Nguyen vs. Volkswagen Group of America, Inc.

Plaintiffs are ordered to provide notice of the Court’s ruling.

6 Nguyen vs. Defendant Volkswagen Group of America, Inc.’s Demurer to Plaintiff’s First Volkswagen Amended Complaint is OVERRULED as to the 6th Cause of Action. Group of America, Inc. Defendant Volkswagen of Garden Grove’s Demurer to Plaintiff’s First Amended Complaint is OVERRULED as to the 5th Cause of Action.

Defendants Volkswagen Group of America, Inc. and Volkswagen of Garden Grove shall file an answer or other pleading in response to the First Amended Complaint for Violation of Statutory Obligations within 10 days of this ruling. (See Cal. Rules of Court rule 3.1320(j).)

Volkswagen Demurrer

Defendant Volkswagen Group of America, Inc. demurs to Plaintiff’s sixth cause of action for fraudulent concealment on the grounds that the claim is not pled with sufficient specificity, that Plaintiff failed to allege a duty to disclose, and that Plaintiff failed to plead ratification by a corporate agent.

A. Specificity in Pleading

Defendant first contends that the 6th Cause of Action is not plead with the requisite particularity.

“’Every element of the cause of action for fraud 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.’” (Stansfield v. Starkey (1990) 220 Cal.App.3d 59, 73, quoting Roberts v. Ball, Hunt, Hart, Brown & Baerwitz (1976) 57 Cal.App.3d 104, 109.) “This particularity requirement necessitates pleading facts which ‘show how, when, where, to whom, and by what means the representations were tendered.’” Stansfield v. Starkey, supra, 220 Cal.App.3d at p. 73, quoting Hills Trans. Co. v. Southwest (1968) 266 Cal.App.2d 702, 707.)

In addition, “[c]oncealment is a species of fraud, and ‘[] must be pleaded with specificity.’” (Blickman Turkus, LP v. MF Downtown Sunnyvale, LLC (2008) 162 Cal.App.4th 858, 878, quoting Linear Technology Corp. v. Applied Materials, Inc., supra, 152 Cal.App.4th at p. 132.) However, “the requirement of specificity is relaxed when the allegations indicate that ‘the defendant must necessarily possess full information concerning the facts of the controversy’ or ‘when the facts lie more in the knowledge of the opposite party.’” (Tarmann v. State Farm Mut. Auto. Ins. Co. (1991) 2 Cal.App.4th 153, 158, quoting Bradley v. Harford Acc. & Indem. Co (1973) 30 Cal.App.3d 818, 825 and Turner v. Milstein (1951) 103 Cal.App.2d 651, 658.)

This also is true when the claim is based upon fraudulent concealment rather than affirmative misrepresentations. As one court has aptly observed, “it is harder to apply [the requirement of specificity] to a case of simple nondisclosure. ‘How does one show “how” and “by what means” something didn't happen, or “when” it never happened, or “where” it never happened?’” (Jones v. ConocoPhillips Co. (2011) 198 Cal.App.4th 1187, 1199, quoting Alfaro v. Community Housing Improvement System & Planning Assn., Inc. (2009) 171 Cal.App.4th 1356, 1384.)

In Dhital v. Nissan North America, Inc., the Court of Appeal stated:

Nissan also contends plaintiffs did not provide specifics about what Nissan should have disclosed. But plaintiffs alleged the CVT transmissions 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 NHTSA and to Nissan and its dealers. It is not clear what additional information Nissan believes should have been included. . .. We conclude plaintiffs’ fraud claim was adequately pleaded.

(Dhital v. Nissan North America, Inc., supra, 84 Cal.App.5th at p. 845.)

Similarly, the FAC in this case alleges that:

• “...Plaintiff is informed, believes, and thereon alleges that prior to Plaintiff acquiring the subject vehicle, VWGOA was well aware and knew that the lithium-ion battery installed in the subject vehicle was defective but failed to disclose this fact to Plaintiff at the time of sale and thereafter...” (FAC, ¶ 54). • “Specifically, VWGOA knew (or should have known) that the battery system had one or more defects that can result in various problems, including, but not limited to, the battery system overheating, loss of propulsion power while driving, sudden and premature battery failure, failure to start, reduced range, thermal runaway, and/or spontaneous combustion and/or fire, (“Battery Defect”).

These conditions present a safety hazard and are unreasonably dangerous to consumers because they can suddenly and unexpectedly cause overhearing and spontaneous combustion at any time. Such unexpected battery failure and catastrophic fire, thereby, exposes Plaintiff and her passengers (along with other drivers who share the road or garage with Plaintiff) to a serious risk of accident and injury.” (FAC, ¶ 55).

• “Plaintiff is informed, believes, and thereon alleges that VWGOA acquired its knowledge of the Battery Defect prior to Plaintiff acquiring the subject vehicle, through sources not available to consumers such as Plaintiff, including but not limited to pre- production and post-production testing data, early consumer complaints about the Battery Defect made directly to VWGOA and its network of dealers, aggregate warranty data compiled from VWGOA’s network of dealers, testing conducted by VWGOA in response to these complaints, as well as warranty repair and part replacements data received by VWGOA from VWGOA’s network of dealers, amongst other sources of internal information.” (FAC ¶ 56).

• “Defendant VWGOA was in a superior position from various internal sources to know (or should have known) the true state of facts about

the material defects contained in vehicles equipped with the lithium- ion battery.” (FAC, ¶ 59 (b)).

The FAC in this case is sufficiently specific pursuant to Dhital v. Nissan North America, Inc. As such, the court finds that Plaintiff has sufficiently pled all elements of a cause of action for fraud.

Therefore, the court will overrule the demurrer to 6th Cause of Action on this basis.

B. Duty to Disclose

Defendant also argues that the FAC fails to establish a duty to disclose because it does not allege the requisite transactional relationship for Plaintiff to allege a fraud claim.

The Court of Appeal has stated that “[a] duty to disclose facts arises only when the parties are in a relationship that gives rise to the duty, such as ‘seller and buyer, employer and prospective employee, doctor and patient, or parties entering into any kind of contractual arrangement.’” (Shin v. Kong (2000) 80 Cal.App.4th 498, 509, quoting Wilkins v. National Broadcasting Co. (1999) 71 Cal.App.4th 1066, 1082.)

As the Court of Appeal explained in Bigler-Engler v. Breg, Inc. (2017) 7 Cal.App.5th 276: Our Supreme Court has described the necessary relationship giving rise to a duty to disclose as a “transaction” between the plaintiff and defendant: “In 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; (3) the defendant actively conceals discovery from the plaintiff.” (Id. at p. 311, quoting Warner Construction Corp. v.

City of Los Angeles (1970) 2 Cal.3d 285, 294, footnotes omitted.)

According to the Bigler-Engler v. Breg, Inc. Court, “[s]uch 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.” (Bigler-Engler v. Breg, Inc., supra, 7 Cal.App.5th at p. 312).

However, in Bigler-Engler v. Breg, Inc., “[the defendant] did not transact with [the plaintiff] in any way.” (Id. at p. 314.) Further, “[the plaintiff] obtained her Polar Care device from [one third-party], based on a prescription written by [another third-party], all without [the defendant’s] involvement.” (Ibid.) Under those circumstances, the Court of Appeal held that there was no duty to disclose. (See id. at pp. 314-315.)

This case, by contrast, does not involve a relationship between the manufacturer and the general public.

Instead, the FAC alleges that there was a relationship between Plaintiff and with Defendant because Plaintiff and Defendant entered into a warranty contract. (FAC, ¶ 7). Thus, unlike in Bigler-Engler v. Breg, Inc., there was a transaction directly between Plaintiffs and Defendant.

This reasoning was confirmed in Dhital v. Nissan North America, Inc. In that case, which was a Song-Beverly action similar to this one, the Court of Appeal held that a car buyer need not allege a contract with the manufacturer in order to allege a duty to disclose:

Nissan argues Plaintiff did not adequately plead the existence of a buyer-seller relationship between the parties, because Plaintiff 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 Plaintiff’s allegations are sufficient. Plaintiff alleges 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 Plaintiff’ claim is barred on the ground there was no relationship requiring Nissan to disclose known defects.

(Dhital v. Nissan North America, Inc., supra, 84 Cal.App.5th at p. 844.)

Thus, the court will overrule the demurrer to 6th Cause of Action on this basis.

C. Ratification

Finally, Defendant argues that Plaintiff fails to allege corporate ratification of fraud.

While the particularity requirement which typically applies to fraud “necessitates pleading facts which ‘show how, when, where, to whom, and by what means the representations were tendered,’” “it is harder to apply this rule to a case of simple nondisclosure.” (Alfaro v. Community Housing Improvement System & Planning Assn., Inc. (2009) 171 Cal.App.4th 1356, 1384). “One of the purposes of the specificity requirement is ‘notice to the defendant, to furnish the defendant with certain definite charges which can be intelligently met.’” (Ibid.). “Less specificity should be required of fraud claims ‘when ‘it appears from the nature of the allegations that the defendant must necessarily possess full information concerning the facts of the controversy...’” (Ibid.) “[E]ven under the strict rules of common law pleading, one of the canons was that less particularity is required when the facts lie more in the knowledge of the opposite party...” (Id.)

Notably, the Court in Alfaro specifically found the pleading standard required for fraudulent omission did not require the plaintiffs therein “to allege each occasion on which an agent of either defendant could have disclosed the restrictive deed” as “[s]urely defendants have records of their dealings with the plaintiffs.” (Alfara, supra, 171 Cal.App.4th at 1384-1385.) The court likewise noted that “plaintiffs may or may not know the names of all the corporate employees with whom they interacted.” (Ibid.) “Those details...are properly the subject of discovery, not demurrer.” (Ibid.)

Applying the above herein, as Plaintiff is alleging concealment, which involves information which “lie[s] more in the knowledge of the opposite party...,” under Alfara, Plaintiff is not required to “to allege each occasion on which an agent of either defendant could have disclosed” as Plaintiff “may or may not know the names of all the corporate employees with whom they interacted.” “Those details...are properly the subject of discovery, not demurrer.”

The court, therefore, OVERRULES the demurrer to the sixth cause of action for fraudulent concealment.

Dealer Demurrer

Defendant Volkswagen of Garden Grove (“Dealer”) demurs to the fifth cause of action for negligent repair on the grounds that Plaintiff failed to allege how Defendant acted negligently and how that unspecified negligence caused Plaintiff’s damages.

The elements to a cause of action for negligence are (1) the existence of a duty, (2) breach, (3) causation, and (4) damages. (Pellegrini v. Weiss (2008) 165 Cal.App.4th 515, 524.) For most claims, including claims for negligence, one need plead only ultimate facts, not evidentiary facts. (See Ludgate Ins. Co. v. Lockheed Martin Corp. (2000) 82 Cal.App.4th 592, 606 [“A cardinal rule of pleading is that only the ultimate facts need be alleged.”].) Plaintiff has sufficiently alleged the scope of Defendant’s duty and breach. (FAC, ¶ 14 (Plaintiff took the vehicle four times for repair but continued to experience symptoms of the defects after repair)). Defendant can obtain any additional details through discovery. (See Lickiss v. Financial Industry Regulatory Authority (2012) 208 Cal.App.4th 1125, 1135.) Plaintiff has sufficiently alleged the ultimate facts for each element of negligence.

Defendant Dealer then argues that Plaintiff’s negligent repair cause of action is barred by the economic loss rule. However, Plaintiff’s cause of action for negligent repair is based on Defendant’s alleged negligent failure to perform services and not the sale or furnishing of defective products. The economic loss rule applies to claims involving the furnishing of goods, not the negligent performance of services as alleged here. (See North American Chemical Co. v. Superior Court (1997) 59 Cal.App.4th 764, 780-781.)

In Sheen, the court held that tort claims for monetary losses between contractual parties are barred by the economic loss rule when they arise from or are not independent of the parties’ underlying contracts. (Sheen v. Wells Fargo Bank, N.A. (2022) 12 Cal.5th 905, 922, 923-925). However, the Sheen Court acknowledged the “recognized exception to the economic loss rule for consumers who contract for certain kinds of professional services.” (Id. at 933.)

Under the factors considered in North American Chemical, the court does not find that the economic loss rule bars a negligent repair cause of action.

The demurrer to the fifth cause of action is overruled.

Moving Defendants to give notice. 7 Cvejkus vs. Volkswagen Group of America, Notices of Withdrawal of Motion (ROA 90, ROA 88, ROA 82, and ROA 80) Inc.

8 Qazi vs. Avenue Motion to Be Relieved As Counsel of Record is off calendar One Community Association, Inc. The Request for Dismissal of Entire Action was filed 06/26/2026.

9 Cunningham vs. Defendant FCA US, LLC’s Demurrer to Plaintiffs’ First Amended FCA US LLC Complaint is OVERRULED. Defendant’s Motion to Strike Plaintiffs’ Claim for Punitive Damages in First Amended Complaint is DENIED.

Demurrer

Breach of the Implied Warranty of Merchantability

“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.” (Civ. Code, § 1791.1, subd. (c).)

However, the duration provision of the Song-Beverly Act does not bar “an action for breach of the implied warranty of merchantability when the purchaser fails to discover and report the defect to the seller within the time period specified in that provision.” Instead, and “particularly in light of the consumer protection policies supporting the Song–Beverly Act, ... the statute merely creates a limited, prospective duration for the implied warranty of merchantability; it does not create a deadline for discovering

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