Judge: Ronald F. Frank, Case: 24TRCV03768, Date: 2025-01-17 Tentative Ruling
Case Number: 24TRCV03768 Hearing Date: January 17, 2025 Dept: 8
Tentative Ruling¿
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HEARING DATE: January 17, 2025
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CASE NUMBER: 24TRCV03768
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CASE NAME: Donald
James Vargo; Alejandra Vargo v. Volkswagen Group of America, Inc., et al.
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MOVING PARTY: (1) Defendant,
Volkswagen Group of America, Inc.
(2) Defendant, PVW
South Bay, LLC dba Pacific Volkswagen
RESPONDING PARTY: (1) Plaintiffs,
Donald James Vargo and Alejandra Vargo
(2) Plaintiffs, Donald James Vargo and
Alejandra Vargo
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TRIAL DATE: Not
Set.
MOTION:¿ (1) Defendant, PVW South Bay, LLC dba Pacific Volkswagen Group of America, Inc.’s
Demurrer
(2) Defendant, Volkswagen Group of America, Inc.’s
Demurrer
Tentative Rulings: (1) SUSTAINED with leave to amend.
(2) SUSTAINED with leave to amend.
I. BACKGROUND¿¿
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A. Factual¿¿
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On November 6, 2024, Plaintiffs, Donald James Vargo
and Alejandra Vargo (collectively, “Plaintiffs”) filed a complaint against
Defendants, Volkswagen Group of America, Inc. and PVW South Bay, LLC dba
Pacific Volkswagen, and DOES 1 through 10. The Complaint alleges causes of
action for: (1) Violation of Song-Beverly Consumer Warranty Act – Breach of
Express Warranty; (2) Violation of Song-Beverly Consumer Warranty Act – Breach
of Implied Warranty; (3) Violation of Business and Professions Code section
17200 ; and (4) Negligent Repair.
Defendants Volkswagen Group of America, Inc. (“VWGoA”)
and PVW South Bay, LLC dba Pacific Volkswagen (“Pacific Volkswagen”) have both
filed demurrers to Plaintiffs’ complaint.
B. Procedural¿¿
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On November
11, 2024, Defendant Pacific Volkswagen filed a Demurrer. On January 6, 2025,
Plaintiffs filed an opposition brief. On January 10, 2025, Pacific Volkswagen
filed a reply brief.
On December
12, 2024, VWGoA filed a Demurrer. On January 6, 2025, Plaintiffs filed an
opposition brief. On January 10, 2025, VWGoA filed a reply brief.
II. ANALYSIS
A.
Legal Standard
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.)¿¿
B.
Defendant, Pacific Volkswagen’s Demurrer
Defendant, Pacific Volkswagen files this demurrer
against Plaintiffs complaint on the grounds that it argues Plaintiffs’ third
cause of action for Violation of Unfair Competition Law, Business and
Professions Code section 17200, et seq. fails to state facts sufficient
to constitute a cause of action against Pacific Volkswagen.
i.
Third Cause of Action for Violation of Unfair Competition Law,
Business and Professions Code section 17200, et seq.
Business and Professions
Code section 17200 describes unfair competition as “any unlawful, unfair or
fraudulent business act or practice and unfair, deceptive, untrue or misleading
advertising and any act prohibited by Chapter 1 (commencing with Section 17500)
of Part 3 of Division 7 of the Business and Professions Code.” (Bus. &
Prof. Code, § 17200.)¿
California courts have consistently
interpreted such language broadly. An “unlawful business activity” includes
“‘anything that can properly be called a business practice and that at the same
time is forbidden by law.’” [Citation.] The Legislature “intended. . . to
permit tribunals to enjoin on-going wrongful business conduct in whatever
context such activity might occur.” [Citation.]
(People v. McKale¿(1979) 25 Cal.3d
626, 632 [McKale].) Our Supreme Court has held that ongoing conduct
requires “a pattern of behavior” or “a course of conduct.” (State of
California ex rel. Van de Kamp v. Texaco, Inc. (1988) 46 Cal.3d 1147,
1170.)¿
“A plaintiff alleging
unfair business practices under these statutes must state with reasonable
particularity the facts supporting the statutory elements of the violation.” (Khoury
v. Maly's of California, Inc. (1993) 14 Cal.App.4th 612, 619 [Khoury v.
Maly’s].) In¿Khoury v. Maly’s, the Court of Appeal held that a
demurrer was “properly sustained” as to a cause of action alleging violations
of Business and Professions Code sections 17000, et seq. and 17200, et
seq. because it failed to identify a “particular section of the statutory
scheme which was violated” and failed to describe “with any reasonable
particularity the facts supporting violation.” (Id., 619.)¿
Here, the Court finds
that Plaintiffs have failed to allege their cause of action for Violation of
Business and Professions Code section 17000 with the requisite specificity. Plaintiffs’
opposition brief argues that because their third cause of action incorporated
all preceding paragraphs (Complaint, ¶ 31), that they have sufficiently alleged
the unlawful violations Pacific Volkswagen has engaged in include their first
and second causes of action for violation of Civil Code section 1793.2, 1791.1,
1792, and 1794. This Court disagrees. Neither Plaintiffs’ first or second
causes of action sufficiently allege the unlawful behavior engaged in by
Pacific Volkswagen with the requisite specificity. For example, even in a cause
of action for Violation of Civil Code section 1793.2, subdivision
(a)(3), where a plaintiff includes an allegation that a defendant manufacturer
or dealer 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, the plaintiff would be required to
include specific facts related to the Subject Vehicle’s repair history. Here,
Plaintiffs’ complaint contains no such allegations.
Plaintiffs’ opposition urges that
Plaintiffs do not have an adequate remedy under the law. The Court disagrees,
but that does not affect the determination that Plaintiffs fail to allege the
required elements of bringing a cause of action for Violation of Business and
Professions Code section 17200, et seq. The demurrer is SUSTAINED with twenty
(20) days leave to amend.
ii.
Negligent Repair
Next, Pacific
Volkswagen argues that Plaintiffs’ fourth cause of action for Negligent Repair
fails to state facts sufficient to assert a negligent repair cause of action
and is barred by the economic loss rule.
The necessary elements for
negligence are: (1) the existence of a legal duty of care that the defendant
owed to the plaintiff; (2) breach; (3) causation; and (4) damages. County
of Santa Clara v. Atlantic Richfield Co. (2006) 137 Cal.App.4th 292, 318 (Atlantic
Richfield); see CACI No. 1220.
Under the economic loss rule, “[w]here 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 Helicopter Co., Inc. v.
Dana Corp. (2004) 34 Cal.4th 979, 988, quotation marks omitted.) The
economic loss rule “hinges on a distinction drawn between transactions
involving the sale of goods for commercial purposes where economic expectations
are protected by commercial and contract law, and those involving the sale of
defective products to individual consumers who are injured in a manner which
has traditionally been remedied by resort to the law of torts.” (Ibid.)
The most widely recognized exception to the economic loss rule is when a
defendant’s conduct constitutes a tort as well as a breach of contract. (Harris
v. Atlantic Richfield (1993) 14 Cal.App.4th 70, 78.)
Plaintiffs’ tort
claim for negligent repair alleged against Pacific Volkswagen is independent
from their action against VGWoA arising under the Song-Beverly Act. Specifically, Plaintiffs allege that Pacific Volkswagen
failed to “properly store, prepare, and repair” the subject vehicle.
(Complaint, ¶ 55.) In their opposition, Plaintiffs argue that the economic loss
rule does not apply in this case because their cause of action for negligent
repair is not one for products liability. The Court is confused by Plaintiffs’
argument and attempt to draw a factual distinction from Food Safety Net
Services v. Eco Safe Systems USA, Inc. (2012) 209 Cal.App.4th 1118, as a
reason the economic loss rule does not apply to this case.
In the case of a contract for the performance
of services “[t]he question of whether a plaintiff may recover damages for
economic loss, absent physical injury to person or property, has been answered
differently in cases involving the quality and condition of goods from when
plaintiff’s loss arises from a negligent performance of services.” (N. Am.
Chem. Co. v. Superior Ct. (1997) 59 Cal.App.4th 764, 777 (North America).)
“Entities generally have no duty to prevent purely economic loss to a potential
plaintiff. Under the common law, it is only where a special relationship
exists, giving rise to such a duty, that a plaintiff may recover purely
economic loss.” (Mega RV Corp. v. HWH Corp. (2014) 225 Cal. App. 4th
1318, 1339 [internal brackets and quotations omitted].) “[I]n negligent
performance cases, . . . the six criteria [mentioned]. . .will determine the
existence of the necessary special relationship . . . In addition, if those six
criteria are satisfied the plaintiff will be entitled to recover economic loss
damages without the need to allege and prove personal injury or property
damage.” (North America, supra, 59 Cal.App.4th at p. 785.) The necessary
“special relationship” is established by the following criteria: “(1) the
extent to which the transaction was intended to affect the plaintiff, (2) the
foreseeability of harm to the plaintiff, (3) the degree of certainty that the
plaintiff suffered injury, (4) the closeness of the connection between the
defendant's conduct and the injury suffered, (5) the moral blame attached to
the defendant's conduct, and (6) the policy of preventing future harm.” (Id.
at p. 782.) “[I]n cases where economic loss has resulted from the negligent
performance of services, . . . absence of a contract remedy is not a
requisite.” (North America, supra, 59 Cal. App. 4th at p. 784 [internal
quotations and brackets omitted])
Defendants rely heavily on the unpublished
decision of Harlan v. Roadtrek Motorhomes, Inc. (S.D. Cal. 2009) 2009
U.S. Dist. LEXIS 29169. While this Court acknowledges that the pleading of a
special relationship is not required for a negligent repair claim (CACI No.
1200), and that the presence or absence of the requisite special relationship
is a question of fact more appropriately determined on a motion for summary judgment,
the Court also emphasizes that Plaintiffs’ Complaint does not seem to plead the
six criteria in North America. Absent this, the Court finds that
Plaintiffs have not overcome the presumption of the economic loss rule applying
here. More recently, in Rattagan v.
Uber Technologies, Inc. (2024) 17 Cal.5th 1, our Supreme Court noted: “the economic loss doctrine applies when
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 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 intentionally 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]mong 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. While the Suprem Court dismissed the review
of a Song-Beverly case (Dhital) that had raised the economic loss rule it did
so for the First District to reconsider its prior ruling in light of Rattigan. The operative complaint does not adequately
overcome the considerations outlined in Rattagan at the pleading stage.
Based on this, Defendant Pacific Volkswagen’s
Demurrer is SUSTAINED with twenty (20) days leave to amend.
C.
Defendant, Volkswagen Group of America, Inc.’s Demurrer
i.
Third Cause of Action for Violation of Unfair Competition Law,
Business and Professions Code section 17200, et seq.
For
the same reasons the Court sustained Pacific Volkswagen’s demurrer to this
cause of action above, the Court also sustained VWGoA’s demurrer to this cause
of action. Plaintiffs are granted twenty (20) days leave to amend.
IV. CONCLUSION¿¿
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For the
foregoing reasons, Defendant, Pacific Volkswagen’s demurrer is SUSTAINED with
twenty (20) days leave to amend. Additionally, Defendant VWGoA’s demurrer is
also SUSTAINED with twenty (20) days leave to amend.
Moving parties are ordered to
give notice.¿¿¿¿
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