Judge: Peter A. Hernandez, Case: 23PSCV02441, Date: 2024-01-29 Tentative Ruling
Case Number: 23PSCV02441 Hearing Date: January 29, 2024 Dept: K
1. Defendant General Motors LLC’s Demurrer
to Plaintiff’s Complaint is OVERRULED.
2. Defendant General Motors LLC’s Motion to Strike Punitive Damages from Plaintiff’s Complaint is DENIED.
Background
On June 21, 2019, Plaintiff purchased a
2019 Chevrolet Silverado, VIN No. 3GCPWDED5KG191672 (“subject vehicle”). The
subject vehicle is equipped with a defective Hydra-Matic 8L90 transmission or
Hydra-Matic 8L45 transmission which can cause sudden lurching forward, sudden
acceleration, delayed acceleration, delayed downshifting, delayed deceleration
and sudden loss of forward propulsion (“Transmission Defect”). The Transmission Defect also causes premature wear to
the 8L90 and 8L45 Transmissions’ components and other vehicle parts. General
Motors LLC (“Defendant”) knew or should have known about the Transmission
Defect before the sale of the subject vehicle.
On August 9, 2023, Plaintiff filed a complaint, asserting causes of action against Defendant and Does 1-10 for:
1.
Violation of Song-Beverly Act—Breach of Express
Warranty
2.
Violation of Song-Beverly Act—Breach of Implied
Warranty
3.
Violation of the Song-Beverly Act Section 1793.2
4.
Fraud—Fraudulent Inducement—Concealment
A Case Management Conference is set for January 29, 2024.
1. Demurrer
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. (Code Civ. Proc., § 430.10, subd. (e).)
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
Defendant demurs to the fourth cause of action (i.e., for Fraud—Fraudulent Inducement—Concealment) in Plaintiff’s complaint, on the basis that it fails to state facts sufficient to constitute a cause of action.
Merits
Defendant first asserts that Plaintiff’s fourth cause of action is time-barred by the three-year statute of limitations set forth in Code of Civil Procedure § 338, subdivision (d). “[F]or a demurrer based on the statute of limitations to be sustained, the untimeliness of the lawsuit must clearly and affirmatively appear on the face of the complaint and matters judicially noticed.” (Coalition for Clean Air v. City of Visalia (2012) 209 Cal.App.4th 408, 420). Defendant fails to address the sufficiency of Plaintiff’s allegations set forth in the section entitled “Tolling of the Statute of Limitations” found in Paragraphs 61-79 of the complaint. Further, while Defendant argues that Plaintiff has conceded that “[t]he Subject Vehicle was delivered to Plaintiff with serious defects” in Paragraph 12 of the complaint, Defendant omits the following sentence in said paragraph, which reads: “However, those defects were not made aware to Plaintiff until the vehicle began to manifest serious defects and nonconformities to warranty including, but not limited to, electrical, suspension, transmission, engine, and emission system defects.” Defendant’s demurrer is overruled on this basis.
Defendant next asserts that Plaintiff has not sufficiently pled the fourth cause of action with the requisite specificity and that Plaintiff has not alleged a transactional relationship giving rise to a duty to disclose. “[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 [citation and internal quotations omitted].)
“In California, fraud must be pled specifically; general and conclusory allegations do not suffice.” (Tenet Healthsystem Desert, Inc. v. Blue Cross of California (2016) 245 Cal.App.4th 821, 837 [internal quotations and citation omitted].) However, the foregoing rule is “intended to apply to affirmative misrepresentations.” (Alfaro v. Community Housing Improvement System & Planning Assn., Inc. (2009) 171 Cal.App.4th 1356, 1384). “[L]ess specificity is required of a complaint when it appears from the nature of the allegations that the defendant must necessarily possess full information concerning the facts of the controversy.” (Tenet, supra, 245 Cal.App.4th at 838 [internal quotations and citation omitted]; see also, Alfaro, supra, 171 Cal.App.4th 1t 1384 [“[I]t is harder to apply this rule to a case of simple nondisclosure: How does one show ‘how’ and ‘by what means’ something didn’t happen, or ‘when’ it never happened, or ‘where’ it never happened?” [internal quotations omitted].)
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.)
Defendant argues that there is no “transactional relationship” giving rise to a duty to disclose; this argument, however, ignores the relationship created between the parties at the time of the purchase of the subject vehicle via the warranty. (See Scherer v. FCA US, LLC (S.D. Cal. 2021) 565 F.Supp.3d 1184, 1994 [“Plaintiffs do present a contractual relationship with Defendant, because they entered into a warranty agreement. Accordingly, this contractual relationship or transaction gives rise to a duty to disclose.”].)
Plaintiff has sufficiently pled the elements of fraudulent inducement—concealment. Plaintiff has alleged, inter alia, that on June 21, 2019, she purchased a 2019 Chevrolet Silverado, VIN No. 3GCPWDED5KG191672 (“subject vehicle”), for which Defendant issued a written warranty (Complaint, ¶ 4) and that the subject vehicle was “design[ed], develop[ed], manufacture[d], distribut[ed], market[ed], s[old], leas[ed], warrant[ed], service[ed], and repair[ed]” by Defendant (Id., ¶ 3); that Plaintiff thereafter presented the subject vehicle to Defendant’s authorized dealership for repairs in December 2020 for issues relating to a design defect in 8L90 and 8L45 transmissions “that causes ‘harsh shifts’ in lower gears, which can feel like jerking, lurching, and/or hesitations (‘Transmission Defect’)” (Id., ¶ 11); that the Transmission Defect in the 8L90 and 8L45 transmissions causes unsafe conditions, including, but not limited to, the subject vehicle suddenly lurching forward, sudden acceleration, delayed acceleration, sudden loss of forward propulsion, and delayed downshifting and decelerating (Id., ¶ 33); that Defendant is responsible for the distribution, service, repair, installation, and decisions regarding the Transmission Defect (Id., ¶ 7); that, prior to purchase, Plaintiff spoke with the dealer sales representative about the subject vehicle, inspected the Monroney sticker posted by Defendant on the vehicle and test drove the subject vehicle (Id., ¶ 13); that Plaintiff was never informed by the dealer sales representative that the vehicle suffered from the Transmission Defect and relied upon this fact in purchasing the vehicle (Id.); that, had Plaintiff been informed that the subject vehicle suffered from the Transmission Defect, she would not have purchased it (Id., ¶ 13); that, prior to placing vehicles containing the above transmissions in the stream of commerce, Defendant became aware of the Transmission Defect through sources not available to Plaintiff, including, but not limited to, preproduction testing, pre-production design failure mode and analysis data, production design failure mode and analysis data, early consumer complaints made exclusively to Defendant’s network of dealers and directly to Defendant, aggregate warranty data compiled from Defendant’s network of dealers, testing conducted by Defendant in response to consumer complaints, and repair order and parts data received by Defendant from Defendant’s network of dealers (Id., ¶ 26; see also ¶ 36); that Defendant and its agents intentionally and knowingly falsely concealed, suppressed, and/or omitted material facts including the standard, quality or grade of the GM’s 8L90 and 8L45 transmissions were defective and susceptible to sudden and premature failure, exposing drivers, occupants, and members of the public to safety risks with the intent that Plaintiff rely on Defendant’s omissions (Id., ¶ 122); and that as a result of Defendant’s failure to disclose the Transmission Defect, Plaintiff is required to spend thousands of dollars to repair or replace the defective transmission or sell the subject vehicle at a substantial loss (Id., ¶ 125).
Additionally, Plaintiff has alleged that Defendant had exclusive knowledge. Courts have defined “exclusive” as having been met if the defendant had superior knowledge of a defect. (See Falk v. General Motors Corp. (N.D. Cal. 2007) 496 F.Supp.2d 1088, 1097 [“It is true that prospective purchasers, with access to the Internet, could have read the many complaints about the failed speedometers (as quoted in the complaint). Some may have. But GM is alleged to have known a lot more about the defective speedometers, including information unavailable to the public. Many customers would not have performed an Internet search before beginning a car search. Nor were they required to do so”]. Plaintiff has alleged that “Defendant acquired its knowledge of the Transmission Defect and its potential consequences prior to plaintiff acquiring the Subject Vehicle, through sources not available to the consumer such as plaintiff, including but not limited to pre-production testing, early consumer complaints about the Transmission Defect made directly to Defendant and its network of dealers, aggregate warranty data compiled from Defendant’s network of dealers, testing conducted by Defendant in response to these complaints, as well as warranty repair and part replacements data received by Defendant from Defendant’s network of dealers, amongst other sources of internal information,” that “Defendant was in a superior position to know the true state of facts about the safety defects contained in the Subject Vehicle and its transmission” and that “Plaintiff could not reasonably have been expected to learn about or discover the Vehicle’s Transmission Defect and its potential consequences until after plaintiff purchased the Vehicle and Defendant failed to repair it after a number of repair attempts. (Complaint, ¶ 127).
Defendant’s demurrer is overruled.
2. Motion to Strike
Legal Standard
Pursuant to Code of Civil Procedure section 436, “the court may, upon a motion made pursuant to Section 435, or at any time in its discretion, and upon terms it deems proper: (a) Strike out any irrelevant, false, or improper matter inserted in any pleading. (b) Strike out all or any part of any pleading not drawn or filed in conformity with the laws of this state, a court rule, or an order of the court.” The grounds for a motion to strike must “appear on the face of the challenged pleading or from any matter of which the court is required to take judicial notice.” (Code Civ. Proc., § 437.)
Discussion
Defendant moves to strike out the following portions of Plaintiff’s complaint:
1.
Page 26, line 8, Paragraph 6 in Prayer for Relief: “For
punitive damages.”
Punitive damages may be awarded upon clear and convincing evidence that a defendant has been guilty of oppression, fraud, or malice. (Civ. Code § 3294, subd. (a).) “Malice” is defined as “conduct which is intended by the defendant to cause injury to the plaintiff or despicable conduct which is carried on by the defendant with a willful and conscious disregard of the rights or safety of others.” “Oppression” is defined as “despicable conduct that subject a person to cruel and unjust hardship in conscious disregard of that person’s rights.” (Civ. Code § 3294, subd. (b).) “Fraud” is defined as “an intentional misrepresentation, deceit, or concealment of a material fact known to the defendant with the intention on the part of the defendant of thereby depriving a person of property or legal rights or otherwise causing injury.” (Civ. Code § 3294, subd. (c).)
Plaintiff has sufficiently pled her fourth cause of action for Fraudulent Inducement—Concealment, as set forth above. The cause of action allows for punitive damages.
Defendant’s motion, then, is denied.