Ibarra, Leticia Lopez vs. FCA US, LLC

As to the sixth cause of action against Defendant FCA for concealment, the amended complaint incorporates the prior allegations and reasserts them as to Defendant FCA's acquisition of knowledge as to the Engine Defect, failure to disclose and Plaintiff's lack of knowledge thereof. (Complaint P.P.64-71.)

Defendants demurrer to the fifth and sixth causes of action and Defendant FCA seeks to strike the punitive damages allegations. In opposition, Plaintiff argues that the facts alleged are sufficient regarding concealment under the analysis set forth in Dhital v. Nissan N. Am., Inc. (2022) 84 Cal.App.5th 828 and that the economic loss rule does not bar the negligent repair claim.

Authority and Analysis (1) Demurrer The purpose of a demurrer is to test whether a complaint "states facts sufficient to constitute a cause of action upon which relief may be based." (Young v. Gannon (2002) 97 Cal.App.4 th 209, 220.

To state a cause of action, a plaintiff must allege facts to support his or her claims, and it is improper and insufficient for a plaintiff to simply plead general conclusions. (Careau v. Security Pacific Business Credit, Inc. (1990) 222 Cal.App.3d 11371, 1390.)

The complaint must contain facts sufficient to establish every element of that cause of action, and thus a court should sustain the demurrer if "the defendants negate any essential element of a particular cause of action." (Cantu v. Resolution Trust Corp. (1992) 4 Cal.App.4 th 857, 879-80)

To determine whether the complaint states facts sufficient to constitute a cause of action, the trial court may consider all material facts pleaded in the complaint and those that arise by reasonable implication therefrom; it may not consider contentions, deductions, or conclusion of fact or law (Moore v. Conliffe (1994) 7 Cal.4 th 634, 638.)

It is well-settled that all well-pled material facts in the complaint are assumed to be true for the purpose of the demurer. (C & H Foods v. Hartford Ins. Co. (1984) 163 Cal.App.3d 1055, 1062) But "doubt in the complaint may be resolved against plaintiff and facts not alleged are presumed not to exist. (Id.)

A demurrer can be used only to challenge defects that appear on the face of the pleading under attack; or from matters outside the pleading 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.) No other extrinsic evidence can be considered (i.e., no "speaking demurrers"). (Ion Equip. Corp. v. Nelson (1980) 110 Cal.App.3d 868, 881.)

Fifth Cause of Action - Negligent Repair The necessary elements for negligence claim are: (1) the existence of a legal duty of care that the defendant owed to the plaintiff; (2) breach; (3) causation; and (4) damages. (County of Santa Clara v. Atlantic Richfield Co. (2006) 137 Cal.App.4th 292, 318.)

As to the arguments that the economic loss doctrine bars the damages alleged here, the Court notes economic loss generally consists of "...damage 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." (Food Safety Net Services v. Eco Safe Systems USA, Inc. (2012) 209 Cal.App.4th 118, 1130.)

The economic loss doctrine, in some cases, bars a tort action in the absence of personal injury or physical damage to property. (Robinson Helicopter Co. v. Dana Corp. (2004) 34 Cal.4th 979, 984.) "The economic loss rule requires a purchaser to recover in contract for purely economic loss due to disappointed expectations, unless he can recover harm above and beyond a broken contractual promise." (Id. at 988.)

However, an exception appears recognized in Jimenez v. Superior Court (2002) 29 Cal.4th 473, 476, where the plaintiff homeowners brought an action against manufacturers of windows installed in mass-produced homes on claims of negligence. The court noted: "California decisional law has long recognized that the economic loss rule does not necessarily bar recovery in tort for damage that a defective product (e.g., a window) causes to other portions of a larger product (e.g., a house) into which the former has been incorporated." (Id. at 483.)

Here, where Plaintiff pleads the Subject Vehicle's engine defect substantially impaired the safety and value of the Subject Vehicle, the Court will apply the exception in Jimenez at the pleading stage and overrule the demurrer regarding the economic loss doctrine.

Defendant Porterville argues additionally that the amended complaint lacks specificity as to the allegations of repair. The Court notes the operative complaint alleges no specific repair attempts. The complaint generally alleges a single repair presentation as to Defendant Porterville. (Complaint P.60.) The Court finds the allegations in paragraphs 60-63 too conclusory. Therefore, the Court will sustain the demurrer as to the fifth cause of action for negligent repair with leave to amend. Plaintiff shall have ten (10) days to file an amended complaint.

Sixth Cause of Action - Concealment "As with all fraud claims, the necessary elements of a concealment/suppression claim consist of '"(1) misrepresentation (false representation, concealment, or nondisclosure); (2) knowledge of falsity (scienter); (3) intent to defraud (i.e., to induce reliance); (4) justifiable reliance; and (5) resulting damage."'" [citation omitted]" (Dhital v. Nissan North America, Inc. (2022) 84 Cal.App.5th 828, 843.)

"Suppression of a material fact is actionable when there is a duty of disclosure, which may arise from a relationship between the parties, such as a buyer-seller relationship. [citation omitted]" (Id.)

Unlike most causes of action where the "the policy of liberal construction of the pleadings," fraud requires particularity, that is, "pleading facts which show how, when, where, to whom, and by what means the representations were tendered." (Lazar v. Superior Court (1996) 12 Cal.4th 631, 645.) Every element of a fraud cause of action must be alleged both factually and specifically. (Cooper v. Equity General Insurance (1990) 219 Cal.App.3d 1252, 1262.)

Dhital, supra, 84 Cal.App.5th at 844 is instructive on the issue of specificity at the pleading stage, providing in relevant part: "Plaintiffs alleged the above elements of fraud in the SAC. As we have discussed, plaintiffs alleged the CVT installed in numerous Nissan vehicles (including the one plaintiffs purchased) were defective; Nissan knew of the defects and the hazards they posed; Nissan had exclusive knowledge of the defects but intentionally concealed and failed to disclose that information; Nissan intended to deceive plaintiffs by concealing known transmission problems; plaintiffs would not have purchased the car if they had known of the defects; and plaintiffs suffered damages in the form of money paid to purchase the car....

Nissan also contends plaintiffs did not provide specifics about what Nissan should have disclosed. But plaintiffs alleged the CVT were defective in that they caused such problems as hesitation, shaking, jerking, and failure to function. The SAC also alleged Nissan was aware of the defects as a result of premarket testing and consumer complaints that were made both to National Highway Traffic Safety Administration and to Nissan and its dealers. It is not clear what additional information Nissan believes should have been included.

We decline to hold (again in the absence of a more developed argument on this point) that plaintiffs were required to include in the SAC more detailed allegations about the alleged defects in the CVT. We conclude plaintiffs' fraud claim was adequately pleaded." (Dhital, supra, 84 Cal.App.5th at 844.)

Further, the Court notes less specificity is required if it appears from the nature of allegations that defendant must necessarily possess full information, or if the facts lie more in the knowledge of opposing parties. (Alfaro v. Community Housing Improvement System & Planning Assn., Inc. (2009) 171 Cal.App.4th 1356, 1384-1385.

Here, Plaintiff pleads that the defect regarding the engine was at issue in numerous similar vehicles, that Defendant FCA knew or should have known of the defect, that Defendant FCA had exclusive knowledge thereof as a result of internal sources or data, including customer complaints, that Defendant FCA failed to disclose the defect, that Plaintiff would not have purchased the Subject Vehicle had the defect as to the engine been disclosed and that Plaintiff suffered damages. These allegations extend beyond the issues or defects that are presupposed by the warranty.

As to any requirement that Plaintiff specifically identify the persons who made the alleged omissions, based on the nature of the concealment claim, the Court finds less specificity is required and that the allegations here are sufficient against FCA as a corporation. As such, the Court overrules the demurrer as to the sufficiency of the allegations arguments.

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.'" (LiMandri v. Judkins (1997) 52 Cal.App.4th 326, 336.)

However, unless the parties were in a fiduciary relationship, the other three circumstances "presupposes the existence of some other relationship between the plaintiff and defendant in which a duty to disclose can arise." (Id. at p. 337.) "Thus, a duty to disclose may arise from the relationship between seller and buyer, employer and prospective employee, doctor and patient, or parties entering into any kind of contractual agreement." (Id.)

On this issue, the court in Dhital, supra, 84 Cal.App.5th at 844 noted: "In its short argument on this point in its appellate brief, Nissan argues plaintiffs did not adequately plead the existence of a buyer-seller relationship between the parties, because plaintiffs bought the car from a Nissan dealership (not from Nissan itself). 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." (Id.)

Here, Plaintiff alleges sufficient facts of a transactional relationship establishing a duty to disclose at the pleading stage with respect to purchase from an authorized retail dealership, presentation to authorized retail dealerships for repair, prior exclusive knowledge of the alleged defective engine based on internal sources and that Plaintiff would not have purchased the Subject Vehicle had the engine issue been disclosed. Therefore, the Court overrules the demurrer to the sixth cause of action as to this argument.

As to the economic loss doctrine, "economic loss consists of damage 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." (Food Safety Net Services v. Eco Safe Systems USA, Inc. (2012) 209 Cal.App.4th 118, 1130.) As noted above, the economic loss doctrine, in some cases, bars a tort action in the absence of personal injury or physical damage to property. (Robinson, supra, 34 Cal.4th 979, 984.) "The economic loss rule requires a purchaser to recover in contract for purely economic loss due to disappointed expectations, unless he can recover harm above and beyond a broken contractual promise." (Id. at 988.)

The holding of Robinson, permitting both recover under fraud and contract, "is 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." (Id. at 993.) The economic loss rule, therefore, does not bar recovery as to a claim for fraudulent inducement. (Id. at 990; see also Dhital, supra, 84 Cal.App.5th at 838.) Therefore, the Court overrules the demurrer to the sixth cause of action as to this argument.

(2) Motion to Strike Defendant FCA seek to strike the section of the prayer seeking punitive damages. Any party may file a timely notice of a motion to strike the whole or any part of a pleading. (Code Civ. Proc., Sec. 435, subd. (b).)

The motion may seek to strike any "irrelevant, false or improper matter inserted in any pleading" or any part of the pleading "not drawn or filed in conformity with the laws of this state, a court rule, or an order of the court." (Code Civ. Proc., Sec. 436.) Irrelevant allegations include allegations that are not essential to the statement of a claim, allegations that are not pertinent to or supported by the claim and demands for judgment requesting relief not supported by the allegations. (Code Civ. Proc., Sec. 431.10, subds. (b), (c).)

Based on the Court's review of the operative complaint and as is detailed above regarding concealment, the Court has found a sufficient pleading as to concealment and therefore punitive damages as a remedy for this cause of action is properly pled.

However, as FCA is a corporation. Civil Code section 3294(b), provides: "An employer shall not be liable for damages pursuant to subdivision (a), based upon acts of an employee of the employer, unless the employer had advance knowledge of the unfitness of the employee and employed him or her with a conscious disregard of the rights or safety of others or authorized or ratified the wrongful conduct for which the damages are awarded or was personally guilty of oppression, fraud, or malice. With respect to a corporate employer, the advance knowledge and conscious disregard, authorization, ratification or act of oppression, fraud, or malice must be on the part of an officer, director or managing agent of the corporation."

Plaintiff has not properly alleged authorization or ratification: "When the defendant is a corporation, '[a]n award of punitive damages against a corporation . . . must rest on the malice of the corporation's employees. [P.] But the law does not impute every employee's malice to the corporation.' [Citation.] Instead, the oppression, fraud, or malice must be perpetrated, authorized, or knowingly ratified by an officer, director, or managing agent of the corporation. [Citation.] '"[M]anaging agent" . . . include[s] only those corporate employees who exercise substantial independent authority and judgment in their corporate decisionmaking so that their decisions ultimately determine corporate policy.' [Citation.]" (Wilson v. Southern California Edison Co. (2015) 234 Cal.App.4th 123, 164.)

While the Court will not require the exact name of the employees on a concealment claim, some allegation connecting the concealment to the FCA as a corporation must be pled in the complaint. Therefore, the Court grants the motion to strike with leave to amend. Plaintiff shall have ten (10) days to file an amended complaint.

If no one requests oral argument, under Code of Civil Procedure section 1019.5(a) and California Rules of Court, rule 3.1312(a), no further written order is necessary. The minute order adopting this tentative ruling will become the order of the court and service by the clerk will constitute notice of the order.

Court reporters are usually not available for law and motion matters in the civil division. The parties and counsel must provide their own reporter if they want a transcript of the proceedings. Re: Felix, Jose vs. D.R. Klassen Packing, Inc.