Hearing DemurrerCal. Super. - 6th Dist.May 3, 2017SUPERIOR COURT OF CALIFORNIA COUNTY OF SANTA CLARA MINUTE ORDER ~ David Lemmon vs General Motors, LLC Hearing Start Time: 9:00 AM 17CV309603 Hearing Type: Hearing: Demurrer Date of Hearing: 07/18/2017 Comments: Heard By: Zayner, Theodore C Location: Department 6 Courtroom Reporter: Rose Ruemmler Courtroom Clerk: Maggie Caste||on Court Interpreter: Court Investigator: Parties Present: Future Hearings: Exhibits: - Jonathan M. Shugart for Defendant general Motors, LLC. Eleazar Kim for Plaintiff David Lemmon. Tentative ruling is contested by Plaintiffs counsel. Tentative ruling is adopted. See below. Currently before the Court are the demurrer and motion to strike by defendant General Motors, LLC( Defendant ). Factual and Procedural Background This is a lemon law action initiated by plaintiff David Lemmon ( Plaintiff) against Defendant. At all times, Defendant was engaged in the business of designing, manufacturing, constructing, assembling, marketing, distributing, and selling automobiles and other motor vehicles and motor vehicle components in Santa Clara County. (Complaint, 4.) On or about June 24, 2009, Plaintiff purchased a 2009 GMC Acadia (Vehicle ), which was manufactured and or distributed by Defendant. (Id, at 6.) Plaintiff purchased the Vehicle from a person or entity engaged in the business of manufacturing, distributing, or selling consumer goods at retail. (Ibid.) Plaintiff purchased the Vehicle as manufactured with [Defendant s] steering system (which is comprised of the steering wheel, steering column, rack and pinion, power steering pump, steering gear, steering gear bushings, grommet, and related components). (Id, at 45.) This steering system is common to all other vehicles in Defendant s Lambda crossover platform. (Ibid.) In connection with the purchase, Plaintiff received an express written warranty in which Defendant undertook to preserve or maintain the utility or performance of the Vehicle or to provide compensation if there is a failure in utility or performance for a specified period of time. (Complaint, 7.) The warranty provided that in the event a defect developed with the Vehicle during the warranty period, Plaintiff could deliver the Vehicle for repair services to Defendant s representatives and the Vehicle would be repaired. (Ibid.) Primed: 7/18/2017 07/18/2017 Hearing: Demurrer - 17CV309603 Page 1 of8 ~ SUPERIOR COURT OF CALIFORNIA COUNTY OF SANTA CLARA MINUTE ORDER During the warranty period, the Vehicle contained or developed defects relating to the Vehicle s HVAC system, transmission, steering system, power steering pump, motor mounts, water pump, and engine. (Complaint, 8.) The Vehicle also contained or developed defects causing the illumination of the check engine light and other defects delineated in the repair orders. (Ibid.) These defects substantially impaired the use, value, and/or safety of the Vehicle. (Ibid.) Defendant, and its representatives, were unable to service or repair the Vehicle to conform to the express warranty after a reasonable number of repair attempts. (Id, at 9 and 12.) However, Defendant failed and refused to promptly replace the Vehicle or make restitution. (Id., at 12.) Plaintiff further alleges that Defendant committed fraud by allowing the Vehicle to be sold to [him] without disclosing that the Vehicle and its steering system [were] defective and susceptible to sudden and premature failure. (Complaint, 46.) Prior to the purchase of the Vehicle, Defendant was aware and knew that the steering system installed on the Vehicle was defective, but Defendant failed to disclose this fact to Plaintiff at the time of the sale and thereafter. (Id., at 47.) Defendant allegedly knew that the steering system had one or more defects that affects the handling, maneuvering, and stability of the Vehicle while it is being operated, which can contribute to car accidents. (Id., at 48.) Defendant acquired knowledge of this defect through sources not available to consumers, like Plaintiff, such as pre-production and post-production testing data, early consumer complaints made to Defendant and its dealers, aggregate warranty data, testing conducted by Defendant in response to consumer complaints, and warranty repair and part replacements data. (Id, at 49.) Plaintiff could not have reasonably learned of or discovered the defect until well after he purchased the Vehicle. (Id., at 52.) Plaintiff would not have purchased the Vehicle if Defendant had disclosed the steering system defect to him. (Id., at 50 and 54.) Based on the foregoing, on May 3, 2017, Plaintiff filed a complaint against Defendant, alleging causes of action for (1) violation of Civil Code section 1793.2, subdivision (d); (2) violation of Civil Code section 1793.2, subdivision (b); (3) violation of Civil Code section 1793.2, subdivision (a)(3); (4) breach of express written warranty; (5) breach of implied warranty of merchantability; (6) violation of the Magnuson-Moss Warranty Act; and (7) fraud by omission. On June 8, 2017, Defendant filed the instant demurrer and motion to strike. Plaintiff filed papers in opposition to the matters on July 5, 2017. On July 11, 2017, Defendant filed reply papers in support of its demurrer and motion to strike. Discussion |. Demurrer Defendant demurs to the seventh cause of action of the complaint on the grounds of uncertainty and failure to allege facts sufficient to constitute a cause of action. (See Code Civ. Proc., 430.10, subds. (e) and (f).) A. Request forJudicial Notice Primed: 7/18/2017 07/18/2017 Hearing: Demurrer - 17CV309603 PageZ ofS SUPERIOR COURT OF CALIFORNIA COUNTY OF SANTA CLARA MINUTE ORDER Plaintiff asks the Court to take judicial notice of three federal district court cases and the second amended complaint filed in the case of Aguilar v. General Motors, LLC (United States District Court, Case No. 13-00437- LJO-GSA) (Aguilar). The federal district court cases are proper subjects ofjudicial notice under Evidence Code section 452, subdivision (a). (See Evid. Code, 452, subd. (a) [judicial notice may be taken of the decisional law ofany state of the United States].) The second amended complaint filed in Aguilar is a proper subject forjudicial notice under Evidence Code section 452, subdivision (d). (See Evid. Code, 452, subd. (d) [judicial notice may be taken of records ofany court of record of the United States].) Accordingly, Plaintiffs request forjudicial notice is GRANTED. B. Service of the Demurrer Plaintiff asserts that the Court should overrule the demurrer because he was not properly served with Defendant s moving papers. Plaintiff states that he first learned of the filing of the demurrer on June 30, 2017, upon review of the court docket, and he did not receive a copy of the demurrer until mid-day on July 5, 2017. As an initial matter, Defendant s demurrer is accompanied by a signed proof of service, which provides that Plaintiff was served with the demurrer by mail on June 8, 2017. Thus, it appears that service was proper. Moreover, Plaintiff does not establish that he was prejudiced by any defect in service. Plaintiff indicates that he received a copy of the demurrer prior to the filing of his opposition papers (see Opp n., p. 1:10-11) and his opposition substantively addresses the arguments raised in Defendant s demurrer. Consequently, the Court finds that Plaintiff s argument regarding service lacks merit. C. Meet and Confer Plaintiff contends that the Court should overrule the demurrer because Defendant failed to adequately meet and confer prior to filing the demurrer. Plaintiff asserts that Defendant failed to engage in any meet and confer efforts whatsoever. Plaintiff s argument is contrary to the declaration of Defendant s counsel, Gabriela Gomez (Gomez ). Gomez declares that she sent a 9-page meet and confer letter to Plaintiff s counsel, explaining in detail each perceived deficiency in the complaint. (Gomez Dec., 2.) Attached to the declaration is a copy of the letter dated May 24, 2017. (Gomex Dec., Ex. A.) Primed: 7/18/2017 07/18/2017 Hearing: Demurrer - 17CV309603 Page?! ofS SUPERIOR COURT OF CALIFORNIA COUNTY OF SANTA CLARA MINUTE ORDER Moreover, even if Defendant had failed to adequately meet and confer, a determination that the meet and confer process was insufficient is not grounds to overrule a demurrer. (Code Civ. Proc., 430.41, subd. (a)(4).) For these reasons, the Court finds that Plaintiff s argument lacks merit. D. Legal Standard The function of a demurrer is to test the legal sufficiency of a pleading. (Trs. Of Capital Wholesale Elec. Etc. Fund v. Shearson Lehman Bros. (1990) 221 Cal.App.3d 617, 621.) Consequently, [a] demurrer reaches only to the contents of the pleading and such matters as may be considered under the doctrine ofjudicial notice. (South Shore Land Co. v. Petersen (1964) 226 Cal.App.2d 725, 732 (South Shore ), internal citations and quotations omitted; see also Code Civ. Proc., 430.30, subd. (a).) It is not the ordinary function of a demurrer to test the truth of the [ ] allegations [in the challenged pleading] or the accuracy with which [the plaintiff] describes the defendant s conduct. [ ] Thus, [ ] the facts alleged in the pleading are deemed to be true, however improbable they may be. (Align Technology, Inc. v. Tran (2009) 179 Cal.App.4th 949, 958, internal citations and quotations omitted.) However, while [a] demurrer admits all facts properly pleaded, [it does] not [admit] contentions, deductions or conclusions of law or fact. (George v. Automobile Club of Southern California (2011) 201 Cal.App.4th 1112, 1120.) E. Uncertainty As articulated above, Defendant demurs to the seventh cause of action for fraud by omission on the ground of uncertainty. Uncertainty is a disfavored ground for demurrer; it is typically sustained only where the pleading is so unintelligible and uncertain that the responding party cannot reasonably respond to or recognize the claims alleged against it. (See Khoury v. Maly s of Cal., Inc. (1993) 14 Cal.App.4th 612, 616.) [T]he failure to specify the uncertain aspects of a complaint will defeat a demurrer based on the grounds of uncertainty. (Fenton v. Groveland Community Services Dist. (1982) 135 Cal.App.3d 797, 809 overruled on other grounds by Katzberg v. Regents of University of California (2002) 29 Cal.4th 300, 328, fn. 30.) Here, Defendant s memorandum of points and authorities fails to directly address the ground of uncertainty. Defendant does not present any argument demonstrating that the seventh cause of action is so unintelligible and uncertain that it cannot reasonably respond to or recognize the claim asserted against it. In fact, Defendant recognizes that the seventh cause of action is for fraud by omission and responds to the merits of the claim in its demurrer. Thus, it is readily apparent that the claim is not truly uncertain. Instead, Defendant appears to believe that the claim is uncertain because Plaintiff purportedly fails to allege sufficient facts to state a claim. However, the law is settled that [a] special demurrer for uncertainty is not intended to reach the failure to incorporate sufficient facts in the pleading but is directed at the uncertainty existing in the allegations actually made. (Butler v. Sequeira (1950) 100 Cal.App.2d 143, 145-146.) Primed: 7/18/2017 07/18/2017 Hearing: Demuner - 17CV309603 Page4 ofS SUPERIOR COURT OF CALIFORNIA COUNTY OF SANTA CLARA MINUTE ORDER For these reasons, the demurrer on the ground of uncertainty is OVERRULED. F. Failure to Allege Facts Sufficient to Constitute a Cause of Action 1. Statute of Limitations Defendant asserts that the seventh cause of action fails to allege sufficient facts to state a claim because, amongst other things, it is time-barred by the applicable statute of limitations. Defendant points out that the seventh cause of action is based on its alleged failure to disclose the steering system defect to Plaintiff prior to the sale of the Vehicle. (See Complaint, 45-56.) Defendant contends that the statute of limitations begins to accrue upon the commission of the alleged fraud. Because Plaintiff alleges the sale of the Vehicle occurred on June 24, 2009 (see id., at 6), Defendant concludes that the claim is time-barred by the three-year statute of limitations set forth in Code of Civil Procedure section 338, subdivision (d). Defendant further asserts that Plaintiff fails to adequately plead facts showing the time and surrounding circumstances of his discovery of the fraud. A court may sustain a demurrer on the ground of failure to state sufficient facts if the complaint shows on its face the statute [of limitations] bars the action. (E-Fab, Inc. v. Accountants, Inc. Services (2007) 153 Cal.App.4th 1308, 1315.) A demurrer is not sustainable if there is only a possibility the cause of action is time- barred; the statute of limitations defense must be clearly and affirmatively apparent from the allegations in the pleading. (Id, at pp. 1315-16.) When evaluating whether a claim is time-barred, a court must determine (1) which statute of limitations applies and (2) when the claim accrued. (Id. at p. 1316.) The parties appear to agree that Code of Civil Procedure section 338, subdivision (d) provides the applicable statute of limitations. Code of Civil Procedure section 338, subdivision (d) specifies a three year statute of limitations for actions grounded in fraud or mistake. For fraud, The cause of action is not to be deemed to have accrued until the discovery, by the aggrieved party, of the facts constituting the fraud or mistake. (Code Civ. Proc., 338, subd. (d); Britton v. Girardi (2015) 235 Cal.App.4th 721, 734.) Here, Defendant misunderstands the application of the statute of limitations under Code of Civil Procedure section 338, subdivision (d). As indicated above, Defendant contends that Plaintiffs fraud cause of action is based upon fraudulent omissions made prior to the sale of the Vehicle in 2009, and Plaintiff did not file this action until May 3, 2017, almost eight years later. However, the statute of limitations begins to run only upon accrual of the cause of action. Under Code of Civil Procedure section 338, subdivision (d), the cause of action accrues once the plaintiff discovers the facts constituting the fraud. (Code Civ. Proc., 338, subd. (d).) Theallegations of the complaint do not disclose when Plaintiff discovered the facts constituting the alleged fraudulent omission. Consequently, the statute of limitations defense is not clearly and affirmatively apparent from the allegations of the complaint. For this reason, the seventh cause of action, as pleaded, is not time-barred by the statute of limitations 2. Economic Loss Rule Primed: 7/18/2017 07/18/2017 Hearing: Demuner - 17CV309603 Page 5 of8 SUPERIOR COURT OF CALIFORNIA COUNTY OF SANTA CLARA MINUTE ORDER Defendant contends that the economic loss rule bars Plaintiff s claim for fraud by omission. Defendant relies on Robinson Helicopter Co., Inc. v. Dana Corp. (2004) 34 Cal.4th 979 ( Robinson )and asserts that a fraud cause of cause may only be brought when a plaintiff relies on a defendant s affirmative representations when entering into a contract. Defendant also asserts that Plaintiff fails to identify any damage independent of his contractual damages. Defendant s arguments are not well-taken. First, Robinson does not stand for the proposition that that a fraud cause of cause may only be brought when a plaintiff relies on a defendant s affirmative representations when entering into a contract. As explained in Robinson, under the economic loss rule, a purchaser may only recover in contract for purely economic loss due to disappointed expectations, unless he can demonstrate harm above and beyond a broken contractual promise. (Robinson, supra, 34 Cal.4th at p. 988.) However, [t]ort 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 because in each of those 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. (Id, at pp. 989-990, internal citations omitted and emphasis added.) The court in Robinson explicitly did not address the question whether a case involving material omissions, rather than affirmative misrepresentation, would similarly be exempt from the economic loss rule. (NuCal Foods, Inc. v. Quality Egg LLC (E.D. Cal. 2013) 918 F.Supp.2d 1023, 1031 citing Robinson, supra, 34 Cal.4th at p. 991 [ 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. 1.) In fact, [t]he opinion strongly suggests no meaningful distinction exists between intentional concealment and intentional misrepresentation; rather, the material distinction is whether the tortious conduct was intentional or negligent. (NuCal Foods, Inc. v. Quality Egg LLC (E.D. Cal. 2013) 918 F.Supp.2d 1023, 1031( NuCal ).) The Court in Robinson noted that in each instance where tort damages were allowed in breach of contract 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. [Citation.] (Robinson, supra, 34 Cal.4th at pp. 990.) In short, the economic loss rule is designed to limit liability in commercial activities that negligently or inadvertently go awry, not to reward malefactors who affirmatively misrepresent and put people at risk. (NuCal, supra, 918 F.Supp.2d at p. 1033 citing Robinson, supra, 34 Cal.4th at p. 991 n. 7.) Here, like in Robinson, but for the alleged conduct (i.e., the intentional fraudulent omissions), Plaintiff would not have purchased the Vehicle. (See id., at pp., 990 91 [ But for Dana s affirmative misrepresentations by supplying the false certificates of conformance, Robinson would not have accepted delivery and used the nonconforming clutches over the course of several years .].) Therefore, Defendant s alleged tortious conduct was separate from the breach of the express warranty. Accordingly, the seventh cause of action is not barred by the economic loss rule. 3. Defendant s Remaining Arguments Defendant argues that (1) Plaintiff fails to plead the alleged fraud with the requisite specificity and (2) Plaintiff fails to allege sufficient facts supporting each element of his claim for fraud. The vast majority of Defendant s arguments in this respect are not well-taken. However, the Court agrees with Defendant that Plaintiff has not alleged sufficient facts demonstrating that Defendant had a duty to disclose the alleged Primed: 7/18/2017 07/18/2017 Hearing: Demuner - 17CV309603 Page 6 of8 SUPERIOR COURT OF CALIFORNIA COUNTY OF SANTA CLARA MINUTE ORDER material fact. [T]he 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.] (Boschma v. Home Loan Center, Inc. (2011) 198 Cal.App.4th 230, 248; Kaldenbach v. Mutual of Omaha Life Ins. Co. (2009) 178 Cal.App.4th 830, 85.) To maintain a cause of action for fraud through nondisclosure or concealment of facts, a plaintiff must demonstrate that the defendant was under a legal duty to disclose those facts. (OCM Principal Opportunities Fund, L.P. v. CIBC World Markets Corp. (2007) 157 Cal.App.4th 835, 845.) Where there is no fiduciary relationship, the duty to disclose generally presupposes a relationship grounded in some sort of transaction between the parties. Thus, a duty to disclose may arise from the relationship between seller and buyer or parties entering into any kind of contractual agreement. (LiMandri v. Judkins (1997) 52 Cal.App.4th 326, 337 ( LiMandri ), internal citations omitted.) |n transactions which do not involve fiduciary or confidential relations, a cause of action for non-disclosure of material facts may arise in at least three instances: (1) the defendant makes representations but does not disclose facts which materially qualify the facts disclosed, or which render his disclosure likely to mislead; (2) the facts are known or accessible only to defendant, and defendant knows they are not known to or reasonably discoverable by the plaintiff; [or] (3) the defendant actively conceals discovery from the plaintiff. (Warner Constr. Corp. v. City of Los Angeles (1970) 2 Cal.3d 285, 294; see Bank of America Corp. v. Super. Ct. (2011) 198 Cal.App.4th 862, 870 871; see also LiMandri, supra, 52 Cal.App.4th at pp. 336 337.) Here, Plaintiff asserts that Defendant had a duty to disclose the alleged material fact because it had exclusive knowledge of the material fact and it actively concealed the material fact. (See Opp n., pp. 7-8.) However, Plaintiff fails to allege any facts demonstrating that there was a relationship between him and defendant grounded in a transaction between the parties. In the complaint, Plaintiff does not allege that Defendant sold him the vehicle or that he entered into a contract with Defendant. Absent such allegations, Plaintiff fails to establish that Defendant had a duty to disclose the alleged material fact. In light of the foregoing, the demurrer on the ground of failure to allege sufficient facts to state a claim is SUSTAINED, with 10 day s leave to amend. Defense counsel to prepare order after hearing. 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