Roy E Stephenson vs Hickingbotham Limited et al
Case No: 17CV00955
Hearing Date: Fri Mar 15, 2019 9:30

Nature of Proceedings: Demurrer and Motion to Strike Second Amended Complaint

TENTATIVE RULING: DMV’s demurrer to plaintiff’s seventh cause of action is sustained without leave to amend. Judgment is ordered entered in favor of DMV and against plaintiff, together with costs. DMV’s motion to strike is moot given the ruling on the demurrer.

BACKGROUND:

In his second amended complaint (“SAC”), plaintiff Roy E. Stephenson alleges that he was defrauded into purchasing a 2011 Porsche 911 Carrera S Cabriolet from defendant Desert European Motorcars, Ltd. (“DEM”), believing that it was new when it was not. The SAC alleges that DEM and defendant Porsche Cars North America, Inc. (“PCNA”) conspired to defraud plaintiff and that defendants filed fraudulent registration and title documents with the California Department of Motor Vehicles (“DMV”) in order to transfer title for the Porsche to plaintiff. Plaintiff’s seventh cause of action for cancellation of void instruments, which is asserted against DMV only, requests an order directing DMV to cancel the fraudulent registration and title documents. The seventh cause of action also requests money damages against DMV, including consequential, exemplary, and punitive damages.

DMV now demurs to the SAC on the grounds that (1) the seventh cause of action does not state facts sufficient to constitute a cause of action for damages against DMV and (2) DMV is immune from suit under the circumstances alleged in the complaint. DMV also moves to strike the punitive damage allegations asserted against it.

ANALYSIS:

Demurrer to SAC

The grounds for objecting to a complaint by demurrer are set forth in Code of Civil Procedure Section 430.10, which provides, in relevant part:

“The party against whom a complaint or cross-complaint has been filed may object, by demurrer or answer as provided in Section 430.30, to the pleading on any one or more of the following grounds:

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“(e) The pleading does not state facts sufficient to constitute a cause of action.”

The function of a demurrer is to test the legal sufficiency of the pleading by raising questions of law, not fact. Buford v. State of California (1980) 104 Cal.App.3d 811, 827. In ruling on a demurrer, the court assumes the truth of all allegations in the complaint that have been properly pleaded, but not contentions, deductions, or conclusions of fact or law. Blank v. Kirwan, supra, 39 Cal.3d 311, 318; Porten v. University of San Francisco (1976) 64 Cal.App.3d 825, 827. The court also assumes the truth of all reasonable inferences that may be drawn from the properly pleaded facts in the complaint. Reynolds v. Bement (2005) 36 Cal.4th 1075, 1083.

DMV initially challenges plaintiff’s SAC on the ground that the seventh cause of action, the sole claim asserted against it, fails to allege facts sufficient to state a cause of action for damages. The court agrees. Plaintiff alleges that DEM and PCNA filed an Application for Registration of New Vehicle Form and a Vehicle Transfer Form with DMV on March 12, 2013, that the forms were invalid because the subject Porsche did not, and does not, qualify as an unregistered new vehicle since it had been driven more than 2,500 miles as a “demo” vehicle, that the registration and transfer forms are in the possession and under the control of DMV, and that the registration and transfer forms are fraudulent and void and should be cancelled. (SAC, ¶¶ 196, 197, 203.) Plaintiff further alleges that he is entitled to “consequential, exemplary and punitive damages” as a result of defendants’ conduct. (SAC, ¶204.)

California law requires a complaint in a civil action to contain a statement of the facts constituting the cause of action in ordinary and concise language and a demand for relief to which the plaintiff claims to be entitled. Code Civ. Proc. §425.10, subd. (a). “What is necessary to state a cause of action are the facts warranting legal relief . . . .” Alfaro v. Community Housing Improvement System & Planning Association, Inc. (2009) 171 Cal.App.4th 1356, 1371. Here, plaintiff has not alleged any facts in his seventh cause of action that would support a claim for damages against DMV. Plaintiff has not alleged that DMV committed fraud or deceit or that it proximately caused injury to plaintiff by accepting the allegedly fraudulent registration and vehicle transfer documents from DEM and PCNA. DMV’s demurrer to plaintiff’s seventh cause of action will therefore be sustained.

DMV next demurs to plaintiff’s SAC on the ground that it is statutorily immune from liability against claims of the type asserted by plaintiff. Government Code Section 818.4 provides:

“A public entity is not liable for an injury caused by the issuance, denial, suspension or revocation of, or by the failure or refusal to issue, deny, suspend or revoke, any permit, license, certificate, approval, order, or similar authorization where the public entity or an employee of the public entity is authorized by enactment to determine whether or not such authorization should be issued, denied, suspended or revoked.”

In interpreting Section 818.4, the California Supreme Court has held that the immunity applies to all discretionary licensing activities of a public entity. See, Morris v. County of Marin (1977) 18 Cal.3d 901, 911. Thus, in Hirsch v. Department of Motor Vehicles (1974) 42 Cal.App.3d 252, the trial court sustained a demurrer filed by the DMV, finding that the DMV was immune from suit filed by an innocent purchaser of a stolen vehicle who relied on the title issued by the DMV to the thief. In affirming the decision, the court of appeal held that the certificate of ownership issued by the DMV fell under Government Code Section 818.4, among other immunities, and thus barred liability against the DMV. Id., at 258.

In this case, plaintiff alleges that DEM and PCNA conspired together and defrauded plaintiff by submitting fraudulent documents to the DMV in order to issue title for a new vehicle rather than a used vehicle. (SAC, ¶¶ 195-204.) As in Hirsch, DMV is immune from liability for accepting the documents and its demurrer to the seventh cause of action for cancellation of void instruments will be sustained. Section 818.4 specifically provides that “[a] public entity is not liable for an injury caused by the issuance . . . [of] any permit, license, certificate, approval, order, or similar authorization . . . .” DMV’s demurrer will be sustained without leave to amend.

Motion to Strike Portions of SAC

DMV’s motion to strike the punitive damage allegations in the seventh cause of action (SAC, ¶ 204) and the prayer (SAC, Prayer, ¶¶ 4, 9) is moot given the ruling on the demurrer.