Judge: Virginia Keeny, Case: 22VECV02514, Date: 2023-03-27 Tentative Ruling
Case Number: 22VECV02514 Hearing Date: March 27, 2023 Dept: W
BRYAN GUINO v.
AMERICAN HONDA MOTOR CO., INC.
Demurrer to complaint
Date of Hearing: March
27, 2023 Trial
Date: None Set.
Department: W Case No.: 22VECV02514
Moving Party: Defendant American Honda Motor Co.
Responding Party: Plaintiff
Bryan Guino
Meet and Confer: Yes. (LaCour Decl. ¶2.)
BACKGROUND
This is a lemon law action which arises
from Plaintiff’s lease of a 2020 Honda Accord. On December 21, 2022, Plaintiff
filed a complaint against Defendant American Honda Motor Co. asserting causes
of action for Violation of Song-Beverly Act and Fraudulent Inducement –
Concealment. Plaintiff alleges their vehicle had a sensing defect, which Defendant
knew about and concealed.
[Tentative] Ruling
Defendant American Honda Motor Co.,
Inc.’s Demurrer is SUSTAINED WITH LEAVE TO AMEND.
REQUEST FOR JUDICIAL NOTICE
In
opposition, Plaintiff requests this court take judicial notice of the second
amended complaint filed in Dhital v Nissan North America, Inc., No. RG19009260
in Alameda County (Exh. 1.)
Defendant
opposes the request for judicial notice on the grounds a petition for review of
the matter was granted February 1, 2023. Defendant states as noted by
California Rules of Court Rule 8.1115(e)(1) “While review is pending. Pending
review and filing of the Supreme Court's opinion, unless otherwise ordered by
the Supreme Court under (3), a published opinion of a Court of Appeal in the
matter has no binding or precedential effect, and may be cited for potentially
persuasive value only.”
The court
grants Plaintiff’s request for judicial notice. The court notes it has been
called to the court’s attention that the case is currently pending review.
DISCUSSION
Defendant American Honda Motor Co.,
Inc. (“AHM”) demur to the Second Cause of Action for Fraudulent Inducement –
Concealment on the grounds Plaintiff’s Second Cause of Action fails to state
facts sufficient to constitute a fraud cause of action against AHM.
The elements of a claim for fraudulent concealment
are: “(1) concealment or suppression of a material fact; (2) by a defendant
with a duty to disclose that 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 the fact and would not have acted as he or she
did if she had known of the concealed or suppressed fact; and (5) plaintiff
sustained damages as a result of the concealment or suppression of the
fact.” (Hambrick v. Healthcare Partners Medical Group, Inc.¿(2015)
238 Cal.App.4th 124, 162.) As it is a species of fraud and deceit, such claim
must be plead with specificity. (Lazar v. Superior Court (1996) 12
Cal.4th 631, 645 (specificity means pleading the who, where, when, what, and
how).) But this rule for fraud by concealment, unlike fraud by an affirmative
misrepresentation, must be applied differently in the case of non-disclosure
because it is difficult to allege “who” or “how” or “by what means” something
was not disclosed or “when” or “where” a statement was not made. (Alfaro
v. Community Housing Imp. System & Planning Ass’n, Inc. (2009) 171
Cal.App.4th 1356, 1384.) Because of the nature of such fraud and the fact
such facts supporting concealment are more likely to be known by defendant,
less particularity is required. (Id.)
Defendant first demurs to the second
cause of action on the grounds Plaintiff failed to plead that AHM concealed or
suppressed a material fact. Specifically, Defendant AHM contends Plaintiff does
not plead with specificity what representations were made and merely alleging
that AHM omitted facts about an alleged Sensing Defect in its general advertisements
to an unknown audience cannot establish: (1) knowledge of a particular defect
in a particular vehicle, or (2) intent to conceal this particular knowledge
from this particular Plaintiff.
The court disagrees. Plaintiff alleges Defendant
AHM knew about the safety hazard posed by the Honda Sensing Defect before the
sale of vehicles from pre-market testing, consumer complaints to the National
Highway Traffic Safety Administration, consumer complaints made directly to AHM
and its dealers, testing conducted in response to those complaints, high failure
rates and replacement part sales data, and other sources which drove AHM to issue
Technical Service Bulletins acknowledging this defect. (Compl. ¶23.) Plaintiff
also alleges sales representatives made several representations about the
subject vehicle but, but did not disclose to Plaintiff any information about
the Honda Sensing Defect. (Comp. ¶87.) Plaintiff alleges AHM intended to
deceive Plaintiff by concealing the known issues with the Honda Sensing Defect,
in an effort to sell the vehicle. (Compl. 117.)
It is true “[a]lthough, typically, a
duty to disclose arises when a defendant owes a fiduciary duty to a plaintiff
[citation], a duty to disclose may also arise when a defendant possesses or
exerts control over material facts not readily available to the plaintiff.
(See, e.g., Magpali v. Farmers Group, Inc. (1996) 48 Cal.App.4th 471,
482, 55 Cal.Rptr.2d 225 [“ ‘[t]he duty to disclose may arise without any
confidential relationship where the defendant alone has knowledge of material
facts which are not accessible to the plaintiff’ ”].)” (Jones v.
ConocoPhillips Co. (2011) 198 Cal.App.4th 1187, 1199.) Plaintiff has
adequately alleged that AHM possessed exclusive control over material facts not
known to the general public about the Honda Sensing Defect and so had a duty to
disclose this information to consumers. Accordingly,
Plaintiff’s allegations are sufficient to establish AHM’s knowledge of any
alleged defect in the subject vehicle.
Similarly, Plaintiff’s allegations are
sufficient to establish AHM intentionally concealed or suppressed the material
fact from Plaintiff. Plaintiff alleges AHM actively concealed the existence and
nature of the Honda Sensing Defect from Plaintiff. Plaintiff claims AHM drafted,
produced, and distributed marketing materials to the public containing factual
representations about the Subject Vehicle and Plaintiff relied on the
statements made during the sales process by AHM’s agents and within the
marketing materials written by AHM. Less
particularity is required for allegations of fraudulent concealment. Plaintiff’s allegations that AHM concealed
information relating to the defect in all of its printed materials and in the
oral representations made by sales persons and agents, is sufficient to allege
active suppression of a material fact.
Defendant AHM further argues even if
Plaintiff claims to have relied on representations, misstatements, or omissions
by AHM’s “network of dealers,” such conduct is not attributable to AHM or actionable
against AHM. In support of this contention, Defendant AHM cites to several
federal cases. Regardless, each do not suggest a bright line rule that “automobile
dealerships cannot be the agents of manufacturers.” (Zeno v. Ford Motor Co.,
Inc. (W.D. Pa. 2007) 480 F.Supp.2d 825, 846.)
Next, Defendant AHM argues Plaintiff
has failed to allege a duty to disclose. Defendant AHM contends any claim that
a duty enumerated above arose from AHM's marketing brochures and general
advertising to potential consumers fails as a transaction giving rise to a duty
to disclose must necessarily arise from direct dealings between the plaintiff
and the defendant.
In opposition, Plaintiff argues Defendant
had a duty to disclose to alleged defect to Plaintiff prior to the Subject Vehicle’s
purchase based on Defendant’s exclusive knowledge and a direct transaction between
Plaintiff and Defendant per the recent holding of Dhital v. Nissan North
America, Inc. (Dhital v. Nissan North America, Inc. (2022) 84
Cal.App.5th 828.)
As Plaintiff has sufficiently alleged AHM’s
exclusive knowledge and active concealment of the defect with requisite factual
specificity, Plaintiff has sufficiently alleged that AHM had a duty to
disclose.
Defendant AHM makes a final argument
that the damages claimed are purely economic and that the fraudulent
concealment claim is barred by the economic loss rule. “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.’” This doctrine
hinges on a distinction drawn between transactions involving the sale of goods
for commercial purposes where economic expectations are protected by commercial
and contract law, and those involving the sale of defective products to
individual consumers who are injured in a manner which has traditionally been
remedied by resort to the law of torts.” (Neibarger v. Universal
Cooperatives, Inc. (1992) 439 Mich. 512, 486 N.W.2d 612, 615, fns.
omitted.) 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. (Redarowicz v. Ohlendorf (1982) 92
Ill.2d 171, 65 Ill.Dec. 411, 441 N.E.2d 324, 327.) Quite simply, the economic
loss rule ‘prevent[s] the law of contract and the law of tort from dissolving
one into the other.’ (Rich Products Corp. v. Kemutec, Inc.
(E.D.Wis.1999) 66 F.Supp.2d 937, 969.)”
(Robinson Helicopter Co., Inc. v. Dana Corp. (2004) 34 Cal.4th
979). The Robinson Helicopter case
carved out a narrow exception to that rule, where defendant makes affirmative
misrepresentations on which a plaintiff relies, leading to a claim for
fraud.
Defendant argues this exception does
not apply to a case of fraudulent concealment, as alleged here. Plaintiff relies on Dhital, supra, which
extended the ruling in Robinson Helicopters to fraudulent concealment
claims. Although Dhital is
currently on review and has no precedential value, the court finds its analysis
of Robinson Helicopters persuasive. Dhital pointed out that the tort
claims considered by the Supreme Court in Robinson Helicopters were
premised on a duty that is either “completely independent of the contract or
arises from conduct which is both intentional and intended to harm.’” (Id.
at p. 990.) Because “that independence
is present in the case of fraudulent inducement (whether it is achieved by
intentional concealment or by intentional affirmative misrepresentations),
because a defendant's conduct in fraudulently inducing someone to enter a
contract is separate from the defendant's later breach of the contract or warranty
provisions that were agreed to,” the economic loss rule should not apply. Here, plaintiffs’ fraudulent inducement claim
alleges presale conduct by AHM (concealment) that is distinct from AHM’s's
alleged subsequent conduct in breaching its warranty obligations, making the
economic loss rule inapplicable.
Motion to Strike
Defendant AHM moves to strike
Plaintiff’s prayer for punitive damages on the grounds: (1) Plaintiff fails to
plead with the requisite specificity facts showing AHM engaged in conduct
rising to the level of malice, oppression, fraud, and therefore fails to allege
sufficient facts to state a claim for punitive damages; and (2) Plaintiff fails
to allege AHM's officers, directors, or managing agents engaged in or otherwise
ratified the conduct Plaintiff contends is wrongful.
The court agrees that plaintiff has
failed to plead punitive damages with the requisite specificity. The motion to strike is granted with leave to
amend.