Judge: Lynette Gridiron Winston, Case: 24PSCV04455, Date: 2025-03-27 Tentative Ruling

Case Number: 24PSCV04455    Hearing Date: March 27, 2025    Dept: 6

CASE NAME:  Alisha Stines v. Ford Motor Company, et al. 

Ford’s Demurrer to Plaintiff’s Complaint 

TENTATIVE RULING 

The Court SUSTAINS Ford’s demurrer to the fifth cause of action in the complaint with 20 days leave to amend. 

             Defendant Ford 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 December 27, 2024, plaintiff Alisha Stines (Plaintiff) filed this action against defendants Ford Motor Company (Ford), Puente Hills Ford, 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, fraudulent inducement-concealment, and negligent repair. 

On February 20, 2025, Ford demurred to the complaint. On March 14, 2025, Plaintiff opposed the demurrer. On March 20, 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.)  

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. (Patel Decl., ¶ 2.) 

Fifth 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 Fifth Cause of Action for fraudulent inducement-concealment on the grounds that the complaint fails to allege facts sufficient to state a cause of action and on the grounds that Plaintiff cannot establish the elements of her fraudulent concealment claim independently of the parties’ contractual rights and obligations. 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 Ford Expedition 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, Plaintiff contends the complaint pleads all essential facts for a fraudulent inducement – concealment claim. Plaintiff contends that in cases claiming fraud through non-disclosure, it is not practical to allege facts showing how, when, and by what means something did not happen. Plaintiff contends to have alleged misrepresentation/concealment, knowledge of falsity, intent to induce reliance, justifiable reliance, and damages. Plaintiff contends allegations like these were found sufficient in Dhital v. Nissan N. Am., Inc. (2022) 84 Cal.App.5th 828 (Dhital). Plaintiff contends she alleged she entered into a warranty relationship with Ford, identified the material facts Ford knew and withheld from Plaintiff before she bought the subject vehicle, Ford had superior knowledge, the safety risks posed by the transmission defect, the materiality of that information, Plaintiff’s reliance on the non-disclosure, and damages. 

Plaintiff then contends that Ford providing a warranty directly to Plaintiff is a contractual relationship between parties that supports a duty to disclose. Plaintiff contends a transactional relationship does not require privity in the sale for the manufacturer to have a duty to disclose. Plaintiff contends to have adequately pleaded that Ford had exclusive knowledge of the true 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 the transmission defect arose during the warranty period. 

Plaintiff further contends Ford had exclusive knowledge of the transmission defect, and that technical service bulletins issued by Ford to its dealerships with varying explanations also show its active concealment of the transmission defect. Plaintiff contends technical service bulletins, recalls, and other documents issued even after the sale of the vehicle can demonstrate Ford’s presale knowledge of the transmission defect. Plaintiff also contends the technical service bulletins show Ford’s active concealment of the transmission defect. 

Plaintiff also contends Plaintiff’s fraudulent inducement-concealment claim is not barred by the economic loss rule. Plaintiff contends the duty that Ford allegedly breached is its duty in tort of fair dealing, which bars presale suppression of information. Plaintiff contends the Rattagan test is inapplicable, but if this Court were to use it, the economic loss rule still does not apply to the intentional tort alleged. Plaintiff contends the scope of the transaction is for the purchase of a vehicle without known material defects. Plaintiff then contends Ford has an independent duty to refrain from fraudulent practices in the sale of its vehicles. Plaintiff also contends the tort elements of fraudulent inducement through concealment are independent of the rights and duties assumed by the parties. 

The Court finds the complaint fails to alleges sufficient facts to state a cause of action for fraudulent inducement-concealment. Fraud claims must be alleged with specificity. While the complaint identifies various alleged material defects and facts that Ford allegedly knew and withheld from Plaintiffs before purchasing the subject vehicle, the complaint fails to identify with any specificity the alleged defects experienced in the subject vehicle. (Compl. ¶¶ 14-17.) The complaint alleges facts showing that Ford had superior knowledge of facts regarding various alleged transmission defects and how such knowledge was obtained, (Compl., ¶¶ 26-37); the safety risks posed by the transmission defects, (Compl., ¶¶ 61-63); the materiality of that information, (Compl., ¶¶ 65-68); that Plaintiffs were unaware of the concealed defect and would not have purchased the subject vehicle had Plaintiffs known of the concealed defect, (Compl., ¶¶ 67, 71-72); and Ford intended to defraud Plaintiffs by selling the subject vehicle to Plaintiffs with its known transmission defects without disclosing them to Plaintiffs, resulting in damages to Plaintiffs. (Compl., ¶¶ 66-72.) However, the complaint does not allege what specific defects Plaintiffs experienced with the subject vehicle, which were allegedly concealed from Plaintiffs. The allegations the Court of Appeal in Dhital found sufficient to withstand demurrer are slightly distinguishable. (Dhital, supra, 84 Cal.App.5th at p. 844.) In Dhital, the plaintiffs alleged that on three occasions in 2015, they took the subject vehicle to the authorized repair facility because of transmission problems, including stalling, jerking and lack of power. (Dhital, supra, 84 Cal.App.5th at p. 833.) These specific facts are not alleged here. Thus, the Court finds that plaintiffs fail to allege sufficient facts to state a cause of action. 

However, the Court 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. 859, italics in original [“Under California law, a vendor has a duty to disclose material facts not only to immediate purchasers, but also to subsequent purchasers when the vendor has reason to expect that the item will be resold. [Citations]”].) The complaint alleges that Plaintiff 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., ¶¶ 10-11, Ex. A.) The complaint also alleges facts demonstrating that Plaintiff relied on Defendant’s nondisclosure when purchasing the vehicle, as Plaintiffs allege they would not have purchased the vehicle had they known about the defect. (Compl., ¶¶ 67, 71-72.) 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. Thus, 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 lack of specificity, the Court SUSTAINS the demurrer with leave to amend. 

CONCLUSION 

The Court SUSTAINS Ford’s demurrer to the fifth cause of action in the complaint with 20 days leave to amend. 

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