Judge Monica Bachner, Case 22STCV11210 2023-01-23 Tentative Ruling

Defendant American Honda Motor Co., Inc.’s demurrer to the 2nd cause of action in Plaintiffs’ complaint is sustained with 10 days leave to amend.

Defendant American Honda Motor Co., Inc (“AHM”) (“Defendant”) demurs to the 2nd cause of action for fraudulent inducement- concealment in the complaint (“Complaint”) of Plaintiffs Raymundo Flores Silva aka Raymundo A. Silva (“Silva”) and Mercedes Casillas Pina (“Pina”) (collectively, “Plaintiffs”). Defendant argues Plaintiffs failed to allege sufficient facts to constitute the causes of action. (Notice of Demurrer, pgs. 1-2; C.C.P. §430.10(e).)

Defendant does not demur to the 1st cause of action for violation of Song-Beverly Consumer Warranty Act (“Song-Beverly”)- breach of express warranty.

On April 1, 2022, Plaintiffs filed their complaint alleging a cause of action under Song-Beverly and fraudulent inducement relating to their August 17, 2019, purchase of a 2019 Honda Odyssey (“Subject Vehicle”) that they claim was defective due to a transmission defect (“Transmission Defect”). (Complaint ¶¶17-20.)

On May 6, 2022, Defendant filed the instant demurrer and accompanying motion to strike. Plaintiffs filed their oppositions on October 21, 2022. Defendant filed its reply on October 27, 2022. The Court conducted a hearing On November 3, 2022, and continued the hearing, allowing a sur-reply and sur-sur-reply to be filed to address Dhital v. Nissan (2022) 84 Cal.App. 5^th 828. Plaintiffs filed their sur reply on January 3, 2023. Defendant filed its sur-sur reply on January 13, 2023.

The elements of fraud are: “‘(a) misrepresentation (false representation, concealment, or nondisclosure); (b) knowledge of falsity (or ‘scienter’); (c) intent to defraud, i.e., to induce reliance; (d) justifiable reliance; and (e) resulting damage.’ [Citations]” (Charnay v. Cobert (2006) 145 Cal.App.4th 170, 184.)

The elements of an action for fraud based on concealment, or fraud by omission, 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.’ [Citation]” (Blickman Turkus, LP v. MF Downtown Sunnyvale, LLC (2008) 162 Cal.App.4th 858, 868.)

In California, fraud must be pled with specificity. (Small v. Fritz Companies, Inc. (2003) 30 Cal.4th 167, 184.) “The requirement of specificity in a fraud action against a corporation requires the plaintiff to allege the names of the persons who made the allegedly fraudulent representations, their authority to speak, to whom they spoke, what they said or wrote, and when it was said or written.” (Tarmann v. State Farm Mutual Automobile Insurance Co. (1991) 2 Cal.App.4th 153, 157.) In cases of alleged fraud by omission, unlike fraud by an affirmative misrepresentation, this specificity requirement must be applied differently because it is difficult to allege “who” or “how” or “by what means” something was not disclosed or “when” or “where” a statement was not made. (Alfaro v. Community Housing Improvement System & Planning Association, Inc. (2009) 171 Cal.App.4th 1356, 1384.) Because the nature of such fraud makes facts supporting concealment more likely to be known by the defendant, less particularity is required. (Id.)

Plaintiffs allege on or around January 20, 2021, Plaintiffs delivered the Subject Vehicle to Diamond Honda of Puente Hills (“Diamond Honda”), Defendant’s authorized repair facility for repair, where repair facility technicians performed Service Bulletin 20-024 for the Odyssey sliding door outer handle cables, Service Bulletin 20-047 for the software update, and Service Bulletin 20-050 for the rear-view camera update, and service technician represented to Plaintiffs that the Subject Vehicle had been repaired and was safe to drive, a representation on which Plaintiffs reasonably relied. (Complaint ¶55.) Plaintiffs allege on or around April 14, 2021, Plaintiffs delivered the Subject Vehicle to Diamond Honda and complained that the Subject Vehicle had an abnormal sound coming from the speakers and the audio unit would randomly turn off; the repair facility technicians found a popping or crackling from the speakers or no sound from the audio system and replaced the affected FAKRA connectors. (Complaint ¶56.) Plaintiffs allege they also complained there was a vibration coming from the Subject Vehicle while driving, and repair facility technicians were unable to duplicate Plaintiffs’ concern. The service technician represented to Plaintiffs that the Subject Vehicle had been repaired and was safe to drive. (Complaint ¶56.) Plaintiffs allege on or around May 14, 2021, Plaintiffs delivered the Subject Vehicle to Diamond Honda and complained that the Subject Vehicle’s battery did not hold charge and that there was a noise coming from the left side of the vehicle when making left turns; the repair facility technicians replaced the battery and were unable to duplicate Plaintiffs’ suspension concern. (Complaint ¶57.) Plaintiffs allege they also complained that the Subject Vehicle had a vibration while driving at speeds of 30 to 40 mph while on acceleration, repair facility technicians were unable to duplicate Plaintiffs’ concern and the service technician

represented to Plaintiffs that the Subject Vehicle had been repaired and was safe to drive. (Complaint ¶57.) Plaintiffs allege on or around July 20, 2021, Plaintiffs delivered the Subject Vehicle to Diamond Honda and complained that the Subject Vehicle’s sliding doors hesitated to close since the recall was performed. (Complaint ¶58.) Plaintiffs allege the repair facility technicians found Service Bulletin 19-028 and replaced both sliding doors, along with the right and left power sliding door motor PCB modules. (Complaint ¶58.) Plaintiffs allege they also complained that the Subject Vehicle shut off while driving on the freeway, and the technician represented to Plaintiffs that the Subject Vehicle had been repaired and was safe to drive. (Complaint ¶58.) Plaintiffs allege on or around August 7, 2021, Plaintiffs delivered the Subject Vehicle to Diamond

Honda and complained that the Subject Vehicle’s steering felt very loose at higher speeds, there was a knock noise when hitting bumps on the freeway, and the Subject Vehicle felt wobbly when making left or right turns. (Complaint ¶59.) The repair facility technicians test drove the Subject Vehicle and were unable to duplicate Plaintiffs’ concern and represented to Plaintiffs that the Subject Vehicle had been repaired and was safe to drive. (Complaint ¶59.)

Plaintiffs allege Defendant was the only party with knowledge of the Transmission Defect, and information regarding the defect was never made publicly available, nor did Defendant publicly or privately disclose any of the information to Plaintiffs. (Complaint ¶79.) Plaintiffs allege Defendant actively concealed information from the public, preventing Plaintiffs from discovering any of the concealed facts. (Complaint ¶80.) Plaintiffs alleges prior to the date of sale, on the date of sale, and on the date of each of the repair attempts, Defendant had an opportunity to disclose the Transmission Defect to Plaintiffs, but instead concealed from and failed to disclose to Plaintiffs, any of the known irreparable issues with the Subject Vehicle. (Complaint ¶81.) Plaintiffs allege Defendant knew of the specific issues affecting the Subject Vehicle, including the Transmission Defect, prior to the sale of the Vehicle, and the Subject Vehicle was sold after Defendant acknowledged these problems in TSBs without any sort of disclosure being made to Plaintiffs, and when Plaintiffs experienced repeated problems with the Transmission Defect in their vehicle and delivered the vehicle to Defendant’s authorized repair facility for evaluation and repair, Defendant and its agents continued to conceal the known Transmission Defect and repeatedly represented to Plaintiffs that it was able to fix the issue. (Complaint ¶83.) Plaintiffs allege they did not know about the Transmission Defect at the time of sale and did not know of the irreparable nature of the problems at the time of any of the repair attempts because Defendant and its agents repeatedly represented that it was able to fix the

Defendant argues Plaintiffs failed to allege that Defendant concealed or suppressed a material fact and do not allege with any degree of specificity which advertisements, service bulletins, or other representations they relied on that failed to include the omitted information or when these advertisements and/or statements were made, such that they could have been made after Plaintiffs’ 2019 purchase of the Subject Vehicle. (Demurrer, pg. 6; Complaint ¶¶49-61.) Defendant further argues that the repair history complained of does not reference a transmission issue. (Sur-sur-reply, pg. 2.)[1] Defendant argues Plaintiffs failed to allege any direct contact with Defendant (as distinct from the dealer) prior to purchase the Subject Vehicle where the alleged omissions regarding the defect at issue should or could have been revealed, and Plaintiffs’ interactions with third-party dealerships, which the Complaint characterizes as statements concealing material facts about a Transmission Defect, amount to nothing more than standard sales “puffery” that courts have repeatedly held to be non-actionable. (Hauter v. Zogarts (1975) 14 Cal.3d 104, 111 [statements of opinion, or “puffing,” are non-actionable]; Schonfeld v. City of Vallejo (1975) 50 Cal.App.3d 401, 412 [a fraud claim cannot be based on “sales talk”].) Defendant further argues Plaintiffs failed to plead with sufficient detail what representation, if any Plaintiffs relied upon in purchasing the 2019 Honda Odyssey, and the Transmission Defect is not “contrary to a [material] representation actually made by the defendant.” (Gutierrez v. Carmax Auto Superstores California (2018) 19 Cal.App.5th 1234, 1258; Daugherty, v. American Honda Motor Co. (2006) 144 Cal.App.4th 824, 834 [holding plaintiff failed to plead a fraudulent omission where “no representation was made to which the alleged concealment was contrary.”].) Defendant argues Plaintiffs fail to allege with sufficient detail any affirmative acts by Defendant to suppress or obscure the defect, and merely alleging that Defendant omitted certain facts about an alleged engine defect in its general advertisements to unknown audience is insufficient to establish (1) knowledge of a particular defect in a particular vehicle or (2) intent to conceal this particular knowledge from this particular Plaintiffs. (See Tenzer v. Superscope, Inc. (1985) 39 Cal.3d 18, 30 [“something more than nonperformance is required to prove the defendant’s intent not to perform his promise”].) Defendant argues it is not liable for the independent negligence of a dealership employee, let alone a non-party dealership with no relationship to Defendant. (Mel Clayton Ford v. Ford Motor Co. (2002) 104 Cal.App.4th 46, 49.) Defendant argues Plaintiffs bear the burden to prove agency such that statements of a purported agent may be attributed to a purported principal. (D’Acquisto v. Evola (1949) 90 Cal.App.2d 210, 213.)

Defendant argues Plaintiffs failed to plead facts sufficient to establish the existence of a duty to disclose the information omitted. (Goodman v. Kennedy (1976) 18 Cal. 3d 335, 347; see also Daugherty, 144 Cal.App.4th at pg. 835.) The

duty to disclose arises in four ways: “(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.” (Heliotis v. Schuman (1986) 181 Cal.App.3d 646, 651, quoting 4 Witkin, Summary of Cal. Law

(8th ed. 1974) Torts, §§459-464.) Defendant argues Plaintiffs do not and cannot allege a fiduciary relationship with Defendant because of “a general rule that a vendor not in a confidential relation to the buyer is not under a duty to make full disclosure concerning the object which he would sell.” (De Spirito v. Andrews (1957) 151 Cal.App.2d 126, 130.)

Here, Plaintiffs do not allege a fiduciary relationship and the Complaint does not allege exclusive knowledge on Defendant’s part because Plaintiffs only references information that was publicly available. Plaintiffs failed to plead sufficient facts to show Defendant’s “exclusive knowledge” or “active concealment” of the alleged defects at issue or other material facts not known to Plaintiffs. Indeed, Plaintiffs specifically allege that the operative facts underlying the alleged transmission defects were publicly available through multiple sources, including the National Highway Transportation Safety Association and Technical Service Bulletins (“TSBs”). (Complaint ¶¶22, 28-35, 37-40, 111.)

Plaintiffs failed to allege facts demonstrating intended Plaintiffs’ reliance or that Plaintiffs’ reliance was “reasonably expected to occur.” (See Lovejoy v. AT&T Corp. (2001) 92 Cal.App.4th 85, 93.) “[M]ere conclusory allegations that the omissions were intentional and for the purpose of defrauding and deceiving plaintiffs and bringing about the purchase . . . are insufficient [to show fraud by concealment].” (Goodman, 18 Cal.3d at pg. 347.) Here, the Complaint only pleads this essential allegation as a pure legal conclusion by stating: “Had [Defendant] and/or its agents publicly or privately disclosed the Transmission Defect to Plaintiffs at or prior to the sale, Plaintiffs would not have purchased the Vehicle.” (Complaint ¶85.)[2] (5)

Based on the foregoing, Defendant’s demurrer to the 2nd cause of action is sustained with 10 days leave to amend.

[1] Defendant’s argument that the evidence cited in the Complaint relates to a different transmission goes beyond the four corners of the Complaint.

[2] Given the Court’s ruling on the substantive cause of action, the Court does not address the economic loss rule.