Judge Lynette Gridiron Winston, Case Number: 24PSCV02991, Date: 2025-02-27 Tentative Ruling

Judge: Lynette Gridiron Winston, Case: 24PSCV02991, Date: 2025-02-27 Tentative Ruling

Case Number: 24PSCV02991 Hearing Date: February 27, 2025 Dept: 6

CASE NAME: Victorino Dominguez Pliego v. General Motors LLC

1 – General Motors LLC’s Demurrer to Plaintiff’s First Amended Complaint; and

2 – General Motors LLC’s Motion to Strike Punitive Damages from Plaintiff’s First Amended Complaint

TENTATIVE RULING

The Court OVERRULES the demurrer to the Fifth Cause of Action of the First Amended Complaint. Defendant General Motors LLC must file an answer to the First Amended Complaint within 10 days of the Court’s order.

The Court DENIES the motion to strike.

Plaintiff is ordered to give notice of the Court’s ruling within five calendar days of this order.

BACKGROUND

This is a lemon law case. On September 12, 2024, plaintiff Victorino Dominguez Pliego (Plaintiff) filed this action. On December 4, 2024, 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 January 24, 2025, Defendant demurred to and moved to strike punitive damages from the FAC. On February 13, 2025, Plaintiff opposed the motions. On February 20, 2024, Defendant replied.

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 (Donabedian).) 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. at pp. 993-994.)

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 pleading, cause of action, or affirmative defense. (See Cal. Rules of Court, rule 3.1320, subd. (a); 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, 1046-1047.)

DISCUSSION – Demurrer

Meet and Confer

Per Code of Civil Procedure section 430.41, subdivision (a), Defendant was required to meet and confer in person, by telephone, or by video conference before bringing this demurrer. (Code Civ. Proc., § 430.41, subd. (a).) The Court finds Defendant’s efforts to meet and confer sufficient. (Habib 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 is barred by the statute of limitations, fails to state facts sufficient to constitute a cause of action, fails to allege a transactional relationship giving rise to a duty to disclose, and is barred by the economic loss rule.

Statute of Limitations

“An action for relief on the ground of fraud or mistake. The cause of action in that case is not deemed to have accrued until the discovery, by the aggrieved party, of the facts constituting the fraud or mistake.” (Code Civ. Proc., § 338, subd. (d).) A demurrer based on the statute of limitations lies only when the dates in question are shown on the face of the complaint. (Union Carbide Corp. v. Superior Ct. (1984) 36 Cal.3d 15, 25.)

Defendant contends the three-year statute of limitations bars this cause of action because Plaintiff purchased the subject vehicle on approximately February 18, 2018, and Plaintiff filed the fraudulent concealment claim more than three years later. Defendant contends Plaintiff cannot invoke the delayed discovery rule because the FAC alleges the defects and nonconformities manifested during the warranty period, and the delayed discovery rule applies only when the Plaintiff is unable to discover the cause of action with reasonable diligence.

In opposition, Plaintiff contends the fraudulent inducement-concealment claim is timely because the running of the statute of limitations does not appear clearly on the face of the FAC. Plaintiff contends the statute of limitations did not begin to run when the subject vehicle was purchased, and even if it had begun to run, the claim would still be timely because of the discovery rule, equitable estoppel doctrine, repair rule, and/or class action tolling. Plaintiff contends the alleged wrongful conduct occurred not only at the time of the purchase, but at each time Plaintiff presented the subject vehicle for repair. Plaintiff contends the FAC alleges that she presented the subject vehicle to Defendant’s authorized repair facilities on multiple occasions, but Defendant, who had superior knowledge of the transmission defect, never disclosed the existence of that defect. Plaintiff contends she became aware of Defendant’s fraud after Defendant’s repeated failures to permanently repair the subject vehicle. Plaintiff then contends Defendant’s fraudulent concealment of the defect tolled Plaintiff’s claim. Plaintiff also contends her claim is tolled under the repair doctrine because Plaintiff alleged that Defendant represented to her the subject vehicle was fixable and attempted to fix it.

The Court finds the FAC does not allege sufficient facts showing that Plaintiff’s fraudulent inducement-concealment claim is time-barred. Plaintiff correctly contends that the purchase of the subject vehicle in 2018 did not trigger the statute of limitations here. What matters is when Plaintiff discovered the facts constituting the alleged fraud. (Code Civ. Proc., § 338, subd. (d).) Nothing in the FAC alleges facts showing that Plaintiff knew or should have known of the alleged fraud at the time of the purchase. (FAC, ¶¶ 6-21.) The FAC does not otherwise allege facts that clearly show when Plaintiff discovered the alleged fraud. (Union Carbide Corp. v. Superior Ct., supra, 36 Cal.3d at p. 25; see also Broberg v. The Guardian Life Ins. Co. of Am. (2009) 171 Cal.App.4th 912, 921 [“When a plaintiff reasonably should have discovered facts for purposes of the accrual of a case of action or application of the delayed discovery rule is generally a question of fact, properly decided as a matter of law only if the evidence (or, in this case, the allegations in the complaint and facts properly subject to judicial notice) can support only one reasonable conclusion. [Citation.]”) Whether the statute of limitations was tolled under the various doctrines Plaintiff claimed in the opposition are questions of fact generally not suitable for demurrer. (See Hopkins v. Kedzierski (2014) 225 Cal.App.4th 736, 755 [equitable tolling]; M.F. v. Pac. Pearl Hotel Mgmt. LLC (2017) 16 Cal.App.5th 693, 703 [questions of fact generally not suitable for demurrer].)

The Court therefore OVERRULES the demurrer to the Fifth Cause of Action based on the statute of limitations.

Failure to State a Cause of Action

To plead 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.) A complaint for fraudulent concealment “must also include specific allegations establishing all the required elements, including (1) the content of the omitted facts, (2) defendant's awareness of the materiality of those facts, (3) the inaccessibility of the facts to plaintiff, (4) the general point at which the omitted facts should or could have been revealed, and (5) justifiable and actual reliance, either through action or forbearance, based on the defendant's omission.” (Rattagan v. Uber Techs., Inc. (2024) 17 Cal.5th 1, 43-44 (Rattagan).)

Defendant contends the fraudulent concealment claim fails because Plaintiff did not allege the identity of who purportedly concealed material facts or made false representations about the subject vehicle, their authority to act on behalf of Defendant, Defendant’s knowledge of the alleged defects at the time of the purchase, any interactions with Defendant before the purchase of the subject vehicle, or Defendant’s intent to induce Plaintiff’s reliance to purchase the subject vehicle.

In opposition, Plaintiff contends the fraud allegations are nearly identical to those that other courts find actionable, and that Defendant had a duty to disclose the transmission defect, regardless of any affirmative misrepresentation. Plaintiff contends the FAC contains all essential elements of fraudulent inducement-concealment. Plaintiff contends to have identified the material facts Defendant knew and withheld from Plaintiff before the purchase of the subject vehicle, that Defendant had superior knowledge of the facts and safety risks posed by the transmission defect, that Defendant knew the materiality of that information, that Plaintiff relied on the nondisclosure, and that Plaintiff suffered damages.

The Court finds the FAC alleges sufficient facts to state a cause of action for fraudulent concealment. The FAC identifies the material defects and facts that Defendant allegedly knew and withheld from Plaintiff before purchasing the subject vehicle. (FAC, ¶¶ 46-63.) The FAC alleges facts showing that Ford had superior knowledge of the facts and how such knowledge was obtained, (FAC, ¶¶ 48-50, 53-55); the safety risks posed by the transmission defect, (FAC, ¶¶ 49, 54-55); the materiality of that information, (FAC, ¶¶ 55, 58-61); that Plaintiff was unaware of the concealed defect and would not have purchased the subject vehicle had Plaintiff known of the concealed defect, (Compl., ¶¶ 60, 63); and that Ford intended to defraud Plaintiff by selling the subject vehicle to Plaintiff with its known transmission defects without disclosing them to Plaintiff, resulting in damages to Plaintiff, (FAC, ¶¶ 56, 58, 63).

The Court therefore OVERRULES the demurrer to the Fifth Cause of Action based on failure to state a cause of action.

Failure to Allege 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 Plaintiff’s fraud claim fails because Plaintiff does not allege a transactional relationship between Defendant and Plaintiff giving rise to a duty to disclose. Defendant contends there needs to have been a direct relationship between the parties, which the FAC does not allege. Defendant contends the FAC does not allege Plaintiff purchased the subject vehicle directly from Defendant, and thus there was no alleged concealment in a direct transaction between them.

In opposition, Plaintiff contends that a transactional relationship is not required for the manufacturer to have a duty to disclose. Plaintiff contends Defendant cannot avoid liability for lack of disclosure by pointing to an independent dealer selling the subject vehicle, and that transactional privity is not required, so Plaintiff’s allegations are sufficient. Plaintiff contends to have alleged a transactional relationship giving rise to Defendant’s duty to disclose the transmission defect by virtue of the warranty contract entered into between the parties in February 2018. Plaintiff also contends to have alleged that Defendant had exclusive knowledge of the extent of the transmission defect and actively concealed this information with the intent to induce Plaintiff into purchasing the subject vehicle. Plaintiff contends the transmission defect is a material fact, the transmission defect poses safety risks, and that the transmission defect arose during the warranty period.

The Court finds the FAC adequately alleges a relationship imposing a duty to disclose. Under OCM Principal Opportunities Fund, L.P. v. CIBC World Markets Corp. (2007) 157 Cal.App.4th 835, a manufacturer has a duty to disclose material facts to subsequent purchasers when the manufacturer has reason to expect that the item will be resold, which the Court finds applicable in the context of a manufacturer selling vehicles through a dealership. (See id. at p. 851.) The FAC alleges that Plaintiff and Defendant entered into a warranty agreement for the subject vehicle, and that Defendant was aware of the transmission defect before the subject vehicle was sold to Plaintiff but did not disclose that knowledge to Plaintiff. (FAC, ¶¶ 6-7, 46-63, Ex. A.)

The Court therefore OVERRULES the demurrer to the Fifth Cause of Action based on failure to allege a transactional relationship.

Economic Loss Doctrine

[T]he economic loss doctrine applies when the parties have entered into a contract; the plaintiff sues for tort damages, alleging defendant failed to perform as the contract requires; and negligently caused economic losses flowing from the breach. In such a case, plaintiffs are generally limited to recovery of those economic damages and cannot seek to expand their remedies beyond those available in contract. The doctrine does not apply if defendant’s breach caused physical damage or personal injury beyond the economic losses caused by the contractual breach and defendant violated a duty flowing, not from the contract, but from a separate, legally recognized tort obligation.

A case in which the plaintiff sues a contractual party for fraud based on conduct committed during the course of a contractual relationship falls outside the economic loss doctrine.

(Rattagan, supra, 17 Cal.5th at p. 44, italics in original.)

Defendant contends Plaintiff’s fraud claim is barred by the economic loss rule. Defendant contends Plaintiff’s concealment claim focuses on Defendant’s alleged failure to disclose a transmission defect, and the potential for a transmission defect is explicitly governed by the warranty Defendant provided for the subject vehicle. Defendant also contends Plaintiff’s alleged injury of impaired value, use, and safety of the subject vehicle was within the contemplation of the parties at the time they entered into the sales contract, as evidenced by the warranty. Defendant contends the warranty contemplates the subject vehicle might have a defect or nonconformity and allocates the risk of the cost of repairing such depending on when the issue occurs.

In opposition, Plaintiff contends the economic loss rule does not apply to fraudulent inducement-concealment claims. Plaintiff contends the allegedly fraudulent inducement is an independent tort since it occurred before the sale. Plaintiff alternatively contends that Plaintiff’s allegations are sufficient for satisfying the three-part test in Rattagan, which states that the Court must ascertain the full scope of the parties’ contractual agreement, determine whether there is an independent tort duty to refrain from the alleged conduct, and determine whether Plaintiff can establish the tort elements independent of the contractual rights and duties assumed by the parties. Plaintiff contends these requirements are satisfied because the scope of the vehicle purchase agreement is for a vehicle without known material defects, Defendant has an independent tort duty to refrain from fraudulent practices in selling its vehicles, and the tort elements of fraudulent inducement-concealment are independent of the rights and duties the parties assumed.

The Court finds that the economic loss doctrine does not bar Plaintiff’s fraudulent inducement-concealment claim. “[T]he economic loss rule does not apply to limit recovery for intentional tort claims like fraud,” but applies instead to negligently inflicted economic losses devoid of physical property damage. (Rattagan, supra, 17 Cal.5th at p. 38.) This cause of action is an intentional tort fraud claim. Given the Court’s finding that the FAC alleges sufficient facts to state a cause of action for fraudulent inducement-concealment, the Court also finds this cause of falls outside the scope of the economic loss rule.

Based on the foregoing, the Court OVERRULES the demurrer to the Fifth Cause of Action based on the economic loss doctrine.

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 in person, by telephone, or by video conference before bringing this motion to strike. (Code Civ. Proc., § 435.5, subd. (a).) The Court finds Defendant’s efforts to meet and confer sufficient. (Habib Decl., ¶ 2.)

Punitive Damages

A claim for punitive damages is subject to a motion to strike when the allegations fail to rise to the level of malice, oppression, or fraud necessary under Civil Code section 3294. (Turman v. Turning Point of Central California, Inc. (2010) 191 Cal.App.4th 53, 64.)

Defendant seeks to strike Plaintiff’s prayer for punitive damages from the FAC on the grounds that Plaintiff has not pleaded a viable fraud claim or any other claim that would support a punitive damages claim, and that it is barred by Defendant’s defenses. Defendant contends the FAC does not allege sufficient facts to support a claim for punitive damages and Plaintiff’s fraud claim is otherwise barred. Defendant also contends that Plaintiff may not recover punitive damages under the Song-Beverly Act.

In opposition, Plaintiff contends the demurrer is meritless and that the motion to strike also fails. Plaintiff contends the demurrer misstates the gravamen of Plaintiff’s fraud claim, which is fraud by omission rather than fraud by affirmative misrepresentation. Plaintiff contends to have pleaded sufficient facts to state a fraudulent inducement-concealment claim and that Plaintiff’s fraud claim is a tort claim independent of Plaintiff’s breach of warranty claims. Plaintiff contends that Plaintiff may seek both punitive damages based on the fraud claim and civil penalties under the Song-Beverly Act. Plaintiff also contends to have sufficiently alleged Defendant’s oppression, fraud, and malice, by alleging that the transmission defect can result in various problems, Defendant knew of these problems before Plaintiff bought the vehicle in 2018, Defendant knew of the defect through sources not available to consumers, and Defendant concealed the defect in the subject vehicle from Plaintiff.

The Court finds the FAC alleges sufficient facts to support a claim for punitive damages. Given the Court found that the FAC alleges sufficient facts to state a cause of action for fraudulent inducement-concealment, Plaintiff has alleged the necessary predicate cause of action to support punitive damages. (See Civ. Code, § 3294, subd. (a).) The Court also finds the FAC alleges sufficient facts to demonstrate malice, oppression, or fraud, as the FAC alleges that Defendant, through its agent dealership, withheld knowledge of a material defect in the subject vehicle to induce Plaintiff to purchase the subject vehicle. (FAC, ¶¶ 46-63.) The Court further notes that Plaintiff may seek punitive damages in connection with the fraud claim while also seeking other remedies available under the Song-Beverly Act. (Anderson v. Ford Motor Co. (2022) 74 Cal.App.5th 946, 973.)

Based on the foregoing, the Court DENIES the motion to strike.

CONCLUSION

The Court DENIES the motion to strike.

Plaintiff is ordered to give notice of the Court’s ruling within five calendar days of this order.