Judge Theresa M. Traber, Case 21STCV31373 2023-04-10 Tentative Ruling

Judge: Theresa M. Traber, Case: 21STCV31373, Date: 2023-04-10 Tentative Ruling

Case Number: 21STCV31373 Hearing Date: April 10, 2023 Dept: 47

Tentative Ruling

Judge Theresa M. Traber, Department 47

HEARING DATE: April 10, 2023 TRIAL DATE: August 8, 2023.

CASE: Antonio Mondragon Espinoza, et al. v. American Honda Motor Co., Inc., et al.

CASE NO.: 21STCV31373

(1) MOTION FOR JUDGMENT ON THE PLEADINGS AS TO

THE FOURTH CAUSE OF ACTION; AND

(2) MOTION TO STRIKE

MOVING PARTY: (1)-(2) Defendant American Honda Motor Co., Inc.

RESPONDING PARTY(S): (1)-(2) Plaintiffs Antonio Mondragon Espinoza and Araceli Garcia Diaz

CASE HISTORY:

· 08/24/19: Complaint filed.

· 09/27/21: Answer by Defendant American Honda Motor Co., Inc. filed.

· 08/23/22: The Court denied Defendant American Honda Motor Co., Inc.’s opposed Motion to Compel Arbitration.

· 10/31/22: Motion to Strike and Motion for Judgment on the Pleadings for the Fourth Cause of Action by Defendant American Honda Motor Co., Inc. filed.

· 03/27/23: Oppositions to Motion to Strike and Motion for Judgment on the Pleadings by Plaintiffs Antonio Mondragon Espinoza and Araceli Garcia Diaz filed.

· 04/04/23: Replies to Oppositions to Motion to Strike and Motion for Judgment on the Pleadings by Defendant American Honda Motor Co., Inc. filed.

STATEMENT OF MATERIAL FACTS AND/OR PROCEEDINGS:

This is a lemon law action filed on August 24, 2021. Plaintiffs Antonio Mondragon Espinoza (aka Antonia Mondragon) and Araceli Garcia Diaz (collectively, “Plaintiffs”) allege that on April 11, 2017, they purchased a new 2017 Honda Pilot that developed serious defects, including transmission problems. Plaintiffs are suing Defendant American Honda Motor Co., Inc. (“AHM”), the manufacturer of the vehicle, under the Song-Beverly Consumer Warranty Act, Civil Code § 1790, et seq.

Defendant American Honda Motor Co., Inc. now moves for judgment on the pleadings as to the fourth cause of action for fraudulent inducement – concealment in Plaintiffs’ Complaint.

Defendant also moves to strike (a) Plaintiffs’ prayer for punitive damages and (b) allegations relating to other recalls, vehicles, and complaints referenced in the Complaint.

TENTATIVE RULINGS:

Defendant’s motion for judgment of the pleadings as to the fourth cause of action is DENIED.

Defendant’s motion to strike is DENIED.

DISCUSSION:

Motion for Judgment on the Pleadings

The standard for granting a motion for judgment on the pleadings is essentially the same as that applicable to a general demurrer. (Burnett v. Chimney Sweep (2004) 123 Cal.App.4th 1057, 1064.) Thus, it may be granted if from the pleadings, together with matters that may be judicially noticed, it appears that a party is entitled to judgment as a matter of law. (CCP § 438(d); Saltarelli & Steponovich v. Douglas (1995) 40 Cal.App.4th 1, 5.)

In ruling on a motion for judgment on the pleadings, courts consider whether the factual allegations, assumed to be true, are sufficient to constitute a cause of action. (Fire Ins. Exchange v. Sup. Ct. (2004) 116 Cal.App.4th 446, 452-453.) Judgment on the pleadings, like a general demurrer, does not lie as to a portion of a cause of action and, if any part of a cause of action is properly pleaded, the motion will be denied. (Id. at p. 452.)

Here, Defendant American Honda Motor Co., Inc. (“Defendant”) moves for judgment on the pleadings as to the fourth cause of action for fraudulent inducement – concealment, arguing (1) the Complaint fails to state facts sufficient to constitute that cause of action, and that (2) the claim is barred by the economic loss, time-barred, and preempted by federal law.

A. Meet and Confer

A party moving for judgment on the pleadings must meet and confer with the party who filed the pleading to determine if an agreement can be reached regarding the issues raised in the motion. (CCP § 439(a).) The moving party must file a declaration detailing the meet and confer efforts. (CCP., § 439(a)(3).)

Here, Defense counsel Jonathan Kom states that Plaintiffs’ counsel did not respond to meet and confer efforts. (Motion, Kom Decl., 2-4.) Counsel’s declaration satisfies the meet and confer requirement. (CCP § 439(a)(3)(B) [providing that the moving party may attach a declaration stating “[t]hat the party who filed the pleading subject to demurrer failed to respond to the meet and confer request of the demurring party or otherwise failed to meet and confer in good faith”].)

B. Page Limit

As an initial matter, Plaintiffs argue that “[t]he Court should exercise its discretion and refuse to consider Defendant’s Motion, which exceeds the page-limit for its memorandum [in violation of California Rules of Court], without application [or obtaining an order granting them leave] to do so, and without any explanation for Defendant’s failure to do so [i.e., follow the page-limit rules].” (Opposition, p. 3:17-19.)

“Except in a summary judgment or summary adjudication motion, no opening or responding memorandum may exceed 15 pages.” (Cal. Rules of Court, rule 3.1113(d).) “A memorandum that exceeds the page limits of these rules must be filed and considered in the same manner as a late-filed paper.” (Cal. Rules of Court, rule 3.1113(g).) “[A] trial court has broad discretion to accept or reject late-filed papers. (Cal. Rules of Court, rule 3.1300(d).)” (Rancho Mirage Country Club Homeowners Assn. v. Hazelbaker (2016) 2 Cal.App.5th 252, 262.)

It is true that Defendant’s Memorandum of Points and Authorities is 17 pages long, exceeding the 15-page limit. However, defense counsel has testified, and Plaintiffs have not disputed, that Plaintiffs failed to respond to Defendant’s meet and confer efforts to discuss the issues raised in the motion. Therefore, the Court exercises its discretion to consider the moving papers despite Defendant’s Rules of Court violation.

C. Sufficiency of Facts

A defendant may move for judgment on the pleadings on the ground that the complaint does not state facts sufficient to constitute a cause of action. (CCP § 438(c)(1)(B).)

Here, Defendant argues that the Complaint fails to state facts sufficient to constitute the fourth cause of action for fraudulent inducement – concealment, for the following reasons.

First, it is argued that the requirement to plead fraud elements with specificity is not satisfied. Plaintiffs allege in their fraud claim that Defendant concealed a “Transmission Defect” that existed in their 2017 Honda Pilot (“Vehicle”) at the time of sale. To support that allegation, the Complaint only recites documents and issues concerning vehicles other than the Vehicle without alleging how those documents and issues concern the Vehicle.

Second, Defendant contends the Complaint fails to allege facts showing any fiduciary or transactional relationship between the parties. Plaintiffs may argue that the dealer representatives they spoke with at the time of sale were Defendant’s “agents,” but, according to Defendants, Plaintiffs have failed to allege facts showing an agency relationship (e.g., direction or control) between Defendant (a manufacturer) and the dealership where Plaintiffs bought their Vehicle.

Third, Defendant argues the absence of allegations facts showing: (a) Defendant had exclusive knowledge of the alleged Transmission Defect, (b) what exactly Defendant concealed from the public, or (c) what misrepresentations Defendant directly made to Plaintiffs.

In short, Defendant argues, the fourth cause of action for fraudulent inducement – concealment, fails because Plaintiffs have failed to plead fraud elements with specificity, demonstrate that Defendant had fiduciary relationship with them such that it had a duty to disclose the Transmission Defendant, and that Defendant actively concealed material facts in its possession.

The elements of fraud are (a) a misrepresentation (false representation, concealment, or nondisclosure); (b) knowledge of its falsity; (c) intent to induce reliance; (d) justifiable reliance; and (e) resulting damage. (Lazar v. Superior Court (1996) 12 Cal.4th 631, 638.)

The elements of fraudulent concealment are (1) concealment or suppression of a material fact; (2) by a defendant with a duty to disclose the fact to the plaintiff; (3) intent to defraud the plaintiff by intentionally concealing or suppressing the fact; (4) the plaintiff was unaware of the fact and would not have acted as he or she did if he or she had known of the concealed or suppressed fact; and (5) the plaintiff sustained damage as a result of the concealment or suppression of fact. (Hambridge v. Healthcare Partners Medical Group, Inc. (2015) 238 Cal.App.4th 124, 162.)

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; or (4) when the defendant makes partial representations but also suppresses some material fact." (LiMandri v. Judkins (1997) 52 Cal.App.4th 326, 336.) A duty to disclose may also arise when a defendant possesses or exerts control over material facts not readily available to the plaintiff. (Jones v. ConocoPhillips Co. (2011) 198 Cal.App.4th 1198, 1199.) Indeed, “[e]ven under the strict rules of common law pleading, one of the canons was that less particularity is required when the facts lie more in the knowledge of the opposite party.” (Alfaro v. Community Housing Improvement System & Planning Assn., Inc. (2009) 171 Cal.App.4th 1256, 1384.)

Contrary to Defendant’s arguments, the California Court of Appeal in Dhital v. Nissan North America, Inc. (2022) 84 Cal.App.5th 828 (“Dhital”) found the allegations very similar to, if not the same as, the ones alleged in Plaintiffs’ Complaint were sufficient to constitute a cause of action for fraudulent concealment.

In Dhital, the plaintiffs alleged the following. “[O]n November 4, 2012, they purchased a new 2013 Nissan Sentra from a Nissan dealership in San Leandro.” (Dhital, supra, 84 Cal. App. 5th at p. 833.) “On three occasions in 2015, plaintiffs took the car to an authorized Nissan repair facility because of transmission problems, including stalling, jerking, and lack of power. They eventually decided to stop using the car due to their concern it posed a risk to their safety and the safety of others ….” (Ibid.) The “Plaintiffs [further] alleged [that] Nissan manufactured or distributed more than 500,000 vehicles in the United States that were equipped with defective continuously variable transmissions (CVT’s), including plaintiffs’ Sentra and other Sentras for model years 2013 through 2017.” (Ibid. [emphasis added].) “As to Nissan’s knowledge that the transmissions were defective, plaintiffs alleged in part that Nissan ‘knew or should have known about the safety hazard posed by the defective transmissions before the sale of CVT-equipped vehicles from premarket testing, consumer complaints to the National Highway Traffic Safety Administration (“NHTSA”), consumer complaints made directly to Nissan and its dealers, and other sources which drove Nissan to issue Technical Service Bulletins acknowledging the transmission’s defect.” (Id. at p. 834 [emphasis added].).) Further, that “Nissan should not have sold, leased, or marketed the CVT-equipped vehicles without a full and complete disclosure of the transmission defect, and should have voluntarily recalled all CVT-equipped vehicles long ago.” (Ibid. [emphasis added].)

The Court of Appeal found that the Dhital plaintiffs had sufficiently pleaded fraudulent concealment to overcome a demurrer by alleging that “[1] the CVT transmissions installed in numerous Nissan vehicles (including the one plaintiffs purchased) were defective; [2] Nissan knew of the defects and the hazards they posed; [3] Nissan had exclusive knowledge of the defects but intentionally concealed and failed to disclose that information; [4] Nissan intended to deceive plaintiffs by concealing known transmission problems; [5] plaintiffs would not have purchased the car if they had known of the defects; and [6] plaintiffs suffered damages in the form of money paid to purchase the car.” (Dhital, supra, 84 Cal.App.5th at p. 844.)

In addition, as to Nissan’s argument in Dhital that “plaintiffs did not adequately plead the existence of a buyer-seller relationship between the parties, because plaintiffs bought the car from a Nissan dealership (not from Nissan itself),” the Court of Appeal held: “At the pleading stage (and in the absence of a more developed argument by Nissan on this point), we conclude plaintiffs’ allegations are sufficient. Plaintiffs alleged that they bought the car from a Nissan dealership, that Nissan backed the car with an express warranty, and that Nissan’s authorized dealerships are its agents for purposes of the sale of Nissan vehicles to consumers. In light of these allegations, we decline to hold plaintiffs’ claim is barred on the ground there was no relationship requiring Nissan to disclose known defects.” (Dhital, supra, 84 Cal.App.5th at p. 844.)

Here, like the plaintiffs in Dhital, the Complaint alleges the following. Defendant “manufactured and/or distributed hundreds of thousands of vehicles throughout the United States equipped with defective transmissions. These defective transmissions were installed in all model year 2014-2019 Honda Pilot vehicles and all model-year 2011-2019 Honda Odyssey vehicles including the [Plaintiffs’ Vehicle, a] 2017 Honda Pilot.” (Compl., ¶ 17.) “The Transmission Defect causes the transmission to [among other things] experience sudden unexpected and violent jerking or shaking … when attempting to shift into higher gearsettings.” (Compl., ¶ 19.) “The Transmission Defect creates unreasonably dangerous driving hazards” by, for example, increasing the risks of crashes due to the driver’s loss of control over their vehicle. (Compl., ¶ 20.) Defendant “knew or should have known about the safety hazard posed by the Transmission Defect before the sale of vehicles such as the 2017 Honda Pilot from pre-market testing, consumer complaints to the … [NHTSA], consumer complaints made directly to [Defendant] and its dealers, testing conducted in response to those complaints, high failure rates and replacement part sales data, and other sources which drove [Defendant] to issue Technical Service Bulletins acknowledging the transmission’s defect.” (Compl., ¶ 22.) Defendant “should not have sold, leased, or marketed vehicles equipped with The Transmission Defect without a full and complete disclosure of the defect, and should have voluntarily recalled all vehicles equipped with the Transmission Defect long ago.” (Compl., ¶ 22.) Defendant “and its authorized agents did not publicly or privately disclose to Plaintiffs any information about the Transmission Defect. These omissions were material to Plaintiffs’ decision to purchase the Subject Vehicle.” (Compl., ¶ 53.) “Had [Defendant] and/or its authorized agents publicly or privately disclosed the Transmission Defect before Plaintiffs purchased the Subject Vehicle, Plaintiffs would have been aware of such disclosures, and would not have purchased the Subject Vehicle.” (Compl., ¶ 54.)

Therefore, the Court finds the facts alleged here sufficient in light of the Court of Appeal’s opinion in Dhital.

D. Economic Loss Rule

Defendants next argue that Plaintiffs’ fourth cause of action for fraudulent inducement – concealment is barred by the economic loss rule because (1) Plaintiffs have not alleged tortious conduct independent of their breach of contract claims and, (2) even if they had, have not alleged appreciable, non-speculated present tortious damage.

“The economic loss rule provides that, ‘[i]n general, there is no recovery in tort for negligently inflicted “purely economic losses,” meaning financial harm unaccompanied by physical or property damage.’ [Citation.]” (Dhital, supra, 84 Cal.App.5th at p. 837.) “For claims arising from alleged product defects, [e]conomic loss consists of damages for inadequate value, costs of repair and replacement of the defective product or consequent loss of profits—without any claim of personal injury or damages to other property.” (Ibid. [internal quotation marks and citations removed].)

In Dhital, the Court of Appeal found that “the fraudulent inducement exception to the economic loss rule applie[d],” because the “Plaintiffs allege[d] that Nissan, by intentionally concealing facts about the defective transmission, fraudulently induced them to purchase a car. Fraudulent inducement is a viable tort claim under California law.” ((Dhital, supra, 84 Cal.App.5th at p. 838.)

Likewise, the fraudulent inducement exception to the economic loss rule applies in this case where Plaintiffs allege that they did not know of the Transmission Defect at the time of sale (Compl., ¶ 147), Defendant and its agents did not publicly or privately disclose information regarding the Transmission Defect (Compl., ¶ 53), the “omissions were material to Plaintiffs’ decision to purchase the Subject Vehicle” (Compl., ¶ 53), had they disclosed the defect, Plaintiffs “would not have purchased the Subject Vehicle” (Compl., ¶ 54), and “Plaintiffs were harmed by Defendant’s concealment of the Transmission Defect because Plaintiffs were induced to enter into the sale of a vehicle that Plaintiffs would not have otherwise Purchased” (Compl., ¶ 150).

Therefore, the Court denies Defendant’s request to find that the economic loss rule bars the fourth cause of action.

E. Statute of Limitations

Defendant also argues that the fourth cause of action for fraudulent inducement – concealment is barred by the statute of limitations.

“The statute of limitations of [CCP] section 338, subdivision (d) provides a limitations period for fraud of three years.” (Britton v. Girardi (2015) 235 Cal.App.4th 721, 733 (“Britton”).) “This section effectively codifies the delayed discovery rule in connection with actions for fraud, providing that a cause of action for fraud ‘“is not to be deemed to have accrued until the discovery, by the aggrieved party, of the facts constituting the fraud or mistake.”’ [Citation.]” The ‘date the complaining party learns, or at least is put on notice, that a representation was false’ is the date the statute starts running. [Citation.]” (Id. at pp. 733-734.)

Here, the Complaint has alleged facts showing that the earliest Plaintiffs could have had any sort of notice of their fraud claim was on or around September 21, 2020, within the statute of limitations period since they filed this lawsuit in 2021. The Complaint alleges the following. “On or around September 21, 2020, Plaintiffs brought their vehicle to an authorized repair facility for a second repair attempt concerning rough riding. Plaintiffs’ vehicle remained at the authorized repair facility for one (1) day before repair technicians finally returned the vehicle claiming it had been repaired. [Defendant] AMERICAN HONDA did not disclose any information regarding the Transmission Defect or the repairs it necessitated prior to the sale of the vehicle to Plaintiffs or at any earlier date during ownership. Accordingly, Plaintiffs could not have discovered Plaintiffs’ fraud claims prior to September 21, 2020. Plaintiffs could not, even with reasonable and diligent investigation, have discovered Plaintiffs’ claims on an earlier date because of AMERICAN HONDA’ concealment of the defects in Plaintiffs’ vehicle ….” (Compl., ¶ 64.)

In addition, “[t]he fraudulent concealment doctrine … toll[s] the statute of limitations. ‘“[T]he ground of relief is that the defendant, having by fraud or deceit concealed material facts and by misrepresentations hindered the plaintiff from bringing an action within the statutory period, is estopped from taking advantage of his own wrong.” [Citation.] ‘To take advantage of this doctrine “‘the plaintiff must show ... the substantive elements of fraud ... and ... an excuse for late discovery of the facts.’” [Citation.]’ [Citation.]” (Britton, supra, 235 Cal.App.4th at p. 734.)

Here, Contrary to the Defendant’s argument, the Court does not find that the Plaintiffs make conclusory allegations of fraudulent concealment. As discussed above, the appellate court in Dhital found similar, if not the same, factual allegations to be sufficient.

Therefore, the Court denies Defendant’s request to find that the three-year statute of limitations bars the fourth cause of action.

F. Federal Preemption

In its last argument, Defendant argues that federal law preempts the fourth cause of action for fraudulent inducement – concealment because the Complaint alleges that the Defendant “should have” recalled the Vehicle (Compl., ¶ 22) and that the issue of recalls is delegated to the NHTSA.

However, the plaintiffs in Dhital also alleged that “should have voluntarily recalled all CVT-equipped vehicles long ago” (Dhital, supra, 84 Cal.App.5th at p. 834), and the California Court of Appeal still found that the plaintiffs had pled facts sufficient to constitute a cause of action.

Therefore, the Court denies Defendant’s request to find that federal law preempts the fourth cause of action.

G. Conclusion

Accordingly, Defendant American Honda Motor Co., Inc.’s Motion for Judgment of the Pleadings is DENIED.

Motion to Strike

Defendant moves to strike Plaintiffs’ prayer for punitive damages and allegations relating to other recalls, vehicles, and complaints referenced in the Complaint.

A. Meet and Confer

The Declaration of Jonathan Kom attached to the motion reflects that the meet and confer requirement set forth in CCP § 435.5 was satisfied.

B. Analysis

Defendant moves “to strike Plaintiffs’ prayer for punitive damages on the grounds that Plaintiffs’ Song-Beverly Act and fraud causes of action cannot support the recovery of punitive damages.” (Notice of Motion to Strike, pp. 1:27-2:1.) According to the Defendant, the Song-Beverly Warranty Act does not allow recovery for punitive damages and Plaintiffs’ fraud claim is “inadequately pled … barred by the economic loss rule and statute of limitation, and it is preempted by federal law.” (Motion, p. 1:8-13.)

However, as discussed above, the Court has found that Complaint has alleged facts sufficient to constitute the fourth cause of action for fraudulent concealment – inducement, and that the claim is not barred or preempted.

Therefore, the Court denies Defendant’s request to strike the punitive damages allegations in the Complaint.

Defendant also moves to strike a “number of paragraphs relating to other recalls, other vehicles, and other complaints pulled from various websites per California Code of Civil Procedure Sections 435, 436, 437, and 431.10, which authorizes the striking of irrelevant or immaterial matter.” (Notice of Motion, p. 2:1-4.) Defendant argues that “the Complaint references technical service bulletins and recalls to different vehicles, customer complaints that are irrelevant to the Subject Vehicle, and other matters which are immaterial to Plaintiffs’ case.” (Motion, p. 2:18-20.)

The Court disagrees that the Complaint’s references to technical service bulletins and recalls to different vehicles and customer complaints are irrelevant to this case, where Plaintiffs allege that the bulletins, vehicles, and customer complaints concerned the same “defective transmission” installed in the Vehicle. (Compl., ¶¶ 17, 30-32, 34, 36, and 39.) Further, as discussed above, the plaintiffs in Dhital made the same allegations and the Court of Appeal did not find those allegations irrelevant.

Therefore, the Court denies Defendant’s request to strike Paragraphs 30-32, 34, 36, and 39 in the Complaint.

C. Conclusion

Accordingly, Defendant American Honda Motor Co., Inc.’s motion to strike is DENIED.

Moving party to give notice, unless waived.

IT IS SO ORDERED.

Dated: April 10, 2023 ___________________________________

Theresa M. Traber

Judge of the Superior Court

Any party may submit on the tentative ruling by contacting the courtroom via email at Smcdept47@lacourt.org by no later than 4:00 p.m. the day before the hearing. All interested parties must be copied on the email. It should be noted that if you submit on a tentative ruling the court will still conduct a hearing if any party appears. By submitting on the tentative you have, in essence, waived your right to be present at the hearing, and you should be aware that the court may not adopt the tentative, and may issue an order which modifies the tentative ruling in whole or in part.