Judge: Salvatore Sirna, Case: 23PSCV03333, Date: 2025-03-03 Tentative Ruling

Case Number: 23PSCV03333    Hearing Date: March 3, 2025    Dept: G

Defendant Ford Motor Company’s Demurrer to Plaintiffs’ First Amended Complaint

Respondent: Plaintiffs Arthur Clark and Maureen Clark

TENTATIVE RULING

Defendant Ford Motor Company’s Demurrer to Plaintiffs’ First Amended Complaint¿is SUSTAINED IN PART without leave to amend as to the fourth cause of action and OVERRULED IN PART as to the first, second, third, and fifth causes of action.

Defendant Ford Motor Company is ordered to file its Answer to the First Amended Complaint, as modified by this ruling, in ten (10) days.

BACKGROUND

This is a Soong-Beverly action. On October 27, 2023, Plaintiffs Arthur Clark and Maureen Clark filed a complaint against Defendants Ford Motor Company (Ford), Puente Hills Ford, and Does 1-10, alleging the following cases of action: (1) violation of Civil Code section 1793.2, subdivision (d); (2) violation of Civil Code section 1793.2, subdivision (b); (3) violation of Civil Code section 1793.2, subdivision (a)(3); (4) breach of implied warranty of merchantability; (5) concealment; and (6) negligent repair.

On December 1, 2023, Ford filed a demurrer to the Clarks’ Complaint. On January 3, 2024, the Clarks filed a First Amended Complaint (FAC) against the same defendants alleging the same causes of action.

On February 6, 2024, Ford filed the present demurrer. On March 19, 2024, Ford’s counsel met and conferred telephonically with the Clarks’ counsel and was unable to reach a resolution. (Patel Suppl. Decl., ¶ 4.)

A hearing on the demurrer is set for March 3, 2025, along with a CMC.

ANALYSIS

Ford demurs to the Clarks’ first cause of action (violation of Civil Code section 1793.2, subdivision (d)), second cause of action (violation of Civil Code section 1793.2, subdivision (b)), third cause of action (violation of Civil Code section 1793.2, subdivision (a)(3)), fourth cause of action (breach of implied warranty of merchantability), and fifth cause of action (concealment). For the following reasons, the court SUSTAINS the demurrer to the fourth cause of action without leave to amend and OVERRULES the demurrer as to the first, second, third, and fifth causes of action.

Legal Standard

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.)

Statutes of Limitations

Ford argues the Clarks’ first cause of action for violation of Civil Code section 1793.2, subdivision (d); second cause of action for violation of Civil Code section 1793.2, subdivision (b); third cause of action for violation of Civil Code section 1793.2, subdivision (a)(3); fourth cause of action for breach of implied warranty of merchantability; and fifth cause of action for concealment are barred by the applicable statutes of limitations. The court agrees as to the fourth cause of action and disagrees as to the other causes of action.

Legal Standard

“A demurrer based on a statute of limitations will not lie where the action may be, but is not necessarily, barred. [Citation.] In order for the bar of the statute of limitations to be raised by demurrer, the defect must clearly and affirmatively appear on the face of the complaint; it is not enough that the complaint shows that the action may be barred.” (Marshall v. Gibson, Dunn & Crutcher (1995) 37 Cal.App.4th 1397, 1403 (Marshall).)

“In order to rely on the discovery rule for delayed accrual of a cause of action, ‘[a] plaintiff whose complaint shows on its face that his claim would be barred without the benefit of the discovery rule must specifically plead facts to show (1) the time and manner of discovery¿and¿(2) the inability to have made earlier discovery despite reasonable diligence.’” (Fox v. Ethicon Endo-Surgery, Inc. (2005) 35 Cal.4th 797, 808, quoting McKelvey v. Boeing North American, Inc. (1999) 74 Cal.App.4th 151, 160, disapproved on another ground in Lopez v. Sony Electronics, Inc. (2018) 5 Cal.5th 627, 633, fn. 3.)

Discussion

Breach of Express Warranty Claims (First, Second, and Third Causes of Action

Claims for breach of express warranties are governed by a four-year statute of limitations. (Com. Code, § 2725, subd. (1).) “A cause of action accrues when the breach occurs, regardless of the aggrieved party’s lack of knowledge of the breach. A breach of warranty occurs when tender of delivery is made, except that where a warranty explicitly extends to future performance of the goods and discovery of the breach must await the time of such performance the cause of action accrues when the breach is or should have been discovered.” (Com. Code, § 2725, subd. (2).)

In this case, Ford argues “there are no specific facts within the four corners of the FAC from which the Court could plausibly conclude that Plaintiffs’ express warranty causes of action did not expire within the intervening period between the date of purchase on January 1, 2018 and October 27, 2023, when Plaintiffs filed suit.” (Demurrer, p. 11:22-26.) That, however, is not the standard for determining if an action is time-barred in demurrer proceedings. Ford must show how specific facts affirmatively establish these causes of action are time barred. (See Marshall, supra, 37 Cal.App.4th at p. 1403.) Because Ford fails to do this, instead arguing these causes of action fail to show why they should not be time-barred, the court finds Ford’s argument as to these causes of action fails.

Accordingly, the court OVERRULES the demurrer to these causes of action.

Breach of Implied Warranty (Fourth Cause of Action)

A claim for breach of implied warranty is also governed by a four-year statute of limitations and accrues upon breach of the warranty. (Com. Code, § 2725, subd. (2).) “Because an implied warranty is one that arises by operation of law rather than by an express agreement of the parties, courts have consistently held it is not a warranty that ‘explicitly extends to future performance of the goods . . . .’” (Cardinal Health 301, Inc. v. Tyco Electronics Corp. (2008) 169 Cal.App.4th 116, 134 (Cardinal Health 301).) Thus, “[a] breach of warranty occurs when tender of delivery is made.” (Com. Code, § 2725, subd. (2).)

Here, the FAC does not specifically allege when Ford tendered delivery of the subject vehicle to the Clarks. Although the FAC alleges the Clarks entered into a warranty contract with Ford on January 1, 2018, the FAC does not allege when Ford actually delivered the subject vehicle to the Clarks. (FAC, ¶ 27.) Based on the allegation that the Clarks presented the subject vehicle to Ford for repairs in June 2018, it appears Ford tendered delivery by that date. (FAC, ¶ 43.) Because this was more than four (4) years before the Clarks filed the present action on October 27, 2023, this cause of action is time-barred on its face. Ford argues this deadline cannot be tolled by the discovery rule and points to federal authorities that have held so. (Demurrer, p. 12:1-19; Nguyen v. Nissan North America, Inc. (N.D. Cal. 2020) 487 F.Supp.3d 845, 854 fn.3 [“The delayed discovery doctrine does not apply to implied warranty claims.”].) In opposition, the Clarks point to Mexia v. Rinker Boat Co., Inc. (2009) 174 Cal.App.4th 1297 (Mexia). (Opp., p. 5:8-21.) There, the court held “[t]he implied warranty of merchantability may be breached by a latent defect undiscoverable at the time of sale.” (Id., at p. 1304.)

The court in Mexia however did not explicitly hold the statute of limitations ran from the date the latent defect was discovered. Instead, it merely held a latent defect may be discovered after the one-year implied warranty period imposed by Civil Code section 1791.1, subdivision (c) had elapsed. (Id., at p. 1304-1305.) Although Mexia did address an issue of timeliness, it held the action was timely because it had been filed within four years of delivery being tendered, which the court noted was “the earliest date the implied warranty of merchantability . . . could have accrued.” (Id., at p. 1306.) While both parties cite dueling federal authorities to support or disapprove of citing Mexia in addressing this statute of limitations issue, neither side provides any controlling California authority. (Opp., p. 6; Reply, p. 3-4.) Such controlling authority does exist, however, in the form of Commercial Code section 2725, subdivision (2).

Because the Song–Beverly Act does not contain a statute of limitations, “California courts have held that the statute of limitations for an action for breach of warranty under the Song–Beverly Act is governed by the same statute that governs the statute of limitations for warranties arising under the Uniform Commercial Code: section 2725 of the Uniform Commercial Code.” (Id., at p. 1305-1306.) The Song–Beverly Act “was intended to supplement the provisions of the California Uniform Commercial Code, rather than to supersede the rights and obligations created by that statutory scheme.” (Krieger v. Nick Alexander Imports, Inc. (1991) 234 Cal.App.3d 205, 215 (Krieger).)

Pursuant to Commercial Code section 2725, subdivision (2), “[a] cause of action accrues when the breach occurs, regardless of the aggrieved party’s lack of knowledge of the breach.” And “[a] breach of warranty occurs when tender of delivery is made, except that where a warranty explicitly extends to future performance of the goods and discovery of the breach must await the time of such performance the cause of action accrues when the breach is or should have been discovered.” (Com. Code, § 2725, subd. (2).) “[T]here is no ‘duration’ of the implied warranty under the Uniform Commercial Code in any meaningful sense; the product is either merchantable or not (and a breach of the implied warranty occurs or not) only at the time of delivery.” (Mexia, supra, 174 Cal.App.4th at p. 1304.) The Song–Beverly Act supplemented the Commercial Code by providing a maximum duration of one (1) year to implied warranties. (Id., at p. 1304.)

As noted above, Mexia held “the implied warranty of merchantability may be breached by a latent defect undiscoverable at the time of sale.” (Id., at p. 1305.) But in holding so, Mexia noted that “[i]n the case of a latent defect, a product is rendered unmerchantable, and the warranty of merchantability is breached, by the existence of the unseen defect, not by its subsequent discovery.” (Id., at p. 1305.) In other words, a latent defect is still a breach that occurs at the time of the delivery. The Song–Beverly Act and Mexia’s interpretation do not change the requirement that a cause of action for breach of implied warranty be brought within four (4) years of the goods being tendered. And this statute of limitations explicitly forecloses application of the discovery rule by stating accrual occurs “regardless of the aggrieved party’s lack of knowledge of the breach.” (Com. Code, § 2725, subd. (2).) Thus, the court finds this cause of action is barred by the applicable statute of limitations.

The Clarks also suggest the “future performance” exception from Krieger applies. (Opp., p. 6:15-23.)  The Clarks fail to explain, however, how this exception is applicable to implied warranties since an implied warranty is based on the good’s merchantability at the time of sale, not a party’s future performance.

Accordingly, the court SUSTAINS Ford’s demurrer to this cause of action without leave to amend.

Concealment (Fifth Cause of Action)

The statute of limitations for fraud is three (3) years from “the discovery, by the aggrieved party, of the facts constituting the fraud or mistake.” (Code Civ. Proc., § 338, subd. (d).) In this case, the FAC alleges the Clarks discovered Ford’s alleged wrongful conduct “shortly before the filing of the complaint.” (FAC, ¶ 8.) Ford argues “there are no facts alleged that would allow the Court plausibly to conclude that Plaintiffs’ fraud cause of action did not expire in the intervening time period before Plaintiffs filed suit on October 27, 2023.” (Demurrer, p. 13:3-5.)

As noted above with regard to the first three causes of action, the court has determined that is not the applicable standard for determining if an action is time-barred in demurrer proceedings. Instead, Ford must show how specific facts affirmatively establish this cause of action is time barred. (See Marshall, supra, 37 Cal.App.4th at p. 1403.) Because Ford fails to do this and instead argues this cause of action fails to show why it should not be time-barred, Ford’s argument fails.

Accordingly, the court OVERRULES the demurrer on this ground.

Concealment (Fifth Cause of Action)

Ford contends the Clarks’ fifth cause of action for concealment is insufficiently pled. The court disagrees.

Legal Standard

“[T]he elements of a cause of action for fraud based on concealment are: ‘(1) the defendant must have concealed or suppressed a material fact, (2) the defendant must have been under a duty to disclose the fact to the plaintiff, (3) the defendant must have intentionally concealed or suppressed the fact with the intent to defraud the plaintiff, (4) the plaintiff must have been unaware of the fact and would not have acted as he did if he had known of the concealed or suppressed fact, and (5) as a result of the concealment or suppression of the fact, the plaintiff must have sustained damage.’” (Kaldenbach v. Mutual of Omaha Life Ins. Co. (2009) 178 Cal.App.4th 830, 850, quoting Roddenberry v. Roddenberry (1996) 44 Cal.App.4th 634, 665-666.)

One party’s failure to disclose material facts unknown to another party is not fraud unless “unless there is¿some relationship¿between the parties which gives rise to a duty to disclose such known facts.” (LiMandri v. Judkins (1997) 52 Cal.App.4th 326, 337, quoting BAJI No. 12.36 (8th ed. 1994.) “A duty to disclose facts arises only when the parties are in a relationship that gives rise to the duty, such as ‘seller and buyer, employer and prospective employee, doctor and patient, or parties entering into any kind of contractual agreement.’” (Shin v. Kong (2000) 80 Cal.App.4th 498, 509, quoting Wilkins v. National Broadcasting Co. (1999) 71 Cal.App.4th 1066, 1082.) “In transactions which do not involve fiduciary or confidential relations, a cause of action for non-disclosure of material facts may arise in at least three instances: (1) the defendant makes representations but does not disclose facts which materially qualify the facts disclosed, or which render his disclosure likely to mislead;¿(2)¿the facts are known or accessible only to defendant, and defendant knows they are not known to or reasonably discoverable by the plaintiff;¿(3) the defendant actively conceals discovery from the plaintiff.” (Warner Constr. Corp. v. City of Los Angeles (1970) 2 Cal.3d 285, 294.)

Discussion

Here, Ford first contends the Clarks failed to allege the defect that Ford allegedly concealed. In the FAC, the Clarks allege Ford knew that the vehicles at issue had transmission defects which resulted in hesitation, delayed acceleration, harsh or hard shifting, jerking, shuddering, or juddering. (FAC, ¶ 83.) The Clarks also allege Ford failed to disclose these defects at the time of purchase. (FAC, ¶ 84.) While Ford attempts to undermine these allegations by claiming they merely demonstrate how the transmissions may be defective, the Clarks’ actual allegations do not contain such tentative language. Thus, the court finds these allegations are sufficiently alleged.

Next, Ford contends the Clarks failed to allege facts establishing Ford was under a duty to disclose allegedly concealed facts. Ford contends Ford did not have a duty to disclose because the Clarks failed to allege the vehicle at issue was purchased directly from Ford. But the Clarks also allege Ford made express written warranties. (FAC, ¶ 27-28.) Express warranties are contractual in nature. (See Hauter v. Zogarts (1975) 14 Cal.3d 104, 117.) And Ford does not provide a single binding authority that holds a manufacturer’s express warranties to a consumer are insufficient to create a transactional relationship.

Ford next contends the Clarks failed to plead Ford had exclusive knowledge of the alleged defects. The Clarks allege Ford was under a duty to disclose because it had knowledge of defects through sources unavailable to the Clarks “including but not limited to pre-production testing data, early consumer complaints about the Transmission Defect made directly to [Ford] and its network of dealers, aggregate warranty data compiled from [Ford]’s network of dealers, testing conducted by [Ford] in response to these complaints, as well as warranty repair and part replacements data received by [Ford] from [Ford]’s network of dealers, amongst other sources of internal information.” (FAC, ¶ 87(a).) The Clarks also allege they “could not reasonably have been expected to learn or discover of the Vehicle’s Transmission Defect and its potential consequences until well after [they] purchased the Vehicle.” (FAC, ¶ 87(d).)

In response, Ford contends the Clarks failed to plead what the testing revealed. But the Clarks do so allege, stating Ford acquired its knowledge of the transmission defect from sources including testing data. (FAC, ¶ 87(a).) To the extent Ford is demanding the Clarks allege the exact results of those tests, such specificity is not required where “the allegations indicate that ‘the defendant must necessarily possess full information concerning the facts of the controversy’” (Tarmann v. State Farm Mut. Auto. Ins. Co. (1991) 2 Cal.App.4th 153, 158, quoting Bradley v. Hartford Acc. & Indem. Co. (1973) 30 Cal.App.3d 818, 825) or if “the facts lie more in the knowledge of the opposite party.” (Ibid, quoting Turner v. Milstein (1951) 103 Cal.App.2d 651, 658.)

Ford next contends the Clarks failed to plead Ford actively concealed the alleged defects and made partial representations. The court finds neither contention persuasive. In addition to alleging Ford knew of the defects and failed to disclose them, the FAC explicitly alleges Ford “knowingly and intentionally” concealed the material facts at issue. (FAC, ¶ 88.) As for the alleged partial representations, Ford issued written warranties to the Clarks as discussed above without disclosing the alleged defects.

Last, Ford contends this cause of action is barred by the economic loss rule because it is based on alleged fraudulent omissions as opposed to misrepresentations. But this argument has since been rejected by the California Supreme Court in Rattagan v. Uber Technologies, Inc. (2024) 17 Cal.5th 1, 39.

Accordingly, the court OVERRULES Ford’s demurrer to this cause of action.

CONCLUSION

Based on the foregoing, Ford’s demurrer to the Clarks’ FAC is SUSTAINED IN PART without leave to amend as to the fourth cause of action and OVERRULED IN PART as to the first, second, third, and fifth causes of action.

Defendant Ford is ordered to file its Answer to the First Amended Complaint, as modified by this ruling, in ten (10) days.