Judge Lee W. Tsao, Case Number: 23NWCV01739, Date: 2023-12-06 Tentative Ruling

Judge: Lee W. Tsao, Case: 23NWCV01739, Date: 2023-12-06 Tentative Ruling

Case Number: 23NWCV01739 Hearing Date: December 6, 2023 Dept: C

moreno v. american honda Motor

CASE NO.: 23NWCV01739

HEARING: 12/6/23 @ 9:30 AM

Defendant’s Demurrer is OVERRULED and its Motion to Strike is DENIED.

Defendant to Answer within 30 days.

Moving Party to give NOTICE.

Defendant American Honda Motor, Co. (Defendant) demurs to the First Amended Complaint’s (FAC) Fifth Cause of Action for Fraud and moves to strike the Plaintiff’s claim for punitive damages.

Background

Plaintiff Juan Moreno (Plaintiff) alleges Defendant violated the Song-Beverly Act and fraudulently induced Plaintiffs into purchasing a 2020 Honda Pilot manufactured by Defendant. They allege that Defendant knew about a sensing system defect and knew that the cooling system installed in Plaintiffs’ vehicle had that defect.

Legal Standard

The party against whom a complaint has been filed may object to the pleading, by demurrer, on several grounds, including the ground that the pleading does not state facts sufficient to constitute a cause of action. (CCP § 430.10(e).) A party may demur to an entire complaint, or to any causes of action stated therein. (CCP § 430.50(a).)

Motions to strike are used to reach defects or objections to pleadings which are not challengeable by demurrer (i.e., words, phrases, prayer for damages, etc.). (CCP §§ 435, 436 & 437.) A motion to strike lies only where the pleading has irrelevant, false or improper matter, or has not been drawn or filed in conformity with laws. (C.C.P. § 436.) The grounds for moving to strike must appear on the face of the pleading or by way of judicial notice. (C.C.P. § 437.)

Discussion

First, Defendant asserts that Plaintiff’s fraud cause of action is preempted by federal law. Defendant claims that Defendant’s necessary public disclosures are within the exclusive authority of the National Highway Traffic Safety Administration (NHTSA) and that a California jury should not be determining whether Defendant has properly warned of or disclosed defects to Plaintiff. The NHTSA is tasked with Early Warning Reporting and collection of related data. “The Early Warning Reporting rule, establishes categories of vehicle manufacturers by size, proscribes the reporting frequency, information contained within the reports, organization of data, scope of comparison data (past nine model years), and vehicle component categories subject to reporting requirements.” (Early Warning Reporting, Foreign Defect Reporting, and Motor Vehicle and Equipment Recall Regulations: 78 Fed. Reg. 161, 51383-51384.) Thus, the NHTSA is concerned with analyzing aggregate data and determining whether warning should be issued in general and not regarding specific vehicles. Here, the fraud action is concerned with whether Defendant knew or should have known that Plaintiff’s vehicle specifically was defect and failed to then disclose the defect to Plaintiff to induce Plaintiff to purchasing that vehicle. Therefore, Plaintiff’s fraud claim is not preempted by the NHTSA.

Second, Defendant argues that Plaintiff failed to allege facts sufficient to establish Defendant had a duty to disclose. A duty to disclose material facts arises in four circumstances: (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. Judikins (1997) 52 Cal.App.4th 326, 336.) Defendant argues that a fiduciary relationship is necessary to give rise to a duty to disclose. “Ordinarily, failure to disclose material facts is not actionable fraud unless there is some fiduciary relationship giving rise to a duty to disclose [citation], and an insurer does not owe a fiduciary duty to its agents. ‘The duty to disclose may arise without any confidential relationship where the defendant alone has knowledge of material facts which are not accessible to the plaintiff. [Citations.]’” (Magpali v. Farmers Group, Inc. (1996) 48 Cal.App.4th 471, 482.) Thus, Plaintiff need only plead that Defendant had exclusive knowledge of a material fact not known to Plaintiff to support a fraud cause of action. Plaintiff has pled that Defendant had extensive and exclusive knowledge of the alleged sensing defects. (Compl. ¶¶ 27-64.) Thus, Plaintiff has sufficiently pled a duty to disclose.

The fraud claim is also not barred by the economic loss rule. “[T]he economic loss rule provides: Where a purchaser’s expectations in a sale are frustrated because the product he bought is not working properly, his remedy is said to be in contract alone, for he has suffered only ‘economic losses.’ The economic loss rule requires a purchaser to recover in contract for purely economic loss due to disappointed expectations, unless he can demonstrate harm above and beyond a broken contractual promise. Quite simply, the economic loss rule ‘prevents the law of contract and the law of tort from dissolving one into the other.” (Food Safety Net Services v. Eco Safe Systems USA, Inc. (2012) 209 Cal.App.4th 1118, 1130 [citing Robinson Helicopter Co., Inc. v. Dana Corp. (2004) 34 Cal.4th 979, 988].) A party alleging fraud or deceit in connection with a contract may recover in tort if he or she can “establish tortious conduct independent of a breach of the contract itself, that is violation of some duty arising from tort law.” (Ibid.) Plaintiff has sufficiently alleged facts to establish tortious conduct independent of a breach of the contract itself. Thus, the economic loss rule does not bar Plaintiff’s fraud claim.

Finally, Defendant argues that Plaintiffs’ claim for punitive damages should be struck from the FAC because there are no supporting allegations of fraud. However, this Court finds that Plaintiffs properly alleged a fraud cause of action. Thus, Defendant’s Motion to Strike Punitive Damages is denied.

Accordingly, Defendant’s Demurrer is OVERRULED and its Motion to Strike is DENIED. Defendant to Answer within 30 days.