Judge Thomas Falls, Case 22PSCV01057 2022-12-06 Tentative Ruling

(1) DEFENDANT AMERICAN HONDA MOTOR CO., INC.’S DEMURRER TO PLAINTIFF’S SECOND CAUSE OF ACTION FOR FRAUDULENT INDUCEMENT-CONCEALMENT

(2) DEFENDANT AMERICAN HONDA MOTOR CO., INC.’S MOTION TO STRIKE PLAINTIFF’S PRAYER FOR PUNITIVE DAMAGES

(1) DEFENDANT AMERICAN HONDA MOTOR CO., INC.’S DEMURRER TO PLAINTIFF’S SECOND CAUSE OF ACTION FOR FRAUDULENT INDUCEMENT-CONCEALMENT is SUSTAINED with leave to amend.

(2) DEFENDANT AMERICAN HONDA MOTOR CO., INC.’S MOTION TO STRIKE PLAINTIFF’S PRAYER FOR PUNITIVE DAMAGES is MOOT.

This is a lemon law case. Plaintiff, NORMA PEREZ VILLARREAL, (“Plaintiff”) alleges the following against Defendant, AMERICAN HONDA MOTOR CO., INC., (“Defendant”): In 2021, Plaintiff purchased a used Honda Odyssey (“Subject Vehicle”), which includes a “9-Speed Transmission” (“Transmission”). According to Plaintiff, Defendant knew that the Transmission is defective and dangerous; yet, despite this knowledge since 2014, Defendant “concealed the existence of those defects from Plaintiff and other consumers.” (Complaint ¶¶17, 21.)

On October 19, 2022, Defendant filed the instant Demurrer with a Motion to Strike.

On November 21, Plaintiff filed an Opposition to both the Demurrer and Motion to Strike.

On November 29, 2022, Defendant filed its Reply to the Demurrer and Motion to Strike.

Defendant demurs to the 2^nd cause of action for Fraudulent Inducement on the following grounds:

- Plaintiff’s Fraudulent Deceit Allegations are Insufficient to State a Cause of Action as a Matter of Law

i. Plaintiff failed to plead that Defendant concealed or suppressed a material fact.

ii. Plaintiff Failed to Plead Facts Sufficient to Establish the Existence of a Duty to Disclose

iii. Plaintiff fails to allege facts beyond pure conclusions of AHM’s intent to deceive Plaintiff.

The elements of an action for fraud and deceit based on a concealment are: (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. (Boschma v. Home Loan Ctr., Inc., 198 Cal. App. 4th 230, 248, see also CACI 1901.) Additionally, fraud must be pled specifically wherein a plaintiff shows “how, when, where, to whom, and by what means the representations were tendered.” (Stansfield v. Starkey (1990) 220 Cal. App. 3d 59, 74.) Furthermore, as for this requirement of specify, in an action against a corporation, a plaintiff must “allege the names of the persons who made the allegedly fraudulent representations, their authority to speak, to whom they spoke, what they said or wrote, and when it was said or written. (Tarmann v. State Farm Mut. Auto. Ins. Co. (1991) 2 Cal.App.4th 153, 157.

“A fact is deemed ‘material,’ and obligates an exclusively knowledgeable defendant to disclose it, if a “reasonable [consumer]’ would deem it important in determining how to act in the transaction at issue.” (Collins v. eMachines, Inc. (2011) 202 Cal.App.4th 249, 256.)

Defendant’s predominant arguments, amongst others, are that (1) Plaintiff does not plead that Defendant made any specific representations directly to Plaintiff and that (2) dealerships are not agents of automobile manufacturers. (Demurrer p. 11.)[1]

In Opposition, Plaintiff cites paragraphs 18-48 and 80 of the complaint to illustrate that Defendant withheld material facts.[2]

At the outset, the court notes that Plaintiff’s 2^nd cause of action “incorporates by reference” preceding allegations. While that is standard pleading practice, it is not a court’s duty to determine what allegations form what elements of a cause of action. Even in Plaintiff’s opposition, Plaintiff cites to numerous allegations, leaving the court to determine what specific material fact was purportedly concealed. That said, as sustaining the demurrer on technical grounds would be a waste of judicial economy because it wouldn’t address Defendant’s substantive arguments, the court will overlook this defect.

Turning to the complaint, the allegations pertinent to the fraud cause of action are the following:

As early as 2014, [Defendant] was aware that the vehicles equipped with the 9- Speed Transmission plagued with the Transmission Defect, contained one or more design and/or manufacturing defects.

[Defendant] knew or should have known about the safety hazard posed by the Transmission Defect before the sale of vehicles such as the Subject Vehicle from pre-market testing including testing incoming components, such as the 9-Speed Transmission, to verify the parts are free from defect and align with Honda’s specifications, consumer complaints to the National Highway Traffic Safety Administration (“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. [Defendant] should not have sold, leased, or marketed vehicles equipped with the 9-Speed Transmission plagued 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.

In fact, before [Defendant’s] implementation of the ZF9HP in its fleet of vehicles like the Subject Vehicle, over one hundred Jeep Cherokee owners filed complaints with the National Highway Traffic Safety Administration (“NHTSA”), and FCA had already issued three technical service bulletins (“TSBs”) relating to problems with the ZF 9HP Automatic Transmission.

Despite hundreds of consumer complaints made to the NHTSA regarding the Transmission Defect, Defendant has systematically withheld information regarding the defective transmission found in vehicles such as the Subject Vehicle.

Here, however, what appears fatal to Plaintiff’s complaint is that Plaintiff itself concedes that disclosures were made. (See ¶83 [AMERICAN HONDA acknowledged these problems in TSBs.”]; see also Reply p. 3, quoting Complaint ¶¶11-40 [“[T]he operative facts underlying the alleged Transmission Defect in Honda (and other) vehicles were publicly available through multiple sources, including the [NHTSA], and [TSBs] and other guidance released to dealerships and repair facilities as far back as 2014 [citation] long before Plaintiff purchased the vehicle.”].)

Not only were disclosures about problems with the Transmission publicly available—undermining any argument that such facts were concealed—a reading of other allegations still leaves the following question: what particular representation did Defendant fail to make to this particular Plaintiff about the Transmission in this particular subject vehicle? The complaint merely states that Plaintiff expected that Defendant “would disclose any such defects[4] to its consumers before they purchased or leased their vehicles. Plaintiff and other consumers did not expect [Defendant] to conceal the Transmission Defect, or to fail to acknowledge the existence of the Transmission Defect.” (Complaint ¶45) (italics added).

All in all, as Plaintiff has failed to point to a specific material fact that Defendant concealed.

Therefore, as Plaintiff has failed to establish the first element of its 2^nd cause of action, the complaint fails to state a cause of action. The court need not address Defendant’s remaining arguments.

[1] Defendant cites to Mel Clayton Ford v. Ford Motor Co. (2002) for the proposition that “[u]nder California law, an automaker is not liable for the independent negligence of a dealership employee.” However, a review of that case and pincite does not substantiate Defendant’s contention.

[2] Plaintiff also cites to Daniel v. Ford Motor Company (2015) 806 F.3d 1217, 1226-27 for the proposition that omissions by a dealership may be imputed to the manufacturer. (Opp. p. 4.) That, however, is a federal case; thus, will not be relied upon by this court.

[3] Plaintiff makes numerous allegations about other models (e.g., Honda Pilot, Acura MDX, Acura TLC). Even if those vehicles had the “same transmission installed in the Subject Vehicle,” Plaintiff has not explained how such allegations are pertinent to disclosure about this vehicle (i.e., Honda Odyssey). Therefore, the court finds those allegations immaterial.

[4] The use of a plural noun makes it more unclear what defect has been allegedly concealed.