Judge: Lee W. Tsao, Case: 23NWCV03000, Date: 2024-06-12 Tentative Ruling
Case Number: 23NWCV03000 Hearing Date: June 12, 2024 Dept: C
QUENNIE YU v. AMERICAN HONDA MOTOR COMPANY, INC.
CASE NO.: 23NWCV03000
HEARING: 6/12/24 @ 9:30 A.M.
#9
TENTATIVE RULING
I.
Defendant American Honda Motor Company, Inc.’s demurrer to plaintiff’s
complaint is OVERRULED.
II.
Defendant American Honda Motor Company, Inc.’s motion to strike is
DENIED.
Moving Party to give NOTICE.
American Honda Motor Company, Inc. demurs to
the complaint’s second cause of action of fraudulent inducement ¿ concealment on
the grounds that it does not state facts sufficient to constitute a cause of
action.
Defendant also moves to strike the claim for
punitive damages.
Plaintiff Quennie Yu
alleges that defendant American Honda Motor Company, Inc. violated the
Song-Beverly Act and fraudulently induced her into buying a 2022 Honda Odyssey manufactured
and distributed by the defendant on October 15, 2021. They allege that the
defendant did not disclose that the vehicle’s sensory system was defective.
Request for Judicial
Notice
Plaintiff requests
judicial notice of a conformed copy of the second amended complaint filed in Dhital
v. Nissan North America, Inc., No. RG19009260 in Alameda County.
A court may take
judicial notice that certain documents were filed in prior litigation, or that
certain factual findings were made, but generally may not take judicial notice
of the contents of those filings, or of the factual findings themselves. (See, e.g.,
Arce v. Kaiser Foundation Health Plan, Inc. (2010) 181 Cal.
App.4th 471, 483-484.)
Thus,
the Court takes judicial notice of the fact of the filing of the complaint, but
not its contents.
Legal
Standard
The party against whom
a complaint has been filed may object to the pleading, by demurrer, on several
grounds, including that the pleading does not state facts sufficient to
constitute a cause of action. (Code Civ. Proc., § 430.10, subd. (e).) A party
may demur to an entire complaint, or to any causes of action stated therein. (Code
Civ. Proc., § 430.50, subd. (a).)
Meet-and-Confer
The
parties have sufficiently met and conferred. (Decl. Sadanaga ¶¶ 2,3.) (Code
Civ. Proc., § 430.41, subd. (a)(3).)
Second Cause of Action
– Fraudulent Concealment
The elements of fraudulent
inducement are the following: (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.)
First,
Defendant argues that the fraud cause of action does not state sufficient facts
to state a cause of action because Plaintiff did not plead it with
particularity. Defendant further argues that to plead a fraud cause of action against
a corporation, plaintiff must allege the name of the persons who made the
allegedly fraudulent representations, their authority to speak, to whom they
spoke, what they said or wrote, and when it was said or written.
The
complaint details allegations that defendant concealed that the subject vehicle
was defective; defendant had the duty to disclose that the sensory system posed
a safety issue; defendant intentionally concealed the defect from plaintiff
with the intent to defraud by inducing plaintiff to purchase the subject
vehicle; plaintiff was not aware that the sensory system was defective and
would not have bought it had they known; and plaintiff suffered damages as a
result of the concealment. (Compl., ¶¶ 67, 71, 80, 100, 118, 119, 120, 122-125.)
Courts have found the above to be sufficiently pleaded for a fraud cause of
action against a company. (Dhital v. Nissan North America, Inc., supra, 84
Cal.App.5th 828 at p. 844.)
Thus,
the complaint contains adequate allegations on this ground.
Second,
Defendant argues that an omission is actionable if the omitted fact is contrary
to a material representation made by the defendant or is a fact the defendant
was obliged to disclose. But the cases Defendant cite in support apply the law
to the Consumer Legal Remedies Act, not a fraudulent concealment cause of
action. (Gutierrez v. Carmax Auto Superstores Calif. (2018) 19
Cal.App.5th 1234; Daugherty v. Am. Honda Motor Co. (2006) 144
Cal.App.4th 824, 835.)
Thus,
the complaint contains adequate allegations on this ground.
Third,
Defendant argues that did not establish a duty to disclose.
In transactions which do not involve fiduciary or confidential
relations, a cause of action for non-disclosure of material facts may arise in
at least three instances: (1) “the defendant had exclusive knowledge of
material facts not known to the plaintiff,” (2) “the defendant actively
conceals a material fact from the plaintiff,” and (3) “the defendant makes
partial representations but also suppresses some material facts.” (Bigler-Engler
v. Breg, Inc. (2017) 7 Cal.App.5th 276, 311.) These three circumstances assume
the existence of some other relationship between the plaintiff and defendant in
which a duty to disclose can arise. (Ibid.)
“Our Supreme Court has described the necessary relationship giving rise
to a duty to disclose as a ‘transaction’ between the plaintiff and defendant ....”
(Bigler-Engler v. Breg, Inc., supra, 7 Cal.App.5th 276 at p. 311.)
The complaint details allegations that
plaintiffs bought the car from defendant’s dealership, that defendant backed
the car with an express warranty, and that defendant’s authorized dealerships
are its agents for purposes of the sale of defendant’s vehicles to consumers. (Compl.,
¶¶ 9, 84, 114.) Courts have found the above to be pleaded sufficiently for a
buyer-seller relationship and hence, a transaction between two parties. (Dhital
v. Nissan North America, Inc., supra, 84 Cal.App.5th 828 at p. 844.)
Thus, the complaint contains adequate
allegations on this ground.
Fourth, Defendant argues that economic loss
rule bars the cause of action.
In
Dhital v. Nissan North America, Inc., the Court of Appeal held that the
plaintiff’s claim for fraudulent inducement (concealment) was not barred by the
economic loss rule (Id. (2022) 84 Cal.App.5th 828, 837.) Like the
instant case, the Dhital plaintiffs alleged that “Nissan, by intentionally
concealing facts about the defective transmission, fraudulently induced them to
purchase a car.” (Id. at 838.). The Court of Appeal ruled that “Robinson
did not hold that any claims for fraudulent inducement are barred by the
economic loss rule. Quite the contrary, the Robinson court affirmed that tort
damages are available in contract cases where the contract was fraudulently
induced.” (Id. at 839.) “[A] defendant’s conduct in fraudulently
inducing someone to enter a contract is separate from the defendant’s later
breach of the contract or warranty provisions that were agreed to.” (Id.)
Here,
Plaintiff’s claim is based upon 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. Super.
Ct. (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.
Thus,
the demurrer is OVERRULED as to the fraud cause of action.
Motion to Strike
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.). (Code Civ. Proc., §§ 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. (Code Civ.
Proc., § 436.) The grounds for moving to strike must appear on the face of the
pleading or by way of judicial notice. (Code Civ. Proc., § 437.)
Meet-and-Confer
The parties have sufficiently met and
conferred. (Decl. Sadanaga ¶¶ 2,3.) (Code Civ. Proc., § 435.5, subd.
(a)(3).)
Discussion
Defendant argues that Plaintiff’s claim for
punitive damages should be stricken because its fraud cause of action fails as
discussed in the demurrer. However, this court finds that plaintiffs properly
alleged a fraud cause of action.
Defendant also argues that Plaintiff did not
plead that any of its corporate officers committed misconduct. But this only
applies when an employee sues an employer. (Civ. Code, § 3294, subd. (b).) This
is not the case here.
Thus, defendant’s motion to strike punitive damages
is denied.
Accordingly, defendant’s
demurrer is OVERRULED and its motion to strike is DENIED.