Judge: Michael Shultz, Case: 24STCV19105, Date: 2025-04-03 Tentative Ruling
Case Number: 24STCV19105 Hearing Date: April 3, 2025 Dept: 40
24STCV19105
Angelica Maria Perez v. American Honda Motor Co., Inc.
Thursday,
April 3, 2025
[TENTATIVE] ORDER
[TENTATIVE] ORDER DENYING THE MOTION
TO STRIKE
I.
BACKGROUND
The first
amended complaint alleges that Defendant issued a warranty to Plaintiff in
connection with the purchase of a 2020 Honda Fit made by Defendant. The vehicle
developed defects that Defendant could not reasonably repair. Defendant
allegedly failed to provide the remedies permitted under the Song-Beverly
Consumer Warranty Act (“SBA”). Plaintiff alleges four separate violations of
the SBA and a fifth cause of action for fraudulent inducement-concealment.
II.
ARGUMENTS
A.
Demurrer and motion to strike filed on December
23, 2024.
Defendant
demurs to the to the fourth cause of action for violation of Civil Code § 1791.1(c)
for breach of implied warranties implied warranties on new vehicles are limited
to one year from the date of purchase. This claim exceeds the warranty period.
Defendant
also demurs to the fifth cause of action for fraudulent inducement-concealment
for failure to allege facts with specificity, and because allegations on
“information and belief” are insufficient. Defendant had no duty to disclose,
and publicly available information negates the alleged concealment.
Defendant
separately moves to strike the claim for punitive damages for failure to allege
facts with specificity to support the claim. The fraud claim is not well stated
and cannot support the claim.
B.
Opposition filed March 20, 2025.
In
opposition, Plaintiff argues that the third cause of action for breach of
implied warranty is well plead because the statute of limitations is tolled
under the repair doctrine and discovery rule. Plaintiff contends that the fraud
claim is adequately supported with specificity. Plaintiff has alleged a basis
for Defendant’s duty to disclose. The economic-loss rule does not bar the claim for fraudulent inducement.
In
opposition to the motion to strike, Plaintiff argues that the fraudulent
inducement claim is well plead and can support recovery of punitive damages,
which is a remedy available under the SBA.
C.
Reply filed March 6, 2025
In
reply, Defendant reiterates that the fraud claim is not alleged with
specificity and is barred by the economic-loss rule. The implied warranty claim
expired because the alleged defect did not manifest within the warranty period.
Plaintiff cannot recover punitive damages on the alleged facts.
III.
LEGAL STANDARDS
The
bases for demurrer are limited by statute and may be sustained for reasons
including failure to state facts to state a cause of action and uncertainty. (Code
Civ. Proc., § 430.10.) A demurrer “tests the sufficiency of a complaint as
a matter of law and raises only questions of law.” (Schmidt
v. Foundation Health (1995) 35 Cal.App.4th 1702, 1706.) The court must
assume the truth of (1) the properly pleaded factual allegations; (2) facts
that can be reasonably inferred from those expressly pleaded; and (3)
judicially noticed matters. (Blank
v. Kirwan (1985) 39 Cal.3d 311, 318.) The court may not consider
contentions, deductions, or conclusions of fact or law. (Moore
v. Conliffe (1994) 7 Cal.4th 634, 638.)
The court may, upon motion or at any time in
its discretion and upon terms it deems proper: (1) strike out any irrelevant,
false, or improper matter inserted in any pleading; or (2) strike out all or any
part of the pleading not drawn or filed in conformity with the laws of
California, a court rule, or an order of the Court. (Code Civ. Proc., § 436 subd (a)-(b)). Grounds for the motion to
strike are limited to matters that appear on the face of the pleading or on any
matter which the court shall or may take judicial notice. (Code Civ. Proc., § 437).
IV.
DISCUSSION
A.
Demurrer to the fourth cause of action is
OVERRULED.
Plaintiff
alleges breach of implied warranty of merchantability. The implied warranty shall
have a duration of no less than 60 days nor more than one year following the
sale of consumer goods to a buyer. (Civ.
Code, § 1791.1, subd. (c).) This
provision is known as the “duration provision.” (Mexia
v. Rinker Boat Co., Inc. (2009) 174 Cal.App.4th 1297, 1309 [“According
to its plain language, the implied warranty exists for at least 60 days and at
most for one year after delivery of the product; after that time, the warranty
ceases to exist.”].)
Contrary
to Defendant’s argument, the duration provision is not a statute of
limitations. Rather, the statute “make[s] clear that it merely creates a
limited, prospective duration for the implied warranty of merchantability; it
does not create a deadline for discovering latent defects or for giving notice
to the seller." (Mexia
at 1301.)
The Mejia
court determined that the Act does not require a purchaser to discover and
report to the seller a latent defect within that time period. (Mexia
at 1310.) The implied warranty may be breached by a latent defect
undiscoverable at the time of sale. (Mexia
at 1304.)
The
first amended complaint alleges Plaintiff entered into the warranty contract on
January 11, 2020. (FAC ¶ 6.) Plaintiff alleges that the vehicle contained one
or more latent defects in the sensors, engine, electrical and transmission
systems (among other defects), and that the vehicle manifested these defects
within the applicable express warranty period. (FAC ¶ 11, 63.) The pleading
alleges that Plaintiff had no way of discovering the defects as Defendant
performed various diagnostics and undertook repairs and claimed that nothing
was wrong with the vehicle. (Complaint, ¶28.)
Defendant’s
argument that the high mileage of the vehicle undermines any claim that the
vehicle was unmerchantable or unfit for its intended use. (Dem. 20:8-12.) However,
a demurrer tests the legal sufficiency of the
allegations. It does not test their truth, the Plaintiff’s ability to prove
them, or the possible difficulty in making such proof. (Saunders v. Superior Court (1994)
27 Cal.App.4th 832, 840.)
Defendant’s contention that this claim is
barred by lack of privity citing in part, Burr v. Sherwin Williams Co. (1954)
42 Cal.2d 682 for the “general rule [] that privity of
contract is required in an action for breach of either express or implied
warranty and [] there is no privity between the original seller and a
subsequent purchaser who is in no way a party to the original sale.” (Burr at 695.)
Plaintiff alleges he entered into a warranty contract with defendant at the
time of purchase. (FAC ¶ 6.)
B.
Demurrer to the fifth cause of action for fraud
in the concealment is OVERRULED.
1)
Sufficiency of the allegations.
The elements of a fraud claim based on
concealment are: “(1) the defendant must have concealed or suppressed a
material fact, (2) the defendant must have been under a duty to disclose
the fact to the plaintiff, (3) the defendant must have intentionally concealed
or suppressed the fact with the intent to defraud the plaintiff, (4) the
plaintiff must have been unaware of the fact and would not have acted as he did
if he had known of the concealed or suppressed fact, and (5) as a result of the
concealment or suppression of the fact, the plaintiff must have sustained
damage.” (Bigler-Engler
v. Breg, Inc. (2017) 7
Cal.App.5th 276, 310–311).
Ordinarily, fraud claims are subject to
strict requirements of particularity in pleading which necessitate pleading
facts showing “how, when, where, to whom, and by what means the representations
were tendered." (Stansfield
v. Starkey (1990) 220
Cal.App.3d 59, 73.) However, the
specificity rule is intended to apply to affirmative misrepresentations and not
to concealment. (Alfaro
v. Community Housing Improvement System & Planning Assn., Inc. (2009) 171 Cal.App.4th 1356, 1384.)
2)
Allegations
on information and belief
Defendant argues that allegations based on
information and belief must allege specific facts upon which that belief is
founded. (Doe
v. City of Los Angeles (2007) 42
Cal.4th 531, 550 “[p]laintiff
may allege on information and belief any matters that are not within his
personal knowledge, if he has information leading him to believe that the
allegations are true."].)
Plaintiff adequately describes the
information supporting the allegation that Honda acquired knowledge of the
defects from pre-production testing data, early consumer complaints, warranty
data compiled from Defendant’s network of dealers, and testing Honda conducted.
(FAC ¶ 80.a. – c.) Defendant counters that Plaintiff may not make “broad
references to data to prove Defendant’s actual knowledge of a defect” citing Wilson
v. Hewlett-Packard Co. (9th
Cir. 2012) 668 F.3d 1136. However,
that case cites examples supporting the allegation that a manufacturer had
knowledge of the defect based on “aggregate date from its dealers” “access to
pre-release testing data” and “access to the numerous complaints from its
consumers.” Wilson
at 1147.)
3)
Duty to
disclose
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.” (Id. at 311). If a fiduciary relationship does not exist, but the latter three
circumstances are present, plaintiff must still show “the existence of some
other relationship between the plaintiff and defendant from which a duty to
disclose can arise.” (Id. at 311).
A duty to disclose may arise as a result
of a transaction between the parties. However, the transaction "must
necessarily arise from direct dealings between the plaintiff and the defendant;
it cannot arise between the defendant and the public at large." (Bigler-Engler at 312 [noting that the duty of a manufacturer to warn consumers of a
product’s hazards and faults applies in the context of strict products
liability actions but does not apply in a suit for intentional
misrepresentation.].) Defendant argues that Plaintiff bought the vehicle from a
dealer, not Defendant, which precludes a finding of a transactional
relationship.
Plaintiff cites Dhital
v. Nissan North America, Inc. (2022)
84 Cal.App.5th 828, wherein
the plaintiff sued Nissan North America, Inc. (Nissan), alleging a transmission
defect. As here, the Dhital plaintiffs alleged claims under the Song-Beverly
Consumer Warranty Act and a common law fraud claim alleging that Nissan
fraudulently concealed the defects and induced them to purchase a car. (Dhital at 838). The California Supreme Court granted review of Dhital on
February 1, 2023, however, the request for de-publication was denied. (Dhital
v. Nissan North America (Cal.
2023) 304 Cal.Rptr.3d 82, 83).
Since review is pending and the Supreme Court did not otherwise order, Dhital
does not having binding effect, however, “it may be cited for potentially
persuasive value only.” (Cal. Rules of Court, Rule 8.1115 (e)(1).)
The Dhital court concluded that
allegations were sufficient to support the existence of a buyer-seller
relationship between the parties as “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 [the manufacturer’s]
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
at 845).
Here, Plaintiff alleges she entered into a
warranty contract with Defendant that included a bumper-to-bumper warranty,
powertrain warranty, emission warranty, and an express warranty. (FAC ¶7.) The
complaint does not allege that Plaintiff bought the vehicle from a dealer. Even
if Plaintiff did buy the vehicle from a dealer, Plaintiff alleges Defendant, and
its agents concealed the defects. (FAC ¶ 44.) Plaintiff’s allegations here
conform with the allegations found by the Dhital court to establish
a relationship with the manufacturer sufficient to withstand demurrer.
4)
Economic
loss rule
Defendant contends that the concealment
claim is barred by the economic loss rule and that since Plaintiff’s
allegations arise solely from the vehicle’s performance and warranty
obligations, Plaintiff may not recover in tort. (Dem. 12:17-18.) Contrary to
this contention, Plaintiff’s claims do not arise solely from the vehicle’s
performance and Defendant’s warranty obligations. Plaintiff alleges facts,
independent of vehicle’s defects, that Defendant actively concealed information
about the alleged defects prior to and at the time of sale. (FAC ¶ 38.)
The economic loss rule bars tort recovery
in a transaction where the plaintiff suffers only economic losses. (Robinson
Helicopter Co., Inc. v. Dana Corp.
(2004) 34 Cal.4th 979, 988.)
Such losses consist of “damages for inadequate value, costs of repair and
replacement of the defective product or consequent loss of profits—without any
claim of personal injury or damages to other property. (Robinson at 988.) The Robinson court held
that the plaintiffs’ claims for affirmative, intentional misrepresentations of
fact were not barred by the economic loss rule because the tort claims were
independent of the plaintiff’s breach of contract. (Robinson
at 991.)
While also relying on Robinson, Defendant argues that the exception under Robinson does not apply
because Plaintiff’s claims here are based on concealment, not affirmative and
intentional misrepresentation. (Dem. 18:26-19:1.) Defendant construes Robinson
as limiting the exception to the economic loss rule to claims for affirmative
fraud as opposed to concealment, relying on federal trial court opinions
reaching similar conclusions. (Dem. 16:22-25.) However, there are other
instances where tort damages were permitted in contract cases where the tort
liability is “either completely independent of the contract or arises from
conduct which is both intentional and intended to cause harm.” (Dhital
v. Nissan North America at 838.)
Thus, in Dhital, the economic loss
rule did not apply because the duty not to disclose arose from liability
independent of contract such as intentionally concealing facts about the
defective transmission and fraudulently inducing plaintiffs to purchase the
car. (Dhital
at 838.) Dhital also acknowledged that
despite the differing views taken by various federal district courts (also
cited by Defendant) the plaintiff’s fraudulent inducement by concealment was
exempt from the economic loss doctrine. (Dhital
at 843.)
Defendant cites Rattagan
v. Uber Technologies, Inc. (2024)
17 Cal.5th 1, wherein the
California Supreme Court held "as a matter of first impression, under
California law, a plaintiff may assert a tort claim for fraudulent concealment
based on conduct occurring in the course of a contractual relationship, if the
elements of the cause of action can be established independently of the
parties' contractual rights and obligations and the tortious conduct exposes
the plaintiff to a risk of harm beyond the reasonable contemplation of the
parties when they entered into the agreement." (Id.) The
Supreme Court expressly did not consider the application of the rule in the SBA
context, noting Dhital was still under review:
"Rattagan's tort claims are, of course, based on alleged conduct
committed during the contractual relationship but purportedly outside the
parties' chosen rights and obligations. This court has granted review in two
other cases — Dhital v. Nissan North America, Inc. (2022) 84 Cal.App.5th 828,
300 Cal.Rptr.3d 715, review granted Feb. 1, 2023, S277568 and Kia America v.
Superior Court (Feb. 3, 2022, D079858) [nonpub. opn.], review granted Apr. 20,
2022, S273170 — both of which involve claims of fraudulent inducement by
concealment claims as well as the potential interplay with remedies available
under the Song-Beverly Consumer Warranty Act (Civ. Code, § 1791 et seq.). We do
not address these issues here." (Rattagan
at 41, fn 12.)
Therefore, while Rattagan supports the principle that a concealment claim can be asserted if the
plaintiff can establish the duty arose from obligations independent of contract,
the Court specifically did not address the economic loss rule in the factual
circumstances asserted here. Regardless, the allegations are adequate as
express by the Dhital court.
C.
The
motion to strike is DENIED.
A plaintiff may recover on a claim for
exemplary damages where the defendant is guilty of oppression, fraud, or
malice. (Civ. Code, § 3294 subd. (a).) The predicate acts to support the claim
must be intended to cause injury or must constitute “malicious” or “oppressive”
conduct as defined by statute. “Malice” is defined as “conduct which is
intended by the defendant to cause injury to the plaintiff or despicable
conduct which is carried on by the defendant with a willful and conscious
disregard of the rights or safety of others.” (Civ. Code, § 3294 subd. (c)(1); College
Hospital Inc. v. Superior Court (1994)
8 Cal.4th 704, 725
["malice involves awareness of dangerous consequences and a willful and
deliberate failure to avoid them"].) "Oppression" is defined as
“despicable conduct that subjects a person to cruel and
unjust hardship in conscious disregard of that person's rights.” (Civ.
Code, § 3294 subd. (a)
subd. (c)(2).)
Plaintiff can allege ultimate facts. Clauson
v. Superior Court (1998) 67
Cal.App.4th 1253, 1255
["In order to survive a motion to strike an allegation of punitive
damages, the ultimate facts showing an entitlement to such relief must be pled
by a plaintiff."].)
The claim for fraud in the concealment
alleges the predicate acts that support the claim that Defendant’s conduct was
“malicious” in that Defendant was allegedly aware of the defects and its dangerous
consequences but willfully and deliberately failed to avoid those consequences.
V.
CONCLUSION
Based on the foregoing, demurrer to the
first amended complaint is OVERRULED. The motion to strike is DENIED. Defendant
is ordered to answer within 30 days.