Judge Ralph C. Hofer, Case 22GDCV00801 2023-02-24 Tentative Ruling

Plaintiffs Tyler Lee and Sherillelyn Lee allege that in December of 2018, plaintiffs entered into a warranty contract with defendant FCA US, LLC (FCA) regarding a 2019 Chrysler Pacifica Hybrid vehicle which was manufactured and/or distributed by FCA. Plaintiff alleges that the warranty contract contained various warranties, including bumper to bumper warranty, powertrain warranty, and emission warranty.

Plaintiffs allege that defects and nonconformities to warranty manifested themselves within the applicable express warranty period, including hybrid system defects, infotainment defects, electrical system defects and engine defects, which defects or nonconformities substantially impaired the use, value, or safety of the vehicle. Plaintiffs allege that under the Song-Beverly Act, defendant FCA had an affirmative duty to promptly offer to repurchase or replace the subject vehicle at the time if it failed to conform the subject vehicle to the terms of the express warranty after a reasonable number of repair attempts, but failed to do so.

Plaintiffs also allege that plaintiffs delivered the subject vehicle to defendant Glendale Dodge Chrysler Jeep (Dodge) for substantial repair on at least one occasion, and that defendant Dodge breached its duty to use ordinary care and skill by failing to properly store, prepare and repair the subject vehicle in accordance with industry standards, which breaches were a proximate cause of damages to plaintiffs.

“(2) The parties shall meet and confer at least five days before the date the responsive pleading is due. If the parties are not able to meet and confer at least five days prior to the date the responsive pleading is due, the demurring party shall be granted an automatic 30-day extension of time within which to file a responsive pleading, by filing and serving, on or before the date on which a demurrer would be due, a declaration stating under penalty of perjury that a good faith attempt to meet and confer was made and explaining the reasons why the parties could not meet and confer. The 30-day extension shall commence from the date the responsive pleading was previously due, and the demurring party shall not be subject to default during the period of the extension. Any further extensions shall be obtained by court order upon a showing of good cause.

The declaration was not filed and served before the date on which a demurrer would be due. As noted above, the date to respond to the FAC was December 9, 2023. Accordingly, the follow up meet and confer email sent on December 12, 2023, and the declaration for automatic extension filed on December 13, 2023 were not served or filed within the time to respond to the pleading, but were 3 and 4 days late. Accordingly, no automatic extension has been properly obtained. In addition, even if the declaration had been timely, the statute provides that the 30-day extension shall commence from the date the responsive pleading was previously due. Again, that date was December 9, 2022. Thirty days from that date was January 8, 2023, a Sunday, so that the 30 days would have been extended to January 9, 2023.

Defendant is accordingly not entitled to an automatic extension of time to respond to the pleading, and in any case missed the deadline for filing the demurrer even if defendant had perfected an extension to plead, and the demurrer is overruled as untimely. However, the court also considers the demurrer on the merits.

To plead a claim for negligence, a plaintiff must allege the following elements: The existence of a duty of care, breach of that duty, and an injury proximately caused by the breach. Ladd v. County of San Mateo (1996) 12 Cal.4th 913, 917. The parties agree that a claim for negligent repair requires pleading of the elements of negligence, that is, “duty, breach, causation, and damages.” Lytle v. Ford Motor Company (E.D. Cal. 2018) 2018 WL 4793800, *2, citing Burgess v. Superior Court (1992) 2 Cal.4th 1064, 1072; Valdez v. J.D. Diffenbaugh Co. (1975) 51 Cal.App.3d 494, 508.

The FAC brings the fifth cause of action against defendant Dodge only, and alleges that plaintiffs “delivered the subject vehicle to defendant Dodge for substantial repair on at least one occasion,” that defendant “owed a duty to Plaintiff to use ordinary care and skill in the storage, preparation, and repair of the Subject Vehicle in accordance with industry standards,” that defendant “breached its duty to use ordinary care and skill by failing to properly store, prepare and repair the Subject Vehicle in accordance with industry standards,” and that defendant’s “negligent breach of its duties owed to Plaintiff were the proximate cause of Plaintiff’s damages.” [FAC, paras. 82-85].

Defendant Dodge argues that a claim for negligent repair must establish proximate cause, that is, that defendant’s negligent repair in some way contributed to the injury, and that the FAC fails to make this showing. The pleading expressly alleges that defendant’s negligent breaches “were the proximate cause of plaintiff’s damages.” [FAC, para. 85]. There is no case cited pursuant to which causation must be “established” at the pleading stage. The case relied upon, in fact, Valdez v. J.D. Diffenbaugh Co. (1975) 51 Cal.App.3d 494, 508, applied a very broad standard for establishing proximate cause: “All a plaintiff need show to establish proximate, or legal, cause is that the defendant’s negligent act in some way contributed to the injury (e.g. but for defendant’s negligence injury would not have occurred.” Valdez, at 508, italics in the original, citation omitted.

In Valdez, which was not a pleading case, the court of appeal found that causation due to negligent repair had been sufficiently established in that case at trial and rejected an argument that the negligence of another party was an intervening cause relieving defendant of liability. Valdez, at 508-510. The Valdez case does not support an argument that causation is insufficiently alleged here.

Defendant also argues that the pleading fails to allege the facts which adequately support the cause of action, as plaintiffs fail to identify what repair was allegedly negligent, how any such repair was negligent, what damages were incurred as a result of such repair, or how such unidentified damages were the proximate cause of plaintiffs’ injury.

As argued in the opposition, defendant points to no legal authority under which a negligence cause of action must be alleged with heightened specificity, and this is arguably a case comparable to cases in which a recognized heightened level of specificity is relaxed where the factual details are within the knowledge of the defendant. See Committee on Children’s Television, Inc. v. General Foods Corp. (1983) 35 Cal.3d 197, 217 (superseded by statute on other grounds in Branick v. Downey Savings & Loan Assn. (2006) 39 Cal.4th 235) (“[e]ven under the strict rules of common law pleading, one of the canons was that less particularity is required when the fact lie more in the knowledge of the opposition party…”, citation omitted.) Here, plaintiffs argue that defendant, who performed the actual repairs to the vehicle, would be in a position to consult records concerning the nature and details of such repairs. The FAC identifies the vehicle model and VIN. [FAC, para. 8]. The cause of action is sufficiently stated, and the demurrer on this ground is overruled.

“Economic loss consists of “ ‘ “ ‘damages for inadequate value, costs of repair and replacement of the defective product or consequent loss of profits—without any claim of personal injury or damages to other property....’ ” ' [Citation.]” (Jimenez v. Superior Court (2002) 29 Cal.4th 473, 482, 127 Cal.Rptr.2d 614, 58 P.3d 450.) Simply stated, the economic loss rule provides: “ ‘ “[W]here a purchaser's expectations in a sale are frustrated because the product he bought is not working properly, his remedy is said to be in contract alone, for he has suffered only ‘economic’ losses.” ' This doctrine hinges on a distinction drawn between transactions involving the sale of goods for commercial purposes where economic expectations are protected by commercial and contract law, and those involving the sale of defective products to individual consumers who are injured in a manner which has traditionally been remedied by resort to the law of torts.” (Neibarger v. Universal Cooperatives, Inc. (1992) 439 Mich. 512, 486 N.W.2d 612, 615, fns. omitted.) The economic loss rule requires a purchaser to recover in contract for purely economic loss due to disappointed expectations, unless he can demonstrate harm above and beyond a broken contractual promise. (Redarowicz v. Ohlendorf (1982) 92 Ill.2d 171, 65 Ill.Dec. 411, 441 N.E.2d 324, 327.) Quite simply, the economic loss rule “prevent[s] the law of contract and the law of tort from dissolving one into the other.” (Rich Products Corp. v. Kemutec, Inc. (E.D.Wis.1999) 66 F.Supp.2d 937, 969.)”

Defendant also cites to Erlich v. Menezes (1999) 21 Cal.4th 543, 551, in which the California Supreme Court noted that conduct amounting to a breach of contract becomes tortious when it violates an independent duty arising from principles of tort law. Erlich, at 551-552. This is clearly a case where an independent duty to exercise due care in repair of the vehicle is alleged, as discussed above.

The opposition argues that Robinson Helicopter is not controlling here, as it involved the applicability of the economic loss rule to fraud claims, not to negligent repair claims. See Robinson Helicopter, at 984 (“In this case, we decide whether the economic loss rule… applies to claims for intentional misrepresentation or fraud in the performance of a contract.”). The Court in Robinson Helicopter, in fact concluded that the economic loss rule did not bar the claim in that action, as the fraud and intentional misrepresentation claim, “is an independent action based in tort…” Robinson Helicopter, at 982.

Plaintiffs also rely on case law in which it recognized that the economic loss rule does not apply to cases involving negligent performance of services. Plaintiffs rely on, for example, North American Chemical Co. v. Superior Court (1997) 59 Cal. App.4th 764, 777-781, in which the Second District ordered issuance of a writ of mandate directing the trial court to vacate its order sustaining a demurrer to a negligence cause of action without leave to amend, finding that in cases arising from a contract for the performance of services rather than the sale of goods, the economic loss rule did not limit plaintiff’s tort damages in all cases, as a contract for the performance of services, “necessarily carries with it both the reasonable expectation and implied in law promise that it will be performed with reasonable care.” American Chemical, at 785, see, also, discussion at 777-785.

Plaintiffs also rely on case law in which federal courts, applying California law, have held that the economic loss rule does not apply to negligent repair claims where subcomponents of a vehicle cause damage to a larger component or where the component causes damage to the vehicle in which it has been incorporated.

In Sabicer v. Ford Motor Company (2019 USDC C.D. Cal.) 362 F.Supp.3d 837, the federal district court for the Central District of California granted a motion to remand an action which had been removed to federal court by a vehicle manufacturer invoking diversity jurisdiction. The case included, as in the instant case, a cause of action for negligent repair against a defendant which had repaired the vehicle, and which was a citizen of California. The federal court, in analyzing whether that co-defendant had been fraudulently joined, so that its citizenship should be ignored for purposes of diversity jurisdiction, rejected the argument, and observed:

“Defendants have failed to show the economic loss rule entirely precludes Plaintiffs' negligent repair claim. Plaintiffs allege problems with various subcomponents of the engine, including the rear driveshaft, engine compartment, and turbocharger. (Compl. ¶ 10.) The economic loss rule would not bar recovery in tort for damage that these subcomponents cause to the engine as a whole or for damage that the engine caused to the Vehicle in which it has been incorporated. Cf. Jimenez, 29 Cal. 4th at 484, 127 Cal.Rptr.2d 614, 58 P.3d 450 (finding the manufacturer of a defective window may be liable in tort for damage that the window's defect causes to other parts of the home, but expressing no opinion as to “whether there may be situations in which the economic loss rule would bar recovery for damages that a defective component part causes to other portions of the finished product of which it is a part”). Defendants have failed to prove that a customer could not possibly recover against a dealership for negligent repair. See Lytle v. Ford Motor Co., 2018 WL 4793800, at 2 (E.D. Cal. Oct. 2, 2018) (“California law is not so settled that a plaintiff could not possibly recover against a dealership for negligent repair of a vehicle.”); see also Tasch v. Ford Motor Co., 2018 WL 3956493, at 1 (finding defendants did not show plaintiff's negligent repair claim was impossible as a matter of California law) (C.D. Cal. Aug. 16, 2018); Forward-Rossi v. Jaguar Land Rover N. Am., LLC, 2016 WL 3396925, at *4 (C.D. Cal. June 13, 2016) (same).”

“First, Defendant FMC argues Plaintiff's negligent repair claim against Defendant RP is barred by California's economic loss rule. Doc. No. 17 at 7–8. Under the economic loss rule, a plaintiff may not recover purely economic damages for tort claims. Jimenez v. Superior Court, 29 Cal.4th 473, 127 Cal.Rptr.2d 614, 58 P.3d 450, 455–56 (Cal. 2002). However, the component exception recognizes that “the economic loss rule does not necessarily bar recovery in tort for damage that a defective product (e.g., a window) causes to other portions of a larger product (e.g., a house) into which the former has been incorporated.” Id., 127 Cal.Rptr.2d 614, 58 P.3d at 457. Multiple district courts, including this Court, have recognized the potential applicability of the component exception in cases involving negligent repair claims against parties sought to be joined in breach of warranty cases against manufacturers. See Diiullo v. FCA US LLC, No. 20-CV-382-MMA (BLM), 2020 WL 1921927, at *3 (S.D. Cal. Apr. 21, 2020) (collecting cases); Viveros, 2021 WL 5989365, at *8.

Plaintiff alleges defects in the Vehicle's engine and electrical system. FAC ¶ 12. Plaintiff further asserts those “defects have substantially impaired the safety, use, and/or value of the Vehicle.” Id. ¶ 16. Given these allegations, the Court finds the component exception facially applicable in this matter.”

While this court recognizes, as pointed out by both defendant and plaintiffs, that the last two federal cases discussed apply a different standard, in effect, that required in making remand determinations, the rationales with respect to application of the economic loss rule in negligent repair cases are well reasoned. The FAC here alleges defects in the specific systems of the vehicle and that the defects substantially impaired the safety, use, and value of the vehicle. [FAC, paras. 13, 14]. As discussed above, the cause of action sufficiently alleges all elements of the cause of action. The allegations support arguments identified in state court case law discussed above, as well as persuasive federal cases discussed above, which would support a reasoned argument that the economic loss rule does not bar the negligent repair cause of action against the moving defendant. The FAC includes sufficient allegations to withstand demurrer on this ground, and the demurrer accordingly is overruled in its entirety.

The Court considers the demurrer on its merits, and the demurrer is overruled, as the fifth cause of action sufficiently alleges all elements of a cause of action for negligent repair, and the cause of action as alleged is not to be subjected to demurrer on the ground the cause of action against the moving defendant is barred by the economic loss rule.

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