Judge: Stephen Morgan, Case: 23AVCV00310, Date: 2023-10-17 Tentative Ruling
Case Number: 23AVCV00310 Hearing Date: October 17, 2023 Dept: A14
Background
This is a Song-Beverly action. Plaintiff
Salinas Landscape and Tree Preservation, Inc. (“Plaintiff”) alleges that it
purchased a 2020 Ford F150 (VIN: 1FTEX1E53LKE40007) (the “Subject Vehicle”) and
that Defendants Ford Motor Company (“Ford”) and Diamond Ford (collectively
“Defendants”) violated the Song-Beverly Consumer Warranty Act by failing to
conform the Vehicle to the express written warranties within a reasonable
number of repair attempts or within the warranty periods, and by failing to
promptly replace the vehicle or make restitution to Plaintiff.
On March 21, 2023, Plaintiff
filed its Complaint alleging four cases of action for: (1) Violation of the
Song-Beverly Consumer Warranty Act Breach of Express Warranty; (2) Violation of
the Song-Beverly Consumer Warranty Act Breach of Implied Warranty; (3)
Violation of Bus. & Prof. Code§ 17200; and Negligent Repair.
On June16, 2023, Plaintiff filed
its First Amended Complaint (“FAC”) alleging the same causes of action.
On September 05, 2023, Defendants
filed their Demurrer to the FAC.
On September 18, 2023, Plaintiff
filed its Opposition.
On October 10, 2023, Defendants
filed their Reply.
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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.¿ (Cal. Code Civ. Proc. § 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.¿¿(Ibid.)¿¿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 v. Kirwan
(1985) 39 Cal.3d 311, 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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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.) It appears that this requirement has been
satisfied. (See Decl. Douglas A. Proudfoot ¶¶ 3-4.)
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Discussion
Application – Defendants
demur to the Third Cause of Action only.
This issue has come before the
Court previously. The Court notes that there appear to be two distinct
differences between the Complaint and the FAC as to the Third Cause of Action:
(1) the addition of: “To wit, Defendants and each of them manufactured, sold
and
distributed a vehicle, which
Defendants knew or should have known, was defective. Specifically, had known
and serious engine issues in paragraph 39; and (2) the addition of:
“Specifically, defendants and each of them, represented that the vehicle was
fit for its intended purpose and that any warrantable defects would be repaired
promptly. The truck was sold with serious engine defects and the repairs were
not promptly completed under warranty as promised with the sale” in paragraph
53.
Defendants argue the allegations
within the FAC do not give rise to relief under Cal. Bus. & Prof. Code §
17200, known also as the Unfair Competition Law (“UCL”), as Plaintiff (1) merely
states that it is an unfair business act or practice for Defendants to fair
provide repair facilities to repair vehicles to conform to the express
warranties, provide its repair facilities service and repair literature, inform
consumers their warranty rights, and trying to coerce Plaintiff and other
members of the public to sign confidentiality clauses (i.e., general and
conclusory); and (2) it fails to plead facts showing “how, when, where, and to
whom and by what means the representations were tendered[]” as required under Lazar
v. Superior Court (1996) 12 Cal.4th 631. Defendants emphasize that the
pleading standard or a corporation is heighted as Plaintiffs must allege the
names of people who made the misrepresentation, their authority to speak for
the corporation, who receive the communication, and when it was made and the
FAC lacks such information. Finally, citing federal case law, Defendants argue
that Plaintiff has not alleged facts establishing an inadequate remedy at law
as he has other viable causes of action for breach of express and implied
warranties under the Song-Beverly Warranty Act.
Plaintiff argues that whether the
promotional material related to the Subject Vehicle is puffery or fact is a
question for the jury under Furla v. Jon Douglas Co. (1998) 65
Cal.App.4th 1069 and where the actual person who authored the false documents
is not, and cannot, be known to the Plaintiff, they are not required to be
identified in the complaint, citing to the relaxed standard of pleadings for
fraud in Tarmann v. State Farm Mutual Auto-Mobile Ins. Co. (1992) 2
Cal.App.4th 153.Thus, Plaintiff believes it does not have to identify who made
the representations as the promotional material was authored by someone
strictly within the knowledge of Defendants. Plaintiff presents that the
alleged facts in the FAC are sufficient to demonstrate a violation of Cal. Bus.
& Prof. Code§ 17200. Plaintiff highlights several cases and argues that
Defendants’ advertisements are actionable.
In reply, Defendants present that
Plaintiff has failed to plead a claim under the UCL as there are no allegations
that Defendants engaged in practices prohibited by statute or that Plaintiff
was damaged by these practices and Plaintiffs have an adequate remedy at law
for a violation of Song-Beverly via repurchasing of the vehicle and restitution
and/or compensatory damage.
The Reply includes a new argument
that the Demurrer must be sustained without leave to amend due to an adequate
remedy at law under Song-Beverly, citing Durkee v. Ford Motor Co.
(N.D.Cal. Sept. 2, 2014) No. C 14–0617 PJH, 2014 WL 4352184, at *3 [“Because
the UCL provides for only equitable remedies, and plaintiffs have an adequate
remedy at law for the alleged Song–Beverly Act violation, plaintiff’s UCL claim
must be dismissed.”]. Defendants’ moving papers did not cite to this case, nor
did they highlight this issue. Rather, Defendants stated: “Plaintiff has now
filed the First Amended Complaint. However, defendant is unable to identify new
allegations that would lead the claim to survive Demurrer. As such, the
Demurrer to the First Amended Complaint should be sustained without leave to
amend. (Motion 3:21-24.) Defendants also included a request that the Court
sustain the Demurrer without leave to amend. (Id. at 7:13-15
[“Accordingly, Defendant requests that the court sustain the Defendant’s
demurrer to Plaintiff’s third cause of action alleged in the Complaint without
leave to amend.”] [emphasis in original].) It is well established that new
arguments presented in reply briefs will not be considered. (See In re
Marriage of Khera & Sameer (2012) 206 Cal.App.4th 1467, 1477-78 [“
‘Obvious reasons of fairness militate against consideration of an issue raised
initially in the reply brief of an appellant. [Citations.]”]; Varjabedian v.
City of Madera (1977) 20 Cal.3d 285, 295, fn. 11 [. . .“Obvious reasons of
fairness militate against consideration of an issue raised initially in the
reply brief of an appellant.”]; People v. Smithey (1999) 20 Cal.4th 936,
1017, fn. 26 [“ ‘[T]he rule is that points raised in the reply brief for the
first time will not be considered, unless good reason is shown for failure to
present them before. [Citations.]’ [Citation.]”].) As such, the Court will not
consider this new argument.
As an initial matter, the
Complaint alleges that there are four different prongs under Cal. Bus. &
Proc. Code § 17200, but frames the actions of Defendants under unfair,
unlawful, and fraudulent prongs. The FAC does not allege what advertisements
were unfair, deceptive, untrue or misleading. Rather, looking at the FAC, it
alleges: (1) “Defendants violated the Song-Beverly Consumer Warranty Act by
failing to conform the Vehicle to the express written warranties within a
reasonable number of repair attempts or within the warranty periods, and by
failing to promptly replace the vehicle or make restitution to Plaintiff[]”
(FAC ¶ 15); (2) “Defendants breached the implied warranty of merchantability as
stated in Cal. Civ. Code § 1791.1 and 1792 in the vehicle has malfunctions, and
nonconformities render the Vehicle unfit for the ordinary purposes for which it
is used, and it would not pass without objection in the trade[]” (FAC ¶ 26);
(3) “Defendant FORD MOTOR COMPANY intentionally placed the Subject Vehicle,
with defective engine components, into the stream of commerce. They knew the
components and the Subject Vehicle suffered from defects to the engine that
involved the CVT phasers not holding at default and due to missing cam shaft
synchronization. The issues that affected the Subject Vehicle were extensive
and Manufacturer knew these defects existed and intentionally sold defective
vehicles to the general public[]” and “Defendant DIAMOND FORD was well aware of
the highly defective components in this Subject Vehicle. Defendant
intentionally failed to properly diagnose the issues in the Subject Vehicle.
Defendant installed remanufactured and or reconditioned components, that were
not of the same quality as the OEM components. Defendant also installed
components, which it knew were defective and would not correct the mechanical
issues exhibited in the Subject Vehicle. Defendant performed negligent repairs
because they knew the Manufacturer was unlikely to reimburse them for multiple
repair due to the same underlying issue[]” (FAC ¶ 39); (4) “Defendant’s actions
and representations constitute an “unfair” business act or practice under §
17200 in that Defendant’s conduct is substantially injurious to consumers,
offends public policy, and is immoral, unethical, oppressive, and unscrupulous
as the gravity of the conduct outweighs any alleged benefits attributable to
such conduct. Without limitation, it is an unfair business act or practice for
Defendants to knowingly or negligently (1) fail to provide repair facilities to
service vehicles to conform to the express warranties reasonably close to where
Defendant’s vehicle is sold, (2) provide their authorized repair facilities
service and repair literature to allow them to conform the vehicles to the
express warranties, (3) inform consumers of their warranty rights on their
repair orders, and (4) pay their authorized repair facilities for work done
under the express warranty. (5) Trying to coerce Plaintiff and other members of
the public to sign confidentiality clauses and []” (FAC ¶ 42); and (5) “Here,
consumers are likely to be deceived by the acts described above in this
complaint. California consumers were never informed of their rights pursuant to
the Song-Beverly
Acts standards. California
consumers were never informed of their rights pursuant to the Song-Beverly Acts
standards[]” (FAC ¶¶ 47- 49.) Based on the pleadings, Defendants’ promotional
material is not at issue.
A plaintiff alleging unfair
business practices under the UCL must state with "reasonable
particularity" the facts supporting the statutory elements of the
violation. The basis for the unlawful prong appears to be the Song-Beverly Act,
Specifically, the allegations in this prong focus on (1) Ford placing the
Subject Vehicle into the stream of commerce, and (2) Diamond failing to
properly diagnose the issues in Subject Vehicle. The addition reads:
“Defendants and each of them manufactured, sold and distributed a vehicle,
which Defendants knew or should have known, was defective. Specifically, had
known and serious engine issues.” (FAC ¶ 39.) The allegations are not
predicated on the allegations that defendants violated the express and implied
warranties under the Song-Beverly Act by failing to conform the vehicle to the
express written and implied warranties within a reasonable number of repair
attempts and failing to properly replace the vehicle or make restitution to
Plaintiff. Here, in the unlawful prong, the “facts” alleged, even with the new
addition, are conclusory. 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.)¿
“In consumer cases, the
[California] Supreme Court has not established a definitive test to determine
whether a business practice is unfair. [Citations.]” (Drum v. San Fernando
Valley Bar Assn. (2010) 182 Cal.App.4th 247, 256.) There are three types of
tests for unfairness in consumer cases: (1) “that the public policy which is a
predicate to a consumer unfair competition action under the ‘unfair’ prong of
the UCL must be tethered to specific constitutional, statutory, or regulatory
provisions[;]” (2) “whether the alleged business practice ‘is immoral,
unethical, oppressive, unscrupulous or substantially injurious to consumers and
requires the court to weigh the utility of the defendant’s conduct against the
gravity of the harm to the alleged victim[;]’ ” and (3) a three-part test that
requires the consumer injury be substantial, that the injury must not be
outweighed by any countervailing benefits to consumers or competition, and the
injury must be an injury that consumers themselves could not reasonably have
avoided. (Id. at 256-57.)
Case law holds that “the ‘unfair’
prong of Cal. Bus. & Prof. Code, § 17200 should be read more broadly in
consumer cases because consumers are more vulnerable to unfair business
practices than businesses and without the necessary resources to protect
themselves from sharp practices.” (Bardin v. DaimlerChrysler Corp.
(2006) 136 Cal. App. 4th 1255, 1268 [citation omitted].) Courts have held that
“unfair competition statutes have always been framed in ‘broad, sweeping
language, precisely to enable judicial tribunals to deal with the innumerable ‘
“new schemes which the fertility of man's invention would contrive” ’ ” (Id.
at 1271 [citations omitted]) and California’s Legislature framed the UCL in
broad, sweeping language, which includes “ ‘ “anything that can properly be
called a business practice and that at the same time is forbidden by law[,]” ’
” so that courts are provided with “ ‘broad equitable powers to remedy
violations’ ” (Kwikset Corp., supra, 51 Cal.4th 310, 320).
Here, Plaintiff has alleged that
the following actions taken on behalf of defendants constitute unfair business
practices or acts:
(See Complaint ¶ 42.)
As mentioned in the previous
Statement of Decision, it is unclear as to which actions are directed to which
defendant as the Third Cause of Action is brought against all defendants and
the unfair prong does not discern which defendant conducted which business
practice.
The addition reads:
“Specifically, defendants and each of them, represented that the vehicle was
fit for its intended purpose and that any warrantable defects would be repaired
promptly. The truck was sold with serious engine defects and the repairs were
not promptly completed under warranty as promised with the sale.” (FAC ¶ 53.)
Even with the addition, all that has been alleged are conclusory statements
summarizing actions defendants allegedly took. Plaintiff has not shown how the
aforementioned actions would be immoral, unethical, oppressive, unscrupulous or
substantially injurious to consumers. Rather, Plaintiff states broadly: “Here,
consumers are likely to be deceived by the acts described above in this
complaint.” (FAC ¶ 47.) It is also unclear whether there is some other
violation than Song-Beverly based on the alleged actions. Finally, there is no
allegation or basis to infer from the complaint that consumers have been
substantially injured by either Ford or Diamond’s conduct. Rather, the focus is
on Defendants’ conduct and the injury to Plaintiff – “Plaintiff has no speedy
adequate remedy at law and damages would not adequately compensate her for the
ongoing wrongs committed by Defendants[]” (FAC ¶ 36), “Plaintiff could not have
reasonably avoided the injury suffered herein[]” (FAC ¶ 44), “Despite the
passage of time, Plaintiff has received no such benefit from the warranty of
the vehicle[]” (FAC ¶ 50.). As to the public, generally, the FAC states only: “consumers
are likely to be deceived by the acts described above in this complaint.” (FAC
¶ 47.) There has been no showing as to how the aforementioned actions would be
immoral, unethical, oppressive, unscrupulous or substantially injurious to
consumers or that consumers, aside from Plaintiff, have been injured by either
Ford or Diamond’s conduct.
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Leave to Amend
Leave to amend must be allowed where there
is a reasonable possibility of successful amendment. (Goodman v. Kennedy¿(1976),
18 Cal.3d 335, 348.) While under California law leave to amend is liberally
granted, “leave to amend should not be granted where, in all probability,
amendment would be futile.” (Vaillette v. Fireman's Fund Ins. Co.
(1993), 18 Cal. App. 4th 680, 685).¿ “A trial court does not abuse its
discretion when it sustains a demurrer without¿leave to amend¿if either (a) the
facts and the nature of the claims are clear and no liability exists, or (b) it
is probable from the nature of the defects and previous unsuccessful attempts
to plead that the plaintiff cannot state a claim.” (Cantu v. Resolution
Trust Corp.¿(1992)¿4 Cal.App.4th 857, 889.)¿¿¿
Here, the deficiencies in the Complaint stem
from a failure to adequately plead the Third Cause of Action under the unfair,
unlawful, and fraudulent prongs. The Court notes that the changes made from the
Complaint were cursory. As such, the Court believes the issues with the FAC may
be rectified by an amendment.
Leave to amend is GRANTED.
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Conclusion
Defendant Ford Motor Company’s Demurrer
is SUSTAINED with leave to amend.
Plaintiff Salinas Landscape and
Tree Preservation, Inc. is to file an amended complaint within 30 days of this
Court Order.