Defendants Ford Motor Company (“Ford”) and David Wilson’s Villa Ford of Orange (“Villa Ford”) demur to the First Amended Complaint (FAC) of plaintiff Cheryl L. De La Rosa (“Plaintiff”).

Song-Beverly Causes of Action Defendants argue the Song-Beverly causes of action are barred by the statute of repose set forth in Code of Civil Procedure section 871.21 because this action was not filed within six years of the original delivery of the vehicle and there are no facts alleged to show that any of the reasons for tolling apply.

Section 871.21 does not apply unless a manufacturer elects to be governed by the statute. (Code Civ. Proc., § 871.29(c).) The face of the FAC does not establish that Ford made such an election. Thus, it is not clear from the face of the FAC that section 871.21 applies to Plaintiff’s causes of action. The Court may only consider the face of the pleading or matters outside the pleading that are judicially noticeable.

Fourth Cause of Action for Breach of Implied Warranty of Merchantability Defendants contend that the fourth cause of action is untimely under Commercial Code section 2725 because it was not brought within four years after the vehicle was delivered to Plaintiff.

A cause of action for a breach of warranty occurs when 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. (Com. Code, § 2725(2).) Such cause of action must be commenced within four years after the cause of action has accrued. (Mexia v. Rinker Boat Co., Inc. (2009) 174 Cal.App.4th 1297, 1306.) While

the Song-Beverly Act “creates a limited, prospective duration for the implied warranty of merchantability[,] it does not create a deadline for discovering latent defects or for giving notice to the seller.” (Id. at p. 1301.)

Here, Plaintiff alleges that Ford’s concealment of the latent defects of the vehicle and its inability to repair those defects were not discovered until shortly before filing this action. (FAC ¶¶ 34, 39.) Accepting this allegation as true, as the Court must on a demurrer, Plaintiff has adequately alleged that she could not have discovered the breach of warranty earlier despite reasonable diligence. (

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.) Because Plaintiff has alleged tolling under the delayed discovery rule, the FAC does not establish on its face that the fourth cause of action is time-barred.

Fifth Cause of Action for Negligent Repair Defendants argue this cause of action is barred by the economic loss rule.

The economic loss rule provides that, “[i]n general, there is no recovery in tort for negligently inflicted ‘purely economic losses,’ meaning financial harm unaccompanied by physical or property damage.” (Sheen v. Wells Fargo Bank, N.A. (2022) 12 Cal.5th 905, 922.) “[T]he rule functions to bar claims in negligence for pure economic losses in deference to a contract between litigating parties” so as to prevent the law of contract and the law of tort from dissolving one into the other. (Ibid.)

The economic loss rule, however, does not bar all cases involving the negligent performance of services. “A contract to perform services gives rise to a duty of care which requires that such services be performed in a competent and reasonable manner.” (North American Chemical Co. v. Superior Court (1997) 59 Cal.App.4th 764, 774.) “A negligent failure to do so may be both a breach of contract and a tort. [Citation.] In such a hybrid circumstance, the plaintiff is entitled to pursue both legal theories until an occasion for an election of remedies arises. [Citation.]” (Ibid.) The economic loss

rule does not apply in cases involving the negligent performance of services that results in foreseeable economic loss. (Id. at pp. 781-785.)

Here, the FAC alleges that Villa Ford breached its duty to use ordinary care and skill in repairing the subject vehicle. (FAC ¶ 75.) Such alleged negligent failure to perform repair services in a competent and reasonable manner may form the basis for the tort of negligence.

Sixth Cause of Action for Fraudulent Concealment Defendants argue this cause of action is barred by the statute of limitations and economic loss rule, fails to allege facts with sufficient specificity, and fails to allege any duty to disclose.

As discussed above, Plaintiff’s allegations regarding delayed discovery are sufficiently alleged. Thus, Defendants’ argument regarding the three year statute of limitations is rejected.

As to specificity, while fraud causes of action generally must be pled with a heightened degree of specificity, this level of specificity may not be required in cases involving nondisclosure, such as here. (Alfaro v. Community Housing Improvement System & Planning Assn., Inc. (2009) 171 Cal.App.4th 1356, 1384.)

Plaintiff alleges that she entered into a warranty contract with Ford when she purchased a 2017 Ford Edge. (FAC ¶ 7.) The vehicle was manufactured and/or distributed by Ford. (Ibid.) After the purchase, defects and nonconformities manifested themselves, including issues with the battery, brake hoses, engine, and acceleration. (FAC ¶¶ 12-15.) Plaintiff further alleges that Ford knew or should have known about the defective nature of its vehicle through sources of available to consumers such as Plaintiff, such as testing data, consumer complaints, and other data. (FAC ¶ 85.) Lastly, Plaintiff alleges that she would not have purchased the vehicle if she had known about the defects at the time of the sale. (FAC ¶ 87.)

The foregoing allegations are sufficient to show a purported defect in the vehicle and the content of omitted facts—the transmission defect which can result in hesitation, delayed acceleration, jerking, etc.—as well as justifiable reliance at the pleadings stage.

The California Supreme Court explained that a duty to disclose a material fact may arise if:

(1) it is imposed by statute; (2) the defendant is acting as plaintiff’s fiduciary or is in some other confidential relationship with plaintiff that imposes a disclosure duty under the circumstances; (3) the material facts are known or accessible only to defendant, and defendant knows those facts are not known or reasonably discoverable by plaintiff (i.e., exclusive knowledge); (4) the defendant makes representations but fails to disclose other facts that materially qualify the facts disclosed or render the disclosure misleading (i.e., partial concealment); or (5) defendant actively conceals discovery of material fact from plaintiff (i.e., active concealment). [Citations.]

Circumstances (3), (4), and (5) presuppose a preexisting relationship between the parties, such as “between seller and buyer, employer and prospective employee, doctor and patient, or parties entering into any kind of contractual agreement. [Citation.] All of these relationships are created by transactions between parties from which a duty to disclose facts material to the transaction arises under certain circumstances.” [Citation.] “Such a transaction must necessarily arise from direct dealings between the plaintiff and the defendant; it cannot arise between the defendant and the public at large.” [Citation.]

Dhital v. Nissan N. Am. Inc. (2022) 84 Cal.App.5th 828, 844, addressed the issue of transactional relationship and privity in the Song Beverly context:

At the pleading stage (and in the absence of a more developed argument by Nissan on this point), we conclude plaintiffs’ allegations are sufficient. Plaintiffs alleged that they bought the car from a Nissan dealership, that Nissan backed the car with an express warranty, and that Nissan’s authorized dealerships are its agents for purposes of the sale of Nissan vehicles to consumers. In light of these allegations, we decline to hold plaintiffs’ claim is barred on the ground there was no relationship requiring Nissan to disclose known defects.

Here, Plaintiff has alleged a relationship with Ford insofar as the parties entered into a warranty agreement. Further, like in Dhital, Plaintiff alleges that she purchased the vehicle from an authorized Ford dealership. (FAC ¶ 9.) The allegations in the FAC are therefore sufficient under Dhital.

The court in Dhital held that, “under California law, the economic loss rule does not bar plaintiffs’ claim here for fraudulent inducement by concealment. Fraudulent inducement claims fall within an exception to the economic loss rule recognized by our Supreme Court [citation], and plaintiffs allege fraudulent conduct that is independent of Nissan’s alleged warranty breaches.” (Id. at p. 843.) Dhital involved allegations that are substantially similar to those raised in the FAC.

Defendants to file an answer to the FAC within 20 days.

Defendants to give notice.