Judge: Peter A. Hernandez, Case: 23PSCV02704, Date: 2024-01-24 Tentative Ruling

Case Number: 23PSCV02704    Hearing Date: January 24, 2024    Dept: K

1.         Defendant American Honda Motor Co., Inc.’s Demurrer to Plaintiff’s First Amended Complaint is OVERRULED.

2.         Defendant American Honda Motor Co., Inc.’s Motion to Strike Portions of Plaintiff’s First Amended Complaint is DENIED.

Background   

Plaintiff Ana Cecilia Lerma Ramirez (“Plaintiff”) alleges as follows:

On April 24, 2021, Plaintiff entered into a warranty contract with American Honda Motor Co., Inc. (“Defendant”) regarding a 2021 Honda Civic, VIN No. 2HGFC2F69MH552933 (“subject vehicle”). The subject vehicle is equipped with a computerized driver-assisting safety system known as “Honda Sensing,” which includes adaptive cruise control, lane departure warnings and steering inputs, and autonomous braking. The Honda Sensing system suffers from a defect that causes the various subsystems within it to malfunction dangerously while the vehicles are driven (“Sensing Defect”). Defendant knew or should have known about the Sensing Defect before the subject vehicle was sold and failed to disclose same.

On November 15, 2023, Plaintiff filed a First Amended Complaint (“FAC”), asserting causes of action against Defendant and Does 1-10 for:

1.                  Violation of Subdivision (d) of Civil Code Section 1793.2

2.                  Violation of Subdivision (b) of Civil Code Section 1793.2

3.                  Violation of Subdivision (a)(3) of Civil Code Section 1793.2

4.                  Breach of the Implied Warranty of Merchantability

5.                  Fraudulent Inducement—Concealment

A Case Management Conference is set for January 24, 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 and 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

Defendant demurs to the fifth cause of action (i.e., for Fraudulent Inducement—Concealment) in Plaintiff’s FAC, on the basis that it fails to state facts sufficient to constitute a cause of action and is uncertain.

Request for Judicial Notice

The court denies Plaintiff’s Request for Judicial Notice as unnecessary. (Quelimane Co. v. Stewart Title Guaranty Co. (1998) 19 Cal.4th 26, 45, fn. 9 [“A request for judicial notice of published material is unnecessary. Citation to the material is sufficient.”].)

Merits

“[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].)

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 sufficiently pled the elements of fraudulent inducement—concealment. Plaintiff has alleged that on or about April 24, 2021, Plaintiff entered into a warranty contract with Defendant regarding a 2021 Honda Civic, VIN No. 2HGFC2F69MH552933 (“subject vehicle”), which was manufactured and/or distributed by Defendant (FAC, ¶ 6); that Plaintiff thereafter presented the subject vehicle to Defendant’s authorized repair facility on April 25, 2022 and August 29, 2022 with various concerns, including the sensing system with the auto brake activating while Plaintiff was driving the subject vehicle and nothing was in front of the subject vehicle (Id., ¶¶ 23 and 24); that Defendant designed, manufactured, tested, warranted, advertised, distributed, sold, and leased 2017-2020 Honda CR-V and 2016-2020 Honda Accord vehicles, including the Subject Vehicle, which were equipped with a computerized driver-assisting safety system known as “Honda Sensing” system (Id., ¶ 63); that the “Honda Sensing” system suffers from a defect (“Sensing Defect”) that causes the various subsystems within it to malfunction while vehicles are driven which impedes the systems' ability to reliably and accurately detect and appropriately respond to conditions on the roadway, causing malfunctions of the adaptive cruise control, the lane-departure system, and the Collision Mitigation Braking System (“CMBS”) (Id., ¶ 64); that Honda knew of the Sensing Defect prior to selling the subject vehicle to Plaintiff, based on pre-production and post-production testing, numerous customer complaints, warranty claims data compiled from Honda 's network of dealers, testing conducted by Honda in response to these complaints, as well as warranty repair and part replacements data received by Honda from Honda's network of dealers (Id., ¶ 68); that Defendant and its agents concealed the existence and nature of the Sensing Defect from Plaintiff at the time of purchase (and/or lease), repair and thereafter (Id., ¶ 71); that Plaintiff is a reasonable consumer who interacted with sales representatives, considered Defendant’s advertisement and/or other marketing materials concerning the Honda Vehicles prior to purchasing the subject vehicle (Id., ¶ 76); that had Honda revealed the Sensing Defect, Plaintiff would have been aware of it and would not have purchased the subject vehicle (Id.); that Defendant also continues to conceal the fact that the software updates and replacement components it provides in an false attempt to repair the defect are equally defective (Id., ¶ 74); and that Plaintiff was harmed by purchasing a vehicle that she would not have leased and/or purchased had she known the true facts about the Sensing Defect and unknowingly exposed herself to the risk of liability, accident and/or injury as a result of Defendant's fraudulent concealment of the Sensing Defect (Id., ¶ 84).

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 was under a duty to Plaintiff to disclose the defective nature of the subject vehicle and its Sensing Defect, its safety consequences and/or the associated repair costs because Defendant “acquired its knowledge of the Sensing Defect and its potential consequences prior to Plaintiff acquiring the Vehicle, through sources not available to consumers such as Plaintiff, including but not limited to pre-production testing data, early consumer complaints about the Sensing Defect made directly to Honda and its network of dealers, aggregate warranty data compiled from HONDA's network of dealers, testing conducted by Honda in response to these complaints, as well as warranty repair and part replacements data received by Honda from Honda's network of dealers, amongst other sources of internal information,” that “Honda was in a superior position from various internal sources to know (or should have known) the true state of facts about the material defects of the sensing systems contained in Honda Vehicles” and that “Plaintiff could not reasonably have been expected to learn or discover of the Vehicle's Sensing Defect and its potential consequences until well after Plaintiff purchased the Vehicle.” (Id., ¶ 80).

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 FAC:

1.                  Page 19, Prayer for Relief line (e): “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).)

“When the defendant is a corporation, ‘[a]n award of punitive damages against a corporation ... must rest on the malice of the corporation's employees. But the law does not impute every employee’s malice to the corporation. Instead, the oppression, fraud, or malice must be perpetrated, authorized, or knowingly ratified by an officer, director, or managing agent of the corporation.” (Wilson v. Southern California Edison Co. (2015) 234 Cal.App.4th 123, 164 [internal citation omitted].)

Plaintiff has sufficiently pled her second cause of action for Fraudulent Inducement—Concealment, as set forth above. The second cause of action allows for punitive damages.

Defendant’s motion, then, is denied.