Judge: Ronald F. Frank, Case: 22TRCV01534, Date: 2023-10-04 Tentative Ruling
Case Number: 22TRCV01534 Hearing Date: October 4, 2023 Dept: 8
¿¿
HEARING DATE: October 4, 2023¿¿
¿¿
CASE NUMBER: 22TRCV01534
¿¿
CASE NAME: Ernesto
G. Caballeros v. General Motors LLC, et al. ¿¿
¿¿
MOVING PARTY: Defendant, General Motors, LLC
RESPONDING PARTY: Plaintiff, Ernesto G. Caballeros (no opposition filed)
¿¿
TRIAL DATE: December
2, 2024
¿¿
MOTION:¿ (1) Demurrer¿
(2) Motion to Strike
¿
Tentative Rulings: (1) Defendant’s Demurrer is OVERRULED.
(2) Defendant’s Motion to Strike is DENIED.
¿
I. BACKGROUND¿¿
¿¿
A. Factual¿¿
¿
On December
12, 2023, Plaintiff, Ernesto G. Caballeros (“Plaintiff”) filed a Complaint
against Defendant General Motors (“GM”) and DOES 1 through 10. On July 20,
2023, Plaintiff filed a First Amended Complaint (“FAC”) alleging causes of
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
Song-Beverly Act § 1793.2; and (4) Fraud – Fraudulent Inducement – Concealment.
Defendant GM
has now filed a Demurrer and Motion to Strike portions of the FAC.
B. Procedural¿¿
On August 21, 2023, Defendants,
GM filed a Demurrer and Motion to Strike. To date, no opposition has been
filed. However, the First Amended
Complaint itself is littered with case citations and legal argument. The Court had previously granted GM’s motion
for judgment on the pleadings as to the fourth cause of action for fraudulent concealment
but had granted leave to amend.
Plaintiff did timely amend and filed the FAC which is the subject of the
subject demurrer and motion to strike.
¿II. MOVING PARTY’S GROUNDS
¿
GM filed their Demurrer and
Motion to Strike Plaintiff’s Fourth Cause of Action for Fraud – Fraudulent
Inducement – Concealment on the grounds it argues Plaintiff has not alleged
sufficient facts to state a cause of action, and that Plaintiff fails to allege
a transactional relationship.
¿III. ANALYSIS¿
¿
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.)¿¿
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.)
Concealment
First, GM argues that Plaintiff’s
concealment allegations are insufficient as a matter of law because Plaintiff
does not allege: (1) GM concealed or suppressed a material fact; (2) GM was
under a duty to disclose the fact to Plaintiff; (3) GM intentionally concealed
or suppressed the fact with intent to defraud Plaintiff; (4) Plaintiff was
unaware of the fact and would not have acted as Plaintiff did if Plaintiff had
known of the concealed or suppressed fact; and (5) Plaintiff was damaged by the
concealment. GM also argues that when dealing with a product, omitted facts are
material only if they implicate a safety concern. GM argues that Plaintiff has
alleged no such facts, and instead, pleads only speculative and conclusory
statements. GM reliance on Daugherty v. Am. Honda. Co. (2006) 144
Cal.App.4th 824, is misplaced and unpersuasive. Daugherty holds, in the
context of a Consumer Legal Rights Act (“CLRA”) claim, “although a claim may be
stated under the CLRA in terms constituting fraudulent omissions, to be
actionable the omission must be contrary to a representation actually made by
the defendant, or an omission of a fact the defendant was obliged to disclose.”
Defendant argues that a similar rule should apply here. However, Daugherty
related to a claim under the CLRA, not common-law fraud. Further, Daugherty
stands for the contention that concealment requires partial representations and
failure to disclose material facts is misplaced and represents only one way to
establish duty. The issue of Duty is discussed below.
Here, GM argues that Plaintiff’s fraud claim
fails as a matter of law because Plaintiff did not plead fraud with the
requisite specificity. The Court disagrees. Instead, the Court finds that
Plaintiff’s allegations are exceptionally detailed, much more so than in the
cases Plaintiff cited to in its opposition. While it is true that the FAC fails
to allege the names of the persons who concealed facts or knew of a
transmission flaw, other than a sales employee of the GM authorized dealership
with whom Plaintiff alleges he had detailed conversations before his purchase, details
of that nature are required in affirmative misrepresentation cases, not
concealment cases. In Plaintiff’s FAC, he alleges sufficient allegations to the
fraud claim. As such, the Court does not sustain the demurrer on this issue
alone.
Under California law, a duty to disclose
material facts may arise (1) when the defendant is in a fiduciary relationship
with the plaintiff; (2) when the defendant has exclusive knowledge of material
facts not known to the plaintiff; (3) when the defendant actively conceals a
material fact from the plaintiff; or (4) when the defendant makes partial
representations but also suppresses some material facts. (Falk v. General
Motors Corp. (N.D. Cal. 2007) 496 F.Supp.2d 1088, 1098-1099 citing LiMandri
v. Judkins (1997) 52 Cal.App.4th 326.)
The Opposition alleges that the FAC contains allegations supporting
three of these four circumstances.
Transactional Relationship
GM argues that Plaintiff’s fraud claim fails
because Plaintiff does not allege a transactional relationship between GM and
Plaintiff, or other circumstances giving rise to a duty to disclose. GM notes
that the FAC is devoid of any allegations that Plaintiff purchased the subject
vehicle directly from GM. But that
argument by itself is insufficient. As LiMandri
made clear, the second, third, and fourth circumstances giving rise to a duty
to disclose “presupposes the existence of some ... relationship between
the plaintiff and defendant.” 52 Cal. App. 4th at 336-37 (emphasis added). For
purposes of duties to disclose, the California Supreme Court has defined a
“relationship” as a “transaction” between the parties. (Warner Constr. Corp.
v. City of Los Angeles (1970) 2 Cal. 3d 285, 294; see LiMandri, 52
Cal. App. 4th at 337 (“As a matter of common sense, such a relationship can
only come into being as a result of some sort of transaction between the
parties.”) (emphasis in original).) Although there is no opposition on file, the
Court notes that a transactional relationship test can be met indirectly, i.e.,
by virtue of an allegation that Plaintiff purchased the subject vehicle from an
authorized GM dealer. There is some
support in published decisions for this argument. Namely, the Court directs the
parties to the case of Dhital v. Nissan North America, Inc. (2022) 84
Cal.App.5th 828. The Court notes that the California Supreme Court granted
review of Dhital, and thus, although not binding, its decision may be cited
for its persuasive authority. The decision in Dhital found the
allegations sufficient to overcome Nissan’s demurrer there.
Dhital states: “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.” (Dhital,
supra, 84 Cal.App.5th at 844 [emphasis added].) Similarly, here,
Plaintiff alleges that he bought the vehicle from Win Chevrolet Hyundai, an
authorized dealership, agent, and representative of GM. (FAC, ¶ 4.) Plaintiff
also alleges that GM provided an express written warranty. (FAC, ¶ 9) covering
the transmission defect and allegedly actively concealed the same, by virtue of
its authorized dealership and agent’s purportedly fraudulent pre-sale conduct.
(FAC, ¶¶ 10-12, 14, 33-67, 82, 138-142.) Although the Court views it as a close
question, the persuasive authority in Dhital is more compelling than
some less well reasoned and unpublished federal district court decisions that
have granted motions for judgment on the pleadings or dismissed fraudulent
concealment claims at the pleading stage.
Next,
although not extensively argued, GM argues that it did not have exclusive
knowledge of the defect. However, the Court finds that Plaintiff’s complaint
clearly alleges that GM had exclusive knowledge. (FAC, ¶¶ 36-38, 42, 43.) The
Court notes that Plaintiff references the NHTSA, as to which
manufacturer-provided TSBs are available to the public. Given the list of TSBs and other service
information referenced in the FAC, it is not at all clear that GM has
“exclusive” knowledge since TSBs are publicly available on the NHTSA
website. Further, GM dealers also are
issued TSBs so the selling dealer also has knowledge of the contents of
technical literature addressing the existing of harsh shifts in low mileage
vehicles. Arguably, if the absence of
any reported repair issues were so material to a buyer that she would not have
made the purchase if the pre-existing technical issues were known, Plaintiff
would need to make specific allegations of efforts to learn about pre-existing
reported repair issues, whether on specific question at the point of sale
and/or upon independent investigation and the lack of any such issues
discovered, in her Complaint. The Court
does not observe any such allegations here.
Instead, the FAC alleges that a reasonable person would have considered
the allegedly undisclosed history GM had experience with other customers’
complaints and repair literature to its dealer body about transmission shifting
would have considered them in deciding to purchase a GM product. (FAC ¶¶ 74-77, 127, 141.) The Court is required to accept those
allegations as true for purposes of a demurrer.
Lastly,
Plaintiff alleges that GM actively concealed material facts. Plaintiff contends
that GM committed fraud by knowingly and intentionally concealing
from Plaintiff that the Vehicle and its Transmissions were defective,
dangerous, and susceptible to sudden and premature failure, including by
issuing TSBs that purported to address the Defect when they were in fact
lurching, shuddering and jerking. (FAC ¶¶ 18, 19, 38, 39, 45, 46, 48, 63, 66,
67.) But the very issuance of publicly available TSBs demonstrates an absence
of affirmative concealment. Unless
Plaintiff is alleging that the TSBs which were issued neglected to mention the
nature of transmission issues Plaintiff herself experienced, the Court would be
inclined to find that there could not be affirmative, active, intentional
concealment of repair issues discussed in a published TSB. The contention that GM has “superior
knowledge” to Plaintiff’s does not, in the Court’s view, satisfy the “exclusive”
knowledge requirement giving rise to a duty to disclose. Every manufacturer and issuer of repair
instructions has knowledge superior to a retail buyer about technical and
repair issues. The mere existence of
knowledge that some prior models have experienced customer complaints is not,
in the Court’s view, sufficient by itself to establish an affirmative duty to
disclose the existence of such complaints for purposes of alleging a punitive
damages cause of action for fraud. But
on balance, the Court finds that the FAC’s exceptionally detailed allegations including
the allegations about his pre-sale discussion with the GM-authorized selling
dealership are sufficient to withstand demurrer. Accordingly, the Demurrer is
overruled.
A. Motion to Strike
Any party, within the time allowed to
respond to a pleading may serve and file a notice of motion to strike the whole
or any part thereof. (Code Civ. Proc., § 435, subd. (b)(1).) The court may,
upon a motion, or at any time in its discretion, and upon terms it deems
proper, strike any irrelevant, false, or improper matter inserted in any
pleading. (Code Civ. Proc., § 436, subd. (a); Stafford v. Shultz (1954)
42 Cal.2d 767, 782 [“Matter in a pleading which is not essential to the claim
is surplusage; probative facts are surplusage and may be stricken out or
disregarded”].) The court may also strike all or any part of any pleading not
drawn or filed in conformity with California law, a court rule, or an order of
the court. (Code Civ. Proc., § 436, subd. (b).) An immaterial or irrelevant
allegation is one that is not essential to the statement of a claim or defense;
is neither pertinent to nor supported by an otherwise sufficient claim or
defense; or a demand for judgment requesting relief not supported by the allegations
of the complaint. (Code Civ. Proc., § 431.10, subd. (b).) The grounds for
moving to strike must appear on the face of the pleading or by way of judicial
notice. (Code Civ. Proc., § 437.)¿¿
Here,
GM bases its Motion to Strike Plaintiff’s prayer for Punitive Damages on the
argument that Plaintiff has not pleaded the fraud cause of action with the
specificity required. Plaintiff’s prayer for punitive damages, and Defendant’s
argument against it, are intrinsically intertwined with the fraudulent
inducement – concealment cause of action, and as such, the Court’s ruling as to
the Motion to Strike is determined by the Court’s ruling of the demurrer. The
Motion to Strike is thus denied.
IV.
CONCLUSION¿¿
¿¿¿
For the foregoing reasons, Defendant’s Demurrer is OVERRULED.
Additionally, Defendant’s Motion to Strike is DENIED.
¿¿¿
Plaintiff is ordered to give notice.