Judge: Walter P. Schwarm, Case: 30-2021-01215534, Date: 2022-11-01 Tentative Ruling
Defendant’s (Kia America, Inc.) Motion for Judgment on the Pleadings (Motion), filed on 6-20-22 under ROA 57, is GRANTED in part and DENIED in part as set forth below.
Code of Civil Procedure section 438, subdivision (c)(1)(B) states, “If the moving party is a defendant, that either of the following conditions exist: [¶] (i) The court has no jurisdiction of the subject of the cause of action alleged in the complaint. [¶] (ii) The complaint does not state facts sufficient to constitute a cause of action against that defendant.” Eckler v. Neutragena Corporation (2015) 238 Cal.App.4th 433, 439 (Eckler), states, “ ‘A motion for judgment on the pleadings serves the function of a demurrer, challenging only defects on the face of the complaint.’ [Citation.] As with a demurrer, ‘[t]he grounds for a motion for judgment on the pleadings must appear on the face of the complaint or from a matter of which the court may take judicial notice.’ [Citation.]” County of Orange v. Association of Orange County Deputy Sheriffs (2011) 192 Cal.App.4th 21, 32 (County of Orange), states, “In reviewing the trial court's grant of the motions for judgment on the pleadings under Code of Civil Procedure section 438, subdivision (b)(1), we apply the same rules governing the review of an order sustaining a general demurrer. [Citation.] A defendant's motion for judgment on the pleadings should be granted if, under the facts as alleged in the pleading or subject to judicial notice, the complaint fails to state facts sufficient to constitute a cause of action. [Citation.] We accept the complaint's properly pleaded factual allegations as true and give them a liberal construction. [Citations.] We do not accept as true ‘any contentions, deductions or conclusions of fact or law contained therein.’ [Citation.]” Committee for Green Foothills v. Santa Clara County Bd. of Supervisors (2010) 48 Cal.4th 32, 42 states, “ ‘ “A demurrer based on a statute of limitations will not lie where the action may be, but is not necessarily, barred. [Citation.] In order for the bar . . . to be raised by demurrer, the defect must clearly and affirmatively appear on the face of the complaint; it is not enough that the complaint shows that the action may be barred. [Citation.]” [Citation.]’ [Citation.]”
The Motion states, “KA’s Motion should be granted as to all six causes of actions. The statute of limitations bars all six causes of action, and no tolling or delayed accrual arguments are sufficiently pleaded to save Plaintiffs’ claims. And, even if the statute limitations did not bar the fraud cause of action, Plaintiffs wholly failed to allege sufficient facts to establish actionable nondisclosure or sufficient damages to avoid the economic loss rule.” (Motion; 1:21-25.)
First Cause of Action (Violation of Civil Code section 1793.2, subdivision (d)):
Plaintiffs allege they purchased the subject vehicle, a 2013 Kia Sorento, in October 2012. (Complaint, ¶ 9.) Plaintiffs allege they received an express written warranty in connection with the purchase and subsequently received a 10-year/120,000 mile warranty extension. (Complaint, at ¶ 10.) The Complaint pleads, “Defendant and its representatives in this state have been unable to service or repair the Vehicle to conform to the applicable express warranties after a reasonable number of opportunities. Despite this fact, Defendant failed to promptly replace the Vehicle or make restitution to Plaintiff as required by Civil Code section 1793.2, subdivision (d) and Civil Code section 1793.1, subdivision (a)(2).” (Complaint, ¶ 81.)
Commercial Code section 2725 provides in part, “(1) An action for breach of any contract for sale must be commenced within four years after the cause of action has accrued. By the original agreement the parties may reduce the period of limitation to not less than one year but may not extend it. [¶] (2) A cause of action accrues when the breach occurs, regardless of the aggrieved party’s lack of knowledge of the breach. A breach of warranty occurs when tender of delivery is made, except that where a warranty explicitly extends to future performance of the goods and discovery of the breach must await the time of such performance the cause of action accrues when the breach is or should have been discovered. . . . [¶] (4) This section does not alter the law on tolling of the statute of limitations nor does it apply to causes of action which have accrued before this code becomes effective.”
Krieger v. Nick Alexander Imports, Inc. (1991) 234 Cal.App.3d 205, 215 (Krieger), states, “The Act was intended to supplement the provisions of the California Uniform Commercial Code, rather than to supersede the rights and obligations created by that statutory scheme. (See Civ. Code, § 1790.3.) California Uniform Commercial Code section 2725 specifically governs actions for breach of warranty in a sales context. We conclude that this special statute of limitations controls rather than the general provision of Code of Civil Procedure section 338, subdivision (a) for liabilities created by statute.” (Footnote 5 omitted.)
Cardinal Health 301, Inc. v. Tyco Electronics Corp. (2008) 169 Cal.App.4th 116, 130 (Cardinal Health), explains, “The scope of the ‘future performance’ exception has been the subject of numerous, and sometimes conflicting, decisions throughout the country. [Citations.] But the majority view is that the exception must be narrowly construed, and that it applies only when the seller has expressly agreed to warrant its product for a specific and defined period of time. [Citations.]” (Italics in Cardinal Health.) “Cardinal alternatively contends the parties’ repair efforts tolled the statute of limitations. Although a defendant’s repair efforts can toll the section 2725 limitations period (§ 2725, subd. (4)), here there were no facts showing T & B engaged in any repair efforts.” (Id., at p. 133.) “Cardinal’s implied warranty claim is also governed by section 2725, subdivision (2), and is barred for the same reason that the express warranty claim is barred. Because an implied warranty is one that arises by operation of law rather than by an express agreement of the parties, courts have consistently held it is not a warranty that ‘explicitly extends to future performance of the goods . . . . [Citations.]” (Id., at p. 134.)
The Motion states, “The future performance exception is thus also inapplicable to Plaintiffs’ express warranty claims. Hence, the statute of limitations began to run at purchase, in October 2012, or at the latest within the year thereafter, i.e. October 2013. (See Mexia, 174 Cal. App. 4th at 1306; see also Krieger, 234 Cal. App. 3d at 213-14 (Song-Beverly Act claim accrues when breach occurs “regardless of the aggrieved party’s lack of knowledge of the breach.”).) Under either timeline, it is plain from the face of the Complaint that all of Plaintiffs’ warranty-based claims (filed in April 1, 2021) are long past due.” (Motion, 4; 12-18.)
Here, Plaintiffs have adequately alleged the existence of a 10-year/100,000 mile powertrain warranty and a 10-year/120,000 mile warranty extension at paragraph 10 of the Complaint. Paragraph 11 of the Complaint states, “. . . during the express warranty period, the Vehicle developed various defects, including but not limited to, defects related to the power train system, including the engine, and/or transmission; and other defects.” Plaintiffs allege that the vehicle developed powertrain defects during the express warranty period. Unlike Cardinal Health, Commercial Code section 2575, subdivision (2)’s future performance exception applies because Defendant expressly agreed to warrant the subject vehicle for a specific and defined period of time.
The Complaint alleges that the defects occurred on 5-5-18 which is within the express warranty period. (Complaint, ¶¶ 16 and 18.) Plaintiffs (Marilyn Weger and Micah Weger) filed this action on 4-1-21 which is within the specific and defined express warranty period. Since Plaintiffs were aware of the alleged defects on 5-5-18, the Complaint adequately alleges that the breach of the express warranties occurred within 4-years of the time of the discovery of the defect. In other words, the alleged statute of limitations defect does not clearly and affirmatively appear in the Complaint as to the first cause of action. Therefore, the court DENIES the Motion as to the first cause of action.
Second Cause of Action (Violation of Civil Code section 1793.2, subdivision (b)):
The court DENIES the Motion as to the second cause of action for the same reasons as stated for the first cause of action.
Third Cause of Action (Violation of Civil Code section 1793.2, subdivision (a)(3)):
The court DENIES the Motion as to the third cause of action for the same reasons as stated for the first cause of action.
Fourth Cause of Action (Violation of Civil Code section 1791.2, subdivision (a)):
The court DENIES the Motion as to the fourth cause of action for the same reasons as stated for the first cause of action.
Fifth Cause of Action (Breach of the Implied Warranty of Merchantability):
The Motion states, “As an implied warranty arises by operation of law rather than through express agreement by the parties, California courts have ‘consistently held’ that an implied warranty does not ‘explicitly extend[ ] to future performance of the goods.’ (Cardinal Health, 169 Cal.App.4th 116, 134 [citing Com. Code, § 2725, subd. (2) and collecting cases].). Thus, here, any breach of implied warranty occurred, if ever, at the time tender of the vehicle was made as well.” (Motion; 3:8-12.)
Civil Code section 1791.1, subdivision (c), provides, “The duration of the implied warranty of merchantability and where present the implied warranty of fitness shall be coextensive in duration with an express warranty which accompanies the consumer goods, provided the duration of the express warranty is reasonable; but in no event shall such implied warranty have a duration of less than 60 days nor more than one year following the sale of new consumer goods to a retail buyer. Where no duration for an express warranty is stated with respect to consumer goods, or parts thereof, the duration of the implied warranty shall be the maximum period prescribed above.”
Mexia v. Rinkler Boat Co., Inc. (2009) 174 Cal.App.4th 1297, 1304-1305 (Mexia), states, “The implied warranty of merchantability may be breached by a latent defect undiscoverable at the time of sale. [Citations.] Indeed, ‘[u]ndisclosed latent defects . . . are the very evil that the implied warranty of merchantability was designed to remedy.’ [Citation.] In the case of a latent defect, a product is rendered unmerchantable, and the warranty of merchantability is breached, by the existence of the unseen defect, not by its subsequent discovery.” Mexia, however, did not address the future performance exception in Commercial Code section 2725, subdivision (2), because it found that the plaintiff had initiated the action within the four-year period described in Commercial Code section 2725, subdivision (2). (Id., at p. 1306.)
Here, the Complaint alleges Plaintiffs purchased the subject vehicle in October 2012. (Complaint, ¶ 9.) The Complaint was filed 4-1-21 which is more than four years from October of 2012. The future performance exception does not apply to the implied warranty claim for the reasons stated in Cardinal Health.
As to whether or not the delayed discovery rule, the fraudulent concealment doctrine, or the equitable estoppel doctrine applies, Commercial Code section 2725, subdivision (2), states, “A cause of action accrues when the breach occurs, regardless of the aggrieved party’s lack of knowledge of the breach. A breach of warranty occurs when tender of delivery is made, except that where a warranty explicitly extends to future performance of the goods and discovery of the breach must await the time of such performance the cause of action accrues when the breach is or should have been discovered.” Fox v. Ethicon Endo-Surgery, Inc. (2005) 35 Cal.4th 797, 808 (Fox) explains, “In order to rely on the discovery rule for delayed accrual of a cause of action, ‘[a] plaintiff whose complaint shows on its face that his claim would be barred without the benefit of the discovery rule must specifically plead facts to show (1) the time and manner of discovery and (2) the inability to have made earlier discovery despite reasonable diligence.’ [Citation.].” Commercial Code section 2725, subdivision (4), provides, “This section does not alter the law on tolling of the statute of limitations nor does it apply to causes of action which have accrued before this code becomes effective.” The delayed discovery rule does not toll a statute of limitations. Rather, the delayed discovery rule is used to determine when a cause of action accrues to start a statute of limitations. Further, Commercial Code section 2725, subdivision (2), explains that the accrual of a cause of action for a breach of warranty occurs “. . . when tender of delivery is made . . .” and that the “. . . cause of action accrues regardless of the aggrieved party’s lack of knowledge . . . .” The delayed discovery rule relates to a party’s knowledge of the cause of action by referring to the party’s time and manner of discovery, and a party’s inability to discover the facts underlying the cause of action. The statute of limitations for breach of the implied warranty of merchantability begins to run upon tender of delivery regardless of the party’s knowledge of the discovery of the facts underlying this cause of action. Thus, under Commercial Code section 2725, subdivision (4), the delayed discovery rule does not toll the statute of limitations.
A & B Painting & Drywall, Inc. (1994) 25 Cal.App.4th 349, 355 (A & B), states, “Tolling during a period of repairs rests upon the same basis as does an estoppel to assert the statute of limitations, i.e., reliance by the plaintiff upon the words or actions of the defendant that repairs will be made. [Citation.]” (See also, Cardinal Health, supra, 169 Cal.App.4th at pp. 133-134.)
The Complaint does not specifically identify the dates and times of the alleged attempts to repair the subject vehicle that would toll the statute of limitations due to repairs before the engine replacement on 5-25-18. (Complaint, ¶¶ 73-75.) Although a defendant’s repair efforts can toll the statute of limitations, Plaintiffs have not alleged any facts showing Defendant engaged in any repair efforts before the expiration of the statute of limitations. Therefore, Plaintiffs have not sufficiently alleged that the repair doctrine tolled the statute of limitations.
The Complaint also alleges the statute of limitations was tolled under a theory of fraudulent concealment. (See ¶¶ 76-79.) Plaintiffs’ Opposition to Motion for Judgment on the Pleadings (Opposition), filed on 10-9-22 under ROA No. 174, states, “Plaintiff has sufficiently alleged that KIA actively concealed material facts from Plaintiff, such as the defective nature of the Vehicle and the attendant safety risks. Plaintiff has also alleged that only Defendant is privy to this information. Defendant knew that Plaintiff is not privy to this information and went out of its way to keep that information secret.” (Opposition; 7:3-6.)
As to whether fraudulent concealment tolls the Commercial Code section 2725, subdivision (1) statute of limitations, Cansino v. Bank of America (2014) 224 Cal.App.4th 1462, 1472 (Cansino), explains, “Because the discovery rule operates as an exception to the statute of limitations, ‘if an action is brought more than three years after commission of the fraud, plaintiff has the burden of pleading and proving that he did not make the discovery until within three years prior to the filing of his complaint.’ [Citation.] To excuse failure to discover the fraud within three years after its commission, a plaintiff also must plead ‘facts showing that he was not negligent in failing to make the discovery sooner and that he had no actual or presumptive knowledge of facts sufficient to put him on inquiry.’ [Citations.] To that end, a plaintiff must allege facts showing ‘the time and surrounding circumstances of the discovery and what the discovery was.’ [Citation.] Conclusory allegations will not withstand a demurrer. [Citation.] The discovery related facts should be pleaded in detail to allow the court to determine whether the fraud should have been discovered sooner. [Citation.]” The court finds that the Cansino rule does not apply for the same reasons as discussed above as to the delayed discovery rule.
Finally, Plaintiffs contend, “Wallis class action was filed on June 02, 2016 and stipulated to dismissal on November
07, 2016. In re: Kia Engine Litigation was filed on May 10, 2017. Judgement was entered on June 10, 2021 and no appeals were filed. [¶] Thus, Plaintiffs’ claims were tolled from June 02, 2016 to November 07, 2016 and again from May 10, 2017 until June 10, 2021 (past the filing date of the complaint).” (Opposition; 7:11-15.)
American Pipe & Construction Co. v. Utah (1974) 414 U.S. 538, 554 (American Pipe) states, “. . . the commencement of a class action suspends the applicable statute of limitations as to all asserted members of the class who would have been parties had the suit been permitted to continue as a class action.” (Footnote 24 omitted.) Montoya v. Ford Motor Company (2020) 46 Cal.App.5th 493, 495-496 (Montoya), states, “The question of whether the equitable tolling made possible in American Pipe should extend to a second class action is a question our federal compatriots have addressed at some length, and we find ourselves in agreement with their resolution of the issue. Therefore, in this case we determine that to toll the statute of limitations during the period of a second class action contravenes the judicial economy and efficiency that American Pipe was trying to achieve. To do so would take the law of class actions back full-circle to the pre-1966 class action procedure when putative class members (like Montoya) could wait and see what sort of outcome would be forthcoming in a class action and then decide to opt out and file their own individual suit. Second class action tolling multiplies litigation, rather than consolidating and reducing it. We therefore hold the second class action against Ford did not toll the four-year statute, and we reverse with directions to enter judgment in favor of defendant Ford.”
The Complaint pleads, “. . . Plaintiff’s claims here were tolled from June 2, 2016 (the date the Wallis action commenced) to November 7, 2016 (the date the Wallis class action was dismissed). . . .” (Complaint, ¶ 72.) Based on paragraph 72 of the Complaint, the 4-year statute of limitations was tolled for approximate five months (June 2016-November 2016.) Even accounting for this 5-month period, the Complaint does not adequately plead that the fifth cause of action was filed within 4-years of October of 2012.
Based on the above, the court GRANTS the Motion as to the fifth cause of action.
Sixth Cause of Action (Fraud by Omission):
“ ‘ “The elements of an action for fraud and deceit 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.” ’ [Citation.] Fraud must be pleaded with specificity rather than with ‘ “general and conclusory” ’ allegations. [Citation.] (Boschma v. Home Loan Center, Inc. (2011) 198 Cal.App.4th 230, 248 (Boschma).)
LiMandri v. Judkins (1997) 52 Cal.App.4th 326, 336 (LiMandri), provides, “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. [Citation.]’ [Citation.]”
Robinson Helicopter Co., Inc. v. Dana Corp. (2004) 34 Cal.4th 979, 988 (Robinson), states, “We begin with a brief background on the economic loss rule. Economic loss consists of damages for inadequate value, costs of repair and replacement of the defective product or consequent loss of profits—without any claim of personal injury or damages to other property. . . [Citation.] [Citation.] 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. [Citation.] 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. [Citation.] Quite simply, the economic loss rule prevent[s] the law of contract and the law of tort from dissolving one into the other. [Citation.]” (Internal quotation marks omitted.) “We hold the economic loss rule does not bar Robinson’s fraud and intentional misrepresentation claims because they were
independent of Dana’s breach of contract. [Citation.] Because Dana’s affirmative intentional misrepresentations of fact (i.e., the issuance of the false certificates of conformance) are dispositive fraudulent conduct related to the performance of the contract, we need not address the issue of whether Dana’s intentional concealment constitutes an independent tort.” (Id., at p. 991; Footnote 7 omitted.)
Santana v. FCA US, LLC (2020) 56 Cal.App.5th 334, 345-346 (Santana), acknowledged the viability of a fraudulent concealment cause of action arising out of the purchase of a vehicle. Santana states, “The sum total of the evidence on that front is the following: a publicly disclosed 2007 recall related to a software problem that apparently was fixed; an issue that cropped up in 2008 and 2009, with an unknown frequency, in a different vehicle, where a TIPM was drawing too much power when the vehicle was not in use; and a 2009 internal e-mail exchange regarding the heating and air conditioning front blower in some vehicle that occurred some amount of times that had something to do with a relay in a TIPM. All the other evidence post-dates the critical time period, which is pre-November 2011. [¶] That is not enough. The very existence of a warranty presupposes that some defects may occur. Thus, the occurrence of a few defects that, so far as the record reveals, were all fixable, and mostly involved vehicles Santana did not own, is not enough to demonstrate an intent to conceal a defect in the TIPM. Santana would need evidence that, prior to Santana's purchase of the vehicle, Chrysler was aware of a defect in the TIPM that it was either unwilling or unable to fix. There was no such evidence.” (Ibid., Footnote 4 omitted.)
Defendant relies on Tarmann v. State Farm Mut. Auto. Ins. Co., (1991) 2 Cal.App.4th 153 (Tarmann) to contend that the Complaint does not plead fraud with adequate specificity. (Motion; 12:7-15.) Tarmann states, “The requirement of specificity in a fraud action against a corporation requires the plaintiff to allege the names of the persons who made the allegedly fraudulent representation, their authority to speak, to whom they spoke, what they said or wrote, and when it was said or written. [Citations.]” (Id., at p. 157.)
Plaintiffs have adequately alleged the elements of this cause of action. First, the Complaint sufficiently alleges that Defendant concealed or suppressed a material fact. (For example, see Complaint at ¶¶ 43, 46-57.) Second, the Complaint sufficiently alleges that Defendant was under a duty to disclose the Engine Defect because it was a material fact within its exclusive knowledge. (Complaint, ¶¶ 63, 106.) Third, the Complaint adequately pleads that Defendant intentionally concealed material facts. (Complaint, ¶¶ 107.) Fourth, the SAC sufficiently pleads reliance. (Complaint, ¶ 109.) Fifth, the SAC adequately alleges damages. (Complaint, ¶ 110.)
As to the economic loss rule, Robinson did not directly address the issue as to whether a cause of action for intentional concealment is an intentional tort for the purpose of applying the economic loss rule. Under Santana, a cause of action for intentional concealment is viable in the context of a purchase of a vehicle. Thus, the court will follow Santana. (See also, Dhital v. Nissan North America, Inc. 2022 WL 14772909 filed on 10-26-22 at pp. 1 and 9.)
Code of Civil Procedure section 338 states, “Within three years: . . . [¶] (d) An action for relief on the ground of fraud or mistake. The cause of action in that case is not deemed to have accrued until the discovery, by the aggrieved party or his or her agent, of the facts constituting the fraud or mistake.” The Complaint pleads that Defendant was aware of the defective condition in 2009. (Complaint, ¶ 36.) Here, Defendant was allegedly aware of the defect when Plaintiff purchased the subject vehicle. Plaintiffs allege they did not discover the wrongful conduct until after the engine replacement on 5-15-18. (For example, see Complaint, ¶¶ 16, 18, and 59-63.) Plaintiffs timely filed the Complaint within three years after the sixth cause of action accrued based on the discovery of the facts constituting fraud on 5-15-18. That is, Plaintiffs timely filed the Complaint within three years of 5-15-18 by filing it on 4-1-21. Thus, the court DENIES the Motion as to the sixth cause of action.
Based on the above, the court GRANTS Defendant’s (Kia America, Inc.) Motion for Judgment on the Pleadings, filed on 6-20-22 under ROA 57, as to the fifth cause of action with 14-days leave to amend from the date of the service of the notice of the court’s decision. (Eckler, supra, 238 Cal.App.4th at p. 439.) The court DENIES the Motion as to the other causes of action challenged by the Motion.
Plaintiffs are to give notice.