Judge: Maurice A. Leiter, Case: 24STCV34409, Date: 2025-04-30 Tentative Ruling

Case Number: 24STCV34409    Hearing Date: April 30, 2025    Dept: 54

Hearing Date: April 30, 2025 

Department 54, Judge Maurice A. Leiter 

Demurrer to Complaint and Motion to Strike 

Moving Party: Defendants Volkswagen Group of America, Inc. and Volkswagen of Garden Grove 

Responding Party: Plaintiff Sharon Paterson 

T/R:     DEFENDANTS’ DEMURRER IS OVERRULED. 

THE MOTION TO STRIKE IS DENIED. 

DEFENDANTS TO FILE AND SERVE ANSWERS TO THE COMPLAINT WITHIN 30 DAYS OF NOTICE OF RULING.  

DEFENDANTS 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 the purchase of a a 2017 Volkswagen Tiguan, manufactured and distributed by Defendants. Plaintiff brings this action for violations of the Song-Beverly Act, negligent repair, 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.) 

A. Fifth Cause of Action for Negligent Repair 

Defendant Volkswagen of Garden Grove demurs to the cause of action for negligent repair on the grounds that it fails to state sufficient facts and is barred by the economic loss rule. Plaintiff alleges Defendant breached its duty of care by negligently repairing Plaintiff’s vehicle, causing damages. This is sufficient to state a claim for negligence. The claim is not barred by the economic loss rule because the claim seeks redress for property damage, not purely economic losses. 

The demurrer to the fifth cause of action is OVERRULED. 

B. Sixth Cause of Action for Fraud 

Defendant Volkswagen Group of America, Inc. demurs the fifth cause of action for fraudulent inducement on the grounds it fails to state sufficient facts and is barred by economic loss rule. 

The Court of Appeal in Dhital v. Nissan North America, Inc. (2022) 84 Cal.App.5th 828, recently addressed issues almost identical to those in this demurrer. The Court found that the following allegations were sufficient to state a cause of action for fraud: “plaintiffs alleged the CVT transmissions installed in numerous Nissan vehicles (including the one plaintiffs purchased) were defective; Nissan knew of the defects and the hazards they posed; Nissan had exclusive knowledge of the defects but intentionally concealed and failed to disclose that information; Nissan intended to deceive plaintiffs by concealing known transmission problems; plaintiffs would not have purchased the car if they had known of the defects; and plaintiffs suffered damages in the form of money paid to purchase the car.” (Id. at 844.) Plaintiff has alleged analogous facts here. This is sufficient to establish fraud. 

Dhital also addressed whether the economic loss rule bars claims for fraud by concealment under Robinson Helicopter Co., Inc. v. Dana Corp. (2004) 34 Cal. 4th 979. The Court explained, 

Applying Robinson here (and cognizant that our Supreme Court may soon provide additional guidance)¹, we conclude plaintiffs’ claim for fraudulent inducement by concealment is not subject to demurrer on the ground it is barred by the economic loss rule. Robinson left undecided whether concealment-based claims are barred by the economic loss rule. What follows from its analysis, however, is that concealment-based claims for fraudulent inducement are not barred by the economic loss rule. The reasoning in Robinson affirmatively places fraudulent inducement by concealment outside the coverage of the economic loss rule. We now hold that the economic loss rule does not cover such claims. First, as discussed, Robinson identified fraudulent inducement as an existing exception to the economic loss rule, before it proceeded to analyze the particular claims at issue in that case relating to fraud during the performance of a contract. (Robinson, supra, 34 Cal.4th at pp. 989–990, 22 Cal.Rptr.3d 352, 102 P.3d 268.) For fraudulent inducement and the other existing exceptions listed in Robinson, “ ‘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.’ ” (Id. at p. 990, 22 Cal.Rptr.3d 352, 102 P.3d 268.) 

(Id. at 840-841.) 

In December 2024, the Supreme Court of California dismissed the appeal of Dhital, making its holding binding. Plaintiff has alleged a claim for fraud by concealment. The economic loss rule does not act as a bar to this claim.  

The demurrer is OVERRULED.  

As Plaintiff has sufficiently alleged fraud, Plaintiff has alleged entitlement to punitive damages. The motion to strike is DENIED.