Demurrer Filed

Cal. Super. - 5th Dist.August 12, 2021

L \OOOQONLII 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Mary Arens McBride, Esq., SBN: 282459 Cameron Major, Esq., SBN: 325986 THE ERSKINE LAW GROUP, PC. 1576 N. Batavia St., Suite A Orange, CA 92867 Tel: (949) 777-6032 Fax: (714) 844-9035 marensmcbride@erskinelaw.com cmaj or@erskinelaw.c0m Attorneys for Defendant, GENERAL MOTORS, LLC SUPERIOR COURT OF THE STATE 0F CALIFORNIA COUNTY 0F FRESNO ALFONSO BADILLO and ZALDA FLORES, Plaintiffs, VS. GENERAL MOTORS, LLC, and DOES 1 through 10, inclusive, Defendants. TO THE HONORABLE COURT, ALL PARTIES AND THEIR ATTORNEYS OF RECORD: PLEASE TAKE NOTICE that 0n May 4, 2022, at 3:30 p.m., 0r as soon thereafter as the matter may be heard in Department 501 0f the above-captioned Court located at 1130 O Street, Fresno, California, 93724, GENERAL MOTORS LLC (“GM”) will and hereby does move this E-FILED 10/1 9/2021 12:08 PM Superior Court of California County of Fresno By: S. GarCIa, Deputy Case No.2 21CECG02378 GENERAL MOTORS LLC’S NOTICE OF DEMURRER AND DEMURRER TO PLAINTIFFS’ COMPLAINT; AND A MEMORANDUM OF POINTS OF AUTHORITIES [Filed concurrently with Declaration of Cameron Major; [Proposed] Orders; and Motion to Strike Punitive Damages] DATE: May 4, 2022 TIME: 3:30 pm. DEPT: 501 RES ID: Assignedfor allpurposes t0 the Hon. D. Tylei Tharpe in Dept. 501 DEMURRER T0 PLAINTIFFS’ COMPLAINT 2 DEMURRER TO PLAINTIFFS’ COMPLAINT 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Court for an order sustaining GM’s Demurrer to Plaintiffs Alfonso Badillo and Zaida Flores (“Plaintiffs”) Complaint. DEMURRER TO PLAINTIFFS’ COMPLAINT GM hereby demurs to Plaintiffs’ Causes of Action within Plaintiffs’ Complaint as filed herein, on the following grounds: 1. The sixth cause of action for Fraud by Omission is barred by the Economic Loss Rule and thus fails to state facts sufficient to constitute a cause of action. (Code of Civ. Proc., § 430.10, subd. (e)) 2. The sixth cause of action for Fraud by Omission fails to state facts relevant to the elements of the claim, and therefore does not constitute a cause of action. (Code of Civ. Proc., §430.10, subd. (e.)) 3. The sixth cause of action for Fraud by Omission is uncertain, ambiguous, and/or unintelligible. (Code of Civ. Proc., § 430.10, subd. (e)) This Demurrer is brought pursuant to California Code of Civil Procedure Section 430.10 and is based on this Notice of Demurrer and the attached Demurrer, Memorandum of Points and Authorities, the Declaration of Cameron Major, the papers and pleadings and records on file in this action and such other papers, pleadings, and arguments as this Court shall admit at the time of the hearing. DATED: October 19, 2021 ERSKINE LAW GROUP, APC By: ________________________________ Cameron Major, ESQ. COUNSEL FOR GENERAL MOTORS LLC 3 DEMURRER TO PLAINTIFFS’ COMPLAINT 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 TABLE OF CONTENTS I. INTRODUCTION .................................................................................................................. 7 II. SUMMARY OF ALLEGATIONS AND PROCEDURAL HISTORY ................................. 7 III. MEET AND CONFER PER CODE OF CIVIL PROCEDURE SECTION 430.41 .............. 8 IV. LEGAL STANDARD ............................................................................................................. 8 V. ARGUMENT .......................................................................................................................... 8 A. The Economic Loss Rule Bars the Fraud Cause of Action. ............................................. 8 B. Plaintiffs’ Allegations Fail to State a Viable Claim for Fraud by Omission.................. 13 C. Plaintiffs’ Concealment Allegations Are Insufficient as a Matter of Law. .................... 14 D. Plaintiffs Fail to Allege Fraud with the Requisite Specificity. ...................................... 16 E. Concealment Cannot Be Based upon Non-actionable Puffery. ..................................... 17 VI. CONCLUSION ..................................................................................................................... 17 4 DEMURRER TO PLAINTIFFS’ COMPLAINT 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 TABLE OF AUTHORITIES Cases Aas v. Superior Court (2000) 24 Cal 4th 627 ................................................................................. 9 Anunziato v. eMachines, Inc. (C.D. Cal. 2005) 402 F.Supp.2d 1133 ........................................... 17 Avalon Painting Co. v. Alert Lumber Co. (1965) 234 Cal.App.2d 178 ........................................ 15 Bardin v. DaimlerChrysler Corp. (2006) 136 Cal.App.4th 1255 ................................................. 15 Blank v. Kirwan (1985) 39 Cal.3d 311 ........................................................................................... 8 Blickman Turkus, LP v. MF Downtown Sunnyvale, LLC (2008) 162 Cal.App.4th 858 ................ 16 Cardinal Health 301, Inc. v. Tyco Electronics Corp. (2008) 169 Cal.App.4th 116 ..................... 16 Consumer Advocates v. EchoStar Satellite Corp. (2003) 113 Cal.App.4th 1351 ........................ 17 D’Acquisto v. Evola (1949) 90 Cal.App.2d 210 ........................................................................... 16 Daugherty v. Am. Honda. Co., 144 Cal.App.4th 824 .................................................................... 14 De Spirito v. Andrews (1957) 151 Cal.App.2d 126 ...................................................................... 15 Donabedian v. Mercury Ins. Co. (2004) 116 Cal.App.4th 968 ...................................................... 8 Engalla v. Permanente Medical Group, Inc. (1997) 15 Cal.4th 951 ............................................ 13 Finney v. Ford Motor Co., 2019 WL 79033 (N.D. Cal. 2019) ..................................................... 11 Hammond v. BMW of North America, No. CV 18-226 DSF (MRWx), 2019 WL 2912232 .. 10, 11 Heliotis v. Schuman (1986) 181 Cal.App.3d 646 ......................................................................... 15 Hien Bui v. Mercedes-Benz USA, LLC, No. 20-CV-1530-CAB-WVG, 2021 WL 242936 (S.D. Cal. Jan. 25, 2021) ............................................................................................................................ 12 Hills Trans. Co. v. Southwest (1968) 266 Cal.App.2d 702 ........................................................... 16 Hsieh v. FCA US LLC, 440 F. Supp. 3d 1157 (S.D. Cal. 2020) ................................................... 12 In re Ford Motor Co. DPS6 Powershift Transmission Prod. Liab. Lit., No. CV1706656ABFFMX, 2019 WL 3000646 (C.D. Cal. May 22, 2019) .......................................................................... 11 Kamen v. Lindley (2001) 94 Cal.App.4th 197 ................................................................................ 8 Kelsey v. Nissan N. Am., No. CV 20-4835 MRW, 2020 WL 4592744 (C.D. Cal. July 15, 2020) 10 La Vista Cemetery Assoc. v. American Savings & Loan Association (1970) 12 Cal.App.3d 365.. 8 Lazar v. Superior Court (1996) 12 Cal 4th 631 ............................................................................ 13 5 DEMURRER TO PLAINTIFFS’ COMPLAINT 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Leon v. Kia Motors America, Inc. (Orange Cnty Cal. Super. 30-2019-01093543-CU-BC-CJC) (Order 12/13/2019) ................................................................................................................... 12 Macias v. Chrysler, No. CV 17-1823, 2020 WL 4723976 ........................................................... 11 Mason v. Drug Inc. (1939) 31 Cal.App.2d 697 ............................................................................ 16 Mel Clayton GM LLC v. GM LLC Motor Co. (2002) 104 Cal.App.4th 46 ............................ 15, 17 Moore v. Regents of University of California (1990) 51 Cal.3d 120 .............................................. 8 Mosqueda v. American Honda Motor Co., ---F. Supp. 3d ----, No. SA CV 19-839 MWF (MAAx), 2020 WL 1698710 (C.D. Cal. 2020) ......................................................................... 11 Nada Pac. Corp. v. Power Eng'g and Mfg., Ltd., 73 F. Supp. 3d 1206 (N.D. Cal. 2014) .............. 9 Osborne v. Subaru of America, Inc. (1988) 198 Cal. App. 3d 646............................................... 17 Penrose v. Winter (1901) 135 Cal. 289........................................................................................... 8 Robinson Helicopter Co., Inc. v. Dana Corp. (2004) 34 Cal. 4th 979 ........................................... 9 Sloan v. Gen. Motors LLC, No. 16-CV-07244-EMC, 2020 WL 1955643 (N.D. Cal. Apr. 23, 2020) ..................................................................................................................................................... 9 Sloan v. General Motors, 2020 WL 1955643 (N.D. Cal. 2020) ................................................... 11 Stansfield v. Starkey (1990) 220 Cal.App.3d 59 ........................................................................... 16 Stewart v. Electrolux Home Prod., Inc., 304 F. Supp. 3d 894 (E.D. Cal. 2018) .......................... 11 Tarmann v. State Farm Mut. Auto Ins. Co. (1991) 2 Cal.App.4th 153 ........................................ 16 Tenzer v. Superscope, Inc. (1985) 39 Cal.3d 18 ........................................................................... 17 Thompson v. BMW of North America, No. SA CV 17-1912 CJC (KSx), 2019 WL 988694 . 10. 11 Traba v. Ford Motor Co., No. CV 18-808 SVW (GJSx), 2018 WL 6038302 (C.D. Cal. 2018) . 11 Vandermark v. Ford Motor Co. (1964) 61 Cal.2d 256 ................................................................. 16 Wilson v. Hewlett-Packard, 668 F.3d 1136 (9th Cir. 2012) .......................................................... 14 Yi v. BMW of North America LLC, No. 2:17-cv-06467-SVW-SK (C.D. Cal. Mar. 5, 2018) ....... 10 Zagarian v. BMW of N.Am., No. CV 18-4857 RSWL (PLAx), 2019 WL 6111731 .............. 10, 11 Statutes Code of Civ. Proc., § 430.10 (f) ...................................................................................................... 8 Code of Civ. Proc., § 430.10(e) ...................................................................................................... 8 6 DEMURRER TO PLAINTIFFS’ COMPLAINT 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Treatises 4 Witkin, Summary of Cal. Law (8th ed. 1974) Torts, §§ 459-464, pp. 2724-2728 .................... 15 7 DEMURRER TO PLAINTIFFS’ COMPLAINT 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 MEMORANDUM OF POINTS AND AUTHORITIES I. INTRODUCTION Plaintiffs Alfonso Badillo and Zaida Flores, (“Plaintiffs”) are attempting to turn this simple lemon law action into a fraud case against GM. But that effort fails, for multiple reasons, and GM’s Demurrer should be sustained without leave to amend. First, the fraud claim fails under the Economic Loss Rule. Second, the claim does not provide the requisite specificity; it has no well-pleaded facts about the how, when, where, to whom, and by what means the fraud occurred. Rather than providing these details (which, of course do not exist), Plaintiffs parrot allegations from a myriad of cases. Those unproven allegations are not “facts,” and assuredly are not facts relevant to Plaintiffs’ vehicle or the repairs to that vehicle under warranty. In short, there is zero factual or legal basis for Plaintiffs’ fraud claim. GM’s demurrer should be sustained without leave to amend. II. SUMMARY OF ALLEGATIONS AND PROCEDURAL HISTORY On or about June 28, 2019, Plaintiffs purchased a 2019 GMC Sierra 1500, vehicle identification number 3GTP8DEDXKG227429 (“Subject Vehicle”). (Complaint at ¶ 8.) On August 12, 2021, Plaintiffs filed “breach of warranty” claims under Song-Beverly, as well as a common law “Fraud by Omission” claim. GM now timely files this demurrer. Plaintiffs’ Complaint fails to provide critical facts necessary to state a claim, such as (1) whether Plaintiffs had any interaction with GM before or after the purchase, (2) GM’s knowledge of the alleged “defects,” (3) how GM intended to “defraud” Plaintiffs, (4) the lack of privity with GM, and/or (5) specifics regarding the warranties that covered the Subject Vehicle. Instead of providing these basic details, the Complaint alleges in conclusory fashion that GM “committed fraud by allowing to be sold to Plaintiffs the Vehicle without disclosing that the Subject Vehicle and its transmission was [sic] defective and susceptible to sudden and premature failure.” (Complaint ¶ 36.) The claim is based almost entirely on the allegation that GM did not disclose to Plaintiffs prior to the sale of the vehicle that it had “defects” based upon unspecified facts GM 8 DEMURRER TO PLAINTIFFS’ COMPLAINT 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 “knew.” (Id. ¶¶ 38-39) That is not enough. III. MEET AND CONFER PER CODE OF CIVIL PROCEDURE SECTION 430.41 On September 29, 2021, the parties telephonically met and conferred to discuss GM’s Demurrer and Motion to Strike to Plaintiff’s Complaint. After discussing the points raised herein, the parties remained at an impasse. (Declaration of Cameron Major (“Major Decl.”), at ¶ 2.) IV. LEGAL STANDARD A demurrer challenges defects that appear on the face of the complaint or matters outside the pleadings that are judicially noticeable. (Blank v. Kirwan (1985) 39 Cal.3d 311, 318; Donabedian v. Mercury Ins. Co. (2004) 116 Cal.App.4th 968, 994.) In ruling on a demurrer, “the trial court. . . treats the demurrer as admitting all material facts properly pleaded, but not contentions, deductions or conclusions of fact or law.” (Kamen v. Lindley (2001) 94 Cal.App.4th 197, 201; see also Moore v. Regents of University of California (1990) 51 Cal.3d 120, 125.) A pleading that “does not state facts sufficient to constitute a cause of action” is subject to demurrer.” (Code of Civ. Proc., § 430.10(e).) A pleading fails to state a cause of action if it pleads essential allegations as legal conclusions rather than as ultimate facts. (Penrose v. Winter (1901) 135 Cal. 289, 290-291.) Furthermore, a pleading that is uncertain, ambiguous and/or unintelligible is subject to demurrer. (Code of Civ. Proc., § 430.10 (f).) The Court must determine if the flaws inherent in the pleading can be remedied by the amendment; if the plaintiff cannot correct the deficiencies, leave to amend should be denied. (La Vista Cemetery Assoc. v. American Savings & Loan Association (1970) 12 Cal.App.3d 365, 369.) Against this standard, Plaintiffs’ fraud claim is barred by significant factual deficiencies and a number of legal doctrines such that this Court should sustain GM’s demurrer without leave to amend. V. ARGUMENT A. The Economic Loss Rule Bars the Fraud Cause of Action. A person “may not ordinarily recover in tort for the breach of duties that merely restate contractual obligations.” (Aas v. Superior Court (2000) 24 Cal 4th 627, 643, superseded by statute 9 DEMURRER TO PLAINTIFFS’ COMPLAINT 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 on other grounds.) The plaintiff must “demonstrate harm above and beyond a broken contractual promise.” (Robinson Helicopter Co., Inc. v. Dana Corp. (2004) 34 Cal. 4th 979, 988 (noting “the economic loss rule prevents the law of contract and the law of tort from dissolving one into the other”) (internal citation and quotation marks omitted).) California courts have consistently held that the economic loss doctrine bars fraudulent omissions claims based on purely economic loss. (See Sloan v. Gen. Motors LLC, No. 16-CV-07244-EMC, 2020 WL 1955643, at *23-*24 (N.D. Cal. Apr. 23, 2020) (surveying decisions).) Plaintiffs did not allege in their Complaint that GM is liable for anything other than economic loss. Despite Robinson’s holding that “the economic loss rule does not bar [a plaintiff’s] fraud and intentional misrepresentation claims [where they are] independent of breach of contract,” it expressly 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.” (22 Cal.Rptr.3d 352 at 991, 993. See also Nada Pac. Corp. v. Power Eng'g and Mfg., Ltd., 73 F. Supp. 3d 1206, 1225 (N.D. Cal. 2014) (“[Plaintiff] does not allege that [the defendant] made any affirmative misrepresentations on which it relied, nor does it allege that it was exposed to liability for personal damages independent of its economic loss. Without having done so, [Plaintiff] cannot fit within Robinson’s narrow and limited holding.”).) The affirmative misrepresentation that exposed the Robinson plaintiff to liability for personal damages, independent of that plaintiff’s economic loss, is regularly referred to as the “Robinson exception.” Multiple courts, in opinions that post-date Robinson, have confirmed that the Robinson exception only applies when the defendant has made an affirmative misrepresentation and the plaintiff has sustained damages independent of the alleged economic loss. The following courts all concluded that the Robinson exception does not extend to fraud claims based upon alleged concealment, omissions, or non-disclosures: • In Zagarian, the plaintiff asserted fraud based upon allegations that BMW omitted information about an “oil consumption” defect in the subject vehicle. (Zagarian v. BMW of N.Am., No. CV 18-4857 RSWL (PLAx), 2019 WL 6111731 at *2 (C.D. Cal. 2019)). The court there recognized that “some courts have applied the economic loss rule to claims 10 DEMURRER TO PLAINTIFFS’ COMPLAINT 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 of fraudulent concealment, finding that its application is only barred where a party has made affirmative representations that are fraudulent.” (Id. at *3) Because the Zagarian plaintiff (i) had not alleged “a single affirmative misrepresentation on the part of BMW” and (ii) had not shown any exposure to “personal damages independent of his economic loss,” the court dismissed the plaintiff’s fraud claim as barred by the economic loss rule. (Id.) • In Hammond, the plaintiff only sought damages associated with defects in the subject vehicle, yet still asserted fraud claims (i) without alleging that BMW made any affirmative misrepresentations and (ii) without claiming damages beyond his economic loss associated with the vehicle itself. (Hammond v. BMW of North America, No. CV 18-226 DSF (MRWx), 2019 WL 2912232 at *2 (C.D. Cal. 2019)). When the plaintiff argued that his fraud claim fell under the Robinson exception, the court rejected that argument, opining that the Robinson exception applied only to affirmative misrepresentations. (Id.) Because the plaintiff had not alleged any affirmative misrepresentations by BMW and did not seek damages other than his economic loss, the Hammond court ruled that the fraud claim based on “omissions” and “concealment” was barred by the economic loss rule. (Id. at *3.) • In Thompson, the plaintiff asserted a fraud claim based upon an allegation that BMW omitted information about an “abnormally high consumption of oil” defect. (Thompson v. BMW of North America, No. SA CV 17-1912 CJC (KSx), 2019 WL 988694 at *1 (C.D. Cal. 2019)). The court there held that, because plaintiff (i) had alleged fraud due to an alleged omission, (ii) had not alleged any personal injury or damages other than economic loss, and (iii) had not alleged a “single affirmative misrepresentation” by BMW, the fraud claim was barred by the economic loss rule. (Id. at *5.) • In Yi, the plaintiff asserted a fraud claim based upon allegations that BMW had omitted information about the subject vehicle “burning through oil at an excessive rate.” (Yi v. BMW of North America LLC, No. 2:17-cv-06467-SVW-SK at *1 (C.D. Cal. Mar. 5, 2018)). The Yi court ruled that, to avoid preclusion of a fraud claim under the economic loss rule, a plaintiff must show exposure to personal damages independent of the economic loss. (Id. at *2 (citing Robinson)). A plaintiff cannot satisfy this condition (i.e., personal damages independent of the economic loss) merely by arguing that the alleged “fraud” would open the door to greater damages for the plaintiff. (Id.) The Yi court noted that, if a court were to interpret the Robinson exception that broadly, it would “eviscerate the guidelines set out by the Robinson court.” (Id.) Because the Yi plaintiff’s complaint did not claim additional, non-economic damages other than the alleged damages arising from the alleged defect (i.e., damages “above and beyond a broken contractual promise”), the “fraud” claim failed as a matter of law. (Id.) These four cases are not outliers. Last summer, in Kelsey v. Nissan N. Am., No. CV 20- 4835 MRW, 2020 WL 4592744, at *1-2 (C.D. Cal. July 15, 2020), the court dismissed the plaintiff’s fraud claim because the plaintiff did not claim any affirmative misrepresentations by Nissan or economic damages other than economic loss due to alleged vehicle defects. The court there noted that “numerous California federal courts sitting in diversity have applied the economic loss rule to prohibit a follow-on fraudulent inducement claim in run-of-the-mill Song-Beverly Act 11 DEMURRER TO PLAINTIFFS’ COMPLAINT 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 warranty breach actions.” (Id. at *2.) The court then provided a “monstrously-long” string cite to support its conclusion: Mosqueda v. American Honda Motor Co., ---F. Supp. 3d ----, No. SA CV 19-839 MWF (MAAx), 2020 WL 1698710 at *13 (C.D. Cal. 2020) (“Because Plaintiffs concede that they seek only economic damages and premise their fraud claim on alleged omissions [,] Plaintiffs’ fraudulent omission claim is barred by the economic loss rule.”); Hammond v. BMW of North America, No. CV 18-226 DSF (MRWx), 2019 WL 2912232 at *2 (C.D. Cal. 2019); Traba v. Ford Motor Co., No. CV 18-808 SVW (GJSx), 2018 WL 6038302 at *4 (C.D. Cal. 2018) (fraudulent concealment “resulted only in Plaintiffs’ disappointed expectations”; plaintiffs “do not claim that the vehicle's alleged defects caused any personal injury or damage to property other than the vehicle”); Thompson v. BMW of North America, No. SA CV 17-1912 CJC (KSx), 2019 WL 988694 at *5 (C.D. Cal. 2019); Zagarian v. BMW of North America, No. CV 18- 4857 RSWL (PLAx), 2019 WL 6111731 at *3 (C.D. Cal. 2019); Sloan v. General Motors, 2020 WL 1955643 at *24 (N.D. Cal. 2020) (“Robinson and the weight of authority within the Ninth Circuit suggest that the economic loss rule applies to fraudulent omission claims under California law”; “many courts within the Ninth Circuit have relied on Robinson in holding that affirmative representations are required for exceptions to the rule to apply”); Finney v. Ford Motor Co., 2019 WL 79033 at *5 (N.D. Cal. 2019) (under economic loss rule, car purchaser's “remedies are in contract and not in fraud”); Stewart v. Electrolux Home Prod., Inc., 304 F. Supp. 3d 894, 902 (E.D. Cal. 2018) (“Plaintiffs’ damages ... are limited to economic loss, precluding their strict liability and fraudulent concealment claims.”); see also, In re Ford Motor Co. DPS6 Powershift Transmission Prod. Liab. Lit., No. CV1706656ABFFMX, 2019 WL 3000646, at *6 (C.D. Cal. May 22, 2019) (finding “insufficient support in the California cases [defendant] cites for its distinction between fraudulent inducement by misrepresentation and fraudulent inducement by omission, and therefore declin[ing] to apply the economic loss rule to the omission claims at [the motion to dismiss] stage”). (Id. at *2.) In addition to Kelsey’s “monstrously-long” list of authority, courts have routinely barred omission- and concealment-based fraud claims under the economic loss rule. (See Macias v. Chrysler, No. CV 17-1823, 2020 WL 4723976, at *2 (C.D. Cal. Aug. 13, 2020) (applying economic loss rule to preclude fraudulent omission claim); Leon v. Kia Motors America, Inc. (Orange Cnty Cal. Super. 30-2019-01093543-CU-BC-CJC) (Order 12/13/2019), RJN Ex. G (applying economic loss rule to preclude fraudulent concealment/omission claim).) 12 DEMURRER TO PLAINTIFFS’ COMPLAINT 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Most notably, in a decision issued earlier this year - in a case that mirrors this case - plaintiff filed a complaint against Mercedes-Benz USA alleging a fraud claim based upon an alleged omission. (Hien Bui v. Mercedes-Benz USA, LLC, No. 20-CV-1530-CAB-WVG, 2021 WL 242936, at *4 (S.D. Cal. Jan. 25, 2021)). The court there barred plaintiff’s claim for fraudulent concealment because the complaint did not allege any personal injury to the plaintiff or any damage to physical property independent of the subject vehicle. (Id.) In fact, the only allegation of harm caused by the alleged omission was that “plaintiff purchased the vehicle at issue that he would not have otherwise purchased.” (Id. See also Complaint at ¶ 44.) The complaint there did not allege any facts that supported a “plausible inference” that Mercedes had any “general duty to disclose the alleged defect regardless of whether plaintiff purchased a vehicle,” so “any omissions were not independent of any warranties related to the actual purchase.” (Id.) Naturally, the court there held that the economic loss rule barred plaintiff’s fraudulent concealment claim. (Id.) But the court did not stop there. It went on to say that, because plaintiff’s alleged “damages were strictly economic” and arose out of the “same conduct as the breach of warranty claims, no amendment to the complaint would be able to avoid this outcome.” (Id. (citing Hsieh v. FCA US LLC, 440 F. Supp. 3d 1157, 1162 (S.D. Cal. 2020) (dismissing fraud claim without leave to amend because the fact that the lawsuit involved “alleged omissions, not affirmative misrepresentations [precluded] Plaintiff’s ability to avoid the economic loss rule.”).) The Bui court also dismissed plaintiff’s prayer for punitive damages predicated on the alleged concealment, because there was no argument to suggest that his punitive damages claim could survive without his fraudulent concealment claim. (Id.) This case is indistinguishable from all the cases in Kelsey’s “monstrously-long” list and nearly identical to the facts presented in Bui. Here, Plaintiffs allege that GM “committed fraud by allowing to be sold to Plaintiffs the Vehicle without disclosing that the Subject Vehicle and its transmission was [sic] defective and susceptible to sudden and premature failure.” (Complaint ¶ 36.) Plaintiffs have not alleged personal injuries or damages to property other than economic loss for the vehicle itself. (Id.) In fact, the only allegation of harm that Plaintiffs alleged in the 13 DEMURRER TO PLAINTIFFS’ COMPLAINT 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Complaint is that, “Had Plaintiffs known that the Vehicle and its transmission were defective at the time of sale, she [sic] would not have purchased/leased the Vehicle.” (Id. at ¶ 44.) This allegation is exactly what the Bui court rejected. (2021 WL 242936, at *4.) Without an affirmative misrepresentation by GM, and without damages independent of the alleged economic loss related to his vehicle, Plaintiffs’ fraud claim is barred and should be dismissed without leave to amend. B. Plaintiffs’ Allegations Fail to State a Viable Claim for Fraud by Omission. Plaintiffs’ fraud by omission claim attempts, but fails, to allege the tort of deceit or fraud. The torts of deceit or fraud require a plaintiff to plead and prove: “(a) [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.” (Lazar v. Superior Court (1996) 12 Cal 4th 631, 638; see also Engalla v. Permanente Medical Group, Inc. (1997) 15 Cal.4th 951, 974.) Plaintiffs’ Complaint does not allege a single, specific, concrete omission by GM. Plaintiffs do not allege facts stating the terms of the warranty or warranties at issue or allege that GM misrepresented anything about the Subject Vehicle. Nor does the Complaint allege facts about (1) whether Plaintiffs communicated with GM before they purchased the Subject Vehicle, (2) whether the purported “defect” was covered under the warranty, (3) which alleged representations were made to Plaintiffs, (4) how the Subject Vehicle does not allegedly conform to its intended use, (5) how GM allegedly failed to provide a refund or replace the vehicle, (6) how GM owed a duty to Plaintiffs, and (7) what facts support Plaintiffs’ allegation that the Subject Vehicle is unsafe or ever exhibited a safety concern. Plaintiffs merely allege in conclusory fashion that GM failed to disclose safety risks associated with the Subject Vehicle. Plaintiffs have provided nothing other than speculative and conclusory statements cloaked in broad and sweeping allegations. Specifically, Plaintiffs’ Complaint alleges the following, and nothing more: GM did not disclose to Plaintiffs prior to the sale of the vehicle that it had “defects” based upon unspecified facts GM “knew.” (Id. ¶¶ 37-42.) To establish GM’s knowledge and intent at the time of sale, Plaintiffs allege that GM “knew” about 14 DEMURRER TO PLAINTIFFS’ COMPLAINT 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 the Vehicle’s “Transmission Defect,” failed to disclose the defective nature “of the Vehicle and its transmission,” and “intentionally concealed material facts” from Plaintiffs, yet they do not offer any information or source for this claim. (Id. ¶¶ 40-43.) This does not establish GM’s intent to defraud Plaintiffs or demonstrate that the transmission was defective at the time of sale. (Id.) Plaintiffs have failed to provide any factual support for these statements and allegations and has merely provided convenient conclusions that lack the foundation and specificity required to plead fraud. C. Plaintiffs’ Concealment Allegations Are Insufficient as a Matter of Law. To establish the tort of concealment (Fraud by Omission), Plaintiffs must prove: (1) GM concealed or suppressed a material fact; (2) GM was under a duty to disclose the fact to Plaintiffs; (3) GM intentionally concealed or suppressed the fact with intent to defraud Plaintiffs; (4) Plaintiffs were unaware of the fact and would not have acted as Plaintiffs did if Plaintiffs had known of the concealed or suppressed fact; and (5) Plaintiffs were damaged by the concealment. (Jones v. ConocoPhillips Co. (2011) 198 Cal.App.4th 1187, 1198.) When dealing with a product, omitted facts are material only if they implicate a safety concern. (Daugherty v. Am. Honda. Co., 144 Cal.App.4th 824, 836; Wilson v. Hewlett-Packard, 668 F.3d 1136, 1141-42 (9th Cir. 2012).) Plaintiffs pled no such facts; instead, they pled nothing other than speculative and conclusory statements. This issue was addressed in Daugherty, an action brought under the CLRA and Business and Professions Code section 17200 (“UCL”). (Daugherty, 144 Cal.App.4th at 824). In that case, several car buyers filed a class action against Honda alleging that it had failed to disclose that its F22 engine had persistent problems with respect to oil leakage. The trial court sustained Honda’s demurrer without leave to amend as to the CLRA and UCL claims because the plaintiff failed to identify any representation made by Honda that its automobiles had any characteristics they did not have or were of a standard or quality they were not. The Daugherty court held: “To be actionable, the [fraudulent] omission must be contrary to a representation actually made by the defendant, or an omission of a fact that defendant was 15 DEMURRER TO PLAINTIFFS’ COMPLAINT 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 obliged to disclose.” (Daugherty, 144 Cal.App.4th at 835; see also Bardin v. DaimlerChrysler Corp. (2006) 136 Cal.App.4th 1255, 1276 (no fraud can be alleged if there is no showing that the defendant was “bound to disclose” the fact at issue)) Here, there is no allegation that GM was aware of any material fact that allegedly impacted the Subject Vehicle’s safety at the time of the lease, or that Plaintiffs had any direct contact with GM at the time of sale. Therefore, there could not be an omission of any material fact at the time of the lease by GM or a failure to disclose any material fact at the time of the lease as it relates to Plaintiffs’ Subject Vehicle having characteristics and benefits that it did not have, or that it was of a particular standard, quality, or grade when it was of another. Further, GM did not have any duty to disclose, and is not liable for concealment. The duty to disclose arises in four circumstances: when the defendant: (1) is in a fiduciary relationship with the plaintiff, (2) had exclusive knowledge of material facts not known to the plaintiff, (3) actively conceals a material fact from the plaintiff; and/or (4) makes partial representations but also suppresses some material facts. (Heliotis v. Schuman (1986) 181 Cal.App.3d 646, 651, quoting 4 Witkin, Summary of Cal. Law (8th ed. 1974) Torts, §§ 459-464, pp. 2724-2728.) As a matter of law, there is no fiduciary relationship between GM and Plaintiffs. “It is a general rule that a vendor not in a confidential relation to the buyer is not under a duty to make full disclosure concerning the object which he would sell.” (De Spirito v. Andrews (1957) 151 Cal.App.2d 126, 130.) Nor do Plaintiffs allege any of the other three circumstances which would create a duty to disclose. In California, an automaker is not liable for the independent conduct of a dealership employee or another third-party entity with no relationship to GM. (Mel Clayton GM LLC v. GM LLC Motor Co. (2002) 104 Cal.App.4th 46, 49.) “A [manufacturer’s] dealer or retailer may in a layman’s view be an agent of the [manufacturer], but he is not an agent in the legal sense of that relationship.” Representations of employees at a dealership are not representations of an agent of Defendant itself. (Avalon Painting Co. v. Alert Lumber Co. (1965) 234 Cal.App.2d 178, 184 [citing Vandermark v. Ford Motor Co. (1964) 61 Cal.2d 256; Cardinal Health 301, Inc. v. Tyco 16 DEMURRER TO PLAINTIFFS’ COMPLAINT 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Electronics Corp. (2008) 169 Cal.App.4th 116, 134 (tolling and estoppel both rely on representations by defendant that repairs will be made; third party representations do not involve reliance on defendant)].) Further, Plaintiffs bear the burden to prove agency, which must rest upon an agreement. (D’Acquisto v. Evola (1949) 90 Cal.App.2d 210, 213.) The Complaint fails to demonstrate any direct representations by GM to Plaintiffs. D. Plaintiffs Fail to Allege Fraud with the Requisite Specificity. “Fraud is never presumed.” (Mason v. Drug Inc. (1939) 31 Cal.App.2d 697, 703.) Rather, California law requires that every element of a fraud cause of action “must be alleged in the proper manner and the facts constituting the fraud must be alleged with sufficient specificity to allow defendant to understand fully the nature of the charge made.” (Tarmann v. State Farm Mut. Auto Ins. Co. (1991) 2 Cal.App.4th 153, 157.) “[T]he policy of liberal construction of the pleadings . . . will not ordinarily be invoked to sustain a pleading defective in any material respect. [citations] This particularity requirement necessitates pleading facts which ‘show how, when, where, to whom and by what means the representations were tendered.’” (Stansfield v. Starkey (1990) 220 Cal.App.3d 59, 73, quoting Hills Trans. Co. v. Southwest (1968) 266 Cal.App.2d 702, 707.) Pleading fraud with specificity is particularly important. (Tarmann v. State Farm, supra, at 157 [“The requirement of specificity in a fraud action against a corporation requires the Plaintiffs to allege the names of the persons who made the allegedly fraudulent representations, their authority to speak, to whom they spoke, what they said or wrote, and when it was said or written.”]; Mason v. Drug Inc., supra, at 703 [“if the Plaintiffs would charge the defendant corporation with making fraudulent misrepresentations it was necessary for him to allege the name of the person who spoke, his authority to speak, to whom he spoke, what he said or wrote, and when it was said or written.”]; Blickman Turkus, LP v. MF Downtown Sunnyvale, LLC (2008) 162 Cal.App.4th 858, 878 [“Concealment is a species of fraud, and fraud must be pleaded with specificity.”].) Here, Plaintiffs fail to identify the salesperson Plaintiffs spoke to when purchasing the vehicle, when Plaintiffs had any conversations with salespeople regarding the vehicle,1 or what 1 In California, an automaker is not liable for the independent conduct of a dealership employee or 17 DEMURRER TO PLAINTIFFS’ COMPLAINT 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 advertisements and/or marketing brochures Plaintiffs reviewed or relied upon in purchasing the vehicle and whether they were prepared by GM or someone else. The vast majority of Plaintiffs’ Complaint consists of non-case specific, conclusory statements. Plaintiffs fail to plead with specificity, as is required, the facts supporting any allegation that GM intended to defraud Plaintiffs by either making any affirmative statements or failing to disclose any alleged facts. (Tenzer v. Superscope, Inc. (1985) 39 Cal.3d 18, 30 [“something more than non-performance is required to prove the defendant’s intent not to perform his promise”].) Based on the foregoing, Plaintiffs’ Fraud by Omission cause of action fails to meet the applicable pleading standard and should be dismissed. E. Concealment Cannot Be Based upon Non-actionable Puffery. Even where pled specifically, forward-looking statements, sales talk, puffery, and other generalized statements, cannot constitute facts to support a cause of action for fraud. (Consumer Advocates v. EchoStar Satellite Corp. (2003) 113 Cal.App.4th 1351, 1361; Osborne v. Subaru of America, Inc. (1988) 198 Cal. App. 3d 646, 660, n.8 [manufacturers “are permitted to ‘puff’ their products by stating opinions about the quality of the goods so long as they do not cross the line and make factual representations about important characteristics like a product's safety”]; Anunziato v. eMachines, Inc. (C.D. Cal. 2005) 402 F.Supp.2d 1133, 1140 [holding that phrases like “quality,” “reliability,” “high performance criteria,” and “latest technology” are all non- actionable puffery].) Plaintiffs’ Complaint does not allege what statements they might have relied on from GM. However, to the extent they may have relied on some unspecified statement, GM asserts that such representation will likely be nothing more than standard sales talk, forward- looking statements, and statements of opinion - all of which are puffery and none of which are actionable. VI. CONCLUSION The sixth cause of action for Fraud by Omission is precluded by the economic loss rule. Additionally, Plaintiffs have failed to state a viable claim for fraud. For these reasons, GM’s another third-party entity with no relationship to GM. (Mel Clayton GM LLC v. GM LLC Motor Co. (2002) 104 Cal.App.4th 46, 49.) 18 DEMURRER TO PLAINTIFFS’ COMPLAINT 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Demurrer to the sixth cause of action for fraud by omission should be sustained without leave to amend. Dated: October 19, 2021 THE ERSKINE LAW GROUP, APC CAMERON MAJOR, ESQ. JED VONDIELINGEN, ESQ. Attorneys for GENERAL MOTORS LLC 10 ll 12 13 14 15 16 17 l8 l9 20 21 22 23 24 25 26 27 28 PROOF OF SERVICE I am employed in the County 0f Orange and my business address is 1576 N. Batavia St., Suite A, Orange, CA 92867. l am over the age 0f 18 years and l am not a party t0 this action. lam readily familiar with the practices 0f THE ERSKINE LAW GROUP, PC for the collection and processing 0f correspondence for mailing With the United States Postal Service. Such correspondence is deposited with the United States Postal Service the same day in the ordinary course of business. On Tuesday, October 19, 2021, I served the foregoing document(s), bearing the title(s): GENERAL MOTORS LLC’S NOTICE OF DEMURRER AND DEMURRER TO PLAINTIFFS’ COMPLAINT; AND A MEMORANDUM OF POINTS OF AUTHORITIES on the interested parties in the action as follows: [X] by placing [] the original [X] a true copy thereof enclosed in a sealed envelope addressed as follows: Counselfor Plaintiffls), STRATEGIC LEGAL PRACTICES, APC 1840 Century Park East, Suite 430 Los Angeles, CA 90067 emailservices@slpattomev.com [] (BY MAIL SERVICE) I placed such envelopes for collection and to be mailed on this date following ordinary business practices. [] (BY NEXT DAY DELIVERY) I caused to be delivered such envelope by hand t0 the office of the addressee. [X] (BY E-MAIL) I caused said document to be transmitted t0 the email address(s) of the addresses(s) designated above. [X] (State) l declare under penalty 0f perjury under the laws of the State 0f California that the foregoing is true and correct. [] (Federal) I declare under penalty of perjury that I am employed by a member of the Bar of this Court, at whose direction this service is made. Executed on Tuesday, October 19, 2021, at Orange, California. Signed: Jasper Aguirre -1 _ PROOF OF SERVICE