Judge: Lee W. Tsao, Case: 22NWCV00937, Date: 2023-05-11 Tentative Ruling
Case Number: 22NWCV00937 Hearing Date: May 11, 2023 Dept: C
DE AREVALO v.
AMERICAN HONDA MOTOR CO., INC.
CASE NO.: 22NWCV00937
HEARING: 05/11/23
#10
TENTATIVE ORDER
I.
Defendant AMERICAN HONDA MOTOR CO., INC.’s
Demurrer to Plaintiffs’ Complaint is OVERRULED.
II.
Defendant AMERICAN HONDA MOTOR CO., INC.’s Motion
to Strike Portions of Plaintiff’s First Amended Complaint is DENIED.
Opposing Party to give notice.
The parties’ Requests for Judicial Notice are GRANTED. (Cal.
Ev. Code §452.)
This “lemon law” action was filed by Plaintiffs MARIA FLORES
DE AREVALO and MAURICIO AREVALO (“Plaintiffs”). Plaintiffs alleges that Defendant AMERICAN
HONDA MOTOR CO., INC. (“Defendant” or “Honda”) did not disclose and actively
concealed a defect known as the “Transmission Defect” affecting Plaintiff’s Plaintiffs’
2019 Honda Pilot vehicle. (See e.g., Complaint ¶¶11-63.)
Plaintiffs’ Complaint asserts the following causes of action: (1)
Violation of Song-Beverly Act (Breach of Express Warranty); (2) Violation of
Song-Beverly Act – Breach of Implied Warranty; and (3) Fraudulent Inducement –
Concealment.
Defendant generally and specially demurs to the second and third causes
of action.
Uncertainty
Defendant argues the third cause of action is fatally uncertain.
This argument lacks merit because “[a] special demurrer for uncertainty is not
intended to reach the failure to incorporate sufficient facts in the pleading
but is directed at the uncertainty existing in the allegations actually made.”
(Butler v. Sequeira (1950) 100 Cal.App.2d 143, 145-146.) Moreover,
demurrers for uncertainty are disfavored and will only be sustained where the
pleading is so bad that the defendant cannot reasonably respond, i.e., he or
she cannot reasonably determine what issues must be admitted or denied, or what
counts or claims are directed against him or her. (Khoury v. Maly’s of
Calif. Inc. (1993) 14 Cal.App.4th 612, 616.) A demurrer for uncertainty is
strictly construed, even where a complaint is in some respects uncertain,
because ambiguities can be clarified under modern discovery procedures.” (Ibid.)
Here, it is clear from Defendant’s other arguments that they understand what
the Complaint at least attempts to allege, and there is no true uncertainty.
The Demurrer is not sustained on the basis of uncertainty.
Third Cause of Action – Fraudulent Inducement (Concealment)
Defendant argues that Plaintiffs’ third cause of action is barred by the
economic loss rule.
Here, Plaintiffs
base their claim on Defendant’s alleged presale concealment, which is distinct
from Defendant’s alleged subsequent breach of its warranty obligations.
Accordingly, based on the existing persuasive authority— Dhital, the
Court finds that the economic loss rule does not bar Plaintiff’s claim. This
court is aware that this very issue is pending before the Supreme Court in Rattagan
v. Uber Tech., Inc. (Case No. S272113) and in Kia v. Superior Court
(Case No. S273170). Until the Supreme
Court states otherwise, this court will follow Dhital for its
“potentially persuasive value” (CRC Rule 8.1115(e)(1)), and finds that
Plaintiff’s claim is not barred by the Economic Loss Rule. The Court proceeds to assess Defendant’s arguments
related to the merits of Plaintiff’s claim.
The
elements of a cause of action for intentional fraud are 1) misrepresentation
(false representation, concealment, or nondisclosure); 2) knowledge of falsity
(scienter); 3) intent to defraud or induce reliance; 4) justifiable reliance;
and 5) damages. (See Cal. Civ. Code §1709.) “[T]he elements of a cause
of 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, (f) 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.” (Marketing West, Inc. v. Sanyo Fisher (USA) Corp.
(1992) 6 Cal.App.4th 603, 612-613.)
Fraudulent inducement is a viable tort claim under California
law. ‘The elements of fraud are (a) a misrepresentation (false representation,
concealment, or nondisclosure); (b) scienter or knowledge of its falsity; (c)
intent to induce reliance; (d) justifiable reliance; and (e) resulting damage. Fraud in the inducement is a
subset of the tort of fraud. It ‘occurs when ‘the
promisor knows what he is signing but his consent is induced by fraud, mutual
assent is present and a contract is formed, which, by reason of the fraud, is
voidable.’” (Dhital v. Nissan North America, Inc. (2022) 84
Cal.App.5th 828, 838-839.)
Here, Plaintiffs allege at ¶¶ 19-63
that Defendant concealed and failed to disclose facts relating to the
defects. ¶¶113-114 alleges scienter and
intent to induce reliance based on concealment.
¶¶121-124 allege Plaintiffs’ resulting damages.
The court finds that the Complaint alleges sufficient prior knowledge at
this pleading stage. Less specificity is required if it appears from the nature of
allegations that defendant must necessarily possess full information, or if the
facts lie more in the knowledge of opposing parties. (Alfaro v. Community Housing Improvement
System & Planning Assn., Inc. (2009) 171 Cal.App.4th 1356,
1384-1385.)
The Demurrer to the third cause of action is OVERRULED.
Second Cause of Action – Violation of Song-Beverly Act – Breach of
Implied Warranty
Defendant argues that Plaintiffs’ implied warranty claim is deficient in
the absence of allegations of a nonconformity during the first year of
ownership.
The demurrer is OVERRULED.
“The implied warranty of merchantability may be breached by a latent
defect undiscoverable at the time of sale.” (Mexia v. Rinker Boat Co., Inc.
(2009) 174 Cal.App.4th 1297, 1304.) “In the case of a latent defect, a product
is rendered unmerchantable, and the warranty of merchantability is breached, by
the evidence of the unseen defect, not by its subsequent discovery.” (Id.
at 1305.)
Here, Plaintiffs sufficiently allege that they discovered the alleged
defect on or about January 30, 2020, and could not, even with reasonable and
diligent investigation, have discovered Plaintiffs’ claims on an earlier date.
(See Complaint ¶59.)
Motion to Strike
Defendant’s accompanying motion to
strike punitive damages is DENIED. The court
finds that the Complaint sufficiently pleads malicious conduct by
concealment. Corporate ratification is
alleged at ¶7. Less specificity is
required if it appears from the nature of allegations that defendant must
necessarily possess full information, or if the facts lie more in the knowledge
of opposing parties. (Alfaro
v. Community Housing Improvement System & Planning Assn., Inc. (2009)
171 Cal.App.4th 1356, 1384-1385; Bushell v.
JPMorgan Chase Bank, N.A. (2013) 220 Cal.App.4th 915, 931
- “plaintiffs did not have to specify the … personnel who prepared these
documents because that information is uniquely within … [defendant’s]
knowledge”.)