Judge: Margaret L. Oldendorf, Case: 23AHCV02048, Date: 2024-05-06 Tentative Ruling
Case Number: 23AHCV02048 Hearing Date: May 6, 2024 Dept: P
[TENTATIVE]
ORDER OVERRULING FORD’S DEMURRER TO THE SECOND, FOURTH AND FIFTH CAUSES OF
ACTION
I. INTRODUCTION
In this lemon law action, Plaintiff Charles Gene Melikidse
alleges that he bought a 2019 Ford Ranger that was defective.
The First
Amended Complaint contains six causes of action: (1) Lemon Law- Civil Code
Section 1793.2(d), (2) Lemon Law-Civil Code Section 1793.2(b), (3) Lemon Law- Civil
Code Section 1793.2(a)(3), (4) Breach of the Implied Warranty of Merchantability,
(5) Fraudulent Inducement-Concealment, and (6) Negligent Repair. The first five
causes of action are pled against Defendant Ford Motor Company.
Ford filed the instant demurrer on November 17, 2023.
Plaintiff filed an opposition on April 23, 2024. Ford filed a reply on April
29, 2024.
Before
the Court are Ford’s challenges to the 2nd, 4th and 5th
causes of action in the First Amended Complaint.
II. DEMURRER
A. Legal Standard
Code
Civ. Proc. Section 430.10(e) provides for a demurrer on the basis that a FAC
fails to state a cause of action. (CCP § 430.10(e).) A demurrer tests the legal
sufficiency of a FAC. (Donabedian v.
Mercury Ins. Co. (2004) 116 Cal.App.4th 968, 994.) A demurrer tests the legal sufficiency of a FAC.
(Donabedian v. Mercury Ins. Co.
(2004) 116 Cal.App.4th 968, 994.) A
demurrer is treated as “admitting all material facts properly pleaded,” but not
the truth of “contentions, deductions or conclusions of law.” (Aubry v.
Tri-City Hospital Dist. (1992) 2 Cal.4th 962, 966-967.) The general rule on
demurrer is that the pleadings are “deemed to be true, however improbable they
may be.” (Del E. Webb Corp. v. Structural Materials Co. (1981) 123
Cal.App.4th 593, 604.)
Questions
of plaintiff’s ability to prove unlikely allegations are of no concern. (Committee
on Children’s Television, Inc. v. General Foods Corp. (1983) 35 Cal.3d 197,
213-214.)
Allegations
need not be accepted as true if they are contradicted by judicially noticeable
facts. (Cansino v. Bank of America (2014) 224 Cal.App.4th 1462,
1474.)
“We
treat the demurrer as admitting all the properly pleaded material facts and
consider matters which may be judicially noticed, but we do not treat as
admitted contentions, deductions, or conclusions of fact or law. (Align
Technology, Inc. v. Tran (2009) 179 Cal.App.4th 949, 958.) Further, ‘ “ ‘we
give the FAC a reasonable interpretation, reading it as a whole and its parts
in their context.’ ”’ (Ibid.) Because a demurrer tests only the legal
sufficiency of the pleading, we accept as true even the most improbable alleged
facts, and we do not concern ourselves with the plaintiff's ability to prove
its factual allegations. (Ibid.) ‘“Facts appearing in exhibits attached
to the first amended FAC also are accepted as true and are given precedence, to
the extent they contradict the allegations.”’ (Paul v. Patton (2015) 235
Cal.App.4th 1088, 1091.) Although a demurrer does not ordinarily reach
affirmative defenses, it ‘“will lie where the FAC ‘has included allegations
that clearly disclose some defense or bar to recovery.’ ”’ (Casterson v.
Superior Court (2002) 101 Cal.App.4th 177, 183, Nolte v. Cedars-Sinai
Medical Center (2015) 236 Cal.App.4th 1401, 1406. )
Code
Civ. Proc. Section 430.10(f) provides for a demurrer where a pleading is
uncertain. (CCP § 430.10(f).) Demurrers for uncertainty are disfavored and are
only sustained where a pleading is so incomprehensible a defendant cannot
reasonably respond. (A.J. Fistes v. GDL Best Contractors, Inc. (2019) 38
Cal.App.5th 677, 695; Khoury v.
Maly’s of California (1993) 14 Cal.App.4th 612, 616.)
B. Meet and Confer Requirement Met
The Declaration of Chen Fei Liu is offered in support of
counsel’s compliance with Code Civ. Proc. Section 430.41. Liu declares that he met
and conferred with Plaintiff’s counsel via telephone. (Liu Declaration ¶ 4.) Parties
did not reach an agreement.
The
meet and confer requirement has been met.
C. 2nd Cause of Action for Violation of Civil Code
Section 1793.2(b)
To plead a cause of action under Civil Code Section 1793.2(b),
Plaintiff must allege that repairs were not started on the vehicle within 30
days of Plaintiff's presentation of the vehicle to the manufacturer/dealership.
(CC § 1793.2(b).)
Here, the First Amended Complaint (FAC) contains
allegations that the repairs were not commenced within 30 days of claim
presentation. (FAC ¶ 49.) This is sufficient at the demurrer stage. (Align
Technology, Inc. v. Tran (2009) 179 Cal.App.4th 949, 958 [demurrer admits
all properly pleaded material facts for purpose of analysis], see Opposition p.
9: 22- p. 10:2.)
The demurrer to the 2nd cause of action is overruled.
D. 4th Cause of Action for Breach of Implied Warranty of
Merchantability
The statute of limitations for breach of implied warranty
of merchantability is four years. (CCP § 337, Comm. Code § 2725, Montoya v.
Ford Motor Co. (2020) 46 Cal.App.5th 493, 495.) “A breach of warranty
occurs when tender of delivery is made, except that where a warranty explicitly
extends to future performance of the goods and discovery of the breach must
await the time of such performance the cause of action accrues when the breach
is or should have been discovered.” (Comm. Code § 2725(b).)[1]
Here, Plaintiff purchased the Ford Ranger on May 6, 2019. Plaintiff
did not file his FAC until September 5, 2023. On its face, this cause of action
is time-barred.
i. Tolling
The delayed discovery rule does not apply to claims for breach
of implied warranties. (Nguyen v. Nissan North America, Inc. (2020) 487
F.Supp.3d 845, 854 fn.3.) In assessing the sufficiency of the allegations of
delayed discovery, the court places the burden on the plaintiff to ‘show
diligence’; ‘conclusory allegations will not withstand demurrer.’ ((Ibid.)”
Fox v. Ethicon Endo-Surgery, Inc. (2005) 35 Cal.4th 797, 808. See also NBC
Universal Media, LLC v. Superior Court (2014) 225 Cal.App.4th 1222, 1232.)
Here, the FAC alleges that the statutes of limitations are
tolled. (FAC ¶ 7.) However, no facts or allegations support this conclusory
allegation. (FAC ¶ 8.)
In his opposition, Plaintiff urges that the four-year
statute of limitations does not apply because the vehicle’s defects were latent
and undiscoverable at the time of sale. (See Mexia v. Rinker Boat Co.
(2009) 174 Cal.App.4th 1297, 1304.) However, case law distinguishes Mexia as
an outlier case. (See Marchante v. Sony Corp. of America, Inc. (2011)
801 F. Supp.2d 1013, 1022 [“Mexia enjoys the limelight as a case
‘contrary to established California case law with respect to the duration of
the implied warranty of merchantability.’”])
Secondly, Plaintiff argues that the statute of limitations
was tolled by Emergency Rule 9. Emergency Rule 9 provides that statutes of
limitations for civil causes of action were unilaterally tolled from April 6, 2020,
to October 1, 2020. (See California Rules of Court Emergency Rule 9(a).) The
Court finds that this cause of action was tolled by Emergency Rule 9 and is
therefore timely.
The demurrer to the 4th cause of action for breach of the
implied warranty of merchantability is overruled.
E.
Demurrer to the 5th Cause of Action for Fraudulent Concealment
i. Statute of Limitations
The
statute of limitations for fraud is three years. (CCP § 338(d).) This cause of
action does not accrue until the Plaintiff discovers the facts constituting the
fraud. (Id.)
Here,
the FAC alleges Ford committed fraud by not disclosing that the vehicle’s
transmission was defective. (FAC ¶ 62.) The FAC alleges that Plaintiff did not
discover the fraud until shortly before the FAC was filed, after Ford attempted
to repair the vehicle. (See FAC ¶ 8.) In his opposition, Plaintiff clarifies
that these repair attempts occurred in 2022. (See Opposition p. 11: 7-8.)
The
Court declines to sustain the demurrer to the 5th cause of action on this
basis.
ii.
Fraud based on Misrepresentation
Ford is correct that fraud is subject to a
heightened pleading standard. Each element must be pleaded with particularity.
(Glaski v. Bank of America (2013) 218 Cal.App.4th 1079, 1090; Heritage
Pacific Financial, LLC v. Monroy (2013) 215 Cal.App.4th 972, 989.) Fraud
actions are subject to “strict requirements of particularity in pleading.
. . . Accordingly, the rule is everywhere followed that fraud must be
specifically pleaded. The effect of this rule is twofold: (a) General pleading
of the legal conclusion of ‘fraud’ is insufficient; the facts constituting the
fraud must be alleged. (b) Every element of the cause of action for fraud must
be alleged in the proper manner (i.e., factually and specifically), and the
policy of liberal construction of the pleadings ... will not ordinarily be
invoked to sustain a pleading defective in any material respect.” (Committee
on Children’s Television, Inc. v. General Foods Corp. (1983) 35 Cal.3d 197,
216, superseded by statute on other grounds.) A fraud cause of action must
contain: “(1) a knowingly false representation by the defendant; (2) an intent
to deceive or induce reliance; (3) justifiable reliance by the plaintiff; and
(4) resulting damages.” (Service by Medallion, Inc. v. Clorox Co. (1996)
44 Cal.App.4th 1807, 1816.) Fraud based on concealment requires that “(1) the
defendant must have concealed or suppressed a material fact, (2) the defendant
must have been under a duty to disclose the fact to the plaintiff, (3) the
defendant must have intentionally concealed or suppressed the fact with the
intent to defraud the plaintiff, (4) the plaintiff must have been unaware of
the fact and would not have acted as he did if he had known of the concealed or
suppressed fact, and (5) as a result of the concealment or suppression of the
fact, the plaintiff must have sustained damage.” (Bigler-Engler v.
Breg, Inc. (2017) 7 Cal.App.5th 276, 310-311.) Less specificity is
required to plead fraud by concealment. (Ibid.) “Even under
the strict rules of common law pleading, one of the canons was that less
particularity is required when the facts lie more in the knowledge of the
opposite party.” (Alfaro v. Community Housing Improvement System &
Planning Assn., Inc. (2009) 171 Cal.App.4th 1256, 1384.)
Plaintiff
alleges Defendant knew since 2018 that the transmission was defective, namely that
the transmission may cause harsh or delayed shifts. (FAC ¶¶ 29-40, 32, 60.)
These defects allegedly expose Plaintiff, his passengers, and others on the
road to a serious risk of accident and injury. (Id. at ¶ 64.)
Plaintiff did not know about these defects and problems, and Defendant did not
disclose the defects when Plaintiff purchased the vehicle. (Id. at
¶¶ 63-66.) Further, Plaintiff alleges that Defendant Ford had exclusive
knowledge of the transmission issues and had a duty to disclose such
information. (Id. at ¶ 68.) As a result, Plaintiff has suffered actual
damages. (Id. at ¶ 73.)
These
allegations are specific enough to allege the information that was concealed,
and the danger the defect posed. (See Jones v. ConocoPhillips Co.
(2011) 198 Cal.App.4th 1187, 1199-1200.)
iii. Transactional Relationship is Sufficiently Alleged
A
duty to disclose does not exist in all circumstances. The tort of fraudulent
concealment is only viable where it does. “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.]”’ (LiMandri v. Judkins (1997) 52
Cal.App.4th 326, 336.)
Where
there is no fiduciary relationship, a duty to disclose exists only where the
parties are in a direct transactional relationship. (CACI 1901; Hoffman v.
162 North Wolfe, LLC (2014) 228 Cal.App.4th 1178, 1187.) Dhital v.
Nissan North America, Inc. (2022) 84 Cal.App.5th 828, 844 provides that
allegations that a plaintiff was sold the vehicle by defendant’s authorized
dealership are sufficient to prove the existence of a transactional
relationship. Specifically, the Court in Dhital held that the fraudulent
concealment cause of action was not barred by failure to plead a buyer-seller
relationship, as the plaintiffs alleged in that case that they bought the car
from an authorized dealership; an express warranty accompanied the vehicle; and
that the dealerships were the authorized agents of the manufacturer. (Id.)
Here,
the FAC contains allegations that Ford Motor Co. entered into a warranty
contract with Plaintiff. (FAC ¶ 9.) Alternatively, the FAC contains allegations
that Ford had exclusive knowledge of the transmission defect. (See FAC ¶
29-40.) Thus, a transactional relationship is adequately alleged.
Because the FAC
alleges the existence of a transactional relationship between the parties that
supports the existence of a duty to disclose, fraudulent concealment is
adequately alleged.
iv. Economic Loss Rule Does Not Bar the Fraudulent
Concealment Claim
Lastly, Ford urges that the fifth cause of action for
fraudulent concealment is barred by the economic loss rule. The economic loss
doctrine bars claims for negligently inflicted economic damages without claims
of physical or property damage. (Sheen v. Wells Fargo Bank, N.A. (2022)
12 Cal.5th 905, 922, internal citations omitted; see also Robinson
Helicopter Co., Inc. v. Dana Corp. (2004) 34 Cal.4th 979, 988.) The Court disagrees.
Robinson
permitted the recovery of economic damages stemming from a fraud that was
separate and apart from the breach of contract. There, a helicopter
manufacturer sued a parts supplier that not only breached the contract but was
found to have committed fraud by, among other things, issuing false
certificates of conformance.
“We
hold the economic loss rule does not bar Robinson’s fraud and intentional
misrepresentation claims because they were independent of Dana’s breach of
contract. Because Dana’s affirmative intentional misrepresentations of fact
(i.e., the issuance of the false certificates of conformance) are dispositive
fraudulent conduct related to the performance of the contract, we need not
address the issue of whether Dana’s intentional concealment constitutes an
independent tort.” (Id. at 991, internal citations omitted.)
In
the context of fraudulent concealment claims against automobile manufacturers, Dhital
v. Nissan North America (2022) 84 Cal.App.5th 828 is instructive. As review
has been granted, Dhital is not binding authority but may have
persuasive value. (CRC 8.1115(e)(1).) The plaintiffs in Dhital sued
Nissan for Song-Beverly violations. They alleged the transmission was faulty
and unreliable, and that it placed them at risk of an accident though they did
not allege they had been injured. The pleading included a claim for fraudulent
inducement. The plaintiffs alleged that Nissan concealed defects it had a duty
to disclose to induce the purchase. The trial court sustained Nissan’s demurrer
to the fraudulent inducement cause of action on the basis that it was barred by
the economic loss doctrine. The appellate court reversed, holding that the
fraudulent inducement claim was not barred.
“The
Robinson court also described instances where tort damages are permitted
in contract cases. ‘“Tort damages have been permitted in contract cases where a
breach of duty directly causes physical injury; for breach of the covenant of
good faith and fair dealing in insurance contracts; for wrongful discharge in
violation of fundamental public policy; or where the contract was fraudulently
induced.” ‘[I]n each of these cases, the duty that gives rise to tort liability
is either completely independent of the contract or arises from conduct which
is both intentional and intended to harm.’” (Robinson, supra, 34
Cal.4th at pp. 989-990, internal citations omitted.)
“Here,
the fraudulent inducement exception to the economic loss rule applies.
Plaintiffs allege that Nissan, by intentionally concealing facts about the
defective transmission, fraudulently induced them to purchase a car. Fraudulent
inducement is a viable tort claim under California law.” (Dhital, supra,
84 Cal.App.5th at 838.)
The
First Amended Complaint alleges that Ford knowingly and intentionally concealed
material facts (FAC ¶ 69) and that this concealment fraudulently induced
Plaintiff to purchase his vehicle. (FAC ¶ 74.)
For
the time being, and unless and until Dhital is reversed, the Court finds
it persuasive and overrules the demurrer argument based on the economic loss
doctrine.
III. CONCLUSION
AND ORDER
Ford’s
demurrers to the 2nd, 4th and 5th causes of action are overruled.
Defendant
Ford Motor Company is given ten days to answer.
Plaintiff Charles Melikidse to give notice of this order.
Dated: May 3, 2024 _______________________________
JARED D. MOSES
JUDGE
OF THE SUPERIOR COURT