Judge: Ronald F. Frank, Case: 22TRCV00984, Date: 2023-04-11 Tentative Ruling

Case Number: 22TRCV00984    Hearing Date: April 11, 2023    Dept: 8

uling 

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HEARING DATE:                 April 11, 2023¿ 

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CASE NUMBER:                  22TRCV00984

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CASE NAME:                        Gail Chelebian v. General Motors, LLC, and DOES 1 through 10

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MOVING PARTY:                Defendant, General Motors, LLC

 

RESPONDING PARTY:       Plaintiff, Gail Chelebian

 

MOTION:¿                              (1) Defendant’s Demurrer

(2) Defendant’s Motion to Strike

 

 

Tentative Rulings:                  (1) Defendant’s Demurrer is SUSTAINED with 20 days leave to amend

(2) Defendant’s Motion to Strike is mooted by the sustaining of the Demurrer.

 

                                                 

 

 

I. BACKGROUND¿ 

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A. Factual¿ 

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            On October 19, 2022, Gail Chelebian (“Plaintiff”) filed a complaint against General Motors LLC (“GM”). On January 12, 2023, Plaintiff filed a First Amended Complaint (“FAC”) alleging causes of action 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 Warrant of Merchantability; ad (5) Fraudulent Inducement – Concealment. This action is based on the fact that on or about December 29, 2017, Plaintiff entered into a warranty contract regarding a 2017 Chevrolet Bolt EV, VIN 1G1FX6S0XH4189565 (the “Subject Vehicle” or “Bolt”). (See FAC, ¶ 6.)

 

B. Procedural  

 

            On March 13, 2023, GM filed a Demurrer and Motion to Strike. On March 28, 2023, Plaintiff filed opposition briefs. On April 4, 2023, GM filed a reply brief to both motions.

 

¿II. GROUNDS FOR MOTIONS

 

            GM demurs to the Fifth Cause of Action because it claims the cause of action is barred by the applicable statute of limitation, that Plaintiff failed to state facts sufficient to establish fraud, and that Plaintiff failed to allege a transactional relationship giving rise to duty to disclose.

 

 

            GM also filed a Motion to Strike Plaintiff’s prayer of relief for Punitive Damages.

 

III. ANALYSIS ¿ 

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A.    Demurrer  

 

A demurrer can be used only to challenge defects that appear on the face of the pleading under attack or from matters outside the pleading that are judicially noticeable. (Blank v. Kirwan (1985) 39 Cal.3d 311, 318.) “To survive a demurrer, the complaint need only allege facts sufficient to state a cause of action; each evidentiary fact that might eventually form part of the plaintiff’s proof need not be alleged.” (C.A. v. William S. Hart Union High School Dist. (2012) 53 Cal.4th 861, 872.) For the purpose of testing the sufficiency of the cause of action, the demurrer admits the truth of all material facts properly pleaded. (Aubry v. Tri-City Hospital Dist. (1992) 2 Cal.4th 962, 966-967.) A demurrer “does not admit contentions, deductions or conclusions of fact or law.” (Daar v. Yellow Cab Co. (1967) 67 Cal.2d 695, 713.)¿ 

 

A pleading is uncertain if it is ambiguous or unintelligible. (Code Civ. Proc., § 430.10, subd. (f).) A demurrer for uncertainty may lie if the failure to label the parties and claims renders the complaint so confusing defendant cannot tell what he or she is supposed to respond to.¿ (Williams v. Beechnut Nutrition Corp. (1986) 185 Cal.App.3d 135, 139, fn. 2.) However, “[a] demurrer for uncertainty is strictly construed, even where a complaint is in some respects uncertain, because ambiguities can be clarified under modern discovery procedures.” (Khoury v. Maly's of California, Inc. (1993) 14 Cal.App.4th 612, 616.)¿ 

 

Statute of Limitations

 

            Here, GM asserts that Plaintiff’s fifth cause of action for Fraudulent Inducement – Concealment is barred by the statute of limitations. GM argues that Plaintiff purchased the Subject Vehicle on December 29, 2017 (FAC, ¶ 6), and as such, had to have brough his fraud claim no later than December 29, 2020. However, Plaintiff brought the fraud claim on October 19, 2022.  The FAC alleges on event within the three -year period, in ¶37 which references a NHTSA recall on November 11, 2020.  The FAC does not allege whether the subject vehicle was or was not within the ambit of this recall campaign, whether Plaintiff received notice of the recall, whether Plaintiff responded to the recall, or other such facts.  Plaintiff also alleges a communication from GM itself in ¶38 on July 14, 2021 constituting instructions to owners and lessees, but that alleged representation was made ¾ a year after the three-year period would have run so it cannot be evidence that GM induced Plaintiffs to refrain from filing suit before December of 2020.   The FAC also lists a repair chronology of presentations of the vehicle to GM authorized service and repair facilities for “battery concerns” on 5/1/18, 6/19/19, 11/18/20, and 12/21/20, all within the three-year period.  While ¶51 of the FAC asserts the conclusion that Plaintiff only discovered “Defendant’s wrongful conduct . . . shortly before the filing of the complaint,” and states that discovery was a continued exhibition of symptoms following unsuccessful repair attempts, the FAC does not allege what was different two years later when Plaintiff did file suit versus the circumstances extant in late 2020 when the 3rd and 4th attempts for “battery concerns” were made at a dealership.  But it is not clear from the FAC whether these four visits all concerned the same claimed defect or malfunction or even symptom with respect the Volt’s battery, or if they involved different issues. 

 

In Plaintiff’s FAC, she alleges that the statute of limitations for the 5th cause of action is equitable tolled due to Defendant’s alleged fraudulent concealment of the defect giving rise to the Lemon Law causes of action. (FAC, ¶ 53.) Plaintiff claims that Defendant concealed the Battery Defect, minimized the scope, cause, and dangers of the Defect with “inadequate” TSBs and/or Recalls, and refused to investigate, address, and remedy the Defect as it pertains to all affected vehicles. (FAC, ¶ 54.) Further, Plaintiff contends that Defendant’s fraudulent concealment was ongoing and that GM blamed the symptoms of the Battery Defect on other issues and not the actual defect itself and purported to be able to repair it because of the Battery Defect. (FAC, ¶ 55.)  In the Court’s view, these allegations are not sufficiently detailed.  Assuming Plaintiff will accept the Court’s invitation to amend, Plaintiff should specify what was inadequate or misleading about the TSBs and/or the recalls generated before the end of calendar year 2020 that may have induced Plaintiff to refrain from contacting legal counsel or filing suit.   

 

Fraudulent Inducement – Concealment

“The elements of fraud,” including a cause of action for fraudulent inducement, “are (a) a misrepresentation (false representation, concealment, or nondisclosure); (b) scienter or knowledge of its falsity; (c) intent to induce reliance; (d) justifiable reliance; and (e) resulting damage.” (Hinesley v. Oakshade Town Ctr. (2005) 135 Cal.App.4th 289, 294.) The facts constituting the alleged fraud must be alleged factually and specifically as to every element of fraud, as the policy of “liberal construction” of the pleadings will not ordinarily be invoked. (Lazar v. Superior Court (1996) 12 Cal.4th 631, 645.) To properly allege fraud against a corporation, the plaintiffs must plead the names of the persons allegedly making the false representations, their authority to speak, to whom they spoke, what they said or wrote, and when it was said or written. (Tarmann v. State Farm Mut. Auto. Ins. Co. (1991) 2 Cal.App.4th 153, 157.)

“The elements of a cause of action for fraudulent concealment are: (1) concealment of a material fact; (2) by a defendant with a duty to disclose; (3) the defendant intended to defraud by failing to disclose; (4) plaintiff was unaware of the fact and would not have acted as it did had it known the fact; and (5) damages.” (Butler America, LLC v. Aviation Assurance Company, LLC (2020) 55 Cal.App.5th 136, 144.) The facts constituting the alleged fraud must be alleged factually and specifically as to every element of fraud, as the policy of “liberal construction” of the pleadings will not ordinarily be invoked. (Lazar v. Superior Court (1996) 12 Cal.4th 631, 645.) To properly allege fraud against a corporation, the plaintiffs must plead the names of the persons allegedly making the false representations, their authority to speak, to whom they spoke, what they said or wrote, and when it was said or written. (Tarmann v. State Farm Mut. Auto. Ins. Co. (1991) 2 Cal.App.4th 153, 157.)  Of course, a concealment cause of action has a more relaxed specificity requirement as compared to affirmative misrepresentations because a concealment claim does not assert that GM actively or affirmatively defrauded the public in general of Plaintiff in particular.  The rule of specifically pleading how, when, where, to whom and by what means, misrepresentations were communicated is intended to apply to affirmative misrepresentations and not to concealment. (Alfaro v. Community Housing Improvement System & Planning Assn, Inc. (2009) 171 Cal.App.4th 1356 at 1384.) Thus, citations in GM’s briefs to cases such as Apollo Capital Fund, LLC v. Roth Capital Partners, LLC (2007) 158 Cal.App.4th 226 are not as instructive as they could be.  Further, Apollo Capital is distinguishable because it involved securities brokers where fiduciary duties exist between investor and investment advisor, and the Second District noted that the principle of equitable tolling does not apply to a section 12(a)(1) claim involving a registration statement for shares of stock.

In a fraud action based on nondisclosure, if the duty to disclose arises from the making of representations that were misleading or false, then those allegations should be described. (Alfaro, supra, 171 Cal.App.4th at p. 1384.)  Further, “mere conclusionary allegation that the omissions were intentional and for the purpose of defrauding and deceiving plaintiffs and bringing about the purchase…and that plaintiffs relied on the omissions in making such purchase are insufficient to show fraud by concealment.” (Goodman v. Kennedy (1976) 18 Cal.3d 335, 347.)  The Court believes greater detail is needed than what is outlined in the FAC.    The FAC gives little detail as to what GM should have disclosed as of what point in time.    For example, did GM know as of late 2020 that 10% or 50% of the Volt vehicles sold during the same model year as Plaintiff’s Volt had already resulted in a non-collision fire, but fail to initiate a recall or service campaign?  Are there specific statements GM is alleged to have made in its Recall submission to NHTSA that demonstrate prior knowledge or concealment of knowledge relevant to Plaintiff’s vehicle? 

            In opposition, Plaintiff argues that she alleges facts establishing that GM had exclusive knowledge of material facts not known to Plaintiff or actively concealed material facts from Plaintiff. (FAC ¶¶ 32, 34, 54, 81, 85-86.) Plaintiff contends that such allegations are sufficient to establish a duty to disclose and must be accepted as true for purposes of demurrer. Plaintiff points to the recent case of Dhital v. Nissan N. Am., Inc., 84 Cal. App. 5th 828 (2022), addressing a similar issue in a lemon law case. But the California Supreme Court has granted a petition for review in Ghital, presumably to address the economic loss rule and whether, as the First District decided in that case, that rule does not bar a fraudulent inducement claim.  GM here does not rely on the economic loss rule and it does not mention Dhital.   There, Nissan argued the Plaintiffs had not adequately plead the existence of a buyer-seller relationship between the parties, because Plaintiffs bought the car from a Nissan dealership (not from Nissan directly). The Court held: “[W]e conclude plaintiffs’ allegations are sufficient. Plaintiffs alleged that they bought the car from a Nissan dealership, that Nissan backed the car with an express warranty, and that Nissan's authorized dealerships are its agents for purposes of the sale of Nissan vehicles to consumers. In light of these allegations, we decline to hold plaintiffs’ claim is barred on the ground there was no relationship requiring Nissan to disclose known defects.” (Dhital, supra, 84 Cal. App. 5th at p. 844.)

            The Court notes that Plaintiff’s FAC alleges, on numerous occasions, that GM had an express warranty attached to the vehicle, and that GM-authorized service and repair facilities fulfilled GM’s statutory duties to service or repair warranty-covered defects that Plaintiff reported.  But a number of federal court decisions have required more detailed allegations from Lemon Law plaintiffs who seek to state a cause of action for fraudulent concealment, most recently Rodriguez v. Nissan North America, Inc. (C.D. Cal., Jan. 30, 2023, No. EDCV221672MWFKK) 2023 WL 2683162.  Rodriguez allowed leave to amend in granting a Rule 12(b)(6) motion as to a fraudulent concealment cause of action.  The Court finds the reasoning in these federal decisions to be persuasive, particularly in light of the California Supreme Court’s granting of review in Dhital.  The Central District in that case gives a road map as to what types of additional details should be provided to satisfy the pleading requirements. 

Defendant Intended to Defraud by Failing to Disclose

            The FAC alleges that in failing to disclose the claimed defects in the Vehicle’s lithium-ion battery, Defendant knowingly and intentionally concealed material facts and breached its duty not to do so. (FAC, ¶ 85.) Plaintiff asserts that the facts concealed or not disclosed by Defendant General Motors, LLC (and its directors, officers, employees, affiliates, and/or agents) to Plaintiff are material in that a reasonable person would have considered them to be important in deciding whether or not to purchase the Vehicle.   Plaintiff further alleges that had Plaintiff known that the Vehicle, and its lithium-ion battery, were defective at the time of sale, Plaintiff would not have purchased the Vehicle. (FAC, ¶ 86.)  Plaintiff contends that she is a reasonable consumer who does not expect the lithium-ion battery to fail and not work properly. (FAC, ¶ 87.)  Plaintiff further contends that he expects and assumes that Defendant will not sell or lease vehicles with known material defects, including, but not limited to, those involving the vehicle’s lithium-ion battery and will disclose any such defect to its consumers before selling such vehicles, noting that had Defendant disclosed the defect, Plaintiff would have been aware of it and would not have purchased the Subject Vehicle. (FAC, ¶ 87.)  As noted above, in an amended pleading Plaintiff should provide more detail as to what she contends GM should have disclosed and when. 

Plaintiff Was Unaware of the Fact and Would Not Have Acted as It Did Had Plaintiff Known the Fact

Plaintiff’s FAC asserts that had Plaintiff known that Subject Vehicle suffered from the Battery Defect, she would not have leased it. (FAC, ¶ 81.) In other words, Plaintiff makes certain that GM’s concealment of this safety defect was material and Plaintiff relied on Defendant’s advertising materials which did not disclose the defect. As a result, she claims the acquisition of Subject Vehicle was fraudulently induced. (FAC, ¶ 81.) Plaintiff also argues that GM continued to conceal the defect and its inability to repair it, making it difficult for Plaintiff to discover Defendant’s wrongdoing. For example, Plaintiff notes that GM did not disclose its wrongdoing nor offer to rectify it during successive repair visits to GM’s authorized dealership. In addition, Plaintiff alleges that GM failed to disclose the existence of the Battery Defect and rectify its wrongdoing during direct calls to Defendant. (FAC, ¶ 82.)  As noted above, in an amended pleading Plaintiff should provide more detail as to what she contends GM should have disclosed and when. 

Damages

            Plaintiff submits that as a result of GM’s misconduct, Plaintiff has suffered and will continue to suffer actual damages. (FAC, ¶ 88.) Plaintiff argues he was harmed by Defendant’s concealment of the Battery Defect, which was a substantial factor in causing his harm. Specifically, Plaintiff asserts she was harmed by purchasing a vehicle which Plaintiff would not have purchased had the Battery Defect been disclosed prior to sale. (FAC, ¶ 88.) Plaintiff contends that as a result of Defendant’s misconduct, she has suffered and will continue to suffer actual damages. (FAC, ¶ 88.) Further, Plaintiff asserts that she was unknowingly exposed to the risk of liability, accident, and/or injury upon third parties as a result of Defendant’s fraudulent concealment of the Battery Defect, which is a material and significant safety hazard. (FAC, ¶ 88.)

            GM, for the first time in its reply brief, argues that Plaintiff has not plead any damages. It is improper to raise arguments for the first time in a reply brief. As such, the Court disposes with this argument. Moreover, Plaintiff does allege several categories of damages, but since she is going to amend the pleading perhaps she will add greater details as to claimed damages that are specific to the 5th cause of action, e.g., specific out of pocket losses or other asserted tort damages.

B.     Motion to Strike

 

Given the Court’s ruling on the Demurrer, the motion to strike is mooted.