HERNANDEZ VS. TOYOTA MOTOR SALES, U.S.A., INC.

First, Toyota argues Plaintiffs fail to plead fraud with the requisite specificity. In Alfaro v. Community Housing Improvement System & Planning Assn., Inc. (2009) 171 Cal.App.4th 1356, 1384, the court addressed the level of specificity required in cases involving

nondisclosure. The Alfaro court stated that “[o]ne 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. 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, [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....” (Ibid. (cleaned up).)

The Alfaro court specifically found the pleading standard required for fraudulent concealment 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.” (Id. at p. 1384- 1385.)

The details concerning facts regarding Toyota’s knowledge of the defects and the identities of those at Toyota who allegedly concealed material facts are, by nature, those of which Toyota must necessarily possess full information. These facts lie more in the knowledge of Toyota. Thus, the allegations in the Complaint are sufficiently specific.

Second, Toyota argues Plaintiff fails to plead facts to allege a duty to disclose. “A duty to disclose a material fact can 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).

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. 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.” (Rattagan, supra, 17 Cal.5th at p. 40-41 (cleaned up).)

Dhital v. Nissan North America, Inc. (2022) 84 Cal.App.5th 828, 844 addressed the issue of a transactional relationship and found a car buyer need not allege a contract with the manufacturer in order to allege a duty to disclose stating:

“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. 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 plaintiffs’ claim is barred on the ground there was no relationship requiring Nissan to disclose known defects.”

(Dhital, supra, 84 Cal.App.5th at p. 844.) Here, the Complaint alleges Toyota manufactured and/or distributed the Subject Vehicle and Plaintiff entered into a warranty contract with Toyota regarding the Subject Vehicle. (Complaint, ¶7.) However, unlike Dhital, the Complaint does not allege Plaintiff purchased the Subject Vehicle from a Toyota dealership or that Toyota’s authorized dealerships are its agents for purposes of sale of Toyota vehicles to its consumers. As a result, the allegations in the Complaint are insufficient under Dhital to show a transaction between Plaintiff and Toyota sufficient to impose a duty to disclose.

However, under LiMandri v. Judkins (1997) 52 Cal.App.4th 326, 337 “duty of disclosure ... may exist when one party to a transaction has sole knowledge or access to material facts and knows that such facts are not known to ... the other party.” Here, Plaintiff adequately pleads Toyota’s sole knowledge or access to facts and Toyota’s failure to disclose those facts to Plaintiff—to whom it provided an express warranty. (Complaint, ¶¶57, 62, 72, & 75.)

Lastly, Toyota argues the economic loss rule precludes the fraudulent concealment claim. Under the economic loss rule in California, “where a purchaser’s expectations in a sale are frustrated because the product he bought is not working properly, his remedy is said to be in contract alone, for he has suffered only economic losses.” (Robinson Helicopter Co. v. Dana Corp. (2004) 34 Cal.4th 979, 988 (cleaned up).)

The parties disagree as to whether the test set forth in Rattagan applies to the case at issue. The Court finds that Dhital is controlling and Rattagan is distinguishable.

In Rattagan, the Supreme Court concluded that “[u]nder California law, a plaintiff may assert a cause of action for fraudulent concealment based on conduct occurring in the course of a contractual relationship if the elements of the claim can be established independently of the parties’ contractual rights and obligations and the tortious conduct exposes the plaintiff to a risk of harm beyond the reasonable contemplation of the parties when they entered into the contract.” (Rattagan, supra, 17 Cal.5th at p. 45 (emphasis added).)

In Dhital, the court ruled, “the economic loss rule does not cover such [fraudulent inducement] claims...For fraudulent inducement and the other existing exceptions listed in Robinson, the duty that gives rise to tort liability is either completely independent of the contract or arises from conduct which is both intentional and intended to harm. In our view, that independence is present in the case of fraudulent inducement (whether it is achieved by intentional concealment or by intentional affirmative misrepresentations), because a defendant’s conduct in fraudulently inducing someone to enter a contract is separate from the defendant’s later breach of the contract or warranty provisions that were agreed to.” (Dhital, supra, 84 Cal.App.5th at p. 841.)

Applying Dhital, the economic loss rule does not bar Plaintiffs’ sixth cause of action for fraudulent inducement – concealment.

Therefore, the demurrer to the sixth cause of action is OVERRULED.

Moving Defendant to give notice.

2. MOTION TO STRIKE PORTIONS OF COMPLAINT

Defendant Toyota Motor Sales, U.S.A., Inc.’s motion to strike the request for punitive damages in the Complaint filed by Plaintiff Isaac Pedrosa Hernandez is DENIED.

Civil Code Section 3294, subdivision (a) states: “(a) In an action for the breach of an obligation not arising from contract, where it is proven by clear and convincing evidence that the defendant has been guilty of oppression, fraud, or malice, the plaintiff, in addition to the actual damages, may recover damages for the sake of example and by way of punishing the defendant.”

Civil Code Section 3294, subdivision (c)(3) states: “ ‘Fraud’ means an intentional misrepresentation, deceit, or concealment of a material fact known to the defendant with the intention on the part of the defendant of thereby depriving a person of property or legal rights or otherwise causing injury.”

For the reasons discussed in the demurrer, the Complaint alleges sufficient allegations of Fraudulent Inducement – Concealment to withstand demurrer. Therefore, the Complaint sufficiently alleges fraud for purposes of Civil Code Section 3294, subdivision (c)(3).

Moving Defendant to give notice.

11. CINEMATIC CAPITAL CORP. VS. SAID 2023-01343920 1. MOTION FOR ISSUANCE OF ORDER SHOWING CAUSE RE: CONTEMPT

Plaintiff’s Motion for OSC Re: Contempt and Sanctions against Abbey Sinowetski (ROA 297) is DENIED.