Judge: Theresa M. Traber, Case: 22STCV17800, Date: 2023-03-29 Tentative Ruling
Case Number: 22STCV17800 Hearing Date: March 29, 2023 Dept: 47
Tentative Ruling
Judge Theresa M. Traber, Department 47
HEARING DATE: March 29, 2023 TRIAL
DATE: NOT SET
CASE: Rafael Aguilar Murillo v. General
Motors, LLC
CASE NO.: 22STCV17800 
DEMURRER
TO FIRST AMENDED COMPLAINT AND MOTION TO STRIKE PORTIONS OF COMPLAINT
MOVING PARTY: Defendant General Motors, LLC
RESPONDING PARTY(S): Plaintiff Rafael
Aguilar Murillo
STATEMENT
OF MATERIAL FACTS AND/OR PROCEEDINGS:
This is a lemon law action filed on May 31, 2022. Plaintiff purchased a
new 2018 Chevrolet Cruze which subsequently manifested serious engine
defects.
Defendant demurs to the fifth cause
of action in the first amended complaint and moves to strike portions of the
complaint.
TENTATIVE RULING:
Defendant’s
Demurrer to the fifth cause of action is OVERRULED.
Defendant’s
Motion to Strike is DENIED.
DISCUSSION:
Demurrer to First Amended Complaint
Defendant
demurs to the fifth cause of action in the first amended complaint for
fraudulent concealment.
Legal
Standard
A demurrer 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 via proper judicial
notice. (Donabedian v. Mercury Ins. Co. (2004) 116 Cal.App.4th 968,
994.) “A demurrer tests the pleadings alone and not the evidence or other
extrinsic matters. Therefore, it lies only where the defects appear on the face
of the pleading or are judicially noticed.” (SKF Farms v. Superior Court
(1984) 153 Cal.App.3d 902, 905.) “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 p. 747.) The
ultimate facts alleged in the complaint must be deemed true, as well as all
facts that may be implied or inferred from those expressly alleged. (Marshall
v. Gibson, Dunn & Crutcher (1995) 37 Cal.App.4th 1397, 1403; see also Shields
v. County of San Diego (1984) 155 Cal.App.3d 103, 133 [stating, “[o]n
demurrer, pleadings are read liberally and allegations contained therein are
assumed to be true”].) “This rule of liberal construction means that the
reviewing court draws inferences favorable to the plaintiff, not the
defendant.” (Perez v. Golden Empire Transit Dist. (2012) 209 Cal.App.4th
1228, 1238.)
Meet and Confer
Before filing a demurrer, the
demurring party shall meet and confer in person or by telephone with the party
who has filed the pleading subject to the demurrer and file a declaration
detailing their meet and confer efforts. (Code Civ. Proc., § 430.41(a).)
However, an insufficient meet and confer process is not grounds to overrule
or sustain a demurrer. (Code Civ. Proc., § 430.41(a)(4).)
The Declaration of Ryan Kay filed
in support of this motion states that he met and conferred telephonically with
Plaintiff’s counsel on September 22, 2022 to resolve the issues raised in this
demurrer, but no resolution was reached. (Declaration of Ryan Kay ISO Demurrer
& Mot. ¶ 2.) As evidence of a sincere, good-faith effort to informally
resolve this dispute, a single sentence in a two-paragraph declaration is
somewhat of a slender reed. However, as Plaintiff has not objected to the
demurrer or motion to strike on this basis, the Court finds that Defendant has
complied with its statutory meet-and-confer obligations.
Statute of Limitations
Defendant
demurs to the fifth cause of action for fraudulent concealment on the grounds
that it is barred by the applicable statute of limitations.
Code of
Civil Procedure section 338(d) states that a party has three years to bring an
action for relief on the ground of fraud or mistake, and that “[t]he cause of
action in that case is not deemed to have accrued until the discovery, by
the aggrieved party, of the facts constituting the fraud or mistake.”
(Code Civ. Proc. § 338(d) [emphasis added].)
Defendant
contends that this claim is barred by the statute of limitations because the
First Amended Complaint alleges that Plaintiff purchased the subject vehicle on
May 30, 2018, four years and one day before this action was filed, but also
alleges that “[d]efects and nonconformities to warranty manifested themselves
within the applicable express warranty period. . .” (FAC ¶¶ 6, 13.) Defendant
argues, without citation to any supporting authority, that the statute of
limitations began to run on May 30, 2018, the day Plaintiff purchased the
vehicle, and therefore that the action should have been filed on or before May
30, 2021. The Court is not persuaded by this conclusory assertion. The Court is
obligated to construe all allegations and inferences in the light most
favorable to the nonmoving party. Defendant’s assumption is wholly improper,
and an insufficient basis for demonstrating that this cause of action is barred
by the statute of limitations.
Defendant also
argues that, even if Plaintiff did not have any reason to suspect a defect in
the vehicle prior to the alleged April 16, 2020 and December 22, 2020 repair
visits, those visits should have been sufficient to put Plaintiff on notice and
cause this claim to accrue. (See FAC ¶¶ 40-41.) Defendant contends that even if
the claim accrued at the time of either of those repair visits, Plaintiff’s
claim still falls outside the statute of limitations. A three-year statute of
limitations running from April 16, 2020 would expire on April 16, 2023, and, if
running from December 22, 2020, would expire on December 22 2023. Thus,
Defendant’s argument only serves to expose a plausible interpretation of the
allegations in the First Amended Complaint that would lead to the conclusion
that Plaintiff’s cause of action is not barred by the statute of limitations.
As the Court is obligated to construe all allegations in favor of the nonmoving
party on demurrer, for that reason alone, Defendant has failed to demonstrate
that this claim is barred by the statute of limitations.
Failure to State Sufficient Facts
Defendant also demurs to the fifth
cause of action for fraudulent concealment for failure to state facts
sufficient to constitute a cause of action.
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.)
Defendant asserts that this cause of action is without merit because
it fails to adequately allege specific facts giving rise to the claim, because
Plaintiff did not allege a transactional relationship, and because the claim is
barred by the economic loss rule.
1. Specificity
Defendant argues that Plaintiff has failed to adequately allege
fraudulent concealment with specificity because Plaintiff did not allege “(1)
the identity of the individuals at GM who purportedly concealed material facts
or made untrue representations about his Cruze, (ii) their authority to speak
and act on behalf of GM, (iii) GM’s knowledge about alleged defects in
Plaintiff’s Cruze at the time of purchase, (iv) any interactions before or
during the purchase of his Cruze, or (v) GM’s intent to induce reliance by
Plaintiff to purchase the specific Cruze at issue.” (Demurrer pp. 15:24-16:2.)
Defendant relies on the general rule for pleading fraud against a corporation,
which requires a plaintiff to allege the identity of the speaker, their
authority, to whom they spoke, what they said, and when it was said. (See,
e.g., Tarmann v. State Farm Mut. Auto Ins. Co. (1991) 2 Cal.App.4th 153,
157.) As Plaintiff correctly states in opposition, however, this rule is
inapplicable to a claim of fraudulent concealment. (Alfaro v. Community
Housing Improvement System & Planning Association, Inc. (2009) 171
Cal.App.4th 1356, 1384 [“How does one show ‘how’ and ‘by what means’ something
didn’t happen, or ‘when’ it never happened, or ‘where’ it never happened?”].)
Instead, such details, in the context of a fraudulent concealment claim, “are
properly the subject of discovery, not demurrer.” (Id. at 1384-85.)
Plaintiff
sufficiently alleges fraud by omission. The complaint alleges a variety of
defects, including “latent defects causing and/or resulting in an engine
coolant leak from the water pump, water pump weep reservoir, and/or water pump
shaft/seal. (FAC ¶ 29.) It also alleges specific facts demonstrating that
Defendant had the requisite knowledge. (¶¶ 30-31, 33-37.) The complaint also
contains sufficient allegations to support Defendant’s duty to disclose the
defect, because it alleges that Defendant had exclusive knowledge of the defect
and that the defect was not known by Plaintiff. (¶¶ 31, 35.) Finally, Plaintiff
had adequately alleged intent to defraud or induce reliance, actual reliance,
and damages. (¶¶ 82-86.)
Defendant has therefore failed to show that this cause of action is
without merit based on a lack of specificity.
2. Special or Transactional Relationship
Defendant next argues that it had no
duty to disclose any defect because it had no special or transactional
relationship with Plaintiff.
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.)
“Even 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.)
Defendant argues that this cause of
action fails because, although the First Amended Complaint contends that
Defendant had exclusive knowledge of and actively concealed material facts from
Plaintiff, the First Amended Complaint does not allege a transactional
relationship between the parties. Ordinarily, a duty to disclose absent a
fiduciary relationship “presupposes the existence of [a] relationship between
the plaintiff and defendant in which a duty to disclose can arise.” (Bigler-Engler
v. Breg, Inc. (2017) 7 Cal.App.5th 276, 311.) Defendant relies on the
general rule to argue that, because Defendant is the manufacturer of
Plaintiff’s vehicle, there was not a “direct dealing” between the parties that
gives rise to a duty to disclose. (See Bigler-Engler, supra, at 311.)
Defendant’s reliance on the Bigler-Engler rule is misplaced, as
that case is both unpersuasive in this context and factually distinguishable.
Bigler-Engler is unpersuasive
because, although a manufacturer does not have a transactional relationship
with the “public at large” (id.), a vendor does have 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.” (OCM Principle Opportunities Fund v. CIBC World Markets Corp. (2007)
157 Cal.App.4th 835, 859-60.) Here, the essential allegation is that
Plaintiff is not a member of the public at large, but a subsequent purchaser of
a product manufactured by Defendant. Furthermore, Bigler-Engler is
factually distinguishable from this case, as that action was, at its heart, a
medical malpractice case in which the plaintiff was a patient who sued a
physician, the physician’s medical group, and the manufacturer of the medical
device involved. (Bigler-Engler, supra, 7 Cal.App.5th at 284.)
Here, however, Plaintiff is a purchaser of the product himself, not
merely the person on whom the product was used. The Court does not interpret
existing precedent to require Plaintiff to allege any further relationship with
the manufacturer of the vehicle exhibiting the defects giving rise to this
action.
The Court therefore concludes that
Defendant has not shown that the fifth cause of action does not state facts
sufficient to constitute a cause of action on this basis.
3. Economic
Loss Rule
Defendant also argues that the economic loss rule bars
Plaintiff’s fifth cause of action, because Plaintiff is attempting to recover
tort damages arising from a contract.
Under the economic loss rule, “[w]here a purchaser’s
expectations in a sale are frustrated because the product he bought is not
working properly, his remedy is in contract alone, for he has suffered only
‘economic losses.’” (Robinson Helicopter Co., Inc. v. Dana Corp. (2004)
34 Cal.4th 979, 988.) The economic loss rule “hinges on a distinction drawn
between transactions involving the sale of goods for commercial purposes where
economic expectations are protected by commercial and contract law, and those
involving the sale of defective products to individual consumers who are
injured in a manner which has traditionally been remedied by resort to the law
of torts.” (Id.) Simply stated, the economic loss rule “prevents the law
of contract and the law of tort from dissolving one into the other.” (Id.)
The restrictions on contract remedies serve purposes not
found in tort law—they protect the parties’ freedom to bargain over special
risks, and they promote contract formation by limiting liability to the value
of the promise. (Harris v. Atlantic Richfield (1993) 14 Cal.App.4th 70,
77.) This encourages efficient breaches, resulting in increased production of
goods and services at a lower cost to society. (Id.) Because of these
overriding policy considerations, the California Supreme Court has proceeded with
caution in carving out exceptions to the traditional contract remedy
restrictions. (Id.)
Nevertheless, the most widely recognized exception to the
economic loss rule is when a defendant’s conduct constitutes a tort as well as
a breach of contract. (Id. at 78.) When one party commits fraud during
the contract formation or performance, the injured party may recover in both
contract and tort. (Id.)
Because Plaintiffs have adequately alleged fraud, their
complaint is not barred by the economic loss rule. Allowing Plaintiffs’ fraud
cause of action to proceed will further, rather than undermine, the public
policy of allowing parties to freely bargain over special risks, because
parties who are deprived of material facts governing their decision to enter
into a contract do not “freely” enter into the contract. Therefore, the
economic loss rule does not bar Plaintiffs fraud cause of action.
Conclusion
Accordingly, Defendant’s Demurrer to
the fifth cause of action is OVERRULED.
Motion to Strike
Defendant
moves to strike subsection (d) of Plaintiff’s prayer for relief.
Legal Standard
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. “When the defect which justifies striking a complaint is capable of cure,
the court should allow leave to amend.” Vaccaro v. Kaiman (1998) 63
Cal.App.4th 761, 768. A motion to
strike can be used where the complaint or other pleading has not been drawn or
filed in conformity with applicable rules or court orders. Code Civ.
Proc., § 436(b). This provision is for "the striking of a pleading due to
improprieties in its form or in the procedures pursuant to which it
was filed." Ferraro v. Camarlinghi (2008) 161
Cal.App.4th 509, 528 (emphasis in original).
Meet and Confer
Before filing a motion to strike,
the moving party shall meet and confer in person or by telephone with the party
who has filed the pleading subject to the motion to strike and file a
declaration detailing their meet and confer efforts. (Code Civ. Proc., §
435.5(a).) However, an insufficient meet and confer process is not grounds to
grant or deny a motion to strike. (Code Civ. Proc., § 435.5(a)(4).)
For the
reasons stated above in connection with the Demurrer, the Court finds that
Defendant has complied with the statutory meet and confer requirements.
Analysis
Defendant
seeks to strike subsection (d) of the prayer for relief, which seeks punitive
damages. Defendant argues that because Plaintiff’s fraud cause of action fails,
the prayer for punitive damages must be stricken. As stated above, the Court
has concluded that Plaintiff has adequately pled a cause of action for
fraudulent concealment. Punitive damages are explicitly authorized when fraud
is pled. (See Civ. Code § 3294.)
Conclusion
Accordingly,
Defendant’s Motion to Strike is DENIED.
CONCLUSION:
Accordingly,
Defendant’s Demurrer to the fifth cause of action is OVERRULED.
Defendant’s
Motion to Strike is DENIED.
Moving
Party to give notice.
IT IS SO ORDERED.
Dated: March 29, 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.