Judge Michael E. Whitaker, Case Number: 23SMCV04204, Date: 2024-10-30 Tentative Ruling

Judge: Michael E. Whitaker, Case: 23SMCV04204, Date: 2024-10-30 Tentative Ruling

On September 6, 2023, Plaintiffs Adib Saghizadeh and Melody Boutehsaz (“Plaintiffs”) brought suit against Defendant American Honda Motor Company, Inc. (“Defendant” or “Honda”) alleging five causes of action for (1) violation of Civil Code section 1793.2, subd. (d); (2) violation of Civil Code section 1793.2, subd. (b); (3) violation of Civil Code section 1793.2, subd. (a)(3); (4) breach of the implied warranty of merchantability; and (5) fraudulent inducement – concealment.

Defendant moves for judgment on the pleadings as to the fifth cause of action for fraudulent inducement – concealment. Plaintiffs oppose the motion and Defendant replies.

A motion for judgment on the pleadings has the same function as a general demurrer, but may be made after the time to demur has expired. (Code Civ. Proc., § 438, subd. (f).) “Like a demurrer, the grounds for the motion [for judgment on the pleadings] must appear on the face of the challenged pleading or from any matter of which the court is required to take judicial notice.” (Civic Partners Stockton, LLC v. Youssefi (2013) 218 Cal.App.4th 1005, 1013.) In ruling on a motion for judgment on the pleadings, “[a]ll allegations in the complaint and matters upon which judicial notice may be taken are assumed to be true.” (Rippon v. Bowen (2008) 160 Cal.App.4th 1308, 1313; see also CACI 1901.)

“The required elements for fraudulent concealment are (1) concealment or suppression of a material fact; (2) by a defendant with a duty to disclose the fact to the plaintiff; (3) the defendant intended to defraud the plaintiff by intentionally concealing or suppressing the fact; (4) the plaintiff was unaware of the fact and would not have acted as he or she did if he or she had known of the concealed or suppressed fact; and (5) plaintiff sustained damage as a result of the concealment or suppression of the fact.” (Hambrick v. Healthcare Partners Medical Group, Inc. (2015) 238 Cal.App.4th 124, 162.)

“In California, fraud must be pled specifically; general and conclusory allegations do not suffice.” (Lazar v. Superior Court (1996) 12 Cal.4th 631, 645.) “This particularity requirement necessitates pleading facts which show how, when, where, to whom, and by what means the representations were tendered.” (Ibid.)

“One of the purposes of the specificity requirement is notice to the defendant, to furnish the defendant with certain definite charges which can be intelligently met.” (Alfaro v. Community Housing Improvement System & Planning Assn., Inc. (2009) 171 Cal.App.4th 1356, 1384.) As such, less specificity is required “when it appears from the nature of the allegations that the defendant must necessarily possess full information concerning the facts of the controversy[.]” (Ibid.) “Even under the strict rules of common law pleading, one of the canons was that less particularity is required when the facts lie more in the knowledge of the opposite party.” (Ibid.)

Defendant argues Plaintiffs’ fraud claim fails because (1) Plaintiffs failed to state a claim with requisite specificity; (2) Plaintiffs have not alleged Honda had a duty to disclose; and (3) the Economic Loss Rule bars Plaintiffs’ fraud claim.

“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.” (Bigler-Engler v. Breg, Inc. (2017) 7 Cal.App.5th 276, 311 (hereafter Bigler-Engler).) In the absence of a fiduciary duty, “[a] duty to disclose facts arises only when the parties are in a relationship that gives rise to the duty, such as seller and buyer, employer and prospective employee, doctor and patient, or parties entering into any kind of contractual arrangement.” (Ibid.)

Further, “Under California law, a vendor has a duty to disclose material facts not only to immediate purchasers, but also to subsequent purchasers when the vendor has reason to expect that the item will be resold.” (OCM Principal Opportunities Fund, L.P. v. CIBC World Markets Corp. (2007) 157 Cal.App.4th 835, 839.) In the context of automobile manufacturers, the appellate court has explained:

In its short argument on this point in its appellate brief, Nissan argues plaintiffs did not adequately plead the existence of a buyer-seller relationship between the parties, because plaintiffs bought the car from a Nissan dealership (not from Nissan itself). At the pleading stage (and in the absence of a more developed argument by Nissan on this point), we conclude plaintiffs’ allegations are sufficient. Plaintiffs 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 plaintiffs’ claim is barred on the ground there was no relationship requiring Nissan to disclose known defects.

(Dhital v. Nissan N. Am. Inc. (2022) 84 Cal.App.5th 828, 843-844 (hereafter Dhital).)

Under Dhital, there would be a fiduciary duty between Honda, as the manufacturer of the subject vehicle, and Plaintiffs, as the purchasers of the subject vehicle, if Plaintiffs either purchased the vehicle directly from Honda or from one of its authorized dealers.

But here, the Complaint does not include any information about when Plaintiffs purchased the vehicle, or from whom the vehicle was purchased. In this regard, the Complaint alleges:

6. On or about November 13, 2020, Plaintiffs entered into a warranty contract with Defendant, regarding a 2021 Honda Odyssey vehicle identification number 5FNRL6H86MB023673 ("Vehicle") which was manufactured and/or distributed by Defendant.

7. The warranty contract contained various warranties, including but not limited to the bumper-bumper warranty, powertrain warranty, emission warranty, etc. A true and correct copy of the warranty contract is attached hereto as Exhibit A. The terms of the express warranty are described in Exhibit A and are incorporated herein.

8. Pursuant to the Song-Beverly Consumer Warranty Act (the "Song-Beverly Act") Civil Code sections 1790 et seq. the Subject Vehicle constitutes "consumer goods" used primarily for family or household purposes, and Plaintiffs have used the vehicle primarily for those purposes. Plaintiffs are "buyers" of consumer goods under the Act. Defendant Honda is a "manufacturer" and/or "distributor" under the Act.

9. Plaintiffs justifiably revoke acceptance of the Subject Vehicle under Civil Code, section 1794, et seq. by filing this Complaint and/or did so prior to filing the instant Complaint.

10. These causes of action arise out of the warranty obligations of Defendant in connection with a motor vehicle for which Defendant issued a written warranty.

11. Defects and nonconformities to warranty manifested themselves within the applicable express warranty period, including but not limited to, infotainment defects, electrical defects, body defects; among other defects and non-conformities.

12. Said defects/nonconformities substantially impair the use, value, or safety of the Vehicle.

14. Under the Song-Beverly Act, Defendant HONDA had an affirmative duty to promptly offer to repurchase or replace the Subject Vehicle at the time if failed to conform the Subject Vehicle to the terms of the express warranty after a reasonable number of repair attempts.

15. Defendant HONDA has failed to either promptly replace the Subject Vehicle or to promptly make restitution in accordance with the Song-Beverly Act.

45. Defendant designed, manufactured, tested, warranted, advertised, distributed, sold, and leased Honda Vehicles, including the Subject Vehicle, which contain a defective integrated in-vehicle communication, navigation, and entertainment system – commonly referred to as an "infotainment system" – that causes many of the Vehicles' features (e.g., navigation system, rear-entertainment system, audio system, backup camera, cabin watch system) to malfunction. As a result of the defect, Honda Vehicles' infotainment systems frequently freeze or crash (in which case no features connected to system are operational, including the navigation technology, the radio, and the rearview camera). These malfunctions pose a safety risk because when the system malfunctions, unexpected audio or video – or a blank or blue infotainment screen – can cause the driver to become distracted. The defect can also render safety-related systems (including backup camera functions) to fail (this defect will be referred to hereafter, as the "Infotainment System Defect").

46. Additionally, because the infotainment system may fail at any time, thereby startling the driver and putting the passengers' safety at risk, the defect makes Honda Vehicles, including the Subject Vehicle, unfit for the use for which they were intended in that they cannot be relied upon as a safe and reliable means of transport.

The warranty attached to the Complaint provides, “To be covered, the vehicle must be distributed by American Honda through the Honda Automobile Division, and sold or leased by an authorized Honda automobile dealer in the United States, Puerto Rico, the U.S. Virgin Islands, Guam, and the Commonwealth of the Northern Mariana Islands.” (Ex. A to Complaint at p. 8.)

However, the Complaint does not actually allege that the subject vehicle was sold or leased by or through an authorized Honda dealer. Thus, Plaintiffs have not alleged facts demonstrating any fiduciary relationship between Honda and Plaintiffs.

48. HONDA knew of the Infotainment System Defect prior to sale of the Subject Vehicle to Plaintiffs, based on pre-production and post-production testing, numerous customer complaints, warranty claims data compiled from HONDA's network of dealers, testing conducted by HONDA in response to these complaints, as well as warranty repair and part replacements data received by HONDA from HONDA's network of dealers, amongst other sources of internal information.

61. Indeed, Plaintiffs allege that prior to the sale of the Subject Vehicle to Plaintiffs, Defendant knew that the Vehicle and its infotainment system suffered from an inherent defect, was defective, would fail prematurely, and was not suitable for its intended use.

a. Plaintiffs are informed, believe, and thereon allege that HONDA acquired its knowledge of the Infotainment System Defect and its potential consequences prior to Plaintiffs acquiring the Vehicle, through sources not available to consumers such as Plaintiffs, including but not limited to preproduction testing data, early consumer complaints about the Infotainment System Defect made directly to HONDA and its network of dealers, aggregate warranty data compiled from HONDA's network of dealers, testing conducted by HONDA in response to these complaints, as well as warranty repair and part replacements data received by HONDA from HONDA's network of dealers, amongst other sources of internal information;

b. HONDA was in a superior position from various internal sources to know (or should have known) the true state of facts about the material defects of the infotainment systems contained in Honda Vehicles; and

c. Plaintiffs could not reasonably have been expected to learn or discover of the Vehicle's Infotainment System Defect and its potential consequences until well after Plaintiffs purchased the Vehicle.

But allegations made “on information and belief,” are insufficient to satisfy the heightened pleading requirement “unless the facts upon which the belief is founded are stated in the pleading.” (Dowling v. Spring Val. Water Co. (1917) 174 Cal.218, 221.)

Here, the specific facts provided in support of Plaintiffs’ “information and belief” are as follows:

51. Examples of some of the complaints about the defective infotainment systems in Honda Vehicles posted on the National Highway Transportation Safety Administration include: "THE CENTER CONSOLE, WHICH IS THE MONITOR THAT UTILIZES GPS NAVIGATION, REAR VIEW CAMERA DISPLAY, CONTROLS HEA T/AC, VOLUME CONTROL, ETC. HAS CONTINUED TO FAIL SINCE DATE OF PURCHASE (7/15/17). THE MONITOR SHUTS DOWN AT RANDOM TIMES, FOR UNIDENTIFIED REASONS, LEA VING THE DRIVER, DISTRACTED AND ATTEMPTING TO RESOLVE. THE SHUT DOWN CAN OCCUR WHILE IN THE VAN IS MOVING OR STATIONARY. NAVIGATION SHUTS DOWN WHILE THE DRIVER IS IN ROUTE TO A LOCATION CAUSING SIGNIFICANT DISTRACTION.... HONDA WAS MADE AWARE OF THIS PROBLEM IN AUGUST 2017. WE BROUGHT OUR VAN IN TO THE SHOP TWICE AND NO RESOLUTION WAS FOUND. WE FILED A COMPLAINT WITH HONDA AMERICA (VOICE MAILS ARE RETAINED AS RECORD). AFTER SEVERAL MONTHS OF NO RESOLUTION, HONDA AMERICAN TOLD US OUR CASE WAS BEING CLOSED BECAUSE THE COMPANY CONTINUED TO HAVE NO RESOLUTION. 7 MONTHS AFTER PURCHASE THE CENTER CONSOLE/MONITOR CONTINUES TO RANDOMLY FAIL. SOMETIMES THE MONITOR GOES BLACK, SOME FEATURES WORK WHILE OTHERS STOP (FOR EXAMPLE THE RADIO MAY WORK WHILE THE SCREEN IS BLACK). SOMETIMES THE MONITOR GOES BLUE AND EVERYTHING SHUTS DOWN. PHOTOS AND VIDEOS OF THESE OCCURRENCES WERE SUBMITTED TO HONDA VIA EMAIL. THE PROMOTED FEATURES BY HONDA AMERICA LEAD THE BUYER TO BELIEVE THERE IS ADDED SAFETY IN THIS VAN. THE OPPOSITE HAS TURNED OUT TO BE TRUE. THESE FAILURES CAUSE SERIOUS SAFETY CONCERNS FOR THE DRIVER AND THE YOUNG FAMILIES UTILIZING THE VAN." (August 23, 2017) "FAILURE OF THE REAR ENTERTAINMENT SYSTEM: THE REAR CAMERA AND ENTERTAINMENT SYSTEM WILL LOST "NETWORK CONNECTIVITY" AND STOP FUNCTIONING.... FAILURE OF THE INFOTAINMENT SYSTEM: THE INFOTAINMENT SYSTEM WILL TURN OFF AND GO INTO A SERIES OF FAILURES, ULTIMATELY TURNING OFF COMPLETELY AND NOT FUNCTIONING. THE INFOTAINMENT SYSTEM WILL ALSO EXPERIENCE POWER ERRORS RESULTING IN ERRORS WITH THE ANTI THEFT SYSTEM. IN ADDITION, THE RADIO/SPEAKERS PERIODICALLY STOP WORKING." (October 14, 2017) "ENTIRE DASH TURNED OFF WHILE DRIVING INCLUDING SPEEDOMETER AND INFORMATION SCREEN-REPLACED RADIOHEAD.... IT'S A BAD REAR ENTERTAINMENT SYSTEM. I BOUGHT MY CAR 1 YEAR AGO AND IT'S OBVIOUSLY FLAWED" (October 29, 2018).

52. A sample of complaints posted on Carcomplaints.com and Edmunds.com reveal the same experiences among consumers of Honda Vehicles: "The infotainment on this car really sucks. It has a mind of its own. And, to add insult to injury the whole thing froze rendering the infotainment useless. Went to the dealer to do a hard reset since there was no way in the world that everything else I could have tried worked. The Dealer informed that the infotainment is a known issue yet nothing has been done to fix it. Recently, it simply refused to shut off. This is a brand new car and having problems like these says a lot about the quality of the accessories." (complaint posted on carcomplaints.com dated December 20, 2017). "This car has numerous electronic and software issues that Honda America is unable to fix. Dealers continue to sell these vehicles without disclosing the problems.... If you buy the Elite, plan on the following; Sirius XM Radio will work occasionally, Cabin Watch and park sense cameras will lock up and won't work until the car goes through a hard reset, the cabin doors will not respond to the auto open and close until a hard reset is performed, the DVD system will lock up and won't play until a hard reset is performed, the infotainment system is immature and is still being debugged by Honda Engineers, the voice command system seldom works or responds. The dealer service department will acknowledge that they can't fix the problems. We brought it back 9 times since Jan 2018-April 18 without any fixes made other than reseting which involves disconnecting the battery and waiting 15 minutes for the system to reset.... It is a Lemon Law candidate as well as a class action law suit (sic) for fraud." (complaint posted on Edmunds.com dated April 10, 2018). "I just bought 2018 odyssey less then 1000miles and my rear entertainment system stop working and went to dealer and find out software problem and honda cannot fix it until they have new update software so I was upset because it's not my fault honda has to replace with new RES but they are not so please before you buy make sure it works and it's not only mine there so many people having same issues....Go to Odyssey forum and you will find details." (complaint posted on Edmunds.com dated September 16, 2017). Defendant Concealed the Infotainment System Defect

But all of these specific allegations of complaints date back to 2017 and 2018, which is at least two years before the subject 2021 Honda Odyssey would have been made available to the public. Thus, it cannot be that any of these consumer complaints pertain to 2021 Honda Odyssey vehicles, like the subject vehicle. Further, there is no allegation that the allegedly defective Infotainment System installed in Plaintiffs’ vehicle is the same as prior year models or other vehicles. Nor are there any other specific allegations demonstrating anyone at Honda had prior knowledge of the alleged defects in the Infotainment System installed in 2021 Honda Odyssey vehicles.

In short, there are no specific allegations that the consumer complaints alleged in the Complaint have any relevance to Plaintiffs’ vehicle, nor are there any specific allegations demonstrating that Honda knew the 2021 Honda Odyssey’s Infotainment System was defective, much less that Honda had exclusive knowledge of the defect.

Therefore, the Complaint fails to allege exclusive knowledge with requisite specificity.

49. Despite HONDA's awareness of the Infotainment System defect, it has not found a solution for it. Instead, HONDA simply replaces defective parts with equally defective parts, thereby leaving consumers caught in a cycle of use, malfunction, and replacement.

53. While Defendant has been fully aware of the Infotainment System Defect affecting the Subject Vehicle, Defendant and its agents concealed the existence and nature of the Defect from Plaintiffs at the time of purchase (and/or lease), repair, and thereafter. Specifically, Defendant failed to disclose or concealed at and after the time of purchase or repair:

a. any and all known material defects or material nonconformity of the Subject Vehicle, including the Infotainment System Defect;

b. that the Subject Vehicle, including its infotainment system, was not in good working order, was defective, and was not fit for the intended purposes;

c. that the Subject Vehicle and its infotainment system was defective, despite the fact that Defendant knew of such defects prior to release, at least as early as 2017; and

d. that Defendant further learned of the widespread problems plaguing consumers of vehicles equipped with the infotainment system through alarming failure rates, customer complaints, as well as through other internal sources, as early as 2017.

54. To this day, Defendant still has not notified Plaintiffs that the Vehicle suffers from a systemic, latent safety defect that causes the infotainment system to malfunction.

55. HONDA's New Vehicle Limited Warranty requires it to "repair or replace any part that is defective in material or workmanship under normal use." But as countless consumers have reported, HONDA has been unable to repair these defects despite being given as numerous opportunities. In violation of this express warranty, and as evidenced by the many complaints or repeat infotainment system failures, Defendant merely replaces a defective part with another defective part.

56. Defendant concealed, and continues to conceal, the fact that the Honda Vehicles, including the Subject Vehicle, contain the defective infotainment systems. Defendant also continues to conceal the fact that the replacement components it provides in an attempt to repair the defect are equally defective. Therefore, Plaintiffs did not discover and could not have discovered this defect through reasonable diligence.

At best, the Complaint alleges that Honda failed to disclose the defects. But there are no specific allegations regarding Honda’s prior knowledge of the defects or active concealment. The only allegation that comes close to alleging active concealment is: “HONDA simply replaces defective parts with equally defective parts, thereby leaving consumers caught in a cycle of use, malfunction, and replacement.” (Complaint ¶ 49.) But the Complaint contains no specific examples of who at Honda did this, to whom, when, or how. Moreover, it is unclear how replacing a defective part with another defective part would in any way conceal the defect from consumers.

Therefore, Plaintiffs have not alleged active concealment with requisite specificity.[1]

“Simply stated, the economic loss rule provides: where a purchaser's expectations in a sale are frustrated because the product he bought is not working properly, his remedy is said to be in contract alone, for he has suffered only ‘economic’ losses.” (Robinson Helicopter Co., Inc. v. Dana Corp. (2004) 34 Cal.4th 979, 988 (hereafter Robinson Helicopter).) “The economic loss rule requires a purchaser to recover in contract for purely economic loss due to disappointed expectations, unless he can demonstrate harm above and beyond a broken contractual promise.” (Ibid.)

However, “Tort damages have been permitted in contract cases where a breach of duty directly causes physical injury; for breach of the covenant of good faith and fair dealing in insurance contracts; for wrongful discharge in violation of fundamental public policy; or where the contract was fraudulently induced.” (Robinson Helicopter, supra, 34 Cal.4th at pp. 989–990.)

Here, as discussed above, Plaintiffs generally allege they were fraudulently induced into purchasing the subject vehicle, due to Honda’s concealment of the Infotainment System defect:

57. As a result of Defendant's concealment, inaction and silence, Plaintiffs were entirely unaware that Plaintiffs purchased, and continued to drive, an unsafe and unreliable vehicle. As Defendant knows, a reasonable person would consider the Infotainment System Defect a material fact and would not purchase or lease a vehicle equipped with a defective engine, or would pay substantially less for the vehicle, if said defect was disclosed in advance.

58. Plaintiffs are reasonable consumers who interacted with sales representatives, considered Defendant's advertisement, and/or other marketing materials concerning the Honda Vehicles prior to purchasing the Subject Vehicle. Had HONDA revealed the Infotainment System Defect, Plaintiffs would have been aware of it and would not have purchased the Subject Vehicle.

However, as discussed above, Plaintiffs have failed to allege fraud with requisite specificity. Therefore, whether the economic loss doctrine bars Plaintiffs’ claim rises or falls with the fraud claim itself.

A plaintiff has the burden of showing in what manner the complaint could be amended and how the amendment would change the legal effect of the complaint, i.e., state a cause of action. (See The Inland Oversight Committee v City of San Bernardino (2018) 27 Cal.App.5th 771, 779; PGA West Residential Assn., Inc. v Hulven Int'l, Inc. (2017) 14 Cal.App.5th 156, 189.) The plaintiff must not only state the legal basis for the amendment, but also the factual allegations sufficient to state a cause of action or claim. (See PGA West Residential Assn., Inc. v Hulven Int'l, Inc., supra, 14 Cal.App.5th at p. 189.) Moreover, a plaintiff does not meet his or her burden by merely stating in the opposition to a demurrer or motion to strike that “if the Court finds the operative complaint deficient, plaintiff respectfully requests leave to amend.” (See Major Clients Agency v Diemer (1998) 67 Cal.App.4th 1116, 1133; Graham v Bank of America (2014) 226 Cal.App.4th 594, 618 [asserting an abstract right to amend does not satisfy the burden].)

Here, Plaintiffs fail to meet this burden, as they do not specify what additional facts they could add to the Complaint to cure the deficiencies identified above. Therefore the Court denies leave to amend.

The Court grants Defendant’s motion for judgment on the pleadings and dismisses the fifth cause of action for fraudulent concealment – inducement without leave to amend for failure to plead with requisite specificity that Honda owed a duty to disclose the Infotainment System defect to Plaintiffs.

Defendant shall provide notice of the Court’s ruling and file the notice with a proof of service forthwith.

[1] The Complaint also contains no allegations that Honda partially disclosed information about the defect to implicate the fourth way a duty to disclose can arise.

DEPARTMENT	207
HEARING DATE	October 30, 2024
CASE NUMBER	23SMCV04204
MOTION	Motion for Judgment on the Pleadings as to the Complaint
MOVING PARTY	Defendant American Honda Motors, Inc.
OPPOSING PARTIES	Plaintiffs Adib Saghizadeh and Melody Boutehsaz