Judge Michael Shultz, Case Number: 24STCV33978, Date: 2025-05-15 Tentative Ruling

The complaint alleges that on December 31, 2021, Defendant, Jaguar Land Rover North America, LLC (“JLRNA”) issued a warranty to Plaintiff with the purchase of a 2018 Land Rover. The vehicle developed defects that Defendants could not repair. Plaintiff alleges claims for violation of the Song-Beverly Consumer Warranty Act, a fifth cause of action against the dealer, Jaguar Land Rover Woodland Hills (“Woodland”) for negligent repair, and a sixth cause of action for fraudulent inducement/concealment.

Defendants move for judgment on the pleading as to the fifth and sixth causes of action on grounds both claims are barred by the economic loss rule. Plaintiff cannot allege a direct transaction with JLRNA. The claim for fraudulent inducement/concealment is not alleged with specificity, fails to allege facts establishing a duty to disclose and facts to support all elements of the claim.

In opposition, Plaintiff argues that the inducement/concealment claim is adequately alleged with specificity. Plaintiff has alleged a basis for Defendant’s duty to disclose, because there was a transactional relationship between the parties, which does not require privity of contract. The economic-loss rule does not bar either claim.

Plaintiff alleges fraud through non-disclosure; it is not practical to allege specifics such as “how, when, and by what means,” in the context of a concealment claim. The focus in a concealment claim is whether there was a duty to disclose.

Plaintiff adequately alleged a claim for negligent repair, which requires the essential elements for a negligent claim. Whether or not Plaintiff paid for out-of-pocket repair work has no bearing at this stage.

Defendants argue that none of what Plaintiff cites changes the outcome of the motion. Plaintiff relies on Dhital v. Nissan N. Am., Inc. (2022) 84 Cal.App.5^th 828, which is persuasive at best and not controlling. The Supreme Court in Rattagan v. Uber Technologies, Inc. (2024) 17 Cal.5^th 1 articulates the governing rule: Plaintiff can allege the claim for concealment only if the tortious conduct exposes Plaintiff to a risk that is outside the contractual relationship. A warranty contract alone does not constitute a direct transactional relationship to support the concealment claim.

The negligent repair claim fails because Plaintiff has not alleged a duty independent of the service contract. The alleged damages are not distinct from the contract cause of action.

The statutory grounds for a defendant’s motion for judgment on the pleadings are either that the court does not have jurisdiction of the cause of action, or the complaint does not state facts sufficient to constitute a cause of action. (Code Civ. Proc., § 438 subd. (c)(B).) A motion for judgment on the pleadings performs the same function as a general demurrer and attacks only those defects disclosed on the face of the pleadings or by matters subject to judicial notice. (Burnett v. Chimney Sweep (2004) 123 Cal.App.4th 1057, 1064.)

Accordingly, all properly alleged material facts are deemed true as well as all facts that may be implied or inferred from those expressly alleged. (Fire Ins. Exchange v. Superior Court (2004) 116 Cal.App.4th 446, 452.) The Court does not consider facts that are extrinsic to the pleading.

The court may not consider contentions, deductions, or conclusions of fact or law. (Moore v. Conliffe (1994) 7 Cal.4th 634, 638.) Because a demurrer tests the legal sufficiency of a complaint, the plaintiff must show that the complaint alleges facts sufficient to establish every element of each cause of action. (Rakestraw v. California Physicians Service (2000) 81 Cal.App.4th 39, 43.)

A. The motion is DENIED as to the fifth cause of action for fraud in the inducement/concealment.

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.) In a claim for concealment, “the pertinent question is not who said what to whom;" rather the question is whether the defendants intentionally concealed material terms from the plaintiff to induce the plaintiff to proceed with the transaction. (Vega v. Jones, Day, Reavis & Pogue (2004) 121 Cal.App.4th 282, 296.)

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.)

In the absence of a fiduciary relationship, the three latter circumstances described above “presuppose the existence of some other relationship between the plaintiff and defendant in which a duty to disclose can arise. (Id. at p. 311.) This relationship has been called a ‘transaction’ and may include ‘seller and buyer, employer and prospective employee, doctor and patient, or parties entering into any kind of contractual arrangement.’”(Bader v. Johnson & Johnson (2022) 86 Cal.App.5th 1094, 1131.)

Where the duty to disclose arises as a result of a transaction between the parties, 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 did not allege a “direct transaction with JLRNA in which the information could have been disclosed.” (Mot. 8:1-3.) Plaintiff alleges that he brought the vehicle to “JLRNA’s dealers who are JLRNA’s agents for vehicle repairs.” Defendant JLRNA and its agents “actively concealed the engine defect and failed to disclose this defect to Plaintiff at the time of purchase of the vehicle or thereafter.” (Complaint, ¶ 56.) The transactional relationship between JLRNA through its agents supports a transactional relationship wherein a duty to disclose arose.

Defendant contends that since the concealment claim does not allege actual property damage or physical injury but seeks only economic damages, the claim is barred by the economic loss rule, and Plaintiff may not recover in tort for fraudulent concealment. (Mot. 9:16:19.) Contrary to this contention, Plaintiff’s claims do not arise solely from the vehicle’s performance and Defendants’ warranty obligations. Plaintiff alleges facts, independent of vehicle’s defects, that Defendants actively concealed information about the alleged defects prior to and at the time of sale, repair, or thereafter. (Complaint, ¶56-59.)

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.)[1] 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 claim for breach of contract. (Robinson at 991.)

In other words, there are exceptions to the economic loss rule; where the plaintiff asserts damages for intentional fraud under Robinson, or under Dhital v. Nissan North America, Inc. (2022) 84 Cal.App.5th 828. In Dhital, 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, but has since dismissed its review in December 2024 after deciding Rattagan v. Uber Technologies, Inc. (2024) 17 Cal.5th 1, which Defendant contends is the controlling authority.^{^[2]} Dhital remains a published opinion. ^{^[3]}

Plaintiff alleges that JLRNA knew about and concealed the engine defect from Plaintiff at the time of sale, repair and thereafter. (Complaint, ¶ 58.) JLRNA knew about the engine defect through sources not available to consumers, such as pre-lease testing data, early consumer complaint to Defendant and its dealers, testing conducted in response to those complaints and failure rates and replacement part sales data among other internal resources. (Complaint, ¶ 62.)

Defendant never disclosed the engine defect to Plaintiff prior to the purchase of the vehicle or at any point during ownership of the vehicle and never instructed its dealers to disclose the engine defect to drivers or potential purchases or lessees. (Complaint, ¶ 67.)

Defendant cites Rattagan v. Uber Technologies, Inc. (2024) 17 Cal.5th 1 contending it is controlling law. In Rattagan, 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.)

Notably, the Supreme Court expressly did not consider the application of the rule in the SBA context, observing at the time that 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 Rattagan Court specifically did not address the economic loss rule in the SBA context asserted here. Regardless, the allegations here are adequate as expressed by the Dhital court, which considered the economic loss rule in the context of a Song-Beverly case.

Defendant argues that this claim is also barred by the economic loss rule. Defendant contends that the core of this claim is that the dealer, Woodland, failed to repair the vehicle in accordance with the warranty. (Mot. 13:4-7.) Defendant argues Plaintiff has not alleged a duty independent of contract.

Plaintiff alleges that Defendant failed to use ordinary care and skill in storage, preparation, and repair of the vehicle in accordance with industry standards. (Complaint, ¶ 47.) This is a duty independent of contract.

Defendants contend that Plaintiff did not allege facts showing that the dealership’s conduct caused any actual damages such as out-or-pocket expenses for repairs performed by the dealership. (Mot. 14-5-13.) Plaintiff alleges he sustained damages as a result of the dealer’s breach of ordinary care. (Complaint, ¶ 49.) Whether the damages consisted of out-of-pocket expenses or some other damage is not an issue that can or should be resolved at this stage. Negligence claims can be alleged in general terms by stating the acts or omissions that were negligently performed. (Greninger v. Fischer (1947) 81 Cal.App.2d 549, 552; Guilliams v. Hollywood Hospital (1941) 18 Cal.2d 97, 101.)

Based on the foregoing, Defendants’ motion for judgment on the pleading is DENIED.

[1] "The Restatement states this form of the economic loss rule as follows: [T]here is no liability in tort for economic loss caused by negligence in the performance or negotiation of a contract between the parties.” (Dhital v. Nissan North America, Inc. (2022) 84 Cal.App.5th 828, 838.)

[2] "Dismissed and remanded to CA 1/4. Review in the above-captioned matter, which was granted and held for Rattagan v. Uber Technologies, Inc. (2024) 17 Cal.5th 1, 324 Cal.Rptr.3d 433, 553 P.3d 1213, is hereby dismissed. (Cal. Rules of Court, rule 8.528(b)(1).)" (Dhital v. Nissan North America (Cal. 2024) 327 Cal.Rptr.3d 898, (Mem)–899.)

[3] " An order dismissing review does not affect the publication status of the Court of Appeal opinion unless the Supreme Court orders otherwise." (Cal. Rules of Court, 8.528 subd. (b)(3).)

Accordingly, all properly alleged material facts are deemed true as well as all facts that may be implied or inferred from those expressly alleged. (Fire Ins. Exchange v. Superior Court (2004) 116 Cal.App.4th 446, 452.) The Court does not consider facts that are extrinsic to the pleading.