Judge: Lynette Gridiron Winston, Case: 23PSCV01283, Date: 2024-03-13 Tentative Ruling
Case Number: 23PSCV01283 Hearing Date: March 13, 2024 Dept: 6
CASE NAME: Carol Carmona, et al. v. General Motors, LLC
General Motors LLC’s Demurrer to Plaintiffs’ First Amended Complaint
TENTATIVE RULING
The Court OVERRULES Defendant General Motors LLC’s Demurrer to Plaintiffs’ First Amended Complaint.
The Court DENIES Defendant General Motors LLC’s Motion to Strike Punitive Damages from Plaintiffs’ Complaint.
Defendant must file and serve an Answer to the First Amended Complaint within 20 days of the Court’s order.
Plaintiffs are ordered to give notice of the Court’s ruling within five calendar days of this order.
BACKGROUND
This is a lemon law case. On April 27, 2023, plaintiffs Carol Carmona and Juan Carmona (collectively, Plaintiffs) filed this action. On October 30, 2023, Plaintiff filed the operative First Amended Complaint (FAC) against Defendant General Motors, LLC (Defendant) and Does 1 through 10, alleging causes of action for violation of subdivision (d) of Civil Code section 1793.2, violation of subdivision (b) of Civil Code section 1793.2, violation of subdivision (a)(3) of Civil Code section 1793.2, breach of the implied warranty of merchantability, and fraudulent inducement – concealment.
On December 22, 2023, Defendant filed a demurrer and motion to strike. On February 29, 2024, Plaintiff filed an opposition to both motions. On March 6, 2024, Defendant filed a reply.
LEGAL STANDARD – Demurrer
A demurrer is a pleading used to test the legal sufficiency of other pleadings. It raises issues of law, not fact, regarding the form or content of the opposing party's pleading (complaint, answer or cross-complaint). (Code Civ. Proc., § 422.10; see Donabedian v. Mercury Ins. Co. (2004) 116 Cal.App.4th 968, 994.) It is not the function of the demurrer to challenge the truthfulness of the complaint; and for purposes of ruling on the demurrer, all facts pleaded in the complaint are assumed to be true. (Id.)
A demurrer can be used only to challenge defects that appear on the face of the pleading under attack; or from matters outside the pleading that are judicially noticeable. (Blank v. Kirwan (1985) 39 Cal.3d 311, 318; Donabedian, supra, 116 Cal.App.4th at p. 994.) No other extrinsic evidence can be considered. (Ion Equip. Corp. v. Nelson (1980) 110 Cal.App.3d 868, 881 [error for court to consider facts asserted in memorandum supporting demurrer]; see also Afuso v. United States Fid. & Guar. Co. (1985) 169 Cal.App.3d 859, 862, disapproved on other grounds in Moradi-Shalal v. Fireman’s Fund Ins. Cos. (1988) 46 Cal.3d 287 [error to consider contents of release not part of court record].)
A demurrer can be utilized where the “face of the complaint” itself is incomplete or discloses some defense that would bar recovery. (Guardian North Bay, Inc. v. Superior Court (2001) 94 Cal.App.4th 963, 971-972.) The “face of the complaint” includes material contained in attached exhibits that are incorporated by reference into the complaint, or in a superseded complaint in the same action. (Frantz v. Blackwell (1987) 189 Cal.App.3d 91, 94; see also Barnett v. Fireman’s Fund Ins. Co. (2001) 90 Cal.App.4th 500, 505 [“[W]e rely on and accept as true the contents of the exhibits and treat as surplusage the pleader’s allegations as to the legal effect of the exhibits.”])
A demurrer can only be sustained when it disposes of an entire cause of action. (Poizner v. Fremont General Corp. (2007) 148 Cal.App.4th 97, 119; Kong v. City of Hawaiian Gardens Redev. Agency (2003) 108 Cal.App.4th 1028, 1046.)
DISCUSSION – Demurrer
Meet and Confer
Per Code of Civil Procedure section 430.41, subdivision (a), Defendant was required to meet and confer with Plaintiff before bringing this demurrer. (Code Civ. Proc., § 430.41, subd. (a).) The Court finds Defendant’s meet-and-confer efforts sufficient. (Yaragchian Decl., ¶ 2.)
Fifth Cause of Action – Fraudulent Inducement-Concealment
Defendant demurs to the Fifth Cause of Action for fraudulent inducement-concealment on the grounds that it: (1) is barred by the statute of limitations; (2) fails to state facts sufficient to constitute a cause of action; and (3) fails to allege facts demonstrating a transactional relationship between Defendant and Plaintiffs giving rise to a duty to disclose. The Court will address each of these grounds below.
Statute of Limitations
Fraud causes of action are governed by a three-year statute of limitations. (Kline v. Turner (2001) 87 Cal.App.4th 1369, 1373, citing Code Civ. Proc., § 338, subd. (d).) A fraud cause of action does not begin to accrue until the plaintiff discovers the facts constituting the fraud. (Code Civ. Proc., § 338, subd. (d); Kline, supra, 87 Cal.App.4th at p. 1374.) A demurrer based on the statute of limitations lies only where the dates in question are disclosed on the face of the complaint. (United W. Med. Centers v. Superior Ct. (1996) 42 Cal.App.4th 500, 505.)
Defendant contends the Fifth Cause of Action for fraudulent inducement-concealment is barred by the statute of limitations because they purchased the subject vehicle on or about September 22, 2018 and did not file this action until April 27, 2023. Defendant also contends the delayed discovery rule does not apply because Paragraph 14 of the FAC alleges that, “[d]efects and nonconformities manifested themselves within the applicable express warranty period…” (FAC, ¶ 14.) Defendant contends this is evidence that Plaintiffs did not act with reasonable diligence in discovering the alleged fraud.
In opposition, Plaintiffs contend, among other things, that their fraudulent inducement-concealment claim is timely because the face of the FAC does not disclose a statute of limitations defense. Plaintiffs argue the purchase of the subject vehicle does not trigger the applicable statute of limitations here because it does not establish that Plaintiff discovered facts constituting the fraud on that date.
The Court finds the face of the FAC does not disclose the statute of limitations defense. First, merely purchasing the subject vehicle is insufficient to trigger the statute of limitations here, as it is unclear how purchasing the vehicle automatically puts the Plaintiffs on notice of the facts constituting the alleged fraud, especially when no defects had yet manifested. (See Code Civ. Proc., § 338, subd. (d).) Defendant also fails to cite any legal authority supporting that interpretation of the applicable statute of limitations.
Second, Paragraph 14 of the FAC contains no dates and does not clearly identify the dates when Plaintiffs learned of the alleged fraud. (See FAC, ¶ 14.) The alleged occurrence of the defect within the warranty period merely shows that the subject vehicle began to have problems in that timeframe; it does not show that Plaintiffs were aware Defendant had defrauded them into purchasing the subject vehicle. The FAC otherwise does not disclose any dates that clearly show Plaintiffs were aware of the facts constituting the fraud. Indeed, the first date alleged in the FAC regarding problems with the subject vehicle, including the transmission, is January 4, 2021. (See FAC, ¶ 25.) Plaintiffs allege that on such date, they presented the subject vehicle to an authorized repair facility, which performed warranty repairs. (Id.) For purposes of the demurrer, these allegations are taken as true. Even if you could arguably use January 4, 2021 as the date Plaintiffs were aware of the facts constituting fraud, the complaint was timely filed within three years.
Based on the foregoing, the Court OVERRULES the demurrer to the Fifth Cause of Action on the grounds that it is time-barred.
Failure to Allege Fraud with the Requisite Specificity
To state a cause of action for fraudulent concealment, the plaintiff must allege facts demonstrating: “(1) concealment or suppression of a material fact; (2) by a defendant with a duty to disclose the fact to the plaintiff; (3) the defendant intended to defraud the plaintiff by intentionally concealing or suppressing the fact; (4) the plaintiff was unaware of the fact and would not have acted as he or she did if he or she had known of the concealed or suppressed fact; and (5) plaintiff sustained damage as a result of the concealment or suppression of the fact. [Citation.]”(Hambrick v. Healthcare Partners Med. Grp., Inc. (2015) 238 Cal.App.4th 124, 162, citation omitted.)
“In California, fraud must be pled specifically; general and conclusory allegations do not suffice. [Citations.] Thus the policy of liberal construction of the pleadings ... will not ordinarily be invoked to sustain a pleading defective in any material respect. [Citation.] [¶] This particularity requirement necessitates pleading facts which show how, when, where, to whom, and by what means the representations were tendered. [Citation.] A plaintiff's burden in asserting a fraud claim against a corporate employer is even greater. In such a case, the plaintiff must allege the names 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. [Citation.]” (Lazar v. Superior Ct. (1996) 12 Cal.4th 631, 645, internal quotation marks omitted.) However, the heightened pleading requirement is relaxed when the allegations show that the defendant necessarily possesses knowledge of the facts. (Quelimane v. Stewart Title Co. (1998) 19 Cal.4th 26, 47.)
Defendant contends the Fifth Cause of Action for fraudulent inducement-concealment fails because Plaintiffs fail to allege with requisite specificity the identities of the persons acting on behalf of Defendant who concealed material facts or made false representations about the subject vehicle, their authority to speak on behalf of Defendant, Defendant’s knowledge regarding alleged defects in the subject vehicle, any interactions with Defendant before or during the purchase of the subject vehicle, or Defendant’s intent to induce reliance by Plaintiffs to purchase the subject vehicle. Defendant also contends the FAC does not allege facts demonstrating that the subject vehicle was unsuitable for its intended use at the time of the purchase.
In opposition, Plaintiffs contend the heightened pleading requirement is relaxed here since Plaintiffs are alleging concealment, which necessarily makes it difficult to allege facts showing how, when, and by what means the alleged representations did not happen. Plaintiffs also cite the case of Dhital v. Nissan North America, Inc. (2022) 84 Cal.App.5th 828, which held that the plaintiffs had pleaded fraud with the requisite specificity. (Id. at p. 844.) The Court declines to address Plaintiffs’ citation to Dhital, as it is currently pending review by the California Supreme Court, which renders it nonbinding authority. (Cal. Rules of Court, rule 8.1115, subd. (e)(1).)
The Court agrees with Plaintiffs that since they are alleging fraud based on Defendant’s nondisclosure, the heightened pleading requirements for fraud based on affirmative misrepresentations are relaxed here. (See Alfaro v. Community Housing Improvement System Planning Assn. (2009) 171 Cal.App.4th 1356, 1384.) Notwithstanding, the FAC identifies the material defects and facts Defendant knew prior to Plaintiffs’ acquisition of Subject Vehicle and withheld from Plaintiffs (FAC, ¶¶ 70-71, 74-77, 79). The FAC allege facts showing that Defendant had superior knowledge of the facts and how such knowledge was obtained (FAC, ¶¶ 72, 80a-80b); the safety risks posed by the Transmission Defect (FAC, ¶¶ 30, 71); the materiality of that information (FAC, ¶ 82); that Plaintiffs were unaware of the concealed fact and that they would not have purchased the subject vehicle had they known of the concealed defect (FAC, ¶¶ 9-10, 73, 77, 82, 84); and that Defendant intended to defraud Plaintiffs by selling the subject vehicle to Plaintiffs with its known transmission defects and not disclosing them to Plaintiffs, and Plaintiffs suffered damages as a result. (See FAC, ¶¶ 68-84.) The Court finds that Plaintiffs have alleged fraud with the requisite specificity.
Based on the foregoing, the Court OVERRULES the demurrer to the Fifth Cause of Action for lack of the requisite specificity.
Lack of a Transactional Relationship
“There are ‘four circumstances in which nondisclosure or concealment may constitute actionable fraud: (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. [Citation.]’ [Citation.]” (LiMandri v. Judkins (1997) 52 Cal.App.4th 326, 336.)
Defendant contends the Fifth Cause of Action for fraudulent inducement-concealment fails because the FAC does not allege that Plaintiffs purchased the subject vehicle directly from Defendant or otherwise entered into a transaction with Defendant.
In opposition, Plaintiffs contend a transactional relationship is not required for the manufacturer to have a duty to disclose and that transactional privity is not required. Plaintiffs then cite Dhital, wherein the Court of Appeal found the plaintiffs’ allegations were sufficient to establish the existence of a buyer-seller relationship. (Dhital, supra, 84 Cal.App.5th at p. 844.) Plaintiffs further argue that the FAC does allege the existence of a transactional relationship between the parties, and that the transmission defect is a material fact, poses safety risks, and arose during the warranty period.
The Court finds Plaintiffs allege sufficient facts for purposes of a transactional relationship between the parties. The FAC alleges that Plaintiffs and Defendant entered into a warranty contract for the subject vehicle. (FAC, ¶¶ 7-8, Ex. A.) The FAC also alleges that Defendant was aware of the transmission defect before the subject vehicle was sold to Plaintiffs while Plaintiffs were unaware of it, and that Defendant actively concealed the defect. (FAC, ¶¶ 68-84.) The Court finds these allegations sufficient to state the existence of a relationship between the parties for purposes of a nondisclosure claim. (See LiMandri, supra, 52 Cal.App.4th at p. 336.)
Moreover, since this is a demurrer, the Court assumes the allegations are true and liberally construes them in favor of the nonmoving party. (Donabedian, supra, 116 Cal.App.4th at p. 994; Code Civ. Proc., § 452 [“In the construction of a pleading, for the purpose of determining its effect, its allegations must be liberally construed, with a view to substantial justice between the parties.”]) Also, as noted above, the Court declines to consider Dhital given its current status pending review before the California Supreme Court.
Based on the foregoing, the Court OVERRULES the demurrer to the Fifth Cause of Action for lack of a transactional relationship.
LEGAL STANDARD – Motion to Strike
“Any party, within the time allowed to respond to a pleading may serve and file a notice of motion to strike the whole or any part thereof, but this time limitation shall not apply to motions specified in subdivision (e).” (Code Civ. Proc., § 435, subd. (b)(2).) “The court may, upon a motion made pursuant to Section 435, or at any time in its discretion, and upon terms it deems proper: (a) Strike out any irrelevant, false, or improper matter inserted in any pleading. (b) Strike out all or any part of any pleading not drawn or filed in conformity with the laws of this state, a court rule, or an order of the court.” (Id., § 436.)
DISCUSSION – Motion to Strike
Meet and Confer
Per Code of Civil Procedure section 435.5, subdivision (a), Defendant was required to meet and confer with Plaintiff before bringing this motion to strike. (Code Civ. Proc., § 435.5, subd. (a).) The Court finds Defendant’s meet-and-confer efforts sufficient. (Yaragchian Decl., ¶ 2.)
Analysis
“In an action for the breach of an obligation not arising from contract, where it is proven by clear and convincing evidence that the defendant has been guilty of oppression, fraud, or malice, the plaintiff, in addition to the actual damages, may recover damages for the sake of example and by way of punishing the defendant.” (Civ. Code, § 3294, subd. (a); see also Turman v. Turning Point of Central California, Inc. (191 Cal.App.4th 53, 64 [claim for punitive damages subject to motion to strike where allegations do not rise to the level of fraud, oppression, or malice necessary under Civil Code section 3294.])
Defendant seeks to strike the prayer for punitive damages from the FAC on the grounds that Plaintiff may not recover punitive damages based on the Song-Beverly Act claims, i.e., the First through Fourth Causes of Action of the FAC. Defendant contends punitive damages are not available here because the Song-Beverly Act provides for statutory penalties, and Plaintiffs cannot demand both statutory penalties and punitive damages here. Defendant further contends Plaintiffs cannot recover punitive damages for their Fifth Cause of Action for fraudulent inducement-concealment because it is not a viable claim for the reasons set forth in their demurrer, and the FAC otherwise fails to allege facts that satisfy the statutory standard.
In opposition, Plaintiffs contend Defendant’s demurrer is meritless, and therefore the motion to strike fails as well. Plaintiffs contend they are able to recover both statutory penalties and punitive damages here because the causes of action are based on different conduct that occurred at different times. Plaintiffs contends their Song-Beverly Act claims are distinct from their fraud claim. Plaintiffs further contend they have alleged sufficient facts evidencing oppression, fraud, or malice for purposes of their punitive damages claim. Plaintiffs also argue that punitive damages are available under the Song-Beverly Act, and that they may seek both punitive damages and statutory penalties at the pleading stage.
The Court finds the punitive damages request in the FAC is not subject to a motion to strike. First, while the Court does not hold that punitive damages are an available remedy under the Song-Beverly Act, Plaintiffs may seek both punitive damages based on their fraud claim and statutory penalties based on their Song-Beverly Act claims because they are based on different conduct that occurred at different times. (Anderson v. Ford Motor Co. (2022) 74 Cal.App.5th 946, 962-963.) Plaintiffs are entitled to seek both punitive damages and statutory penalties at the pleading stage. (See Clauson v. Superior Court (1998) 67 Cal.App.4th 1253, 1256.) Second, given the Court’s overruling of Defendant’s demurrer to the Fifth Cause of Action for fraudulent inducement-concealment, the Court finds the FAC also alleges sufficient facts to state a claim for punitive damages. (See Civ. Code, § 3294, subd. (a).)
Based on the foregoing, the Court DENIES Defendant’s motion to strike.
CONCLUSION
The Court OVERRULES Defendant General Motors LLC’s Demurrer to Plaintiffs’ First Amended Complaint.
The Court DENIES Defendant General Motors LLC’s Motion to Strike Punitive Damages from Plaintiffs’ Complaint.
Defendant must file and serve an Answer to the First Amended Complaint within 20 days of the Court’s order.
Plaintiffs are ordered to give notice of the Court’s ruling within five calendar days of this order.