Judge Margaret L. Oldendorf, Case Number: 23AHCV01043, Date: 2023-08-15 Tentative Ruling

Judge: Margaret L. Oldendorf, Case: 23AHCV01043, Date: 2023-08-15 Tentative Ruling

Case Number: 23AHCV01043 Hearing Date: August 15, 2023 Dept: P

SUPERIOR COURT OF THE STATE OF CALIFORNIA

FOR THE COUNTY OF LOS ANGELES

NORTHEAST DISTRICT

JESUS CORREA MORALES AKA JESUS MORALES, Plaintiff, vs. FORD MOTOR COMPANY, a Delaware corporation, LAD-F, INC., a California corporation, dba FORD OF DOWNTOWN LA, and DOES 1 through 10, inclusive, Defendants. ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) Case No.: 23AHCV01043 [TENTATIVE] ORDER SUSTAINING DEMURRER BY DEFENDANT FORD OF DOWNTOWN LA TO THE NEGLIGENT REPAIR CAUSE OF ACTION WITHOUT LEAVE TO AMEND Date: August 15, 2023 Time: 8:30 a.m. Dept.: P

I. INTRODUCTION

Plaintiff Jesus Morales alleges three claims for violation of the Song-Beverly Act against Defendant Ford Motor Company (Ford). He also alleges a cause of action for negligent repair against Defendant LAD-F, Inc., dba Ford of Downtown LA (DTLA Ford).

Before the Court is DTLA Ford’s demurrer to the negligent repair claim. The demurrer is sustained on the ground that it is barred by the economic loss doctrine.

II. LEGAL STANDARD

A. Law Governing Demurrers

Code Civ. Proc. §430.10(e) provides for a demurrer on the basis that a complaint fails to state a cause of action. A demurrer admits, provisionally for purposes of testing the pleading, all material facts properly pleaded. Tindell v. Murphy (2018) 22 Cal.App.5th 1239, 1247. A demurrer tests the legal sufficiency of a complaint. Donabedian v. Mercury Ins. Co. (2004) 116 Cal.App.4th 968, 994.

B. Economic Loss Doctrine

“Economic loss … is a shorthand term for pecuniary or commercial loss that does not arise from actionable physical, emotional or reputational injury to persons or physical injury to property.” Gas Leak Cases (2019) 7 Cal.5th 391, 398.

“The [economic loss] rule itself is deceptively easy to state: In general, there is no recovery in tort for negligently inflicted ‘purely economic losses,’ meaning financial harm unaccompanied by physical or property damage. (Gas Leak Cases, supra, 7 Cal.5th at p. 400, 247 Cal.Rptr.3d 632, 441 P.3d 881; see also Aas, supra, 24 Cal.4th at p. 636, 101 Cal.Rptr.2d 718, 12 P.3d 1125 [‘In actions for negligence, a manufacturer’s liability is limited to damages for physical injuries; no recovery is allowed for economic loss alone. [Citation.] This general principle [is] the so-called economic loss rule’]; Seely v. White Motor Co. (1965) 63 Cal.2d 9, 18, 45 Cal.Rptr. 17, 403 P.2d 145 (Seely) [similar]; Rest., § 1 [‘An actor has no general duty to avoid the unintentional infliction of economic loss on another’].). Sheen v. Wells Fargo Bank, N.A. (2022) 12 Cal.5th 905, 922.

III. DISCUSSION

A. Summary of Facts Alleged

In the Song-Beverly causes of action, Morales alleges that in September 2020 he entered into a warranty contract with Ford regarding a 2019 Ford Transit Connect (Vehicle). He alleges that defects and nonconformities to the warranty manifested

themselves within the warranty period, and that the nonconformities substantially impaired the use, value, and/or safety of the Vehicle. Morales alleges that he took the Vehicle to an authorized Ford repair facility for repairs, but that Ford was not able to conform the Vehicle to the express warranty after a reasonable number of attempts.

In the fourth cause of action, Morales alleges the following:

¶51 Plaintiff delivered the Vehicle to DTLA Ford for repair on numerous occasions.

¶52 DTLA Ford owed Plaintiff a duty to use ordinary care and skill in storage, preparation, and repair of the Vehicle in accordance with industry standards.

¶53 DTLA Ford breached its duty to Plaintiff to use ordinary care and skill by failing to properly store, prepare, and repair the Vehicle in accordance with industry standards.

¶54 DTLA Ford’s negligent breach was a proximate cause of Plaintiff’s damages.

B. Economic Loss Rule Bars the Negligence Claim

As with all negligence claims, a central question is whether a duty is owed. In undertaking to repair the Vehicle, DTLA Ford had a duty to use reasonable care to avoid causing harm. But absent physical harm, no negligence claim is stated: “[U]nder California law, it is ‘not presumed’ that a defendant owes a duty of care to guard against economic losses unaccompanied by injury to person or property.” Southern California Gas Leak Cases, supra, 7 Cal.5th at 397. Stated differently, DTLA Ford did not have “a tort duty to guard against negligently causing” “purely economic losses.” Id. at 398.

Here, because the Complaint does not allege injury to person or property, no tort duty exists.

Plaintiff’s Complaint does not allege any contractual relationship between Morales and DTLA Ford; but assuming there is one, the economic loss rule would still bar recovery.

“[T]he [economic loss] rule functions to bar claims in negligence for pure economic losses in deference to a contract between litigating parties. (See Robinson, supra, 34 Cal.4th at p. 988, 22 Cal.Rptr.3d 352, 102 P.3d 268 [‘Quite simply, the economic loss rule

“‘prevent[s] the law of contract and the law of tort from dissolving one into the other’” ’]; Aas, supra, 24 Cal.4th at pp. 635–636, 101 Cal.Rptr.2d 718, 12 P.3d 1125; accord, Erlich v. Menezes (1999) 21 Cal.4th 543, 550–551, 87 Cal.Rptr.2d 886, 981 P.2d 978 (Erlich); Bily v. Arthur Young & Co. (1992) 3 Cal.4th 370, 398, 11 Cal.Rptr.2d 51, 834 P.2d 745 (Bily); Foley v. Interactive Data Corp. (1988) 47 Cal.3d 654, 683, 254 Cal.Rptr. 211, 765 P.2d 373 (Foley).)” Sheen, supra, 12 Cal.5th at 922-923.

“[A] claim based on negligence or even strict liability will not lie where the wrong has resulted only in economic loss rather than actual damage to person or property.” Tiffin Motorhomes, Inc. v. Superior Court (2011) 202 Cal.App.4th 24, 31, fn. 11.

Morales urges in his opposition that the economic loss rule does not apply in cases involving negligent performance of services, citing North American Chemical Co. v. Superior Court (1997) 59 Cal.App.4th 764, 777-781. The facts of that case are important to the holding. North American Chemical had a contract with Harbor Pac to “bag, containerize and transport” chemicals to its customers. Harbor Pac negligently mixed the 47 metric tons of boric acid North American delivered to it with a product known as V-bor, thus contaminating the boric acid. Harbor Pac then packaged and delivered the contaminated product. When received by North American’s customers, the boric acid was unusable, and North American was required to pay damages to its customers. In other words, it was not Harbor Pac’s non-performance but its negligent performance that caused North American’s damage.

Subsequent California Supreme Court opinions, while not overruling North American, have narrowed its scope. Erlich v. Menezes (1999) 21 Cal.4th 543, 515, modified the finding in North American that the same wrong may constitute both a contract and a tort. The Erlich court stated that “conduct amounting to a breach of contract becomes tortious only when it also violates a duty independent of the contract arising from principles of tort law,” citing Applied Equipment Corp. v. Litton Saudi Arabia Ltd. (1994) 7 Cal.4th 503, 515. The Erlich court also observed that “‘[C]ourts will generally enforce the breach of a contractual promise through contract law, except when the actions that

constitute the breach violate a social policy that merits the imposition of tort remedies,’” citing Freeman & Mills, Inc. v. Belcher Oil Co. (1995) 11 Cal.4th 85, 107. Here, Plaintiff’s Complaint does not allege the violation of any duty independent of a contract.

In Aas, the California Supreme Court rejected as unpersuasive the notion that negligent performance of a contract may constitute claims for both breach of contract and a tort. “A person may not ordinarily recover in tort for the breach of duties that merely restate contractual obligations.” Aas v. Superior Court (2000) 24 Cal.4th 627, 643 (superseded by statute on other grounds).

Morales cites Sheen for its discussion of an exception to the rule for cases involving insurance, and contracts for professional services such as legal services. Sheen, supra, 12 Cal.5th at 929. This is not such a case, however. Rather, this case concerns a car repair, not insurance or professional services. Car repair does not involve characteristics that give rise to a “special or quasi-fiduciary relationship.” Id. at 930.

The decisions in Erlich, Aas, and Sheen carry great weight, as they represent the Supreme Court’s most recent discussion of the economic loss rule. Based on the findings in those cases, this Court concludes that the economic loss rule bars Morales’ negligence cause of action against DTLA Ford.

Finally, Morales seeks to rely on the principle that “the economic loss rule allows a plaintiff to recover in strict products liability in tort when a product defect causes damage to ‘other property,’ that is, property other than the product itself.” Jimenez v. Superior Court (2002) 29 Cal.4th 473, 483, italics in original. Jimenez holds that a manufacturer may be strictly liable for harm resulting to other parts of a product caused by the defective part that it manufactured. This is sometimes referred to as the “component exception.” This argument is not aligned with the pleading in this case, however. Morales has not asserted a claim for strict liability. Further, there are no allegations that DTLA Ford manufactured any part, much less a defective part that caused harm to Plaintiff’s the Vehicle.

In urging the application of the component exception in this case, Morales relies on unpublished federal cases. The theory of these cases is that negligent repair of a

subcomponent part could cause damage to other parts of the vehicle. Even if the Complaint contained such allegations, this argument would fail because the federal cases are governed by a different standard. Viveros v. Ford Motor Company (S.D. Cal. July 28, 2021) 2021 WL 5989365 was decided in the context of a joinder motion under 28 U.S.C. §1447 and concerned whether claims against an authorized repair facility were properly joined in an action against a vehicle manufacturer. The standard for such a motion is different than the standard on demurrer: “‘For the purposes of joinder under § 1447(e), a plaintiff’s claim need only be facially viable—the claim need not be plausible nor stated with particularly.’ (Citation.) ‘In considering the validity of plaintiff’s claims, “‘the [c]ourt need only determine whether the claim seems valid’” which is not the same as the standard in either a motion to dismiss or a motion for summary judgment.’ (Citations).” Id. at *6. A state law demurrer is akin to a Rule 12(b) motion to dismiss for failure to state a claim. That is, the standard on which Viveros permitted the claim (it “seems valid”) is a lower pleading standard than either that (or the equivalent) of a Code Civ. Proc. §430.10(e) standard (“the pleading does not state facts sufficient to constitute a cause of action”).

The Court notes that the California Rules of Court do not prohibit citation to unpublished federal cases, which may be cited for their persuasive authority. Airline Pilots Assn. Internat. v. United Airlines, Inc. (2014) 223 Cal.App.4th 706, 724, fn. 7. Here, however, the Court does not find Viveros (or the cases cited therein) to be persuasive. The same is true for the other cases Morales cites in support of a claim for application of the component exception. Adams v. FCA US, LLC (C.D. Cal. Sept. 21, 2020) 2020 WL 5642006, for example, was decided in the context of a “fraudulent joinder” analysis; according to that case, this is a heavy burden to meet because a defendant must show it cannot be liable on any theory. Id. at *2.

For all these reasons, the component exception theory does not assist Morales.

C. Damages Not Well Pleaded

DTLA Ford makes a second argument in support of its demurrer: “Plaintiff does not allege that he paid out-of-pocket for any repairs performed by DTLA Ford because those repairs were covered under warranty.” Memorandum of Points and Authorities at 1:23-24. Morales opposes by urging that he has adequately alleged the element of damages. Code Civ. Proc. §425.10(a) requires “A statement of the facts constituting the cause of action, in ordinary and concise language.” Arguably, the allegation that “DTLA Ford’s negligent breach was a proximate cause of Plaintiff’s damages” (Complaint at ¶54) is a legal conclusion rather than fact pleading. However, there is no real need to reach this issue because the negligence claim is barred by the economic loss rule.

IV. CONCLUSION AND ORDER

The demurrer by DTLA Ford to Plaintiff’s 4th cause of action for negligent repair is sustained on the ground that it is barred by the economic loss doctrine. It does not appear that this is a defect that can be cured by amendment. Therefore, the tentative is to sustain the demurrer without leave to amend.

Defendant DTLA Ford is ordered to serve and lodge forthwith a proposed Judgment of dismissal.

Defendant is ordered to provide notice of this ruling.

Dated: _______________________________

MARGARET L. OLDENDORF

JUDGE OF THE SUPERIOR COURT