Judge Thomas D. Long, Case Number: 24STCV25704, Date: 2025-06-03 Tentative Ruling

On October 3, 2024, Plaintiff Barbara Lana Labon filed this action against Defendant FCA US LLC arising from Plaintiff’s purchase of an allegedly defective vehicle.

On November 22, 2024, Defendant filed an answer, and on April 29, 2025, Defendant filed a motion for judgment on the pleadings as to the sixth cause of action for Fraudulent Inducement – Concealment.

A motion for judgment on the pleadings is the functional equivalent to a general demurrer. (Lance Camper Mfg. Corp. v. Republic Indemnity Co. of Am. (1996) 44 Cal.App.4th 194, 198.) Accordingly, the Court occasionally cites law about the pleadings standards on demurrer.

Like demurrers, motions for judgment on the pleadings challenge the legal sufficiency of the allegations, not their veracity. (Donabedian v. Mercury Ins. Co. (2004) 116 Cal.App.4th 968, 994.) The Court “must accept as true all material facts properly pleaded, but does not consider conclusions of law or fact, opinions, speculation, or allegations contrary to law or facts that are judicially noticed.” (Stevenson Real Estate Services, Inc. v. CB Richard Ellis Real Estate Services, Inc. (2006) 138 Cal.App.4th 1215, 1219-1220.)

Defendant argues that the sixth cause of action does not state sufficient facts. (Motion at pp. 17-20.)

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).) “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.)

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 (Hoffman).)

Defendant argues that “the Complaint does not specify any particular misrepresentation or omission made directly to Plaintiff that induced reliance in purchasing the Subject Vehicle.” (Motion at pp. 18-19.) “Plaintiff’s Complaint fails to allege that any false assertions were made,” and it “fails to state who, if anyone, made the assertion or statement and whether that person knew that the assertion or statement was false.” (Id. at p. 19.) Plaintiff does not allege any affirmative misrepresentation; rather, Plaintiff alleges that material information was concealed.

Plaintiff alleges that Defendant knew about the defects before she purchased the vehicle. (See, e.g., Complaint ¶¶ 19, 21.) Because of the defect, “Plaintiff was harmed by purchasing a vehicle that Plaintiff would not have leased and/or purchased had Plaintiff known the true facts about the Engine Defect” and “was unknowingly exposed to the risk of liability, accident and injury as a result of Defendant’s fraudulent concealment.” (Complaint ¶¶ 71-72.) Plaintiff did not know about these defects and problems, and Defendant, who had superior knowledge of the defect, did not disclose the defects when Plaintiff purchased the vehicle. (E.g., Complaint ¶¶ 21, 23, 25-29.) The allegations are specific enough to allege the information that was concealed. (See Jones v. ConocoPhillips Co. (2011) 198 Cal.App.4th 1187, 1199-1200.)

Plaintiff also sufficiently alleges Defendant’s exclusive knowledge of the defect. Defendant knew of the defect “through sources not available to consumers such as Plaintiff, including but not limited to pre-production testing data, early consumer complaints about the Engine Defect made directly to FCA and its network of dealers, aggregate warranty data compiled from FCA’s network of dealers, testing conducted by FCA in response to these complaints, as well as warranty repair and part replacements data received by FCA from FCA’s network of dealers, amongst other sources of internal information.” (Complaint ¶¶ 22, 67(a); see Complaint ¶¶ 26, 29.)

Defendant argues that the sixth cause of action is barred by the three-year statute of limitations. (Motion at pp. 8-14; see Code Civ. Proc., 338, subd. (d).)

To sustain a demurrer on the statute of limitations, the running of the statute must appear clearly and affirmatively on the face of the complaint. (Geneva Towers Ltd. Partnership v. City of San Francisco (2003) 29 Cal.4th 769, 781.) “‘[I]t is not enough that the complaint might be time-barred. [Citation.]’” (Ibid.)

Plaintiff alleges that on April 30, 2021, she entered into a warranty contract with Defendant. (Complaint ¶ 10.) Before Plaintiff purchased the vehicle, Defendant “was well aware and knew that the Vehicle was defective but failed to disclose this fact to Plaintiff at the time of sale and thereafter.” (Complaint ¶ 21; see Complaint ¶¶ 22-24, 28.) Plaintiff was harmed by this concealment when she purchased a vehicle that she otherwise would not have purchased. (Complaint ¶ 71.) Accordingly, the deadline to file an action for fraudulent inducement of that purchase was April 30, 2024, but Plaintiff did not file this action until October 3, 2024.

Plaintiff alleges that “the running of the limitation periods have been tolled by, inter alia, the following doctrines or rules: equitable tolling, the discovery rule, the fraudulent concealment rules, equitable estoppel, the repair rule, and/or class action tolling (e.g., the American Pipe rule).” (Complaint ¶ 7.)

Plaintiff does not allege any facts for class action tolling or the repair doctrine, so these cannot be bases for tolling. (See Motion at pp. 10-14.) Plaintiff also does not address these in her Opposition. Accordingly, only Plaintiff’s delayed discovery of Defendant’s concealment is at issue.

“The general rule is that the statute of limitations begins to run when the wrongful act is done, even though the plaintiff is ignorant of his or her cause of action or of the identity of the wrongdoer.” (Snow v. A. H. Robins Co. (1985) 165 Cal.App.3d 120, 127.) The running of the statute of limitations may be postponed on certain causes of action until the time of discovery of the facts. (Ibid.) “With respect to actions based on fraud, the statute of limitations is tolled whenever plaintiff is able to show the defendant fraudulently concealed facts which would have led him to discover his potential cause of action.” (Id. at pp. 127-128.)

Plaintiff alleges that she discovered the wrongful conduct on September 12, 2024, when she requested a buyback and/or restitution of the vehicle, but Defendant failed to provide restitution. (Complaint ¶ 8.) Although this may be sufficient delayed discovery for the Song-Beverly violations, this does not allege facts about when Plaintiff discovered that Defendant concealed information.

However, the Complaint still does not facially show that the statute of limitations bars this cause of action. Plaintiff does allege that “[d]efects and nonconformities to warranty manifested themselves within the applicable express warranty period, including but not limited to, engine defects, transmission defects, electrical defects; among other defects and non-conformities,” but no dates are alleged. (Complaint ¶ 15.) It is not clear from the face of the Complaint when Plaintiff should have discovered that Defendant concealed information about the vehicle’s defects. Plaintiff also alleges that Defendant had superior and exclusive knowledge of the defects through “sources not available to consumers, including FCA’s own aggregate pre-market data and other aggregate post-market data from FCA authorized dealers.” (Complaint ¶ 26.)

Defendant argues that the sixth cause of action is barred by the economic loss rule. (Motion at pp. 14-17.)

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), 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.)

“[U]nder 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.) The Supreme Court recently confirmed that “the economic loss rule does not apply to limit recovery for intentional tort claims like fraud.” (Rattagan v. Uber Technologies, Inc. (2024) 17 Cal.5th 1, 38 (Rattagan).) “A plaintiff may assert a tort claim for fraudulent concealment based on conduct occurring in the course of a contractual relationship, if the elements of the cause of action can be established independently of the parties’ contractual rights and obligations and the tortious conduct exposes the plaintiff to a risk of harm beyond the reasonable contemplation of the parties when they entered into the agreement.” (Ibid.)

Defendant contends that the Complaint fails to allege any independent duty or harm beyond the terms of the contractual relationship, and only economic damages from breach of warranty are alleged. (Motion at pp. 16-17.) Plaintiff “was harmed by purchasing a vehicle that Plaintiff would not have leased and/or purchased had Plaintiff known the true facts about the Engine Defect.” (Complaint ¶ 71.) This harm is purely economic from the purchase of the vehicle. Plaintiff’s allegation that she was “unknowingly exposed to the risk of liability, accident and injury” (Complaint ¶ 72) does not state that he in fact was damaged. Unknown risk that does not result in liability or injury by definition is not actual damage. (Small v. Fritz Companies, Inc. (2003) 30 Cal.4th 167, 202 [“Misrepresentation, even maliciously committed, does not support a cause of action unless the plaintiff suffered consequential damages,” concurring opinion]; Boschma v. Home Loan Center, Inc. (2011) 198 Cal.App.4th 230, 248 [“as a result of the concealment or suppression of the fact, the plaintiff must have sustained damage”].)

Plaintiff’s only alleged harm is the economic harm from her purchase of the vehicle, which was within the reasonable contemplation of the parties when they entered into the agreement. (See Rattagan, supra, 17 Cal.5th at p. 38.) Accordingly, this cause of action is barred by the economic loss rule.

The motion for judgment on the pleadings is GRANTED on the ground that the economic loss rule bars the sixth cause of action.

Parties who intend to submit on this tentative must send an email to the Court at SMCDEPT48@lacourt.org indicating intention to submit. If all parties in the case submit on the tentative ruling, no appearances before the Court are required unless a companion hearing (for example, a Case Management Conference) is also on calendar.

Hon. Thomas D. Long

Judge of the Superior Court