Judge: Ronald F. Frank, Case: 23TRCV01591, Date: 2023-12-01 Tentative Ruling
Case Number: 23TRCV01591 Hearing Date: December 1, 2023 Dept: 8
Tentative Ruling¿
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HEARING DATE: December 1, 2023¿¿
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CASE NUMBER: 23TRCV01591
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CASE NAME: Rebecca
Alvarez v. General Motors, LLC, et al.
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MOVING PARTY: Defendant, General Motors, LLC
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RESPONDING PARTY: Plaintiff,
Rebecca Alvarez
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TRIAL DATE: None set.
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MOTION:¿ (1) Demurrer¿to fraudulent concealment
cause of action
(2)
Motion to Strike
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Tentative Rulings: (1) SUSTAINED, with leave to
amend
(2)
Defendants’ Motion to Strike is MOOTED
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I. BACKGROUND¿¿
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A. Factual¿¿
On May 18, 2023,
Plaintiff, Rebecca Alvarez (“Plaintiff”) filed a Complaint against Defendant,
General Motors, LLC, and DOES 1 through 10. On September 1, 2023, Plaintiff
filed a First Amended Complaint (“FAC”) alleging causes of action 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; and (5) Fraudulent Inducement – Concealment.
Defendant, General
Motors, LLC (“GM”) has now filed a demurrer and motion to strike portions of
the FAC.
B. Procedural¿¿
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On
October 30, 2023, GM filed a Demurrer and Motion to Strike. On November 16,
2023, Plaintiff filed oppositions to both motions. On November 21, 2023, GM
filed reply briefs to both.
¿II. GROUNDS FOR DEMURRER
& MOTION TO STRIKE
Defendant
demurs to Plaintiff’s Fifth Cause of Action arguing it fails to state
sufficient facts to establish fraud, fails to allege a transactional
relationship giving rise to a duty to disclose, and because the statute of
limitation bars Plaintiff’s fifth cause of action.
Defendant
also filed a Motion to Strike the following paragraphs from Plaintiff’s
Complaint on the grounds they argue Plaintiff has failed to allege any facts
supporting the claims for punitive damages:
1.
The demand “[f]or punitive damages” in the
Prayer for Relief. (Prayer, ¶ 6.)
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.)¿¿¿
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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.)¿
Fraud – Fraudulent Inducement – Concealment
Statute of Limitations
The
statute of limitations for fraud generally is three years. (See Code Civ.
Proc., § 338(d).) The cause of action begins to accrue when the aggrieved party
discovers the facts constituting the fraud. (San Francisco Unified School
Dist. v. W.R. Grace & Co. (1995) 37 Cal.App.4th 1318, 1327 (“A cause of
action does not accrue until the plaintiff either discovers the injury and its
negligent cause or could have discovered the injury and cause through the
exercise of reasonable diligence.”).) Further, the statute of
limitations for the fraud causes of action is highly related to the delayed
discovery rule.
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,
Defendant notes that the Fraudulent Inducement – Concealment occurred at the
time of the sale of the Subject Vehicle, on or about May 21, 2017, and that
Plaintiff did not file this action until May 18, 2023. Plaintiff included in
her FAC that the discovery rule, the Repair Doctrine, and Fraudulent
Concealment Tolling (Estoppel) delayed expiration of her fraudulent inducement
– concealment claim. The FAC alleges GM’s fraudulent inducement – concealment
occurred, not only at the time of the sale, but also concealed the defects,
minimized the scope, cause, and dangers of the defects with inadequate TSBs
and/or recalls, and refused to investigate, address, and remedy the defects as
it pertains to all affected vehicles. (FAC, ¶ 42.) Plaintiff also alleges that
Defendant’s fraudulent concealment was ongoing as Defendant blamed the symptoms
of the defects on other issues and not the actual defect itself and purported
to be able to repair Plaintiff’s issues. (FAC, ¶ 43.) It is not “clearly and
affirmatively” apparent from the FAC that the fraudulent inducement –
concealment claim is barred by the statute of limitations. As such, the Court
finds that based on Plaintiff’s allegations, tolling is sufficiently alleged.
Specificity
Requirement
Defendant also argues that Plaintiff’s fraud
claim fails as a matter of law because it is not plead with the requisite
specificity. 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.)
Here, GM
argues that the fraud claim fails as a matter of law because Plaintiff did not
plead it with the requisite specificity. GM asserts that Plaintiff needs to
allege: (1) the identity of the individuals at GM who purportedly concealed
material facts or made untrue representations about the Sierra; (2) their
authority to speak and act on behalf of GM; (3) GM’s knowledge about alleged
defects in Plaintiff’s Sierra at the time of purchase; (4) any interactions
with GM before or during the purchase of Plaintiff’s Sierra; or (5) GM’s intent
to induce reliance by Plaintiff to purchase the specific Sierra at issue. The
Court disagrees. In fact, the allegations in Plaintiff’s Complaint are
exceptionally detailed. Although it is true that the Complaint fails to allege
the names of the persons who concealed facts or who knew of a transmission
flaw, details of that nature are required in affirmative misrepresentation
cases, not concealment cases.
This Court
finds that such specificity meets the requisite pleading standard for
fraudulent concealment, as distinct from the more stringent standards applicable
to affirmative misrepresentation cases. However, with fraudulent concealment, 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 also
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 contends that because the FAC does not
allege that Plaintiff purchased the vehicle directly from GM or otherwise
entered into a transaction with GM, Plaintiff has not alleged facts
demonstrating a duty to disclose. GM notes that absent a fiduciary relationship
between the parties, a duty to disclose can arise in only three circumstances:
(1) the defendant had exclusive knowledge of the material fact; (2) the
defendant actively concealed the material fact; or (3) the defendant made
partial representations while also suppressing the material fact. (BiglerEngler
v. Breg, Inc. (2017) 7 Cal.App.5th 276, 311; LiMandri v. Judkins
(1997) 52 Cal.App.4th 326, 336.) GM further cites to Bigler-Engler,
noting that the Court of Appeals reversed a verdict for fraudulent concealment
against the manufacturer of a medical device because the manufacturer and the
plaintiff (who was injured by using the device) did not have the required
direct transactional relationship. (Bigler-Engler, supra, 7 Cal.App.5th
at 314-15.) There, the plaintiff did not obtain the device directly from the
manufacturer but from a medical group that sold and leased such devices. (Id.
at 287, 314.) The Court of Appeals went on to explain, the lack of direct
dealings between the plaintiff and the manufacturer was fatal to the
plaintiff’s argument that the manufacturer had a duty to disclose. (Id.
at 312 [“Where, as here, a sufficient relationship or transaction does not
exist, no duty to disclose arises even when the defendant speaks.”].)
GM argues
that the same is true here. GM contends that the FAC does not allege that
Plaintiff purchased the Sierra directly from GM. Thus, GM argues that any
alleged concealment by GM did not arise in a direct transaction between
Plaintiff and GM.
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.) GM argues that the Complaint does not allege that
Plaintiff purchased her Sierra directly from GM, and thus, any alleged
concealment by GM did not arise in a direct transaction between Plaintiff and
GM.
The Court
notes Plaintiff’s opposition does not seem to oppose the transactional
relationship argument. Instead, Plaintiff contends that a transactional
relationship is not required for GM to have a duty to disclose. The Court notes
that the FAC does contains allegations that from September 2014 to at least
February 2019, Defendant issued many TSBs and service bulletin updates to its
dealers in the United States, but not [directly] to its customers,
acknowledging problems of harsh shifting, jerking, clunking, and delays in
acceleration or deceleration releasing to the 8-speed transmission.
Although a
transactional relationship has not been alleged or argued, Plaintiff argues
that the transmission defect is a material fact, poses a safety risks, and that
the transmission defect arose during the warranty period. However, the other
requirements besides transactional relationship are exclusive knowledge to
material fact, active concealment of a material fact, or partial representation
but suppression of a material fact. The FAC does not allege exclusive knowledge,
but it does allege superior knowledge. The FAC also alleges that GM’s
concealment of this safety defect was material and Plaintiff relied on
Defendant GM’s advertising materials which did not disclose the defect. (FAC, ¶
74.) The FAC also contends that GM knowingly and intentionally concealed
material facts and breached its duty not to do so. (FAC, ¶ 78.) Plaintiff
argues that these facts are material in that a reasonable person would have
considered them to be important in deciding whether or not to purchase the
Vehicle. (FAC, ¶ 79.)
The Court
will invite oral argument as to whether there exists any general duty by a
motor vehicle manufacturer to disclose to a consumer that it has had warranty
complaints or reports of malfunctions or that a component or system in a prior
version of a transmission has been the subject of repair recommendations or
procedures. The creation of such a duty seems better left to the policy-making
branches of government rather than the judiciary. Such a duty seems to
implicate balancing the burden that would be placed on manufacturers of such a
broad duty against the perceived value that disclosures of such a wide array of
information might yield for consumers. The law already recognizes a duty to
recall or retrofit (see, e.g., Hernandez v. Badger Construction Equipment Co.
(1994) 28 Cal.App.4th 1791, 1827; Lunghi v. Clark Equipment Co. (1984)
153 Cal.App.3d 485, 494), but such a cause of action requires harm in the form
of personal injury rather than the economic losses alleged in the FAC here.
(The Court is mindful that a claim for fraudulent inducement by concealment is
not subject to demurrer on the ground it is barred by the economic loss rule,
pending a decision by the California Supreme Court on certified question from
the Ninth Circuit and on petition for review of Dhital v. Nissan North
America, Inc. (2022) 84 Cal.App.5th 828.)
B. Motion
to Strike
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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 sufficiently. As for the fraud claim, the Court notes that the
argument for punitive damages as to fraud are predicated on the dame arguments
made in the demurrer, and will be determined in oral argument. However, the
Court’s tentative ruling is to sustain demurrer as to the fraudulent inducement
– concealment cause 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 would
be MOOTED.
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