Judge: Salvatore Sirna, Case: 23PSCV01470, Date: 2023-09-25 Tentative Ruling

Case Number: 23PSCV01470    Hearing Date: October 23, 2023    Dept: G

Defendant Rusnak/Pasadena’s Demurrer to Plaintiffs’ Complaint

Respondent: Plaintiffs Hamlet Avanessian and Ayris Avanessian

TENTATIVE RULING

Defendant Rusnak/Pasadena’s Demurrer to Plaintiffs’ Complaint is SUSTAINED with ten (10) days leave to amend.

BACKGROUND

This is a lemon law action. On December 3, 2020, Plaintiffs Hamlet Avanessian and Ayris Avanessian allegedly entered into a warranty contract with Defendant Volkswagen Group of America, Inc. (Volkswagen) by leasing a 2020 Audi A4. The Avanessians allege the vehicle was delivered with transmission, electrical, suspension, engine, and structural system defects.

On May 15, 2023, the Avanessians filed a complaint against Defendants Volkswagen, Rusnak/Pasadena, and Does 1-10, alleging (1) breach of express warranty, (2) breach of implied warranty, (3) violation of Song-Beverly Act section 1793.2, subdivision (b), and (4) negligent repair.

On July 21, 2023, Rusnak/Pasadena filed the present demurrer. On September 25, the court continued the hearing for parties to further meet and confer. On October 2, Rusnak/Pasadena’s counsel met and conferred telephonically with the Avanessians’ counsel. (Bell Suppl. Decl., ¶ 11.)

A hearing on the present demurrer and a case management conference are both set for October 23, 2023.

ANALYSIS

Rusnak/Pasadena demurs to the Avanessians’ fourth cause of action for negligent repair on the grounds that it is (1) barred by the economic loss rule and (2) fails to allege sufficient facts to state a claim. For the following reasons, the court SUSTAINS Rusnak/Pasadena’s demurrer with leave to amend.

Legal Standard

Demurrer

A party may demur to a complaint on the grounds that it “does not state facts sufficient to constitute a cause of action.” (Code Civ. Proc., § 430.10, subd. (e).) A demurrer tests whether the complaint states a cause of action. (Hahn v. Mirda (2007) 147 Cal.App.4th 740, 747 (Hahn).) When considering demurrers, courts accept all well pleaded facts as true. (Fox v. JAMDAT Mobile, Inc. (2010) 185 Cal.App.4th 1068, 1078.) In a demurrer proceeding, the defects must be apparent on the face of the pleading or via proper judicial notice. (Donabedian v. Mercury Ins. Co. (2004) 116 Cal.App.4th 968, 994.) “A demurrer tests the pleadings alone and not the evidence or other extrinsic matters. Therefore, it lies only where the defects appear on the face of the pleading or are judicially noticed.” (SKF Farms v. Superior Court (1984) 153 Cal.App.3d 902, 905.) “The only issue involved in a demurrer hearing is whether the complaint, as it stands, unconnected with extraneous matters, states a cause of action.” (Hahn, supra, at p. 747.)

Economic Loss Rule

The economic loss rule prevents tort recovery for “‘purely economic losses,’ meaning financial harm unaccompanied by physical or property damage.” (Sheen v. Wells Fargo Bank, N.A. (2022) 12 Cal.5th 905, 922.) This is because “conduct amounting to a breach of contract becomes tortious only when it also violates a duty independent of the contract arising from principles of tort law.” (Erlich v. Menezes (1999) 21 Cal.4th 543, 551.) Economic loss can include “damages for inadequate value, costs of repair and replacement of the defective product or consequent loss of profits.” (Robinson Helicopter Co., Inc. v. Dana Corp. (2004) 34 Cal.4th 979, 988 (Robinson), quoting Jimenez v. Superior Court (2002) 29 Cal.4th 473, 482 (Jimenez).)

Discussion

In this case, the Avanessians allege Rusnak/Pasadena owed them a duty “to use ordinary care and skill in storage, preparation, and repair of the Subject Vehicle in accordance with industry standards.” (Complaint, ¶ 61.) But it is unclear if this alleged duty is contractual or based on an independent duty. When it is unclear if an action arises from a contract or noncontractual duty, “the action will be considered based on contract rather than tort.” (Arthur L. Sachs, Inc. v. City of Oceanside (1984) 151 Cal.App.3d 315, 322.) Thus, because the Avanessians’ negligent repair action is based on a contractual duty to repair and they have not alleged any facts establishing an independent noncontractual duty, their fourth cause of action is barred by the economic loss rule.

The Avanessians contend there is an exception to the economic loss rule for professional services contracts. Indeed, such an exception does exist to ensure “that the consumer receives the services the professional agreed to provide.” (Sheen v. Wells Fargo Bank, N.A. (2022) 12 Cal.5th 905, 933.) “In such settings, professionals generally agree to provide ‘careful efforts’ in rendering contracted-for services,¿but ‘most clients do not know enough to protect themselves by inspecting the professional’s work or by other independent means.’” (Ibid, quoting Rest.3d Torts, Liability for Economic Harm (June 2020) § 4, com. a., p. 22.) Such professional services can include those offered by doctors, attorneys, accountants, and stockbrokers. (See Neel v. Magana, Olney, Levy, Cathcart & Gelfand (1971) 6 Cal.3d 176, 188.) However, the Avanessians do not provide any binding authority that establishes whether vehicle repair service contracts meet this exception.

The Avanessians also rely on Jimenez which holds “California decisional law has long recognized that the economic loss rule does not necessarily bar recovery in tort for damage that a defective product (e.g., a window) causes to other portions of a larger product (e.g., a house) into which the former has been incorporated.” (Jimenez, supra, 29 Cal.4th at p. 483.) But the Avanessians fail to allege how Rusnak/Pasadena’s failure to make unspecified repairs caused damage to other subcomponents of the vehicle. (Complaint, ¶ 59-62.)

Accordingly, Rusnak/Pasadena’s demurrer to this cause of action is SUSTAINED with leave to amend.

CONCLUSION

Based on the foregoing, Rusnak/Pasadena’s demurrer to the Avanessians’ Complaint is SUSTAINED with ten (10) days leave to amend as to the fourth cause of action.