Judge: Lee W. Tsao, Case: 23NWCV04023, Date: 2024-09-25 Tentative Ruling
Case Number: 23NWCV04023 Hearing Date: September 25, 2024 Dept: C
TABBAA v. General Motors LLC, ET AL.
CASE NO.: 23NWCV04023
HEARING: 9/25/24 @ 10:30 A.M.
#10
TENTATIVE RULING
I.
Defendant General Motor LLC’s demurrer to the complaint is OVERRULED in
part and SUSTAINED in part. Plaintiff has 20 days to amend the complaint.
II.
Defendant General Motor LLC’s motion to strike is DENIED.
Moving Party to give NOTICE.
This is a Song-Beverly action. Defendant
General Motors LLC demurs to the First Amended Complaint’s (FAC) fourth cause
of action for fraud and fifth cause of action of unfair competition law on the
grounds that they do not state facts sufficient to constitute causes of action.
Defendant also moves to strike the claim for
punitive damages.
I.
Demurrer
The party against whom
a complaint has been filed may object to the pleading 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. (Code Civ. Proc., §
430.50, subd. (a).)
Meet
and Confer
As a preliminary
matter, the parties have sufficiently met and conferred. (Decl. Park, ¶ 1; Code
Civ. Proc., § 430.41, subd. (a)(3).)
Discussion
Fourth Cause of Action
– Fraud
Defendant demurs to the
fraud cause of action on multiple grounds.
Specificity
Defendant asserts that
Plaintiff has not pleaded the fraud cause of action with specificity because the
complaint does not state the how, where, to whom, and by what means any
misrepresentation or concealment occurred. Defendant also argues that Plaintiff
must plead each element of fraudulent concealment with specificity.
The elements of
tortious fraud are the following: (1) misrepresentation; (2) knowledge of
falsity; (3) intent to defraud; (4) justifiable reliance; and (5) resulting
damages. (Engalla v. Permanente Medical Group, Inc. (1997) 15 Cal.4th
951, 964.)¿Fraud in the
inducement is a type of fraud. (Dhital v. Nissan North America, Inc.
(2022) 84 Cal.App.5th 828, 839.) It occurs when the
promisor knows what he is signing but his consent is induced by fraud; and
there is mutual assent and a contract is formed, which is voidable because of
the fraud. (Ibid.)
As
Plaintiff alleges, Defendant General Motors marketed the subject vehicle as
having long range capability. (Compl., ¶ 81.) Defendant concealed that the
vehicle could not achieve its expected range and safety due to its overheating
battery. (Compl., ¶ 87.) Defendant had a duty to disclose that the battery was
unsafe at the time of purchase. (Compl., ¶ 90.) Defendant intended Plaintiff to
rely on those representations. (Compl., ¶ 91.) Plaintiff was not aware that the
battery was unsafe, and had Plaintiff known, Plaintiff would not have bought
the vehicle. (Compl., ¶ 93.) Plaintiff has suffered injury of anxiety and fear due
to the concealment. (Compl., ¶ 94.) Courts have found the above to be
sufficiently pleaded for a fraud cause of action against a company. (See Dhital
v. Nissan North America, Inc., supra, 84 Cal.App.5th 828 at pg. 844.) Also,
damages for mental pain and suffering are recoverable in a tort deceit action.
(Sprague v. Frank J. Sanders Lincoln Mercury, Inc. (1981) 120 Cal.App.3d
412, 417.)
Economic
Loss Rule
Defendant
argues that Plaintiff’s prayer for economic losses based on alleged fraudulent
concealment is barred by the economic loss rule.
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.
Duty to Disclose
Defendant argues that Plaintiff does not allege
that they bought their vehicle directly from it or otherwise entered a
transaction giving rise to 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.)
As Plaintiff alleges, Plaintiff 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., ¶ 7.) 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.)
Therefore, defendant’s demurrer to the fraud
cause of action is overruled on all three grounds.
Accordingly, defendant’s demurrer is
OVERRULED.
Fifth Cause of Action – Violation of Business and Professions Code,
17200
Defendant demurs to the fifth cause of action
because Plaintiff did not identify an underlying statute and because Plaintiff does
not reference any established public policy that Defendant’s actions have
violated or claim that the conduct is immoral, unethical, oppressive, or
unscrupulous.
To set forth a claim for a violation of Business and Professions Code
section 17200 (“UCL”), Plaintiff must establish Defendant was
engaged in an “unlawful, unfair or fraudulent business act or practice and
unfair, deceptive, untrue or misleading advertising” and certain specific acts.
(Bus. & Prof. Code, § 17200.)
Unlawful
Conduct
“Unlawful” conduct claims may borrow
violations of other laws and make those unlawful practices separately
actionable through the UCL. (Klein v. Chevron U.S.A., Inc. (2012) 202
Cal.App.4th 1342, 1383.) It includes any business practice or act forbidden by
local, state or federal statutes or by regulations or case law. (Munson v.
Del Taco, Inc. (2009) 46 Cal.4th 661,676.)
Here, Plaintiff alleges that Defendant’s
use of a defective battery is false, deceptive, misleading, and unreasonable. (Compl.,
¶ 123.) This is common law.
Thus, the Court determines that the
unlawful prong is sufficiently alleged.
Unfair
Conduct
There is a split in authority about what
constitutes an “unfair” practice in consumer actions in unfair competition law.
Some cases hold an “unfair” practice as one that offends established public
policy: one that is immoral, unethical, oppressive, unscrupulous, or
substantially injurious to consumers, or that has an impact on the victim that
outweighs defendant's reasons, justifications, and motives for the practice. (Jolley v. Chase Home Fin., LLC (2013) 213 Cal. App. 4th
872, 907.) Others hold that the public policy, which is a predicate to a claim
under the “unfair” prong of the UCL, must be tethered to specific
constitutional, statutory, or regulatory provisions. (Ibid.) The Court
adopts the latter approach.
Here, as discussed above, Plaintiffs
tethered the conduct to common law. Thus, the unfair prong is not sufficiently
alleged.
Based on all the above, the demurrer to
the fifth cause of action is SUSTAINED with 20 days leave to amend. Even though
the Court does not agree with some of the reasons Defendant gave for sustaining
the demurrer, a general demurrer does not apply to only part of a cause of
action. (Daniels v. Select Portfolio Servicing, Inc. (2016) 246
Cal.App.4th 1150, 1167.)
II.
Motion to Strike
Legal
Standard
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
As
a preliminary matter, the parties have sufficiently met and conferred. (Decl.
Park, ¶ 1; Code Civ. Proc., § 435.5, subd. (a)(3).)
Discussion
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.