Judge: Kenneth J. Medel, Case: 37-2023-00039225-CU-BC-CTL, Date: 2024-04-19 Tentative Ruling

SUPERIOR COURT OF CALIFORNIA,

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HALL OF JUSTICE

TENTATIVE RULINGS - April 18, 2024

04/19/2024  09:30:00 AM  C-66 COUNTY OF SAN DIEGO

JUDICIAL OFFICER:Kenneth J Medel

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Civil - Unlimited  Breach of Contract/Warranty Demurrer / Motion to Strike 37-2023-00039225-CU-BC-CTL RANDOLPH VS AMERICAN HONDA MOTOR CO INC [IMAGED] CAUSAL DOCUMENT/DATE FILED: Demurrer, 11/09/2023

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

Plaintiff alleges a defective 2022 Honda Accord manufactured and sold by AHM. Plaintiffs' Complaint alleges violation of the Song-Beverly Consumer Warranty Act, and a cause of action for fraudulent inducement by concealment. Plaintiff alleges defects related to the computerized driver-assistance safety system and the collision mitigation braking system (COMPLAINT, ¶¶ 89-91.) Plaintiff also alleges that although AHM knew of the Sensing Defect prior to Plaintiffs' purchase of the Subject Vehicle, AHM and its authorized agents actively concealed information about the Sensing Defect from Plaintiffs.

Plaintiffs filed the instant action alleging causes of action arising under the Song-Beverly Consumer Warranty Act in addition to a cause of action for fraudulent inducement by concealment.

This is a demurrer to the SECOND CAUSE OF ACTION FOR FRAUDULENT INDUCEMENT – CONCEALMENT cause of action as well as a Motion to Strike Punitive Damages.

Defendant 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].) Plaintiffs have alleged sufficient facts to meet the following elements: (1) Defendant concealed or suppressed a material fact (COMPLAINT, ¶¶ 23- 26, 28, 35, 37-43, 69, 71, 74-75, 84-87, 111-117, 119-120.); (2) Defendant had a duty to disclose the fact to Plaintiffs (COMPLAINT, ¶¶ 65-70.); (3) Defendant intentionally concealed or suppressed the fact with the intent to defraud Plaintiffs (COMPLAINT, ¶ 118.); (4) Plaintiffs were unaware of the fact and would not have acted as they did had they known of the concealed or suppressed fact (COMPLAINT, ¶¶ 66, 80, 87, 123-124.); and (5) Plaintiffs were damaged as a result of the concealment (COMPLAINT, ¶¶ 80, 82-83, 123-124.) No Transactional Relationship Honda 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.

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3050557  42 CASE NUMBER: CASE TITLE:  RANDOLPH VS AMERICAN HONDA MOTOR CO INC [IMAGED]  37-2023-00039225-CU-BC-CTL 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.

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 sensing defect.

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 known defects, and its failure to do so gives rise to an actionable fraudulent concealment claim.

Plaintiffs' Complaint alleges that AHM has always had superior knowledge of the Sensing Defect through sources not available to consumers, including Defendant's own design expertise, Defendant's own records of customers' complaints, dealership repair records, records from the National Highway Traffic Safety Administration (NHTSA), warranty and post-warranty claims, and internal pre-sale durability testing and technical service bulletins (TSBs). (COMPLAINT, ¶¶ 23, 29, 38-40, 71.) Exclusive knowledge does not require that AHM alone have access to the information, but rather that AHM had advanced and superior knowledge of the Sensing Defect. AHM did have exclusive knowledge of the Sensing Defect and had a duty to disclose the defect to Plaintiffs based on this knowledge. Further, AHM had a duty to disclose facts about the Sensing Defect because AHM actively concealed those material facts regarding the quality of the Sensing Defect at the time of and prior to Plaintiffs' purchase of the Subject Vehicle.

(COMPLAINT, ¶¶ 23-26, 28, 35, 37-43, 69, 71, 74-75, 84-87, 111-117, 119-120.) Motion to Strike Honda 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 is overruled. Thus, there are fraud allegations that at the pleading stage support a claim for punitive damages.

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