Judge Randy Rhodes, Case 22CHCV01104 2023-04-19 Tentative Ruling

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RESPONDING PARTY: Plaintiffs Luis Alberto Becerra Gutierrez and Maria Del Socorro Esparza

RULING: The demurrer is sustained with 20 days leave to amend as to the 4^th cause of action. The motion to strike is denied as moot.

This action arises out of Plaintiffs Luis Alberto Becerra Gutierrez and Maria Del Socorro Esparza (collectively, “Plaintiffs”) purchase of a vehicle on March 1, 2020, which vehicle was manufactured and warrantied by Defendant General Motors LLC (“Defendant”). Plaintiffs allege that the vehicle began to display transmission defects after their purchase and that despite multiple attempts to have the vehicle repaired, the problem has not been solved.

On November 8, 2022, Plaintiffs filed this action 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; and (4) Fraud – Fraudulent Inducement – Fraudulent Concealment.

Defendant now demurs to the 4^th cause of action on the grounds that it fails to state a cause of action. Additionally, Defendant moves to strike the request for punitive damages in the prayer for relief of Plaintiffs’ complaint.

4^TH CAUSE OF ACTION – FRAUD – FRAUDULENT INDUCEMENT – FRAUDULENT CONCEALMENT[1]

The elements of a cause of action are for fraudulent concealment are: (1) the defendant concealed or suppressed a material fact; (2) the defendant was under a duty to disclose the fact to the plaintiff; (3) the defendant intentionally concealed or suppressed the fact with the intent to defraud the plaintiff; (4) the plaintiff was unaware of the fact and would not have acted in the same way knowing of the concealed or suppressed fact; (5) causation; and (6) the plaintiff sustained damages. (Blickman Turkus, LP v. MF Downtown Sunnyvale, LLC (2008) 162 Cal.App.4th 858, 868.)

Fraud must be specifically pleaded. (Lazar v. Superior Court (1996) 12 Cal.4th 631, 645.) Fraud allegations against a corporation must specify “who made the allegedly fraudulent representations, their authority to speak, to whom they spoke, what they said or wrote, and when it was said or written.” (Id. [internal citations omitted].) However, fraudulent concealment claims do not require as much specificity as affirmative misrepresentation claims. (Alfaro, supra, 171 Cal.App.4th at p. 1384.)

A duty to disclose for purposes of fraudulent concealment arises in four situations: “(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.)

Plaintiffs have failed to allege sufficient facts to state a claim for fraudulent concealment. Plaintiffs have not provided much detail surrounding the purchase of the subject vehicle. At most, Plaintiffs allege they spoke with a sales representative from the dealership about the vehicle before purchasing it. (Compl., ¶12.) Plaintiffs have not identified the name of the dealership or the sales representative with whom they allegedly spoke, nor have they alleged anything to show that the dealership was authorized to make any representations (or omissions) on behalf of Defendant. Simply being a dealer of cars manufactured by Defendant does not automatically render the dealer authorized to make representations on behalf of or impute liability to the Defendant. (See Avalon Painting Co. v. Alert Lumber Co. (1965) 234 Cal.App.2d 178, 184 [“A Ford dealer or retailer may in a layman’s view be an agent of the Ford Motor Co., but he is not an agent in the legal sense of that relationship.’”] [internal citations omitted].) Plaintiffs have not alleged any direct interactions with the Defendant in connection with their purchase of the subject vehicle either.

Moreover, Plaintiffs’ argument about a duty to disclose arising when there are safety issues is based on a misreading of the law. Plaintiffs cite to Daugherty v. American Honda Motor Co., Inc. (2006) 144 Cal.App.4th 824 for the argument that Defendant owed Plaintiffs a duty to disclose because of potential safety issues involving the alleged transmission defects. However, Daugherty addresses the duty of disclosure in the context of the Consumers Legal Remedies Act, not in the context of common law fraudulent concealment. (See Id. at p. 836.)

Plaintiffs also have not alleged the existence of a duty to disclose on the other available bases. Plaintiffs do not dispute the absence of a fiduciary relationship between the parties. They also have not adequately alleged that Defendant had exclusive knowledge of the transmission defects. While Plaintiffs may allege in a conclusory fashion that Defendant had exclusive knowledge of the transmission defects, this is contradicted by Plaintiffs’ own allegations of the various service bulletins having been sent to dealers across the country and their mechanics. (Compl., ¶¶ 40, 126.) As noted above, dealers are not automatically or necessarily agents of the manufacturers. (See Avalon Painting Co., supra, 234 Cal.App.2d at p. 184). Plaintiffs have not alleged any facts to indicate that Defendant actively concealed this information from Plaintiffs either. Plaintiffs have also failed to provide allegations of any sort of partial representations by Defendant while suppressing some material facts. In fact, Plaintiffs have conceded in their opposition that Defendants have not any affirmative misrepresentations. (Opp. 7:14-21.)

Accordingly, the Court will sustain the demurrer as to this cause of action with leave to amend.

Punitive damages are recoverable in an action for breach of an obligation not arising from contract, where it is proven by clear and convincing evidence that the defendant has been guilty of oppression, fraud, or malice. (Civ. Code § 3294(a).) Mere conclusions that a defendant’s conduct was wrongful, willful, wanton, reckless or unlawful are insufficient to state a claim for punitive damages. (See G.D. Searle & Company (1975) 49 Cal.App.3d 22, 29-30.) The type of despicable conduct necessary to support a claim for punitive damages is conduct which is “so vile, base, contemptible, miserable, wretched or loathsome that it would be looked down upon and despised by ordinary, decent people.” (Mock v. Michigan Millers Mutual Ins. Co. (1992) 4 Cal.App.4th 306, 331.)

Because Plaintiffs’ punitive damages are related to their fraud claim and given that the Court has sustained the demurrer to Plaintiffs’ fraud claim, the motion is moot.

The Court SUSTAINS the demurrer as to the fourth cause of action in the complaint with 20 days leave to amend.

[1] Although the 4^th cause of action is labeled as “Fraud – Fraudulent Inducement – Fraudulent Concealment,” its focus is on concealment and does not address other types of fraud. Plaintiffs concede in their opposition that Defendant has not made an affirmative misrepresentation. (Opp. 7:14-21.)