Judge: Michael Small, Case: 23STCV28195, Date: 2024-04-22 Tentative Ruling

Inform the clerk if you submit on the tentative ruling. If moving and opposing parties submit, no appearance is necessary.

Case Number: 23STCV28195    Hearing Date: April 22, 2024    Dept: 57

Isaac and Elizabeth Boteo (collectively, "the Plaintiffs") sued Ford Motor Company ("Ford") under the Song-Beverly Consumer Warranty Act ("Song-Beverly Act") for breaches of express and implied warranties related to a 2018 Ford Expedition ("the Subject Vehicle") that was manufactured and distributed by Ford and for fraudulently inducing Plaintiffs to purchase the Subject Vehicle while concealing defects in the Subject Vehicle about which Ford was aware.  (Plaintiffs also sued South Bay Ford, Inc. for negligent repair.)  Pending before the Court is Ford's demurrer to all of the causes of action against Ford in the Plaintiffs' operative First Amended Complaint ("FAC").  The Court is overruling the demurrer as to Plaintiffs' claims for breach of express warranty (the first, second, and third causes of action).  Contrary to Ford's position in the demurrer, these claims are not barred on the face of the FAC by the applicable four-year statute of limitations.  The Court is sustaining the demurrer with leave to amend as to the claim for breach of implied warranty (the fourth cause of action) with leave to amend) and the claim for fraudulent inducement-concealment (the fifth cause of action) on the ground that these claims are barred by applicable statutes of limitations.

Express Warranty Claims (the First Through Third Causes of Action)

The statute of limitation on a claim for breach of an express warranty is four years.  (Krieger v. Nick Alexander Imports, Inc. (1991) 234 Cal.App.3d 205, 213-215 ["Krieger"].)  The FAC alleges that Plaintiffs entered into a warranty contract with Ford related to the Subject Vehicle on September 29, 2018.  Plaintiffs sued Ford more than five years later on November 16, 2023.  Hence, says Ford, Plaintiffs' claims for breach of the express warranty related to the Subject Vehicle are time-barred. 

Ford is incorrect.  The Song Beverly Act requires a manufacturer to commence repairs within a reasonable time after a vehicle with defects is presented to the manufacturer’s authorized representative for repair and to complete repairs to conform to the manufacturer's warranty within 30 days of presentation.  (Civil Code Section 1793.2(b).)  It also requires the manufacturer to replace a buyer's vehicle or reimburse the buyer when the manufacturer is unable to repair the vehicle after a reasonable number of attempts (Civil Code Section 1793.2(d).)  Both of these provisions render the buyer's discovery of the manufacturer's failure to carry out its obligation to perform certain tasks related to the warranty (that is, making repairs and taking steps if the repairs cannot be made after attempts to repair) as the date that claims for breach of the warranty accrues.  (Krieger, supra, 234 Cal.App.3d at p. 215; Galvez v. Ford Motor Co., No. 2:17-cv-02250-KJM-KNV (E.D. Cal. Sept. 30, 2018) 2018 WL 4700001, at *4.)  The Court cannot conclude on the face of the allegations in the FAC that Plaintiffs discovered Ford's failure to carry out its warranty obligations more than four years before Plaintiffs brought suit.  In fact, the FAC alleges that Plaintiffs presented the subject vehicle for repair several times beginning in December 2021, which was less than two years before Plaintiffs brought suit.

Implied Warranty Claim  (Fourth Cause of Action) 

The statute of limitations on a claim for breach of an implied warranty of merchantability is four years.  (Montoya v. Ford Motor Co. (2020) 46 Cal.App.5th 493, 495.)  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, Section 2725 of the Commercial Code 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, the FAC does not allege that the sales agreement for the Subject Vehicle extends the implied warranty to a future performance date by Ford.  Plaintiffs’ claim for breach of the implied warranty of merchantability thus accrued when the Subject Vehicle was delivered to them.  That occurred on September 29, 2018.  Plaintiffs did not sue Ford until more than five years later.  Accordingly, Plaintiffs’ claim for breach of the implied warranty related to the Subject Vehicle is time-barred on the face of the FAC.

Plaintiffs contend 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.)

Ford’s demurrer to Plaintiffs’ claim for breach of the implied warranty of merchantability is sustained with leave to amend.

Fraudulent Inducement-Concealment (Fifth Cause of Action)

The statute of limitations on claims for fraudulent inducement-concealment is three years.  (Code of Civil Procedure Section 338(d).)

Plaintiffs’ attempt to evade the statute of limitations through the “discovery rule,” which “postpones accrual of a cause of action until the¿plaintiff discovers, or has reason to discover, the cause of action.”¿ (Fox¿v.¿Ethicon¿Endo-Surgery, Inc.¿(2005) 35 Cal.4th 797, 807.)¿ Put another way, “[t]he discovery rule only delays accrual until the plaintiff has, or should have, inquiry notice of the cause of action.”¿ (Ibid.)¿ This means that plaintiffs “are required to conduct a reasonable investigation after becoming aware of an injury, and¿are charged with knowledge of the information that would have been revealed by such an investigation.”¿ (Id. at p. 808.)¿ “The limitations period begins once the plaintiff has notice or information of circumstances to put a reasonable person on inquiry.”¿ (Alexander¿v. Exxon Mobil¿(2013) 219 Cal.App.4th 1236, 1251, citation omitted).¿ The discovery rule imposes a pleading requirement on a party seeking the protection of the rule in the face of a demurrer.¿ Specifically, “[i]n order to rely on the discovery rule for delayed accrual of a cause of action,¿‘a plaintiff whose complaint shows on its face that his claim would be barred without the benefit of the discovery rule must specifically plead facts to show (1) the time and manner of discovery, and (2) the inability to have made earlier discovery despite reasonable diligence.’”¿ (Fox,¿supra 35 Cal.4th at p. 809, citation omitted.)¿¿

Plaintiffs have failed in the FAC to plead within the ambit of the discovery rule.  The FAC alleges that Plaintiffs did not discover Ford’s fraud until shortly before Plaintiffs sued Ford.  Missing from the FAC, however, are allegations that Plaintiffs were unable to have made this discovery earlier despite reasonable diligence.

The FAC alleges that the statute of limitations on Plaintiffs’ claims is tolled under the class action tolling doctrine.  In their opposition to the demurrer, however, Plaintiffs make no argument as to how this doctrine salvages their fraud claim.

The Court is sustaining Ford’s demurrer to the Plaintiffs’ fraud on statute of limitations grounds with leave to amend.  Ford also argued in its demurrer as to the fraud claim that the Plaintiffs in the FAC failed to plead the defect that Ford allegedly concealed and that Ford had a duty to disclose the alleged defect, and that Plaintiffs’ fraud claim is foreclosed by the economic loss rule.  Because the Court has determined that the fraud claim is barred by the statute of limitations, the Court is declining to address these other arguments at this time.