Judge: Lynette Gridiron Winston, Case: 24PSCV04304, Date: 2025-03-18 Tentative Ruling

Case Number: 24PSCV04304    Hearing Date: March 18, 2025    Dept: 6

CASE NAME:  Fabian Vasquez, et al. v. Ford Motor Company, et al. 

Defendant Ford Motor Company’s Demurrer to Plaintiffs’ Complaint 

TENTATIVE RULING 

The Court OVERRULES the demurrer. Defendant Ford Motor Company must file and serve an answer to the complaint within 20 calendar days of this order. 

             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 February 6, 2025, plaintiffs Fabian Vasquez and Maria Del Rayo Alvarez (collectively, Plaintiffs) filed this action against defendants Ford Motor Company (Ford), Ted Jones Ford, Inc. a California Stock Corporation DBA Ken Grody Ford Buena Park, and Does 1 through 10, alleging causes of action for violation of Song-Beverly Act – breach of express warranty, violation of Song-Beverly Act – breach of implied warranty, violation of Song-Beverly Act – section 1793.2, fraudulent inducement – concealment, and negligent repair. 

On February 6, 2025, Ford demurred to the complaint. On March 5, 2025, Plaintiff opposed the demurrer. On March 11, 2025, Ford replied. 

LEGAL STANDARD 

            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.) 

PRELIMINARY ISSUE 

            The Court notes that the memorandum to Plaintiff’s opposition was 16 pages long, and thereby exceeds the 15-page limit for such memorandums. (Cal. Rules of Court, rule 3.1113, subd. (d).) Oversized memorandums are deemed late. (Id., rule 3.1113, subd. (g).) The Court will still consider Plaintiff’s opposition, but admonishes Plaintiff to comply with the requirements of the California Rules of Court going forward. (Id., rule 3.1300, subd. (d); Juarez v. Wash Depot Holdings, Inc. (2018) 24 Cal.App.5th 1197, 1202 [court has discretion to consider late-filed opposition].) 

DISCUSSION 

Meet and Confer 

Per Code of Civil Procedure section 430.41, subdivision (a), Ford 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 Ford’s efforts to meet and confer sufficient. (Liu Decl., ¶ 2.) 

Fourth Cause of Action – Fraudulent Inducement-Concealment 

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). 

Ford demurs to the Fourth Cause of Action for fraudulent inducement-concealment on the grounds that it fails to allege facts sufficient to state a cause of action and is barred by the economic loss rule. Ford contends the complaint fails to allege facts with the requisite specificity. Ford contends Plaintiffs fail to allege the content of omitted facts, but instead merely lists a number of ways in which 10R80 transmissions may be defective, which is insufficient. Ford also contends Plaintiffs fail to identify who made the alleged omissions when Plaintiffs purchased the subject vehicle. 

Ford contends Plaintiffs fail to allege facts establishing a duty to disclose. Ford contends Plaintiffs do not allege a fiduciary relationship or a direct transactional relationship with Ford, as there is no allegation that Plaintiffs bought the subject vehicle directly from Ford, had any interactions with Ford when they bought it, or that buying the vehicle from an independent dealership resulted in a monetary benefit to Ford following the initial sale of the vehicle to the dealership. Ford contends Plaintiffs fail to plead Ford had exclusive knowledge of the purported transmission defect at the time of sale to trigger a duty to disclose or that Ford actively concealed the alleged defects. Ford also contends Plaintiffs fail to allege justifiable and actual reliance, as providing a warranty acknowledges the possibility the vehicle could be defective. 

Ford further contends Plaintiffs’ fraudulent concealment claim is barred by the economic loss rule under Rattagan. Ford contends the risk that the transmission might be defective is a risk contemplated and covered by the warranty. Ford contends the allegations here are based on disappointed expectations under the warranty, and there are no allegations of physical injury or property damages outside of the alleged defective vehicle itself. 

In opposition, Plaintiffs contend the economic loss rule does not bar Plaintiffs’ fraud claim. Plaintiffs contend Rattagan is factually distinguishable because it addresses fraud in the performance of a contract, whereas Plaintiffs allege fraudulent inducement to enter into a contract. Plaintiffs contend Rattagan does not disturb the well-established rule that fraudulent inducement supports an independent tort claim. Plaintiffs contend their fraudulent inducement claim is rooted in Ford’s independent duty to disclose material defects, and the economic loss rule therefore does not apply. Plaintiffs also cite Dhital v. Nissan North America, Inc. (2022) 84 Cal.App.5th 828 (Dhital) for the proposition that the economic loss rule does not bar a fraudulent concealment claim based on the failure to disclose a material defect in a vehicle. 

Plaintiffs then argue that they have pleaded their fraud claim with the requisite specificity, as the specificity requirement applies only to affirmative representations, not concealment claims. Plaintiffs contend they have alleged the 10R80 transmissions installed in numerous Ford vehicles were defective, Ford had exclusive knowledge of the defects, Ford intentionally concealed information regarding the defects, Ford intended to deceive Plaintiffs, Plaintiffs would not have bought the car if they had known of the defects, and plaintiffs suffered damages as a result of buying the car. Plaintiffs cite Dhital which found similar allegations sufficient to withstand demurrer. 

Plaintiffs further contend Rattagan did not change the law, and that Plaintiffs have properly pleaded their fraud claim per Rattagan, by alleging the contents of the omitted facts, Ford’s awareness of the materiality of those facts, the inaccessibility of the facts to Plaintiffs, when the omitted facts could or should have been revealed, and justifiable and actual reliance. Plaintiffs contend they have pleaded sufficient facts regarding the transmission defect and a duty to disclose, and that pleading marketing materials or other statements with particularity is not required. Plaintiffs also contend they have sufficiently alleged a transactional relationship. 

The Court finds the complaint alleges sufficient facts to state a cause of action for fraudulent inducement-concealment. Plaintiff correctly contends that the heightened pleading requirement for fraud claims is relaxed when it appears the defendant has full knowledge of the facts or has more knowledge than the plaintiff. (See Alfaro v. Cmty. Hous. Improvement Sys. & Plan. Assn., Inc. (2009) 171 Cal.App.4th 1356, 1384.) The complaint identifies the material defects and facts that Ford allegedly knew and withheld from Plaintiffs before purchasing the subject vehicle. (Compl., 23:15-27:9.) The complaint alleges facts showing that Ford had superior knowledge of the facts regarding the alleged transmission defect and how such knowledge was obtained, the safety risks posed by the transmission defect, the materiality of that information, Plaintiff was unaware of the concealed defect and would not have purchased the subject vehicle had Plaintiffs known of the concealed defect, and Ford intended to defraud Plaintiffs by selling the subject vehicle to Plaintiff with its known transmission defects without disclosing them to Plaintiff, resulting in damages to Plaintiff. (Compl., 23:15-27:9.)[1] The Court of Appeal in Dhital found similar allegations sufficient to withstand demurrer. (Dhital, supra, 84 Cal.App.5th at p. 844.) This Court likewise finds these allegations sufficient, and satisfy the pleading requirements set forth in Rattagan, including the content of the omitted facts. (Rattagan, supra, 17 Cal.5th at pp. 43-44.) 

The Court also finds the complaint alleges sufficient facts demonstrating 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.) Further, unlike in Bigler-Engler v. Breg, Inc. (2017), 7 Cal. App. 5th 276, 314 (relied on by Ford), Plaintiffs allege that Ford directly marketed and advertised its product to consumers, including Plaintiff. (Compl., ¶ 56). The complaint also alleges that Plaintiffs and Ford entered into a warranty agreement for the subject vehicle, and that Ford was aware of the transmission defect before the subject vehicle was sold to Plaintiffs but did not disclose that knowledge to Plaintiffs. (Compl., 3:10-24, 23:15-27:9, Ex. 1.) The complaint alleges facts demonstrating that Plaintiff relied on Defendant’s nondisclosure when purchasing the vehicle, as Plaintiff alleges he would not have purchased the vehicle had he known about the defect. (Compl., 26:4-23.) The Court of Appeal in Dhital found similar allegations sufficient to withstand demurrer. (Dhital, supra, 84 Cal.App.5th at p. 844.) This Court also finds them sufficient. 

The Court further finds this cause of action is not barred by the economic loss rule. “[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 or 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 complaint alleges sufficient facts to state a cause of action for fraudulent inducement-concealment, the Court also finds this cause of action falls outside the scope of the economic loss rule. 

The Court declines to consider the parties’ remaining arguments. Based on the foregoing, the Court OVERRULES the demurrer.     

CONCLUSION 

The Court OVERRULES the demurrer. Defendant Ford Motor Company must file and serve an answer to the complaint within 20 calendar days of this order. 

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