PAUL M. BERSON vs. FCA US LLC; ET AL.

Case No. CU25-05938

1). Demurrer by Defendant FCA US LLC to 6th Cause of Action in Plaintiff’s Complaint (Fraudulent Inducement); and

2). Motion by Defendant FCA US LLC to Strike Punitive Damage Allegations

The demurrer filed to challenge the 6th cause of action for fraudulent inducement— concealment is sustained, with leave to amend, on some, but not all, of the grounds raised by the demurring defendant, FCA US, LLC (“FCA”).

The court finds no merit in FCA’s argument of an insufficient transactional relationship between a new vehicle manufacturer and a consumer who purchases the new vehicle from a dealership to support a duty to disclose, nor the economic loss rule argument.

There is one citable California case on the issue of whether a vehicle manufacturer can be subject to a fraudulent inducement—concealment cause of action, and it clearly holds in favor of such liability, and against the application of the economic loss rule to this situation. Dhital v. Nissan North America, Inc. (2022) 84 Cal.App.5th 828.

As to the insufficient transactional relationship argument, it also has been expressly rejected by Dhital. While a new vehicle manufacturer may not be a party to the purchase agreement between purchaser and dealer, it is well understood that the manufacturer and purchaser have a transactional relationship distinct from the terms of the purchase agreement. Davis v. Nissan North America, Inc. (2024) 100 Cal.App.5th 825, 837 [“Under California law, manufacturer warranties that accompany the sale of a vehicle without regard to the substantive terms of the sales contract between the buyer and the dealer are independent of the sales contract”].

It is also well understood that almost all new vehicle manufacturers sell to individual consumers exclusively through authorized dealers. Thus, the court finds that the absence of a specific allegation in the complaint confirming vehicle purchase occurred through an authorized dealer is of no real consequence (although better form would be to include such an allegation).

Finally, although FCA argued that Plaintiff failed to allege the reliance element, the court finds otherwise.

Plaintiff’s Complaint includes the allegation that “had Plaintiff known of the Engine Defect”, “Plaintiff would not have purchased the Subject Vehicle, or would have paid less for it” [¶24; see also 69 and 70].

Other arguments raised by FCA support the sustaining of its demurrer to the 6 th cause of action for fraudulent inducement/concealment, albeit with leave to amend.

C.C.P. §338(d) sets a three-year limitations period on a fraud claim, but “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 . . . .”

A plaintiff who files a complaint more than three years after the alleged fraud took place has the burden of pleading when and how the fraud was discovered, and why he or she could not with reasonable diligence discovered it earlier. Czajkowski v. Haskell & White, LLP (2012) 208 Cal.App.4th 166, 174-175.

See also Hobart v. Hobart Estate Co. (1945) 26 Cal.2d 412, 437 [“if an action is brought more than three years after commission of the fraud, plaintiff has the burden of pleading and proving that he did not make the discovery until within three years prior to the filing of the complaint”].

That burden of pleading the when and how of discovery applies not only to fraud, but also to fraudulent concealment. Community Cause v. Boatwright (1981) 124 Cal.App.3d 888, 900.

Generally, the time of discovery is determined as the time when the plaintiff suspects or should suspect that someone has done something wrong to cause the injury. Kleefeld v. Superior Court (1994) 25 Cal.App.4th 1680, 1683-1684.

A plaintiff may not have any duty to investigate until he or she has suffered an injury, and has reason to suspect the factual basis for a claim. Shively v. Bozanich (2003) 31 Cal.4th 1230, 1247-1248.

Plaintiff’s complaint alleged only that he discovered the fraudulent inducementconcealment “shortly before the filing of the complaint, as the Vehicle continued to exhibit symptoms of defects following FCA’s unsuccessful attempts to repair them” [Complaint, ¶38]. But the complaint did not allege when the repairs were attempted, or any other time landmarks which would conclusively set the filing of the complaint within three years of discovery.

In addition, Plaintiff’s complaint does not allege what defects manifested in his specific vehicle, necessary to specifically allege the sustaining of damage element of fraudulent inducement--concealment. Bjoin v. J-M Manufacturing Co., Inc. (2025) 113 Cal.App.5th 884, 901.

Plaintiff’s Complaint alleged “engine defects, transmission defects electrical defects; among other defects and non-conformities” [¶12]; and that the type of engine (5.7L engine) used in 2019 Ram 1500 vehicles has “one or more defects that can result in loss of power, stalling, engine running rough, engine misfires, failure or replacement of the engine” [¶16]. The Complaint included allegations that the engine defect “can suddenly affect the driver’s ability to control the vehicle or cause a non-collision vehicle fire” and “can cause the vehicle to fail without warning, while the Vehicle is moving at highway speeds [¶17].

And it included allegations that FCA “was inundated with complaints regarding the Engine Defect but rather than repair the problem under warranty, FCA dealers either inform consumers that their vehicles are functioning properly or conduct repairs that merely mask the defect” [¶26].

What is missing from Plaintiff’s complaint are any specific allegations of what issues he experienced with his vehicle, as opposed to problems other drivers have reported as to their vehicles. All it alleges as to Plaintiff and his vehicle is that “Defects and nonconformities to warranty manifested themselves within the warranty period, including but not limited to, engine defects, transmission defects, electrical defects; among other defects and nonconformities” [Complaint, ¶12].

Thus, the court sustains FCA’s demurrer to this cause of action, with 30 days leave for Plaintiff to file a first amended complaint which addresses these deficiencies.

The court also sustains with leave to amend FCA’s demurrer to the 4th cause of action for breach of implied warranty, for similar reasons. Mexia v. Rinker Boat Co., Inc. (2009) 174 Cal.App.4th 1297, 1305-1306 [applicable limitations period for breach of implied warranty cause of action is four years, per Commercial Code §2725];

Commercial Code §2725(3) and (4) [discovery and/or tolling can apply to extend this period]; Jamil v. Mercedes-Benz USA, LLC (C.D.Cal. 2025) 780 F.Supp.3d 957, 967 [allegations of the defects, when the defects were or should have been discovered, and efforts made by conceal to existence of non-remediable defects are needed to support equitable tolling of this limitations period].

Additionally, the court grants with leave to amend FCA’s motion to strike the punitive damage allegations in the complaint.

A plaintiff must allege facts sufficient to constitute oppression, fraud or malice to justify a claim for punitive damages. Civil Code §3294(a).

To recover punitive damages against a corporation, a plaintiff must show authorization or ratification by a corporate officer, director or managing agent. Civil Code §3294(b).

With the court sustaining FCA’s demurrer to the 6th cause of action for fraudulent inducement/concealment, no fraud allegations remain to support the claim for punitive damages.

The complaint also failed to include any allegations of authorization or ratification by a corporate officer, director or managing agent.

The court understands that at this early stage of litigation, a lemon law plaintiff may not be able to identify the name(s) or title(s) of any corporate officer(s), director(s) or managing agent(s). Tenet Healthsystem Desert, Inc. v. Blue Cross of California (2016) 245 Cal.App.4th 821, 838 [“less particularity is required when the facts lie more in the knowledge of the opposite party”]. Still, the complaint must allege, at least in general terms, the authorization or ratification of the wrongful conduct was made by a corporate officer, director or managing agent. Such allegations do not appear anywhere within Plaintiff’s complaint.

The granting of this part of FCA’s motion to strike is with leave to amend.

A lemon law plaintiff may be forced at a later time in the case, such as before entry of judgment, to elect between the remedies of civil penalties and punitive damages. Troensegaard v. Silvercrest Indus. (1985) 175 Cal.App.3d 218 [mobile home purchaser alleged formaldehyde was present in the home beyond recommended levels; jury award of both civil penalties and punitive damages was revised, to strike the punitive damage recovery even though both had been adequately proven].

This election of remedies is not required to be made at the pleading stage. The court denies FCA’s motion to strike insofar as FCA sought to strike paragraph 67 of the complaint, and its allegations about defects allegedly reported to FCA or its agents earlier by owners of other vehicles with the same type of engine as the one in Plaintiff’s vehicle. The court is not yet convinced that such allegations are irrelevant, misleading, or improper.

For the matters for which this ruling allows leave to amend, Plaintiff has 30 days leave to file and serve a first amended complaint.

Regardless of whether oral argument is requested on this tentative ruling, the parties are to appear for hearing. The court wants an update from the parties as to their compliance with the mandatory deadlines set by C.C.P. §871.26, including early meaningful mediation within 150 days of the filing of a responsive pleading (i.e., the demurrer and motion to strike). The filing of somewhat vague pleadings, and inclusion in demurrer of arguments clearly precluded under existing law, does not fill this court with confidence that the parties are taking their duties under C.C.P. §871.26 seriously and have complied by the deadlines mandated by that statute.

DAVID LOPEZ; ET AL. vs. AMERICAN HONDA MOTOR CO., INC.