Judge: Ronald F. Frank, Case: 23TRCV02548, Date: 2024-02-21 Tentative Ruling
Case Number: 23TRCV02548 Hearing Date: February 21, 2024 Dept: 8
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HEARING DATE: February 21, 2024¿¿
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CASE NUMBER: 23TRCV02548
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CASE NAME: Katelyn
Dow Stepanyan v. General Motors LLC, et al.
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MOVING PARTY: Defendant, General Motors, LLC
RESPONDING PARTY: Plaintiff, Katelyn Dow Stepanyan
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TRIAL DATE: Not
Set
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MOTION:¿ (1) Demurrer¿ to 1st, 2nd and
3rd causes of action
(2) Motion to Strike
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Tentative Rulings: (1) SUSTAINED, with 30 days leave
to amend
(2) MOOTED
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I. BACKGROUND¿¿
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A. Factual¿¿
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On August 7, 2023,
Plaintiff, Katelyn Dow Stepanyan (“Plaintiff”) filed a Complaint against
Defendant, General Motors, LLC and DOES 1 through 20 (“GM”). The Complaint
alleges causes of action for: (1) Fraud, Concealment, and Misrepresentation;
(2) Negligent Misrepresentation; (3) Business and Professions Code § 17200; (4)
Song-Beverly Consumer Warranty Act – Breach of Express Warranty; (5)
Song-Beverly Consumer Warranty Act – Breach of Implied Warranty; and (6) Song-Beverly
Consumer Warranty Act – Civil Code § 1793.2(b).
Defendant GM
has now filed a Demurrer and Motion to Strike portions of the Complaint.
B. Procedural¿¿
On November 28, 2023, Defendant,
GM filed a Demurrer and Motion to Strike. On February 6, 2024, Plaintiff filed
opposition papers. On February 13, 2024, Defendant, GM filed a reply brief.
¿II. MOVING PARTY’S GROUNDS
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GM demurs to Plaintiff’s
complaint on the grounds that it argues the First Cause of Action for Fraud and
Misrepresentation, the Second Cause of Action for Negligent Misrepresentation,
and the Third Cause of Action for Violation of Business and Professions Code §
17200 fail to state sufficient facts to state a claim for these causes of
action against Defendant GM.
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.)¿¿
Fraud, Concealment, and Misrepresentation
GM argues that Plaintiff’s fraud causes of
action fail because Plaintiff did not plead fraud with the requisite
specificity. Preliminarily, the Court notes that Plaintiff has two different
causes of action consolidated into the first cause of action: (1) Fraud –
Concealment; and (2) Fraud – Misrepresentation. Pleading the two causes of
action as one presents an issue because although they may seem to have the same
elements, fraudulent misrepresentation must be pleaded with much more
specificity than fraudulent concealment. “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.)
Moreover, “[t]he elements of a cause of action
for intentional misrepresentation are (1) a misrepresentation, (2) with
knowledge of its falsity, (3) with the intent to induce another’s reliance on
the misrepresentation, (4) actual and justifiable reliance, and (5) resulting
damage.” (Daniels v. Select Portfolio
Servicing, Inc. (2016) 246 Cal.App.4th 1150, 1166.) 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, Plaintiff’s Complaint does allege that GM
intentionally and knowingly concealed, suppressed, and/or omitted materials
including the presence of the defective high voltage battery pack in the
vehicle. (Complaint, ¶ 29.) Plaintiff also alleges that GM knew (at the time of
purchase and thereafter) that the Vehicle contained the alleged battery defect,
concealed the defect, and never intended to replace the battery defect during
the relevant warranty periods. (Complaint, ¶ 30.) Next, Plaintiff alleges GM
owed a duty to disclose the battery defect because GM possessed superior and
exclusive knowledge regarding the defect. (Complaint, ¶ 31.) Plaintiff contends
that GM concealed this fact to sell additional vehicles and avoid the cost of
repair or replacement. (Complaint, ¶ 31.) Plaintiff alleges that her reliance
with actual and justifiable because Plaintiff had a reasonable expectation that
the vehicle would not expose her and other vehicle occupants to such a safety
hazard, and that no reasonable consumer expects a vehicle to be designed,
manufactured and assembled such that a defect would pose a significant risk. (Complaint,
¶ 32.) Finally, Plaintiff has alleged that she has suffered actual damages
because of this concealment. (Complaint, ¶ 35.)
As
such, preliminarily, Plaintiff has alleged all elements of fraudulent
concealment, however, if this is a cause of action for fraudulent
misrepresentation, than this cause of action fails as the Complaint fails to
allege the names of the persons allegedly making the false representations,
their authority to speak, to whom they spoke, and when it was said or written. The
Court notes that Plaintiff does include that she met with a salesperson, and
that the salesperson spoke to Plaintiff about the Subject Vehicle, how far it
could drive on a single charge, and all of its features. However, this
allegation is still missing crucial information. This Court requests further
specification as to what cause of action is being alleged in Plaintiff’s First
Cause of Action. This request for clarification alone may be enough to sustain
the demurrer for uncertainty.
However, even if this cause of action is
clearly for fraudulent concealment, the Court will continue its analysis below.
Pursuant to 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.) Specifically,
Plaintiff argues, in her opposition, that the Complaint contains allegations
supporting that Defendant GM had exclusive knowledge.
Duty to Disclose
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 argues that Plaintiff’s first cause of action
fails as a matter of law because Plaintiff did not identify a material fact
regarding the Subject Vehicle that GM concealed or suppressed. 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.)
The Court notes Plaintiff’s opposition argues
that she sufficiently alleged Defendant’s knowledge of the Battery Defect because,
she alleges, GM knew this information through its exclusive knowledge of
non-public information such as pre-release reviews and testing, customer
satisfaction notices, software updates, internal investigations, and recalls as
early as 2017.
Further, this 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 vehicle
system 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 Complaint 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.)
This
Court notes that as LiMandri made clear, the circumstances giving rise
to a non-fiduciary relationship 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, including the non-binding but permissible
considered argument in Dhital, which found the allegations of a
transactional relationship 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 GM
provided an express written warranty covering the battery defect and allegedly
actively concealed the same, by virtue of the sales person’s purportedly
fraudulent pre-sale conduct. However, what is lacking from Plaintiff’s
Complaint is any allegation that the salesperson worked at or for a GM-authorized
dealership – a crucial component. The Court views Dhital 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. However, because the
authorized dealer allegation is missing, it will allow leave to amend to add
such an allegation if the facts support the same.
As such, the Court’s tentative ruling is to
sustain the demurrer as to the First Cause of Action, with leave to amend.
Negligent Misrepresentation
“California
courts have recognized a cause of action for negligent misrepresentation, i.e.,
a duty to communicate accurate information, in two circumstances. The first
situation arises where providing false information poses a risk of and results
in physical harm to person or property. The second situation arises where
information is conveyed in a commercial setting for a business purpose.” (Friedman v. Merck & Co. (2003) 107
Cal.App.4th 454, 477.)
As
against Defendant GM, Plaintiff has alleged that GM, through its advertisements
and publications that the Vehicle’s range on a single charge was 259 miles and
there were no problems with the vehicle’s battery. (Complaint, ¶ 8.) Plaintiff
alleged that GM knew or should have known that the Vehicle was being advertised
and sold with false and misleading representations regarding the range of the
Vehicle and the risk of fire posed by the defective batteries. (Complaint, ¶
25.) Plaintiff contends that GM failed to exercise due care in ascertaining the
accuracy of the representations about the Vehicle made to Plaintiff.
(Complaint, ¶ 39.) Plaintiff claims she was unaware of the falsity of the
representations and acted in reliance upon the truth of those representations
and was justified in relying upon those representations. (Complaint, ¶ 41.) There is no allegation of any personal injury
or fire that actually manifest itself in this case, so it is unclear if
Plaintiff is seeking to predicate the misrepresentation on a fear of a future
risk, or some likelihood of a future risk?
Also, because a copy of the claimed advertisement or advertisements is
not attached to the Complaint and not quoted verbatim, it is unclear whether
there is qualifying language in the advertisement bearing on the specifics of the
claimed representation.
As
noted above, Plaintiff’s Complaint fails to allege a sufficient cause of action
for negligent misrepresentation against GM because the specificities required
for misrepresentation are not met here. With respect to advertisements, did the
Plaintiff read or hear them, or are the alleged advertisements things counsel have
located in preparing the case as evidence bearing on this cause of action? While Plaintiff alludes to a salesperson and
representations allegedly made by that salesperson, Plaintiff’s Complaint is
missing required specificity as to misrepresentation as identified above. If the
salesperson were a dealership employee rather than a GM employee, further details
and allegations of imputing statements made by a dealership employee to hold GM
responsible would be required. But the Complaint
is vague on who made the allegedly negligent representations. As
such, the demurrer is SUSTAINED, with 30 days leave to amend.
Violation
of Business and Professions Code § 17200
For the same reasons above, Plaintiff fails to
adequately plead a cause of action for fraud. Because Plaintiff’s third cause
of action is based on fraud, this cause of action is sustained as well.
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 fraud causes 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 Mooted.
IV.
CONCLUSION¿¿
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For the foregoing reasons, Defendant’s Demurrer is
SUSTAINED with thirty (30) days leave to amend. Additionally, Defendant’s
Motion to Strike is MOOTED.
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GM is ordered to give notice.