Judge: Steven J. Kleifield, Case: 22STCV17112, Date: 2023-04-27 Tentative Ruling

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Case Number: 22STCV17112    Hearing Date: April 27, 2023    Dept: 57

Defendant Kia North America, Inc. (“Kia”) has demurred to two causes of action in Plaintiff Jacqueline Frias’s Second Amended Complaint: the fourth cause of action for breach of the implied warranty of merchantability and the fifth cause of action for fraudulent inducement - concealment.   Kia also has moved to strike the fourth cause of action, along with the prayers for civil penalties under the Song-Beverly Consumer Warranty Act (“Song-Beverly”) and punitive damages, as well the allegations in the Second Amended Complaint on which those prayers rest.   The Court’s tentative decision is to overrule the demurrer as to the cause of action for breach of the implied warranty of merchantability; sustain the demurrer with leave to amend as to the fifth cause of action; and grant the motion to strike in part with leave to amend.

Kia based its demurrer to the cause of action for breach of the implied warranty of merchantability on the following proposition: the Court previously sustained Kia’s demurrer to that cause of action in Frias’s First Amended Complaint on statute of limitations grounds without leave to amend and thus Frias improperly included that same cause of action in the Second Amended Complaint.   That proposition is incorrect.   The Court sustained Kia’s demurrer to the cause of action for breach of the implied warranty of merchantability in Frias’s First Amended Complaint with leave to amend.  Thus, it was not improper to Frias to try to plead around the statute of limitations and include the cause of action for breach of the implied warranty of merchantability in her Second Amended Complaint.  Kia’s opening brief in support of its demurrer makes no argument on the sufficiency of the allegations supporting the cause of action for breach of the implied warranty of merchantability.  The brief rested exclusively on the mistaken premise that the Court’s prior ruling sustaining Kia’s demurrer to that cause of action did not give Frias leave to amend.  In its reply brief in support of the demurrer, Kia argues that the cause of action for breach of the implied warrant of merchantability in the Second Amended Complaint is barred by the statute of limitations.  That argument, coming for the first time on reply, is too late.  Kia’s motion to strike the cause of action of action for breach of the implied warranty of merchantability is denied as well because it too is based on the erroneous notion that it was improper, in the wake of the Court’s prior demurrer ruling, for Frias to include that cause of action in the Second Amended Complaint.

Kia fares better with respect to its demurrer to Frias’s fifth cause of action for fraudulent inducement – concealment on statute of limitations grounds.  In the Court’s view, the demurrer to that cause of action should be sustained, albeit with leave to amend again.

In general, a cause of action accrues, thereby starting the running of the clock on the statute of limitations, when all of the elements of the cause of action are present.  (Cansino v. Bank of America (2014) 224 Cal.App.4th 1462, 1472.)  Accrual is postponed, however, until a plaintiff discovers, or had reason to discover, the facts supporting the cause of action.  (Ibid.)  This discovery rule is built into the statute of limitations for fraud claims, which is three years from the date the plaintiff discovered the facts constituting the alleged fraud.  (Code of Civil Procedure Section 338(d).  Because the discovery rule tolls the running of the statute of limitations, a plaintiff asserting a fraud claim more than three years after the commission of the fraud (meaning more than three years after all the elements of the cause of action are present) has the burden of pleading that he or she did not discover the facts giving rise to the claim until within three years prior to the filing of the complaint and could not have discovered those facts before then with the exercise of reasonable diligence.  (Cansino, supra, 224 Cal.App.4th at p. 1472; Czajkowski v. Haskell & White, LLP (2012) 208 Cal.App.4^th 166, 175.)   This requires the plaintiff to allege that he or she did not have actual or presumptive knowledge of facts that would have placed a reasonable person on notice of the fraud claim.  (Fox v. Ethicon Endo-Surgery, Inc. (2005) 35 Cal.4th 797, 807.)   Conclusory allegations are inadequate to overcome the statute of limitations at the demurrer stage when, from the face of the complaint, a claim is time-barred.  (Id. at p. 808.)  To come within the discovery rule’s protective ambit, allegations regarding the circumstances surrounding discovery of the facts bearing on the claim and the inability to have discovered those facts earlier must be set forth in detail.  (Ibid.)  The limitations period on the claim begins to run once the plaintiff has notice or information of circumstances that would put a reasonable person on notice of the claim.  (Alexander v. Exxon Mobil (2013) 219 Cal.App.4th 1236, 1251.)

Frias’s Second Amended Complaint arises from her purchase in 2016 of a motor vehicle manufactured by Kia that allegedly had a defective engine.  Frias alleges that KIA perpetrated a fraud by allowing the vehicle to be sold without disclosing to her the engine defect.  Frias further alleges that she did not discover the defect until 2022, more than six years her purchase of the vehicle.  Frias’s allegations are insufficient to trigger application of the discovery rule and thereby do not shield her fraud claim from the three-year statute of limitations.  Missing from the Second Amended Complaint are any allegations that would explain or justify Frias’s failure to discover the alleged defect sooner than 2022 when her allegations concede that she drove the car for six years before that and took the vehicle to be repaired fifteen different times during that time span.  Frias describes the problems that led her to take the car for repairs on so many occasions.  But she provides no allegations that would support the contention that those problems would not have placed a reasonable person on notice of the defect, and hence on notice of the fraud claim, within the limitations period.  In short, the discovery rule is unavailable to Frias.  It does not save her fraud claim from the three-year statute of limitations.   

Nor can Frias avail herself of the related doctrine of equitable tolling of the statute of limitations on fraud claims.  Like the discovery rule, equitable tolling, too, requires allegations that the plaintiff should not be blamed for failing to discover the claim within the limitations period and could not have discovered the claim in the exercise of reasonable diligence.  (Sagehorn v. Engle (2006) 141 Cal.App.4th 452, 460–461; Barber v. Superior Court (1991) 234 Cal.App.3d  1076, 1083.)

Finally, Frias gets no traction from the class action tolling doctrine.  When that doctrine applies, it tolls the statute of limitations for claims of individuals who are members of a putative class action in which claims are being brought collectively.  The tolling begins when the class action is filed and ends when class certification is denied.  (American Pipe & Construction v. Utah (1974) 414 U.S. 538, 554;  Falk v. Children’s Hospital of Los Angeles (2015) 237 Cal.App.4th 1454, 1462-1463.)  Frias contends that she was a class member in two class action lawsuits brought against Kia alleging engine defects, one filed in 2016 and the other in 2017.  She alleges that the former action was dismissed a year it was filed, but that the latter class action is still pending and therefore the statute of limitations on her individual claim remains tolled.  The rub for Frias here is two-fold.  First, on the one hand, by alleging she was a member of class actions against Kia based on engine defects in vehicles that were filed in 2016 and 2017, Frias acknowledges that she was aware of the facts giving rise to her fraud claim long before the alleged discovery date of 2022.  Second, on the other hand, if Frias really did not discover the facts giving rise to her fraud claim until 2022, then it is difficult to conceive that she could be a bona fide member of a class action that was filed back in 2017 and is still ongoing. 

The Court is granting Frias leave to amend her complaint one more time to afford her an opportunity to plead within the rubric of the discovery rule and equitable tolling and to harmonize her reliance on those two tolling principles with her reliance on class action tolling under American Pipe.

Kia’s motion to strike the prayer for punitive damages in the Second Amended Complaint is denied to the extent that the motion targets Frias’s fraud claim as the basis for a punitive damages award.  This aspect of the motion to strike is moot in light of the Court’s ruling sustaining the demurrer as to the fraud claim with leave to amend.  The motion to strike is granted with leave to amend to the extent that the motion targets the first, second, and third causes of action in the Second Amended Complaint, all of which are brought under Song-Beverly, as the basis for civil penalties and punitive damages.  The Court agrees with Kia that the allegations in the Second Amendment do not support either an award of civil penalties under Song-Beverly or punitive damages.

Frias is directed to file and serve a Third Amended Complaint within 21 days from the hearing on Kia’s demurrer to the Second Amended Complaint and motion to strike aspects of that pleading.