Judge: Richard Y. Lee, Case: 30-2021-01202126, Date: 2022-08-25 Tentative Ruling

Defendant Kia America, Inc. (f/k/a Kia Motors America, Inc.) (“KA”) seeks an order sustaining its demurrer to the 1-6th causes of action of Plaintiff’s Second Amended Complaint.

Initially, CCP §430.41(a) requires that, “Before filing a demurrer pursuant to this chapter, 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.” Here, the Declaration of Defense Counsel, Edmond Menchavez establishes that he sent a meet and confer “correspondence” on 4/25/2022 (Decl. of Menchavez ¶2); and, attempted to call Plaintiff’s counsel on the same date but was unable to reach Plaintiff’s counsel. (Id. ¶3) Despite the meet and confer correspondence and leaving a message, Plaintiff’s counsel has not responded to the meet and confer efforts. (Id. ¶4).

Despite the failure to comply with CCP§430.41, the Court will proceed to the merits.

To that end, Defendant seeks an order sustaining its demurrer to the 1^st through 6th causes of action of the SAC.

Notably CCP §430.41(b) provides, in relevant part, “A party demurring to a pleading that has been amended after a demurrer to an earlier version of the pleading was sustained shall not demur to any portion of the amended complaint… on grounds that could have been raised by demurrer to the earlier version of the complaint….” 

This Court notes that Plaintiff pled the following causes of action in the First Amended Complaint:

1. Violation of Civil Code section 1793.2(D);

2. Violation of Civil Code section 1793.2(B);

3. Violation of Civil Code section 1793.2(A)(3);

4. Breach of express written warranty (Civil Code sections 1791.2(a) and 1794);

5. Breach of implied warranty of merchantability (Civil Code sections 1791.1, 1794, and 1795.5);

6. Fraudulent inducement – Concealment.

Defendant filed a demurrer which was directed to the 3rd, 5th, and 6th causes of action only. (See ROA 39) The demurrer was sustained with leave to amend. (See ROA 72) and related to statute of limitations arguments. Plaintiff filed a Second Amended Complaint, pleading the same causes of action. (See ROA 75)

Presently, Defendant filed a Demurrer to the Second Amended Complaint which is impermissibly directed to the 1st, 2nd, and  4th  causes of action.  As the grounds for demurrer to these causes of action (SOL) could have been raised by demurrer to the earlier version of the complaint, Defendant is barred from attempting to do so now pursuant to CCP §430.41(b). Accordingly, the demurrers to the 1st, 2nd and 4th causes of action are OVERRULED.

As to the arguments relating to the 3rd, 5th, and 6th causes of action of the Second Amended Complaint, the arguments, both in demurrer and opposition, seem relatively the same as directed to the First Amended Complaint. Furthermore, Plaintiff has not directed the Court to any distinctively new facts which cure the prior deficiencies.

Are the various causes of action barred by the Statute of Limitations?

As to the 3rd cause of action for Violation of Civil Code section 1793.2(a)(3), Defendant does not make a specific argument directed to this cause of action, but rather, lumps it into the analysis of all the “warranty based claims”. (See Demurrer page 2:25.) Similarly, Plaintiff’s opposition does not appear to address the statute of limitation relevant to this cause of action.

The gravamen of the claim is that, “Defendant failed to make available to its authorized service and repair facilities sufficient service literature and replacement parts to effect repairs during the express warranty period. Plaintiffs have been damaged by Defendant’s failure to comply with its obligations pursuant to Civil Code section 1793.2(a)(3), and therefore brings this Cause of Action pursuant to Civil Code section 1794.” (SAC ¶115)

The Court notes, per the SAC, the last repair attempt was made June 7, 2019 (SAC¶73).

Therefore, based on Defendant’s failure to address the cause of action, the fact that a statute of limitations defense does not appear from the face of the Second Amended Complaint based on the allegations of the claim, and the analysis relating to the 5th cause of action set forth below, the demurrer to the 3rd cause of action is OVERRULED.

As to the 5th claim for Breach of implied warranty of merchantability (Civil Code sections 1791.1, 1794, and 1795.5), the four-year statute of limitations under California Uniform Commercial Code § 2725 applies to breach of warranty claims under the Song-Beverly Act. (Kreiger v. Nick Alexander Imports, Inc. (1991) 234 Cal.App.3d 205, 213-216.) 

An action for breach of warranty accrues “when the breach occurs, regardless of the aggrieved party’s lack of knowledge of the breach” and the breach of warranty occurs “when tender of delivery is made, except where a warranty explicitly extends to future performance of the goods and discovery of the breach must await the time of such performance.” (Commercial Code §2725(2)).

As noted above, UCC Section 2725 applies to claims for breach of warranty under the Song-Beverly Act. (Krieger, supra, 234 Cal.App.3d at p. 215.) “Thus, under section 2725, the general limitations rule for a breach of warranty cause of action is four years from the date the goods are delivered (regardless of the date the buyer discovers the breach), unless the ‘warranty explicitly extends to future performance of the goods and discovery of the breach must await the time of such performance . . . .” (§ 2725, subd. (2).) If the exception applies, the accrual date is the time the breach ‘is or should have been discovered.’ (Ibid.)” (Cardinal Health 301, Inc. v. Tyco Electronics Corp. (2008) 169 Cal.App.4th 116, 129 (Cardinal Health).)

Kia cites to Cardinal Health, which did not involve a claim under the Song-Beverly Consumer Warranty Act, for the proposition that this exception does not apply to the implied warranty of merchantability:  “Because an implied warranty is one that arises by operation of law rather than by an express agreement of the parties, courts have consistently held it is not a warranty that ‘explicitly extends to future performance of the goods ....’ ”. (Cardinal Health, supra, 169 Cal.App.4th at p. 134.) In discussing the meaning of “future performance” and the applicability of the exception in UCC 2725(2), the Court of Appeal in Cardinal Health stated:  “The scope of the ‘future performance’ exception has been the subject of numerous, and sometimes conflicting, decisions throughout the country. [Citations.] But the majority view is that the exception must be narrowly construed, and that it applies only when the seller has expressly agreed to warrant its product for a specific and defined period of time. [Citations.]” (Id. at pp. 130-131.)

In Opposition, Plaintiffs do not expressly refer to “future performance,” but do allege that they pled specific repair visits and at each visit, Defendant’s technicians represented to Plaintiffs that the vehicle was repaired and that Plaintiffs relied on these representations. Notably, the warranty is pled at ¶10 of the SAC.

The Court of Appeal in Krieger, discussed UCC Section 2725(2), and found that the causes of action for breach of warranty provisions of the Song-Beverly Consumer Warranty Act, citing to Civil Code §§ 1792-1795.5, and breach of written warranty were not barred by the four-year statute of limitations set forth in UCC Section 2725, applying the discovery rule of UCC Section 2725(2), where the verified complaint alleged that plaintiffs had received a written warranty that all defects would be repaired for a period of 36 months or within the first 36,000 miles of use, and that evidence submitted showed that the vehicle had been repaired for the last time on May 30, 1984. (Krieger, supra, 234 Cal.App.3d at pp. 211, 215-219.) “A promise to repair defects that occur during a future period is the very definition of express warranty of future performance.” (Id. at p. 217.) The Court of Appeal thus found that a reasonable trier of fact could conclude that the causes of action for breach of warranty accrued in May 1984, not on December 31, 1983 when the vehicle was sold and delivered, and that said causes of action were not barred by the statute of limitations because the complaint was filed on February 5, 1988, less than four years from the accrual of the cause of action in May 1984. (Id. at pp. 218-219.)

Notably, the Court of Appeal in Cardinal stated that Krieger provided an example of a warranty that explicitly extends to future performance because it contains an express time limit:  “The automobile warranty stated the defendant would repair defects for 36 months or the first 36,000 miles, whichever occurs first—thus creating a defined three-year outer limit for the warranty period. [Citation.] Moreover, the Krieger court focused on the promise to repair the vehicle during the warranty period.” (Cardinal Health, supra, 169 Cal.App.4th at p. 133.) 

Here, the SAC alleges that Plaintiffs received an “express written warranty, including, a 5-year/60,000 mile express bumper to bumper warranty, a 10- year/100,000 mile powertrain warranty which, inter alia, covers the engine and transmission, various emissions warranties that exceed the time and mileage limitations of the bumper to bumper and powertrain warranties, as well as other warranties that came with the vehicle and/or subsequently issued by Defendant. Subsequently, Defendant provided a 10-year/120,000 mile warranty extension on 2.0 and 2.4L GDI engines (including the Subject Vehicle’s engine).” (SAC ¶10.)

The SAC also alleges that the warranty provided that “in the event a defect developed with the Subject Vehicle during the warranty period, Plaintiffs could deliver the Subject Vehicle for repair services to Defendant’s representative and the Subject Vehicle would be repaired.” (Id.)

The SAC additionally alleges that the subject vehicle was presented to KA’s authorized repair facility on July 10, 2015 (SAC ¶68); November 20, 2015 (SAC ¶69); December 7, 2015 (SAC ¶70); August 18, 2017 (SAC ¶71); November 8, 2018 (SAC ¶72); June 7, 2019 (SAC ¶73).

The Plaintiffs also plead that, “Defendant’s repair facility represented that the car conformed to warranty” (SAC ¶75) and that, “Plaintiff trusted and relied on Defendant’s authorized repair facilities to diagnose and repair her vehicle and to inform Plaintiff of any issues with the Subject Vehicle and its state of conformity.” (SAC ¶76) And finally that, “Plaintiffs discovered Defendant’s wrongful conduct alleged herein after relying on Defendant’s representations that the Vehicle conformed to warranty following each repair visit, yet symptoms persisted despite replacement of the Vehicle’s engine long block, and despite KMA’s unsuccessful attempts to repair it.” (SAC ¶77)

Based on the allegations which are assumed to be true, like the warranty in Krieger, it appears that the warranty here extends to future performance because it contains an express time limit, such that it appears that the discovery rule under UCC Section 2725(2) may apply.

This means that the cause of action would have accrued in June 2019. Plaintiff’s Complaint was filed on May 21, 2021, less than four years from the accrual of the breach of warrant cause of action in June 2019.

Based on the foregoing, it appears that the SAC sufficiently alleges facts in support of the delayed discovery rule / “future performance” exception, such that the cause of action would be timely.

Therefore, the demurrer to the Fifth cause of action is OVERRULED.

As to the 6th claim for Fraudulent inducement – Concealment,  the statute of limitations for fraud is three years. (CCP section 338(d).) Such a claim does not accrue, however, “until the discovery, by the aggrieved party, of the facts constituting the fraud or mistake.” (CCP § 338(d).)

Where a plaintiff relies on a theory of fraudulent concealment, delayed accrual, equitable tolling, or estoppel to save a cause of action that otherwise appears on its face to be time-barred, he or she must specifically plead facts which, if proved, would support the theory. (Mills v. Forestex Co. (2003) 108 Cal.App.4th 625, 641 (Mills).)

“A close cousin of the discovery rule is the ‘well accepted principle ... of fraudulent concealment.’ [Citation.] ‘It has long been established that the defendant’s fraud in concealing a cause of action against him tolls the applicable statute of limitations, but only for that period during which the claim is undiscovered by plaintiff or until such time as plaintiff, by the exercise of reasonable diligence, should have discovered it.’ [Citation.] Like the discovery rule, the rule of fraudulent concealment is an equitable principle designed to effect substantial justice between the parties; its rationale ‘is that the culpable defendant should be estopped from profiting by his own wrong to the extent that it hindered an “otherwise diligent” plaintiff in discovering his cause of action.’ ” (Bernson v. Browning-Ferris Industries (1994) 7 Cal.4th 926, 931.)

“When a plaintiff alleges the fraudulent concealment of a cause of action, the same pleading and proof is required as in fraud cases: the plaintiff must show (1) the substantive elements of fraud, and (2) an excuse for late discovery of the facts. [Citation.] With respect to ... the belated discovery, the complaint must allege (1) when the fraud was discovered; (2) the circumstances under which it was discovered; and (3) that the plaintiff was not at fault for failing to discover it or had no actual or presumptive knowledge of facts sufficient to put him on inquiry.” (Community Cause v. Boatwright (1981) 124 Cal.App.3d 888, 900.) 

Here, it appears that the Sixth Cause of Action would be barred by the 3-year statute of limitations under CCP section 338(d). The Sixth Cause of Action for “Fraudulent Inducement – Concealment” based on fraud occurring at the time of the purchase, May 26, 2012 (SAC ¶¶9,128).

Plaintiff did not bring this action until May 21, 2021. As such, unless Plaintiff alleges sufficient facts in support of delayed discovery or tolling, the three-year statute of limitations for this claim expired on May 26, 2015.

Plaintiffs contend that the fraud claim is timely tolled under the discovery rule, as well as fraudulent concealment doctrine, repair doctrine, American Pipe rule, and equitable estoppel. (Opposition, page 2:9-10). Plaintiff also argues Class Action tolling exists. (Opposition, page 4:23)

As to Delayed Discovery and the Fraudulent Concealment Doctrine, Plaintiffs argue they plead the facts explaining delayed discovery (see SAC para. 67-86). In those paragraphs, Plaintiffs set forth the repair history and conclude with,  “despite numerous visits to Defendant’s repair facilities, Defendant’s agents did not inform Plaintiff of the Engine Defects.” (SAC¶86.)

Although Plaintiffs allege it was difficult to discover the Engine Defects due to Defendant’s issuance of various TSBs and Recalls purporting to fix the defects (SAC¶83) and that the Vehicle was repaired on six different occasions, Plaintiffs still fail to allege the actual time or actual manner of discovery.

That is, despite this being the Second Amended Complaint, there are still no allegations as to when the fraud was discovered and the circumstances under which it was discovered, let alone facts which are pled specifically. Thus, it does not appear that the discovery rule is sufficiently pled or pled with the requisite specificity.

As to the “repair doctrine” and the “American Pipe Rule”, Plaintiffs do not specifically address these arguments in the opposition or provide any substantive analysis; and thus, the arguments are waived. The Court may treat an argument as waived where no legal authority supporting the argument is cited. (Hood v. Gonzales (2019) 43 Cal.App.5th 57, 73-74.) “Contentions supported neither by argument nor by citation of authority are deemed to be without foundation and to have been abandoned. [Citation.]” (Anastos v. Lee (2004) 118 Cal.App.4th 1314, 1318 [finding party cited no applicable statute or case authority supporting their contention and that citation to entire Code of Civil Procedure was overbroad and insufficient].)

As to Equitable Estoppel, “Equitable tolling…may suspend or extend the statute of limitations when a plaintiff has reasonably and in good faith chosen to pursue one among several remedies and the statute of limitations' notice function has been served.” (Aryeh v. Canon Bus. Sols., Inc. (2013) 55 Cal.4th 1185, 1192.) “To create an equitable estoppel, ‘it is enough if the party has been induced to refrain from using such means or taking such action as lay in his power, by which he might have retrieved his position and saved himself from loss.’ ... ‘Where the delay in commencing action is induced by the conduct of the defendant it cannot be availed of by him as a defense.’” (Lantzy v. Centex Homes (2003) 31 Cal.4th 363, 384.)

Plaintiffs argue Defendant never disclosed the defects to Plaintiff during any of the repair visits—and told Plaintiff that the engine problems were repaired. They cite to “Compl. ¶¶ 80-90” instead of the Second Amended Complaint.

The “equitable estoppel” portion of the SAC appears to be combined with “Fraudulent Concealment-Tolling”. (See SAC ¶¶99-102). Plaintiffs plead therein, “Defendant concealed the Engine Defect, minimized the scope, cause, and dangers of the Defect with inadequate recalls, and refused to investigate, address, and remedy the Defect as it pertains to all Kia Vehicles as set forth herein. (SAC ¶100.)

However, there are insufficient facts that any of the repairs or recalls induced Plaintiff to refrain from filing suit. Arguably, the various recall efforts and the failed attempts to repair the subject vehicle support a growing suspicion of a defect. (SAC, ¶77-78.)

As such, it does not appear the doctrine of equitable estoppel saves the time barred cause of action.

Finally, as to Class Action Tolling, Plaintiff fails to provide any analysis as to this theory in the Opposition itself. (See Opposition page 4: 23-28 to page 5:1.)

Relying on American Pipe in the SAC (see ¶¶87-95), Plaintiff contends his claims were tolled by: (1) Wallis et al. v. KJA Motors America, Inc. (C.D. Cal. No. 8:16-cv-01033) class action filed on June 2, 2016; and (2) In re: Kia Engine Litigation class action (C.D. Cal. No. 8:17-cv-00838), filed on May 10, 2017. (See SAC, ¶ 88.)

Per American Pipe & Const. Co. v. Utah (1974) 414 U.S. 538, “the commencement of a class action suspends the applicable statute of limitations as to all asserted members of the class who would have been parties had the suit been permitted to continue as a class action.” (Id. at 554).

As set forth previously in the ruling on the demurrer to the First Amended Complaint, the Court finds this argument unpersuasive considering the Wallis putative class action which Plaintiffs claim tolled limitation of their claims under American Pipe was filed on June 2, 2016—over a year after the limitations expired for the fraud claim and well before Plaintiffs’ alleged delayed discovery around May 2020; the In re: Kia Litigation commenced on May 10, 2017, nearly two years after the statute of limitations expired on the fraud claim. Here, Plaintiffs’ claims accrued on May 26, 2012 when Plaintiffs purchased the Vehicle. Plaintiffs do not allege they made a timely motion to intervene or that they timely filed an individual action. Plaintiffs do not allege whether they opted in or out of the class action nor when the matter was certified. As such, the Court finds the statute of limitations was not tolled due to the class action filing of Wallis or In re: Kia Engine.

As such, there being no doctrine, theory or exception to the 3 year statute of limitations, the demurrer to the 6th cause of action is SUSTAINED WITHOUT LEAVE TO AMEND.

The demurrer based on economic loss rule is MOOT as is the Motion to Strike Plaintiffs’ prayer for punitive damages given the ruling above. 

Defendant to give notice and Answer the SAC within 20 days.