Judge: Melvin D. Sandvig, Case: 23CHCV02062, Date: 2023-10-20 Tentative Ruling

Case Number: 23CHCV02062    Hearing Date: October 20, 2023    Dept: F47

Dept. F47

Date: 10/20/23

Case #23CHCV02062

 

DEMURRER TO THE ORIGINAL COMPLAINT

 

Demurrer filed on 8/15/23.

 

MOVING PARTY: Defendants Ford Motor Company and Autonation Ford Valencia

RESPONDING PARTY: Plaintiffs Bobby Burgess Sr. and Bobby Burgess Jr.

NOTICE: ok

 

Demurrer is to the 5th and 6th causes 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 Implied Warranty of Merchantability – Civil Code 1791.1, 1794, 1795.5

            5.  Fraudulent Inducement – Concealment

            6.  Negligent Repair

 

RULING: The demurrer is sustained without leave to amend as to the 5th cause of action and overruled as to the 6th cause of action.  Answer(s) is(are) due within 20 days. 

 

SUMMARY OF FACTS & PROCEDURAL HISTORY

 

This action arises out of Plaintiffs Bobby Burgess Sr. and Bobby Burgess Jr.’s (Plaintiffs) purchase of a 2020 Ford Ranger (the Vehicle) on 12/28/20.  (Complaint ¶10).  Plaintiffs allege that “[d]efects and nonconformities to warranty manifested themselves within the applicable express warranty period, including but not limited to, transmission defects, engine defects; among other defects and non-conformities.” (Id. ¶15).  Plaintiffs allege that they “discovered Defendants’ wrongful conduct alleged herein shortly before the filing of the complaint, as the Vehicle continued to exhibit symptoms of defects following FMC’s unsuccessful attempts to repair them. However, FMC failed to provide restitution pursuant to the Song- Beverly Consumer Warranty Act.”  (Id. ¶8).

 

Plaintiffs allege that Defendant Ford Motor Company (Ford) “acquired its knowledge of the Transmission Defect prior to Plaintiffs acquiring the Subject Vehicle, through sources not available to consumers such as Plaintiffs” and had a duty to disclose “the defective nature of the Subject Vehicle and its transmission” because Ford was “in a superior position from various internal sources to know (or should have known) the true state of facts about the material defects contained in vehicles equipped with the defective transmission[.]”  (Complaint ¶¶62, 65, 65(b)). 

 

As against Defendant Autonation Ford Valencia (Autonation), Plaintiffs allege that they presented the Vehicle to Autonation for substantial repair “on at least one occasion” and that Autonation breached its duty by failing to properly store, prepare and repair the subject vehicle in accordance with industry standards.  (Complaint ¶¶74, 76). 

On 7/13/23, Plaintiffs filed this action against Ford and Autonation 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 Implied Warranty of Merchantability – Civil Code 1791.1, 1794, 1795.5;

(5) Fraudulent Inducement – Concealment and (6) Negligent Repair.  After meet and confer efforts failed to resolve issues Ford and Autonation had with the complaint, on 8/15/23, Ford and Autonation filed and served the instant demurrer to the 5th cause of action for Fraudulent Inducement – Concealment which is alleged against Ford and the 6th cause of action for Negligent Repair which is alleged against Autonation.  Plaintiffs have not opposed or otherwise responded to the demurrer. 

 

ANALYSIS

 

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. 

 

5th Cause of Action – Fraudulent Inducement – Concealment

 

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.  Additionally, every element of a fraud cause of action must be alleged with factual specificity.  Cooper (1990) 219 CA3d 1252, 1262; Lazar (1996) 12 C4th 631, 645.  Concealment of a material fact is actionable when there is a duty of disclosure, which may arise from a relationship between the parties, such as a buyer-seller relationship.  Dhital (2022) 84 CA5th 828, 843-844, review granted, citing Hoffman (2014) 228 CA4th 1178, 1186-1187.  In such case, the plaintiff must describe the content and where the omitted information should or could have been revealed.  Tapia (S.D. Cal. 2015) 116 F.Supp.3d 1149, 1163.

 

Plaintiffs have failed to allege with the requisite particularity the defect Ford allegedly concealed.  The complaint merely describes a list of ways of the resultant effects the vehicles equipped with the same 10-speed transmissions may experience but does not state what the alleged defect is in the Vehicle or otherwise.  (See Complaint ¶26).  Such allegations are insufficient to support the fraud-based claim.  Santana (2020) 56 CA5th 334, 345.

 

Plaintiffs have also failed to allege where the omitted information should or could have been revealed by Ford and fail to identify the requisite representative samples of advertisements, offers, or other representations by Ford that consumers relied upon to make their purchase. Additionally, Plaintiffs do not identify by name who made the alleged omissions when they purchased the Vehicle.

 

Even if Plaintiffs had pled an identifiable defect in the Vehicle, they have not alleged facts showing Ford had a legal duty to disclose those facts.  “There are ‘four circumstances in which 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.’”  LiMandri (1997) 52 CA4th 326, 336.  Regardless of the circumstances under which a duty to disclose may arise, Plaintiffs must allege facts to show that Ford was aware of a defect at the time of sale.  Wilson (9th Cir. 2012) 668 F.3d 1136, 1145.

 

Here, Plaintiffs have failed to plead sufficient facts to establish any of the above circumstances exist so as to give rise to a duty by Ford to disclose to Plaintiffs.  (See Complaint ¶¶65(b)).  Plaintiffs have also failed to plead sufficient facts to show Ford was aware of the purported defect in the Vehicle at the time of the sale to Plaintiffs.  (See Complaint ¶63).      

 

Plaintiffs have also failed to allege sufficient facts to establish that their fraud 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.  Based on the allegations in the Complaint, it appears that the only duty allegedly breached was that created by the terms of the warranty and the only harm which resulted from Ford’s alleged concealment was that Plaintiffs would not have purchased/leased the Vehicle.  (See Complaint ¶67).    

 

Also, the holding in Robinson Helicopter was narrowly limited to “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.

 

6th Cause of Action – Negligent Repair

 

Autonation contends that Plaintiff’s complaint fails to allege sufficient facts to state the claim for negligent repair based on the “economic loss rule” and failure to sufficiently allege all of the elements of the cause of action (i.e., damages). 

 

The “economic loss rule ” provides that there is no recovery in tort where damages consist solely of economic loss.  See Sheen (2022) 12 C5th 905, 922; Pilgrim 2020 WL 7222098, at *10.  The purpose of the “economic loss rule” is to prevent the law of contract and the law of tort from dissolving into each other.  Robinson Helicopter Co., Inc. (2004) 34 C4th 979, 988.  However, not all tort claims for monetary losses between contractual parties are barred by the economic loss rule.  Sheen, supra at 923.  Courts have allowed tort recovery in some cases involving insurance policies and contract for professional services.  Id. at 929, 933.

 

“A contract to perform services gives rise to a duty of care which requires that such services be performed in a competent and reasonable manner.  A negligent failure to do so may be both a breach of contract and a tort.”  North American Chemical Co. (1997) 59 CA4th 764, 774.  Additionally, the economic loss rule does not bar recovery in tort for damage that a defective product causes to other portions of a larger product into which the former has been incorporated.  Jimenez (2002) 29 C4th 473, 483; See also Velasco (S.D. Cal. 2022) 2022 WL 2287258 at 4.

 

Autonation has failed to establish that Plaintiff’s negligent repair claim is barred as a matter of law by the “economic loss rule.”

 

Additionally, a complaint must only allege facts sufficient to state a cause of action; each evidentiary fact that might prove a plaintiff’s claim need not be alleged.  See C.A. (2012) 53 CA4th 861, 872.  Here, Plaintiff has alleged that Autonation’s alleged negligent repair of the Vehicle was a proximate cause of Plaintiff’s damages which is sufficient to plead the damage element of the negligent repair claim.  (Complaint ¶¶73-77); See CACI 1220.

 

CONCLUSION

 

The demurrer is sustained without leave to amend as to the 5th cause of action for Fraudulent Inducement – Concealment for the reasons set forth above and Plaintiffs’ lack of opposition and/or failure to indicate how the defects in the claim can be cured on amendment. 

 

The demurrer is overruled as to the 6th cause of action for Negligent Repair for the reasons set forth above.

 

Answer(s) is(are) due within 20 days.