Judge: Mark A. Young, Case: 23SMCV00933, Date: 2025-01-14 Tentative Ruling
Case Number: 23SMCV00933 Hearing Date: January 14, 2025 Dept: M
CASE NAME: Amaya v. General Motors LLC, et al.
CASE NO.: 23SMCV00933
MOTION: Demurrer to the Second Amended Complaint
HEARING DATE: 1/14/2025
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
Statute of Limitations
Defendant argues that the three-year statute of limitations has run with respect to the fraud cause of action. Unless a complaint affirmatively discloses on its face that the statute of limitations has run, a demurrer must be overruled. (Lockley v. Law Office of Cantrell, Green, Pekich, Cruz & McCort (2001) 91 Cal.App.4th 875, 881.) “Generally, a cause of action accrues and the statute of limitation begins to run when a suit may be maintained. Ordinarily this is when the wrongful act is done and the obligation or the liability arises . . .. In other words, a cause of action accrues upon the occurrence of the last element essential to the cause of action. [Citation.]” (Cobb v. City of Stockton (2011) 192 Cal.App.4th 65, 72-73, alterations and internal quotation marks omitted.)
The statute of limitations for fraud is three years. (CCP § 338(d).) “In California, fraud must be pled specifically; general and conclusory allegations do not suffice. ‘Thus “ ‘the policy of liberal construction of the pleadings ... will not ordinarily be invoked to sustain a pleading defective in any material respect.’ ” (Lazar v. Superior Court (1996) 12 Cal.4th 631, 645, citations omitted.) Under the so-called “discovery rule,” the accrual of the statute is tolled until a plaintiff discovers, or has reason to discover, the cause of action. The discovery rule protects those who are ignorant of their cause of action through no fault of their own. (April Enterprises, Inc. v. KTTV (1983) 147 Cal.App.3d 805, 832.) “The provision tolling operation of the statute until discovery of the fraud has long been treated as an exception and, accordingly, this court has held that if an action is brought more than three years after commission of the fraud, plaintiff has the burden of pleading and proving that he did not make the discovery until within three years prior to the filing of his complaint.” (Hobart v. Hobart Estate Co. (1945) 26 Cal.2d 412, 437.) Thus, to avoid the statute of limitations bar, a plaintiff must specifically plead facts to show (1) the time and manner of discovery and (2) the inability to have made earlier discovery despite reasonable diligence. (CAMSI IV v. Hunter Technology Corp. (1991) 230 Cal.App.3d 1525, 1536-37.) “Mere conclusory assertions that delay in discovery was reasonable are insufficient and will not enable the complaint to withstand general demurrer.” (Id.)
On June 28, 2019, Plaintiff travelled to an authorized Chevrolet dealership and leased the subject vehicle, a 2019 Chevrolet Bolt EV. (SAC ¶8.) GM delivered the vehicle to Plaintiff “with serious defects and nonconformities to warranty” including the battery defect. (SAC ¶ 10.) Unbeknownst to Plaintiff, the battery in the vehicle has a defect which may cause a fire. (¶ 11.) This resulted in the manufacturer issuing numerous recalls, reducing the charge capacity, reducing the distance the vehicle can be driven on a single charge, and manufacturer advising owners of the vehicle not to charge the vehicle in their garages due to the risk of fire. (Id.) The SAC alleges that Plaintiff would not have leased the vehicle if she knew of the battery defect. (¶12.) Defendant was aware of the defective batteries plaguing Chevrolet Bolt vehicles as early as 2017. (¶ 13.) These allegations show that all elements of fraud were complete on June 28, 2019. Thus, the three-year statute of limitations expired three years later on June 28, 2022. Plaintiff did not file the instant fraud action until eight months later, on February 28, 2023.
However, Plaintiff alleges sufficient facts for delayed discovery. On November 13, 2020, GM announced to its authorized dealerships its intent to recall over 50,000 Chevrolet Bolt vehicles because the battery pack posed a risk of fire when charged to full, or very close to full, capacity. (SAC ¶19.) The purpose of the recall was to install an interim software fix that called for reprogramming the hybrid propulsion system control module to limit the battery’s range to approximately 214 miles on a single battery charge, a decrease of range of approximately 10%. (¶ 20.) This recall was the first time GM made the public, including Plaintiffs, aware of the defective battery in Chevrolet Bolt vehicles. (¶ 21.) The Vehicle’s battery did not exhibit any signs of being susceptible to catching fire prior to GM’s announcement of the recall. (Id.) Plaintiff had no way of discovering that the battery in their Vehicle was defective and could cause fire prior to GM’s announcement of the November 13, 2020 recall. (Id.) Plaintiff thus alleges that she discovered the truth of the concealed battery defect on November 13, 2020, within three years of filing of this suit on February 28, 2023. As such, the fraud cause of action is not barred by the statute of limitations on the face of the complaint.
Particularity
Defendant argues that the fraud claim fails because Plaintiff does not identify the alleged misrepresentations with specificity, including who at GM made the alleged misrepresentations, their authority to speak on behalf of GM, and when/where such misrepresentations were made. GM also argues that there are insufficient facts showing knowledge about alleged defects in Plaintiff’s Bolt, and GM’s intent to induce reliance by Plaintiff to lease the specific Bolt at
issue.
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.) “[T]o establish fraud through nondisclosure or concealment of facts, it is necessary to show the defendant ‘was under a legal duty to disclose them.’” (OCM Principal Opportunities Fund v. CIBC World Markets Corp. (2007) 157 Cal.App.4th 835, 845.) Nondisclosure may constitute actionable fraud when: (1) there is a fiduciary relationship between the parties; (2) the defendant had exclusive knowledge of material facts not known to the plaintiff; (3) the defendant actively conceals a material fact from the plaintiff; and (4) the defendant makes partial representations but also suppresses some material facts. (Los Angeles Memorial Coliseum Commission v. Insomniac, Inc. (2015) 233 Cal.App.4th 803, 831.)
Generally, 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.) However, less specificity is required to plead fraud by concealment. (Jones v. ConocoPhillips Co. (2011) 198 Cal.App.4th 1187, 1199.) “As one court has aptly observed, ‘it is harder to apply [the requirement of specificity] to a case of simple nondisclosure. “How does one show ‘how’ and ‘by what means’ something didn't happen, or ‘when’ it never happened, or ‘where’ it never happened?” ’ ” (Ibid; see also Alfaro v. Community Housing Improvement System & Planning Assn., Inc.¿(2009) 171¿Cal.App.4th1356, 1384; see Committee on Children’s Television, Inc. v. General Foods Corp. (1983) 35 Cal.3d 197, 217 [“ ‘[e]ven 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 ...’”].)
The SAC alleges a theory of fraud by concealment. As noted, GM knew of the defective batteries in the 2017 to 2019 Chevrolet Bolt vehicles, including Plaintiff’s vehicle. (¶¶ 18, 28, 34.) Despite this knowledge, GM concealed the defect from Plaintiff, never intending to replace the battery defect during the relevant warranty periods. (Id.) GM owed a duty to disclose the battery defect and its corresponding safety hazard to Plaintiff because GM possessed superior and exclusive knowledge regarding the defect. (¶ 35.) GM knew its concealment and suppression of the battery defect would sell more vehicles and encourage Plaintiff to purchase the defective vehicle. (¶ 36.) Plaintiff was unaware of GM’s concealment of the battery defect and would not have leased the Vehicle but for GM’s omissions and concealment of material facts regarding the nature and quality of the Vehicle and existence of the battery defect. (¶ 37.) Plaintiff has therefore pled a duty for GM to disclose the truth of the known battery defect, and GM’s breach of said duty by failing to disclose this safety defect at the time of purchase.
Accordingly, the demurrer is OVERRULED.
UCL
Defendant demurs to the UCL claim. Defendant argues that the UCL claim fails to plead fraud by alleging facts showing how, where, to whom, and by what means the representations that allegedly violated the UCL were tendered by GM to Plaintiff, how these alleged false and misleading statements were likely to deceive a reasonable consumer, the names of the persons who made the misrepresentations, and their authority to speak on behalf of GM.
First, Defendant cites no authority that a UCL claim would be subject to the heightened pleading standard of common law fraud. Business and Professions Code section 17200 prohibits “any unlawful, unfair or fraudulent business act or practice.” To bring a claim under the fraud prong, a plaintiff must allege an affirmative misrepresentation, conduct, or business practice on the part of a defendant; or an omission in violation of a defendant’s duty to disclose; and that is likely to deceive members of the public. (Buller v. Sutter Health (2008) 160 Cal.App.4th 981, 986; Hypertouch, Inc. v. ValueClick, Inc. (2011) 192 Cal.App.4th 805, 839-840 [whether statements or advertisements are likely to deceive a reasonable consumer, is a fact question].) The fraud prong of the UCL is less rigorous than common law fraud, as common law fraud requires allegations of actual falsity and reasonable reliance while fraud under UCL does not. (Morgan v. AT&T Wireless Services, Inc. (2009) 177 Cal.App.4th 1235, 1256.) Even if the pleading standard applied, the Court has already explained why the pleading meets the pleading standard for common law prong. Moreover, the SAC establishes all that is required for the UCL fraud cause of action: an omission in violation of GM’s duty to disclose. The SAC alleges facts which, if believed, show that GM’s deception is likely to deceive a member of the public. (SAC ¶¶ 8-21.)
Defendant also ignores the unlawfulness prong. “An unlawful business practice or act is an act or practice, committed pursuant to business activity, that is at the same time forbidden by law.” (Klein v. Earth Elements, Inc. (1997) 59 Cal.App.4th 965, 969.) A violation of other laws is deemed independently actionable under the UCL. (Law Offices of Mathew Higbee v. Expungement Assistance Services (2013) 214 Cal.App.4th 544, 554.) “‘Virtually any law—federal, state or local—can serve as a predicate for a section 17200 action.’” (Id.) The SAC alleges just that: violations of the Song-Beverly Consumer Warranty Act. (SAC ¶¶ 41, 48-88.) This provides independent grounds for the UCL cause of action.
Plaintiff has standing to assert the instant UCL claim. Private parties can sue under the UCL only if,¿as a result of¿unfair competition, they have 1) suffered¿injury in fact,¿and 2) suffered some form of economic injury. (Bus. & Prof. Code § 17204; see¿Kwikset Corp. v. Superior Court (2011) 51 Cal.4th 310, 322.) There must be a causal link between the alleged unfair competition and plaintiff's injury; plaintiff must have lost money or property¿because of¿the challenged act. (Hall v. Time Inc. (2008) 158 Cal.App.4th 847, 855.) “The phrase ‘as a result of’ in its plain and ordinary sense means ‘caused by’ and requires a showing of a causal connection or reliance on the alleged misrepresentation.” (Kwikset Corp., supra, 51 Cal.4th at 326.) Plaintiff alleges an injury in fact. As a result of GM’s fraudulent business practices, Plaintiff purchased the defective Vehicle that she otherwise would not have purchased. (¶¶ 8-12.)
Accordingly, the demurrer is OVERRULED as to this cause of action.
Motion to Strike - Punitive Damages
Defendant argues that Plaintiff has not alleged facts showing that GM “intended . . . to cause injury to [Plaintiff],” or engaged in “despicable conduct . . . with a willful and conscious disregard of the rights or safety of others,” or “subject[ed] [Plaintiff] to cruel and unjust hardship in conscious disregard of [his] rights,” or “intentional[ly] misrepresent[ed], decei[ved], or conceal[ed] . . . a material fact known to [GM] with the intention . . . of . . . depriving [Plaintiff] of property or legal rights or otherwise causing injury.”
Civil Code section 3294 defines fraud “an intentional misrepresentation, deceit, or concealment of a material fact known to the defendant with the intention on the part of the defendant of thereby depriving a person of property or legal rights or otherwise causing injury.”
As discussed, the SAC alleges an intentional omission on the part of GM with the intent of depriving Plaintiff of property, legal rights, or otherwise causing injury. Defendant had a duty to disclose known material safety defects due to its superior and exclusive knowledge regarding the battery defect. (SAC ¶ 35.) Defendant “intentionally and knowingly concealed, suppressed and/or omitted material facts” including the presence of the defective high voltage battery pack. (SAC ¶¶ 11, 31-33.) Defendant “intended to defraud Plaintiff” because it knew its concealment and suppression of material facts were false and misleading, that nondisclosure of the battery defect would sell more vehicles, and would specifically “encourage Plaintiff to purchase the defective vehicle.” (¶ 36.) Plaintiff was unaware of the truth, and would not have purchased the vehicle if she knew the truth of the battery defect. (¶ 37.) Thus, Plaintiff was harmed by GM’s fraudulent and intentional omission. The “fraud” element of punitive damages is therefore sufficiently pled.
Accordingly, the motion is DENIED.