Judge: Timothy Patrick Dillon, Case: 21STCV24122, Date: 2023-02-14 Tentative Ruling
Case Number: 21STCV24122 Hearing Date: February 14, 2023 Dept: 73
GARCIA v. FCA US, LLC
Counsel
for Plaintiff/opposing party: Tionna
Dolin (Strategic Legal Practices, APC)
Counsel
for Defendant/moving party: Spencer P
Hugret (Gordon Rees Scully Mansukhani, LLP)
Defendant’s motion for judgment on the pleadings (filed 09/20/22)
Defendant’s motion for judgment on the pleadings is
DENIED.
Discussion
This is a
lemon law case. On June 29, 2021, Plaintiff Byron Enrique Garcia filed this
action against FCA U.S. LLC, and Los Angeles Chrysler Dodge Jeep Ram. Plaintiff
alleges the following causes of action: (1) violation of subdivision (d) of
Civil Code 1793.2; (2) violation of subdivision (b) of Civil Code section
1793.2; (3) violation of subdivision (a)(3) of Civil Code section 1793.2; (4) breach
of express written warranty; (5) breach of implied warranty of merchantability;
(6) fraudulent inducement – concealment; and (7) negligent repair.
On September 20, 2022, Defendants FCA US
LLC (“FCA”) and Los Angeles Chrysler Dodge Jeep Ram (“Dealer”) filed a motion
for judgment on the pleadings, arguing:
·
The sixth cause of action for fraudulent
inducement and the seventh cause of action for negligent repair are barred by
the economic loss rule because Plaintiff seeks purely economic damages.
·
The sixth and seventh causes of action
do not allege damages separate from the alleged warranty claims.
·
The sixth cause of action is
insufficiently plead under heightened pleading requirements.
·
Plaintiff cannot demonstrate essential
elements of the sixth and seventh cause of action.
·
Plaintiff’s request for punitive damages
fails with the fraud claim.
In opposition, [Opposing Party] argues that:
·
The sixth cause of action for fraudulent
inducement is well plead and not barred by the economic loss rule.
·
The
seventh cause of action for negligent repair is well plead and not barred by
the economic loss rule.
No reply has been filed as of February 9, 2023.
A. Legal
Standard for Motion for Judgment on the Pleadings
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.) 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.) Courts must consider whether properly pled factual
allegations—assumed to be true and liberally construed—are sufficient to
constitute a cause of action. (Stone Street Capital, LLC v. Cal. State
Lottery Com'n (2008) 165 Cal.App.4th 109, 116.)
B.
Sixth Cause of Action for Fraudulent Inducement – Concealment
The
elements of fraud are: “(a) misrepresentation, false representation,
concealment, or nondisclosure; (b) knowledge of falsity (or ‘scienter’); (c)
intent to defraud, i.e., to induce reliance; (d) justifiable reliance; and (e)
resulting damage.”¿ (Charnay v. Cobert¿(2006) 145 Cal.App.4th 170,
184.)¿ In California, fraud generally must be pleaded with specificity.¿ (Small
v. Fritz Companies, Inc.¿(2003) 30 Cal.4th 167, 184.)¿ “The particularity
demands that a plaintiff plead¿facts which show how, when, where, to whom, and
by what means the representations were tendered.”¿ (Cansino v. Bank of
America¿(2014) 224 Cal.App.4th 1462, 1469.) “This statement of the
rule reveals that it is intended to apply to affirmative
misrepresentations.” (Alfaro (2009) 171 Cal. App. 4th at
1384.) Less specificity should be required of fraud claims “when ‘it
appears from the nature of the allegations that the defendant must necessarily
possess full information concerning the facts of the controversy.” (Id.)
Defendants
argue that Plaintiff cannot state a cause of action for fraudulent because (1) Plaintiff
fails to state that the subject vehicle lost power, shut off, or stalled and
there is insufficient detail about the circumstances of these alleged defects;
(2) the complaint contains no names of employees or actual facts about which
employees concealed, suppressed, or had exclusive knowledge of material; and
(3) Plaintiff fails to allege specific cognizable damages resulting from the
fraud.
The
court finds that the facts put forth in the complaint are plead with the
requisite specificity at this stage. First, the complaint alleges that
Plaintiff’s vehicle did develop defects related to the transmission and defects
causing stalling. (Complaint ¶ 11.) The heightened pleading standard for fraud
does not require Plaintiff to describe with exact certainty these incidents.
Second,
as mentioned above, less specificity is required when it appears from the
nature of the allegations that defendant possesses the full information. The
complaint asserts that FCA failed to disclose “that the Subject Vehicle and its
transmission and PCM was defective which can cause loss of engine timing and
result in shutting off or stalling without warning.” (Complaint ¶ 56.)
Additionally, the complaint states that “FCA had superior and exclusive
knowledge of the Stalling Defect” and acquired knowledge of this defect through
“pre-production testing data, early consumer complaints about the Stalling
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 ¶ 21, 58a.)
The
court finds that this cause of action is plead with the requisite specificity
to survive a motion for judgment on the pleadings.
C.
Economic Loss Rule as to Fraudulent Inducement
Defendants argue that the sixth cause of action is barred by the
economic loss rule because Plaintiff is only seeking money damages.
“Simply stated, the¿economic¿loss¿rule¿provides: ‘[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. v. Dana
Corp. (2004) 34 Cal. 4th 979, 988.) “The¿economic¿loss¿rule¿requires a
purchaser to recover in contract for purely¿economic¿loss¿due to disappointed
expectations, unless he can demonstrate harm above and beyond a broken
contractual promise.” (Id. (citations omitted)).
However, when a person makes affirmative misrepresentations that
induces another party into a contract, the economic loss rule does not prevent
that party from alleging both a contract and a tort claim. (Id at
991.) Robinson did not address a fraudulent concealment cause
of action. The court stated that its holding was “narrow in scope and limited
to a defendant's affirmative misrepresentations on which a plaintiff relies and
which expose a plaintiff to liability for personal damages¿independent of the
plaintiff's¿economic loss.” (Robinson,¿supra, 34 Cal.4th at pp.
991, 993.)¿
However, the fact that the court in¿Robinson¿did not
specifically “carve out” an exception to the¿economic loss¿rule for a
concealment cause of action does not necessarily mean that no such exception
exists. To the contrary, the court in Dhital v. Nissan North America, Inc.
recently held that the economic loss rule did not bar a fraudulent inducement
by concealment claim at the demurrer stage. (Dhital v. Nissan North America
(2022) 84 Cal.App.5th 828, 843.)
Here, although the Defendants attempt to argue that the economic
loss rule bars fraudulent concealment, Plaintiff’s citation to Dhital says
otherwise. As discussed above, Plaintiff alleges sufficient facts supporting
the elements of a claim for fraudulent inducement, in that Defendant’s
concealment of this defect caused Plaintiff to purchase the vehicle that he
would not have, if he had known of the defect.
Defendants’ motion for judgment on the pleadings is denied as to
the sixth cause of action.
D.
Seventh Cause of Action for Negligent Repair
Defendants argue that the cause of action for negligent repair
fails because the allegations are conclusory and the cause of action is barred
by the economic loss rule.
The elements of negligence are “(a) a legal duty to use due care;
(b) a breach of such legal duty; [and] (c) the breach as the proximate or legal
cause of the resulting injury.” (Ladd v. County of San Mateo (1996) 12 Cal.4th
913, 917.)
The complaint alleges that Plaintiff delivered the vehicle to
Defendant Los Angeles Chrysler Dodge Jeep Ram for repair and Defendant owed a
duty to Plaintiff to use ordinary care, and Defendant breached its duty by
“failing to properly store, prepare and repair the Subject Vehicle in
accordance with industry standards.” (Complaint ¶ 67.) This failure to use due
care caused Plaintiff’s damages. (Complaint ¶ 68.)
This is sufficient to state a cause of action for negligent
repair. There is no heightened pleading standard for negligence. Further, this cause
of action is not barred by the economic loss rule because it is stemming from
conduct that is distinct from the warranty claims, namely that Plaintiff’s
vehicle incurred damages while being repaired and stored at Defendant.
Defendants’ motion for judgment on the pleadings is denied as to
the seventh cause of action.
E.
Punitive Damages
Defendant argues that the punitive damages claim fails because
Plaintiff’s fraud claim fails. However, as mentioned above, Plaintiff has
sufficinently plead fraud.
Defendants’ motion for judgment on the pleadings is denied as to
the punitive damages claim.
1.
Subheading