Judge: Maurice A. Leiter, Case: 23STCV28701, Date: 2024-08-06 Tentative Ruling

Case Number: 23STCV28701    Hearing Date: August 6, 2024    Dept: 54

Hearing Date: August 6, 2024

Department 54, Judge Maurice A. Leiter

Demurrer to First Amended Complaint & Motion to Strike

Moving Party: Defendant General Motors, LLC

Responding Party: Plaintiff Michele Rene Davis

T/R:     DEFENDANT’S DEMURRER IS SUSTAINED WITH LEAVE TO AMEND. THE MOTION TO STRIKE IS MOOT.

PLAINTIFF TO FILE AND SERVE A SECOND AMENDED COMPLAINT WITHIN 20 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 8:30 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 Plaintiff Michele Rene Davis’s purchase of a 2019 Chevrolet Camaro manufactured and distributed by Defendant General Motors Inc. Plaintiff filed the operative First Amended Complaint on March 21, 2024, asserting causes of action for: (1) violation of subdivision (d) of Civil Code § 1793.2; (2) violation of subdivision (b) of Civil Code § 1793.2; (3) violation of subdivision (a)(3) of Civil Code § 1793.2; (4) breach of the implied warranty of merchantability; (5) violation of the Magnuson-Moss Warranty Act; and (6) fraudulent inducement-concealment.

Defendant demurs to the sixth cause of action and moves to strike the claim for punitive damages.

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 argues that the sixth cause of action is time-barred and has not been pleaded with the requisite specificity.

A.   Whether the Sixth Cause of Action is Time-Barred

Pursuant to Code of Civil Procedure § 338(d), a fraud cause of action is “not deemed to have accrued until the discovery, by the aggrieved party, of the facts constituting the fraud or mistake.”

            The sixth cause of action is not time-barred. The FAC alleges that the transmission defect underlying the fraud claim manifested itself during the applicable warranty period. (FAC ¶ 11.) The vehicle was “equipped with GM's defective 8-speed transmission” at the time of purchase. (Id. at ¶ 72.) Plaintiff’s fraud claim is alleged to have accrued on the date of purchase. Plaintiff was obligated to assert her fraud claim by November 14, 2024; the complaint was not filed until November 22, 2024.

But the FAC pleads sufficient facts to toll the claim pursuant to the delayed discovery rule.

To rely on the delayed discovery rule, 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,” and “conclusory allegations will not withstand demurrer.”  (Fox v. Ethicon Endo-Surgery, Inc. (2005) 35 Cal.4th 797, 808.)

The FAC alleges that Plaintiff presented the vehicle to an authorized repair facility on several occasions concerning the transmission, and after each visit Plaintiff was told the vehicle had been repaired. (FAC at ¶¶ 24-28.) The FAC also alleges that Plaintiff did not discover the transmission defect until shortly before filing the action. (Id. at ¶ 31.) These allegations are sufficient to show that Plaintiff was unable to discover the transmission defect sooner despite reasonable diligence. 

The demurrer is overruled on this ground.

B. Whether the Sixth Cause of Action has been Alleged with the Requisite Specificity.

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 Plaintiff failed to allege that Defendant concealed a material fact and that there was a duty to disclose any such facts. The Court agrees. Plaintiff alleges that Defendant failed to disclose the engine defects to consumers, as evidenced by materials such as technical service bulletins and customer complaints, as well as pre-production and post-production testing data. This is insufficiently specific to establish concealment.

            The FAC also fails to sufficiently allege a transactional relationship between the parties. A duty to disclose pursuant to the four circumstances listed above “presuppose[ ] the existence of some other relationship between the plaintiff and defendant in which a duty to disclose can arise.” (LiMandri v. Judkins (1997) 52 Cal.App.4th 326, 337.) The California Supreme Court “has described the necessary relationship giving rise to a duty to disclose as a ‘transaction’ between the plaintiff and defendant ….” (Bigler-Engler v. Breg, Inc. (2017) 7 Cal.App.5th 276, 311; Warner Construction Corp. v. City of Los Angeles (1970) 2 Cal.3d 285, 294 [“In transactions which do not involve fiduciary or confidential relations”]; Hoffman v. 162 North Wolfe LLC (2014) 228 Cal.App.4th 1178, 1187–89 [rejecting concealment claim where plaintiffs “were not involved in a transaction with the parties they claim defrauded them”]; LiMandri, supra, 52 Cal.App.4th at p. 337 [“such a relationship can only come into being as a result of some sort of transaction between the parties”].) 

            Plaintiff’s reliance on Dhital v. Nissan North America (2022) 84 Cal.App.5th 828 is not persuasive. 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 though they did not allege they had been injured. The pleading included a claim for fraudulent inducement, alleging that Nissan concealed defects it had a duty to disclose in order to induce the purchase. The trial court sustained Nissan’s demurrer to the fraudulent inducement cause of action as barred by the economic loss doctrine. In reversing, the Court of Appeal stated:

“[a]t the pleading stage (and in the absence of a more developed argument by Nissan on this point), we conclude Plaintiff’s allegations are sufficient. Plaintiff alleged that they bought the car from a Nissan dealership, that Nissan backed the car with an express warranty, and that Nissan’s authorized dealerships are its agents for purposes of the sale of Nissan vehicles to consumers. In light of these allegations, we decline to hold Plaintiff’s claim is barred on the ground there was no relationship requiring Nissan to disclose known defects.”

(Dhital, supra, 84 Cal.App.5th at pp. 727-729.)

Unlike the defendant in Dhital, Defendant here has shown why an agency relationship cannot be presumed. “[A] dealer or retailer may in a layman's view be an agent of the [manufacturer], but he is not an agent in the legal sense of that relationship.” (Avalon Painting Co. v. Alert Lumber Co. (1965) 234 Cal.App.2d 178, 184; see also Herremans v. BMW of N. Am., LLC, No. (C.D.Cal. 2014) 2014 WL 5017843, at *6 [“[t]he relationship between automobile manufacturers and their dealers has been examined by a host of courts throughout the country, all of which have agreed that dealers are not ‘agents’ of manufacturers.”].) The FAC does not allege that Defendant’s authorized dealerships are its agents. Absent a transactional relationship, the FAC fails to allege the existence of a duty.

The demurrer is SUSTAINED with leave to amend. The motion to strike is MOOT.