Judge: Mark A. Young, Case: 23SMCV00895, Date: 2023-08-23 Tentative Ruling
Case Number: 23SMCV00895 Hearing Date: March 27, 2024 Dept: M
CASE NAME: Lewis v.
General Motors LLC
CASE NO.: 23SMCV00895
MOTION: Demurrer
and Motion to Strike the First Amended Complaint
HEARING DATE: 3/27/2024
Legal
Standard
A
demurrer for sufficiency tests whether the complaint states a cause of action.
(Hahn v. Mirda (2007)
147 Cal.App.4th 740, 747.) When considering demurrers, courts read the
allegations liberally and in context. In a demurrer proceeding, the defects
must be apparent on the face of the pleading or via proper judicial notice. (Donabedian v. Mercury Ins. Co.
(2004) 116 Cal.App.4th 968, 994.) A demurrer tests the pleadings alone and not
the evidence or other extrinsic matters. Therefore, it lies only where the
defects appear on the face of the pleading or are judicially noticed. (CCP §§
430.30, 430.70.) At the pleading stage, a plaintiff need only allege ultimate
facts sufficient to apprise the defendant of the factual basis for the claim
against him. (Semole v. Sansoucie
(1972) 28 Cal. App. 3d 714, 721.) A “demurrer does not, however, admit
contentions, deductions or conclusions of fact or law alleged in the pleading,
or the construction of instruments pleaded, or facts impossible in law.” (S. Shore Land Co. v. Petersen
(1964) 226 Cal.App.2d 725, 732, internal citations omitted.)
A
special demurrer for uncertainty is disfavored and will only be sustained where
the pleading is so bad that defendant cannot reasonably respond—i.e., cannot
reasonably determine what issues must be admitted or denied, or what counts or
claims are directed against him/her. (CCP § 430.10(f); Khoury v. Maly’s
of Calif., Inc. (1993) 14 Cal.App.4th 612, 616.) Moreover, even if
the pleading is somewhat vague, “ambiguities can be clarified under modern
discovery procedures.” (Ibid.)
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. (CCP § 435(b)(1); Cal. Rules of Court, Rule
3.1322(b).) The court may, upon a motion or at any time in its discretion and
upon terms it deems proper: (1) strike out any irrelevant, false, or improper
matter inserted in any pleading; or (2) strike out all or any part of any
pleading not drawn or filed in conformity with the laws of California, a court
rule, or an order of the court. (CCP §§ 436(a)-(b); Stafford v. Shultz (1954) 42 Cal.2d 767, 782 [“Matter in a
pleading which is not essential to the claim is surplusage; probative facts are
surplusage and may be stricken out or disregarded”].)
“Liberality in permitting amendment
is the rule, if a fair opportunity to correct any defect has not been given.” (Angie
M. v. Superior Court (1995) 37 Cal.App.4th 1217, 1227.) It is an abuse of
discretion for the court to deny leave to amend where there is any reasonable
possibility that plaintiff can state a good cause of action. (Goodman v.
Kennedy (1976) 18 Cal.3d 335, 349.) The burden is on plaintiff to
show in what manner plaintiff can amend the complaint,
and how that amendment will change the legal effect of the
pleading. (Id.)
Analysis
Defendant General Motors LLC demurs the claims for fraud, negligent misrepresentation,
and a violation of the Unfair Competition Law in Plaintiff Daniel Lewis’s First
Amended Complaint (FAC). Defendant also moves to strike the related claim for
punitive damages.
Fraud Based
Causes of Action.
As stated, Defendant demurs to the two fraud-based
causes of action – fraud and negligent misrepresentation. The elements
of fraud are: “(a) misrepresentation (false representation, concealment, or
nondisclosure); (b) knowledge of falsity (or ‘scienter’); (c) intent to
defraud, i.e., to induce reliance; (d) justifiable reliance; and (e) resulting
damage.” (Charnay v. Cobert (2006) 145 Cal.App.4th 170, 184.) In
California, fraud, including negligent misrepresentation, must be pled with
specificity. (Small v. Fritz Companies, Inc. (2003) 30 Cal.4th
167, 184.) “The particularity demands that a plaintiff plead facts which show
how, when, where, to whom, and by what means the representations were
tendered.” (Cansino v. Bank of America (2014) 224 Cal.App.4th 1462,
1469.) Negligent misrepresentation requires the defendant to make
false statements believing them to be true, but without reasonable ground for
such belief. (Bily v. Arthur Young & Co. (1992) 3 Cal.4th 370, 407.)
The Court previously sustained Defendant’s demurrer to the initial
complaint for failure to allege sufficient facts under the heightened pleading
standard for fraud. The Court noted that the complaint relied on active
misrepresentations by an alleged agent and advertisements, and therefore had to
allege the fraud with specificity, i.e., the allege the who-what-when-where-how
of the misrepresentations. Defendant
argues that the FAC still fails to meet the heightened pleading standard
because Plaintiff only offers conclusions based on alleged representations made
by an unidentified person at the time Plaintiff was leasing the Subject
Vehicle. (FAC ¶¶ 8, 29-42.)
The FAC alleges that sometime prior to June 21, 2021, Plaintiff reviewed GM’s
advertisements and publications which asserted that the 2021 Chevrolet Bolt EV
could travel 259 miles on a single charge, that it could be charged indoors at
his home, that the vehicle was safe, and that it if it had a defect during the
express warranty period, the manufacturer would repair it at no charge to
Plaintiff. (FAC ¶ 8.) On June 21, 2021,
Plaintiff travelled to an authorized Chevrolet dealership to acquire a safe and
reliable electric vehicle that would be able to go at least 250 miles per
charge. (¶ 8.) Plaintiff met with an unnamed salesperson who was authorized to
speak on behalf of GM with respect to the Chevrolet vehicles the dealership was
selling. (Id.) The salesperson spoke to Plaintiff about the Subject Vehicle,
how far it could drive on a single charge, and all of its features and
warranties. (Id.) The salesperson’s oral statements “reiterated the written
representations Manufacturer made in its advertisements and publications
regarding the 2021 Chevrolet Bolt EV, i.e., that the 2021 Chevrolet Bolt EV
could travel 259 miles on a single charge, that it could be charged indoors at
his home, that the Vehicle was safe, and that it if it had a defect during the
express warranty period, Manufacturer would repair it at no charge to
Plaintiff.” (¶¶ 8, 39.)
The FAC thereby establishes, to a reasonable degree of particularity, several
of the heightened pleading factors for fraud. The FAC establishes that on June
21, 2021 (when), at the Culver City Chevrolet dealership (where), an unnamed,
authorized sales representative of GM made certain oral representations (by
what means) directly to Plaintiff (to whom) that the 2021 Chevrolet Bolt EV
could travel 259 miles on a single charge, that it could be charged indoors at
his home, that the vehicle was safe, and that it if it had a defect during the
express warranty period, the manufacturer would repair it at no charge.
However, the FAC does not allege the names or any other identifying
information regarding the person who made the representations, beyond the fact
that they were an authorized salesperson. The FAC also does not allege what particular
authority, if any, the representative had to make such representations on
behalf of GM. (See Tarmann v. State Farm Mut. Auto. Ins. Co., (1991) 2
Cal. App. 4th 153, 157 [a fraud action against a corporation requires
the plaintiff to allege the names of the persons who made the allegedly
fraudulent representations and their authority to speak, beyond general
allegations that the persons were “authorized
agents” and were “adjustors and/or claims supervisors/managers”].) Citing to Tarmann,
Plaintiff asserts he does not have to allege the specific identity of the agent
because “[t]he requirement of specificity is relaxed when the allegations
indicate that the defendant must necessarily possess full information
concerning the facts of the controversy or when the facts lie more in the
knowledge of the opposite party.” (Id., at 158) However, Tarmann
specifically rejected the application of this rule, holding “State
Farm has no more reason to know who made the allegedly false representations to
Tarmann than Tarmann.” (Id.) The
same is true here. Plaintiff is in the position to state who made the
representations on June 21, 2021. Thus, further facts are required to meet the
heightened pleading standard for the fraud-based claims.
Furthermore, the FAC does not establish that GM intended to induce
reliance on the representations. The FAC only alleges that GM “intentionally
and knowingly” misrepresented and concealed the material facts, that GM never
intended to replace the battery defect through the warranty, and that GM
intended to defraud Plaintiff. (FAC ¶¶ 30-34.) However, this is not the intent
required for actionable fraud. Therefore, further allegations are required to
establish GM’s intent to induce reliance.
Otherwise, the claims are well-stated. Plaintiff establishes that he
relied on the representations made by GM’s agent that the Subject Vehicle’s
range on a single charge was 259 miles, and that it could be charged at home
indoors in order to enter into the lease at issue. (FAC ¶¶ 8, 41.) Plaintiff
would not have leased the vehicle but for the representations regarding the
Bolt’s range. (¶¶ 11-12.) Plaintiff alleges that these representations were
false because GM was aware of the safety issues plaguing batteries in Bolt vehicles,
including the 2021 Bolt, but chose only to issue recalls and notices for the
2021 Bolt after Plaintiff’s purchase. (¶¶ 13-24.) Such facts demonstrate
that, prior to GM’s alleged representations to Plaintiff, GM was aware of the
alleged design defects with the battery in the 2021 Bolt, and intentionally
limited the Bolt’s range to less than the advertised range.
Accordingly, the demurrer is SUSTAINED with leave to amend as to the
first two causes of action.
UCL
Defendant argues that the UCL claim alleges unlawfulness without
sufficient facts, as there are no facts showing how, where, to whom, and by what
means the representations that allegedly violated the UCL were tendered by GM
to Plaintiff. However, this misreads the FAC as the UCL claim is not solely
premised on fraudulent conduct.
A demurrer is properly sustained under the “unlawful” prong if a
complaint “identifies no particular section of the statutory scheme which was
violated.” (Khoury v. Maly’s of Calif., Inc. (1994) 14 Cal.App.4th 612,
619.) Here, Plaintiff’s UCL claim alleges that GM’s conduct was “unlawful
because, as set forth herein, it violates the Song-Beverly Consumer Warranty
Act and the Consumer Legal Remedies Act”. (FAC ¶ 46.)
GM fails to challenge the allegations that they violated the Song-Beverly
Act, and instead only focuses on the failure to meet the heightened pleading
standards of fraud. However, a “fraudulent business practice” under section
17200 ‘is not based upon proof of the common law tort of deceit or deception,
but is instead premised on whether the public is likely to be deceived.’” (Pastoria
v. Nationwide Ins. (2003) 112 Cal.App.4th 1490, 1498.) GM does not cite any
authority which suggests that UCL claims would be subject to the same
heightened pleading standard as common law fraud.
GM also argues that Plaintiff lacks standing to recover under the UCL. A private party has standing to bring a UCL claim if he or
she has suffered injury in fact and has lost money or property as a result of
unfair competition. (Law Offices of Mathew Higbee v. Expungement Assistance
Services (2013) 214 Cal.App.4th 544, 555-56.) Any “identifiable trifle [of
injury] is enough for standing . . ..” (Id. at 561; see Kwikset
Corp. v. Superior Court (2011) 51 Cal.4th 310, 324 [a plaintiff must have
lost money or property to have standing to allege a UCL claim].) The FAC alleges sufficient facts for UCL standing. As to the fraud prong,
Plaintiff leased the vehicle in reliance on the alleged misrepresentations,
thereby losing money and suffering an injury in fact. (FAC ¶47.) As to
the unlawful prong, Plaintiff’s vehicle has material and unrepaired defects in
violation of the Song-Beverly Act. This is a sufficient, identifiable injury
for standing.
Accordingly, the demurrer is OVERRULED as to the third cause of action.
Motion to Strike
The motion to strike punitive damages is MOOT per the ruling on demurrer.
Plaintiff has 10 days to file an amended complaint.