Judge: Ronald F. Frank, Case: 24TRCV03084, Date: 2025-01-14 Tentative Ruling

Case Number: 24TRCV03084    Hearing Date: January 14, 2025    Dept: 8

Tentative Ruling

HEARING DATE: January 14, 2025

CASE NUMBER: 24TRCV03084

CASE NAME: Jimmy Lee Jackson Jr. FCA US, LLC, et al.

MOVING PARTY: Defendant, FCA US LLC

RESPONDING PARTY: Plaintiff, Jimmy Lee Jackson Jr.

TRIAL DATE: None set.

MOTION: (1) Demurrer

Tentative Rulings: (1) FCA’s demurrer is SUSTAINED with leave to amend.

I. BACKGROUND

A. Factual

On September 16, 2024, Plaintiff, Jimmy Lee Jackson Jr. (“Plaintiff”) filed a complaint against Defendant, FCA US, LLC, 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) Fraudulent Inducement – Concealment.

Now, FCA US, LLC (“FCA”) files a demurrer as to Plaintiffs’ third cause of action for Violation of Civil Code § 1793.2(a)(3) fails to allege sufficient facts to constitute a valid cause of action. FCA also demurs to the fifth cause of action for Fraudulent Inducement – Concealment on the grounds that FCA argues it fails to meet the heightened pleading standard for fraud and fails to adequately state a cause of action.

B. Procedural

On November 15, 2024, FCA filed a Demurrer. On May 24, 2024, Plaintiff filed an opposition brief. On May 31, 2024, Defendants filed a reply brief.

II. 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.)

i. Meet and Confer Requirement

“Before filing a demurrer pursuant to this chapter, the demurring party shall meet and confer in person or by telephone with the party who filed the pleading that is subject to demurrer for the purpose of determining whether an agreement can be reached that would resolve the objections to be raised in the demurrer.” (Code Civ. Proc., § 430.41, subd. (a).)¿¿

Counsel for FCA, Samantha M. Geraghty (“Geraghty”), states in her declaration (“Geraghty Decl.”), that on October 4, 2024, she sent Plaintiff’s counsel of record a meet and confer letter requesting his availability to telephonically meet and confer. (Geraghty Decl., ¶ 3, Exhibit 1.) However, Geraghty states that Plaintiff’s counsel did not respond, necessitating FCA’s filing of a declaration extending their deadline by 30 days. (Geraghty Decl., ¶ 4.) As of the filing of FCA’s demurrer on November 15, 2024, Geraghty declares that Plaintiff’s counsel never responded to the meet and confer letter. (Geraghty Decl., ¶ 5.)

Despite FCA’s failure to follow up on the meet and confer letter or attempt to reach out to Plaintiff’s counsel telephonically prior to the filing of this demurrer, Plaintiff’s counsel nonetheless failed to respond to these efforts for over a month. As such, the Court finds the meet and confer efforts sufficient enough to move forward on analyzing the merits of this motion.

ii. Violation of Civil Code section 1793.2, subdivision (a)(3)

First, FCA demurs to Plaintiff’s third cause of action for Violation of Civil Code section 1793.2, subdivision (a)(3) on the grounds that it argues the complaint fails to allege sufficient facts to constitute a valid cause of action. California Civil Code section 1793.2(a)(3) reads, in relevant part: “Every manufacturer of consumer goods sold in this state and for which the

manufacturer has made an express warranty shall: [. . .] Make available to authorized service and repair facilities sufficient service literature and replacement parts to effect repairs during the express warranty period.

Plaintiff’s complaint alleges that “[i]n violation of Civil Code section 1793.2, subdivision (a)(3), Defendant FCA failed to make available to its authorized service and repair facilities sufficient service literature and replacement parts to effect repairs during the express warranty period. Plaintiff has been damaged by Defendant FCA’s failure to comply with its obligations pursuant to Civil Code section 1793.2(a)(3), and therefore brings this Cause of Action pursuant to Civil Code section 1794.” (Complaint, ¶ 52.) Plaintiff’s complaint also alleges, “Defendant FCA’s failure to comply with its obligations under Civil Code section 1793.2, subdivision (a)(3) was willful, in that Defendant FCA knew of its obligation to provide literature and replacement parts sufficient to allow is repair facilities to effect repairs during the warranty period, yet Defendant FCA failed to take any action to correct its failure to comply with the law. Accordingly, Plaintiff is entitled to a civil penalty of two times Plaintiff's actual damages; pursuant to Civil Code section 1794(c).” (Complaint, ¶ 53.)

Here, the Court finds that Plaintiff has not alleged facts related to the Subject Vehicle’s repair history other than, paragraph 47, which states “[a]lthough Plaintiff presented the Vehicle to Defendant’s representative in this state, Defendant FCA and its representative failed to commence the service or repairs within a reasonable time and failed to service or repair the Vehicle so as to conform to the applicable warranties within 30 days, in violation of Civil Code section 1793.2, subdivision (b). Plaintiff did not extend the time for completion of repairs beyond the 30-day requirement.” (Complaint, ¶ 47.) In Plaintiff’s opposition, he states that the FCA has access to this information and records through its warranty system, from which it receives “warranty repair and part replacements data…from FCA’s network of dealers.” (citing Complaint, ¶ 62a.) Further, Plaintiff argues that further detail can be worked out in discovery.

The Court does not find the allegations described by Plaintiff to be sufficient regarding the repair history details. Most Lemon Law complaints describe the dates the Vehicle was taken in for repair, what issues caused Plaintiff to take the Vehicle in for repair, and sometimes what the diagnosis for the Vehicle was by the repair facility. Here, the Third Cause of Action contains only conclusory allegations with virtually no facts at all to support the claims alleged. (See Gutierrez v. Carmax Auto Superstores California (2018) 19 Cal.App.5th 1234, 1247-1248). Other than stating that the subject vehicle is a Dodge Durango, the Complaint in this case could be used for any or every other vehicle on the road. What are the alleged defects? Are they the same one or ones alleged in paragraph 60 with symptoms of loss of power, stalling, rough running and misfires, or something else? What literature or replacement parts were the ones FCA supposedly failed to provide to its authorized dealers? Were any individual alleged defects ones that arose during the Presumption period? Did any? As a result, there is no factual basis alleged for Plaintiff's claim that he was "damaged by Defendant's failure to comply with its obligations pursuant to Civil Code section 1793.2(a)(3)" and no alleged causal nexus between the literature or parts deficiencies and the alleged engine defect? (Complaint, ¶ 32.)

Accordingly, the Demurrer to the Third Cause of Action is SUSTAINED with leave to amend.

iii. Fraudulent Inducement – Concealment

FCA demurs to Plaintiff’s fifth cause of action for Fraudulent Inducement – Concealment on the grounds that: (1) Plaintiffs complaint does not contain facts to establish that FCA had a duty of disclosure to Plaintiff; and (2) The Economic Loss Rule Bars Plaintiff’s Fraudulent Concealment Claim.

1. Specificity Requirement

As recently reaffirmed in the California Supreme Court case of Rattagan v. Uber Technologies, Inc., 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. (Rattagan v. Uber Technologies, Inc. (2024) 17 Cal.5th 1, 40 citing Civ. Code, § 1710; Warner Constr. Corp. v. City of Los Angeles (1970) 2 Cal.3d 285, 294; LiMandri v. Judkins (1997) 52 Cal.App.4th 326.) Our Supreme Court in Rattagan answered “Yes” to the question of whether “a plaintiff [can] assert an independent claim of fraudulent concealment in the performance of a contract?” (Rattagan, supra, 17 Cal.5th at 38.) “A plaintiff may assert a tort claim for fraudulent concealment based on conduct occurring in the course of a contractual relationship, if the elements of the cause of action can be established independently of the parties’ contractual rights and obligations and the tortious conduct exposes the plaintiff to a risk of harm beyond the reasonable contemplation of the parties when they entered into the agreement.” (Ibid.) The current complaint does not satisfy these pleading requirements.

The Rattagan Court explained the economic loss rule as applied to fraudulent concealment: “the economic loss doctrine applies wen the parties have entered into a contract; the plaintiff sues for tort damages, alleging defendant failed to perform as the contract requires; and negligently caused economic losses flowing from the breach.” (Id. at 44.) The Court continued, that “[i]n such a case, plaintiffs are generally limited to recovery of those economic damages and cannot seek to expand their remedies beyond those available in contract.” (Ibid.) Further, the Rattagan Court explained that “[t]he doctrine does not apply if defendant’s breach caused physical damage or personal injury beyond that economic loss caused by the contractual breach and defendant violated a duty flowing, not from the contract, but from a separate, legally recognized tort obligation.” (Ibid.) The Court stated that “[a] case in which the plaintiff sues a contractual party for fraud based on conduct committed during the course of a contractual relationship falls outside the economic loss doctrine,” citing to their reasoning in Robinson which reads, “[d]ealing with affirmative acts of fraud and misrepresentation raises different policy concerns than those raised by negligence or strict liability claims.” (Ibid citing Robinson, supra, 34 Cal.4th at 991.) There is no allegation in the Plaintiff’s Complaint here of physical injury or property damage. The reaffirmed economic loss doctrine thus appears to bar the fraudulent concealment claim in a garden-variety Lemon Law claim. Perhaps that explains why the Supreme Court remanded Dhital for consideration of Rattagan’s impact on claims in the Song-Beverly arena.

The Rattagan Court explained that the analysis “focuses on whether the plaintiff can establish the elements of the cause of action independently of the parties’ contractual rights and obligations.” (Rattagan, supra, 17 Cal.5th at 44.) In other words, “the question will turn on the nature of the alleged conduct, the provisions of the contract itself, and whether the conduct

exposed a party to a risk of harm neither reasonably contemplated nor allocated by the parties before entering their agreement.” (Ibid.) The Court clarified in Rattagan, that “[p]arties generally do not enter a contract expecting that its terms will be intentional ignored…[h]owever, to assure greater certainty between themselves, they may choose at the outset to contractually guard against certain risks by imposing specific obligations on the other party and allocate their agreed-upon remedies should a breach occur.” (Ibid.) The Rattagan Court continued that “[a]among other reasons, they may choose to provide for how violations will be treated, to provide greater deterrence for some kinds of violations, or to eliminate the need to litigate regardless of whether the breach was intentional or negligent. The freedom to do so, however, is limited to agreements that do not violate public policy.” (Ibid.) Rattagan stated that “California public policy strongly supports imposing a tort duty on contractual parties to refrain from fraudulent deceit and favors enforcement of valid fraud actions, which the Legislature has facilitated through the enactment of the general fraud statute.” (Ibid.)

In Plaintiff’s opposition brief, Plaintiff argues that Rattagan is inapplicable because the complaint alleges fraudulent inducement through pre-sale concealment or non-disclosure, and is not subject to the economic loss rule. (Complaint, 60.) However, Plaintiff also argues that even if this Court were to find that Rattagan applied, the allegations in Plaintiff’s complaint are sufficient. First, Plaintiff concedes that the existence of a warranty is evidence that the parties envisioned the possibility that FCA might deliver a vehicle with unknown defects and “guarded against that possibility by ensuring the manufacturer would deliver a serviceable [vehicle] and repair any defect.” (Rattagan, supra, 17 Cal.5th at 37.) However, Plaintiff argues that such a warranty “d[oes] not consider, or allocate the risk for, the manufacturer lying about the quality” of the vehicle. (Ibid.) Plaintiff states that he “could not have been reasonably expected to allocate the risks of harm that resulted when the manufacturer did so.” (Ibid.) In other words, Plaintiff states that while FCA knew of the Engine Defect, Plaintiff did not, and thus could not properly allocate the risks.

Second, Plaintiff argues that FCA has an independent tort duty to refrain from fraudulent practices in the sale of its vehicles under California Civil Code sections 1709 and 1710. Third, Plaintiff contends that the tort element of fraudulent inducement through concealment are independent of the rights and duties assumed by the parties, and FCA’s duty to disclose known material defects was breached by its non-disclosure, which was required prior to the sale and is separate from the rights and duties in the contract.

Moreover, Plaintiff relies on the following hypothetical posed in Rattagan:

[A] seller negligently manufactures and delivers a product under warranty without being aware of a latent defect. Later, the seller learns of the defect, knows it poses a risk of serious harm beyond the parties’ reasonable contemplation when they formed their warranty contract, and knows these facts are unknown or not reasonably discoverable by the buyer. If the seller fails to disclose this information or actively conceals it, the buyer may assert an independent tort for fraudulent concealment during performance against the seller, assuming all the other elements of the cause of action can be established.

(Rattagan v. Uber Technologies, Inc., supra, at fn. 13.) Plaintiff explains that this hypothetical confirms that FCA’s continuing concealment and lack of disclosure during the course of the

warranty may allow a consumer to advance an independent tort claim for fraudulent concealment during the performance of the warranty. Although the Court acknowledges Plaintiff’s argument, these facts are not present in the complaint. In fact, Plaintiff’s complaint alleges that “FCA committed fraud by allowing the Subject Vehicle to be sold to Plaintiff without disclosing that the subject Vehicle equipped with the 5.7L engine was defective, and which may result in loss of power, stalling, engine running rough, engine misfires, failure or replacement of the engine….” (Complaint, ¶ 60.)

Arguably, where the duty to disclose is tied to contractual performance, fraudulent concealment cannot survive the economic loss rule. Plaintiff’s alleged injury – impaired value, use, or safety of the vehicle due to an allegedly unrepaired defect – was within the contemplation of the parties at the time they entered into the sales contract, as evidenced by the warranty itself. The fact that the warranty expressly contemplates that the vehicle might have a defect or nonconformity and allocates the risk of the cost of repairing such issue to FCA or to Plaintiff depending on, among other things, when the issue occurs. FCA argues that Plaintiff’s allegations are confined to purely economic loss tied to the vehicle’s quality and performance, which are foreseeable risks when a vehicle is purchased. The California Supreme Court in Rattagan noted that “the question will turn on the nature of the alleged conduct, the provisions of the contract itself, and whether the conduct exposed a party to a risk of harm neither reasonably contemplated nor allocated by the parties before entering their agreement.” (Rattagan, supra, 17 Cal.5th at 44.). Plaintiff’s allegations do not satisfy these parameters as currently pleaded.

On the record before the Court, the FCA warranty accounts for repair issues and contemplates a remedy allocated by the parties if and when that issue might arise during Plaintiff’s use of the subject product. The Song-Beverly Act’s use, value, and safety parameters for measuring substantiality and the cause of action for failure to recall a motor vehicle adequately account for the claim of a potential, possible, future physical harm or property damage that might occur because of a malfunction or failure of a component or system covered byte FCA warranty. Thus, the Court seeks oral argument on how Plaintiff can allege that FCA’s conduct exposed him to a risk of harm neither reasonably contemplated nor allocated by the parties before entering their agreement. While paragraph 67 alleged that Plaintiff was “exposed to the risk” of physical injury, no such injury is alleged nor is any property damage alleged. The Court’s tentative ruling is to SUSTAIN the demurrer with leave to amend.

IV. CONCLUSION

For the foregoing reasons, FCA’s Demurrer is SUSTAINED with leave to amend.

FCA is ordered to give notice.