Judge: Peter A. Hernandez, Case: 23PSCV03765, Date: 2024-05-02 Tentative Ruling

Case Number: 23PSCV03765    Hearing Date: May 2, 2024    Dept: K

1.         Defendant Ford Motor Company’s Demurrer to Plaintiff’s Complaint is OVERRULED.

2.         Defendant Ford Motor Company’s Motion to Strike Plaintiff’s Complaint is DENIED.

Background[1]  

Plaintiff Irma Gonzalez (“Plaintiff”) alleges as follows:

On October 26, 2022, Plaintiff entered into a warranty contract with Ford Motor Company (“FMC”) regarding a 2020 Ford Explorer, VIN No. 1FM5K8GC0LGB29409 (“subject vehicle”). The subject vehicle is equipped with a defective 10-speed transmission that can cause the subject vehicle to experience hesitation and/or delayed acceleration; harsh and/or hard shifting; jerking, shuddering, and/or juddering ("Transmission Defect"). FMC knew or should have known about the Transmission Defect before the sale of the subject vehicle.

On December 5, 2023, Plaintiff filed a complaint, asserting causes of action against FMC, Ford of Upland (“Ford”) 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.                  Violation of the Magnuson-Moss Warranty Act

6.                  Fraudulent Inducement—Concealment

7.                  Negligent Repair

A Case Management Conference is set for May 2, 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/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

FMC demurs to the sixth 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.

“[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].)

“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.) “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.4th 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.)

FMC 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 that she entered into a warranty contract with FMC directly on or about October 26, 2022 regarding a 2020 Ford Explorer, VIN # 1FM5K8GC0LGB29409 (“subject vehicle”) (Complaint, ¶ 9); that FMC manufactured and/or distributed the subject vehicle equipped with a 10-speed transmission (Id., ¶¶ 9 and 25); that vehicles equipped with the same 10-speed transmission as the subject vehicle[2] suffered from one or more defects that could cause the vehicles and their 10-speed transmissions to experience hesitation and/or delayed acceleration; harsh and/or hard shifting; jerking, shuddering, and/or juddering ("Transmission Defect") (Id., ¶¶ 25 and 73) and that the Transmission Defect presents a safety hazard and is unreasonably dangerous to consumers because it can “suddenly and unexpectedly affect the driver’s ability to control the vehicle’s speed, acceleration, deceleration, and/ or overall responsiveness of the vehicle in various driving conditions” (Id., ¶ 73).

Plaintiff has alleged that FMC knew of the Transmission Defect prior to Plaintiff purchasing the subject vehicle, “through various sources of information, including but not limited to 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., ¶¶ 26, 72 and 75); that FMC failed to disclose or concealed the existence and nature of the Transmission Defect from Plaintiff at the time of Plaintiff’s purchase, repair, and thereafter (Id.); that the facts FMC concealed or failed to disclose to Plaintiff are material in that a reasonable person would have considered them to be important in deciding whether or not to purchase the subject vehicle (Id., ¶ 79); that, had Plaintiff known of the Transmission Defect at the time of sale of the subject vehicle, Plaintiff would not have purchased the subject vehicle (Id.); that Plaintiff is a reasonable consumer who does not expect her transmission to fail (Id., ¶ 80); that Plaintiff expects and assumes that FMC will not sell or lease vehicles with known material defects and will disclose any such defect its consumers before selling such vehicles (Id.); and that she was harmed (Id., ¶¶ 16, 23 and 82-84).

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 “FMC acquired its knowledge of the Transmission Defect prior to Plaintiff acquiring the Subject Vehicle, through sources not available to consumers such as Plaintiff, including but not limited to pre-production and post- production testing data, early consumer complaints about the transmission defect made directly to FMC and its network of dealers, aggregate warranty data compiled from FMC's network of dealers, testing conducted by FMC in response to these complaints, as well warranty repair and part replacements data received by FMC from FMC’s network of dealers, amongst other sources of internal information.” (Complaint, ¶ 74).

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

FMC moves to strike out the following portions of Plaintiff’s complaint:

1.                  Page 17, Prayer for Relief, line (h): “For punitive damages.”

Punitive damages may be awarded in an action for the breach of an obligation not arising from contract 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.” (Civ. Code § 3294, subd. (c)(1).) “Oppression” is defined as “despicable conduct that subjects a person to cruel and unjust hardship in conscious disregard of that person’s rights.” (Civ. Code § 3294, subd. (c)(2).) “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)(3).)

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

FMC’s motion, then, is denied.