Judge: Michael Small, Case: 22STCV17112, Date: 2023-08-31 Tentative Ruling

Case Number: 22STCV17112    Hearing Date: August 31, 2023    Dept: 57

Jacqueline Frias’s action against Defendant Kia America, Inc. (“Kia”) arises from Frias’s purchase in 2016 of a motor vehicle manufactured by Kia, a model year 2016 Kia Optima, that she alleges had a defective engine.  Frias’s current operative pleading is her Third Amended Complaint (“TAC”).  Kia has demurred to two causes of action in the TAC: the fourth cause of action for breach of the implied warranty of merchantability under the Song-Beverly Consumer Warranty Act (“Song-Beverly Act”) and the fifth cause of action for fraudulent inducement - concealment.  Kia also has moved to strike the TAC’s requests for civil penalties and punitive damages and the allegations in the TAC on which those requests are based.   

The Court’s ruling is as follows.  The demurrer is sustained without leave to amend as to both the fourth and fifth cause of action on statute of limitations grounds.  The motion to strike is granted without leave to amend.

Demurrer to Implied Warranty of Merchantability Claim

All claims for breach of an implied warranty pertaining to consumer goods, including claims for such a breach brought under the Song-Beverly Act, must be filed within four years after the claim accrues; otherwise, the claim is barred by the statute of limitations.  (Commercial Code § 2725(1); Krieger v. Nick Alexander Imports, Inc. (1991) 234 Cal.App.3d 205, 215 fn. 5.)   The claim “accrues when the breach occurs, regardless of the aggrieved party’s lack of knowledge of the breach.  A breach of warranty occurs when tender of delivery is made. . . . .”  (Commercial Code § 2725(2).)  In short, the statute is clear: there is no delayed-discovery rule with respect to accrual of a claim for breach of an implied warranty. (Cardinal Health 301, Inc. v. Tyco Electronics Corp. (2008) 169 Cal. App. 4th 116, 129, 134.)  If the contract expressly extends the warranty to “future performance” of the goods, then the claim accrues when the breach is discovered or should have been discovered.  But absent such an explicit extension, accrual occurs at the time of the breach, which is the time of delivery of the goods in question.  (Id. at p. 129.)  

Here, Frias purchased her allegedly defective Kia Optima in 2016.  She did not sue Kia until 2022.  There was no contractual extension of the accrual date for the claim to the time of future performance.  Accordingly, Frias’s claim for breach of the implied warranty of merchantability under the Song-Beverly Act is barred by the four-year statute of limitations.  

Frias states that Mexia v. Rinker Boat Co. (2009) 174 Cal.App.4th 1297, stands for the proposition that the statute of limitations on a claim for breach of the implied warranty of merchantability of a consumer good is tolled for the duration of the period of the express warranty on the good when the good’s defect is latent.   That is not so.  The Court in Mexia said flat out that “[i]n the case of a latent defect, a product is rendered unmerchantable, and the warranty of merchantability is breached, by the existence of the unseen defect, not by its subsequent discovery.” (Id. at 1304-1305.)

The TAC marks the fourth time that Frias has attempted to plead her claim for breach of the implied warranty of merchantability within the statute of limitations.  The Court, per Judge Steven Kleifield, previously sustained a demurrer to the claim in Frias’s First Amended Complaint (“FAC”) on statute of limitations grounds.[1]  At this point, it does not appear reasonably possible that Frias can amend her pleading in a way that would shield the claim for breach of the implied warranty of merchantability from the four-year statute of limitations.  For this reason, the Court is sustaining the demurrer to the claim without leave to amend.

Demurrer to Fraud Claim

In general, a cause of action accrues, thereby starting the running of the clock on the statute of limitations, when all of the elements of the cause of action are present.  (Cansino v. Bank of America (2014) 224 Cal.App.4th 1462, 1472.)  Accrual is postponed, however, until a plaintiff discovers, or had reason to discover, the facts supporting the cause of action.  (Ibid.)  This discovery rule is built into the statute of limitations for fraud claims, which is three years from the date the plaintiff discovered the facts constituting the alleged fraud.  (Code of Civil Procedure Section 338(d).)  (As indicated above, the discovery rule does not apply to claims for breach of the implied warranty of merchantability.) 

Because the discovery rule tolls the running of the statute of limitations, a plaintiff asserting a fraud claim more than three years after the commission of the fraud (meaning more than three years after all the elements of the cause of action are present) has the burden of pleading that he or she did not discover the facts giving rise to the claim until within three years prior to the filing of the complaint and could not have discovered those facts before then with the exercise of reasonable diligence.  (Cansino, supra, 224 Cal.App.4th at p. 1472; Czajkowski v. Haskell & White, LLP (2012) 208 Cal.App.4th 166, 175.)   This requires the plaintiff to allege that he or she did not have actual or presumptive knowledge of facts that would have placed a reasonable person on notice of the fraud claim.  (Fox v. Ethicon Endo-Surgery, Inc. (2005) 35 Cal.4th 797, 807.)   Conclusory allegations are inadequate to overcome the statute of limitations at the demurrer stage when, from the face of the complaint, a claim is time-barred.  (Id. at p. 808.)  To come within the discovery rule’s protective ambit, allegations regarding the circumstances surrounding discovery of the facts bearing on the claim and the inability to have discovered those facts earlier must be set forth in detail.  (Ibid.)  The limitations period on the claim begins to run once the plaintiff has notice or information of circumstances that would put a reasonable person on notice of the claim.  (Alexander v. Exxon Mobil (2013) 219 Cal.App.4th 1236, 1251.)

Frias fails in the TAC to bring her fraud claim within the ambit of the discovery rule.  Frias alleges that she did not discover the engine defect in her Kia Optima until 2022.   Missing from the TAC, however, are any allegations that would explain or justify Frias’s failure to discover the alleged defect sooner than 2022 when she concedes, through myriad allegations in the TAC, that she drove the vehicle for six years before 2022 and took the vehicle to be repaired fifteen different times during that time span.  Frias’s allegations describe in detail the problems that led her to take the vehicle for repairs on so many occasions.  But she provides no allegations that would support the contention that those problems would not have placed a reasonable person on notice of the defect, and hence on notice of the fraud claim, within the limitations period.  In short, the discovery rule is unavailable to Frias.  It does not save her fraud claim from the three-year statute of limitations.   

The allegations in the TAC regarding Frias’s membership in two class actions brought against Kia for engine defects in the 2016 Optima further close the door on the application of the discovery to Frias’s fraud claim.  Frias alleges that the first class action was filed in June 2016 in Wallis et al. v Kia Motors America, Inc. (C.D. Cal. No 8:16-cv-01033, and the second was filed in May 2017 in In re: Kia Engine Litigation (C.D. Cal. No. 8:17-cv-00838.)  Frias further alleges that the Wallis class action was dismissed by stipulation in November 2016 and that the class action in Kia Engine Litigation is still pending.  Frias fails to articulate in the TAC how her knowledge of her membership in two class actions that alleged engine defects in the 2016 Kia Optima did not put her on notice of her individual fraud claim for the same defects that she did not file until 2022. 

Frias alleges in the TAC (but not in her opposition to Kia’s demurrer) that, under the class action tolling doctrine announced in American Pipe & Construction v. Utah (1974) 414 U.S. 538, her individual fraud claim was tolled from the date in June 2016 that the Wallis class action commenced until it was dismissed in November 2016, and then was tolled again from the date that the Kia Engine Litigation class action commenced in May 2017 and remains tolled due to the continued pendency of that class action.  In other words, Frias alleges that even if she was long ago aware of her individual fraud claim, the statute of limitations on the claim has yet to run by dint of the American Pipe class action tolling doctrine.

Frias is wrong.  Montoya v. Ford Motor Company 46 Cal.App.5th (2020), establishes that the American Pipe class action tolling doctrine does not apply to situations in which a plaintiff who was a member of two class actions brings an individual claim after the second class action commenced.  The Court in Montoya held that a plaintiff cannot “stack” multiple class action tolling periods to extend the statute of limitations on the plaintiff’s individual claim.  (Id. at pp. 495-496, 503.)   The plaintiff in Montoya sued an automobile manufacturer for breach of the implied warrant of merchantability under the Song-Beverly Act in 2013.  The plaintiff purchased the automobile in April 2003.  During that ten-year period, the plaintiff was a member of  two separate class actions arising from alleged defects in automobiles of the same make and model year as the plaintiff’s.  The plaintiff argued that his individual claim was tolled from the time the first class action was filed in April 2006 to the time that class certification in that case was denied in November 2009, and then tolled again from the time the second class action was filed in January 2010 until April 2013 when the plaintiff opted out of the second class action and filed his individual claim.  (Id. at p. 495.)   The Court in Montoya rejected plaintiff’s double tolling argument.  It held that the plaintiff’s claim was tolled only for the three-and one-half year period from the initiation of the first class action to the denial of certification in that action, and that therefore the four-year statute of limitations on his claim for breach of the implied warranty of merchantability expired no later than 2010.  (Id. at p. 504.)  The 2010 date was arrived at as follows: the plaintiff purchased the vehicle in April 2003.  The claim was tolled for three and one-half years from April 2006 until November 2009.  And then the clock started running again and ran out in 2010.

Under Montoya, Frias’s fraud claim was tolled only for the period of the pendency of the Wallis class action.  Frias gets no additional tolling traction from the filing of the Kia Engine Litigation class action.

Just as with Frias’s claim for breach of the implied warranty of merchantability, it is not reasonably possible at this stage, when we are dealing with a third amended complaint, that Frias can save her fraud claim from the statute of limitations through a fourth amended complaint.  Accordingly, Kia’s demurrer to the fraud claim is sustained without leave to amend.

Motion to Strike

Punitive damages are available on fraud claims.  But because the demurrer to Frias’s fraud claim is being sustained without leave to amend, there is no basis for punitive damages on that claim.  The  motion to strike is denied as moot to the extent that it targeted the prayer for relief in the TAC, and corresponding allegations, for an award of punitive damages on the fraud claim.

The motion to strike is granted without leave to amend to the extent it targets the prayer for relief in the TAC, and corresponding allegations, for an  award of punitive damages on Frias’s claim for breach of the express warranty under the Song-Beverly Act.   Punitive damages are not authorized by the terms of the Song-Beverly Act.  Frias cites no California state court precedent to the contrary.

The motion to strike also is granted without leave to amend to the extent it targets the prayer for relief in the TAC, and corresponding allegations, for an award of a civil penalty under the Song-Beverly Act.   A civil penalty is authorized under the Song-Beverly Act for willful violations of the Act.  In the Court’s view, the TAC is devoid of allegations that would support a finding that Kia’s violations of the Song-Beverly Act were willful.  The Court, per Judge Kleifield, previously granted an earlier motion to strike that Kia filed targeting Frias’s prayer for relief, and corresponding allegations, for an award of a civil penalty under the Song-Beverly Act.  Frias was given another opportunity to plead willfulness.  She has failed in the TAC to do so.  Accordingly, the motion to strike is granted without leave to amend this time.