Judge: Ronald F. Frank, Case: 23TRCV04039, Date: 2024-02-20 Tentative Ruling
Case Number: 23TRCV04039 Hearing Date: February 20, 2024 Dept: 8
Tentative Ruling¿
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HEARING DATE: February 20, 2024¿¿
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CASE NUMBER: 23TRCV04039
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CASE NAME: Ayline A.
Amirayan v. Ford Motor Company, et al. ¿¿¿
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MOVING PARTY: Defendant, Ford Motor Company and AutoNation Ford Torrance
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RESPONDING PARTY: Plaintiff, Ayline A. Amirayan
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TRIAL DATE: None set.
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MOTION:¿ (1) Demurrer¿
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Tentative Rulings: (1) Defendants’ Demurrer is SUSTAINED. The Court will entertain oral argument as to
what allegations plaintiff contends could be made if given leave to amend,
which the Court is inclined to grant
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I. BACKGROUND¿¿
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A. Factual¿¿
On December 4, 2023,
Plaintiff, Ayline A. Amirayan (“Plaintiff”) filed a Complaint against
Defendants, Ford Motor Company, AutoNation Ford Torrance, and DOES 1 through
10. The Complaint alleges 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, and 1795.5; (5) Negligent Repair; (6) Violation of the
Magnuson-Moss Warranty Act; and (7) Fraudulent Inducement - Concealment
Defendant, Ford Motor
Company (“Ford”) and its co-defendant authorized dealer AutoNation Ford
Torrance now demur to two causes of action contained within Plaintiff’s
Complaint.
B. Procedural¿¿
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On
January 8, 2024, Ford Motor Company and AutoNation Ford Torrance filed a
Demurrer. On February 5, 2024, February 5, 2024, Plaintiff filed an opposition
brief. On February 9, 2024, Defendants filed a reply brief.
II. GROUNDS FOR DEMURRER
& MOTION TO STRIKE
Defendants
demurs to Plaintiff’s Complaint on the grounds that they argue the Fifth Cause
of Action for Negligent Repair and the Seventh Cause of Action for Fraudulent
Inducement – Concealment fail because they are barred by the economic loss rule
and fail to state sufficient facts to state a cause of action against demurring
Defendants.
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.)¿
Negligent Repair
Economic Loss Rule
Demurring
Defendants argue that Plaintiff’s Fifth Cause of action for Negligent Repair
against Defendant, AutoNation fails because it is barred by the economic loss
rule. Under the
economic loss rule, a plaintiff is precluded from recovery in tort where her
damages consist solely of an economic loss. (Seely v. White Motor Co.
(1965) 63 Cal.2d 9, 17-18 (Seely).) “California Courts define economic loss as ‘damages for inadequate value,
costs of repair and replacement of the defective product or consequent loss of
profits—without any claim of personal injury or damages to other
property.’” (Department of Water & Power v. ABB Power T & D
Co. (C.D.Cal. 1995) 902 F.Supp. 1178, 1186, fn. 4.) The economic loss
rule requires a purchaser to recover in contract for purely economic loss due
to disappointed expectations unless she can demonstrate harm above and beyond a
broken contractual promise. (Robinson Helicopter Co., Inc. v. Dana
Corp. (2004) 34 Cal.4th 979, 988, 993 (Robinson) (economic loss rule
prevents law of contract and law of tort “from dissolving one into the other”).)
As with all negligence claims, a central question is
whether a duty is owed. In undertaking to repair the vehicle, AutoNation had a
duty to use reasonable care to avoid causing harm. However, absent physical harm,
no negligence claim is stated: “[U]nder California law, it is ‘not
presumed’ that a defendant owes a duty of care to guard against economic losses
unaccompanied by injury to person or property.” (Southern California Gas
Leak Cases, supra, 7 Cal.5th 391, 397.) Stated differently,
AutoNation did not have “a tort duty to guard against negligently causing”
“purely economic loss.” (Id. at 398.) Here, because the Complaint does
not allege injury to person or property, no tort duty exists. In this case,
Plaintiff does not allege any contractual relationship between Plaintiff and
AutoNation; but assuming there is one, the economic loss rule would still bar
recovery.
In Plaintiff’s opposition brief,
Plaintiff urges this Court to find that the economic loss rule does not apply
to negligent repair claims where subcomponents of a vehicle cause damage to a
larger component or where the component causes damage to the vehicle into which
it has been incorporated. (relying on Jimenez v. Superior Court (2002) 29 Cal. 4th 473.) Jimenez
holds that a manufacturer may be strictly liable for harm resulting to other
parts of a product caused by the defective part that it manufactured. This is
sometimes referred to as the “component exception.” This argument is not
aligned with the pleading in this case, however. Plaintiff has not asserted a
claim for strict liability. Further, there are no allegations that AutoNation
manufactured any part, much less a defective part that caused harm to
Plaintiff’s Vehicle. While Plaintiff does assert that AutoNation is
in the business of selling automobiles and automobile component parts
(Complaint, ¶ 5), Plaintiff’s allegations against AutoNation only reference the
repair aspect of AutoNation’s business and its alleged failure to properly
store, prepare, and repair the Subject Vehicle. (Complaint, ¶¶ 5, 57-59.)
Demurring
Defendants specifically rely on the argument that Plaintiff’s claim is that
AutoNation failed to repair Plaintiff’s vehicle to conform to warranty, and
thus, arises from the warranty contracts involved in the case. In urging the
application of the component exception in this case, Plaintiff relies on an unpublished
federal case. The theory of this cases is that negligent repair of a
subcomponent part could cause damage to other parts of the vehicle. However,
the Complaint here does not discuss AutoNation’s liability in terms of using
defective component parts, nor does the Complaint allege property damage to
other components nor does it alleged bodily injury. As such, Plaintiff may not now rely on this
argument, and the arguments in its cited unpublished case to stand for the
proposition that its Complaint is not barred by the economic loss rule or is
saved by the component parts exception. Instead, the Complaint alleges contract
damages, not tort damages, despite Plaintiff’s argument that a tort theory should
be permitted to move forward. The Court
disagrees with Plaintiff’s argument so the demurrer to the Fifth Cause of
Action is SUSTAINED as the cause of action, on its face, is barred by the
economic loss rule.
Insufficient
Facts Plead
Demurring Defendants
next argue that Plaintiff’s Fifth Cause of Action for Negligent Repair fails
because it lacks sufficient facts to state a cause of action against
AutoNation. A cause of action for negligence requires (1) a legal duty owed to
the plaintiff to use due care, (2) breach of that duty, (3) causation, and (4)
damage to the plaintiff. (County of Santa Clara v. Atlantic Richfield
Co. (2006) 137 Cal. App. 4th 292, 318.)
Specifically, Demurring
Defendants argue that Plaintiff has failed to plead any facts that show that
AutoNation’s conduct resulted in any damages. The Court agrees. Though
Plaintiff’s Complaint asserts, in a conclusory way, that “AutoNation’s
negligent breach of its duties owed to Plaintiff was a proximate cause of
Plaintiff’s damages,” Plaintiff fails to otherwise plead the nature and extent
of what her claimed tort damages are. (Complaint, ¶ 60.) Thus, the demurrer is
SUSTAINED on the grounds that Plaintiff fails to plead damages supporting her
negligent repair cause of action.
Fraud – Fraudulent Inducement – Concealment
Demurring
Defendants again argue that Plaintiff’s fraud cause of action is barred by the
economic loss rule. As discussed above, the economic loss rule stands for the
notion that “where a purchaser's expectations in a sale are frustrated because
the product he bought is not working properly, his remedy is said to be in
contract alone, for he has suffered only “economic” losses.’”’” (Robinson,
supra, 34 Cal.4th at 988, quoting Neibarger v. Universal Cooperatives,
Inc. (1992) 439 Mich. 512, 520.) However, there is an exception by which a
plaintiff may recover tort damages in a contract case when the contract was
fraudulently induced. (Robinson, supra, 34 Cal.4th at 989.)
In
the instant matter, the parties discuss Dhital v. Nissan N. America, Inc.
(2022) 84 Cal.App.5th 828 (Dhital), in which the First District held in
a Song-Beverly vehicle defect case that the plaintiffs’ fraudulent inducement
claim against the vehicle manufacturer was not barred by the economic loss
rule. Our Supreme Court is currently reviewing this case, such that its holding
is merely persuasive. (Cal. Rules of Court, rule 8.1115(e)(1); Dhital v.
Nissan N. America (2023) 523 P.3d 392.) Demurring Defendants attempt to
differentiate Dhital from Robinson, however the Court does not
believe the two contradict. In Dhital, the purchasers of a vehicle
accused the manufacturer, Nissan, of fraudulently concealing an allegedly known
transmission defect. (Dhital, supra, at 834.) The First District
held that the fraud exception to the economic loss rule, as expressed in Robinson,
applied because "Plaintiffs allege that Nissan, by intentionally
concealing facts about the defective transmission, fraudulently induced them to
purchase a car." (Id., 838.) Acknowledging that Robinson
applied the exception to fraudulent misrepresentation rather than concealment,
the appellate court nonetheless held that the reasoning applied to the
plaintiffs’ fraudulent concealment claim, too. (Dhital, supra, at
841.)
Under
Dhital, the exception applies to Plaintiff’s own claim, as Plaintiff’s
facts are the same as those in Dhital. But Defendants argue that
Plaintiff’s claim is distinct because it is based on an alleged “fraudulent
omission” rather than affirmative misrepresentation. The Court disagrees that
Plaintiff’s fraudulent concealment claim is based on non-performance under the
warranty. In the Complaint, Plaintiff accuses Ford of “commit[ing] fraud by
allowing the Subject Vehicle to be sold to Plaintiff without disclosing that
the Subject Vehicle and its transmission was defective and susceptible to
sudden and premature failure.” (Complaint, ¶ 76.) The Complaint further alleges
that had Plaintiff known that the Subject Vehicle suffered from the
Transmission Defect, they would not have purchased the Subject Vehicle.
(Complaint, ¶ 80.) Plaintiff further alleges that this information not
disclosed was material and that a reasonable person would have considered them
to be important in deciding whether or not to purchase the Subject Vehicle. (Id.,
¶ 84.)
Based
on this language, Plaintiff’s fraudulent concealment claim is rooted in the
sale of the Vehicle. The facts are not analogous to Defendants’ authority, Food
Safety Net Servs. v. Eco Safe Systems USA, Inc. (2012) 209 Cal.App.4th 118
(Eco Safe). In Eco Safe, a manufacturer of food disinfection
equipment, Eco Safe, accused a testing agency, Food Safety, of making
fraudulent statements to induce Eco Safe into hiring Food Safety to assess the
efficacy of its disinfection product. The Court of Appeal held that Eco Safe’s
fraud claim arose from their contract. This was because the alleged fraudulent
statements were that Food Safety would perform the tests in a specific manner;
and the contract between Eco Safe and Food Safety contained terms that
explicitly reflected the requirement to utilize this manner of testing. (Id.,
1125.) Since Eco Safe was accusing Food Safety of failing to conduct the tests
in this manner, Eco Safe was disputing Food Safety’s performance under the
contract.
Here,
the Court is unaware of any term in the warranty under which Ford promised to
disclose allegedly material defects affecting the Vehicle. This is the conduct
that Plaintiff accuses Ford of failing to do. The warranty, on the other hand,
is a promise to fix certain defects that the purchaser becomes aware of; there
is no obligation for Ford to affirmatively disclose any defects under the
warranty.
Therefore,
the Court is satisfied that Plaintiff has pled allegations sufficient to
satisfy the fraud exception to the economic loss rule. But the analysis does
not end there.
Insufficient Facts Plead
Demurring Defendants next argue that
Plaintiff has failed to state sufficient facts to state a cause of action for
fraud against Ford because Plaintiff failed to plead the defect Ford allegedly
concealed, and failed to allege a duty to disclose.
First Demurring Defendants argue that
Plaintiff’s fraud claim fails as a matter of law because it is not pleaded with
the requisite specificity, i.e., the specific nature of a defect in Plaintiff’s
vehicle. 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.)
Ford argues Plaintiff’s allegation that the
Ford Mustang has a transmission defect manifesting in “hesitation and/or
delayed acceleration, harsh and/or hard shifting, jerking, shuddering, and/or
juddering” (Complaint, ¶ 78) is not sufficiently detailed. The Court is not
persuaded by this argument or Demurring Defendants’ reliance on an unpublished
case. Demurring Defendants also argue that Plaintiff’s Complaint fails to
allege where the omitted information should or could have been revealed by Ford
and failed to identify the requisite representative samples of advertisements,
offers, or other representations by Ford that consumers relied upon to make
their purchase, nor identifies by name who made the alleged omission when she
purchased the vehicle. This Court disagrees with Defendants’ narrow reading of
the requirements. Although it is true that the Complaint fails to allege the
names of the persons who concealed facts or who knew of the transmission flaw,
details of that nature are required in affirmative misrepresentation cases, not
concealment cases. As a generally rule, plaintiffs can survive demurrer in a concealment
case where the symptom or manifestation of the claimed defect is alleged, since
it is the nature of a concealment claim that the Defendant did not reveal or
disclose the nature of the flaw within the transmission, leaving it to
discovery for plaintiff to unearth a specific manufacturing or design flaw that
causes the claimed symptoms.
Next, Demurring Defendants argue thar
Plaintiff failed to allege a duty to disclose.
Under California law, a duty to disclose material facts may arise either
(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.)
Plaintiff’s opposition again relies on
Dhital, where the Court there found that the stated allegations, similar
to the allegations made in the case at bar, were sufficient to survive a
pleading attack – noting:
At the pleading
stage (and in the absence of a more developed argument by Nissan on this
point), we conclude plaintiffs’ allegations are sufficient. 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. In light of
these allegations, we decline to hold plaintiffs’ claim is barred on the ground
there was no relationship requiring Nissan to disclose known defects.
(Dhital v. Nissan, supra,
84 Cal.App.5th at 844.) Based on this, Plaintiff contends that at the pleading
stage, its fraud allegations are sufficient.
This Court
notes that 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 Ford
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 Ford
provided an express written warranty. (Complaint, ¶¶ 10, 17) covering the
transmission defect (Complaint, ¶ 14) and allegedly actively concealed the
same, by virtue of its authorized dealership and agent’s purportedly fraudulent
pre-sale conduct. (Complaint, ¶¶ 74.-89) However, what is lacking from Plaintiff’s
Complaint is any allegation that AutoNation is an 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, the Court’s tentative ruling is to
SUSTAIN demurrer as to this cause of action.
Next, Demurring Defendants argue that Plaintiff has failed to
allege that Ford had exclusive knowledge of the transmission defect. Although
the Court notes that Plaintiff’s references TSBs are available to the
public, and are not helpful to Plaintiff’s exclusive knowledge argument,
Plaintiff’s Complaint also argues that the exclusive knowledge came from
sources unavailable to Plaintiff including, pre-production testing data, early
consumer complaints about the Transmission Defect made directly to Defendant
Ford and its network of dealers, aggregate warranty data compiled from
Defendant Ford’s network of dealers, testing conducted by Ford in response to
these complaints, as well as warranty repair as part replacements date received
by Defendant Ford from Defendant’s network of dealers. (Complaint, ¶ 82(a).) 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. However, instead, the Complaint
alleges that a Plaintiff, as a reasonable consumer would have considered these
facts to be important in deciding whether or not to purchase the vehicle, and
that had Plaintiff known, they would not have purchased the subject vehicle.
(Complaint, ¶¶ 83-84.) But the Complaint is vague and unclear as to whether
Plaintiff would have not purchased the Mustang if the TSB information alone had
been disclosed or whether even with knowledge of the TSB information Plaintiff would
not have made the purchase had the pre-production testing and early consumer
complaint information been concealed form the public. This vagueness make it difficult for the
Court to allow a fraud claim to pass muster at the pleading stage when some or perhaps
all of the same information in the publicly disclosed TSBs was the claimed
material concealment in the pre-production testing and early consumer complaint
information that was not publicly disclosed.
The Court invited argument from Plaintiff as to what might be alleged in
an amended pleading if the Court were to grant leave to amend this vagueness.
Lastly, Demurring Defendants argue that Plaintiff’s Complaint
fails to allege that Ford actively concealed a material fact from Plaintiff. Plaintiff’s
Complaint states that although Ford was fully aware of the Transmission Defect,
Ford actively concealed the existence and nature of the Defect from Plaintiff
at the time of purchase, repair, and thereafter. (Complaint, ¶ 36.) Plaintiff
also alleges Forde knowingly and intentionally concealed material facts.
(Complaint, ¶ 83.) 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 experienced herself, 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 Ford has “superior knowledge”
or was in a “superior position” to Plaintiff 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. The demurrer as to the Seventh Cause of Action
for Fraudulent Concealment is thus SUSTAINED, with the Court inclined to give Plaintiff
twenty (20) days leave to amend.
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