Judge Peter A. Hernandez, Case Number: 23PSCV00084, Date: 2023-07-10 Tentative Ruling

Defendant Ford Motor Company’s Motion for Judgment on the Pleadings is DENIED in part (i.e., as to the third cause of action) and GRANTED in part (i.e., as to the fifth cause of action). The court will hear from counsel for Plaintiff as to whether leave to amend is requested and will require an offer of proof if so.

On August 11, 2020, Plaintiff entered into a warranty contract with Ford Motor Company (“FMC”) regarding a 2018 Ford F-150, VIN No. 1FTEW1EG6JFE68832 (“subject vehicle”). FMC knew that the 10R80 10 speed automatic transmission installed in the subject vehicle was defective but failed to disclose same to Plaintiff at the time of the sale and thereafter.

On January 11, 2023, Plaintiff filed a complaint, asserting causes of action against FMC, Puente Hills Ford and Does 1-10 for:

4. Breach of the Implied Warranty of Merchantability (Civil Code § 1791.1; § 1794; § 1795.5)

The rules governing demurrers are generally applicable to a motion for judgment on the pleadings. (Cloud v. Northrop Grumman Corp. (1998) 67 Cal.App.4^th 995, 999; Code Civ. Proc., § 438, subd. (d) [“The grounds for motion. . . shall appear on the face of the challenged pleading or from any matter of which the court is required to take judicial notice. Where the motion is based on a matter of which the court may take judicial notice. . ., the matter shall be specified in the notice of motion, or in the supporting points and authorities, except as the court may otherwise permit”].)

A motion by a plaintiff may only be made on the grounds “that the complaint states facts sufficient to constitute a cause or causes of action against the defendant and the answer does not state facts sufficient to constitute a defense to the complaint.” (Code Civ. Proc., § 438, subd. (c)(1)(A).) A motion by a defendant may only be made on the grounds that (1) “[t]he court has no jurisdiction of the subject of the cause of action alleged in the complaint” or (2) “[t]he complaint does not state facts sufficient to constitute a cause of action against that defendant.” (Code Civ. Proc., § 438, subd. (c).)

Although a nonstatutory motion “may be made at any time either prior to the trial or at the trial itself” (Stoops v. Abbassi (2002) 100 Cal.App.4th 644, 650 [quotation marks and citation omitted]), a statutory motion cannot be made after entry of a pretrial conference order or 30 days before the initial trial date, whichever is later, unless the court otherwise permits. (Code Civ. Proc., § 438, subd. (e).)

FMC moves the court for an order for judgment on the pleadings as to Plaintiff’s third and fifth causes of action.

Third Cause of Action (i.e., Violation of Subdivision (a)(3) of Civil Code Section 1793.2)

FMC claims that Plaintiff has failed to allege facts sufficient to state a cause of action for violation of Civil Code § 1793.2, subdivision (a)(3); this section provides, in relevant part, that “[e]very manufacturer of consumer goods sold in this state and for which the manufacturer has made an express warranty shall:. . . (3) Make available to authorized service and repair facilities sufficient service literature and replacement parts to effect repairs during the express warranty period.”

Here, Plaintiff has alleged that FMC “failed to make available to its authorized service and repair facilities sufficient service literature and replacement parts to effect repairs during the express warranty period.” (Complaint, ¶ 47.) Plaintiff has alleged that “FMC and its representatives in this state have been unable to service or repair the Vehicle to conform to applicable express warranties after a reasonable number of opportunities” (Id., ¶ 36) These allegations, taken together, indicate that the literature and/or replacement parts were insufficient and that Plaintiff suffered damages as a result.

FMC contends that Plaintiff’s fifth cause of action is barred by the economic loss rule. The economic loss rule limits a party to a contract “to recover in contract for purely economic loss due to disappointed expectations, unless he can demonstrate harm above and beyond a broken contractual promise.” (Robinson Helicopter Co., Inc. v. Dana Corp. (2004) 34 Cal.4th 979, 988.)

The First District, Division Four Court of Appeal in Dhital v. Nissan North America, Inc. (2022) 84 Cal.App.5th 828[1] determined that in a contract case, a fraudulent inducement claim based in part on presale concealment falls within an exception to the economic loss rule. (Id. at 727 [“Fraudulent inducement claims fall within an exception to the economic loss rule recognized by our Supreme Court, and plaintiffs allege fraudulent conduct that is independent of Nissan’s alleged warranty breaches”]; see also Erlich v. Menezes (1999) 21 Cal.4th 543, 551-552 [in contract cases involving fraudulently inducement and other exceptions listed in Robinson, supra, 34 Cal.4th 979, “the duty that gives rise to tort liability is either completely independent of the contract or arises from conduct which is both intentional and intended to harm”] and Harris v. Atlantic Richfield Co. (1993) 14 Cal.App.4th 70, 78 [“when one party commits a fraud during the contract formation or performance, the injured party may recover in contract and tort”].)

Plaintiff’s fifth cause of action is likewise based in part on presale concealment. (Complaint, ¶ 26 [“Prior to Plaintiff purchasing the Vehicle, Defendant FMC knew that vehicles equipped with the same 10R80 transmission as the Vehicle suffered from one or more defects that can cause the vehicles and their 10R80 transmissions to experience hesitation and/or delayed acceleration; harsh and/or hard shifting; jerking, shuddering, and/or juddering”]; ¶ 34 [“Although it has been fully aware of the Transmission Defect, Defendant FMC actively concealed the existence and nature of the Defect from Plaintiff at the time of purchase, repair, and thereafter”]; ¶ 57 [“prior to Plaintiff acquiring the Vehicle, FMC was well aware and knew that the transmission installed in the Vehicle was defective but failed to disclose this fact to the plaintiff at the time of the sale and thereafter”]; ¶ 60 [“while Defendant knew about the Transmission Defect, and its safety risks, Defendant nevertheless concealed and failed to disclose the defective nature of the Vehicle and its transmission to Plaintiff at the time of sale, repair, and thereafter. Had Plaintiff known that the Subject Vehicle suffered from the Transmission Defect, they would not have purchased the Subject Vehicle”].

FMC further contends that Plaintiff’s fifth cause of action has not been sufficiently pled. The court agrees.

“[T]he elements of an action for fraud and deceit 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.” (Boschma v. Home Loan Center, Inc. (2011) 198 Cal.App.4th 230, 248.)

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.” (Heliotis v. Schuman (1986) 181 Cal.App.3d 646, 651.) “[A] duty to disclose may arise from the relationship between seller and buyer, employer and prospective employee, doctor and patient, or parties entering into any kind of contractual agreement.” (LiMandri v. Judkins (1997) 52 Cal.App.4th 326, 337.)

Plaintiff has failed to sufficiently plead the elements of fraudulent inducement—concealment. In addition to the allegations set forth above, Plaintiff has alleged that on or about August 11, 2020, Plaintiff entered into a warranty contract with FMC regarding a 2018 Ford F-150, VIN No. (“subject vehicle”) (Complaint, ¶ 10); that “[d]effects and nonconformities to warranty manifested themselves . . . including but not limited to. . . transmission defects” (Id., ¶ 15); that these defects substantially impair the use, value, or safety of the subject vehicle (Id., ¶ 16); that prior to Plaintiff purchasing the subject vehicle, FMC knew that vehicles equipped with the same 10R80 transmission as the subject vehicle suffered from one or more defects that can cause the vehicles and their 10R80 transmissions to experience hesitation and/or delayed acceleration; harsh and/or hard shifting; jerking, shuddering, and/or juddering ("Transmission Defect") (Id., ¶ 26), which knowledge FMC acquired through various sources of information, such as pre-production testing, pre-production design failure mode and analysis data, production failure mode and analysis data, early consumer complaints made exclusively to Ford's network of dealers and directly to Ford, aggregate warranty data compiled from Ford's network of dealers, testing conducted by Ford in response to consumer complaints, and repair order and parts data received by Ford from Ford’s network of dealers (Id., ¶ 27); that FMC subsequently issued TSBs concerning the Transmission Defect as a result of this internal knowledge and investigations (Id., ¶ 28); that Plaintiff thereafter presented the subject vehicle to FMC for a reasonable number of repair attempts (Id., ¶ 66); that FMC and its representatives have been unable to service or repair the subject vehicle to confirm to the applicable express warranties after a reasonable number of opportunities (Id., ¶ 36); and that Plaintiff would not have purchased the subject vehicle, or would have paid less for it, had Plaintiff known of the Transmission Defect, given the unsafe nature of the Defect (Id., ¶ 33).

Plaintiff, however, has not alleged any relationship requiring FMC to disclose known defects. In Dhital, the court of appeal rejected Nissan’s argument that plaintiffs did not adequately plead the existence of a buyer-seller relationship between the parties because plaintiffs brought the subject vehicle from a Nissan dealership rather than Nissan itself: “At the pleading stage. . ., we conclude plaintiffs’ allegations are sufficient, Plaintiffs alleged that they bought the car from a Nissan dealership, that Nissan backed the car with an express warranty, and that Nissan's authorized dealerships are its agents for purposes of the sale of Nissan vehicles to consumers. In light of these allegations, we decline to hold plaintiffs’ claim is barred on the ground there was no relationship requiring Nissan to disclose known defects.”

Plaintiff here made no allegations of an agency relationship between FMC and its dealerships. Plaintiff’s only reference to FMC’s representatives is with respect to repairs of the subject vehicle, not the sale of same.

[1] Review was granted by the California Supreme Court on February 1, 2023. Pursuant to California Rules of Court Rule 8.1105, subdivision (e)(1)(B), “Unless otherwise ordered under (2): (B) Grant of review by the Supreme Court of a decision by the Court of Appeal does not affect the appellate court's certification of the opinion for full or partial publication under rule 8.1105(b) or rule 8.1110, but any such Court of Appeal opinion, whether officially published in hard copy or electronically, must be accompanied by a prominent notation advising that review by the Supreme Court has been granted.” Subdivision (e)(2) provides that “[t]he Supreme Court may order that an opinion certified for publication is not to be published or that an opinion not certified is to be published. The Supreme Court may also order depublication of part of an opinion at any time after granting review.” The California Supreme Court denied Defendant/Respondent Nissan North America, Inc.’s request for depublication of the opinion on February 1, 2023.

California Rules of Court Rule 8.1115 provides, in relevant part, as follows: “(e) When review of published opinion has been granted (1) [] Pending review and filing of the Supreme Court's opinion, unless otherwise ordered by the Supreme Court under (3), a published opinion of a Court of Appeal in the matter has no binding or precedential effect, and may be cited for potentially persuasive value only. Any citation to the Court of Appeal opinion must also note the grant of review and any subsequent action by the Supreme Court (2) [] After decision on review by the Supreme Court, unless otherwise ordered by the Supreme Court under (3), a published opinion of a Court of Appeal in the matter, and any published opinion of a Court of Appeal in a matter in which the Supreme Court has ordered review and deferred action pending the decision, is citable and has binding or precedential effect, except to the extent it is inconsistent with the decision of the Supreme Court or is disapproved by that court. (3) [] At any time after granting review or after decision on review, the Supreme Court may order that all or part of an opinion covered by (1) or (2) is not citable or has a binding or precedential effect different from that specified in (1) or (2).” (Underline added).