Judge Melvin D. Sandvig, Case Number: 23CHCV01493, Date: 2023-10-25 Tentative Ruling

Judge: Melvin D. Sandvig, Case: 23CHCV01493, Date: 2023-10-25 Tentative Ruling

Case Number: 23CHCV01493 Hearing Date: October 25, 2023 Dept: F47

Dept. F47

Date: 10/25/23

Case #23CHCV01493

DEMURRER & MOTION TO STRIKE

TO THE

ORIGINAL COMPLAINT

Demurrer & Motion to Strike filed on 7/5/23.

MOVING PARTY: Defendant American Honda Motor Co., Inc.

RESPONDING PARTY: Plaintiff Gerardo Zavala

NOTICE: ok

Demurrer is to the 2^nd cause of action:

1. Violation of Song-Beverly Act – Breach of Express Warranty

2. Fraudulent Inducement - Concealment

RELIEF REQUESTED IN MOTION TO STRIKE: An order striking Plaintiff’s prayer for punitive damages (p.27:23).

RULING: The demurrer is sustained with 30 days leave to amend.

SUMMARY OF ACTION & PROCEDURAL HISTORY

This action arises out of Plaintiff Gerardo Zavala’s (Plaintiff) purchase of a new 2022 Honda Accord (the Vehicle). On 5/22/23, Plaintiff filed this action against Defendant American Honda Motor Co., Inc. (Defendant) for: (1) Violation of Song-Beverly Act – Breach of Express Warranty and (2) Fraudulent Inducement - Concealment.

After meet and confer efforts failed to resolve the issues Defendant had with the complaint, on 7/5/23, Defendant filed and served the instant demurrer to the 2^nd cause of action for fraudulent inducement - concealment and motion to strike seeking an order striking Plaintiff’s prayer for punitive damages at page 27, line 23 of the complaint. (See Lacour Decl.). Plaintiff has opposed the demurrer and motion to strike and Defendant has filed replies to the oppositions.

ANALYSIS

Plaintiff’s Request for Judicial Notice is granted.

A demurrer may be based on the ground that the complaint fails to state facts sufficient to constitute a cause of action. CCP 430.10(e). A demurrer admits the truth of all properly pleaded facts regardless of how unlikely or improbable they may be. See Aubry (1992) 2 C4th 962, 966-967; Del E. Webb Corp. (1981) 123 CA3d 593, 604. Allegations in a complaint must be liberally construed with a view toward substantial justice between the parties. CCP 452.

Plaintiff’s fraudulent inducement – concealment cause of action is based on the claim that Defendant “and its agents concealed the existence and nature of the Honda Sensing Defect from Plaintiff at the time of purchase, repair and thereafter.” (Complaint ¶71; See also Complaint ¶112).

The elements of a fraudulent concealment cause of action are: (1) concealment or suppression of a material fact, (2) a duty to disclose the fact to the plaintiff, (3) intentional concealment or suppression of the fact with the intent to defraud the plaintiff, (4) that the plaintiff was unaware of the fact and would not have acted as he/she did if he/she had known of the concealed or suppressed fact, and (5) as a result of the concealment or suppression of the fact, the plaintiffs sustained damage. Boschma (2011) 198 CA4th 230, 248; See also Civil Code 1709, 1710. Additionally, every element of a fraud cause of action must be alleged with factual specificity. Stansfield (1990) 220 CA3d 59, 73-74. When pleading fraud against a corporation, a plaintiff must allege the names of the persons who made the misrepresentations, their authority to speak, to whom they spoke, what they said or wrote and when it was said or written. Tarmann (1991) 2 CA4th 153, 157.

Here, Plaintiff has not alleged facts showing that Defendant definitively knew about the purportedly concealed information such that Defendant could have intentionally concealed or suppressed it. (See Complaint ¶¶23, 44 whereat Plaintiff alleges that Defendant “knew or should have known” about defect and hazard posed thereby and Defendant “undoubtedly review[s] NHTSA consumer complaints” which would have purportedly made Defendant aware of the defect).

An omission is only actionable if the omitted fact is: (1) contrary to a material representation made by the defendant or (2) a fact the defendant was obligated to disclose. Gutierrez (2018) 19 CA5th 1234; Daugherty (2006) 144 CA4th 824, 835. The complaint fails to establish that Defendant omitted a material fact regarding the alleged defect, the Honda Sensing Defect, that was contrary to a material representation made to Plaintiff, by Defendant or a dealership. (See Complaint ¶¶86-88).

A duty/obligation to disclose arises in four circumstances: (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. LiMandri (1997) 52 CA4th 326, 336; Heliotis (1986) 181 CA3d 646, 651.

A transaction giving rise to a duty to disclose must arise from direct dealings between the plaintiff and the defendant not between the defendant and the public at large. Bigler-Engler (2017) 7 CA5th 276, 312. Therefore, any claim that Defendant had a duty to disclose based on its marketing brochures and general advertising fails.

With regard to the first circumstance, the complaint does not allege that a fiduciary relationship existed between Plaintiff and Defendant, nor could it, based on the relationship between the parties. See De Spirito (1957) 151 CA2d 126, 130 (Generally, a vendor that is not in a confidential relationship to the buyer is not under a duty to make full disclosure regarding the object it would sell.).

With regard to the second, third and fourth circumstances, the complaint fails to allege facts to support a finding that Defendant had exclusive knowledge of material facts not known to Plaintiff, that Defendant actively concealed a material fact or that Defendant made partial representations to Plaintiff while suppressing material facts.

With regard to Defendant’s exclusive knowledge, Plaintiff has alleged facts indicating that information regarding the alleged defect were publicly available through a National Transportation Safety Board report, news stories, complaints to the National Highway Transportation Safety Association (NHTSA), and Technical Service Bulletins (TSBs) before Plaintiff’s purchase of the Vehicle. (See Complaint ¶¶29-64). Additionally, the sources which Plaintiff contend gave Defendant “exclusive knowledge” of a defect do not include complaints to NHTSA or a TSB referencing a 2022 Honda Accord. Even if a TSB had been issued regarding the purported defect at issue in this case, such cannot automatically be construed as an admission of a design or other defect. See American Honda Motor Co. (2011) 199 CA4th 1367, 1378.

Plaintiff’s reliance on Falk (N.D. Cal. 2007) 496 F.Supp.2d 1088, 1096-97 for the proposition Defendant had exclusive knowledge of the alleged defect is misplaced for several reasons. First, Falk was a federal putative Consumer Legal Remedies Act (CLRA) class action dealing with defective speedometers. Second, the decision predates the public availability of the NHTSA database for TSBs as required by law in 2012. Third, multiple federal cases have declined to follow Falk. See Grodzitsky 2013 WL 690822, at *7; Eisen 2012 WL 841019, at *3; Cheng 2013 WL 12133886, at *4 (finding that Falk pre-dates the Ninth Circuit’s decision in Wilson (9th Cir. 2012) 668 F.3d 1136, 1147 which discussed and declined to follow Falk); Morgan 2009 WL 2031765, at *5; Williams (C.D. Cal. 2015) 106 F.Supp.3d 1101, 1114. Similarly, Plaintiff’s reliance on In re Toyota Motor Corp. Unintended Acceleration Marketing, Sales Practices, & Products Liability Litigation (C.D. Cal. 2010) 754 F.Supp.2d 1145, 1174, 1192, is misplaced as it is another class action with CLRA claims.

With regard to active concealment and partial representations while suppressing material facts, as noted above, Plaintiff has failed to establish that Defendant definitively knew about the purportedly concealed information such that Defendant could have actively/intentionally concealed or suppressed it. (See Complaint ¶¶23, 44).

Plaintiff has also failed to allege sufficient facts to establish that his fraudulent inducement – concealment claim is not barred by the “economic loss rule.” “[T]he economic loss rule allows a plaintiff to recover in strict products liability in tort when a product defect causes damage to ‘other property,’ that is, property other than the product itself. The law of contractual warranty governs damage to the product itself.” Robinson Helicopter Co., Inc. (2004) 34 C4th 979, 989 citing Jimenez (2002) 29 C4th 473, 482-483. A narrow exception to the “economic loss rule” exists where “a defendant’s affirmative misrepresentations on which a plaintiff relies and which expose a plaintiff to liability for personal damages independent of the Plaintiffs’ economic loss.” Robinson Helicopter, supra at 993; In re Ford Motor Co. (C.D. Cal. 2020) 483 F.Supp.3d 838, 848. Here, the fraud claim is based on purported concealment, not affirmative misrepresentations and seeks recovery for economic loss associated only with the Vehicle. Therefore, the claim is barred by the “economic loss rule.” See Mosqueda (C.D. Cal. 2020) 443 F.Supp.3d 1115, 1134.

Plaintiff has failed to cite adequate binding authority to support his position. Plaintiff relies heavily on Dhital (2022) 84 CA5th 828 which is not binding as a petition for review has been granted. See CRC 8.1115(e)(1).

The opposition to the motion to strike concedes that the punitive damage claim is based on the fraudulent inducement – concealment cause of action. Since that cause of action fails, so does the related prayer for punitive damages.

CONCLUSION

The demurrer is sustained and the motion to strike is granted, both with 30 days leave to amend. Due to the liberal policy of allowing leave to amend and since this is only the original complaint, Plaintiff is given the opportunity to try to cure the defects in his pleading.