EVAN QUADJOVIE vs. SAN FRANCISCO BAY AUTOS LLC, ET AL

If the complaint fails to state a cause of action, the court must grant the plaintiff leave to amend if there is a reasonable possibility that the defect can be cured by amendment. (Blank v. Kirwan (1985) 39 Cal.3d 311, 318.) The onus is on the plaintiff to articulate the “specifi[c] ways” to cure the identified defect, and absent such an articulation, a trial or appellate court may

grant leave to amend “only if a potentially effective amendment [is] both apparent and consistent with the plaintiff's theory of the case.” (Shaeffer v. Califia Farms, LLC (2020) 44 Cal.App.5th 1125, 1145.)

DISCUSSION – DEMURRER

Defendant demurs to the First, Third, and Fourth Causes of Action on the grounds that they fail to state facts sufficient to constitute causes of action against Defendant. (Code. Civ. Proc., § 430.10, subd. (e).)

Defendant is a surety that executed a Motor Vehicle Dealer Bond for San Francisco Bay Autos, LLC (“Dealer”), Bond No. 100856210, pursuant to Sections 11710 and 11711 of the California Vehicle Code (“Bond”). Plaintiff alleges on October 20, 2026, Plaintiff went to Dealer’s business to attempt to purchase a 2018 Honda CR-V. (Compl., ¶ 6). Plaintiff alleges at the time of sale, Dealer stated that it was giving Plaintiff a warranty. (Id., ¶ 7). Plaintiff alleges that Dealer failed to repair the vehicle, and failed to register and title the vehicle for several months, and when it was later registered and titled it incorrectly stated the vehicle was a commercial vehicle. (Id., ¶ 8).

Plaintiff alleges that Dealer has not paid any title transfer penalty. (Id.,¶ 9). Plaintiff alleges Defendant is the Bond Holder in the amount of $50,000.00 on behalf of Dealer. (Id., ¶¶ 2, 3, 10). Plaintiff alleges his cause of actions arise out of Defendants’ misrepresentations, breach of warranty, and violations of law, and he seeks damages against the Defendants for incidental, consequential, exemplary, and actual damages, including interest, costs, and actual attorney fees. (Id., ¶ 11).

First Cause of Action - Violation of the Consumers Legal Remedies Act

Pursuant to Civil Code section 1770, subd. (a), “The unfair methods of competition and unfair or deceptive acts or practices listed in this subdivision undertaken by any person in a transaction intended to result or that results in the sale or lease of goods or services to any consumer are unlawful...”

With its Motion, Defendant argues that Plaintiff makes no allegations that Defendant undertook in any “unfair methods of competition and unfair or deceptive acts or practices” as a person. Plaintiff also fails to allege that Defendant was a “person in a transaction intended to result or that results in the sale or lease of goods or services to any consumer.” Plaintiff will be unable to allege any such facts, because Defendant is merely the bonding company for San Francisco Bay Autos, LLC (Complaint ¶ 2, 3, 10), and Defendant was not part of any transaction in the sale of the vehicle to the Plaintiff (Complaint ¶ 6-9). As such, Defendant concludes, Plaintiff cannot maintain a First Cause of Action against Defendant for violation of the Consumer Legal Remedies Act.

In Opposition, Plaintiff cites to Pierce v. Western Surety Co. (2012) 207 Cal.App.4th 83 (Pierce) arguing that the surety’s liability is commensurate with the principal’s. Plaintiff argues, if the principal is liable under the Consumer Legal Remedies Act, the surety is as well and because Defendant does not contend that Plaintiff failed to state a cause of action against the principal, the cause of action stands.

However, this interpretation ignores the important nuance of Pierce. Pierce stands for the proposition that “a surety's liability is commensurate with that of the principal within the express terms of the bond and any applicable statutes.” (Pierce, supra, 207 Cal.App.4th at p.

93. Emphasis added. See also Milliron v. Dittman (1919) 180 Cal. 443, 446 (underlying conduct intended to be protected by the bond was determinative as to whether a surety would be held liable for obligations of the principal).)

Pierce was clear that CLRA violations can fall within the terms of a section 11711 bond, but not all CLRA violations will do so. (Pierce, supra, 207 Cal.App.4th at pp. 91-2. Emphasis added.)

Vehicle Code section 11711, subdivision (a) (bond statute) provides a person shall have a right of action against the surety bond for any “loss or damage by reason of any fraud practiced on him or fraudulent representation made to him by a licensed dealer or one of such dealer's salesmen acting for the dealer, in his behalf, or within the scope of the employment of such salesman and such person has possession of a written instrument furnished by the licensee, containing stipulated provisions and guarantees which the person believes have been violated by the licensee.”

Civil Code section 1770 (CLRA) describes 24 separate acts that may constitute a CLRA violation. Some of those acts could violate section 11711 (bond statute), i.e., fraud or fraudulent representation. (Pierce, supra, 207 Cal.App.4th at p. 92.) For example, “[r]epresenting that goods or services are of a particular standard, quality, or grade ... if they are of another”; “[a]dvertising goods or services with intent not to sell them as advertised”; “[m]aking false or misleading statements of fact concerning reasons for, existence of, or amounts of price reductions”; and “[r]epresenting that the subject of a transaction has been supplied in accordance with a previous representation when it has not,” etc. (Ibid., citing Civ. Code, § 1770, subd. (a)(7), (a)(9), (a)(13) & (a)(16).)

Here, the Complaint alleges:

“By virtue of the misrepresentations made during the course of the sale, including that the vehicle would be registered and titled free and clear to Plaintiff, that the vehicle was being sold for personal use, and that Dealer would be repair the vehicle pursuant to his warranty, Defendants have engaged, or attempted to engage, in unlawful methods, acts, or practices during the relevant time period herein pursuant to CLRA, including, but not limited to, California Civil Code § 1770(a): (2) Misrepresenting the source, sponsorship, approval, or certification of goods or services. (5) Representing that goods or services have sponsorship, approval, characteristics, ingredients, uses, benefits, or quantities which they do not have or that a person has a sponsorship, approval, status, affiliation, or connection which he or she does not have. (9) Advertising goods or services with intent not to sell them as advertised. (14) Representing that a transaction confers or involves rights, remedies, or obligations which it does not have or involve, or which are prohibited by law.”

(Compl., ¶ 17.)

In order to state a cause of action seeking to recover under the bond, Plaintiff must allege an act of fraud committed by the dealer. Here, Plaintiff has not done so.

The words “fraud” and “fraudulent representation” in sections 11710 and 11711 of the Vehicle Code were intended by the Legislature to be used in the normal meaning of fraud as defined by sections 1571, 1572, and 1573 of the Civil Code and the cases construing those sections. (Beverly Finance Co. v. American Cas. Co. of Reading, Pa. (1969) 273 Cal.App.2d 259, 268.)

The elements of fraud are: (1) a misrepresentation (false representation, concealment, or nondisclosure), (2) knowledge of falsity (or scienter), (3) intent to defraud, i.e., to induce reliance, (4) justifiable reliance, and (5) resulting damage. (Robinson Helicopter Co., Inc. v. Dana Corp. (2004) 34 Cal.4th 979.) “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. [Citation.]” ’ (LiMandri v. Judkins (1997) 52 Cal.App.4th 326, 336.)

Fraud must be specifically pleaded. The effect of this rule is twofold: (a) General pleading of the legal conclusion of ‘fraud’ is insufficient; the facts constituting the fraud must be alleged. (2) Every element of the cause of action for fraud must be alleged in the proper manner (i.e. factually and specifically), and the policy of liberal construction of the pleadings will not ordinarily be invoked to sustain a pleading defective in any material respect. (Vaughn v. Certified Life Ins. Co. of Cal. (1965) 238 Cal.App.2d 177, 181–82.)

Although Plaintiff alleges one conclusory sentence in the Second Cause of Action (not challenged by way of Demurrer) stating “[t]hese representations on the contract were fraudulent,” this is a general pleading of the legal conclusion of fraud without the facts constituting fraud. (Compl., ¶ 29.) With respect to the misrepresentations themselves, the Complaint alleges “The contract for purchase stated that Dealer would title and register the vehicle to Plaintiff.” (Compl., ¶ 6.) “At the time of sale, Dealer stated that it was giving Plaintiff a warranty on the vehicle and that Dealer would be 100% of labor and parts for 90 days or 4,500 miles.

However, Dealer has failed to repair the vehicle in that period of time.” (Id., at ¶ 7.) After the purchase Dealer failed to register and title the vehicle for several months. (Id., at ¶ 8.) On January 5, 2026, Plaintiff demanded that Dealer provide him with his title and title transfer penalty. Dealer has still not paid the title transfer penalty. (Id., at ¶ 9.)

Here the Complaint fails to allege knowledge of falsity, intent to defraud, justifiable reliance, etc. Because the CLRA cause of action as presently alleged does not adequately allege fraud and the only right of recovery against the bond stems from such a claim, the Demurrer to the First Cause of Action is SUSTAINED with leave to amend.

Third Cause of Action - Breach of Implied Warranty of Title (Magnuson-Moss) and Fourth Cause of Action – Failure to Transfer Title (Veh. Code, § 5753)

The Opposition provides no briefing on the Third and Fourth Causes of Action. Under the heading on the First Cause of Action, Plaintiff merely repeats the refrain “The surety’s liability is commensurate with the principal’s. Thus, if the principal is liable under the Consumer Legal Remedies Act, the surety is as well. If the principal is liable under the Magnusson Moss Act, the surety is as well. If the principal is liable under the Vehicle Code, the surety is as well.”

For the reasons stated above, this statement is overbroad. The express terms of the bond and any applicable statutes limit surety liability within that of the principal. (Pierce, supra, 207 Cal.App.4th at p. 93.) As further stated above, in order to state a cause of action seeking to recover under the bond, Plaintiff must allege an act of fraud committed by the dealer. Plaintiff makes no such allegations vis a vis the Third and Fourth Causes of Action.

For these reasons, the Demurrer to the Third and Fourth Causes of Action is also SUSTAINED with leave to amend.

LEGAL STANDARD – MOTION TO STRIKE

On noticed motion, the Court also may strike out “any irrelevant, false, or improper matter inserted in any pleading,” and “all or any part of any 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., § 436.) The basis for granting the motion to strike must appear on the face of the challenged pleading or else be judicially noticeable. (Id., § 437, subd. (a).)

The motion must be served and filed within the time allowed for a responsive pleading (id., § 435, subd. (b)(1)), or as otherwise allowed at the Court's discretion (id., § 436). The notice of motion must quote in full the portions sought to be stricken except where the motion is to strike an entire paragraph, cause of action, count or defense. (Cal. Rules of Court, rule 3.1322.) When the defect that justifies striking a complaint is capable of cure, the court should allow leave to amend. (Perlman v. Municipal Court (1979) 99 Cal.App.3d 568, 575.)

DISCUSSION – MOTION TO STRIKE

With this Motion, Defendant seeks to strike 1. Plaintiff’s prayer for punitive damages; 2. Plaintiff’s prayer for penalties pursuant to the Vehicle Code of $7,500; and 3. Plaintiff’s prayer for injunctive relief under Civil Code section 1780.

The sole cause of action remaining against Defendant after the Demurrer is the Second Cause of Action for Violation of Vehicle Code section 11710 against Bond Holder. Because the Demurrer to the causes of action giving rise to claims for punitive damages, the $7,500 penalty, and section 1780 injunctive relief was sustained and those causes of action are effectively no longer part of the operative Complaint, the Motion to Strike is GRANTED with leave to amend.

All parties must comply with Marin County Superior Court Local Rules, Rule 2.10(B) to contest the tentative decision. Parties who request oral argument are required to appear in person or remotely by ZOOM. Regardless of whether a party requests oral argument in

accordance with Rule 2.10(B), the prevailing party shall prepare an order consistent with the announced ruling as required by Marin County Superior Court Local Rules, Rule 2.11.

The Zoom appearance information for August, 2026 is as follows: https://marin-courts-ca-gov.zoomgov.com/j/1615487764?pwd=Ob4B5J7LLKcpnkxzJjjEOSHNzEGafG.1

Meeting ID: 161 548 7764 Passcode: 502070

If you are unable to join by video, you may join by telephone by calling (669) 254-5252 and using the above-provided passcode. Zoom appearance information may also be found on the Court’s website: https://www.marin.courts.ca.gov

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