Judge: Upinder S. Kalra, Case: 22STCV11193, Date: 2022-08-11 Tentative Ruling

Case Number: 22STCV11193    Hearing Date: August 11, 2022    Dept: 51

Tentative Ruling


Judge Upinder S. Kalra, Department 51


HEARING DATE:   August 11, 2022                                             


CASE NAME:            Edgard Marroquin v. American Honda Motor Co.


CASE NO.:                22STCV11193




MOVING PARTY: Defendant American Honda Motor Co


RESPONDING PARTY(S): Edgard Marroquin




1.      An order sustaining the demurrer as to the second cause of action

2.      An order striking the punitive damages portion of the complaint


1.      Demurrer is OVERRULED.

2.      Motion to Strike is GRANTED, with leave to amend.


On April , 2022, Edgard Marroquin (“Plaintiff”) filed a complaint against Defendant American Honda Motor Co., Inc., (“Defendant”). The complaint alleged two causes of action: (1) Violation of Song-Beverly Act – Breach of Express Warranty and (2) Fraudulent Inducement – Concealment. The complaint alleges that Plaintiff purchased the Subject Vehicle with express and limited warranties. During these warranties, the Subject Vehicle contained defects and nonconformities. Plaintiff further alleges that these defects were not sufficiently fixed when the Subject Vehicle was brought in for repairs.


On May 6, 2022, Defendant filed a Demurrer with a Motion to Strike. Plaintiff’s opposition was filed on July 29, 2022.  


Meet and Confer:

The Declaration of Theodore Dorenkamp III indicates that the parties met and confer; Plaintiff’s counsel would not stipulate to dismissing the fraudulent concealment claim. (Dec. Dorenkamp, Ex. B).



Proof of Service attached to the Demurrer indicates that Plaintiff’s counsel was served via email. The Proof of Service attached to the Opposition indicates that Defendant’s counsel was served via email.






A demurrer for sufficiency tests whether the complaint states a cause of action. Hahn v. Mirda (2007) 147 Cal.App.4th 740, 747. When considering demurrers, courts read the allegations liberally and in context. In a demurrer proceeding, the defects must be apparent on the face of the pleading or via proper judicial notice. Donabedian v. Mercury Ins. Co. (2004) 116 Cal.App.4th 968, 994; Weil & Brown, Civ. Pro. Before Trial (The Rutter Group 2011) ¶7:8. “A demurrer tests the pleadings alone and not the evidence or other extrinsic matters. Therefore, it lies only where the defects appear on the face of the pleading or are judicially noticed (Code Civ. Proc., §§ 430.30, 430.70). The only issue involved in a demurrer hearing is whether the complaint, as it stands, unconnected with extraneous matters, states a cause of action.” Hahn 147 Cal.App.4th at 747.  


Motion to Strike


The court may, upon a motion, or at any time in its discretion, and upon terms it deems proper, strike any irrelevant, false, or improper matter inserted in any pleading. (Code Civ. Proc., § 436(a).) The court may also 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. (Id., § 436(b).) The grounds for a motion to strike are that the pleading has irrelevant, false or improper matter, or has not been drawn or filed in conformity with laws. (Id. § 436.) The grounds for moving to strike must appear on the face of the pleading or by way of judicial notice. (Id. § 437.) “When the defect which justifies striking a complaint is capable of cure, the court should allow leave to amend.” (Vaccaro v. Kaiman (1998) 63 Cal.App.4th 761, 768.)




Defendant argues that the Economic Loss Rule bars the second cause of action for fraudulent concealment. Additionally, Defendant contends that the second cause of action also fails because the Plaintiff did not allege sufficient facts to constitute a cause of action. Defendant does not have a fiduciary relationship with Plaintiff and therefore has no duty to disclose. Further, Defendant argues that no partial representations were made to Plaintiff, and the complaint does not allege facts that Defendant had exclusive knowledge of a material fact or active concealment by Defendant.


The elements of an action for fraud based on 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.” (Mktg. W., Inc. v. Sanyo Fisher (USA) Corp. (1992) 6 Cal.App.4th 603, 612-613.)


“‘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.’ [Citations] . . . [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.’ [Citations] A relationship between the parties is present if there is ‘some sort of transaction between the parties. [Citations.] Thus, a duty to disclose may arise from the relationship between seller and buyer, employer and prospective employee, doctor and patient, or parties entering into any kind of contractual agreement.’” (Hoffman v. 162 North Wolfe LLC (2014) 228 Cal.App.4th 1178, 1186-1187.)


Defendant argued that Plaintiffs could not and cannot prove the existence of a special or transactional relationship between Plaintiffs and Defendant so as to establish a duty to disclose facts. Here, the Complaint alleges that Defendant had knowledge of the defects in Plaintiff’s vehicle, as demonstrated by previous customer complaints, records from the National Highway Traffic Safety Administration, and technical service bulletins. (Complaint ¶¶ 33-70). This would constitute “superior knowledge.” Despite this superior knowledge, Defendant still failed to disclose these defects to Plaintiffs and other consumers. Further, Defendant made express warranties under the SBA, is deemed to be a “manufacturer” since it is a warrantor, and thus had a relationship of manufacturer and buyer. Therefore, Plaintiff has sufficient pled a special relationship.


Here, the Complaint sufficiently pleads fraudulent concealment. First, Defendant concealed a material fact. (Complaint ¶ 17-79, 90-93). Second, there was a duty to disclose. (Complaint ¶ 43, 111-115). Third, Defendant intentionally concealed these defects. (Complaint ¶ 112,116). Fourth, Plaintiff was not aware of these defects (Complaint ¶ 80, 88, 119). Lastly, Plaintiff was damaged as a result. (Complaint ¶ 83, 105).


Next, the Court finds that Plaintiffs’ cause of action for fraud by omission is not barred by the economic loss rule. Despite the economic loss rule, “tort damages have been permitted in contract cases where a breach of duty directly causes physical injury; for breach of the covenant of good faith and fair dealing in insurance contracts; for wrongful discharge in violation of fundamental public policy; or where the contract was fraudulently induced. In each of these cases, the duty that gives rise to tort liability is either completely independent of the contract or arises from conduct which is both intentional and intended to harm.” (Robinson Helicopter Co., Inc. v Dana Corp. (2004) 34 Cal.4th 979, 989-990.)


Thus, tort damages are permitted in contract cases where the contract has been fraudulently induced. Plaintiff alleges that Defendant had prior knowledge of the defect in the Subject Vehicle, but intentionally concealed those facts. (Complaint ¶ 111-121). Given that Plaintiffs have pled facts sufficient to state a cause of action for fraud by omission and have alleged that had they known of the defects Plaintiffs “would not have purchased the Subject Vehicle,” the economic loss rule does not apply.


Therefore, Defendant’s demurrer to the second cause of action for fraud is OVERRULED.


Motion to Strike:


Defendant moves to strike the prayer for punitive damages.


Defendant moves strike punitive damages on the grounds that Plaintiff did not plead facts with specificity to constitute malice, oppression, or fraud that punitive damages require, Plaintiff did not allege that Defendant’s officers ratified conduct, and Plaintiff cannot recover punitive damages under Song-Beverly.


CCP §3294 states that “(a) In an action for the breach of an obligation not arising from contract, where it is proven by clear and convincing evidence that the defendant has been guilty of oppression, fraud, or malice, the plaintiff, in addition to the actual damages, may recover damages for the sake of example and by way of punishing the defendant.” Under CCP §3294(c)(3),  fraud is defined as “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.”


First, Defendant contends that the punitive damages claim fails because the cause of action for fraud fails. However, as stated above, Plaintiff has sufficiently pleaded fraud.


Second, Defendant argues that the Complaint does not allege that Defendant’s officers or agents ratified the conduct raised in the complaint. Subsection (b) of Civil Code § 3294 states:


An employer shall not be liable for damages pursuant to subdivision (a), based upon acts of an employee of the employer, unless the employer had advance knowledge of the unfitness of the employee and employed him or her with a conscious disregard of the rights or safety of others or authorized or ratified the wrongful conduct for which the damages are awarded or was personally guilty of oppression, fraud, or malice. With respect to a corporate employer, the advance knowledge and conscious disregard, authorization, ratification or act of oppression, fraud, or malice must be on the part of an officer, director, or managing agent of the corporation.


Plaintiff contends that omissions made by a dealership may be imputed to the manufacturer. Plaintiff cites to Daniel v. Ford Motor Company. There, the court determined that a reasonable fact finder could “could conclude that Ford knew that its consumers depended at least in part on its authorized dealerships for information about its vehicles and that Ford's authorized dealerships would have disclosed the alleged rear suspension defect to consumers if Ford had required it.” (Daniel v. Ford Motor Co. (9th Cir. 2015) 806 F.3d 1217, 1227). Here, the complaint alleges that Plaintiff reviewed marketing brochures, viewed commercials, and later relied on statements made with Defendant’s agents and marketing brochures provided by Defendant. (Complaint ¶ 6, 86-88).


However, Plaintiff has failed to plead sufficient facts to allow punitive damages with respect to a corporate employer. As required in CCP § 3294(b), this knowledge or ratification must be on the part of an officer, director or managing agent. The Court in Cruz indicated that these individuals are part of a group whose “intentions guide corporate conduct.” (Cruz v. HomeBase (2000) 83 Cal.App.4th 160, 167). “'Managing agents’ are employees who “exercise [ ] substantial discretionary authority over decisions that ultimately determine corporate policy.” [citation] “Corporate policy” is not defined by statute, nor in the case law relating to punitive damages. Dictionary definitions of “policy” include the following: “The general principles by which a government is guided in its management of public affairs.” (Id.). Here, Plaintiff has failed to allege sufficient facts that would indicate that this conduct was done by an officer, director, or managing agent. Plaintiff does not indicate who Plaintiff spoke to and how that person is or could be considered an officer, director, or managing agent.


Lastly, Defendant contends that Plaintiff cannot recover punitive damages under Song-Beverly. However, this argument fails. The court in Anderson indicated that punitive damages and statutory penalties under Song-Beverly are allowed simultaneously. This is because the two situations are based on different conduct. Anderson stated, “the punitive damages were based on conduct underlying the fraud/CLRA causes of action and took place before the sale. The civil penalty was based on defendant's post-sale failure to comply with its Song-Beverly Act obligations to replace the vehicle or make restitution when reasonable attempts to repair had failed.” (Anderson v. Ford Motor Co. (2022) 74 Cal.App.5th 946, 966, reh'g denied (Mar. 8, 2022), review denied (May 11, 2022)). Here, Plaintiff alleged fraud based on the concealment of defects prior to the sale of the subject vehicle. (Complaint ¶ 11-121). The other cause of action, which is based on Song-Beverly, was failure to repurchase or make restitution. (Complaint ¶ 103).


            Punitive damages are allowed with cause of action based on Song-Beverly. However, while Plaintiff did successfully plead fraud, it failed to plead sufficiently how Defendant, as a corporation, ratified or authorized an officer, director, or managing agent’s conduct, as required under CCP § 3294(b). The Motion to Strike is GRANTED.


Leave to Amend


Leave to amend should be liberally granted if there is a reasonable possibility an amendment could cure the defect.  (County of Santa Clara v. Superior Court (2022) 77 Cal.App.5th 1018,1035.) The Plaintiff has the burden of demonstrating that leave to amend should be granted. (Goodman v. Kennedy (1976) 18 Cal.3d 335, 349 [“Plaintiff must show in what manner he can amend his complaint and how that amendment will change the legal effect of his pleading.”].) The Plaintiff is likely able fix the defects, with respect to pleading sufficient facts under subsection (b) of CCP § 3294. It is probable that Plaintiff will be able to plead information if granted leave to amend, such as who sold the car or made the representations.




            For the foregoing reasons, the Court decides the pending motion as follows:


            Demurrer is OVERRULED.


Motion to Strike is GRANTED, with leave to amend.


Moving party is to give notice.




Dated:             August 11, 2022                      __________________________________                                                                                                                Upinder S. Kalra

                                                                                    Judge of the Superior Court