Judge: Randy Rhodes, Case: 22CHCV01412, Date: 2023-04-28 Tentative Ruling
Case Number: 22CHCV01412 Hearing Date: April 28, 2023 Dept: F51
Dept. F-51¿¿
Date: 4/28/23¿
Case #22CHCV01412
DEMURRER
WITH MOTION TO STRIKE
¿
Demurrer with Motion to
Strike Filed: 2/17/23
¿
MOVING PARTY: Defendant General Motors LLC, a
Delaware limited liability company (“Defendant”)
RESPONDING PARTY: Plaintiffs
Omar Zavala Perez, an individual; and Araceli Cruz Lopez, and individual (collectively,
“Plaintiffs”)
NOTICE: OK¿
¿
RELIEF REQUESTED: Defendant
demurs to the fourth cause of action in Plaintiffs’ complaint. Defendant also
seeks an order striking Plaintiffs’ prayer for punitive damages.
¿
TENTATIVE RULING: The demurrer is overruled, and the
motion to strike is denied. Defendants shall file and serve an answer to
Plaintiffs’ complaint within 30 days.
BACKGROUND¿
On 7/17/22, Plaintiffs allegedly
purchased a vehicle manufactured by Defendant, and now bring this action under
the Song-Beverly Consumer Warranty Act (Civil Code § 1790 et seq.), alleging
that Defendant had actual knowledge of a transmission defect in the vehicle
model while concealing such knowledge and continuing to market and sell the
vehicles under the representation that they were “world-class.” (Compl. ¶ 9.)
Plaintiffs allege that they later discovered the transmission defects, but the
authorized dealerships were unable to resolve the issues. (Id. at ¶¶ 13–14.)
On 12/16/22, Plaintiffs filed their
complaint against Defendant, alleging the following causes of action: (1)
Violation of Song-Beverly Act – Breach of Express Warranty; (2) Violation of
Song-Beverly Act – Breach of Implied Warranty; (3) Violation of Song-Beverly
Act section 1793.2; and (4) Fraud/Fraudulent Inducement – Concealment.
On 2/17/23, Defendant filed the
instant demurrer and motion to strike. On 4/17/23, Plaintiffs filed their
opposition. On 4/21/23, Defendant filed its reply.
DEMURRER
Meet-and-Confer
Before filing its demurrer, “the demurring party shall meet
and confer in person or by telephone with the party who filed the pleading that
is subject to demurrer for the purpose of determining whether an agreement can
be reached that would resolve the objections to be raised in the demurrer.”
(Code Civ. Proc. § 430.41, subd. (a).) The demurring party must file and
serve a meet and confer declaration stating either: “(A) The means by which the
demurring party met and conferred with the party who filed the pleading subject
to demurrer, and that the parties did not reach an agreement resolving the
objections raised in the demurrer;” or “(B) That the party who filed the
pleading subject to demurrer failed to respond to the meet and confer request
of the demurring party or otherwise failed to meet and confer in good faith.” (Id.
at subd. (a)(3).)
Here, Defendant’s counsel declares that his “office
attempted to meet and confer telephonically with Plaintiffs’ counsel to discuss
the issues we had with Plaintiffs’ Complaint, but unfortunately, were
unsuccessful in our attempts.” (Decl. of Jesse Valencia, ¶ 2.) In opposition,
Plaintiffs’ counsel declares that “Defendant’s counsel did not contact my
office nor provide the legal reasoning underlying Defendant’s Demurrer or
Motion to Strike.” (Decl. of Harry Terzian, ¶ 4.) Therefore, it is unclear
whether Defendant’s counsel has satisfied the preliminary meet and
confer requirements of Code of Civil Procedure section 430.41, subdivision
(a). Nevertheless, a finding “that the meet and confer process was
insufficient shall not be grounds to overrule or sustain a demurrer.” (Code Civ. Proc. § 430.41, subd. (a)(4).)
Legal Standard
As a general matter, a party may respond to a pleading
against it by demurrer on the basis of any single or combination of eight
enumerated grounds, including that “the pleading does not state facts
sufficient to constitute a cause of action” and is uncertain, meaning
“ambiguous and unintelligible.” (Code Civ. Proc., § 430.10, subds. (e) and (f).) 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 pleading alone, and not the evidence
or facts alleged.” (E-Fab, Inc. v. Accountants, Inc. Servs.
(2007) 153 Cal.App.4th 1308, 1315.) As such, the court assumes the truth of the
complaint’s properly pleaded or implied factual allegations. (Ibid.) The
only issue a demurrer is concerned with is whether the complaint, as it stands,
states a cause of action. (Hahn v. Mirda (2007) 147 Cal.App.4th
740, 747.)
Here,
Defendant¿demurs to Plaintiffs’ fourth cause of action on the bases that the complaint
fails¿to allege facts sufficient to¿state¿a cause of action for fraudulent
concealment, and is therefore uncertain.
A. Fraudulent
Concealment
Plaintiffs’
fourth cause of action alleges fraudulent concealment against Defendant. “The
required elements for fraudulent concealment are (1) concealment or suppression
of a material fact; (2) by a defendant with a duty to disclose the fact to the
plaintiff; (3) the defendant intended to defraud the plaintiff by intentionally
concealing or suppressing the fact; (4) the plaintiff was unaware of the fact
and would not have acted as he or she did if he or she had known of the
concealed or suppressed fact; and (5) plaintiff sustained damage as a result of
the concealment or suppression of the fact.” (Hambrick v. Healthcare
Partners Medical Group, Inc. (2015) 238 Cal.App.4th 124, 162.)
Particularity
Fairness
requires that allegations of fraud be pled “with particularity” so that the
court can weed out nonmeritorious actions before a defendant is required to
answer. (Small v. Fritz Companies, Inc. (2003) 30 Cal.4th 167, 184.) The
particularity requirement necessitates pleading facts that “show how, when,
where, to whom, and by what means the representations were tendered.” (Lazar
v. Superior Court (1996) 12 Cal.4th 631, 645.)
In the
complaint, Plaintiffs allege that Defendant had actual knowledge of the
transmission defect through prior consumer complaints, and issued at least 60
service bulletins “acknowledging problems of harsh shifting, shuddering,
jerking, clunking, and delays in acceleration or deceleration relating to the
8L90 and 8L45 transmissions.” (Compl. ¶¶ 35, 40.) Despite this knowledge,
Defendant allegedly “marketed and sold its new eight-speed automatic
transmissions as having “world-class performance” rivaling top performance
vehicles, lightning-fast and smooth shifting, along with improved fuel
efficiency, among other representations.” (Id. at ¶ 28.)
Here,
Defendant argues that Plaintiffs fail to meet the particularity requirement for
pleading a fraud cause of action because the complaint “has no well-pleaded
facts about the how, when, where, to whom, and by what means the fraud
occurred.” (Dem. 6:6–7.) Specifically, “Plaintiffs’ Complaint fails to provide
critical facts necessary to state a claim, such as (1) whether Plaintiffs had
any interaction with GM before or after the sale, (2) GM’s knowledge of the
alleged ‘defects,’ (3) how GM intended to ‘defraud’ Plaintiffs, and (4) the
lack of privity with GM.” (Id. at 6:22–25.)
Plaintiffs
argue in opposition that the particularity requirement is relaxed when, as
here, a plaintiff brings a cause of action for fraudulent concealment as
opposed to fraud. (Pls.’ Opp. 4:10–12; “Plaintiffs are alleging fraudulent
concealment and inducement, which, by their very nature, cannot be described in
terms of time, place, and contents of the misrepresentation or the identity of
the person making the misrepresentation.” Id. at 4:23–25.)
“Less
specificity should be required of fraud claims when it appears from the nature
of the allegations that the defendant must necessarily possess full information
concerning the facts of the controversy; even under the strict rules of common
law pleading, one of the canons was that less particularity is required when
the facts lie more in the knowledge of the opposite party.” (Alfaro v.
Community Housing Improvement & Planning Assn., Inc. (2009) 171
Cal.App.4th 1356, 1384 [internal quotations and citations omitted].)
In Alfaro,
the Court of Appeal found that plaintiffs home purchasers in a housing
development were sufficiently specific in pleading fraud based on the defendant
vendors' alleged nondisclosure of deed restrictions, even though plaintiffs did
not allege that the nondisclosure occurred by a certain means or at a certain
time or place, because the defendants possessed the records of their dealings
with plaintiffs. (Id. at 1385.) Here, as Plaintiffs allege, Defendant
has access to such records as “exclusive knowledge of non-public, internal data
about the Transmission Defect, including: pre-release testing data,” consumer
complaints, aggregate dealership data, dealership repair orders, and service
bulletins. (Compl. ¶ 35.)
The Court
notes that Defendant does not address this argument in its reply. Accordingly,
the Court finds that the particularity requirement for pleading a fraud cause
of action is relaxed at this stage, and Plaintiffs have sufficiently alleged
facts to meet the relaxed standard.
Duty to
Disclose
“Fraudulent
concealment requires the ‘suppression of a fact, by one who is bound to
disclose it.’” (Huy Fong Foods, Inc. v. Underwood Ranches, LP (2021) 66
Cal.App.5th 1112, 1121, quoting Civ. Code § 1710, subd. 3.) “Although, typically, a duty to disclose
arises when a defendant owes a fiduciary duty to a plaintiff …, a duty to
disclose may also arise when a defendant possesses or exerts control over
material facts not readily available to the plaintiff.” (Jones v.
ConocoPhillips Co. (2011) 198 Cal.App.4th 1187, 1199.)
Here, Defendant
further argues that Plaintiffs do not allege any direct dealings with
Defendant, and therefore have not alleged that Defendant had any duty to
disclose. (Dem. 9:17–20.) Defendant argues that no duty to disclose exists
where, as here, a plaintiff brings its claims against a manufacturer from which
it did not directly obtain the product in question. (Id. at 10:13–24,
citing Bigler-Engler v. Breg, Inc. (2017) 7 Cal.App.5th 276, 311.)
In Bigler-Engler,
the Court of Appeal found that the defendant manufacturer of a medical device owed
the plaintiff patient no duty to disclose where there was insufficient evidence
that the parties transacted in any way. (7 Cal.App.5th at 314.) Here, as
Defendant argues, “the Complaint does not allege that Plaintiffs purchased
their Silverado directly from GM,” thus no transactional relationship exists
between the parties. (Dem. 10:24–25.)
Notwithstanding
Defendant’s argument, the Court, as previously discussed, finds that Plaintiffs
have sufficiently alleged that Defendant, as the manufacturer, “had exclusive
knowledge of the Transmission Defect as early as 2014 through the present from
consumer complaints, litigation, from GM’s exclusive knowledge of non-public
internal data about the Transmission Defect.” (Pls.’ Opp. 10:19–21.) Absent a
fiduciary relationship between the parties, Defendant may nevertheless have a
duty to disclose based on such control over the material facts underlying the
action. (Jones, 198 Cal.App.4th at 1199.)
Based on
the foregoing, the Court finds that Plaintiffs have alleged facts sufficient to
support a finding that Defendant had the requisite duty to disclose, giving
rise to a fraudulent concealment cause of action. The Court takes note of
Plaintiffs’ arguments regarding a manufacturer’s duty to disclose safety
hazards, but need not reach it based on the foregoing finding. Accordingly,
Defendant’s demurrer to Plaintiffs’ fourth cause of action is overruled.
MOTION TO STRIKE
Meet and Confer
“Before filing a motion to strike pursuant
to this chapter, the moving party shall meet and confer in person or by
telephone with the party who filed the pleading that is subject to the motion
to strike for the purpose of determining if an agreement can be reached that
resolves the objections to be raised in the motion to strike.” (Code Civ. Proc.
§ 435.5, subd. (a).) The parties are required to meet and confer at least five
days before the date a motion to strike must be filed, otherwise the moving
party is granted a 30-day extension to file the motion. (Ibid.)
Here, as previously mentioned, Defendant’s counsel declares that his “office attempted to
meet and confer telephonically with Plaintiffs’ counsel to discuss the issues
we had with Plaintiffs’ Complaint, but unfortunately, were unsuccessful in our
attempts.” (Valencia Decl., ¶ 2.) In opposition, Plaintiffs’ counsel declares
that “Defendant’s counsel did not contact my office nor provide the legal
reasoning underlying Defendant’s Demurrer or Motion to Strike.” (Terzian Decl.,
¶ 4.) Therefore, it is unclear to the Court whether counsel has
satisfied the preliminary meet and confer requirements of Code of Civil
Procedure section 435.5, subdivision (a). Nevertheless, a finding “that
the meet and confer process was insufficient shall not be grounds to grant or
deny the motion to strike.” (Code Civ. Proc. § 435.5,
subd. (a)(4).)
A.
Punitive
Damages
Punitive damages may be recovered upon a proper showing of
malice, fraud, or oppression by clear and convincing evidence. (Civ. Code §
3294, subd. (a).) “Malice” is defined as conduct intended to cause injury to a
person or despicable conduct carried on with a willful and conscious disregard
for the rights or safety of others. (Turman v. Turning Point of Cent. Cal.,
Inc. (2010) 191 Cal.App.4th 53, 63.) “Oppression” means despicable conduct
subjecting a person to cruel and unjust hardship, in conscious disregard of the
person’s rights. (Ibid.) “Fraud” is an intentional misrepresentation,
deceit, or concealment of a material fact known by defendant, with intent to
deprive a person of property, rights or otherwise cause injury. (Ibid.)
Punitive damages
must be supported by factual allegations. Conclusory allegations, devoid
of any factual assertions, are insufficient to support a conclusion that
parties acted with oppression, fraud or malice. (Smith v. Superior Court
(1992) 10 Cal.App.4th 1033, 1042; Anschutz
Entertainment Group, Inc. v. Snepp (2009) 171
Cal.App.4th 598, 643.)
Here, Defendant argues that punitive damages are not
recoverable under the Song-Beverly Act, and that “Plaintiffs’ opposition
erroneously states that Song-Beverly permits punitive damages.” (MTS 2:25; MTS Reply 3:6–7.) However, Defendant’s argument to this point is incorrect
and thus irrelevant, as Plaintiffs expressly state that they “are not
alleging a claim for punitive damages with regard to their first three causes
of action,” but in relation to their fourth cause of action for fraudulent
concealment. (MTS Opp. 2:18–19.) As the Court finds that Plaintiffs have stated
a viable cause of action against Defendant for fraudulent concealment, they may
proceed with a prayer for relief derivative thereof.
Defendant
further argues that Plaintiffs have failed to allege facts with sufficient
particularity as to show Defendant’s “malice, fraud,
or oppression by clear and convincing evidence.” (Civ. Code § 3294, subd. (a).)
“The Complaint alleges that GM concealed defects, but it fails to allege
well-pleaded facts to support that conclusory allegation.” (MTS 3:27–4:1.)
In
opposition, Plaintiffs argue that the complaint “meets the requirements for
pleading fraud in support of their request for punitive damages. Plaintiffs
plead specific facts that justify punitive damages including ¶¶ 4-14, 23-59,
60-77, and 119-139 of the Complaint.” (MTS Opp. 3:14–16.) As Plaintiffs
observe, these portions of the complaint allege that “Defendant knew of the
defects in the transmission. Defendant intentionally failed to disclose the
defects in the transmission, and knew that Plaintiffs had no way of knowing of
the deception regarding the transmission.” (Id. at 3:19–21.)
Specifically, the cited portions allege that Defendant had actual knowledge of
the defect through litigation, consumer complaints, and service bulletins, yet
concealed this information from members of the public including Plaintiffs to
induce them into purchasing the vehicle. (Compl. ¶¶ 125–139.)
The
Court finds that Plaintiffs have sufficiently alleged facts to support their
prayer for punitive damages under the “fraud” prong of Civil Code section 3294.
As Plaintiffs observe, the issue of Defendant’s intent to defraud is a question
of fact that the Court declines to address at the demurrer stage. (MTS Opp.
6:22–23, citing Beckwith v. Dahl (2012) 205 Cal.App.4th 1039, 1061.)
While the Court finds Plaintiffs’ arguments that they are entitled to recover
punitive damages based on malice and oppression to be conclusory in fashion,
they may nevertheless proceed in their prayer for relief under the “fraud”
prong.
Based on the foregoing, the motion to strike Plaintiffs’ prayer for
punitive damages is denied.
CONCLUSION¿
The demurrer is overruled, and the motion to strike is
denied. Defendants shall file and serve an answer to Plaintiffs’ complaint
within 30 days.