Judge: Ronald F. Frank, Case: 23STCV02546, Date: 2023-12-12 Tentative Ruling
Case Number: 23STCV02546 Hearing Date: December 12, 2023 Dept: 8
Tentative Ruling¿
¿¿
HEARING DATE: December 12, 2023¿¿
¿¿
CASE NUMBER: 23STCV02546
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CASE NAME: Larry Tran v.
Tesla, Inc., et al.
¿¿
MOVING PARTY: Defendant, Tesla, Inc.
¿¿
RESPONDING PARTY: Plaintiff,
Larry Tran
¿¿
TRIAL DATE: Not Set.
MOTION:¿ (1) Demurrer¿
(2)
Motion to Strike
¿
Tentative Rulings: (1) Defendants’ Demurrer is
SUSTAINED in part and OVERRULED in part.
Details as to each cause of action are contained below.
(2)
Defendants’ Motion to Strike is Mooted
¿¿
I. BACKGROUND¿¿
¿¿
A. Factual¿¿
On August 4, 2023,
Plaintiff, Larry Tran (“Plaintiff”) filed a Complaint against Defendants,
Tesla, Inc., Tesla Motors, Inc., and DOES 1 through 10. The Complaint alleges
causes of action for: (1) Breach of Warranty – Song-Beverly Act: Failure
to Repurchase or Replace Consumer Good After Reasonable Number of Repair
Opportunities (Civ. Code § 1793.2(d)); (2) Breach of Warranty – Song-Beverly
Act: Failure to Promptly Repurchase or Replace New Motor Vehicle (Civ. Code, §
1793.2(d)); (3) Breach of Warranty – Magnuson-Moss Warranty Act 15 USC §2301 et
seq.; (4) Breach of Implied Warranty of Merchantability; (5) Breach of Express
Warranty under the Cal UCC 2313; (6) Strict Liability - Product Liability
Failure to Warn; (7) Strict Liability - Design Defect; (8) Mfg. Defect - Duty
to Warn Negligence; (9) Negligent Misrepresentation; (10) Intentional
Misrepresentation; (11) Concealment; (12) Illegal Tying Arrangement Under the
Cartwright Act; (13) CLRA Civ Code §1770 et seq.; and (14) UCL § 17200.
The Complaint is based on Plaintiff’s June 27, 2020
purchase of a 2013 Tesla Model S online from AutoNation. (Complaint, ¶ 10.)
Plaintiff also alleges the vehicle was covered under Tesla’s manufacturer’s
warranty because it had 97,134 miles on it. (Complaint, ¶ 13.)
Defendant, Tesla, Inc.,
has now filed a demurrer and motion to strike portions of the Complaint.
B. Procedural¿¿
¿
On
October 31, 2023, Tesla, Inc. filed a Demurrer and Motion to Strike. On
November 29, 2023, Plaintiff filed oppositions to both motions. On December 5,
2023, Tesla, Inc. filed reply briefs to both oppositions.
¿II. REQUEST FOR JUDICIAL
NOTICE
Filed
concurrently with Tesla, Inc.’s moving papers, Tesla includes a request for
judicial notice of the following documents:
1. Articles
of Incorporation and Statements of Information regarding AutoNation, Inc.,
filed with the California Secretary of State (Exhibit 3.)
2. Articles
of Incorporation and Statements of Information regarding Tesla, Inc. d/b/a
Tesla Motors, Inc., filed with the California Secretary of State (Exhibit 4.)
This Court GRANTS
Tesla, Inc.’s request and takes judicial notice of the above documents.
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.)¿
Song-Beverly Causes of Action (First and Second
Causes of Action)
Tesla
argues that Plaintiff’s Song-Beverly, Magnuson-Moss Act, and UCC Claims
pertaining to his used vehicle are barred as a matter of law. A plaintiff
pursuing an action under the Song-Beverly Consumer Warranty Act must show that
(1) the vehicle had a nonconformity covered by the express warranty that
substantially impaired the use, value or safety of the vehicle (the
nonconformity element); (2) the vehicle was presented to an authorized
representative of the manufacturer of the vehicle for repair (the presentation
element); and (3) the manufacturer or his representative did not repair the
nonconformity after a reasonable number of repair attempts (the failure to
repair element). (Oregel v. Am. Isuzu Motors, Inc. (2001) 90 Cal. App.
4th 1094, 1101.) Civil Code section 1795.5 provides: “Notwithstanding the
provisions of subdivision (a) of Section 1791 defining consumer goods to mean
‘new’ goods, the obligation of a distributor or retail seller of used consumer
goods in a sale in which an express warranty is given shall be the same as that
imposed on manufacturers under this chapter,” except for two specified
exceptions.
The
demurrer relies on Rodriguez v. FCA U.S., LLC (2022) 77 Cal.App.5th
209, review granted, for the proposition that the core SBA Causes of action and
the Magnuson-Moss causes of action are barred because the alleged purchase of a
used car with over 97,000 miles on its odometer is not covered by the California
nor federal Lemon Law statutes. Defendant
also relies on Dagher
v. Ford Motor Co. (2015) 238 Cal.App.4th 905. In Dagher, the plaintiff purchased a
used vehicle from private
sellers during the vehicle’s express manufacturer’s warranty period. (Id.
at p. 912.) The trial court granted the manufacturer’s motion for summary
judgment because the plaintiff was not a “buyer” as defined in Civil Code
section 1791(b), as he had not purchased from “a person engaged in the business
of manufacturing, distributing, or selling consumer goods at retail.” (Id.
at p. 914.) The trial court also denied the plaintiff’s pending motion to
amend without prejudice to filing a new action. (Ibid.) The
appellate court reversed the judgment and directed the trial court to permit
the plaintiff to move to amend the complaint to allege express warranty claims
under the Commercial Code and the Magnuson-Moss Act. (Id. at p.
929.)
In
opposition, Plaintiff relies on Jensen v. BMW of North America, Inc.
(1995) 35 Cal.App.4th 112, noting that although his car was previously owned,
it still was covered by the remaining balance of the manufacturer’s new vehicle
warranty. Plaintiff also contends in his opposition brief that Defendant’s
reliance on Rodriguez v. FCA is premature as the California Supreme
Court has not ruled on it yet. This Court notes that the California Supreme
Court has granted review of Rodriguez, but ordered under Rule
8.1115(e)(3) that “pending review, [Rodriguez] may be cited, not only
for its persuasive value, but also for the limited purpose of establishing the
existence of a conflict in authority. In Rodriguez, the Fourth District
held that a used car cannot as a matter of law be considered a “new motor
vehicle” under Civil Code § 1793.2.
In
Rodriguez, the buyer of a used truck, which still had a balance on the
manufacturer’s limited powertrain warranty at the time the buyer purchased it
from a used car dealership, brought an action against the manufacturer for
breach of express warranty under Civil Code § 1793.2(d)(2). The trial court
granted manufacturer’s motion for summary judgment. The Court of Appeal upheld
the trial court’s ruling and held that a used truck with an unexpired express
warranty was not a “new motor vehicle” subject to the refund-or-replace
provision of the Song-Beverly Act. (Rodriguez, 77 Cal.App.5th at p.
215.) The Rodriguez Court explained that Civil Code § 1793.2(d)(2)
applies to the sale of new vehicles only, which is defined in Civil Code §
1793.22(e)(2) as, “a new motor vehicle that is bought or used primarily for
personal, family, or household purposes…[and includes] a dealer-owned vehicle
and a ‘demonstrator’ or other motor vehicle sold with a manufacturer’s new car
warranty.” The Rodriguez Court considered the language of the provision,
its statutory context, and legislative intent and history and concluded that
the phrase “’other motor vehicle sold with a manufacturer’s new car warranty’
unambiguously refers to cars that come with a new or full express warranty.” (Id.
at 222.)
The
Rodriguez Court found that the Plaintiff had no recourse
under the Song-Beverly Act because his used car purchased from a third-party
dealership without any evidence that any express warranties had been issued to
plaintiff at the time of sale, did not meet the definition of “new motor
vehicle.” (Id.at 225.) The key distinguishing fact in Jensen was
highlighted in the Rodriguez decision. Jensen involved a lease by
a manufacturer-affiliated dealer who issued a full new car warranty along
with the lease. (Id. at 223.) Here, Plaintiff does not allege that he
purchased the 2013 Tesla from a manufacturer-affiliated dealer, but instead,
purchased the vehicle from AutoNation, a third party seller with no alleged affiliation
to Tesla. Plaintiff has not provided any facts to indicate that he purchased
from a manufacturer-affiliated dealer, nor that he received a full new car
warranty from one. This Court finds the
holding in Rodriguez persuasive and well-reasoned, thus the Court joins
the numerous federal district courts that have adopted its holding. See,
e.g., Barboza v. Mercedes-Benz LLC, 2022 WL 17978408, at *3 (E.D.
Cal. Dec. 28, 2022); Edwards v. Mercedes-Benz USA, LLC, 2022 WL 5176869,
at *3 (C.D. Cal. Oct. 5, 2022); Pineda v. Nissan N. Am., Inc., 2022 WL
2920416, at *3 (C.D. Cal. July 25, 2022); Lemke-Vega v. Mercedes-Benz USA,
LLC (N.D. Cal., Sept. 12, 2023, No. 23-CV-01408-DMR) 2023 WL 5957175, at *4;
Molina v. Ford Motor Company (C.D. Cal., Sept. 19, 2023, No.
2:23-CV-06323-RGK-KS) 2023 WL 7314127, at *3.)
As such, the Court SUSTAINS the demurrer as to the First and Second
causes of action.
Breach of Warranty – Magnuson-Moss Warranty Act
15 USC § 2301, et seq. (Third Cause of Action)
The
Magnuson–Moss Warranty—Federal Trade Commission Improvement Act
(Magnuson–Moss), 15 U.S.C. sections 2301 et seq., authorizes a civil suit by a
consumer to enforce the terms of an implied or express warranty. Magnuson–Moss
‘calls for the application of state written and implied warranty law, not the
creation of additional federal law,’ except in specific instances in which it
expressly prescribes a regulating rule. (Citation.) Accordingly, the trial
court correctly concluded that failure to state a warranty claim under state
law necessarily constituted a failure to state a claim under Magnuson–Moss.” (Daugherty
v. American Honda Motor Co., Inc. (2006) 144 Cal.App.4th 824, 832-833.) However,
there are circumstances where a Lemon Law plaintiff is precluded from utilizing
the Song-Beverly Act such as for out-of-state sales, but may still pursue a
federal Lemon Law claim under the Magnuson-Moss Act. (See Cummins, Inc. v. Superior Court
(2005) 36 Cal.4th 478, 493; Dagher, supra, 238 Cal.App.4th at p. 929 (dismissing
SBA causes of action but determining the plaintiff there had “some viable cause
of action under Magnuson–Moss” during the unexpired portion of the
manufacturer’s new car warranty.)) The
Complaint alleges that Tesla provided a 7-year or 150,000 mile warranty, and it
alleges in Paragraph 17 that the time duration of the warranty was extended to
November of 2021 because of in-service repairs with Tesla during the first 7
years of the vehicle.
A
second issue raised in the demurrer is that 15 U.S.C. § 2310 (a)(3)(C) states
that a consumer is required to initially resort to utilizing a manufacturer’s
informal dispute resolution procedure before bringing any civil action (other
than a class action) against the manufacturer under the Magnuson-Moss Act. This
requirement is echoed by 16 C.F.R. § 703.5 and confirms that a civil action is
barred in the absence of a consumer’s prior utilization of an informal dispute
resolution mechanism. Defendant argues that Plaintiff’s Complaint is silent on
whether he engaged in the required informal dispute resolution process prior to
the filing of his lawsuit. In opposition, Plaintiff contends that the Complaint
alleges that Plaintiff contacted the manufacturer on March 22, 2023, and that
Tesla refused to repair or replace the vehicle on May 18, 2023. (Complaint, ¶¶
56-57, 85.) While the Court does not find that these allegations would be
sufficient to indicate that Plaintiff engaged in any informal dispute
resolution process prior to the filing of his lawsuit, nor do the four corners
of the Complaint allege that Tesla has such an informal ADR.
Accordingly, the
demurrer is sustained as to Plaintiff’s third cause of action, but with leave
to amend as in Dagher.
Breach of Implied Warranty of Merchantability
(Fourth Cause of Action)
Tesla,
Inc. demurs to the Fourth cause of action for Breach of Implied Warranty of
Merchantability on the grounds that Plaintiff purchased the subject vehicle
used from a third party rather than from Tesla. “‘Implied warranty of
merchantability’ or ‘implied warranty that goods are merchantable’ means that
the consumer goods meet each of the following: [¶] (1) Pass without objection
in the trade under the contract description. [¶] (2) Are fit for the ordinary
purposes for which such goods are used. [¶] (3) Are adequately contained,
packaged, and labeled. [¶] (4) Conform to the promises or affirmations of fact
made on the container or label.” (Civ. Code, § 1791.1, subd. (a).)
“The implied warranty
of merchantability may be breached by a latent defect undiscoverable at the
time of sale. Indeed, ‘[u]ndisclosed latent defects… are the very evil that the
implied warranty of merchantability was designed to remedy.’ In the case of a
latent defect, a product is rendered unmerchantable, and the warranty of
merchantability is breached, by the existence of the unseen defect, not by its
subsequent discovery…’ The Song–Beverly Act does not include its own statute of
limitations. California courts have held that the statute of limitations for an
action for breach of warranty under the Song–Beverly Act is governed by the
same statute that governs the statute of limitations for warranties arising
under [Uniform Commercial Code §2725 (“Section 2725”)]. Under this statute,
‘(1) An action for breach of any contract for sale must be commenced within
four years after the cause of action has accrued.... [¶] (2) A cause of action
accrues when the breach occurs, regardless of the aggrieved party’s lack of
knowledge of the breach. A breach of warranty occurs when tender of delivery is
made, except that where a warranty explicitly extends to future
performance of the goods and discovery of the breach must await the time of
such performance the cause of action accrues when the breach is or should have
been discovered.’” (Mexia v. Rinker Boat Co., Inc. (2009) 174 Cal.App.4th
1297, 1304–1306 (emphasis added, internal citations omitted).)
This Court notes that the Song-Beverly Act defines the
implied warranties that accompany the sale of consumer goods, and it permits a
buyer to bring an action for damages and other relief when the implied
warranties are breached.¿ (See Civ. Code, §§ 1791.1, 1794.)¿ “[I]n the sale of
used consumer goods, liability for breach of implied warranty lies with
distributors and retailers, not the manufacturer, where there is no evidence
the manufacturer played any role in the sale of the used car to plaintiff.”¿ (Nunez
v. FCA US LLC (2021) 61 Cal.App.5th 385, 398 (Nunez).)¿ “[O]nly
distributors or sellers of used goods—not manufacturers of new
goods—have implied warranty obligations in the sale of used goods.”¿ (Id.
at 399.)¿ Thus, under Nunez, Tesla, Inc. would not have any
liability of the sale of the 2013 used Tesla by a third-party seller. As such,
the Court SUSTAINS the demurrer as to the fourth cause of action, without leave
to amend as to Defendant, Tesla, Inc.
Breach
of Express Warranty under Cal. UCC 2313
The
Court notes that Tesla’s Demurrer conclusion requests the Court to sustain
demurrer as to each cause of action in the Complaint, including the Fifth Cause
of Action for Breach of Express Warranty under California UCC § 2313, however,
the body of the demurrer does not – besides in a couple of footnotes – make any
argument for why this Court should sustain a demurrer to the UCC claim. Under the California
Commercial Code section 2313, subdivision (1)(a) and (b):
“(a) Any affirmation of fact or promise
made by the seller to the buyer which relates to the goods and becomes part
of¿the basis of the bargain¿creates¿an¿express¿warranty¿that the goods shall
conform to the affirmation or promise.¿(b) Any description of the goods which
is made part of the basis of the bargain¿creates¿an¿express¿warranty¿that the
goods shall conform to the description.”
(Weinstat v. Denstply Internat., Inc. (2010)
180 Cal.App.4th 1213, 1227.) The essential elements of a cause of action
under the UCC for breach of an express warranty to repair are (1) an express
warranty (id. § 2313) to repair defects given in connection with the sale of
goods; (2) the existence of a defect covered by the warranty; (3) the buyer's
notice to the seller of such a defect within a reasonable time after its
discovery (id., § 2607(3)(A)); (4) the seller's failure to repair the defect in
compliance with the warranty; and (5) resulting damages (id. §§ 2714,
2715; Cardinal Health 301, Inc. v. Tyco Electronics Corp. (2008) 169 CA4
116, 145).
Though not entitled to the
refund-or-replace remedy for new vehicles under the Song-Beverly Act, the
beneficiary of a transferable express warranty covering a previously-owned
vehicle can sue a manufacturer for breach of an express warranty to repair defects
under the California Uniform Commercial Code. In fact, the Fourth District in Rodriguez
specified in their ruling that their conclusion does not mean that “plaintiffs
or others in their position have no legal recourse against a manufacturer who
fails to conform a vehicle to an applicable, unexpired express warranty.” (Rodreguiz,
supra, 77 Cal.App.5th at 225.) Instead, they noted that although “not
entitled to the Act’s refund-or-replace remedy, the beneficiary of a
transferrable express warranty can sue a manufacturer for breach of an express
warranty to repair defects under the California Uniform Commercial Code. (Cal.
U. Com. Code §§ 2313, 2714, 2715.)” (Ibid.)
Here, Plaintiff’s Complaint alleges
Tesla gave him a written warranty on the battery and drive unit and provided a
User’s Manual for Model S online that stated the vehicle would continue to
drive on the roadways so long as there was a SOC, going into conversation mode
when it ran down to 5% but it would still continue to operate above 0%.
(Complaint, ¶ 94.) Plaintiff alleges the vehicle did not perform as stated
(Complaint, ¶ 95.); noticed Tesla of the defect within a reasonable time after
discovery (Complaint, ¶ 96); noted that Tesla failed to repair the defect in
compliance with the warranty (Complaint, ¶ 97); and that Plaintiff has suffered
damages. (Complaint, ¶ 98.) As such, the Court finds that on the face of the
pleading, Plaintiff’s Complaint has stated sufficient facts to a cause of
action for Breach of Express Warranty under California UCC 2313. Thus, the
demurrer is overruled as to the fifth cause of action.
Product
Liability Failure to Warn, Design Defect, and Duty to Warn (Sixth, Seventh, and
Eighth Causes of Action)
Tesla argues that the Plaintiff’s causes of action six
through eight are time barred. The statute of limitation for Product Liability
actions is two years. Here, Defendant argues that Plaintiff purchased the
vehicle on June 27, 2020 (Complaint, ¶ 8) and that he concedes he discovered
the alleged defect on May 14, 2021 (Complaint, ¶ 22), making the causes of
action time barred after May 14, 2023. However, Plaintiff did not file this
case until August 4, 2023.
California’s discovery rule delays
the start of the statute of limitations until the plaintiff discovers, or is on
inquiry notice (i.e., has reason to discover) facts supporting a cause of
action. (Fox v. Ethicon Endo-Surgery, Inc. (2005) 35 Cal.4th 797,
807.) “The discovery rule only delays accrual until the plaintiff
has, or should have, inquiry notice of the cause of action. The discovery rule
does not encourage dilatory tactics because plaintiffs are charged with presumptive
knowledge of an injury if they have “ ‘ “information of circumstances to put
[them] on inquiry ” ’ ” or if they have “ ‘ “the opportunity to obtain
knowledge from sources open to [their] investigation.” (Id. at 808; fn.
2 provides: “At common law, the term “injury,” as used in determining the date
of accrual of a cause of action, “means both ‘a person's physical condition and
its “negligent cause.” ’ ” ”(emphasis in original).)
“In order to rely on the discovery
rule for delayed accrual of a cause of action, ‘[a] plaintiff whose complaint
shows on its face that his claim would be barred without the benefit of the
discovery rule must specifically plead facts to show (1) the time and manner of
discovery and (2) the inability to have made earlier discovery despite
reasonable diligence.’ ” (Fox, supra, 35 Cal.4th at 808, citing (McKelvey
v. Boeing North American, Inc. (1999) 74 Cal.App.4th 151, 160 (superseded
on limited grounds by Code Civ. Proc. § 340.8(c))(emphasis in
original).) “When a plaintiff reasonably should have discovered
facts for purposes of the accrual of a case of action or application of the
delayed discovery rule is generally a question of fact, properly decided as a
matter of law only if the evidence (or, in this case, the allegations in the
complaint and facts properly subject to judicial notice) can support only one
reasonable conclusion.” (Broberg v. Guardian Life Ins. Co. of America
(2009) 171 Cal.App.4th 912, 921.)
Here, this Court notes that unlike
many plaintiffs’ law suit papers, the Plaintiff here does not include a statute
of limitation tolling section in the complaint. However, the Court also notes
that Plaintiff contends that he delivered his vehicle to Tesla or its
authorized repair facilities approximately nine (9) different times for repair
from July 12, 2020 through November 22, 2022, but that the issue was never
fixed. (Complaint, ¶ 68.) However, the Court does not believe this allegation
meets the requirements of showing: (1) the time and manner of discovery and (2)
the inability to have made earlier discovery despite reasonable diligence. Although
the Court understands that Plaintiff had continuous repairs, Plaintiff does not
plead the repair doctrine tolled the statute of limitations. In fact, Plaintiff
also notes that he brought the vehicle for inspection outside of Tesla and
discovered that two cells in the lithium battery were not functioning in what
appears to be May 2021. (Complaint, ¶ 58.) This Court notes that under
Plaintiff’s fraud and concealment related claims, Plaintiff pleads that Tesla
intentional failed to disclose certain facts that were known only to it and
that Plaintiff could not discover as follows: (1) Tesla controlled the ability
to see how the HV battery was operating. (Complaint, ¶ 156.) Plaintiff also
alleges Tesla prevented Plaintiff from discovering certain facts as follows:
(1) Tesla would not disclose the metrics rom its software diagnostics to plaintiff
when he brought his vehicle in for servicing as fully alleged; (2) Tesla had
secret teams to suppress thousands of driving range complaints; and (3) Tesla
did not have a buffer. (Complaint, ¶ 157.) While these facts may speak to the
fraud allegations, the do not per se have anything to do with the product
liability causes of action.
The Court will allow oral argument
as to this issue, however, the Court’s tentative ruling is to sustain the
demurrer as to causes of action six through eight with twenty (20) days leave
to amend.
Ninth, Tenth, Eleventh, and Thirteenth
Causes of Action based on Fraud
Statute
of Limitations
Tesla also argues that the statute of limitations
applicable to an action for relief on the ground of fraud or mistake is three
years, and thus bars Plaintiff’s causes of action for Negligent
Misrepresentation, Intentional Misrepresentation, Concealment, and CLRA Civil
Code § 1771, et seq. (Code Civ. Proc. § 338.) However, as noted above, under
Plaintiff’s cause of action for concealment, he alleges Tesla intentionally
failed to disclose certain facts that were known only to it and that Plaintiff
could not discover as follows: (1) Tesla controlled the ability to see how the
HV battery was operating. (Complaint, ¶ 156.) Plaintiff also alleges Tesla
prevented Plaintiff from discovering certain facts as follows: (1) Tesla would
not disclose the metrics from its software diagnostics to plaintiff when he
brought his vehicle in for servicing as fully alleged; (2) Tesla had secret
teams to suppress thousands of driving range complaints; and (3) Tesla did not
have a buffer. (Complaint, ¶ 157.) Based on these allegations, it is not
“clearly and affirmatively” apparent from the Complaint that the fraud causes
of action are barred by the statute of limitations. As such, the Court finds
that based on Plaintiff’s allegations, tolling is sufficiently alleged as to Causes
of Action 9-11 and 13.
Specificity Requirement – COA 9-11
Tesla also argues that Plaintiff’s Ninth,
Tenth, Eleventh, causes of action fail to meet the required heightened pleading
standards. “The elements of fraud 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.)
Tesla
argues that the fraud claims fail as a matter of law because Plaintiff vaguely
and nonspecifically alleges that Tesla intentionally misrepresented facts to
Plaintiff, negligently misrepresented facts to Plaintiff, and intentionally
concealed facts from Plaintiff about the Subject Vehicle. (Complaint, ¶¶ 129,
138, 150.) Tesla argues that Plaintiff’s complaint fails to identify any
individual authorized to speak on Tesla’s behalf during the sale, fails to
identify a single individual with knowledge that any representations were false
and/or who concealed information or who acted with the intent to induce
reliance. Although it is true that the Complaint fails to allege the names of
persons who concealed facts or who knew of the defect, the Court distinguishes
concealment from misrepresentation, and notes that details of that nature are
required in affirmative misrepresentation cases, not concealment cases. As
such, based on this factor alone, Plaintiff’s ninth and tenth causes of action
would fail.
This Court
finds that Plaintiff’s Eleventh Cause of Action for Concealment does not meet
the required elements. (Complaint, ¶¶ 141-151.) It is not enough to allege that
Tesla had exclusive knowledge of an alleged defect, but Plaintiff must also
allege that Tesla had a duty to make such disclosures. The Complaint fails to
allege that Tesla had such a duty to a person who did not purchase a Tesla
vehicle from Tesla or a Tesla-affiliated entity. As such, the Court sustains demurrer as to
causes of action 9-11 as they do not meet the specificity requirements.
Illegal
Tying Arrangement under Cartwright Act
The elements of a per se tying arrangement violating
the Cartwright Act are: (1) a tying agreement, arrangement or
condition existed whereby the sale of the tying product was linked to the sale
of the tied product or service, (2) the party had sufficient economic power in
the tying market to coerce the purchase of the tied product, (3) a substantial
amount of sale was affected in the tied product, and (4) the complaining party
sustained pecuniary loss as a consequence of the unlawful act. (SC
Manufactured Homes, Inc. v. Liebert (2008) 162 Cal.App.4th 68.) California
Courts have required a “high degree of particularity” in pleading conspiracy
claims under the Cartwright Act.
Here, Plaintiff alleges that there is an unlawful
tying arrangement in which Tesla vehicle is the tying product and diagnostics
for servicing the Tesla vehicle is the tied product. (Complaint, ¶ 166.) Plaintiff
argues that Tesla sold the vehicle and required or otherwise coerced buyers to
also purchase: (1) repair and services from an authorized Tesla service center
using Tesla diagnostic equipment; and (2) OEM wheels. (Complaint, ¶ 168.)
Further, Plaintiff contends Tesla has sufficient economic power in the market
for electronic vehicles to coerce at least some consumers into purchasing
service and repair only from Tesla authorized service centers using Tesla
diagnostic equipment. (Complaint, ¶ 169.) Plaintiff further asserts he was
harmed because of this.
Here, the Court does not believe Plaintiff has plead
this cause of action with any specificity, and instead mrely parrots the
required elements of the act. The demurrer as to this cause of action is
sustained, with leave to amend.
CLRA
Civil Code §§ 1770, et seq.
The California Consumers Legal Remedies Act (CLRA),
Civil Code section 1750 et seq., protects consumers from a broad range of
unfair or deceptive business practices. Under the Act, in order to sue for
money damages, a plaintiff must first provide the defendant with notice and a
30-day opportunity to cure the issue. (Civ. Code § 1782, subd. (a).) Although
not specified, it appears Plaintiff is alleging violation of Civil Code §
1770(a)(5) as Plaintiff’s Complaint alleges that Tesla represented that the
product had characteristics, uses, or benefits that it did not have, to wit the
SOC reading on the vehicle above 0% meaning there was enough energy left in the
vehicle for it to continue driving.
Here, as noted above, because Plaintiff has failed to
plead fraud with particularity, Plaintiff has not stated a claim for violations
of California’s Consumer Legal Remedies Act. The demurrer as to this cause of
action is sustained, with leave to amend.
UCL
§ 17200
As noted above, the Court does not
find that Plaintiff’s fraud causes of action without the requisite specificity,
it also does not meet the required specificity of the UCL § 17200. The demurrer
as to this cause of action is sustained.
B. Motion
to Strike
¿
Here, Tesla bases its Motion to Strike Plaintiff’s
prayer for Punitive Damages on the argument that Plaintiff has not plead the
fraud cause of action with the specificity required. As for the fraud claim,
the Court notes that the argument for punitive damages as to fraud are
predicated on the same arguments made in the demurrer. However, the Court’s
tentative ruling is to sustain demurrer as to the fraud causes of action.
As noted above, the Court’s tentative ruling is to
SUSTAIN the demurrer as to the fraud cause of action. As such the Motion to
Strike is MOOTED.