Judge Kerry Bensinger, Case Number: 24STCV34475, Date: 2025-05-21 Tentative Ruling

On December 30, 2024, plaintiff Sven Altmetz (“Plaintiff”) filed this Song-Beverly action against defendants Ford Motor Company (“Ford”) and South Bay Ford Lincoln. According to the Complaint, in 2017, Plaintiff purchased a 2017 Ford F-150 (the “Vehicle”) which later presented with a transmission defect. Plaintiff purchased the Vehicle with a warranty. As relevant here, Plaintiff alleges GM concealed the defects at the time of Plaintiff’s purchase.

On February 26, 2025, Ford filed a demurrer to Plaintiff’s fifth causes of action for fraudulent inducement-concealment.

A demurrer for sufficiency tests whether the complaint states a cause of action. (Hahn v. Mirda (2007) 147 Cal.App.4th 740, 747.) When considering demurrers, courts read the allegations liberally and in context, accepting the alleged facts as true. (Nolte v. Cedars-Sinai Medical Center (2015) 236 Cal.App.4th 1401, 1406.) “Because a demurrer challenges defects on the face of the complaint, it can only refer to matters outside the pleading that are subject to judicial notice.” (Arce ex rel. Arce v. Kaiser Found. Health Plan, Inc. (2010) 181 Cal.App.4th 471, 556.)

Ford demurs to the fifth cause of action for fraudulent inducement-concealment on the grounds Ford did not have a duty disclose because there was no alleged direct transaction between Ford and Plaintiff. Because this argument is meritorious, and dispositive of the demurrer, the court does not consider Ford’s remaining challenges to the fraud clam.

The elements of a claim for fraudulent inducement – concealment are: “(1) misrepresentation (false representation, concealment, or nondisclosure); (2) knowledge of falsity (scienter); (3) intent to defraud (i.e., to induce reliance); (4) justifiable reliance; and (5) resulting damage.” (Dhital v. Nissan North America, Inc. (2022) 84 Cal.App.5th 828, 843-844 [review denied] (internal citations omitted).) “Suppression of a material fact is actionable when there is a duty of disclosure, which may arise from a relationship between the parties, such as a buyer-seller relationship.” (Ibid.) “Fraud, including concealment, must be pleaded with¿specificity.” (Ibid.; Bigler-Engler v. Breg, Inc.¿(2017) 7 Cal.App.5th 276, 310-311 (Bigler-Engler); CACI No. 1901.)

An essential element of intentional concealment includes the duty to disclose, which must be based upon a transaction, or a special relationship, between plaintiff and defendant.¿ (Bigler-Engler, supra,¿at p. 314.) “[T]o establish fraud through nondisclosure or concealment of facts, it is necessary to show the defendant ‘was under a legal duty to disclose them.’”¿ (OCM Principal Opportunities Fund v. CIBC World Markets Corp. (2007) 157 Cal.App.4th 835, 845 (OCM Principal).)¿

In¿Bigler-Engler, a product liability case, the plaintiff, Engler, injured her knee and had surgery.¿ After the surgery, the doctor recommended use of an “ice” machine.¿ The doctor prescribed the Polar Care 500 ice machine which was manufactured by defendant Breg, Inc (Breg).¿ The ice machine made things worse and caused additional injuries.¿ Engler sued Breg for intentional concealment.¿ The jury returned a verdict in plaintiff’s favor.¿ The Court of Appeal reversed finding that Breg did not owe Engler a duty of care. The¿Bigler-Engler¿Court described the circumstances that give rise to a duty of care as follows: ¿

“There 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. [Citation.] Where, as here, a fiduciary relationship does not exist between the parties, only the latter three circumstances may apply. These three circumstances, however, presuppose the existence of some other relationship between the plaintiff and defendant in which a duty to disclose can arise. [Citation.] A duty to disclose facts arises only when the parties are in a relationship that gives rise to the duty, such as seller and buyer, employer and prospective employee, doctor and patient, or parties entering into any kind of contractual arrangement.¿ [Citation.]”

(Bigler-Engler,¿supra, at p. 311 [cleaned up].) “Such a transaction must necessarily arise from direct dealings between the plaintiff and the defendant; it cannot arise between the defendant and the public at large.”¿ (Id.¿at p. 312.)¿

Here, Plaintiff does not point to any allegation showing or otherwise suggesting direct dealings between Ford and Plaintiff. ¿ Indeed, Plaintiff appears to concede as much by arguing that a direct transactional relationship is not required to give rise to a manufacturer’s duty to disclose material facts. ¿For this proposition, Plaintiff cites¿OCM¿Principal,¿supra,¿157 Cal.App.4th 835.¿ Plaintiff misstates¿OCM Principal.¿ There, the Court of Appeal stated, “Where . . . there is no fiduciary relationship, the duty to disclose generally presupposes a relationship grounded in “some sort of transaction between the parties.” ¿(OCM Principal,¿157 Cal.App.4th at p. 859.)¿ This principle is consistent with¿Bigler-Engler. ¿

Plaintiff also argues that Dhital is a better fit. The court disagrees. In Dhital, the Court of Appeal reviewed a trial court’s order sustaining a demurrer to a fraudulent inducement by concealment claim without leave to amend. The Court of Appeal reversed, holding that plaintiffs’ allegations 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” were sufficient to establish a buyer-seller relationship. (Dhital, 84 Cal.App.5th at p. 844.) Unlike Dhital, Plaintiff does not allege having purchased the Vehicle from an authorized Ford dealership. Dhital does not apply here.

Last, Plaintiff goes on to argue that, under Rattagan v. Uber Technologies, Inc. (2024) 17 Cal.5th 1, 40 (Rattagan), a duty to disclose arises when parties enter into any kind of contractual agreement. And here, the Complaint alleges that Plaintiff entered into a warranty contract with Ford regarding the vehicle. (Complaint, ¶ 10.) However, Plaintiff overlooks the distinction the Rattagan Court drew between pre-contract conduct and post-contract conduct. As the Rattagan Court noted, the duty to disclose arises from direct dealings between the parties in entering a contract.[1] Moreover, Plaintiff’s allegations place his fraud claim squarely within pre-contract conduct. The Complaint alleges:

Defendant FORD committed fraud by allowing the Subject Vehicle to be sold to Plaintiff without disclosing that the Subject Vehicle and its transmission was defective and susceptible to sudden and premature failure.

In particular, the Plaintiff is informed, believe and thereon allege that prior to Plaintiff acquiring the Vehicle, FORD was well aware and knew that the transmission installed in the Vehicle was defective but failed to disclose this fact to the Plaintiff at the time of the sale and thereafter.

Ford establishes it had no duty to disclose the transmission defect as a matter of law because there was no direct transactional relationship between the parties.¿

The demurrer to the fifth cause of action is SUSTAINED. Although leave to amend is liberally granted, amendment in this instance would be futile. Accordingly, leave to amend is DENIED.

The demurrer to the fifth cause of action is Sustained. Leave to Amend is Denied.

Kerry Bensinger

Judge of the Superior Court

[1] The California Supreme Court stated, “A plaintiff may assert a tort claim for fraudulent concealment based on conduct occurring in the course of a contractual relationship, if the elements of the cause of action can be established independently of the parties' contractual rights and obligations and the tortious conduct exposes the plaintiff to a risk of harm beyond the reasonable contemplation of the parties when they entered into the agreement.” (Rattagan, supra, 17 Cal.5th at 38.)