Judge Thomas D. Long, Case 21STCV03527 2022-12-27 Tentative Ruling

On December 28, 2021, Plaintiff Shirlee S. Low filed a second amended complaint (“SAC”) against Defendant Kia Motors America, Inc., arising from Plaintiff’s purchase of an allegedly defective vehicle.

On September 20, 2022, Defendant filed a motion for summary adjudication of the second, third, fifth, and sixth causes of action.

Plaintiff’s request for judicial notice is denied. A different court’s unpublished and non-binding order denying summary adjudication in a different case is not relevant.

With her December 13, 2022 opposition, Plaintiff filed a Notice of Lodging, pursuant to California Rules of Court, rule 2.551(b)(3). Defendant therefore had until December 23, 2022 to file a motion to seal the conditionally lodged documents.

As of the time the Court posts the tentative order, neither party has moved to file these records under seal. The Clerk is therefore ordered to promptly transfer these documents to the public file. (California Rules of Court, rule 2.551(b)(3)(B).)

Plaintiff inserted improper argument in her responses to Defendant’s separate statement of material facts. For example, in response to Undisputed Material Fact No. 1, which states, “On May 1, 2016, Plaintiff purchased a 2017 Kia Sportage from Car Pros Kia of Glendale,” Plaintiff argues that the failure to timely repair is two distinct violations, Defendant does not meet its burden, and there are triable issues of fact. Plaintiff makes the same argument in response to Undisputed Material Fact Nos. 9-17, which state that Plaintiff presented the vehicle for service on certain dates. In response to Undisputed Material Fact No. 7, which states, “The basic warranty expired in approximately February 2020 when the vehicle surpassed 60,000 miles,” Plaintiff argues that the fact has nothing to do with the fraud claim and ignores other warranties. These responses and cited evidence do not make the facts disputed.

The separate statement of material facts is not the proper place for objections or argument. The separate statement in opposition to a motion for summary judgment is supposed to “unequivocally state whether the fact is ‘disputed’ or ‘undisputed.’ An opposing party who contends that a fact is disputed must state, on the right side of the page directly opposite the fact in dispute, the nature of the dispute and describe the evidence that supports the position that the fact is controverted. Citation to the evidence in support of the position that a fact is controverted must include reference to the exhibit, title, page, and line numbers.” (California Rules of Court, rule 3.1350(f)(2).)

On May 1, 2016, Plaintiff purchased a 2017 Kia Sportage from Car Pros Kia of Glendale. (Undisputed Material Facts “UMF” 1; Additional Material Facts “AMF” 1.) Plaintiff is listed as the buyer on the sale contract and Car Pros Kia of Glendale is listed as the seller; there are no other parties identified on the sale contract. (UMF 4.) The vehicle came with a 5-year/60,000-mile basic warranty and a 10-year/100,000-mile powertrain warranty, which covered the engine and transmission. (UMF 6; AMF 5.)

On July 9, 2016, Plaintiff presented the vehicle to Kia of Carson, where it was out of service one day for a Kia service campaign. (UMF 9; AMF 8.) On October 1, 2016, Plaintiff presented the vehicle to Kia of Carson, where it was out of service one day for the remote not unlocking the door. (UMF 10.) On October 25, 2016, Plaintiff presented the vehicle to Kia of Carson, where it was out of service one day for a non-warranty tire replacement. (UMF 11.) On August 4, 2018, Plaintiff presented the vehicle to Kia of Glendale, where it was out of service one day for two Kia service campaigns. (UMF 12; AMF 10.) On January 19, 2019, Plaintiff presented the vehicle to Kia of Glendale, where it was out of service two days for a Kia product improvement campaign. (UMF 13; AMF 11.) On February 3, 2019, Plaintiff presented the vehicle to Kia of Glendale, where it was out of service four days for a battery replacement. (UMF 14; AMF 14.) On November 16, 2019, Plaintiff presented the vehicle to Kia of Glendale, where it was out of service for one day for an RPM issue that was not duplicated. (UMF 15; AMF 15.) On August 22, 2020, Plaintiff presented the vehicle to Kia of Glendale, where it was out of service one day for a non-warranty repair. (UMF 16; AMF 16.) On August 29, 2020, Plaintiff presented the vehicle to Kia of Glendale, where it was out of service one day for a non-warranty repair. (UMF 17; AMF 17.) On June 18, 2022, with approximately 96,810 miles on the odometer, the vehicle was presented to Defendant’s authorized facility with concerns of abnormal engine vibration and RPM, among other things. (AMF 19.)

For each claim in the complaint, the defendant moving for adjudication must satisfy the initial burden of proof by showing that one or more elements of a cause of action cannot be established or that there is a complete defense to a cause of action. (Code Civ. Proc., § 437c, subd. (p)(2); Scalf v. D. B. Log Homes, Inc. (2005) 128 Cal.App.4th 1510, 1520 (Scalf).) Then the burden shifts to the plaintiff to show that a triable issue of material fact exists as to that cause of action or a defense. (Code Civ. Proc., § 437c, subd. (p)(2); Scalf, supra, 128 Cal.App.4th at p. 1520.) To establish a triable issue of material fact, the party opposing the motion must produce “substantial responsive evidence.” (Sangster v. Paetkau (1998) 68 Cal.App.4th 151, 162-163.)

Defendant argues that Plaintiff cannot prove that Defendant did not comply with its repair obligations. (Motion at pp. 4-5.)

Under Civil Code section 1793.2, subdivision (b) (second cause of action), “[w]here . . . service or repair of the goods is necessary because they do not conform with the applicable express warranties, service and repair shall be commenced within a reasonable time by the manufacturer or its representative in this state,” and “the goods shall be serviced or repaired so as to conform to the applicable warranties within 30 days.”

Under Civil Code section 1793.2, subdivision (a)(3) (third cause of action), the manufacturer must “[m]ake available to authorized service and repair facilities sufficient service literature and replacement parts to effect repairs during the express warranty period.”

Defendant contends that all warrantable repairs collectively took no more than 10 days. (Motion at pp. 2, 4.) Three visits were for Technical Service Bulletins and Product Improvement Campaigns, which were identified in documents provided to authorized repair facilities. (UMF 9, 12, 13.) Defendant has met its initial burden of showing that the vehicle was repaired within 30 days and that it provided the repair facilities with sufficient literature and replacement parts to effect repairs.

Plaintiff provides evidence that she has continued to experience problems with the vehicle’s engine in 2022. (Low Decl. ¶¶ 17-18 & Exs. 11-12.) Although the October 11, 2022 issue was with 100,954 miles on the odometer—and thus outside the 10-year/100,000-mile powertrain warranty—the June 18, 2022 issue at 96,810 miles on the odometer was within the warranty period. The primary purpose of the vehicle’s June 18, 2022 service appears to be a routine oil and filter change, but the invoice also notes, “Customer states rpm jumps customer states vibration on engine.” (Low Decl., Ex. 11.) This creates a triable issue regarding whether Defendant has repaired the vehicle to conform with the applicable express warranties and whether it provided sufficient parts or literature to effectuate successful repairs.

Defendant argues that the fifth cause of action for breach of implied warranty under Civil Code sections 1791.1, 1794, and 1795.5 is barred by the statute of limitations. (Motion at p. 5.)

An implied warranty claim is governed by the four-year statute of limitations period of California’s Uniform Commercial Code section 2725. (Mexia v. Rinker Boat Co., Inc. (2009) 174 Cal.App.4th 1297, 1305-1306 (Mexia).) “A cause of action accrues when the breach occurs, regardless of the aggrieved party’s lack of knowledge of the breach. A breach of warranty occurs when tender of delivery is made, except that where a warranty explicitly extends to future performance of the goods and discovery of the breach must await the time of such performance the cause of action accrues when the breach is or should have been discovered.” (Comm. Code, § 2725, subd. (2).) In contrast to an express warranty, “an implied warranty . . . is not a warranty that ‘explicitly extends to future performance of the goods’ [Citations.]” (Cardinal Health 301, Inc. v. Tyco Electronics Corp. (2008) 169 Cal.App.4th 116, 134 (Cardinal Health 301).) “The implied warranty of merchantability may be breached by a latent defect undiscoverable at the time of sale.” (Mexia, supra, 174 Cal.App.4th at p. 1304.) “In the case of a latent defect, a product is rendered unmerchantable, and the warranty of merchantability is breached, by the existence of the unseen defect, not by its subsequent discovery. . . . Thus, although a defect may not be discovered for months or years after a sale, merchantability is evaluated as if the defect were known” (Id. at p. 1305.)

Defendant argues any breach of the implied warranty occurred at the time of purchase on May 1, 2016, and the statute of limitations ran four years later, on May 1, 2020. (Motion at p. 6.) Plaintiff filed this action on January 28, 2021. Defendant has met its initial burden.

In opposition, Plaintiff argues that a claim can be tolled by delayed discovery or fraudulent concealment. (Opposition at p. 8.) But Plaintiff cites cases that are either nonbinding federal orders or which do not involve the statute of limitations for implied warranties. (Ibid.) Plaintiff does not refute that the cause of action accrued when the breach occurred (when tender of delivery was made), and that an implied warranty does not explicitly extend to future performance of the goods. (See Comm. Code, § 2725, subd. (2); Cardinal Health 301, supra, 169 Cal.App.4th at p. 134.)

Defendant argues that the sixth cause of action is barred by the economic loss rule. (Motion at pp. 9-11.) 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 said to be in contract alone, for he has suffered only ‘economic’ losses.” (Robinson Helicopter Co., Inc. v. Dana Corp. (2004) 34 Cal.4th 979, 988 (Robinson Helicopter), quotation marks omitted.) However, tort damages may be permitted when the breach of contract is accompanied by a tort such as fraud. (Id. at pp. 989-990.) To plead around the economic loss rule, a party must plead the existence of a duty that arises independent of any contractual duty and independent injury, other than economic loss, that arises from the breach of that duty. (Id. at pp. 988-991.)

The Court of Appeal recently “conclude[d] that, under California law, the economic loss rule does not bar [a claim] for fraudulent inducement by concealment. Fraudulent inducement claims fall within an exception to the economic loss rule recognized by our Supreme Court” in Robinson, and such claims allege fraudulent conduct that is independent of the alleged warranty breaches. (Dhital v. Nissan North America, Inc. (2022) 84 Cal.App.5th 828, 843.)

Fraud based on concealment requires that “(1) the defendant must have concealed or suppressed a material fact, (2) the defendant must have been under a duty to disclose the fact to the plaintiff, (3) the defendant must have intentionally concealed or suppressed the fact with the intent to defraud the plaintiff, (4) the plaintiff must have been unaware of the fact and would not have acted as he did if he had known of the concealed or suppressed fact, and (5) as a result of the concealment or suppression of the fact, the plaintiff must have sustained damage.” (Bigler-Engler v. Breg, Inc. (2017) 7 Cal.App.5th 276, 310-311 (Bigler-Engler).) An essential element of intentional concealment includes the duty to disclose, which must be based upon a transaction, or a special relationship, between plaintiff and defendant. (Id. at p. 314.)

“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. 311.) “[O]ther than the first instance, in which there must be a fiduciary relationship between the parties, ‘the other three circumstances in which nondisclosure may be actionable presuppose[ ] the existence of some other relationship between the plaintiff and defendant in which a duty to disclose can arise. . . . “[W]here material facts are known to one party and not to the other, failure to disclose them is not actionable fraud unless there is some relationship between the parties which gives rise to a duty to disclose such known facts.” [Citation.]’ [Citation.]” (Hoffman v. 162 North Wolfe LLC (2014) 228 Cal.App.4th 1178, 1187.)

Defendant argues that it had no duty to disclose to Plaintiff because there was no transaction between the parties. (Motion at pp. 11-12.) Plaintiff purchased the vehicle from Car Pros Kia of Glendale, not Defendant. (UMF 4-5.) Defendant has met its burden of showing no relationship between it and Plaintiff.

Plaintiff cites OCM Principal Opportunities Fund v. CIBC World Markets Corp. (2007) 157 Cal.App.4th 835, 851 (OCM) for the proposition that “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.” (Opposition at p. 13.) OCM involved an investment dispute in which an investment bank prepared an offering memorandum for unregistered promissory notes issued by a fragrance company. The investment bank sold the unregistered notes to qualified buyers; these notes were then transformed into registered notes according to a predetermined process, and the registered notes were eventually traded on the open market and purchased by the plaintiffs. Those plaintiffs relied on written representations the investment bank had made in its offering memorandum in making their decision to purchase the notes. The company folded shortly thereafter and the plaintiffs brought suit, alleging that the investment bank had failed to disclose in the offering memorandum that the fragrance company was struggling. The Court of Appeal affirmed that the investment bank had a legal duty to disclose the company’s struggles to investors in this scenario.

Two major points make OCM inapposite to this case. First, the investment bank in OCM had issued a written offering memorandum that it knew that the eventual purchasers of the registered notes would reference in deciding whether to purchase. That brings this case under the fourth circumstance in which a defendant has made partial representations while withholding material information. Fourth-prong cases are of an entirely different character than this case because in fourth-prong cases, the defendant has already established the requisite relationship with the plaintiff by making the partial representations. Second, none of the cases upon which the OCM court based its oft-cited assertion about subsequent purchasers suggest that the rule from OCM should apply in a situation where the three entities are the manufacturer, the distributor, and the retail consumer.

For example, in Barnhouse v. City of Pinole (1982) 133 Cal.App.3d 171 (Barnhouse), a home developer concealed deficient soil conditions, and several homeowners brought suit for fraud by omission against the developer. Some of those homeowners were subsequent purchasers, i.e., they bought their home from a prior homeowner and not from the developer itself. The Court of Appeal confirmed that in such a case, the fraudulent omission claim would pass from the initial purchaser to the subsequent purchaser. It observed that, in this situation, since both the initial purchaser and the subsequent purchaser were unaware of the soil problems, the initial purchaser was unharmed, and it would be unjust to see the fraud claim as extinguished merely because the nondisclosure had “passed on” from one homeowner to another. Crucially, in this situation, the requisite relationship (buyer-seller) existed in the first place between the developer and the initial buyer, and the fraudulent omission that arose from that transaction was then passed on to the subsequent purchaser.

Here, Plaintiff is not alleging that Defendant, the manufacturer, committed fraud upon the dealer as an initial purchaser of the vehicle and that that omission to the dealer has been passed on to Plaintiff who may now sue for fraud as a “subsequent purchaser.” Plaintiff does not have the required relationship with the manufacturer like the initial buyers in Barnhouse did with the developer. There is nothing in OCM or Barnhouse that indicates that a retail purchaser possesses the requisite relationship with the manufacturer merely because the purchaser purchased the item from an intermediary distributor.

Defendant argues that Plaintiff lacks evidence of her damages and cannot prove the actual value or market price of the defective vehicle. (Motion at pp. 14-15.)

“[A] defendant moving for summary judgment [must] present evidence, and not simply point out that the plaintiff does not possess, and cannot reasonably obtain, needed evidence.” (Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 854, footnote omitted.) Defendant must therefore “present evidence that the plaintiff does not possess, and cannot reasonably obtain, needed evidence—as through admissions by the plaintiff following extensive discovery to the effect that he has discovered nothing.” (Id. at p. 855.) Defendant ahs not done so here.

Defendant argues that Plaintiff lacks evidence to support her request for punitive damages. (Motion at pp. 15-17.)

“Only the grounds specified in the notice of motion may be considered by the trial court. [Citation.] This rule has been held to be especially true in the case of motions for summary adjudication of issues.” (Gonzales v. Superior Court (1987) 189 Cal.App.3d 1542, 1545.)

The Notice of Motion seeks adjudication of the second, third, fifth, and sixth causes of action. The Memorandum of Points and Authorities is similarly titled “KIA AMERICA, INC.’S MOTION FOR SUMMARY ADJUDICATION OF PLAINTIFF’S SECOND, THIRD, FIFTH, AND SIXTH CAUSES OF ACTION.” Only the argument section of the motion seeks adjudication of the issue of punitive damages.

The motion for summary adjudication is GRANTED for the fifth and sixth causes of action, and is otherwise denied.

Parties who intend to submit on this tentative must send an email to the Court at SMCDEPT48@lacourt.org indicating intention to submit. Parties intending to appear are encouraged to appear remotely and should be prepared to comply with Dept. 48’s new requirement that those attending court in person wear a surgical or N95 or KN95 mask.

Hon. Thomas D. Long

Judge of the Superior Court