Judge: Ronald F. Frank, Case: 23TRCV01697, Date: 2023-12-15 Tentative Ruling
Case Number: 23TRCV01697 Hearing Date: December 15, 2023 Dept: 8
HEARING DATE: December 15, 2023
CASE NUMBER: 23TRCV01697
CASE NAME: Lottie Mae Patterson Shumate v. General Motors, LLC, et al.
MOVING PARTY: Defendant, General Motors, LLC
RESPONDING PARTY: Plaintiff, Lottie Mae Patterson Shumate
TRIAL DATE: Not Set
MOTION: (1) Demurrer
(2) Motion to Strike
Tentative Rulings: (1) Defendant’s Demurrer is SUSTAINED, with 30 days leave to amend
(2) Defendant’s Motion to Strike is MOOTED
I. BACKGROUND
A. Factual
On May 26, 2023, Plaintiff, Lottie Mae Patterson Shumate (“Plaintiff”) filed a Complaint against Defendant General Motors (“GM”) and DOES 1 through 10. On September 12, 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; and (5) Fraudulent Inducement – Concealment.
Defendant GM has now filed a Demurrer and Motion to Strike portions of the FAC.
B. Procedural
On November 9, 2023, Defendant, GM filed a Demurrer and Motion to Strike. On December 7, 2023, Plaintiff filed opposition papers. On December 8, 2023, Defendant, GM filed a reply brief.
II. MOVING PARTY’S GROUNDS
GM demurs to Plaintiff’s complaint on the grounds that it argues the Fifth Cause of Action alleging It is barred by the statute of limitations, fails to state facts relevant to the elements of the claim, and fails to allege a transactional relationship giving rise to a duty to disclose.
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.)¿¿
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 asserts that the Fraudulent Inducement – Concealment occurred, if at all, at the time of the sale of the Subject Vehicle. The Complaint alleges the sale occurred on or about August 17, 2016, but Plaintiff did not file this action until May 21, 2023. Plaintiff alleged 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, ¶ 40.) 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, ¶ 41.) 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 CT66666; (2) their authority to speak and act on behalf of GM; (3) GM’s knowledge about alleged defects in Plaintiff’s CT6 at the time of purchase; (4) any interactions with GM before or during the purchase of Plaintiff’s CT6; or (5) GM’s intent to induce reliance by Plaintiff to purchase the specific CT6 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 allegedly 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. 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 CT6 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 GT6 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. In Dhital v. Nissan North America, Inc. (2022) 84 Cal.App.5th 828, 844, the First District held that a Lemon Law plaintiff adequately pleaded the existence of a buyer-seller relationship between the parties, because plaintiffs bought the car from a Nissan dealership (not from Nissan itself). Of course, the California Supreme Court has granted review of Dhital but signaled that trial courts may consider the Court of Appeal decision for its persuasive effect.
Although a transactional relationship has not been alleged or argued, Plaintiff argues that the transmission defect is a material fact, poses safety risks, and that the transmission defect arose during the warranty period. The FAC alleges 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 to its customers, acknowledging problems of harsh shifting, jerking, clunking, and delays in acceleration or deceleration releasing to the 8-speed transmission. Other requirements besides transactional relationship are exclusive knowledge of a 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 position. (FAC, ¶75(b).) 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, ¶ 72.) The FAC also contends that GM knowingly and intentionally concealed material facts and breached its duty not to do so. (FAC, ¶ 76.) 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, ¶ 77.)
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 decision in Rattagan v. Uber Technologies, Inc. (9th Cir. 2021) 19 F.4th 1188, 1191, and on petition for review of Dhital.)
Further, the Court is mindful that in most Lemon Law claims, the manufacturer / warrantor has been alleged to have published repair literature or technical bulletins to its authorized dealers that bear on the claimed defect or defects. Does Plaintiff contend that where she can truthfully allege that defendant had prior knowledge that a component or system like the transmission has been the subject of TSBs or other published repair procedures that were not disclosed to the plaintiff prior to the date of sale to the plaintiff, those facts establish a viable fraudulent concealment claim? Further, how is it that Plaintiff can allege that such TSBs were publicly disclosed to NHTSA but at the same time were concealed from the general public including plaintiff? This Court is not convinced, on the allegations before it, that such a duty exists. Nor is the Court convinced that such inconsistent allegations of disclosure and concealment of the same facts would permit a viable fraudulent concealment claim. The Court will entertain argument on the point and will grant leave to amend if counsel believes additional allegations would bolster support for such a duty, but the Court’s tentative ruling is to sustain the Demurrer to the fraudulent concealment cause of action as alleged here.
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 mooted by the Court’s tentative sustaining of the demurrer to the fraudulent concealment cause of action.
IV. CONCLUSION
For the foregoing reasons, Defendant’s Demurrer is SUSTAINED. Additionally, Defendant’s Motion to Strike is MOOTED.