Judge Timothy B. Taylor, Case 37-2023-00016604-CU-BC-CTL 2023-09-15 Tentative Ruling

Judge: Timothy B. Taylor, Case: 37-2023-00016604-CU-BC-CTL, Date: 2023-09-15 Tentative Ruling

SUPERIOR COURT OF CALIFORNIA,

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HALL OF JUSTICE

TENTATIVE RULINGS - September 14, 2023

09/15/2023 01:30:00 PM C-72 COUNTY OF SAN DIEGO

JUDICIAL OFFICER:Timothy Taylor

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Civil - Unlimited Breach of Contract/Warranty Demurrer / Motion to Strike 37-2023-00016604-CU-BC-CTL ALSPAUGH VS AMERICAN HONDA MOTOR CO INC [IMAGED] CAUSAL DOCUMENT/DATE FILED: Demurrer, 05/30/2023

Tentative Rulings on Demurrer to Fraud Count and Motion to Strike Punitive Damages Claim;

OSC Regarding Transfer to Vista Branch Alspaugh v. American Honda, Case No. 2023-16604 Sept. 15, 2023, 1:30 p.m., Dept. 72 1. Overview and Procedural Posture.

This is a Song-Beverly 'lemon law' case involving a new 2018 Honda Odyssey purchased by plaintiff in June of that same year. Plaintiff alleges several defects in the complaint, which was filed in April of 2023. The complaint focuses specifically on the '9-speed ZF9HP transmission defect.' Presently, Honda has demurred and filed a motion to strike. ROA 10-13. The demurrer challenges the 'fraudulent inducement – concealment' count on several grounds, but does not cite Dhital v. Nissan North America, Inc. (2022) 84 Cal.App.5th 828.* The motion to strike attacks the prayer for punitive damages. Plaintiff filed opposition. ROA 18-19. Honda filed reply. ROA 21-22. The court has reviewed the papers, and no further submissions are authorized in connection with these pleading challenges.

The case is also set for a CMC. ROA 15-16.

2. Applicable Standards.

A. A demurrer may only be sustained if the complaint fails to state a cause of action under any possible legal theory. Fox v. Ethicon Endo-Surgery, Inc. (2005) 35 Cal.4th 797, 810. Properly pleaded facts must be accepted as true, but not contentions or conclusions of law or fact. Czajkowski v. Haskell & White, LLP (2012) 208 Cal.App.4th 166, 173. The court's function is limited to testing the legal sufficiency of the complaint, which must be construed with a view to substantial justice between the parties. Fremont Indemnity Co. v. Fremont General Crop. (2007) 148 Cal.App.4th 97, 113; Code Civ. Proc. § 452.

B. 'The required elements for 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) the defendant intended to defraud the plaintiff by intentionally concealing or suppressing the fact; (4) the plaintiff was unaware of Calendar No.: Event ID: TENTATIVE RULINGS

2980022 39 CASE NUMBER: CASE TITLE: ALSPAUGH VS AMERICAN HONDA MOTOR CO INC [IMAGED] 37-2023-00016604-CU-BC-CTL 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) plaintiff sustained damage as a result of the concealment or suppression of the fact.' Graham v. Bank of America, N.A. (2014) 226 Cal.App.4th 594, 606. A duty to disclose facts arises only when the parties are in a relationship that gives rise to the duty, such as 'seller and buyer, employer and prospective employee, doctor and patient, or parties entering into any kind of contractual agreement.' Wilkins v. National Broadcasting Co. (1999) 71 Cal.App.4th 1066, 1082. Allegations of fraud must be pleaded with particularity. Lazar v. Superior Court (1996) 12 Cal.4th 631, 645.

C. Code of Civil Procedure section 436 authorizes a court to strike allegations from a pleading in two situations. Under subdivision (a), the court may strike 'any irrelevant, false, or improper matter inserted in any pleading.' This provision does not authorize striking an entire cause of action, but permits the court to excise 'superfluous or abusive allegations.' Ferraro v. Camarlinghi (2008) 161 Cal.App.4th 509, 528. Subdivision (b) provides that a court may 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.' This provision 'authorizes the striking of a pleading due to improprieties in its form or in the procedures pursuant to which it was filed' and 'is commonly invoked to challenge pleadings filed in violation of a deadline, court order, or requirement of prior leave of court.' Ferraro, 161 Cal.App.4th at 528. In either situation, the motion is addressed to the sound discretion of the trial court. Clements v. T.R. Bechtel Co. (1954) 43 Cal.2d 227, 242.

D. Motions to strike are often used to challenge portions of causes of action seeking punitive damages.

PH II, Inc. Superior Court (1995) 33 Cal.App.4th 1680, 1683. In order to state a prima facie claim for punitive damages, a complaint must set forth the elements as stated in the general punitive damage statute, Civil Code section 3294. Turman v. Turning Point of Central California, Inc. (2010) 191 Cal.App.4th 53, 63. These statutory elements include allegations that the defendant has been guilty of oppression, fraud, or malice. Civ. Code § 3294(a). As relevant here, 'fraud' is 'an intentional misrepresentation, deceit, or concealment of a material fact known to the defendant with the intention on the part of the defendant of thereby depriving a person of property or legal rights or otherwise causing injury.' Civ. Code § 3294(c)(3).

3. Discussion and Rulings.

A. The demurrer to the complaint is overruled.

The demurrer based on the failure to sufficiently plead the fraudulent claim is overruled. Plaintiff alleges that she bought the car from a Honda dealership; that Honda backed the car with an express warranty; and that Honda's authorized dealerships are its agents for purposes of the sale of Honda vehicles to consumers. (See Complaint at ¶¶ 9, 55, 120.) Plaintiff further alleges that the ZF9HP automatic transmissions installed in numerous Honda and Acura vehicles (including the vehicle plaintiff purchased) were defective; Honda knew of the defects and the hazards they posed; Honda had exclusive knowledge of the defects but intentionally concealed and failed to disclose that information; Honda intended to deceive plaintiff by concealing known transmission problems; plaintiff would not have purchased the car if she had known of the defects; and plaintiff suffered damages in the form of money paid to purchase the car. (See id. at ¶¶ 21-40, 73, 117, 124-125, 129-130.) These facts are sufficient to state a claim for fraudulent concealment under Dhital. See Dhital, supra, 84 Cal.App.5th at 844. Plaintiff is not required to plead facts showing 'how, when, where, to whom, and by what means the representations were tendered' as this is a case of alleged nondisclosure. See Alfaro v. Community Housing Improvement System & Planning Assn., Inc. (2009) 171 Cal.App.4th 1356, 1384.

Honda argues that plaintiff failed to adequately plead that Honda had a duty to disclose known defects because dealerships are not agents of manufacturers for the purposes of vehicle sales. However, a similar argument was rejected at the pleading stage in Dhital. See Dhital, 84 Cal.App.5th at 844 ('[W]e decline to hold plaintiffs' claim is barred on the ground there was no relationship requiring Nissan to disclose known defects.'). Moreover, none of the California state cases cited by Honda involve lemon law claims. The one federal case alleging such claims is distinguishable because, unlike here, the Calendar No.: Event ID: TENTATIVE RULINGS

2980022 39 CASE NUMBER: CASE TITLE: ALSPAUGH VS AMERICAN HONDA MOTOR CO INC [IMAGED] 37-2023-00016604-CU-BC-CTL plaintiffs failed to allege sufficient facts showing that the dealership and manufacturer were in an agency relationship. See Keegan v. American Honda Motor Co., Inc. (C.D. Cal. 2012) 838 F.Supp.2d 929, 953-54.

The demurrer based on the economic loss rule is overruled. In general, there is no recovery in tort for negligently inflected 'purely economic losses' – i.e., financial harm unaccompanied by physical or property damage. Sheen v. Wells Fargo Bank, N.A. (2022) 12 Cal.5th 905, 922. However, tort damages are available in contract cases where the contract is fraudulently induced. Robinson Helicopter Co. v. Dana Corp. (2004) 34 Cal.4th 979, 989-90. In Robinson Helicopter, the California Supreme Court held that affirmative misrepresentations fell within this exception, but expressly declined to address whether intentional concealment claims did as well. Id. at 991. This question remained unresolved under California law until Dhital, which answered it in the affirmative: '[C]oncealment-based claims for fraudulent inducement are not barred by the economic loss rule.' Dhital, 84 Cal.App.5th at 840. Honda contends that Dhital is not binding because the California Supreme Court granted review of the case.

While this is true, the case remains persuasive authority. CRC 8.1115(e)(1). Thus, in the absence of other published Court of Appeal decisions on the issue, the court elects to follow it.

B. The motion to strike the prayer for punitive damages is denied. For the reasons discussed above in the ruling on Honda's companion demurrer, plaintiff has sufficiently alleged 'fraud' within the meaning of Civil Code section 3294(c)(3). See Nissan Motor Acceptance Cases (2021) 63 Cal.App.5th 793, 829 ('[F]raudulent concealment is an intentional tort that may support a punitive damage award.').

C. Honda must file and serve an answer to the complaint by September 25, 2023.

4. CMC.

As part of the CMC, the parties are ordered to show cause why the case should not be transferred to the Vista branch of the court. It appears to the court that venue was improperly laid in the Central division.

See Local Rule 1.2.2E and O. The grounds for this finding are the allegations of paragraphs 2, 4 and 5 of the complaint (which reflect that the warranty was issued in Escondido, which is in the North County branch of the Court, where plaintiff lives). It appears to the court that the witnesses likely live closer to the Vista branch, and that the Vista branch will also be more convenient for counsel (who have offices in Los Angeles and Torrance, at least 45 minutes closer to Vista than to downtown San Diego via automobile).

_______________________ *On February 1, 2023, the California Supreme Court granted review of Dhital (S277568), but deferred further action 'pending consideration and disposition of a related issue in Rattagan v. Uber Techs., Inc., S272113[.]' In Rattagan, the Ninth Circuit Court of Appeals certified the question the following question to the High Court: 'Under California law, are claims for fraudulent concealment exempted from the economic loss rule?' Rattagan v. Uber Technologies, Inc. (9th Cir. 2021) 19 F.4th 1188, 1193.

According to the Supreme Court's docket (viewed September 14, 2023), Rattagan is fully briefed but has not been set for oral argument.

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