of limitations for violation of the CLRA bars Count VI. (Code of Civ. Proc., § 338(d); Civ. Code, § 1783.) A court may sustain a demurrer on the ground of failure to state sufficient facts if 'the complaint shows on its face the statute [of limitations] bars the action.' E-Fab, Inc. v. Accountants, Inc. Services, 153 Cal.App.4th 1308, 1315 (2007).

The statute of limitations under Code Civ. Proc., §338(d) states: An action for relief on the ground of fraud or mistake. The cause of action in that case is not deemed to have accrued until the discovery, by the aggrieved party, of the facts constituting the fraud or mistake. Here, the operative portion of the statute is 'until the discovery, by the aggrieved party, of the facts constituting the fraud.' Code Civ. Proc., §338(d). See also Britton v. Girardi, 235 Cal.App.4th 721, 734 (2015) (the cause of action is not deemed to have accrued until the discovery, by the aggrieved party, of the facts constituting the fraud).

Contrary to GM's argument, the accrual of the statute of limitations did not accrue at the time of the sale of the Subject Vehicle in or around January 10, 2019.

The fact that the alleged fraudulent inducement-concealment occurred on the date of sale does not establish that Plaintiff discovered the facts constituting fraud on that date. See Broberg v. Guardian Life Ins. Co. of America, 171 Cal.App.4th 912, 921 (2009) ('When a plaintiff reasonably should have discovered facts for purposes of the accrual of a cause of action ... is generally a question of fact, properly decided as a matter of law only if the evidence (or, in this case, the allegations in the complaint and facts properly subject to judicial notice) can support only one reasonable conclusion.') In this case, Plaintiff allege that GM's fraudulent inducement-concealment occurred, not only at the time of sale, but every time that Plaintiff presented Subject Vehicle to GM's dealership(s) with concerns related to the Transmission Defect and up through the time that Plaintiff filed her Complaint. (FAC ¶¶ 25-29.) Consequently, the statute of limitations defense is not clearly and affirmatively apparent from the Calendar No.: Event ID: TENTATIVE RULINGS

3038242 28 CASE NUMBER: CASE TITLE: MORENO VS GENERAL MOTORS LLC [IMAGED] 37-2023-00006886-CU-BC-CTL allegations in the FAC and cannot be asserted on demurrer.

- 'Specificity' GM argues that fraud has not been pled with requisite specificity. However, this is fraudulent concealment. Cases claiming fraud through non-disclosure, it is not practical to allege facts showing how, when and by what means something did not happen. (Alfaro v. Community Housing Improvement System Planning Assn. (2009) 171 Cal.App.4th 1356, 1384.) If the concealment is based on providing false or incomplete statements, the pleading must at least set forth the substance of the statements at issue. (Ibid.) Additionally, the specificity requirement of fraud is 'relaxed when it is apparent from the allegations that the defendant necessarily possesses knowledge of the facts.' (Quelimane Co. v. Steward Title Guaranty Co. (1998) 19 Cal.4th 26, 27; see also Committee on Children's Television, Inc.

v. General Foods Corp. (1983) 35 Cal.3d 197, 216-217, [when it appears from the nature of the allegations that the defendant must necessarily possess full information concerning the facts of the controversy, even under strict rules of common law pleading, one of the canons is that less particularity is required when the facts lie more in the knowledge of the opposite party].) In the FAC, Plaintiff has sufficiently alleged the elements of a fraudulent inducement by concealment claim under Dhital. (Supra, 84 Cal.App.5th at 843-44.) Plaintiff has alleged (1) concealment (FAC ¶¶ 37-38, 41, 70, 73-74, 77-78, 80, 87, 91-92), (2) knowledge of falsity (Id. ¶¶ 66-67, 70-73, 75, 85, 89, 90d-90e) (3) intent to induce reliance (Id. ¶ 91), (4) justifiable reliance (Id. ¶¶ 69, 73, 78, 80, 92), and (5) damages (Id. ¶¶ 80, 94-95). The Court of Appeal in Dhital found that the stated allegations were more than sufficient to survive a pleading attack: Plaintiffs alleged the above elements of fraud in the SAC. As we have discussed, plaintiffs alleged the CVT transmissions installed in numerous Nissan vehicles (including the one plaintiffs purchased) were defective; Nissan knew of the defects and the hazards they posed; Nissan had exclusive knowledge of the defects but intentionally concealed and failed to disclose that information; Nissan intended to deceive plaintiffs by concealing known transmission problems; plaintiffs would not have purchased the car if they had known of the defects; and plaintiffs suffered damages in the form of money paid to purchase the car. (Dhital v. Nissan, supra, at 843-844.) Here, Plaintiff alleges she entered into a warranty contract with GM on January 10, 2019 (FAC ¶¶ 6-7); Plaintiff identifies the material facts GM knew prior to their acquisition of Subject Vehicle and withheld from Plaintiff (Id. ¶¶ 66-67, 70-73, 75, 85, 89, 90d-90e); Plaintiff alleges that Defendant had superior knowledge of the facts (Id. ¶¶ 68, 76a-76b, 86, 90a-90b); the safety risks posed by the Transmission Defect (Id. ¶¶ 30, 67, 85); the materiality of that information (Id. ¶ 91); Plaintiff's reliance on the non-disclosure (Id. ¶ 69, 73, 78, 80, 92); and damages (Id. ¶¶ 80, 94-95.) - No Transactional Relationship GM argues that California law does not permit a cause of action for concealment that did not arise in a fiduciary relationship or in a transaction involving 'direct dealings' between the plaintiff and the defendant. Because the FAC does not allege that Plaintiff purchased the Cadillac directly from GM, Plaintiff has not alleged facts demonstrating a duty to disclose.

GM argues that there is no sales contract or agreement alleged between AHM and Plaintiffs. Ergo, Honda could not 'induce' plaintiffs to enter into a contract.

But the duty to disclose only requires a relationship between the plaintiff and defendant. (Bigler-Engler v. Breg, Inc., (2017) 7 Cal. App. 5th 276, 314.) For example, the Court in Daniel v. AHM Motor Company (2015) 806 F.3d 1217, 122-27, ruled, based on the evidence, that a reasonable fact finder could conclude that AHM knew that its customers depended on AHM's authorized dealers for information about its vehicles and that the dealership would have disclosed information about a vehicle's defects if required by AHM. In this case, Plaintiffs' Complaint sufficiently alleges that Plaintiffs relied on information produced and provided by AHM, in addition to the information provided by its authorized dealership.

(COMPLAINT, ¶¶ 78-81.) The Court of Appeal of the State of California First Appellate District, Division Four held that fraud was adequately pled in Dhital v. Nissan N. Am., Inc. (cited above). There, Nissan argued that the plaintiffs did not adequately plead the existence of a buyer-seller relationship between the parties, because plaintiffs bought the car from a Nissan dealership (not from Nissan itself). The Court found that '[a]t the pleading stage...we conclude plaintiffs' allegations are sufficient. 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 the sale of Nissan vehicles to consumers. In light of these allegations, we decline to hold plaintiffs' claim is barred on the ground there was no relationship requiring Nissan to disclose known defects.' Dhital at *9.

Calendar No.: Event ID: TENTATIVE RULINGS

3038242 28 CASE NUMBER: CASE TITLE: MORENO VS GENERAL MOTORS LLC [IMAGED] 37-2023-00006886-CU-BC-CTL In any event, '[t]here are four circumstances in which nondisclosure or concealment may constitute actionable fraud: (1) when the defendant is in a fiduciary relationship with the plaintiff; (2) when the defendant had exclusive knowledge of material facts not known to the plaintiff; (3) when the defendant actively conceals a material fact from the plaintiff; and (4) when the defendant makes partial representations but also suppresses some material facts.' (LiMandri v. Judkins 52 Cal.App.4th 326, 336 (1997)) [citation and quotations omitted].) Plaintiff has alleged a transactional relationship giving rise to Defendant's duty to disclose the Transmission Defect. On or around January 10, 2019, Plaintiff entered into a warranty contract directly with Defendant GM. (FAC ¶ 6-7.) Plaintiff also adequately plead other circumstances that give rise to GM's duty to disclose. Plaintiff alleges that Defendant GM had exclusive knowledge of the true extent of the Transmission Defect (Id. ¶¶ 68, 76a-76b, 86, 90a-90b), actively concealed this information regarding the Transmission Defect (Id. ¶¶ 37-38, 41, 70, 73- 74, 77-78, 80, 87, 91-92), with the intent to induce Plaintiff into purchasing Subject Vehicle. (Id. ¶ 91.) There is an entire body of fraudulent concealment jurisprudence, which recognizes that a failure to disclose a material fact can constitute actionable fraud. (Collins v. eMachines, Inc., 202 Cal.App.4th 249, 255, 259 (2011) [as modified Dec. 28, 2011, finding plaintiffs sufficiently pled common law fraud in connection with defendant's failure to disclose a material fact, citing LiMandri v. Judkins, 52 Cal.App.4th 326, 336 (1997); Falk v. General Motors Corp., 496 F.Supp.2d 1088, 1094-95 (N.D.Cal. 2007); and Daugherty v. Amer.

Honda Motor Co., Inc., 144 Cal.App.4th 824, 835 (2006)].) Under this well-settled law, Defendant had a duty to disclose the Transmission Defect, and its failure to do so gives rise to an actionable fraudulent concealment claim.

Plaintiff has explicitly alleged the safety risks associated with the Transmission Defect (FAC ¶¶ 30, 67, 85), 'These conditions present a safety hazard and are unreasonably dangerous to consumers because they can suddenly and unexpectedly cause the driver to be unable to control the speed and acceleration/deceleration of the vehicle.') - Lack of Notice for CLRA c/a California Civil Code § 1782 provides in pertinent part: (a) Thirty days or more prior to the commencement of an action for damages pursuant to this title, the consumer shall do the following: (1) Notify the person alleged to have employed or committed methods, acts, or practices declared unlawful by Section 1770 of the particular alleged violations of Section 1770. (2) Demand that the person correct, repair, replace, or otherwise rectify the goods of services alleged to be in violation of Section 1770. 14 The notice shall be in writing and shall be sent by certified or registered mail, return receipt requested, to the place where the transaction occurred or to the person's principal place of business within California.

... (d) An action for injunctive relief brought under the specific provisions of Section 1770 may be commenced without compliance with subdivision (a). (Civ. Code, § 1782.) GM argues that in this case, there was no letter or notice sent to GM prior to the filing of Plaintiff's initial Complaint (or attached to the FAC) that qualifies under § 1782(a). (See generally Complaint & FAC.) In her FAC, Plaintiff states '[i]f, within 30 days providing notice of Defendant's CLRA violation, Defendant fails to provide the appropriate relief of its violation of the CLRA, Plaintiff will amend this Complaint and seek monetary, compensatory, restitution, punitive damages, in addition to the injunctive and equitable relief she seeks now.' (FAC ¶ 97.) GM argues it did not receive proper notice under the statute.

This argument is inappropriate for demurrer, as it asks the Court to consider facts of the case outside of the pleadings. Further, with respect to the CLRA claim, Plaintiff has only asked for equitable and injunctive relief at this time. (FAC p. 21 Footnote 8). Therefore, Plaintiff's 30-day notice requirements have not been triggered and GM's demurrer on this ground is meritless. (Cal Civ Code § 1782(a-b)).

Motion to Strike GM argues that, for the reasons articulated in its Demurrer, Plaintiff's fraud claim is not well pled and, therefore, their punitive damages claim, which depends on the fraud claim, fails as a matter of necessity.

As stated above, the demurrer to the concealment causes of action should be overruled.

GM briefly asserts that Plaintiff may not seek punitive damages under Song-Beverly. GM wishes to strike Plaintiff's punitive damages prayer from the Complaint in its entirety. If Plaintiff's fraud claim is well pled, then the punitive damages claim survives regardless of whether, as a matter of law, punitive damages are available under Song-Beverly.

Calendar No.: Event ID: TENTATIVE RULINGS

3038242 28