Judge: Sandy N. Leal, Case: 2021-01200180, Date: 2023-07-20 Tentative Ruling

Motion for Summary Judgement and/or Adjudication

Defendant, Kia America, Inc. f/k/a Kia Motors America, Inc.’s (Defendant) Motion for Summary Adjudication (Motion) is GRANTED.

Plaintiff’s Objections to the Declaration of Ariston Crane are sustained.

Defendant’s Objections to the Declaration of Plaintiff are overruled. Defendant’s Objections to the Declaration of Candice Sannella are sustained.

Pursuant to Code of Civil Procedure section 437c(f)(1): “A party may move for summary adjudication as to one or more causes of action within an action, one or more affirmative defenses, one or more claims for damages, or one or more issues of duty, if the party contends that the cause of action has no merit, that there is no affirmative defense to the cause of action, that there is no merit to an affirmative defense as to any cause of action, that there is no merit to a claim for damages, as specified in Section 3294 of the Civil Code, or that one or more defendants either owed or did not owe a duty to the plaintiff or plaintiffs. A motion for summary adjudication shall be granted only if it completely disposes of a cause of action, an affirmative defense, a claim for damages, or an issue of duty.”

Sixth Cause of Action for Fraudulent Inducement

Defendant moves for summary adjudication on the sixth cause of action for fraudulent concealment.

““ ‘[T]he elements of an action for fraud and deceit 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.’ ” (Boschma v. Home Loan Center (2011) 198 Cal.App.4th 230, 248.)

1.       Duty to Disclose

First, Defendant argues that Plaintiff has no evidence that it had a duty to disclose any facts regarding the Vehicle because Plaintiff has no evidence that she had any specific relationship with Defendant such that a duty to disclose arises. (Motion, 4:24-6:15.)

In Opposition, Plaintiff argues that there is a duty to disclose because the Vehicle exhibited Theta II engine defects, which are unreasonable safety risks and per se material. Plaintiff also contends that materiality gives rise to a duty to disclose. (Opposition, 8:12-10:12.)

A duty to disclose sufficient to support a fraudulent concealment cause of action arises in the following four circumstances: “… (1) when the defendant is in a fiduciary relationship with the plaintiff; (2) when the defendant had exclusive knowledge of material facts not known to the plaintiff; (3) when the defendant actively conceals a material fact from the plaintiff; and (4) when the defendant makes partial representations but also suppresses some material facts. [Citation.]”[citation]” (Limandri v. Judkins (1997) 52 Cal.App.4th 326, 336 (LiMandri).)

Other than the first circumstance, “[e]ach of the other three circumstances in which nondisclosure may be actionable presupposes the existence of some other relationship between the plaintiff and defendant in which a duty to disclose can arise. 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. [citation]… Thus, a duty to disclose may arise from the relationship between seller and buyer, employer and prospective employee, doctor and patient, or parties entering into any kind of contractual agreement” (Id. at 336-337; see also Goodman v. Kelly (1976) 18 Cal.3d 335, 347[“[t]he only other basis for a duty of disclosure is one which may exist when one party to a transaction has sole knowledge or access to material facts and knows that such facts are not known to or reasonably discoverable by the other party.”].)

Here, it is undisputed that Plaintiff purchased the Vehicle from Garden Grove Nissan. (SUMF, No. 1, Crane Declaration, ¶ 5, Exhibit 2.)

However, the Court sustains Plaintiff’s objections to the Crane Declaration as to its statements about Garden Grove Nissan being an independent dealership.

Additionally, the Court notes that Plaintiff’s objections point to some of Mr. Crane’s testimony for the argument that whether Garden Grove Nissan is independent is a question of fact. For example, Mr. Crane testified as follows regarding TSBs:

Q: Okay. I’m going to tag as Exhibit 12, we’ve looked at this document before. This is “TSB P11805.” A couple of questions about TSBs in general. Kia provides the TSB to the dealerships; correct?

A: Yes.

Q: Are the dealerships required to follow the instructions in a TSB, or are they allowed to use alternative repair procedures?

A: My understanding is this TSB provides information to the dealership on what to do for the Product Improvement Campaign.”

(Sannella Declaration, Exhibit 25, 82:22-83:13.)

As a further example, Mr. Crane has testified that Defendant provides warranties to consumers along with their vehicle purchases:

“Q: …so the contents of this Warranty annual describe the warranty terms; is that correct?

A: Yes.

Q: And these are the warranties that were issued with the vehicle at the time the vehicle was sold; correct?

A: Yes.”

(Sannella Declaration, Exhibit 25, 29:19-30:1.)

Based on the above examples, it appears that Defendant at minimum provides dealerships such as Garden Grove Nissan information on “what to do” for certain aspects of cars sold to consumers and that Defendant provides warranties to consumers in connection with their vehicle purchases. Therefore, the Court finds that Defendant does not meet its burden as the moving party of demonstrating that it did not have any relationship with Plaintiff as defined under LiMandri. For these reasons, Defendant’s first argument in support of its Motion fails.

2.       Whether Statements Actionable

Second, Defendant next argues that to the extent Plaintiff is claiming fraud based on her reliance on Defendant’s advertising statements, such statements are non-actionable puffery and summary adjudication is warranted.

““Generally, actionable misrepresentation must be one of existing fact; “predictions as to future events, or statements as to future action by some third party, are deemed opinions, and not actionable fraud ....” [citation] But there are exceptions to this rule: “(1) where a party holds himself out to be specially qualified and the other party is so situated that he may reasonably rely upon the former's superior knowledge; (2) where the opinion is by a fiduciary or other trusted person; [and] (3) where a party states his opinion as an existing fact or as implying facts which justify a belief in the truth of the opinion.”” (Cohen v. S & S Construction Co. (1983) 151 Cal.App.3d 941, 946 (Cohen).)

Here, the Complaint alleges that Defendant was under a duty to disclose the Vehicle’s defects, especially as to its Theta II engine because “KMA was in a superior position from various internal sources to know (or should have known) the true state of facts about the material defects contained in vehicles equipped with the Theta II engine.” (Complaint, ¶ 111(b).) These allegations fit into the exception stated in Cohen that actionable misrepresentations must generally be one of existing fact.

Defendant does not submit evidence in support of its argument that the sixth cause of action fails because Plaintiff is relying on non-actionable puffery. The Complaint’s allegations at paragraph 111(b) fit into the exception to the general rule discussed in Cohen that fraud must generally be based upon statements of fact. Thus, based on the above, Defendant’s second argument in support of its motion.

3.       Damages

Third, Defendant contends that Plaintiff’s claim for fraud fails because Plaintiff cannot prove damages resulting from fraud. (Motion, 7:26-9:17.) According to Defendant, Plaintiff must demonstrate her “out-of-pocket” damages resulting from Defendant’s fraudulent conduct. (Id.)

Civil Code section 3343 provides in part: “(a)One defrauded in the purchase, sale or exchange of property is entitled to recover the difference between the actual value of that with which the defrauded person parted and the actual value of that which he received” together with certain additional damages listed in this section. (Code Civ. Proc. § 3343(a).)  “In fraud cases involving the purchase, sale, or exchange of property, as here, the out-of pocket measure of damages applies as set forth in Civil Code section 3343.” (Hensley v. McSweeney (2001) 90 Cal.App.4th 1081, 1085.)

Plaintiff’s Opposition asserts that Plaintiff has presented evidence of damages because the parties have agreed on the purchase price of the Vehicle. (Opposition, 16:4-18.) The Opposition cites to Evidence Code 813 for the argument that Plaintiff, as the owner of the Vehicle, may provide an opinion as to the value of the Vehicle. Plaintiff appears to be saying that the entire purchase price of the Vehicle is the measure of her damages.

In Reply, Defendant cites to Fragale v. Faulkner (2003) 110 Cal.App.4th 229 (Fragale) for the argument that Plaintiff’s declaration alone is insufficient evidence of the value of the Vehicle notwithstanding Evidence Code section 813(a). Additionally, the Reply argues that because Plaintiff admitted that she thought she paid a fair price for the Vehicle at the time of purchase, this is an admission that Plaintiff did not suffer damages as a result of fraud. (Reply, 5:17-27.)

In Fragale, the court held that the owner of a house may not provide her own declaration as sufficient evidence of its value under Evidence Code section 813 because “[w]hile Evidence Code section 813 permits opinion testimony from the owner on the value of property, the opinion “is limited to such an opinion as is based on matter perceived by or personally known to the witness ... that is of a type that reasonably may be relied upon by an expert in forming an opinion as to the value of property....” (Evid. Code, § 814.) No such basis was provided for an opinion on the market value of the house as affected by the code violations and structural defects.” (Id. at 241.)

Here, Defendant points to Plaintiff’s discovery responses for the argument that Plaintiff does not have evidence of damages. (SUMF, No. 8.) The Opposition does not dispute this evidence but instead relies on Plaintiff’s declaration for evidence of the Vehicle’s value. Plaintiff’s Declaration states: “[a]t the time I bought the Vehicle, I thought the price paid for the Vehicle was fair and that it would be reliable. But in retrospect, I believe that the problems with the Vehicle, including its defective engine, made it worthless, or worth substantially less than I paid for it. [¶] Had Kia disclosed to me the truth about the defective Theta II engine in the Vehicle, I would not have purchased or paid for the Vehicle.” (Plaintiff Declaration, ¶¶ 23, 25.)

Based on the foregoing, the Court first finds that Defendant meets its burden as the moving party of demonstrating that Plaintiff does not have evidence of damages. “The defendant can satisfy its burden by presenting evidence that negates an element of the cause of action or evidence that the plaintiff does not possess and cannot reasonably expect to obtain evidence needed to support an element of the cause of action. (Miller v. Department of Corrections (2005) 36 Cal.4th 446, 460, 30 Cal.Rptr.3d 797, 115 P.3d 77.) If the defendant meets this burden, the burden shifts to the plaintiff to set forth “specific facts” showing that a triable issue of material fact exists. (Code Civ. Proc., § 437c, subd. (p)(2).)” (Securitas Sec. Servs. USA, Inc. v. Superior Ct., (2011) 197 Cal. App. 4th 115, 120.)

Second, the Court finds that pursuant to Fragale, Plaintiff’s declaration is insufficient to raise a triable issue as to whether Plaintiff suffered damages as a result of Defendant’s conduct. Specifically, Plaintiff both states that she believed the purchase price of the Vehicle initially was fair, and that “in retrospect,” she believed the Vehicle was both “worthless” “or worth substantially less.” Such statements are vague and unclear as to whether Plaintiff suffered any out-of-pocket damages resulting from Defendant’s allegedly fraudulent conduct.

Because the Court should find that Plaintiff does not meet her burden of submitting evidence as to damages and damages is an element of a claim for fraud (see Lazar v. Superior Court (1996) 12 Cal.4th 631, 638 [holding that “resulting damage” is an element of fraud]), the Court GRANTS Defendant’s Motion as to the sixth cause of action.

Punitive Damages

Defendant contends that summary adjudication must also be granted as to Plaintiff’s claim for punitive damages because punitive damages are not available under Song-Beverly Act claims and summary adjudication on Plaintiff’s fraud claim is warranted. (Motion, 15:5-16:8.)

Under Civil Code section 1794, punitive damages are not listed as one of available remedies for a Plaintiff in a lemon law action. Further, case law has interpreted the civil penalties available under Civil Code section 1794(d) to punitive damages. (see Kwan v. Mercedes-Benz of North America, Inc. (1994) 23 Cal.App.4th 174, 184.)

As discussed above, the Court grants summary adjudication on Plaintiff’s sixth cause of action for fraud. The Opposition does not respond to Defendant’s statutory argument that punitive damages are also unavailable as a general matter for lemon law cases.

Thus, because summary adjudication on Plaintiff’s fraud claim is warranted and Plaintiff does otherwise have evidence supporting her punitive damages claim, the Court also GRANTS summary adjudication on Plaintiff’s claim for punitive damages.

Defendant is to give notice.