Judge: Lee W. Tsao, Case: 23NWCV03823, Date: 2024-08-22 Tentative Ruling

Case Number: 23NWCV03823    Hearing Date: August 22, 2024    Dept: SEC

ZAPANTA v. AMERICAN HONDA MOTOR COMPANY, INC.

CASE NO.:  23NWCV03823

HEARING: 08/22/24

#6

     I.        DDefendant AMERICAN HONDA MOTOR CO., INC.’s Demurrer to Plaintiff’s Complaint is OVERRULED.

    II.        DDefendant AMERICAN HONDA MOTOR CO., INC.’s Motion to Strike Portions of Plaintiff’s Complaint is DENIED.  

Opposing Party to give Notice.

This “lemon law” action was filed by Plaintiff CELESTE R. ZAPANTA (“Plaintiff”) against Defendant AMERICAN HONDA MOTOR COMPANY, INC. (“Defendant”) on November 27, 2023.

Plaintiff alleges that “[o]n or about April 30, 2017, Plaintiff entered into a warranty contract with Defendant, regarding a 2017 Honda CR-V… [¶] The warranty contract contained various warranties, including but not limited to the bumper-to-bumper warranty, powertrain warranty, emission warranty, etc.” (Complaint ¶¶6-7.) “Defects and nonconformities to warranty manifested themselves within the applicable express warranty period, including, but not limited to, sensing defects, engine defects, infotainment defects, climate control defects, electrical defects; among other defects and non-conformities.” (Complaint ¶11.) “Defendant HONDA has failed to either promptly replace the Subject Vehicle or to promptly make restitution in accordance with the Song-Beverly Act.” (Complaint ¶15.)

The Complaint asserts the following causes of action:

(1) Violation of Cal. Civ. Code §1939.2(d);

(2) Violation of Cal. Civ. Code §1793.2(b);

(3) Violation of Cal. Civ. Code §1793.2(A)(3);

(4) Breach of Implied Warranty of Merchantability

(5) Fraudulent Inducement – Concealment;

Defendant  generally demurs to the fifth cause of action.  

Defendant argues that Plaintiff’s fifth cause of action is barred by the economic loss rule.

In Dhital v. Nissan North America, Inc., wherein 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.) Similar to 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 bases her 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—the Court finds that the economic loss rule does not bar Plaintiff’s claim. 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.5^th 828, 838-839.)

Here, Plaintiff alleges at ¶¶ 67-70 that Defendant concealed and failed to disclose facts relating to the Cooling System Defect.  ¶77 alleges scienter and intent to induce reliance based on concealment.  ¶80 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

The Motion to Strike punitive damages is DENIED based on the Court’s ruling with respect to the fifth cause of action for Fraudulent Inducement, above.