Judge: Peter A. Hernandez, Case: 23PSCV02921, Date: 2024-02-26 Tentative Ruling

Case Number: 23PSCV02921    Hearing Date: February 26, 2024    Dept: K

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

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

Background[1]  

Plaintiff Victor Paredes Ramirez (“Plaintiff”) alleges as follows:

On November 2, 2021, Plaintiff entered into an express written contract with American Honda Motor Co., Inc. (“Defendant”) regarding a new 2022 Honda CR-V, VIN # 7FARW1H75NE003437. 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 autonomous braking known as the Collision Mitigation Braking System (“CMBS”). 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 September 21, 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.                  Fraudulent Inducement—Concealment

A Case Management Conference is set for February 26, 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 second cause of action (i.e., for Fraudulent Inducement—Concealment) in Plaintiff’s complaint, 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 of various documents published by the National Highway Traffic Safety Administration (“NHTSA”). “A party requesting judicial notice of material under Evidence Code sections 452 or 453 must provide the court and each party with a copy of the material. . .” (Cal. Rules of Court, rule 3.1306, subd. (c).)

The court denies Defendant’s Request for Judicial Notice of the Second Amended Complaint filed January 10, 2020 in case styled Dhital, et al. v. Nissan North America, Inc., Case No. RG19009260.

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.4^th 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.) “Each of the other three circumstances in which nondisclosure may be actionable [i.e., excluding the existence of a fiduciary relationship] presupposes the existence of some other relationship between the plaintiff and defendant in which a duty to disclose can arise.” (LiMandri v. Judkins (1997) 52 Cal.App.4^th 326, 336-337). “[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.” (Id. at 337.)

Plaintiff has sufficiently pled the elements of fraudulent inducement—concealment. Plaintiff has alleged that he purchased a new 2022 Honda CR-V, VIN #7FARW1H75NE003437 (“subject vehicle”) on November 2, 2021 (Complaint, ¶¶ 8, 27 and 84); that he entered into an express written contract with Defendant, referred to as the New Vehicle Limited Warranty (Id., ¶¶ 9 and 101); that Defendant manufactured and/or distributed the subject vehicle equipped with a computerized driver-assistance safety system known as “Honda Sensing” and with an autonomous braking system within Honda Sensing called the Collision Mitigation Braking System (“CMBS”) (Id., ¶¶ 11 and 85); that the Honda Sensing system suffers from a defect that causes the various subsystems within it to malfunction dangerously while the vehicles are driven. This defect 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 CMBS (“Sensing Defect”) (Id., ¶ 16); that on January 31, 2022 and May 19, 2022, he delivered the subject vehicle to Defendant’s authorized repair facility for repair, with complaints that the subject vehicle made a loud humming noise at start and that a suction noise was heard from the driver’s side of the dashboard (Id., ¶¶ 89 and 90); that on September 21, 2022, he delivered the subject vehicle to Defendant’s authorized repair facility for repair, with complaints that the subject vehicle’s brake assist indicator came on despite no other objects being in front of the subject vehicle and that the subject vehicle continued to make a humming noise (Id., ¶ 91); that on November 11, 2022, he delivered the subject vehicle to Defendant’s authorized repair facility for repair, with complaints that the subject vehicle’s brake assist indicator light came on, despite no other object being in front of it, and that the subject vehicle continued to make a humming noise when being operated or placed on idle (Id., ¶ 92); that on November 15, 2022, he delivered the subject vehicle to Defendant’s authorized repair facility for repair and requested that the subject vehicle’s sensors be inspected (Id., ¶ 93); and that on December 26, 2022, he delivered the subject vehicle to Defendant’s authorized repair facility for repair, with complaints that the subject vehicle’s brake warning light came on while driving on the freeway despite nothing being in front of it and that a humming noise comes from the air conditioner, despite it not being in use (Id., ¶ 94).

Plaintiff has alleged that Honda knew of the Sensing Defect prior to the time he purchased the subject vehicle, based on pre-market testing, consumer complaints made to the NHTSA and directly to Defendant and its dealers, dealership repair records, warranty and post-warranty claims, high failure rates raised by the Sensing Defect, technical service bulletins and other sources (Id., ¶ 38); that Defendant concealed the existence of the Sensing Defect from him at the time of purchase, and thereafter (Id., ¶¶ 25 and 71); that he reviewed marketing brochures, viewed television commercials and/or heard radio commercials about the qualities of the 2022 Honda CR-V and relied on statements made during the sales process by Defendant’s agents and within the marketing materials written by Defendant, as well as on Defendant’s reputation as an established and experienced auto manufacturer prior to purchasing the subject vehicle (Id., ¶¶ 87 and 88); that Defendant and its authorized agents did not disclose any information to him about the Honda Sensing Defect, which omissions were material to his decision to purchase the subject vehicle (Id., ¶ 87); that the Sensing Defect causes unsafe driving conditions (Id., ¶ 19); that the existence of the Sensing Defect is a material fact that a reasonable consumer would consider when deciding whether to purchase or lease a vehicle equipped with Honda Sensing (Id., ¶ 65); that he would not have purchased the subject vehicle, or would have paid significantly less for it, had he known of the Sensing Defect and the safety hazard it creates (Id., ¶ 66) and that he was harmed (Id., ¶¶ 125-127).

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 knew or should have known about the safety hazards posed by the Sensing Defect before the sale of vehicles such as the subject vehicle from pre-market testing, consumer complaints to the NHTSA, to Defendant and to Defendant’s dealers, testing conducted in response to those complaints, high failure rates and replacement part sales data, and other sources which caused Defendant to issue certain TSBs. (Id., ¶¶ 23, 29, 37-48, 70, 71). Plaintiff has alleged that while Defendant has not published its October 2018 message to dealers “for the benefit of drivers or potential purchasers of affected vehicles and has not instructed its dealerships to warn drivers or prospective buyers about the problem.” (Id., ¶¶ 26, 62 and 63). Plaintiff has also alleged that Defendant’s TSB’s concerning the Sensing Defect were not sent to prospective purchasers or to consumers after purchase and “did not fully disclose the pervasiveness of the defect, the safety issues arising from the defect, or the uncertain nature of the prescribed fixes.” (Id., ¶ 70).

Finally, the court rejects Defendant’s contention that there was no relationship requiring it to disclose known defects (i.e., since Plaintiff did not directly purchase the subject vehicle from Defendant), on the same grounds articulated in Dhital v. Nissan North America, Inc. (2022) 84 Cal.App.5th 828, 844[2]: “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 has likewise alleged he purchased the subject vehicle from Car Pros Honda El Monte, an authorized Defendant dealership (Id., ¶ 84), that Defendant backed the subject vehicle with an express warranty (Id., ¶ 9) and that Defendant’s authorized dealerships are its agents for purposes of the sale of Honda vehicles to consumers such as Plaintiff (Id., ¶ 117).

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 28, line 9, Prayer for Relief line (6): “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.4^th 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.