Judge Lee W. Tsao, Case Number: 23NWCV01377, Date: 2024-08-13 Tentative Ruling

Judge: Lee W. Tsao, Case: 23NWCV01377, Date: 2024-08-13 Tentative Ruling

Case Number: 23NWCV01377 Hearing Date: August 13, 2024 Dept: C

David Suarez, et al. vs General Motors, LLC.

Case No.: 23NWCV01377

Hearing Date: August 13, 2024 @ 10:30 a.m.

Tentative Ruling

I. Defendant General Motors, LLC’s Demurrer is OVERRULED.

II. Defendant’s Motion to Strike is DENIED.

Answer is due within 10 days of notice of this ruling.

Plaintiff to give NOTICE.

Background

This is a lemon law action. Plaintiffs David Saurez and Alma Castellanos (“Plaintiffs”) filed this action on May 3, 2023. Plaintiffs filed their operative First Amended Complaint (“FAC”) on November 15, 2023. Plaintiffs allege Defendant General Motors, LLC (“Defendant”) did not disclose and actively concealed defects involving a 2021 Chevrolet Silverado (“Vehicle”).

Plaintiffs’ Complaint asserts the following causes of action: (1) Violation of Civil Code § 1793.2(d); (2) Violation of Civil Code § 1793.2(b); (3) Violation of Civil Code § 1793.2(a)(3); (4) Breach of Implied Warranty of Merchantability; and (5) Fraudulent Inducement – Concealment.

Defendant demurs to the Fifth Cause of Action on the grounds that the Complaint fails to allege facts sufficient to state a cause of action and that it is barred by the lack of a transactional relationship between the parties.

Legal Standard

Code Civ. Proc. §430.10(e) provides for a demurrer on the basis that a complaint fails to state a cause of action. A demurrer admits, provisionally for purposes of testing the pleading, all material facts properly pleaded. (Tindell v. Murphy (2018) 22 Cal.App.5th 1239, 1247.) A demurrer tests the legal sufficiency of a complaint. (Donabedian v. Mercury Ins. Co. (2004) 116 Cal.App.4^th 968, 994. )

Discussion

Agency

A duty to disclose only exists where there is some relationship, whether fiduciary or transactional, between the parties, and that such relationship must be alleged. (CACI 1901; Hoffman v. 162 North Wolfe, LLC (2014) 228 Cal.App.4th 1178, 1187.)

A duty to disclose does not exist in all circumstances. The tort of fraudulent concealment is only viable where it does. “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.]”’ (LiMandri v. Judkins (1997) 52 Cal.App.4th 326, 336.)

The complaint alleges that: “On or about June 08, 2021, Plaintiffs entered into a warranty contract with Defendant GM regarding a 2021 Chevrolet Silverado vehicle identification number 3GCPWBEK0MG358770 (hereafter "Vehicle" or “Subject Vehicle”), which was manufactured and or distributed by Defendant GM. Subject Vehicle was purchased at Win Chevrolet Hyundai in Carson, CA (GM’s authorized dealer).” (Complaint, ¶ 7.)

Together, these allegations contend that Plaintiffs purchased the vehicle from Defendant through its agent Win Chevrolet Hyundai.

Defendant argues that there is no transactional relationship between itself and Plaintiff. Plaintiff argues that Defendant expects its dealerships to sell its vehicles to purchasers. Additionally, citing Khan v. Shiley Inc. (1990) 217 Cal. App. 3d 848, 850-51, Plaintiff states that privity of contract is not required for a deceit cause of action. Plaintiff cites the following holding that addresses transactional relationships and privity:

“At the pleading stage (and in the absence of a more developed argument by Nissan on this point), 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 v. Nissan N. Am., Inc. (2022) 84 Cal. App. 5th 828, 844 (emphasis added).)

Here, Plaintiff adequately argues that Plaintiff entered into a warranty contract directly with Defendant and that Win Chevrolet Hyundai was an authorized dealer of Defendant. (Complaint, ¶7.) Accordingly, Plaintiff has properly pleaded agency.

Facts Sufficient to State Cause of Action

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.5^th 828, 838-839.)

Here, Plaintiffs alleges at ¶¶ 69-77 that Defendant concealed and failed to disclose facts relating to the defects. ¶¶ 82-83 alleges scienter and intent to induce reliance based on concealment. ¶ 84 alleges Plaintiff’s 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 Fifth cause of action is OVERRULED.

Motion to Strike

Given the reasoning above as to the Fifth Cause of Action, Defendant’s Motion to Strike is DENIED.