Judge: Lee W. Tsao, Case: 23NWCV01846, Date: 2024-02-06 Tentative Ruling
Case Number: 23NWCV01846 Hearing Date: February 6, 2024 Dept: C
Michael Thalken, et al. vs Ford Motor Company,
et. al
Case No.: 23NWCV01846
Hearing Date: February 06, 2024 @ 9:30 AM
#4
Tentative Ruling
I.
Defendant Ford Motor Company’s Demurrer to
the Second Cause of Action is OVERRULED.
II.
Defendant Santa Margarita Ford’s Demurrer
to the Third Cause of Action is SUSTAINED with 30 days leave to amend.
Defendant Ford Motor Company to Answer within
20 days.
Defendants to give notice.
Background
On June 15, 2023, Plaintiffs Michael Thalkan and Brandi
Thalken initiated this action asserting a cause of action against Defendant Ford
Motor Company under the Song-Beverly Consumer Warranty Act (“Act”) for breach
of express warranty, a second cause of action for fraudulent concealment
against Ford Motor Company, and a third cause of action for negligent repair
against Santa Margarita Ford. The Complaint alleges that on June 30, 2020,
Plaintiffs purchased a new 2020 Ford Expedition (“Subject Vehicle” or the
“Vehicle”). (Compl. ¶ 9.) It further alleges that “[d]efects and
nonconformities to warranty manifested themselves within the applicable express
warranty period.” (Id., ¶ 77.)
The Complaint further alleges that Ford “knew or should
have known about the safety hazard posed by the defective transmissions before
the sale of 10R80-equipped vehicles from pre-market testing, consumer
complaints to the National Highway Safety Administration (’NHTSA’), consumer
complaints made directly to FORD and its dealers, warranty claims for repairs
to the 10R80 transmission from its dealers, and other sources. . .” (Id.
at ¶ 16) and “FORD had and continues to have a duty to disclose the 10R80 Transmission
Defect and the likelihood of the associated out-of-pocket repair costs to
Plaintiffs and other consumers: because 1) the defect poses an unreasonable
safety hazard; 2) FORD has exclusive knowledge that is not reasonably
discoverable by Plaintiffs and consumers; 3) FORD has actively concealed the
defect.” (Id. at ¶ 43.)
Defendant Ford Motor Company now demurs to the Second Cause
of Action for Fraudulent Inducement—Concealment on the grounds that the
Complaint fails to allege facts sufficient to state a cause of action under
Section 430.10(e) of the Code of Civil Procedure. Defendant Santa Margarita Ford
demurs to the Third Cause of Action for Negligent Repair on the grounds that
Plaintiffs fail to allege facts sufficient to state a cause of action under
Section 431.10(e) of the Code of Civil Procedure.
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).)
Discussion
I.
Demurrer to the Second Cause
of Action for Fraudulent Inducement—Concealment
For fraudulent concealment, Plaintiffs must plead: (1)
concealment or suppression of a material fact, (2) a duty to disclose the fact
to the plaintiff(s), (3) intentional concealment or suppression of the fact
with the intent to defraud the plaintiff(s), (4) that the plaintiff(s) was
unaware of the fact and would not have acted as they did if they had known of
the concealed or suppressed fact, and (5) as a result of the concealment or
suppression of the fact, the plaintiff(s) sustained damage. (Boschma v. Home
Loan Center, Inc., 198 Cal.App.4th 230, 248 (2011).) Every element of a
fraud cause of action must be alleged both factually and specifically. (Cooper
v. Equity General Insurance, 219 Cal.App.3d 1252, 1262 (1990).)
¶¶ 20-21 allege concealment of
material facts, ¶¶ 41-46 allege a duty to disclose the facts to the plaintiffs,
¶ 47 alleges intentional concealment of the facts, ¶¶ 51 and 57 allege the
Plaintiff was unaware of the facts, and ¶¶ 59-69 allege that Plaintiff
sustained damages.
Defendant Ford Motor Company also argues that the second
cause of action is barred by the economic loss rule.
“The economic loss rule precludes recovery in tort where a
plaintiff’s damages consist solely of economic loss.” (Seely v. White Motor
Co., 63 Cal.2d 9, 17– 18 (1965) (superseded by statute on other grounds).)
California has a longstanding exception to the economic
loss rule in cases of fraudulent inducement to enter into a contract because,
unlike tortious conduct in the performance of a contract, the fraudulent
conduct is a violation of an independent duty that occurs before the contract
is ever breached—indeed, before the contract is even formed: “Although punitive
damages may not be awarded where defendant merely breaches a contract [ ], such
damages may be awarded where defendant fraudulently induces plaintiff to enter
into a contract. Fraudulent inducement to enter into a contract constitutes a
tort.” (Kuchta v. Allied Builders Corp. (1971) 21 Cal.App.3d 541, 549;
see also Walker v. Signal Companies, Inc. (1978) 84 Cal.App.3d 982, 996
[punitive damages available “where a defendant fraudulently induces the
plaintiff to enter into a contract” in addition to breach of contract.].)
As noted above, ¶¶
47 and 51 properly allege that Defendant Ford Motor Company fraudulently
induced Plaintiffs to enter into the contract.
Accordingly, Defendant Ford Motor
Company’s demurrer to the Second Cause of Action is OVERRULED.
II.
Demurrer to the Third Cause of
Action for Negligent Repair
Defendant Santa Margarita argues that
Plaintiffs’ second cause of action for Negligent Repair is barred by the
economic loss rule because Plaintiff claims solely economic damages. (Mot., p.
3) “Simply stated, the economic loss rule provides: ‘ “ ‘[W]here 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.’ ” ’ ” (Robinson Helicopter Co., Inc. v.
Dana Corp. (2004) 34 Cal.4th 979, 988.)
In Erlich v. Menezes (1999) 21 Cal.4th
543, the court determined that homeowners could not recover tort damages for
emotional distress caused by a contractor’s negligent construction of their
home. A breach of contract is tortious
“only when some independent duty arising from tort law is violated. [citation]
If every negligent breach of a contract gives rise to tort damages, the
limitation [upon tort damages] would be meaningless, as would the statutory
distinction between tort and contract remedies.” (Id. at p. 554.) “The
benefits of broad compensation must be balanced against the burdens on
commercial stability. ‘Courts should be
careful to apply tort remedies only when the conduct in question is so clear in
its deviation from socially useful business practices that the effect of
enforcing such tort duties will be … to aid rather than discourage commerce.’”
(Ibid. (citing Freeman & Mills, Inc. v. Belcher Oil Co.
(1995) 11 Cal.4th 85, 109).)
The Robinson court held “the economic
loss rule does not bar [Plaintiff’s] fraud and intentional misrepresentation
claims because they were independent of [Defendant’s] breach of contract.” (Robinson
Helicoptor v. Dana Corp, supra, 34 Cal.4th 979,
991.) The court carved out a “narrow”
and “limited” exception to the economic loss rule, holding that “a defendant's
affirmative misrepresentations on which a plaintiff relies and which expose a
plaintiff to liability for personal damages independent of the plaintiff's economic
loss” is excluded from the economic loss rule. (Id. at 993.) Here,
Plaintiffs allege a claim for negligent repair which does not fall within the
narrow exceptions carved out by the California Supreme Court in Robinson.
Plaintiffs do not allege that Defendant Santa
Margarita Ford engaged in any intentional misconduct or made any affirmative
misrepresentations. Nor do Plaintiffs
adequately allege an independent duty giving rise to tort liability. (Erlich
v. Menezes, supra, 21 Cal.4th 543, 554.) As alleged, the
second cause of action is barred by the economic loss rule.
Accordingly, Defendant Santa Margarita Ford’s
demurrer to the Second Cause of Action is SUSTAINED with 30 days leave to
amend.