Judge: Stephen Morgan, Case: 22AVCV00901, Date: 2023-04-25 Tentative Ruling

Case Number: 22AVCV00901    Hearing Date: April 25, 2023    Dept: A14

Background

This is a Lemon Law action. Plaintiff Jonathan Hernandez (“Plaintiff”) alleges that on March 19, 2018, he purchased a 2017 Chevrolet Silverado, VIN: 3GCUKTECXHG343180 (the “Subject Vehicle”), and that Defendant General Motors, LLC (“Defendant”) issued various warranties, include a written warranty, a 3-year/36,000 mile express bumper to bumper warranty, a 5-year/60,000 mile powertrain warranty, and various emissions warranties. Plaintiff further alleges that Defendant warranted the Subject Vehicle and agreed to preserve or maintain the utility or performance of Plaintiff’s vehicle or to provide compensation if there was a failure in such utility or performance. Plaintiff presents that the Subject Vehicle was delivered to him with serious defects and nonconformities to the warranty and developed other serious defects and nonconformities to warranty including, but not limited to, electrical, structural, emission, transmission, and engine system defects; Defendant was unable to repair the Subject Vehicle after a number of reasonable opportunities; and Defendant failed to either promptly replace the new motor vehicle or to promptly make restitution in accordance with the Song-Beverly Act.

On November 02, 2022, Plaintiff filed his Complaint alleging four cases of action for: (1) Violation of Song-Beverly Act – Breach of Express Warranty; (2) Violation of Song-Beverly Act – Breach of Implied Warranty; (3) Violation of the Song -Beverly Act Section 1793.2; and (4) Fraud – Fraudulent Inducement – Concealment.

On January 23, 2023, Defendant filed its first Demurrer with Motion to Strike.

On January 24, 2023, Plaintiff filed his First Amended Complaint (“FAC”).

On March 22, 2023, Defendant filed this instant Demurrer with Motion to Strike to the FAC.

On April 12, 2023, Plaintiff filed his Oppositions.

On April 19, 2023, Defendant filed its Replies. “. . .[A]ll reply papers [shall be filed with the court and a copy served on each party] at least five court days before the hearing.” (Cal. Code Civ. Proc. § 1005(b).) “Section 1013, which extends the time within which a right may be exercised or an act may be done, does not apply to a notice of motion, papers opposing a motion, or reply papers governed by this section.” (Ibid.) The hearing is set for April 25, 2023. Accordingly, Replies were due by April 18, 2023 and Defendant’s Replies are untimely. “No paper may be rejected for filing on the ground that it was untimely submitted for filing. If the court, in its discretion, refuses to consider a late filed paper, the minutes or order must so indicate.” (Cal. Rules of Court, Rule 3.1300(d).) The Court, in its discretion, considers the late filed Replies.

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Legal Standard

Standard for 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.)¿ In a demurrer proceeding, the defects must be apparent on the face of the pleading or by proper judicial notice.¿ (CCP § 430.30(a).)¿A demurrer tests the pleadings alone and not the evidence or other extrinsic matters.¿ (SKF Farms v. Superior Court¿(1984) 153 Cal. App. 3d 902, 905.)¿ Therefore, it lies only where the defects appear on the face of the pleading or are judicially noticed.¿¿(Id.)¿¿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.)¿¿¿¿¿¿ ¿¿¿¿¿¿

A general demurrer admits the truth of all factual, material allegations properly pled in the challenged pleading, regardless of possible difficulties of proof.¿¿(Blank,¿supra, 39 Cal.3d at p. 318.)¿ Thus, no matter how unlikely or improbable, plaintiff’s allegations must be accepted as true for the purpose of ruling on the demurrer.¿¿(Del E. Webb Corp. v. Structural Materials Co.¿(1981) 123 Cal.App.3d 593, 604.)¿ Nevertheless, this rule does not apply to allegations expressing mere conclusions of law, or allegations contradicted by the exhibits to the complaint or by matters of which judicial notice may be taken.¿¿(Vance v. Villa Park¿Mobilehome¿Estates¿(1995) 36 Cal.App.4th 698, 709.)¿ A general demurrer does not admit contentions, deductions, or conclusions of fact or law alleged in the complaint; facts impossible in law; or allegations contrary to facts of which a court may take judicial notice.¿¿(Blank,¿supra, 39 Cal.3d at p. 318.)¿¿¿¿¿¿¿ ¿¿¿¿¿¿¿ 

Pursuant to¿Code Civ. Proc.¿§430.10(e), the party against whom a complaint has been filed may object by demurrer to the pleading on the grounds that the pleading does not state facts sufficient to constitute a cause of action.¿ It is an abuse of discretion to sustain a demurrer without leave to amend if there is a reasonable probability that the defect can be cured by amendment.¿¿(Schifando¿v. City of Los Angeles¿(2003) 31 Cal.4th 1074, 1082,¿as modified (Dec. 23, 2003).)¿¿¿¿¿¿¿ ¿

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Standard for Motion to Strike – The court may, upon a motion, or at any time in its discretion, and upon terms it deems proper, strike any irrelevant, false, or improper matter inserted in any pleading. (Code Civ. Proc., § 436(a).) The court may also strike 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. (Id., § 436(b).) The grounds for a motion to strike are that the pleading has irrelevant, false or improper matter, or has not been drawn or filed in conformity with laws. (Id. § 436.) The grounds for moving to strike must appear on the face of the pleading or by way of judicial notice. (Id. § 437.)¿¿¿¿¿ ¿

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Meet and Confer Requirement¿– Before filing a demurrer or a motion to strike, the demurring or moving party is required to meet and confer with the party who filed the pleading demurred to or the pleading that is subject to the motion to strike for the purposes of determining whether an agreement can be reached through a filing of an amended pleading that would resolve the objections to be raised in the demurrer.¿ (Cal. Code Civ.¿Proc. § 430.41 and § 435.5.)¿

No meet and confer occurred. Counsel for Defendant, Jesse Valencia (“Valencia”), informs the Court that his office attempted to meet and confer with Plaintiff’s counsel to discuss the issues Defendant had with the FAC, but was unsuccessful in their meet and confer attempts. (Decl. Valencia ¶ 2.) Plaintiff’s counsel, Harry H. Terzian[1] (“Terzian”), presents that Defendant’s counsel did not contact his office or provide his office with the legal reasoning underlying Defendant’s Demurrer or Motion to Strike.

“A determination by the court that the meet and confer process was insufficient shall not be grounds to overrule or sustain a [demurrer/motion to strike].” (Cal. Code Civ. Proc. §§ 430.41(a)(4), 435.5(a)(4).)

Accordingly, the Court determines the motions on their merit.

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Discussion

Application –

i.        Demurrer

Defendant demurs only to the Fourth Cause of Action (Fraud - Fraudulent Inducement – Concealment).

Defendant presents that the three-year statute of limitations for fraud bars Plaintiff’s claim as he purchased the Subject Vehicle on March 19, 2018, but did not file his Complaint until November 02, 2022. Defendant argues that Plaintiff cannot invoke the delayed discovery rule because Plaintiff’s pleadings allege that the “Subject Vehicle was delivered to Plaintiff with serious defects” (FAC ¶¶ 11 and 81) and the delayed discovery rule tolls the applicable statute of limitations only if a plaintiff is unable to discover his cause of action with reasonable diligence, and to rely upon it, the plaintiff must plead “facts showing that [he] was not negligent in failing to make the discovery sooner and that [he] had no actual or presumptive knowledge of facts sufficient to put him on inquiry.”  (Demurrer 8:6-10 [citing Hobart v. Hobart Estate Co. (1945) 26 Cal.2d 412, 437 and Johnson v. Ehrgott (1934) 1 Cal.2d 136, 137].) Defendant further argues that the Fourth Cause of Action (Fraud - Fraudulent Inducement – Concealment) is not pled with the requisite specificity as Plaintiff failed to allege (1) the identity of the individuals at Defendant’s corporation who purportedly concealed material facts or made untrue representations about the Silverado (2) their authority to speak and act on behalf of Defendant, (3) Defendant’s knowledge about alleged defects in Plaintiff’s Silverado at the time of purchase, (4) any interactions with Defendant before or during the purchase of Plaintiff’s Silverado, or (5) Defendant’s intent to induce reliance by Plaintiff to purchase the specific Silverado at issue. Finally, Defendant presents that Plaintiff does not allege a transactional relationship between the parties. That is, Plaintiff’s FAC does not allege that Plaintiff purchased his Silverado directly from Defendant or otherwise entered into a transaction with Defendant, thus, Plaintiff has not alleged facts demonstrating a duty to disclose.

Plaintiff argues that the delayed discovery rule applies as Plaintiff has pled that Defendant concealed the Transmission defect since 2014 and that Plaintiff did not discover the true nature of the Transmission Defect until shortly before filing this lawsuit and could not have discovered, even with diligence, the nature of the concealed facts before, during, and after their purchase of the Subject Vehicle due to the fact that the information was internal and Defendant’s authorized repair facility continued to assert that such a defect could be fixed. Plaintiff emphasizes that though the Subject Vehicle was delivered with defects, Plaintiff did not learn about the defects until shortly before he filed the lawsuit. Regarding specificity of the pleadings, Plaintiff argues that it does not apply where the full information or the facts lie more in the knowledge of opposing parties and that there is a difference between “fraud” and fraudulent inducement/concealment. Plaintiff attempts to distinguish fraud from fraudulent concealment and inducement. Plaintiff believes that the FAC’s allegations are sufficient for the Fourth Cause of Action. Finally, Plaintiff argues that he does not need to show a fiduciary or direct relationship in a fraudulent concealment case were safety is an issue under Daugherty v. Am. Honda Motor Co. (2006) 144 Cal.App.4th 824 and that his Fourth Cause of action is properly pled under Defendant’s cited cases.

Defendant’s Reply reiterates that there was no fiduciary relationship between the parties and argues that Plaintiff offers no support for his argument that a Court should find an exception to the rule that absent a fiduciary relationship, the duty to disclose arises only when “ ‘the defendant makes representations but fails to disclose additional facts which materially qualify the facts disclosed, or which render the disclosure likely to mislead.’ ” (Reply 2:12-15 [citing Roddenberry v. Roddenberry (1996) 44 Cal.App.4th 634, 666].) Defendant also reiterates the argument that Plaintiff’s allegations fail to establish a fraud cause of action as it is not pled with the required specificity. Specifically, Defendant highlights that the FAC lacks allegations that Defendant knew about the defects in the Subject Vehicle, that Defendant had intent to defraud Plaintiff, and Plaintiff has not pled damages.

The sections in the FAC regarding delivery of the Subject Vehicle that concern Defendant read:

The Subject Vehicle was delivered to Plaintiff with serious defects. However, those defects were not made aware to Plaintiff until the vehicle began to manifest serious defects and nonconformities to warranty including, but not limited to, electrical, emission, engine, structural, and transmission system defects.

[. . .]

The Subject Vehicle was delivered to Plaintiff with serious defects. However, those defects were not made aware to Plaintiff until the vehicle began to manifest serious defects and nonconformities to warranty including, but not limited to, electrical, emission, engine, structural, and transmission system defects.

(FAC ¶¶ 11, 81.)

In determining a pleading’s effect, the allegations must be liberally construed, with a view to substantial justice between the parties. (Cal. Code Civ. Proc. § 452; see also Schnall v. Hertz Corp. (2000) 78 Cal.App.4th 1144, 1152 [“We construe the allegations of the complaint liberally  ‘ “ ‘with a view to substantial justice between the parties.’ ” ’].)

A liberal reading of these sections, as well as the other allegations in the FAC, supports an inference that Plaintiff purchased the Subject Vehicle, the Subject Vehicle contained the defects and/or nonconformities, Plaintiff began to experience the defects, and Plaintiff took the Subject Vehicle to Defendant’s authorized dealerships for repair, Defendant’s authorized dealerships contain repair facilities and such facilities could not rectify the damage. Only after attempting to correct the damage three times did Plaintiff filed his Complaint (FAC ¶¶ 62-64) and discovered the deception (FAC ¶ 67.)

A cause of action is presumed to accrue when the plaintiff's injury occurs. The plaintiff has the burden of rebutting the presumption by pleading and proving facts establishing delayed discovery of the injury. (Grisham v. Philip Morris U.S.A., Inc. (2007) 40 Cal.4th 623, 638.) To raise the issue of delayed discovery, a complaint must allege with particularity when the cause of action was discovered, the circumstances of the discovery, and that the claimant's failure to discover the cause of action earlier was “reasonable, justifiable and not a result of plaintiff's failure to investigate or to act.” (Dujardin v. Ventura County Gen. Hosp. (1977) 69 Cal.App.3d 350, 356; See also Fox v. Ethicon Endo-Surgery, Inc. (2005) 35 Cal.4th 797, 808 [“A plaintiff asserting delayed discovery, ‘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.’ ”].) Conclusory allegations will not withstand demurrer. (Grisham, supra, 40 Cal.4th at 638; Fox, supra, 25 Cal.4th at 808 [“In assessing the sufficiency of the allegations of delayed discovery, the court places the burden on the plaintiff to show diligence; conclusory allegations will not withstand demurrer.”].) Where a plaintiff successfully pleads the delayed discovery requirements, “the statute of limitations for that cause of action will be tolled until such time as a reasonable investigation would have revealed its factual basis.” (Fox, supra, 35 Cal.4th 797, 803.) If the claim was presented more than 6 months after the injury, and the plaintiff has not obtained either leave to present a late claim, relief from the claim requirements, or properly pled facts in the complaint establishing claim was timely due to delayed discovery, the complaint is subject to demurrer.

Defendant’s argument regarding the delayed discovery rule is only to the Fourth Cause of Action (Fraud - Fraudulent Inducement – Concealment). As such, the Court must also address another aspect of tolling. “A close cousin of the discovery rule is the well accepted principle. . .of fraudulent concealment. It has long been established that the defendant's fraud in concealing a cause of action against him tolls the applicable statute of limitations, but only for that period during which the claim is undiscovered by plaintiff or until such time as plaintiff, by the exercise of reasonable diligence, should have discovered it." (Bernson v. Browning-Ferris Industries (1994) 7 Cal.4th 926, 931 [internal quotation marks and citations omitted].) It appears that Plaintiff makes this argument in his Opposition. (See Opposition 2:21-27 [“Plaintiff did not discover the true nature of the Transmission Defect until shortly before filing this lawsuit and could not have discovered, even with diligence, the nature of the concealed facts before, during, and after their purchase of the Subject Vehicle, as Defendant concealed its internal data, consumer complaints, pre-release testing data, aggregate data from dealers to GM, dealership repair orders, and GM service bulletins. Moreover, Defendant’s authorized repair facility continued to assert that the Transmission Defect could be fixed, which further concealed the true nature of the Defect.”].)

"When a plaintiff alleges the fraudulent concealment of a cause of action, the same pleading and proof is required as in fraud cases: the plaintiff must show (1) the substantive elements of fraud, and (2) an excuse for late discovery of the facts. With respect to ... the belated discovery, the complaint must allege (1) when the fraud was discovered; (2) the circumstances under which it was discovered; and (3) that the plaintiff was not at fault for failing to discover it or had no actual or presumptive knowledge of facts sufficient to put him on inquiry." (Community Cause v. Boatwright (1981) 124 Cal.App.3d 888, 900 [internal citation omitted].) As for the specificity requirement for fraudulent concealment, “[l]ess specificity is required when it ‘appears from the nature of the allegations that the defendant must necessarily possess full information concerning the facts of the controversy.’ ” (Committee on Children's Television, Inc. v. General Foods Corp. (1983) 35 Cal.3d 197, 216 [quoting Bradley v. Hartford Acc.& Indem. Co. (1973) 30 Cal.App.3d 818, 825].) The specificity requirement is greatly relaxed or eliminated under circumstances where the defendant must necessarily possess superior information of the fraud. (Id, at 216-217; see also Silberg v. Anderson (1990) 50 Cal.3d 205, 212-213.

Plaintiff alleges the following forms of tolling: (1) equitable tolling; (2) the delayed discovery rule; (3) fraudulent concealment; (4) equitable estoppel; (5) the repair doctrine; and (6) tolling under American Pipe & Construction Co. v. Utah (1974) 414 U.S. 538, 554 (“American Pipe”).

Regarding estoppel, “[a] party claiming an estoppel must prove four elements: (1) the party to be estopped must know the facts; (2) the estopped party must intend that his conduct shall be acted upon, or must act in a way that causes the other party to believe that was his intent; (3) the party asserting estoppel must be unaware of the true facts; and (4) he must detrimentally rely on the other party's conduct.” (Estate of Bonzi (2013) 216 Cal.App.4th 1085, 1106.) “Tolling during a period of repairs generally rests upon the same legal basis as does an estoppel to assert the statute of limitations, i.e., reliance by the plaintiff on the words or actions of the defendant that repairs will be made.” (Cardinal Health (2008) 169 Cal.App.4th 116, 133-34.).

Plaintiff does not sufficiently allege facts to support an assertion of tolling under American Pipe, equitable tolling, or delayed discovery rule. It appears from Plaintiff’s arguments in his Opposition, that Plaintiff believes that tolling occurred due to fraudulent concealment. (See Opposition at V.)

Regarding fraudulent concealment, Plaintiff pleads that (1) “Defendant owed a continuous duty to disclose to Plaintiff the accurate character, quality, and nature of GENERAL MOTORS LLC vehicles suffering from the Transmission Defect, and the inescapable repairs, costs, and damages resulting from the Transmission Defect;” (2) Silence, where there is a duty to speak, may be the basis for equitable estoppel, citing Dettamanti v. Lompoc Union High School Dist. Of Santa Barbara County (1956) 143 Cal.App.2d 715, 720 (“The basis for an estoppel may be found in the failure of the party sought to be estopped to speak when he is under a duty to speak as well as in his speaking falsely and in a manner which tends to deceive.”); (3) “Plaintiff is informed and believe, and based thereon allege, that, prior to placing the [vehicles with the 8L90 and 8L45 transmissions] in the stream of commerce, GENERAL MOTORS LLC became aware of the Transmission Defect through sources not available to Plaintiff, including, but not limited to, preproduction testing, pre-production design failure mode and analysis data, production design failure mode and analysis data, early consumer complaints made exclusively to GENERAL MOTORS LLC’S network of dealers and directly to GENERAL MOTORS LLC, aggregate warranty data compiled from GENERAL MOTORS LLC’s network of dealers, testing conducted by GENERAL MOTORS LLC in response to consumer complaints, and repair order and parts data received by GENERAL MOTORS LLC from GENERAL MOTORS LLC’s network of dealers. On information and belief, GENERAL MOTORS LLC actively monitors and records consumer complaints made to GENERAL MOTORS LLC’s network of dealers as well as all service and repair work done related to the Transmission Defect at its network of dealers;” and (4) Defendant began marketing  the vehicles, including press releases in which vehicles with the 8L90 and 8L45 transmissions were paraded as high quality, including subject vehicle, in 2014 and continued to do so despite its knowledge of the transmission defect in these vehicles. Plaintiff further pleads that “Plaintiff could not have discovered through the exercise of reasonable diligence that Defendant was concealing material information about the Transmission Defect. See Cal. Com. Code § 2725(2).” (FAC ¶ 68.) Plaintiffs timeline for attempts to repair the defects/nonconformities is: (1) February 2021, Plaintiff first presented the Subject Vehicle for repairs and Defendant’s dealership told Plaintiff that the vehicle was operating normally and no repairs were necessary; (2) Plaintiff presented the Subject Vehicle in January 2022 where Defendant’s dealership replaced the Camshaft and set the timing, reinstalled the oil pump, pan, cover, both cylinder heads with new lifters, and all remaining components as well as informed Plaintiff that the vehicle required no further repairs and was operating normally again. (FAC ¶¶ 63-64.) Plaintiff alleges discovery of the fraud only upon filing of the Complaint. (FAC ¶67.)

The Court must accept these allegations as true for the purposes of a demurrer. (See Legal Standard, ante.) It appears Plaintiff has successfully pled an excuse for late discovery of the facts. It also appears, based on the relaxed standards for fraudulent concealment, that Plaintiff has pled their claim with the requisite specificity. The Court next turns to the substantive elements that make up Plaintiff’s claim,

“[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.)

“A duty to speak may arise in four ways: it may be directly imposed by statute or other prescriptive law; it may be voluntarily assumed by contractual undertaking; it may arise as an incident of a relationship between the defendant and the plaintiff; and it may arise as a result of other conduct by the defendant that makes it wrongful for him to remain silent.” (SCC Acquisitions, Inc. v. Central Pacific Bank (2012) 207 Cal.App.4th 859, 860.)

Plaintiff does not allege a fiduciary relationship between the parties. Plaintiff believes such an allegation is not needed as there is a safety issue, citing Daugherty v. Am. Honda Motor Co. (2006) 144 Cal.App.4th 824 (“Daugherty”).

Daugherty does not involve fraudulent concealment. Specifically, Daugherty asserted causes of action for breach of express warranty; violation of the Magnuson-Moss Warranty—Federal Trade Commission Improvement Act (15 U.S.C. § 2301 et seq.); unlawful, unfair and fraudulent business practices in violation of the unfair competition law; and violation of the Consumers Legal Remedies Act (Civ. Code, § 1750 et seq.) (“CLRA”). (See Daugherty, supra, 144 Cal.App.4th at 829.) A discussion of fraudulent concealment occurs in the context of Outboard Marine Corp. v. Superior Court (1975) 52 Cal.App.3d 30, but does not discuss fiduciary relationships. The citation in Daugherty to Bardin v. DaimlerChrysler Corp. (2006) 136 Cal.App.4th 1255, 1261-62 (“Bardin”), which Plaintiff relies on, reads: “The complaint is devoid of factual allegations showing any instance of physical injury or any safety concerns posed by the defect. (See Bardin, supra, 136 Cal.App.4th at pp. 1261–1262, 1270 [plaintiffs alleged the manufacturer knew and concealed fact that tubular steel exhaust manifolds prematurely cracked and failed much earlier than conventional cast iron manifolds; plaintiffs did not allege any personal injury or safety concerns and did not allege use of the manifolds violated any warranty or other agreement].)” Bardin also relates to a CLRA claim and not one for fraudulent concealment under Cal. Civ. Code § 1710. The Bardin Court further states: “ ‘It is fundamental that every affirmative misrepresentation of fact works a concealment of the true fact. … [¶] Fraud or deceit may consist of the suppression of a fact by one who is bound to disclose it or who gives information of other facts which are likely to mislead for want of communication of that fact.’ ” (Bardin, supra, 136 Cal.App.4th at 1276.)

California appellate courts have interpreted Daugherty as “holding the practice proscribed by Civil Code section 1770, subdivision (a)(7) ‘included “a proscription against a concealment of the characteristics, use, benefit, or quality of the goods contrary to that represented.” [Citation.] The court identified two categories of actionable nondisclosures by stating, ‘although a claim may be stated under the CLRA in terms constituting fraudulent omissions, to be actionable the omission must be [1] contrary to a representation actually made by the defendant, or [2] an omission of a fact the defendant was obliged to disclose.’ [Citation.]” (Gutierrez v. Carmax Auto Superstores California (2018) 19 Cal.App.5th 1234, 1254.)  Examining both federal and California appellate court decision discussing safety concerns, the Gutierrez Court held: “a duty to disclose material safety concerns ‘can be actionable in four situations: (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; or (4) when the defendant makes partial representations but also suppresses some material fact.’ [Citation.]” (Id. at 1260.)

Plaintiff’s FAC addresses the safety risk in various paragraphs: 

In fact, the Transmission Defect in the 8L90 and 8L45 transmissions causes unsafe conditions, including, but not limited to, the Subject Vehicle suddenly lurching forward, sudden acceleration, delayed acceleration, and sudden loss of forward propulsion. These conditions present a safety hazard because they severely affect the driver’s ability to control the car’s speed, acceleration, and deceleration. As an example, these conditions may make it difficult to safely merge into traffic, and drivers have reported sudden lurching into intersections when attempting to gradually accelerate from a stopped position and other dangerous driving conditions. Even more troubling, the Transmission Defect can cause the vehicle to delay downshifting and decelerating when the brakes are depressed. 

[. . .]

The fact that the 8L90 or 8L45 transmissions installed in the Subject Vehicle is defective is also material because it presents a safety risk and places the driver and occupants at risk of serious injury or death. Because of the Transmission Defect, the Subject Vehicle may suddenly shift harshly or stall, thereby causing an accident. Drivers and occupants of the Subject Vehicle are at risk for rear-end collisions and other accidents caused by the Transmission Defect, and the general public is also at risk for being involved in an accident with a Subject Vehicle. . .

(FAC ¶¶ 32, 125.)

Plaintiff alleges that despite this risk, Defendant intentionally marketed the 8L90 transmission with affirmative misrepresentations such as being “tuned for world-class shift-response times;” “deliver[ing] shift performance that rivals the dual-clutch/semi-automatic transmissions found in many supercars – but with the smoothness and refinement that comes with a conventional automatic fitted with a torque converter;” and, in the context of a 2015 Corvette which had the same transmission, as having “comfort and drivability[,]” “lightning-fast shifts[,]” and “enhanc[ed] refinement, particularly during low-speed gear changes.” (FAC ¶¶ 28-31.)

Plaintiff has pled that the defect was a safety defect that could lead to serious injury. Plaintiff has also pled that Defendant had exclusive knowledge of the material facts. (See Complaint ¶¶ 25, 35, 126.) As such, an allegation of a fiduciary relationship is not needed between the parties.

Plaintiff has pled that he was unaware of the fact as it was concealed (see FAC [generally]) and would not have purchased the Subject Vehicle had he known about the Transmission Defect (FAC ¶¶ 12, 125, 139). The Court notes that the FAC at para. 125 concedes that Plaintiff may have still purchased the Subject Vehicle, but not at the marketed price. Plaintiff further alleges that he has suffered damages in the form of inescapable repairs and costs. (FAC ¶ 75.)

As such, Plaintiff’s FAC has pled that (1) Defendant concealed or suppressed a material fact; (2) Defendant was under a duty to disclose the fact to the plaintiff; (3) Defendant must have intentionally concealed or suppressed the fact with the intent to defraud not only Plaintiff, but the public through its press releases; (4) Plaintiff was unaware of the defect and would not have acted as he did if he had known of the it; and (5) as a result of the concealment or suppression of the fact, the plaintiff must have sustained damage. (See Boschma, supra, 198 Cal.App.4th 230, 248.)

Accordingly, the Demurrer is OVERRULED.

ii.      Motion to Strike

Defendant seeks to strike punitive damages from Plaintiff’s Prayer for Relief.

Defendant presents that punitive damages are not available under the Song-Beverly Act as the statute limits recovery to a refund of the purchase price paid and payable (or replacement of the subject vehicle), plus—under certain circumstances—a Civil Penalty not to exceed two times Plaintiff’s actual damages. Defendant believes that, Song-Beverly Act aside, the FAC fails to state facts sufficient to support punitive damages as it does not prove that Defendant has been guilty of oppression, fraud, or malice as defined in Cal. Civ. Code § 3294(c). Defendant also argues that, as the Fourth Cause of Action (Fraud - Fraudulent Inducement – Concealment) fails, it cannot support punitive damages.

Plaintiff presents that his FAC supports punitive damages as it is only requested for the Fourth Cause of Action (Fraud - Fraudulent Inducement – Concealment) and he has properly pled facts from which it can reasonably be inferred that Defendant acted with malice, oppression, or fraud. Plaintiff reiterates arguments associated with the Demurrer in his Opposition to the Motion to Strike.

Defendant, in Reply, argues that Plaintiff has not alleged facts sufficient to support punitive damages under either the claim for fraud or Cal. Civ. Code § 3924, and that punitive damages are not available under Plaintiff’s other claims.

The Court has overruled Defendant’s Demurrer. As such, Defendant’s argument regarding (Fraud - Fraudulent Inducement – Concealment) is now inapplicable to this Motion to Strike.

Punitive damages under Cal. Civ. Code § 3294 are allowed where it is proven by clear and convincing evidence that the defendant had been guilty of fraud. (See Cal. Civ. Code § 3294(a).) Because fraud is properly presented here, see ante, Defendant’s argument that punitive damages are unsupported by the allegations is no longer applicable.

The issue presented before this Court is whether a plaintiff can recover compensatory damages under the Song-Beverly Act as well as punitive damages for fraud. The California Courts of Appeal have addressed this issue. “ ‘Fraud’ means an intentional misrepresentation, deceit, or concealment of a material fact known to the defendant with the intention on the part of the defendant of thereby depriving a person of property or legal rights or otherwise causing injury. (Id. at (a)(3).)

Court of Appeal of California, Fourth Appellate District holds:

We accept that a plaintiff cannot recover both a statutory penalty and punitive damages based on the same conduct. (See part VIII, post.) The present question, however, is whether a plaintiff can recover compensatory damages on one claim and punitive damages on a different claim. That issue simply was not presented in Fineman. As the treble damages were $19.5 million, evidently the compensatory damages on the antitrust claim were $6.5 million; the compensatory damages on the state law claim were $17.7 million. Thus, the plaintiff had no incentive to try to combine compensatory damages on the antitrust claim with punitive damages on the state law claim.

Ford also cites Quest Medical, Inc. v. Apprill (5th Cir. 1996) 90 F.3d 1080, which was decided under Texas law. (See id. at pp. 1089–1090, 1093.) In Texas, however, attorney fees may be awarded as an element of punitive damages. (Canales v. Zapatero (Tex.App. 1989) 773 S.W.2d 659, 660; Carter v. Barclay (Tex.Civ.App. 1972) 476 S.W.2d 909, 917.) Hence, an award of both attorney fees and punitive damages can constitute a double recovery. (JHC Ventures, L.P. v. Fast Trucking, Inc. (Tex.App. 2002) 94 S.W.3d 762, 774–776, disapproved on other grounds in Medical City Dallas, Ltd. v. Carlisle Corp. (Tex. 2008) 251 S.W.3d 55, 62.) That is not the law in California.

Ford also cites Celeritas Technologies, Ltd. v. Rockwell Internat. Corp. (Fed. Cir. 1998) 150 F.3d 1354, cert. den. (1999) 525 U.S. 1106. There, however, the plaintiff had stipulated before trial that, “to simplify the trial and avoid a duplicative recovery,” it would accept the award on either its breach of contract, misappropriation of trade secrets, or patent infringement theory, whichever was highest. (Id. at p. 1357.) The appellate court held that, because of its stipulation, the plaintiff could not recover both the compensatory damages awarded for breach of contract and the punitive damages awarded for misappropriation. (Id. at p. 1362.) The Bowsers entered no such stipulation.

We therefore conclude that the Bowsers are entitled to compensatory damages (and attorney fees) under the Song-Beverly Act as well as punitive damages for fraud.

(Bowser v. Ford Motor Co. (2022) 78 Cal.App.5th 587, 626-27.)

Court of Appeal of California, Third Appellate District holds:

Ford also argues that “a defendant‘s conduct is ‘substantially the same’ when it is part of a ‘unified course of conduct,’” “even when multiple and distinct acts, giving rise to claims under different legal theories, are involved.” And because the “facts” developed from the evidence of its corporate communications overlap to show reprehensibility for punitive damages and willfulness for the Song-Beverly Act violation, both awards therefore address substantially the same conduct, or a unified course of conduct, and therefore an award  of punitive damages and a Song-Beverly Act civil penalty amount to Ford being punished twice for the same conduct. We do not agree.

We have already rejected Ford's assertion that the underlying conduct need only be “substantially” the same to prohibit the recovery of both punitive damages and civil penalties; rather, the recovery of both punitive damages and civil penalties is prohibited when the underlying conduct for both remedies is the same conduct, i.e., identical conduct. And as we have said, the punitive damages award based on fraud and violation of the CLRA were based on Ford's presale fraudulent conduct leading up to and culminating in the sale, where Ford concealed problems relating to the defective 6.0 liter Navistar diesel engine. The Song-Beverly Act civil penalty related to Ford's willful postsale conduct in failing to promptly replace the truck after a reasonable number of repair attempts or make restitution to plaintiffs.

[. . .]

Ford appears to assert that plaintiff effectively combined the conduct underlying the fraud/CRLA cause of action and the Song-Beverly Act cause of action by arguing Ford engaged in a pattern and practice of misconduct and thus the two awards were based on substantially the same conduct. But plaintiffs are not prohibited from receiving both an award for punitive damages based on presale fraudulent inducement and a postsale Song-Beverly Act penalty based on willful noncompliance because they argued pattern and practice in the trial court. “A pattern or practice of wrongful conduct is often introduced as evidence of malice or oppression to justify a punitive damage award.” (George F. Hillenbrand, Inc. v. Insurance Co. of North America (2002) 104 Cal.App.4th 784, 820–821 [128 Cal. Rptr. 2d 586].) Thus, whether Ford's conduct involved a pattern and practice of misconduct as well  as other factors, such as how reprehensible Ford's conduct was and whether Ford disregarded the safety of others were all express considerations for the jury to weigh in deciding the amount of punitive damages. (CACI No. 3942.) And the amount of punitive damages is not limited to consideration of a pattern and practice of misconduct presale. The jury could consider a pattern or practice that continued beyond the date of the sale.

Moreover, whether Ford engaged in an ongoing pattern or practice of misconduct pertinent to the amount of punitive damages award does not become an impermissible consideration by virtue of the fact that plaintiffs were also separately alleging, and attempting to establish, that Ford willfully failed to comply with the requirements of the Song-Beverly Act. Nor does the proper consideration of whether Ford engaged in such a pattern or practice, including pre- and postsale conduct, lead to the conclusion that the fraud/CLRA claims and the Song-Beverly Act claim were based on the same conduct. Plaintiffs did not argue to the jury that the failure to comply with the Song-Beverly Act obligations to replace the vehicle or make restitution supported the punitive damages award. In fact, in phase 2, plaintiffs' attorney briefly discussed the Song-Beverly Act, noting, “[y]ou can be an honest manufacturer and still have Song-Beverly issues, a customer came in multiple times, there were defects, you didn't fix them.” Counsel then stated that the Song-Beverly Act and its civil penalties were “totally separate.”

Ford simply cannot escape liability for both awards by virtue of the fact that it engaged in a pattern or practice of deceitful misconduct throughout the course of the discrete events and conduct involved here.

We conclude that punitive damages and the Song-Beverly Act civil penalty were both properly awarded to plaintiffs.

(Anderson v. Ford Motor Co. (2022) 74 Cal.App.5th 946, 970-73 (“Anderson”).)

Here, as in Anderson, the Song-Beverly claims are related to Defendant’s ability to replace the Subject Vehicle or make restitution in accordance with the Song-Beverly Act while the Fourth Cause of Action (Fraud - Fraudulent Inducement – Concealment) is based on pre-sale actions of fraudulent concealment which ultimately led to the purchase of the Subject Vehicle.

Accordingly, the Motion to Strike is DENIED.

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Conclusion

Defendant General Motors, LLC’s Demurrer is OVERRULED.