TODD ANDREW RAEL, ET AL VS. GENERAL MOTORS, LLC.

Proc., § 430.50, subd. (a).) Code of Civil Procedure section 430.10 sets forth eight possible grounds for demurrer, including that “[t]he pleading does not state facts sufficient to constitute a cause of action” (Code Civ. Proc., § 430.30, subd. (e)). A demurrer founded on section 430.10, subdivision (e), is called a “general demurrer.” (McKenney v. Purepac Pharm. Co. (2008) 167 Cal.App.4th 72, 77.) Accordingly, “[a]

August 14, 2026 Law and Motion Calendar PAGE 11 HONORABLE MICHAEL L. MAU, Department 20 ________________________________________________________________________ ruling on a general demurrer is thus a method of deciding the merits of a cause of action on assumed facts without a trial.” (Ibid. (internal quotations omitted) (emphasis added).) Since a general demurrer “admits the truth of all material factual allegations in the complaint,” a plaintiff’s ability to prove these allegations “does not concern the reviewing court.

The plaintiffs need only plead facts showing that they may be entitled to some relief.” (Fisher v. San Pedro Peninsula Hosp. (1989) 214 Cal.App.3d 590, 604 (Fisher) (internal quotations omitted) (superseded by statute on other grounds).) Though when a complaint sounds in fraud: In California, fraud must be pled specifically; general and conclusory allegations do not suffice. “Thus ‘the policy of liberal construction of the pleadings ... will not ordinarily be invoked to sustain a pleading defective in any material respect.’ This particularity requirement necessitates pleading facts which ‘show how, when, where, to whom, and by what means the representations were tendered.’” (Lazar v.

Superior Ct. (1996) 12 Cal.4th 631, 645 (internal citations omitted) (emphasis retained).) When fraud is claimed against a corporation, the plaintiff must “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.” (Tarmann v. State Farm Mut. Auto. Ins. Co. (1991) 2 Cal.App.4th 153, 157.) However, this heightened pleading standard “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, supra, 2 Cal.App.4th 153, 158 (internal quotations omitted) (citations omitted).)

This exception to the heightened pleading standard for fraud applies where, as here, the information about Defendant GM’s wrongdoing lies primarily within Defendant GM’s knowledge (see, e.g., FAC, ¶¶ 78 & 80). “[I]t is harder to apply [the heightened pleading requirement] 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?’” (Alfaro v. Cmty. Hous. Improvement Sys. & Plan. Assn., Inc. (2009) 171 Cal.App.4th 1356, 1384 (Alfaro).)

In addition, a court reviewing a demurrer does not “assume the truth of contentions, deductions or conclusions of law.” (Aubry v. Tri-City Hosp. Dist. (1992) 2 Cal.4th 962, 967.) Nonetheless: If the complaint states a cause of action under any theory, regardless of the title under which the factual basis for relief is stated, that aspect of the complaint is good against a demurrer. “[W]e are not limited to plaintiffs’ theory of recovery in testing the sufficiency of their complaint against a demurrer, but instead must determine if the factual allegations of the complaint are adequate to state a cause of action under any legal theory.

The courts of this state have ... long since departed from holding a plaintiff strictly to the ‘form of action’ he has pleaded and instead have adopted the more flexible approach of examining the facts alleged to determine if a demurrer should be sustained.” (Quelimane Co. v. Stewart Title Guar. Co. (1998) 19 Cal.4th 26, 38–39 (citations omitted) (italics retained).) Moreover, when a plaintiff “has stated a cause of action under any possible legal theory,” it is error to sustain a demurrer. (Bush v.

California Conservation Corps (1982) 136 Cal.App.3d 194, 200 (emphasis added).) Further:

August 14, 2026 Law and Motion Calendar PAGE 12 HONORABLE MICHAEL L. MAU, Department 20 ________________________________________________________________________ the court is required to look at the existing pleading and hazard its best judgment whether behind the words of the pleading anything of legal substance lies, whether on further revision the pleading can honestly state a cause of action. (Tovar v. S. Cal. Edison Co. (1988) 201 Cal.App.3d 606, 615.) Finally, “it is an abuse of discretion to sustain a demurrer without leave to amend if the plaintiff shows there is a reasonable possibility any defect identified by the defendant can be cured by amendment.” (Hale v.

Sharp Healthcare (2010) 183 Cal.App.4th 1373, 1379.) The Demurrer Is Overruled As to the Fourth Cause of Action. Defendant GM asserts that the fourth cause of action of the FAC, for breach of the implied warranty of merchantability, is time-barred by the applicable four-year statute of limitations. (Com. Code, § 2725.) Defendant GM argues that since the implied warranty arises by operation of law, it is not prospective, so that the cause of action accrues when breach occurs and the delayed discovery rule does not apply.

The cited statute provides in pertinent part that: A cause of action accrues when the breach occurs, regardless of the aggrieved party’s lack of knowledge of the breach. A breach of warranty occurs when tender of 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, subd. (b)(2).) In addition, the Song-Beverly Act specifies that the implied warranty of merchantability is prospective and has a maximum duration of one year. (Civ.

Code, § 1791.1, subd. (c).) The Court of Appeal explains that the Song-Beverly Act does not include its own statute of limitations, and adopts the four-year statute of limitations of the Uniform Commercial Code (“UCC”) (Mexia v. Rinker Boat Co. (2009) 174 Cal.App.4th 1297, 1305-06 (Mexia)), but the Song-Beverly Act defines “a duration for the implied warranties” pursuant to itself (Mexia, supra, 174 Cal.App.4th 1297, 1304). In particular; the plain language of the statute, particularly in light of the consumer protection policies supporting the Song–Beverly Act, make clear that the statute merely 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. (Mexia, supra, 174 Cal.App.4th 1297, 1301.)

Further, “The implied warranty of merchantability may be breached by a latent defect undiscoverable at the time of sale.” (Mexia, supra, 174 Cal.App.4th 1297, 1304-05 (citations omitted).) Defendant GM asserts that Plaintiffs’ reading of Mexia to hold that the discovery rule applies to the implied warranty of merchantability is incorrect, because “Mexia clearly states: ‘In the case of a latent defect, a product is rendered unmerchantable, and the warranty of merchantability is breached, by the existence of the unseen defect, not by its subsequent discovery.[‘] (Id. at p. 1305, emphasis added.)” (Reply, 2:17-19.)

However, as quoted supra, Mexia also clearly states that, “The implied warranty of merchantability may be breached by a latent defect undiscoverable at the time of sale.” (Mexia, supra, 174 Cal.App.4th 1297, 1304-05 (citations omitted).) Clarifying its position consistent with the

August 14, 2026 Law and Motion Calendar PAGE 13 HONORABLE MICHAEL L. MAU, Department 20 ________________________________________________________________________ latter statement, the Mexia Court further explains that: To say that a warranty exists is to say that a cause of action can arise for its breach. Defining the time period during which the implied warranty exists, therefore, also defines the time period during which the warranty can be breached. Thus, by giving the implied warranty a limited prospective existence beyond the time of delivery, the Legislature created the possibility that the implied warranty could be breached after delivery.

As discussed above, this is a change from the Uniform Commercial Code, under which the implied warranty could be breached only at the time of delivery. Giving the implied warranty a prospective existence, however, is not new under the law. Prior to the adoption of the Uniform Commercial Code, California courts recognized that the implied warranty of merchantability could have a prospective existence. (Mexia, supra, 174 Cal.App.4th 1297, 1309 (citations omitted).) Moreover: In order for the bar of the statute of limitations to be raised by demurrer, the defect must clearly and affirmatively appear on the face of the complaint; it is not enough that the complaint shows merely that the action may be barred. (E-Fab, Inc. v.

Accountants, Inc. Services (2007) 153 Cal.App.4th 1308, 1315-16 (internal quotation and citations omitted).) Here, taking the allegations of the FAC to be true as it must on demurrer, and applying the delayed discovery rule in this context as directed by Mexia, the Court finds that it does not clearly and affirmatively appear on the face of the FAC that the fourth cause of action is time-barred. It Does Not Clearly and Affirmatively Appear on the Face of the FAC That the Fifth Cause of Action Is Time-Barred.

Defendant GM asserts that the fifth cause of action of the FAC, for fraudulent inducement – concealment, is time-barred by the applicable three-year statute of limitations. (Code Civ. Proc., § 338, subd. (d).) This statute provides that the time for bringing an action other than to recover realty is: Within three years: ... An action for relief on the ground of fraud or mistake. The cause of action in that case is not deemed to have accrued until the discovery, by the aggrieved party, of the facts constituting the fraud or mistake. (Ibid.)

Also, again: In order for the bar of the statute of limitations to be raised by demurrer, the defect must clearly and affirmatively appear on the face of the complaint; it is not enough that the complaint shows merely that the action may be barred. (E-Fab, Inc. v. Accountants, Inc. Services (2007) 153 Cal.App.4th 1308, 1315-16 (internal quotation and citations omitted).)

August 14, 2026 Law and Motion Calendar PAGE 14 HONORABLE MICHAEL L. MAU, Department 20 ________________________________________________________________________ Defendant GM argues that the allegations of the FAC do not support the application of the delayed discovery rule, in that they allege that defects and nonconformities manifested themselves within the warranty period (FAC, ¶ 23) and do not show that Plaintiffs could not have discovered the defects despite reasonable diligence. The Court of Appeal explains that: The statute commences to run only after one has knowledge of facts sufficient to make a reasonably prudent person suspicious of fraud, thus putting him on inquiry.

Section 19 of the Civil Code provides: “Every person who has actual notice of circumstances sufficient to put a prudent man upon inquiry as to a particular fact, has constructive notice of the fact itself in all cases in which, by prosecuting such inquiry, he might have learned such fact.” (Italics added.) Under this section it was held in Tarke v. Bingham, 123 Cal. 163 [55 P. 759], that the plaintiff was not barred by subdivision 4 of section 338 of the Code of Civil Procedure, since nothing had occurred “to excite his suspicion, or to put him upon inquiry.” (123 Cal. at p. 166.)

The court said: “Where no duty is imposed by law upon a person to make inquiry, and where under the circumstances ‘a prudent man’ would not be put upon inquiry, the mere fact that means of knowledge are open to a plaintiff, and he has not availed himself of them, does not debar him from relief when thereafter he shall make actual discovery. The circumstances must be such that the inquiry becomes a duty, and the failure to make it a negligent omission.” (Italics added.) Many other decisions have adopted this view.

In many cases it has been said that means of knowledge are equivalent to knowledge. This is true, however, only where there is a duty to inquire, as where plaintiff is aware of facts which would make a reasonably prudent person suspicious. In the Lady Washington case, the court said (113 Cal. at p. 487) that “as the means of knowledge are equivalent to knowledge, if it appears that the plaintiff had notice or information of circumstances which would put him on an inquiry which, if followed, would lead to knowledge, or that the facts were presumptively within his knowledge, he will be deemed to have had actual knowledge of these facts.” (Italics added.) (Hobart v.

Hobart Estate Co. 26 Cal.2d 412, 437–39 (italics retained) (multiple citations omitted).) Plaintiffs point out that they need not have suspected that Defendant GM was deceiving them merely because they brought the Vehicle in for service during the warranty period. “A reasonable individual with car troubles, even on several occasions, would not immediately suspect their entire engine was defective, and also that the defect was known and concealed by the manufacturer.” (Opp., 7:16-18.) Indeed: There is no duty resting upon a citizen to suspect the honesty of those with whom he [or she] transacts business.

Laws are made to protect the trusting as well as the suspicious. [T]he rule of caveat emptor should not be relied upon to reward fraud and deception. (Boschma v. Home Loan Ctr., Inc. (2011) 198 Cal.App.4th 230, 249 (Boschma) (internal quotations and citation omitted).) The allegations of the FAC show clearly that Plaintiffs could not have discovered, and in fact did not discover, the defects despite their reasonable diligence. The FAC alleges that Plaintiffs took the Vehicle in for maintenance and repair multiple times, and each time, Defendant GM’s repair

August 14, 2026 Law and Motion Calendar PAGE 15 HONORABLE MICHAEL L. MAU, Department 20 ________________________________________________________________________ technicians represented that the Vehicle had been repaired or was working as designed, so that in reasonable reliance on these misrepresentations, Plaintiffs had no way of uncovering Defendant GM’s deception regarding the Vehicle’s defects. (FAC, ¶¶ 11-19.) Under Boschma, Plaintiffs had no duty to suspect the honesty of Defendant GM’s repair facilities.

The Court finds that it does not clearly and affirmatively appear on the face of the FAC that the fifth cause of action is time-barred. The Fifth Cause of Action Is Sufficiently Pled. The elements of a cause of action for fraud based on concealment are: (1) the defendant must have concealed or suppressed a material fact, (2) the defendant must have been under a duty to disclose the fact to the plaintiff, (3) the defendant must have intentionally concealed or suppressed the fact with the intent to defraud the plaintiff, (4) the plaintiff must have been unaware of the fact and would not have acted as he did if he had known of the concealed or suppressed fact, and (5) as a result of the concealment or suppression of the fact, the plaintiff must have sustained damage. (Jones v.

ConocoPhillips Co. (2011) 198 Cal.App.4th 1187, 1198 (Jones) (internal quotations omitted) (citations omitted).) Though fraud must be pleaded specifically (Lazar v. Superior Ct. (1996) 12 Cal.4th 631, 645), this heightened pleading standard “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, supra, 2 Cal.App.4th 153, 158 (internal quotations omitted) (citations omitted).)

Defendant GM asserts that the FAC does not state facts sufficient to plead the fifth cause of action, and does not allege a transactional relationship that gives rise to a duty of Defendant GM to disclose. Defendant GM ignores this exception to the heightened pleading standard for fraud, which applies where, as here, the information about Defendant GM’s wrongdoing lies primarily within Defendant’s knowledge. (Alfaro, supra, 171 Cal.App.4th 1356, 1384.) Here, without even reaching the previous paragraphs of the FAC which are incorporated by reference (FAC, ¶ 74), the Jones elements are sufficiently pled, as follows: (1) (see, e.g., id., ¶¶ 75-76); (2) (see, e.g., id., ¶ 82); (3) (see, e.g., id., ¶¶ 80, 83); (4) (see, e.g., id., ¶¶ 79-80); and (5) (see, e.g., id., ¶ 86).

Defendant GM relies on Rattagan v. Uber Techs., Inc. (2024) 17 Cal.5th 1 (Rattagan), for five specific kinds of allegations that must be included in the FAC. However, the Rattagan Court distinguishes cases like the instant and Dhital v. Nissan North America, Inc. (2022) 84 Cal.App.5th 828 (Dhital), which “involve claims of fraudulent inducement by concealment claims as well as the potential interplay with remedies available under the Song-Beverly Consumer Warranty Act (Civ. Code, § 1791 et seq.).

We do not address these issues here.” (Rattagan, supra, 17 Cal.5th 1, 41, n.12 (emphasis added).) The Rattagan Court confirmed that “it has long been the rule that where a contract is secured by fraudulent representations, the injured party may elect to affirm the contract and sue for the fraud” (Rattagan, supra, 17 Cal.5th 1, 41, quoting Lazar), going on to state that, “The same may not necessarily be true of fraudulent concealment claims based on conduct occurring after the contract has been formed.” (Rattagan, supra, 17 Cal.5th 1, 41.)] Here, Plaintiffs allege fraudulent inducement by concealment prior to their purchase of the Vehicle, and that they would not have purchased the Vehicle but for Defendant GM’s fraud. (FAC, ¶¶ 79, 80,

August 14, 2026 Law and Motion Calendar PAGE 16 HONORABLE MICHAEL L. MAU, Department 20 ________________________________________________________________________ 84 & 86.) However, Plaintiffs further allege that Defendant GM continued to conceal the alleged defects and the inability to repair them after the contract was formed, so that it was difficult for Plaintiffs to discover Defendant GM’s wrongdoing given Defendant GM’s failure to disclose at successive repair visits. (Id., ¶¶ 57, 59, 67, 68, 70, 74-78; see also ¶¶ 30, 34.)

Since the Rattagan Court explicitly distinguished cases such as the instant, which involves this cause of action for fraudulent inducement by concealment as well as claims sounding in the Song-Beverly Act so that any resulting remedies will involve the interplay of the causes of action, Dhital, rather than the Rattagan factors, applies here. Nonetheless, the Rattagan factors are amply satisfied in the fifth cause of action alone, without even reaching the previous paragraphs of the FAC which are incorporated by reference (id., ¶ 74): (1) the content of the omitted facts (see, e.g., FAC, ¶¶ 75-77, 81); (2) Defendant GM’s awareness of the materiality of those facts (see, e.g., id., ¶¶ 76-78, 80- 81); (3) the inaccessibility of the facts to Plaintiffs (see, e.g., id., ¶¶ 78-80); (4) the general point at which the omitted facts should or could have been revealed (see, e.g., id., ¶¶ 81, 85); and (5) justifiable and actual reliance, either through action or forbearance, based on Defendant GM’s omission (see, e.g., id., ¶¶ 79-80, 82, 85-86).

Here, as in Dhital: Plaintiffs alleged the above elements of fraud in the SAC. As we have discussed, plaintiffs alleged the CVT transmissions 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. (Dhital, supra, 84 Cal.App.5th 828, 844.)

Further: 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 the 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 transmissions. We conclude plaintiffs’ fraud claim was adequately pleaded. (Ibid. (footnote omitted).) Under Dhital, the FAC’s allegations of fraud suffice to survive demurrer. (See, e.g., FAC, ¶¶ 76-78, 80-82, 84, & 86.)

August 14, 2026 Law and Motion Calendar PAGE 17 HONORABLE MICHAEL L. MAU, Department 20 ________________________________________________________________________ Yet Defendant GM asserts that since it did not deal directly with Plaintiffs, as a seller and buyer or transacting parties might, it owed Plaintiffs no duty to disclose. However, as the Court of Appeal explains: 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. (Dhital, supra, 84 Cal.App.5th 828, 844.)

Here, Plaintiffs allege that they bought the Vehicle from a named authorized dealership of Defendant GM (FAC, ¶ 8), that Defendant GM backed the Vehicle with an express warranty (id., ¶¶ 1-2, & Exh. A), and implicitly that “Defendant GM’s authorized retail dealership Stewart Chevrolet” was Defendant GM’s agent for purposes of the sale of its vehicles to consumers (id., ¶ 8; see also ¶ 80). On the last point, Defendant GM emphasizes that even if Dhital were applied, Plaintiffs do not allege that they bought the Vehicle from Defendant GM’s agent, unlike in Dhital.

However, such agency is implicit in the allegation that “Defendant GM’s authorized retail dealership Stewart Chevrolet” was Defendant GM’s agent for purposes of the sale of its vehicles to consumers. (FAC, ¶ 8; see also ¶ 80.) Since Plaintiffs “need only plead facts showing that they may be entitled to some relief” (Fisher, supra, 214 Cal.App.3d 590, 604 (emphasis added)), the allegations of the FAC suffice to survive demurrer, especially in light of Dhital, which in any case did not require such an allegation but included it as an example of what was there pled as part of a cause of action which was deemed overall to suffice.

The Court declines to hold that the fifth cause of action is barred on the ground that no relationship between the parties required Defendant GM to disclose known defects. Further, privity between the parties is not required, as is clear in that Defendant GM’s duty to disclose applies not only to the initial purchaser of a vehicle, but to subsequent purchasers as well where, as here. the manufacturer has reason to know that the vehicle will be resold. (OCM Principal Opportunities Fund v. CIBC World Markets Corp. (2007) 157 Cal.App.4th 835, 859-860; see also Barnhouse v.

City of Pinole (1982) 133 Cal.App.3d 171, 191 (“An action for deceit does not require privity of contract.” (quotations and citations omitted).) The Fifth Cause of Action Is Not Barred by the Economic Loss Rule. Defendant GM asserts that the fifth cause of action is barred by the economic loss rule and the independent tort principle because Plaintiffs cannot establish the elements of this cause of action independently of the parties’ contractual rights and obligations. “The economic loss rule requires a purchaser to recover in contract for purely economic loss due to disappointed expectations, unless he can demonstrate harm above and beyond a broken contractual promise.” (Robinson Helicopter Co. v.

Dana Corp. (2004) 34 Cal.4th 979, 988 (citation omitted).)

August 14, 2026 Law and Motion Calendar

HONORABLE MICHAEL L. MAU, Department 20 ________________________________________________________________________

To the contrary, Plaintiffs cite Dhital and Lazar. The latter makes the point that: Contrary to defendant’s arguments, fraudulent inducement of contract—as the very phrase suggests—is not a context where the “traditional separation of tort and contract law” obtains. To the contrary, this area of the law traditionally has involved both contract and tort principles and procedures. For example, it has long been the rule that where a contract is secured by fraudulent representations, the injured party may elect to affirm the contract and sue for the fraud. (Lazar v. Super. Ct. (1996) 12 Cal.4th 631, 645 (citations omitted).) As Dhital holds many times over: “[U]nder California law, the economic loss rule does not bar plaintiffs’ fraudulent inducement claim.” (Dhital, supra, 84 Cal.App.5th 828, 833; see also id., 837, 839, 841, & 843.)

As such, the Demurrer is OVERRULED. Defendant to file its Answer within ten days after service of the Order after hearing.

Any party who contests a tentative ruling must email Dept20@sanmateocourt.org with a copy to all other parties by 4:00 p.m. stating, without argument, the portion(s) of the tentative ruling that the party contests.

If the tentative ruling is uncontested, it shall become the order of the Court. Thereafter, Counsel for the prevailing party shall prepare for the Court’s signature a written order consistent with the Court’s ruling pursuant to CRC Rule 3.1312 and provide written notice of the ruling to all parties who have appeared in the action, as required by law and by the CRC. Please note that Local Rule 3.403(b)(iv) states in part “prevailing party on a tentative ruling is required to prepare a proposed order REPEATING VERBATIM the tentative ruling” (emphasis added). The order should be filed or e-filed only, do not email or mail a hard copy to the Court.