Judge: Ronald F. Frank, Case: 23TRCV01092, Date: 2023-10-24 Tentative Ruling
Case Number: 23TRCV01092 Hearing Date: October 24, 2023 Dept: 8
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HEARING DATE: October 24, 2023¿¿
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CASE NUMBER: 23TRCV01092
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CASE NAME: Francisco
Reyes v. General Motors LLC, et al. ¿¿
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MOVING PARTY: Defendant, General Motors, LLC
RESPONDING PARTY: Plaintiff, Francisco Reyes
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TRIAL DATE: Not
Set.
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MOTION:¿ (1) Demurrer¿
(2) Motion to Strike
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Tentative Rulings: (1) Defendant’s Demurrer is OVERRULED,
per Dhital Case.
(2) Defendant’s Motion to Strike DENIED.
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I. BACKGROUND¿¿
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A. Factual¿¿
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On April 7,
2023, Plaintiff, Francisco Reyes (“Plaintiff”) filed a Complaint against
Defendant, General Motors (“GM”). On July 17, 2023, Plaintiff filed a First
Amended Complaint (“FAC”) alleging causes of actions for: (1) Violation of Civil Code § 1793.2(d); (2)
Violation of Civil Code § 1793.2(b); (3) Violation of Civil Code §1793.2(a)(3);
(4) Breach of the Implied Warranty of Merchantability (Civil Code §§ 1791.1;
1794; 1795.5); (5) Fraudulent Inducement – Concealment; and (6) Violation of
the Magnuson-Moss Warranty Act.
Defendant GM
has now filed a Demurrer and Motion to Strike portions of the FAC.
B. Procedural¿¿
On August 15, 2023, Defendants,
GM filed a Demurrer and Motion to Strike. On October 11, 2023, Plaintiff filed
oppositions to both motions. On October 13, 2023, Defendant filed
¿II. MOVING PARTY’S GROUNDS
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GM filed their Demurrer and
Motion to Strike Plaintiff’s Fifth 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¿
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A. Demurrer
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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.)¿¿¿
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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) the identify of the individuals at GM who purportedly
concealed material facts or made untrue representations about his CTS; (2) his
authority to speak and act on behalf of GM; (3) GM’s knowledge about alleged
defects in Plaintiff’s CTS at the time of purchase; (4) any interactions with
GM before or during the purchase of the CTS, or (5) GM’s intent to induce
reliance by Plaintiff to purchase the specific CTS at issue. GM also asserts
that the facts in the FAC do not establish GM’s intent to defraud Plaintiff or
demonstrate that the CTS was unsuitable for its intended use at the time of
purchase.
In opposition. Plaintiff argues that he has
sufficiently alleged: (1) concealment (FAC, ¶¶ 30, 63, 66-67, 70-71, 73); (2)
knowledge of falsity (FAC, ¶¶ 59-60, 63-66, 68); (3) intent to induce reliance
(FAC, ¶ 71; (4) justifiable reliance (FAC, ¶¶62, 66, 71, 73); and (5) damages
(FAC, ¶ 73.) The Court agrees that Plaintiff’s allegations are exceptionally
detailed. While it is true that the FAC fails to allege the names of the
persons who concealed facts or knew of a transmission flaw, 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 that
the transmission defect was a material fact, that it poses safety risks, and
that it arose during the warranty period.
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).) 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 Woodland Motors Corp., an
authorized dealership of GM. (FAC, ¶ 6.) Plaintiff also alleges that GM
provided an express written warranty. (FAC, ¶¶ 7, 11) 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, ¶¶ 30, 63,
66-67, 70.) 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
alleges that GM had exclusive knowledge. (FAC, ¶¶ 61, 69a-69b.) The Court notes
that Plaintiff references TSBs which 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 ¶¶ 69, 71.) 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 could suddenly and unexpectedly cause the driver to be unable to
control the speed and acceleration/deceleration of the vehicle. (FAC, ¶¶ 59, 60,
66, 68, 70.) 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 himself 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” or was in a “superior position” 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 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 plead 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¿¿
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For the foregoing reasons, Defendant’s Demurrer is
OVERRULED. Additionally, Defendant’s Motion to Strike is DENIED.
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Plaintiff is ordered to give notice.