Judge: Peter A. Hernandez, Case: 22PSCV00200, Date: 2022-10-13 Tentative Ruling
Case Number: 22PSCV00200 Hearing Date: October 13, 2022 Dept: O
Defendants Envision WC MB Auto, LLC dba Mercedes-Benz of
West Covina’s (erroneously sued and served as Mercedes-Benz of West Covina), and
Mercedes-Benz Financial Services USA LLC’s Demurrer to Plaintiff’s First
Amended Complaint is SUSTAINED (i.e., as to the first and second causes of
action). Defendant Federated Mutual Insurance Company’s Demurrer to Plaintiff’s
First Amended Complaint is SUSTAINED (i.e., as to the third cause of action). The court will hear from counsel for
Plaintiff as to whether leave to amend is requested, and as to which cause(s)
of action, and will require an offer of proof if so.
Background
Plaintiff Ho Yee Lai (“Plaintiff”) alleges as follows:
On April 28, 2022, Plaintiff filed a First Amended Complaint, asserting causes of action against MBWC, Mercedes-Benz Financial Services USA LLC (“MBFS”), Federated Mutual Insurance Company (“Federated”) and Does 1-50 for:
1.
Violation of the Consumer Legal Remedies Act (Civ. Code
§§ 1750, et seq.)
2.
Violation of Song-Beverly Consumer Warranty Act
3.
Claim Against Dealer Bond
On June 14, 2022, a “Stipulation of the Parties to Strike All References to Punitive Damages in the First Amended Complaint; Order” was filed.
A Case Management Conference is set for October 13, 2022.
Legal Standard
A
demurrer may be made on the grounds that the pleading, inter alia, does not
state facts sufficient to constitute a cause of action and/or is uncertain.
(Code Civ. Proc., § 430.10, subds. (e) and (f).)
When considering demurrers, courts read the allegations liberally and in context. In a demurrer proceeding, the defects must be apparent on the face of the pleading or via proper judicial notice. (Donabedian v. Mercury Ins. Co. (2004) 116 Cal.App.4th 968, 994.) “A demurrer tests the pleadings alone and not the evidence or other extrinsic matters. Therefore, it lies only where the defects appear on the face of the pleading or are judicially noticed.” (SKF Farms v. Superior Court (1984) 153 Cal.App.3d 902, 905 [citations omitted].) At the pleading stage, a plaintiff need only allege ultimate facts sufficient to apprise the defendant of the factual basis for the claim against him. (Semole v. Sansoucie (1972) 28 Cal. App. 3d 714, 721.) “[A] demurrer does not, however, admit contentions, deductions or conclusions of fact or law alleged in the pleading, or the construction placed on an instrument pleaded therein, or facts impossible in law, or allegations contrary to facts of which a court may take judicial knowledge.” (S. Shore Land Co. v. Petersen (1964) 226 Cal.App.2d 725, 732 [citations omitted].)
Discussion
MBWC and MBFS demur, pursuant to Code of Civil Procedure § 430.10, subdivision (e), to the first and second causes of action in Plaintiff’s FAC, on the basis that they both fail to state facts sufficient to constitute a cause of action. Federated demurs to the third cause of action on this basis. MBWC and MBFS also demur, per subsection (f), to the second cause of action on the basis of uncertainty.
First Cause of Action (i.e., Violation of the Consumer Legal Remedies Act (Civ. Code §§ 1750, et seq.)
The elements of a cause of action under the CLRA are (1) a consumer (2) who suffers any damage (3) as a result of the use or employment by any person of a method, act, or practice declared to be unlawful by Section 1770. (Civ. Code § 1780, subd. (a).) “[C]auses of action under the CLRA. . . must be stated with reasonable particularity.” (Gutierrez v. Carmax Auto Superstores California (2018) 19 Cal.App.5th 1234, 1261.)
Here, Plaintiff alleges MBWC violated subdivisions (a)(7) and (a)(14) of Section 1770 for failing to disclose the vehicle needed paint repairs. (FAC, ¶ 30.) Subdivision (a)(7) prohibits “[r]epresenting that goods or services are of a particular standard, quality, or grade, or that goods are of a particular style or model, if they are of another.” Subdivision (a)(14) prohibits “[r]epresenting that a transaction confers or involves rights, remedies, or obligations that it does not have or involve, or that are prohibited by law.”
“Not every omission or nondisclosure of fact is actionable. . . an omission is actionable under the CLRA if the omitted fact is (1) ‘contrary to a [material] representation actually made by the defendant’ or (2) is ‘a fact the defendant was obliged to disclose.’” (Gutierrez, supra, 19 Cal.App.5th at 1258, quoting Daugherty v. American Honda Motor Co., Inc. (2006) 144 Cal.App.4th 824, 835.)
There are four situations in which a failure to disclose a fact constitutes a deceptive practice actionable under the CLRA: “[1] when the defendant is the plaintiff’s fiduciary, [2] when the defendant has exclusive knowledge of material facts not known or reasonably accessible to the plaintiff,. . . [3] when the defendant actively conceals a material fact. . . [and [4]] when the defendant makes partial representations that are misleading because some other material fact has not been disclosed.” (Id. [internal quotations and citation omitted].) However, “[a] duty to disclose cannot exist if the defendant was not aware of the facts that were not disclosed.” (Id. at 1262.)
Here, Plaintiff has alleged that the subject vehicle was sold to Plaintiff as a certified pre-owned vehicle; that, as part of the CPO process, MBWC inspected the subject vehicle thoroughly; that, during this inspection, MBWC became aware that the subject vehicle had a defective paint job, which it did not disclose to Plaintiff prior to Plaintiff’s purchase of the subject vehicle; that, sometime after purchasing the subject vehicle, Plaintiff observed that the paint on the subject vehicle was a bit rough; and that Plaintiff had a repair estimate commissioned on the subject vehicle and learned that the subject vehicle needed at least $1,500 in paint repairs. (FAC, ¶¶ 16-21.)
There is nothing alleged in the FAC as to when Plaintiff discovered the alleged rough paint after her purchase. If the alleged rough condition of the subject vehicle’s paint was something that did not exist at the time of purchase, but was something that developed over time, it logically follows that MBWC would not have discovered it during the CPO inspection in order to be under any duty to disclose it as the condition did not exist yet. If the alleged condition existed at the time of sale, however, MBWC would be under no obligation to disclose it as it was something that Plaintiff herself would have been able to observe prior to purchase. There is no allegation in the FAC that the rough paint was somehow hidden on the subject vehicle.
Plaintiff’s claim as against MBFS fails, in that it is based on MBWC’s liability. Also, Plaintiff asserts that MBFS, as holder of the retail installment sales contract (“RISC”), “[is] liable to the extent that it receives payments on the contract.” (Opposition, 4:4-5.) “The Holder Rule requires credit consumer contracts to provide notice that any holder to the contract is subject to all claims and defenses that a buyer could assert against the seller.” (LaChapelle v. Toyota Motor Credit Corp. (2002) 102 Cal.App.4th 977, 984.) Plaintiff, however, does not allege that the RISC included any such notice, nor is a copy of the RISC attached.
MBWC and MBFS’s demurrer to the first cause of action is sustained.
Second Cause of Action (i.e., Violation of Song-Beverly Consumer Warranty Act)
Plaintiff states that she is only making a claim under the implied warranty of merchantability. (Opposition 5:1-2.)
The implied warranty of merchantability “does not impose a general requirement that goods precisely fulfill the expectation of the buyer. Instead, it provides for a minimum level of quality.” (American Suzuki Motor Corp. v. Superior Court (1995) 37 Cal.App.4th 1291, 1296 [internal quotations and citation omitted].) “[I]n the case of automobiles, the implied warranty of merchantability can be breached only if the vehicle manifests a defect that is so basic it renders the vehicle unfit for its ordinary purpose of providing transportation.” (Id.)
Plaintiff’s FAC is devoid of any allegation that the subject vehicle suffers from any such defect impacting its use.
Plaintiff’s claim as to MBFS fails, because it is derivative of MBWC’s liability and because of the holder rule analysis set forth above.
MBWC and MBFS’s demurrer to the second cause of action is sustained.
Third Cause of Action (i.e., Claim Against Dealer Bond)
Plaintiff concedes that the bond claim against Federated is dependent upon Plaintiff’s claim against MBWC under the CLRA (Opposition, 5:6-9); accordingly, inasmuch as the demurrer to the first cause of action has been sustained, the third cause of action is also sustained.