Judge: Serena R. Murillo, Case: 23STCV08871, Date: 2023-10-23 Tentative Ruling
Case Number: 23STCV08871 Hearing Date: October 23, 2023 Dept: 31
TENTATIVE
Defendant General
Motor, LLC’s demurrer is OVERRULED. Defendant’s motion to strike is DENIED.
Legal Standard
Demurrer
A demurrer for sufficiency tests
whether the complaint states a cause of action. (Hahn v. Mirda (2007) 147 Cal.App.4th 740, 747.)
When considering demurrers, courts read the allegations liberally and in
context. (Taylor v. City of Los Angeles Dept. of Water and Power (2006) 144 Cal.App.4th 1216,
1228.) The court “treat[s] the demurrer as admitting all material facts
properly pleaded, but not contentions, deductions or conclusions of fact or law
….” (Berkley v. Dowds (2007) 152 Cal.App.4th 518, 525).) 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. (Code Civ. Proc., §§ 430.30, 430.70.) 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, 147 Cal.App.4th at 747.)
Motion
to Strike
“The court may,
upon a motion made pursuant to Section 435, or at any time in its discretion,
and upon terms it deems proper: (a) Strike out any irrelevant, false, or
improper matter inserted in any pleading. (b) Strike out all or any part of any
pleading not drawn or filed in conformity with the laws of this state, a court
rule, or an order of the court.” (Code Civ. Proc., § 436.) The
defects must be apparent on the face of the challenged pleading. (Code
Civ. Proc., § 437.)
Meet and Confer
The
demurrer and motion to strike are accompanied by the declaration of Arash Yaraghchian,
which satisfies
the meet and confer requirements. (Code Civ. Proc. §§ 430.41; 435.5(a).)
Discussion
A.
Demurrer
Defendant
demurs to the first through third causes of action for Fraudulent
Concealment and Misrepresentation, Negligent Misrepresentation, and Business
and Professions Code section 17200, arguing they fail to state a cause of action.
I.
First Cause of Action for Fraudulent
Concealment and Misrepresentation
“The elements of
fraud, which give rise to the tort action for deceit, are (a) misrepresentation
(false representation, concealment, or nondisclosure); (b) knowledge of falsity
(or ‘scienter’); (c) intent to defraud, i.e., to induce reliance; (d) justifiable
reliance; and (e) resulting damage.” (Lazar v.
Superior Court (1996) 12 Cal.4th 631, 645.)
“‘[T]he
elements of an action for fraud and deceit based on a 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, Inc. (2011) 198 Cal.App.4th 230, 248.)
“[F]raud
must be pled specifically; general and conclusory allegations do not suffice.”
(Id.) To survive demurrer, plaintiff must plead
facts that “show how, when, where, to whom, and by what means the
representations were tendered.” (Hamilton v. Greenwich Investors XXVI, LLC
(2011) 195 Cal.App.4th 1602, 1614.)
“[T]he requirement of specificity is relaxed when the allegations
indicate that ‘the defendant must necessarily possess full information
concerning the facts of the controversy or when the facts lie more in the
knowledge of the opposite party.’ [Citation.]” (Tarmann v. State Farm
Mut. Auto. Ins. Co.¿(1991) 2 Cal.App.4th 153, 157.)
Defendant argues
Plaintiff failed to plead the alleged “fraud” with particularity, as she did
not identify a single representation by or from GM, nor did she allege facts
showing who, when, where, or how GM made any representation about her Bolt, or
how Plaintiff interacted with GM before or after the lease.
Defendant also argues that Plaintiff did
not identify a material fact regarding the Subject Vehicle that GM concealed or
suppressed, or the identity of the individuals at GM who concealed
facts, GM’s knowledge about alleged defects in Plaintiff’s Bolt at the time of
sale, or GM’s intent to induce reliance by Plaintiff to lease the specific Bolt
at issue.
Plaintiff points out that less
specificity is required regarding who made, authored or presented the relevant
brochures, marketing and advertising materials, because this information is
strictly within Defendant’s knowledge.
“‘[T]he courts should not ... seek to absolve the defendant
from liability on highly technical requirements of form in pleading. Pleading
facts in ordinary and concise language is as permissible in fraud cases as in
any others, and liberal construction of the pleading is as much a duty of the
court in these as in other cases.’” (Appollo
Capital Fund, LLC v. Roth Capital Partners, LLC (2007) 158 Cal.App.4th 226, 242.)¿The rule of specificity of
pleading is intended to apply only to affirmative representations and not to
fraud by concealment. (See Alfaro, supra, 171 Cal.App.4th at 1384.) As the Alfaro court observed: “it is harder to apply
[the requirement of specificity] to a case of simple nondisclosure. ‘How does
one show “how” and “by what means” something didn't happen, or “when” it never
happened, or “where” it never happened?’ ” (Ibid.; see Jones
v. ConocoPhillips (2011) 198 Cal.App.4th 1187, 1200 [concealment is
sufficiently pled when the complaint as a whole provides sufficient notice of the claims against defendants].)¿
The Complaint sufficiently alleges
GM concealed or suppressed the material fact that the Vehicle was equipped with
a defective battery that had shorter range and can cause fire. (Complaint, ¶¶ 8,
11-25.) Plaintiff sufficiently alleged
the “when,” which is before the purchase of the subject vehicle and during the
lease. (Complaint, ¶ 8.) The “how” is the failure to disclose the defect to
Plaintiff. (Id., ¶¶ 11-26.) Plaintiff’s Complaint also alleges that Defendant
knew about the battery defect since at least 2017 from its issuance of customer
satisfaction notices, software updates, internal investigations, recalls, and
other sources not available to consumers. (Id., ¶¶ 13-23.) GM knew or should
have known this information through its exclusive knowledge of
non-public information, including (inter alia) pre-release reviews and
testing, customer satisfaction notices, software updates, internal
investigations, and recalls as early as 2017. (Id.) Plaintiff also
alleges that the nondisclosure was material because if Plaintiff knew about the
defect, Plaintiff would not have leased the vehicle. (Id., ¶ 27.) As to the
intent to defraud, the complaint alleges that GM knew its concealment and
suppression of the battery defect would sell more vehicles. (Id., ¶ 34.)
Lastly, as to damages, the complaint alleges Plaintiff specifically wanted a
car that could drive 250 miles on a single charge, and she “never would have
leased the Vehicle had she been advised that she could not drive 259 miles on a
single charge, or had she been advised that the Vehicle could catch on fire and
burn down her home.” (Id., ¶ 12.)
Defendant argues in reply that
Plaintiff's Complaint does not include sufficient facts to support Plaintiff's
claim that GM had a duty to disclose under the theory that GM has exclusive
knowledge of material facts not known to Plaintiff.
“Although, typically, a duty to
disclose arises when a defendant owes a fiduciary duty to a plaintiff
[Citation], a duty to disclose may also arise when a defendant possesses or
exerts control over material facts not readily available to the plaintiff.” (Jones
v. ConocoPhillips Co. (2011) 198 Cal.App.4th 1187, 1199.) There are “four
circumstances in which nondisclosure or concealment may constitute actionable
fraud: (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.]” (Heliotis
v. Schuman¿(1986) 181 Cal.App.3d 646, 651.)
Moreover, Defendant argues, it is
clear from Plaintiff's factual allegations that GM’s knowledge of its vehicles'
alleged “battery defect” was not “exclusive.” That is, Plaintiff's recitation
of the public record is just that--public and available to Plaintiff and
others. (See Warner Construction Corp. v. City of Los Angeles (1970) 2
Cal. 3d 285, 294 (in the absence of a fiduciary or confidential relationship,
nondisclosure of material facts is actionable if the facts are only known to
defendant or not reasonably discoverable by Plaintiff).) Therefore, Defendant
argues that the very “facts” Plaintiff cites concerning alleged defects in GM
vehicles relating to the battery were not only known and accessible to NHTSA
and others, but as a public record, were available to Plaintiff as well.
The
complaint sufficiently alleges that GM owed a duty to disclose the battery defect and its
corresponding safety hazard to Plaintiff because GM possessed superior and
exclusive knowledge regarding the defect. (Compl., ¶ 31.) Next, the fact that other entities may have also known this
information would not defeat the “exclusive” element Defendant’s knowledge. Courts have not defined
"exclusive" literally, but have found the standard met if the
defendant had "superior" knowledge of a defect (Falk v. Gen.
Motors Corp. (N.D. Cal. 2007) 496 F.Supp.2d 1088, 1096-97.) Therefore, the
above allegations demonstrate that Defendant had exclusive knowledge of
material facts not reasonably discoverable to the plaintiffs which may impose
a¿duty¿to disclose. (LiMandri v.¿Judikins¿(1997) 52
Cal. App. 4th 326, 337; see¿also Falk, supra, 496 F.Supp.2d at
1096¿[manufacturer had exclusive knowledge based on aggregate data from
dealers, pre-release testing, and complaints from customers].)¿¿
As such, the Court finds the first cause of action is
sufficiently pled, and thus, Defendant’s demurrer as to the first cause of
action is OVERRULED.
II.
Second Cause of Action for Negligent Misrepresentation
Defendant argues the second cause of
action for negligent misrepresentation fails to state a cause of action because
Plaintiff did not identify any misrepresentation that GM allegedly made.
The elements
of¿negligent¿misrepresentation¿are “(1) the misrepresentation of a past or
existing material fact, (2) without reasonable ground for believing it to be
true, (3) with intent to induce another's reliance on the fact misrepresented,
(4) justifiable reliance on the misrepresentation, and (5) resulting damage.” (Apollo
Capital Fund LLC¿v. Roth Capital Partners, LLC (2007) 158 Cal.App.4th 226,
243.)¿Negligent¿misrepresentation¿claims must be alleged with the same factual
specificity as intentional misrepresentation claims.¿(See¿Small v.¿Fritz
Companies, Inc. (2003) 30 Cal.4th 167, 184;¿Cadlo v.
Owens-Illinois, Inc.¿(2004) 125 Cal.App.4th 513, 519.)
In opposition, Plaintiff relies on
the representations made in the brochure for this negligent misrepresentation
cause of action. (Compl., ¶ 8.) The complaint alleges Defendant Manufacturer
through its advertisements and publications made representations that the
Vehicle’s range on a single charge was 259 miles. (Id.)
Defendant argues in reply that a transaction giving rise
to a duty to disclose must necessarily arise from direct dealings between the
plaintiff and defendant; it cannot arise between the defendant and the public
at large. (Bigler-Engler v. Breg, Inc. (2017) 7 Cal.App.5th 276, 312.)
Bigler involved
circumstances in which the plaintiffs alleged that a product manufacturer
defendant engaged in fraudulent concealment by intentionally concealing facts
of a study that showed that the product could cause injury. (Bigler,
7 Cal.App.5th at pp. 290-291, 311.) The defendant manufacturer argued
that it had no duty to disclose because there was no transactional relationship
between the plaintiffs and the manufacturer. (Id. at p. 291,
311.) The Court of Appeal agreed with defendant and ruled that the
evidence did not support the jury’s verdict in favor of the plaintiff because
there was no evidence of a relationship between the plaintiff and the
manufacturer sufficient to give rise to a duty to disclose. (Id. at
p. 314.) The Court specifically noted that the seller of the device had
obtained it from the manufacturer and had maintained the device for rental to
its patients for years prior to the sale to the plaintiffs and that the manufacturer
had not interacted with the plaintiff in any way. (Id. at pp.
311-315.)
Bigler is
distinguishable from the facts at hand. Here, Plaintiff alleges that all owners and lessees of 2021
General Motors vehicles receive multiple express warranties directly from GM,
LLC for periods of up to 8 years or 100,000 miles. Owners and lessees receive
these express warranties solely based on their status as owners and/or lessees
and without regard to who they acquired the vehicle from or the terms of acquisition.
By issuing the express warranties directly to Plaintiff, GM undertook to
preserve or maintain the utility or performance of Plaintiff’s vehicle or
provide compensation if there was a failure in such utility or performance. (Id., ¶ 9.) Plaintiff further alleges that she
delivered the Subject Vehicle to Defendant’s authorized repair facilities for
repair on multiple occasions. (Id., ¶¶ 57, 84.) Plaintiff further
alleges that she was satisfied by the representations and publications regarding
the Subject Vehicle and relied on these materials in deciding to lease the
Subject Vehicle. (Id., ¶¶ 8, 41.)
On demurrer, the
court treats all properly pled allegations of fact as admitted. (Doe,
supra, 42 Cal.4th at p. 550; Berkley, supra, 152
Cal.App.4th at p. 525.) Unlike in Bigler, Plaintiff alleges that
she had direct relations with Defendant GM, including through GM’s Warranty
over the Subject Vehicle. These allegations are sufficient for Plaintiff
to plead that the alleged misrepresentation arose from direct dealings between
Defendant and Plaintiff, and Defendant’s argument thus is unavailing.
The demurrer is OVERRULED as to the
negligent misrepresentation cause of action.
III.
Third
Cause of Action Under the Unfair Competition Law
Defendant also demurs to the third cause
of action, arguing that (1) Plaintiff fails to establish the alleged
unlawfulness of GM’s conduct with sufficient facts; (2) Plaintiff fails to
establish the requisite standing to recover under the UCL as the Complaint as a
whole fails to allege any facts in support of the contention that Plaintiff has
suffered an injury in fact and has lost money or property as a result of unfair
competition as required pursuant to Section 17204; and (3) Plaintiff made no
showing that she can plead the facts necessary to constitute a cause of action
under the UCL for injunctive relief.
California Business and Professions Code section
17200 prohibits “any unlawful, unfair or fraudulent business act or practice.”
(Bus. & Prof. Code § 17200; see Clark v. Superior Court (2010) 50
Cal.4th 605, 610.) “An unlawful business practice or act is an act or practice,
committed pursuant to business activity, that is at the same time forbidden by
law.” (Klein v. Earth Elements, Inc. (1997) 59 Cal.App.4th 965, 969.)¿As
for fraud, to establish a fraudulent practice under the UCL, the plaintiff must
show that members of the public are likely to be deceived. (See West v.
JPMorgan Chase Bank, N.A. (2013) 214 Cal.App.4th 780, 806.)¿Lastly, “[a]
business practice is unfair within the meaning of the UCL if it violates
established public policy or if it is immoral, unethical, oppressive or
unscrupulous and causes injury to consumers which outweighs its benefits.” (McKell
v. Washington Mutual, Inc. (2006) 142 Cal.App.4th 1457, 1473.)
As to the argument that Plaintiff fails to plead
sufficient facts for this cause of action, because Defendant’s demurrer to the
fraud causes of action was overruled, and because the complaint also alleges violations
under the Song-Beverly Act, which Defendant has not challenged, this argument
fails. “By proscribing ‘any unlawful’ business practice, ‘[Business and
Professions Code] section 17200 ‘borrows’ violations of other laws and treats
them as unlawful practices’ that the unfair competition law makes independently
actionable. [Citation.] ‘Thus, a violation of another law is a predicate for
stating a cause of action under the UCL's unlawful prong.’ [Citation.]” (Rubenstein
v. The Gap, Inc. (2017) 14 Cal.App.5th 870, 879–880.)
Moreover, as discussed above, Plaintiff properly
alleges an injury, as she alleges she
would never have leased the Vehicle had she been advised that she could not
drive 259 miles on a single charge. (Compl., ¶ 12.)
A private person now has standing to assert a UCL
claim only if he or she (1) “has suffered injury in fact,” and (2) “has lost
money or property as a result of the unfair competition.” (Hall, supra,
at p. 852, citing Bus. & Prof. Code, § 17204.) “There are
innumerable ways in which economic injury from unfair competition may be shown.
A plaintiff may (1) surrender in a transaction more, or acquire in a
transaction less, than he or she otherwise would have; (2) have a present or
future property interest diminished; (3) be deprived of money or property to
which he or she has a cognizable claim; or (4) be required to enter into a
transaction, costing money or property, that would otherwise have been
unnecessary.” (Kwikset Corp. v. Superior Court (2011) 51 Cal.4th
310, 323.) Thus, Plaintiff acquired less in a transaction than she would
otherwise have. Further, the complaint alleges that as a result of GM’s
unfair, deceptive and/or fraudulent business practices, Plaintiff has suffered
an ascertainable loss of money and/or property and/or loss in value. (Compl., ¶ 26.)
Next, Defendant argues Plaintiff does not
identify any particular activity against which an injunction could be enforced
as a preventative measure. Indeed, Plaintiff specifically alleges that GM has
already acknowledged the Battery Defect in Bolt vehicles and issued a recall.
(Compl., ¶¶ 20-23.) Defendant argues the UCL provides two remedies to redress
its violations: (1) injunctive relief “to ‘prevent’ practices of unfair
competition” and (2) restitution “to ‘restore to any person in interest’ any
money or property acquired through unfair practices.” (Korea Supply Co. v.
Lockheed Martin Corp., (2003) 29 Cal. 4th 1134, 1147 (quoting Bus. & Prof.
Code §17203)).
However, the
complaint also seeks equitable damages under the UCL. Demurrers do not lie as to only parts of causes of action,
where some valid claim is alleged. (Poizner v. Fremont General Corp. (2007)
148 Cal.App.4th 97, 119 (“A demurrer must dispose of an entire cause of action
to be sustained.”)
The demurrer to the UCL cause of action
is OVERRULED.
B.
Motion to Strike
Defendant
contends that punitive damages are not available under the Song-Beverly Act,
Plaintiff fails to properly plead her fraud causes of action, and Plaintiff
fails to plead malice, or oppression, and thus, the punitive damages claim
fails.
To state a claim for
punitive damages under Civil Code section 3294, a plaintiff must allege
specific facts showing that the defendant has been guilty of malice, oppression
or fraud. (Smith v. Superior Court (1992) 10 Cal. App. 4th 1033, 1042.)
The basis for punitive damages must be pled with specificity; conclusory
allegations devoid of any factual assertions are insufficient. (Id.) A motion
to strike may lie where the facts alleged, if proven, would not support a
finding that the defendant acted with malice, fraud or oppression. (Turman
v. Turning Point of Central California (2010) 191 Cal. App. 4th 53, 63.)
As the
Court has overruled the fraud causes of action, the allegations relating to
fraud are sufficient to withstand the pleading requirements for punitive
damages. The motion to strike is therefore denied.
Conclusion
Based on the foregoing, Defendant’s
demurrer is OVERRULED. Defendant’s motion to strike is DENIED.
Moving party is
ordered to give notice.