Judge Stephen Morgan, Case Number: 23AVCV00376, Date: 2023-12-12 Tentative Ruling

This is a lemon law action. Plaintiff Andre Farmer (“Plaintiff”) alleges that, on or about December 08, 2019, he entered into a warranty contract with Defendant General Motors LLC (“Defendant”) regarding a 2017 Chevrolet Volt with the vehicle identification number 1G1RC6S53HU104098 (the “Subject Vehicle”), which was manufactured and/or distributed by GM. Plaintiff states that the warranty contract contained various warranties, including but not limited to: bumper-bumper warranty, powertrain warranty, emission warranty. Plaintiff contends (1) defects and nonconformities occurred during the express warranty period, including but not limited to, battery defects, engine defects, electrical defects, transmission defects, and infotainment defects; and (2) that Defendant knew (or should have known) that the battery system in the Subject Vehicle had one or more defects which could lead to various problems and Defendant failed to disclose such knowledge to him. Plaintiff further alleges that Defendant had a duty promptly offer to repurchase or replace the Subject Vehicle at the time if it failed to conform the Subject Vehicle to the terms of the express warranty after a reasonable number of repair attempts; and Defendant failed to either promptly replace the Subject Vehicle or to promptly make restitution in accordance with the Song-Beverly Act and the Magnuson-Moss Warranty Act.

On April 06, 2023, Plaintiff filed his Complaint, alleging six causes of action for: (1) Violation of Cal. Civ. Code § 1793.2(d); (2) Violation of Cal. Civ. Code § 1793.2(b); (3) Violation of Cal. Civ. Code § 1793.2(A)(3); (4) Breach of Implied Warranty of Merchantability (Cal. Civ. Code §§ 1791.1, 1794, 1795.5); (5) Fraudulent Inducement – Concealment; and (6) Violation of the Magnuson-Moss Warranty Act.

On May 08, 2023, defense counsel Ryan Kay (“Kay”) filed a declaration, indicating an extension to the filing date of a response under Cal. Code Civ. Proc. § 430.41(a)(2).

On September 06, 2023, Plaintiff filed his First Amended Complaint (“FAC”) alleging the same causes of action as the Complaint.

No Reply has been filed. “. . .[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 December 12, 2023. Accordingly, a Reply was due by December 05, 2023. Should a Reply be filed, it is now untimely.

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.¿¿(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 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 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).)¿¿¿¿¿¿

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.)¿¿¿¿

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.)¿ The Court notes that Kay declares he conferred telephonically with Plaintiff’s counsel; however, no agreement was reached. (Decl. Kay ¶ 2.)

Defendant demurs only to the Fifth Cause of Action (Fraudulent Inducement – Concealment).

First, Defendant argues that the three-year statute of limitations for fraud bars Plaintiff’s claim. Defendant highlights that, based on the alleged date of the purchase of the Subject Vehicle, Plaintiff had to file his claim no later than December 08, 2022[1] and that Plaintiff did not do this, instead filing his Complaint on April 06, 2023. Defendant presents that: (1) Plaintiff cannot invoke the delayed discovery rule because Plaintiff affirmatively states that the alleged “[d]efects and nonconformities to warranty manifested themselves within the applicable express warranty period” (FAC ¶ 11), and (2) because of this statement, the delayed discovery rule does not apply.

Plaintiff argues that his fraud claim is timely as the statute of limitations did not begin to run as of the date that the Subject Vehicle was purchased and, even if it had, the discovery rule, equitable estoppel doctrine, repair rule, and/or class action tolling (i.e., the American Pipe rule) apply.

It appears that Defendant’s calculations do not include the tolling period due to the COVID-19 pandemic. The COVID-19 Emergency Rules for tolling, Specifically Emergency Rule 9, tolled civil actions with statute of limitations exceeding 180 days from April 6, 2020, until October 1, 2020 and is inapplicable to this case. (See California Courts, Emergency Rules Related to COVID-19 < https://www.courts.ca.gov/documents/appendix-i.pdf> [as of November 29, 2023].) This is applicable to the action as: (1) the Subject Vehicle was purchased on December 08, 2019, and (2) the statute of limitations for fraud actions is three years or 1,095 days. (See Complaint ¶ 6; see also Cal. Code Civ. Proc. § 338(d).) Accordingly, three years plus the tolling for the COVID-19 pandemic places the last date for filing the Complaint, had Plaintiff been aware of the defects on the day of purchase of the Subject Vehicle, on Saturday, June 03, 2023. “Unless otherwise provided by law, if the last day for the performance of any act that is required by these rules to be performed within a specific period of time falls on a Saturday, Sunday, or other legal holiday, the period is extended to and includes the next day that is not a holiday.” (Cal. Rules of Court, Rule 1.10(b).) Accordingly, the last date for filing the Complaint in this action with all calculations, using the date of the Subject Vehicle purchase is June 05, 2023.

Plaintiff filed his Complaint on April 06, 2023. The Court need not discuss the delayed discovery rule, repair doctrine tolling, or class action tolling as Plaintiff’s action has been timely brought.

Next, Defendant argues that Plaintiff’s Fifth Cause of Action is not pled with the requisite specificity. Defendant presents that Plaintiff has failed to allege (i) the identity of the individuals at Defendant who purportedly concealed material facts or made untrue representations about the Subject Vehicle, (ii) their authority to speak and act on behalf of Defendant, (iii) Defendant’s knowledge about alleged defects in the Subject Vehicle at the time of purchase, (iv) any interactions with Defendant before or during the purchase of the Volt, or (v) Defendant’s intent to induce reliance by Plaintiff to purchase the Subject Vehicle as is.

Plaintiff argues that his FAC contains all the elements necessary for a fraud claim, highlighting that, in fraud through non-disclosure, “it is not practical to allege facts showing how, when and by what means something did not happen.” (Opp. 7:16-17 [citing Alfaro v. Community Housing Improvement System Planning Assn. (2009) 171 Cal.App.4th 1356, 1384].) Plaintiff emphasizes that where a defendant necessarily possesses full information concerning the facts of the controversy, less particularity is required. Plaintiff highlights Dhital v. Nissan N. Am., Inc. (2022) 84 Cal.App.5th 828 (“Dhital”), its holding, and presents that he has pled all elements required under Dhital.

Regarding specificity, “[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 has alleged that “[Defendant] knew since 2016 that the model year 2017 or newer Chevrolet Volt EV vehicles, including 2017 Chevrolet Volt vehicles such as the Subject Vehicle . . ., contained one or more design and/or manufacturing defects in the battery. . .[;]” and that (1) “on November 13, 2020, GM issued NHTSA Recall No. 20V-701/GM Recall No. N202311730, as an interim remedy. The repair procedure calls for dealers to program the hybrid propulsion control module 2 (HPCM2) to limit full charge of the battery to 90%. The revised software is intended to limit the vehicle’s full charge to 90% of the battery capacity[,]” (FAC ¶ 36)and (2) “[o]n July 14, 2021, even for those that had the Recall performed, GM instructed owners and lessees of these Chevy Vehicles to “park their vehicles outside away from homes and other structures immediately after charging and…not leave their vehicles charging overnight” (FAC ¶ 37). The Court notes that no citation has been provided for the quote in paragraph 37 of the FAC. However, a reasonable inference can be drawn from the recall, the number of which Plaintiff has provided, that Defendant must necessarily possess superior information.

The Court notes that, at this time, the California Supreme Court has granted review of Dhital. As such, the Dhital holding may be cited only for persuasive value. (See Cal. Rules of Court, Rule 8.1115(e)(1).) The Court believes that its analysis, ante, sufficiently addresses the concerns of the parties without a discussion of Dhital.

Finally, Defendant argues that the Fraud claim fails as Plaintiff does not allege a transactional relationship between the parties which gives rise to a duty to disclose. That is, Defendant argues that, absent a fiduciary relationship, a duty to disclose can only arise in three circumstances under case law – (1) the defendant had exclusive knowledge of the material fact; (2) the defendant actively concealed the material fact; or (3) the defendant made partial representations while also suppressing the material fact – and that these three circumstances only arise from direct dealings which is absent in this case. (See Bigler-Engler v. Breg, Inc. (2017) 7 Cal.App.5th 276 (“Bigler-Engler”); LiMandri v. Judkins (1997) 52 Cal.App.4th 326 (“LiMandri”.)

Plaintiff argues that under California law, a vendor has a duty to disclose material facts not only to immediate purchasers, but also to subsequent purchasers when the vendor has reason to expect that the item will be resold, so, likewise, that a manufacturer should have such a duty. Plaintiff next discusses Dhital to highlight that, at the pleading stage, his allegations are sufficient. Plaintiff addresses the LiMandri principles presenting that Plaintiff entered into a warranty contract directly with Defendant and that Defendant had exclusive knowledge of the battery defect and the battery defect (1) is a material fact, (2) posed safety risks, and (3) arose during the warranty period.

The Court notes that the LiMandri holding has been questioned by the United States Court of Appeals for the Ninth Circuit, but not California courts and, as such, remains binding on this Court.

Bigler-Engler emphasizes the LiMandri principles, but goes further to include another case precedent:

This court examined the circumstances giving rise to a duty to disclose in LiMandri v. Judkins (1997) 52 Cal.App.4th 326 [60 Cal. Rptr. 2d 539] (LiMandri). In that case, we explained, “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.’” (Id. at p. 336.) Where, as here, a fiduciary relationship does not exist between the parties, only the latter three circumstances may apply. These three circumstances, however, “presuppose[] the existence of some other relationship between the plaintiff and defendant in which a duty to disclose can arise.” (Id. at pp. 336–337.) “A duty to disclose facts arises only when the parties are in a relationship that gives rise to the duty, such as ‘“seller and buyer, employer and prospective employee, doctor and patient, or parties entering into any kind of contractual arrangement.”’” (Shin v. Kong (2000) 80 Cal.App.4th 498, 509 [95 Cal. Rptr. 2d 304].)

While Defendant believes that Bigler-Engler supports its argument, Defendant fails to address that this statement includes parties entering into a contractual agreement, which necessarily includes warranty contracts such as the one in this action.

The Court need not address whether the battery defect was considered a material fact as one of the LiMandri principals has been met.

For clarity, the Court also addresses Defendant’s next citation from Bigler-Engler: “Such a transaction must necessarily arise from direct dealings between the Plaintiff[s] and defendant; it cannot arise between the defendant and the public at large.” (Id. at 312.) This is not a case between Defendant and the public at large. This is a case between Plaintiff and Defendant regarding the warranty agreement entered into by the parties and the defects in the Subject Vehicle purchased.

Based on the allegations of the FAC, this is a case where when Defendant had exclusive knowledge of material facts not known to the plaintiff. Thus, the LiMandri standard has been met.

Defendant seeks to strike Plaintiff’s demand for punitive damages in the Prayer for Relief. Provides several arguments: (1) Plaintiff may not recover punitive damages based upon the Song-Beverly Act (directed to non-fraud based claims); (2) Plaintiff has not pled facts within the Fifth Cause of Action (Fraudulent Inducement – Concealment) to support a claim of punitive damages under Cal. Civ. Code § 3294; and (3) Plaintiff’s Fifth Cause of Action (Fraudulent Inducement – Concealment) is time-barred and fails to state facts sufficient to state a cause of action and, therefore, cannot support punitive damages.

Plaintiff argues that as Defendant’s Demurrer fails, so too must its Motion to Strike. Plaintiff emphasizes that his fraudulent-inducement claim is separate and distinct from the warranty claims under Song-Beverly. Plaintiff next presents that he has sufficiently alleged Defendant’s oppression, fraud, and malice. Finally, Plaintiff cites federal cases discussing Song-Beverly to show that punitive damages are available at the pleading stage.

The issue presented before this Court, based on the FAC, 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.¿¿

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.¿¿

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 Fifth Cause of Action (Fraudulent Inducement – Concealment) is based on pre-sale actions of fraudulent concealment which ultimately led to the purchase of the Subject Vehicle.¿¿¿

Further, as discussed ante, the allegations of for the Fifth Cause of Action (Fraudulent Inducement – Concealment) have been pled with the requisite specificity.

[1] The Court notes that, while the alleged date of purchase remains the same, Defendant has changed the date of when Plaintiff was to file the Complaint in their argument from December 09, 2022 in the first Demurrer to December 08, 2022 in the Demurrer to the FAC.