Judge: Maurice A. Leiter, Case: 21STCV40089, Date: 2022-10-18 Tentative Ruling

Case Number: 21STCV40089    Hearing Date: October 18, 2022    Dept: 54

Hearing Date: October 18, 2022

Department 54, Judge Maurice A. Leiter

Demurrer to First Amended Complaint and Motion to Strike

Moving Party: Defendant General Motors, LLC

Responding Party: Plaintiffs Ramon Ortega and Donna Ortega

T/R:    DEFENDANT’S DEMURRER IS SUSTAINED WITHOUT LEAVE TO AMEND.

THE MOTION TO STRIKE IS MOOT.

DEFENDANT TO FILE AND SERVE AN ANSWER TO THE SECOND AMENDED COMPLAINT WITHIN 15 DAYS OF NOTICE OF RULING.

            DEFENDANT TO NOTICE.

If the parties wish to submit on the tentative, please email the courtroom at¿SMCdept54@lacourt.org¿with notice to opposing counsel (or self-represented party) before 8:00 am on the day of the hearing.

            The Court considers the moving papers, opposition, and reply.

BACKGROUND

This is a lemon law action arising out of Plaintiffs’ purchase of a 2018 Chevrolet Bolt EV manufactured and distributed by Defendant General Motors LLC. Plaintiffs brings this action for violations of the Song-Beverly Act and fraudulent concealment.

ANALYSIS

A demurrer to a complaint may be taken to the whole complaint or to any of the causes of action in it.  (CCP § 430.50(a).)  A demurrer challenges only the legal sufficiency of the complaint, not the truth of its factual allegations or the plaintiff's ability to prove those allegations.  (Picton v. Anderson Union High Sch. Dist. (1996) 50 Cal. App. 4th 726, 732.)  The court must treat as true the complaint's material factual allegations, but not contentions, deductions or conclusions of fact or law.  (Id. at 732-33.)  The complaint is to be construed liberally to determine whether a cause of action has been stated.  (Id. at 733.)

Defendant demurs to the fifth cause of action for fraud by concealment.

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.) California law recognizes four circumstances in which a 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.”  (Heliotis v. Schuman (1986) 181 Cal. App. 3d 646, 651.) 

Generally, “[i]n California, fraud must be pled specifically; general and conclusory allegations do not suffice.” (Alfaro v. Community Housing Improvement System & Planning Assn., Inc. (2009) 171 Cal.App.4th 1356, 1384, internal quotations omitted.) Fraudulent concealment need not be pled with the same degree of specificity, as “it appears from the nature of the allegations that the defendant must necessarily possess full information concerning the facts of the controversy,” and it is necessarily difficult to specifically plead something that did not occur. (Id.) However, some level of specificity is required. (See Blickman Turkus, LP v. MF Downtown Sunnyvale, LLC (2008) 162 Cal.App.4th 858, 878 [“Concealment is a species of fraud, and ‘[f]raud must be pleaded with specificity.’”])

Defendant argues that Plaintiffs have failed allege fraud with the requisite specificity. Plaintiffs allege that Defendant continually failed to disclose to consumers the engine defects as evidenced by the numerous technical service bulletins, customer complaints, etc. This is insufficiently specific to establish concealment. The FAC asserts that Defendant knew of the defect through pre-production and post-production testing data, early consumer complaints, warranty data and other testing. This is again too broad to establish fraud.

Defendant also contends that Plaintiffs’ fraud claims are barred by the “economic loss rule.”  “[T]he economic loss rule provides: [W]here a purchaser's expectations in a sale are frustrated because the product he bought is not working properly, his remedy is said to be in contract alone, for he has suffered only ‘economic’ losses.”  (Robinson Helicopter Co., Inc. v. Dana Corp. (2004) 34 Cal. 4th 979, 988 [internal quotations omitted].)  However, “the economic loss rule does not bar [plaintiff’s] fraud and intentional misrepresentation claims because they were independent of [defendant’s] breach of contract.”  (Id. at 991.)

Plaintiffs assert that intentional concealment falls within the fraud exception to the economic loss rule and therefore Plaintiffs’ concealment claim is not barred. Courts are split on this issue. (See e.g. Rattagan v. Uber Technologies, Inc., 19 F.4th 1188, 1190-3 (9th Cir. 2021), certifying the question of whether concealment is an exception to the economic loss rule to the California Supreme Court.) As Plaintiffs have failed to allege sufficient facts to support their concealment claim, the Court need not resolve the split.

Plaintiffs do not show that these defects can be cured by amendment. The demurrer is SUSTAINED without leave to amend. The motion to strike is MOOT.