Judge: Melvin D. Sandvig, Case: 23CHCV00326, Date: 2023-06-29 Tentative Ruling
Case Number: 23CHCV00326 Hearing Date: August 29, 2023 Dept: F47
Dept. F47
Date: 8/29/23
Case #23CHCV00326
DEMURRER &
MOTION TO STRIKE TO THE FIRST AMENDED COMPLAINT
Demurrer & Motion to Strike filed on 7/17/23.
MOVING PARTY: Defendant General Motors LLC
RESPONDING PARTY: Plaintiff David Wallenstein
NOTICE: ok
Demurrer is to the 5th cause of action:
1. Violation of
Civil Code 1793.2(d)
2.
Violation of Civil Code 1793.2(b)
3.
Violation of Civil Code 1793.2(a)(3)
4.
Breach of the Implied Warranty of Merchantability (Civil Code 1791.1,
1794, 1795.5)
5. Fraudulent Inducement – Concealment
RELIEF REQUESTED IN MOTION TO STRIKE: An order striking the prayer for punitive damages.
RULING: The demurrer is overruled and the motion
to strike is denied. Answer is due
within 20 days.
SUMMARY OF FACTS & PROCEDURAL HISTORY
This action arises out of Plaintiff David Wallenstein’s
(Plaintiff) purchase of a 2014 Chevrolet Volt on or about 11/21/14. (FAC ¶6).
On 2/3/23, Plaintiff filed this action against Defendant General Motors,
LLC (Defendant) and Does 1-10 for: (1) Violation of Civil Code 1793.2(d); (2) Violation
of Civil Code 1793.2(b); (3) Violation of Civil Code 1793.2(a)(3); (4) Breach
of the Implied Warranty of Merchantability (Civil Code 1791.1, 1794, 1795.5)
and (5) Fraudulent Inducement – Concealment.
In response to a demurrer and motion to strike to the original
complaint, on 6/15/23, Plaintiff filed his First Amended Complaint alleging the
same 5 causes of action.
With regard to the 5th cause of action for
Fraudulent Inducement – Concealment, the cause of action is essentially based
on claim that Defendant General Motors LLC (GM) did not disclose to Plaintiff
prior to the sale of the vehicle and during the repair process that it had “defects”
of which GM was aware. (FAC ¶¶24-27, 42,
67-80).
After meet and confer efforts failed to resolve the
issues GM had with the First Amended Complaint, on 7/17/23, GM filed and served
the instant demurrer to the 5th cause of action for Fraudulent
Inducement – Concealment on the ground that the pleading fails to state
sufficient facts to constitute a cause of action for fraudulent inducement
based on concealment. CCP 430.10(e). Additionally, GM filed and served the instant
motion to strike seeking an order striking the prayer for punitive damages. Plaintiff has opposed the demurrer and motion
to strike and GM has filed replies to the oppositions.
ANALYSIS
DEMURRER
A complaint that does not allege sufficient facts to
constitute a cause of action is subject to demurrer. CCP 430.10(e). A demurrer challenges defects that appear on
the face of the complaint or matters outside the pleadings that are subject to judicial
notice. Blank (1985) 39 C3d 311,
318; Donabedian (2004) 116 CA4th 968, 994. In ruling on a demurrer, all properly pled
material facts are deemed true, but not contentions, deductions or conclusions
of fact or law. Kamen (2001) 94 CA4th 197, 201; Moore
(1990) 51 C3d 120, 125.
GM contends that Plaintiff’s fraudulent inducement –
concealment cause of action fails to state a claim because: (1) it is barred by
the applicable statute of limitations, (2) it is not pled with the requisite
specificity and (3) it does not plead a transactional relationship giving rise
to a duty to disclose.
Statute of Limitations
In order to sustain a demurrer based on the ground that a
claim is time-barred, the statute of limitations defense must be shown on the
face of the complaint. See Union
Carbide Corp. (1984) 36 C3d 15, 25; E-Fab, Inc. (2007) 153 CA4th
1308, 1315-16.
The three-year statute of limitations set forth in CCP
338 governs a fraud cause of action. CCP
338(d) provides:
“An action for relief on the ground
of fraud or mistake. The cause of action in that case is not deemed to have
accrued until the discovery, by the aggrieved party, of the facts constituting
the fraud or mistake.”
GM has failed to establish that Plaintiff’s fraudulent
inducement – concealment claim is barred on the face of the First Amended
Complaint. GM argues that because
Plaintiff has alleged that he purchased the vehicle on or about 11/21/14, he
had to file his fraud claim no later than November 2021. (See Demurrer, p.7:4-8). It is not clear why GM claims the statute of
limitations expired 7 years after the purchase date. Regardless, GM contends that the filing of
this action on 2/3/23 is over 5 years too late.
(Demurrer, p.7:8-9).
The delayed discovery rule tolls the applicable statute
of limitations if the plaintiff is unable to discover the cause of action with
reasonable diligence. Hobart
(1945) 26 C2d 412, 437; Johnson (1934) 1 C2d 136, 137; Jolly
(1988) 44 C3d 1103, 1110; Fox (2005) 35 C4th 797, 807; Glue-Fold,
Inc. (2000) 82 CA4th 1018, 1029. In
the moving papers, GM makes the conclusory argument that Plaintiff cannot
invoke the delayed-discovery rule because Plaintiff has alleged that the
defects in the vehicle manifested within the applicable express warranty period. (See Demurrer, p.7:10-12 and p.7:19-22
citing FAC ¶13). In the reply, Defendant
mispresents that paragraph 8 in the First Amended Complaint alleges that
“information about the alleged transmission, engine, and/or electrical defects
was abundant (and publicly available on the internet).” (See Reply, p.1:17-18).
Paragraph 8 of the First Amended Complaint actually
alleges the opposite:
“Prior to purchasing Subject
Vehicle, Plaintiffs (1) saw GM’s TV commercials for the 2014 Chevrolet Volt,
(2) researched the 2014 Chevrolet Volt on GM’s website and (3) reviewed the
Monroney label affixed to Subject
Vehicle. Had these GM marketing materials / product disclosures disclosed to
Plaintiffs - prior to purchase - that Subject Vehicle had a Battery Defect,
Plaintiffs would not have purchased it.” (emphasis added).
Plaintiff also alleges that GM and its agents,
representatives, officers, directors, employees, affiliates, and/or authorized
dealerships concealed the defects which provides another basis for tolling the
statute of limitations. (FAC ¶44); See
Aryeh (2013) 55 C4th 1185, 1192; Karoutas (1991) 232 CA3d 767,
771.
Further, when a plaintiff reasonably should have
discovered facts for the purposes of the accrual of a cause of action is
generally a question of fact and can only be decided as question of law (i.e.,
on demurrer) if the allegations in the complaint and facts subject to judicial
notice can support only one reasonable conclusion. Broberg (2009) 171 CA4th 912,
921.
Based on the allegations in the First Amended Complaint,
it cannot be determined as a matter of law that Plaintiff’s fraudulent
inducement – concealment claim is time-barred.
(See FAC ¶¶24-27, 29-30, 32, 72, 75a-75b).
Specificity
The elements of a cause of action for fraud based on
concealment are: (1) the defendant
concealed or suppressed a material fact, (2) the defendant had a duty to
disclose the fact to the plaintiff, (3) the defendant intentionally concealed
or suppressed the fact with the intent to defraud the plaintiff, (4) the
plaintiff was unaware of the fact and would not have acted as he/she/they did
if he/she/they had known of the concealed or suppressed fact, and (5) as a
result of the concealment or suppression of the fact, the plaintiff sustained
damage. Jones (2011) 198 CA4th
1187, 1198, quoting Kaldenbach (2009) 178 CA4th 830, 850. Since concealment is a species of fraud, it
must be pled with specificity. Blickman
Turkus LP (2008) 162 CA4th 858, 878.
However, the specificity requirement is “relaxed when it is apparent
from the allegations that the defendant necessarily possesses knowledge of the
facts.” Quelimane Co. (1998) 19
C4th 26, 27. Similarly, actions for
fraud based on omission or concealment do not have the same specificity
requirement. Alfaro (2009) 171
CA4th 1356, 1384.
There are four circumstances where 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. Bigler-Engler (2017) 7
CA5th 276, 311-312. The last three
require evidence of some transaction (i.e. direct dealings between the plaintiff
and the defendant). Id.; Dhital
(2022) 84 CA5th 828, 843-844 (review granted on the issue of economic loss
rule) citing Hoffman (2014) 228 CA4th 1178, 1186-1187.
Here, Plaintiff has sufficiently alleged a transactional
relationship with GM based on the allegation that GM issued the warranty on
Subject Vehicle through Plaintiff’s purchase of same through an authorized GM
dealer. (FAC ¶¶6-7); Dhital, supra. Additionally, the concealment claim is based
on superior knowledge and intentional and knowing concealment. (FAC ¶¶72, 75a-75b, 76). A claim for fraudulent inducement-concealment
can be based on facts known only to a defendant, defendant knows Plaintiff does
not know these facts and cannot reasonably discover them, and where the
defendant actively conceals discovery from Plaintiff. Warner Construction Corporation (1970)
2 C3d 285, 294; See also Valencia (N.D. Cal. 2015) 119 F. Supp.3d
1130, 1137-1138; Gutierrez (2018) 19 CA5th 1234, 1261-1262; In re
MyFord Touch Consumer Litigation (N.D. Cal. 2014) 46 F.Supp.3d 936, 959-960;
Mui Ho (N.D.Cal. 2013) 931 F.Supp.2d 987, 997-998, 999.
Under the relaxed requirements for a fraud claim based on
concealment, the Court finds that Plaintiff has pled sufficient facts to state
the claim. (See FAC ¶¶6, 8-9, 36,
38, 44-45, 70-73, 75- 77, 80); See Alfaro, supra at
1384. Similarly, based on the
circumstances of the purchase of the Subject Vehicle, Plaintiff’s reliance on
the alleged misconduct could have been reasonably expected which is sufficient
to satisfy the intent to induce reliance element of the claim. See Lovejoy (2001) 92 CA4th 85,
93, 96.
MOTION TO STRIKE
Punitive damages may be recovered where it is proven by
clear and convincing evidence that the defendant is guilty of fraud, oppression
or malice. See Civil Code
3294(a), (c)(3). Since Plaintiff has
sufficiently alleged his fraud claim, the First Amended Complaint alleges a
sufficient basis to support a claim for punitive damages.
CONCLUSION
Based on the foregoing, the demurrer is overruled and the
motion to strike is denied. Answer is
due within 20 days.