Case Number: BC515241 Hearing Date: June 24, 2014 Dept: 34

Moving Party: Defendant Ford Motor Company (“defendant”)

Resp. Party: Plaintiffs Roger Pike and Rebecca Pike (“plaintiffs”)

Defendant’s demurrer to the first through third (to the extent they are based on a tort claim for fraud and not a claim for rescission of the sales agreement), fourth, and fifth causes of action is SUSTAINED.

With respect to the claim for rescission of the sales contract in the first, second, and third causes of action, the demurrer is OVERRULED.

PRELIMINARY COMMENTS:

The Court finds some of Plaintiffs’ citations to be less than helpful. For instance, Plaintiffs state that they have “sufficiently pleaded that the limitations period was told by fraudulent concealment in the discovery rule and equitable estoppel. (SAC ¶¶ 30-113.)” (See Opp., p. 2:17-18.) To refer the court to some 83 paragraphs of the second amended complaint is not particularly helpful. Two sentences later, plaintiffs quote some case for the proposition that it “must appear clearly and affirmatively that, upon the face of the complaint, the right of action is necessarily barred.” For this proposition, plaintiffs cite to “Id., at p. 881.” (Opp., p. 2:20-21.) However, the “Id” does not appear to refer to anything; the previous citation is to the SAC; the two previous cases to which plaintiffs cite are found at 87 Cal.App.4th 73 and 147 Cal. 739 (see opp., p. 2:3-4) – neither case has a page 881.

BACKGROUND:

Plaintiffs commenced this action on 7/16/13 against defendant for: (1) fraud; (2) fraud (concealment); (3) negligent misrepresentation; (4) fraud; (5) violation of the CLRA; and (6) violation of the Song-Beverly Act. Plaintiffs filed a first amended complaint (“FAC”) on 9/16/13 alleging the same six causes of action.

On 2/3/14, the Court sustained defendant’s demurrer to the FAC in part, and overruled it in part. The Court overruled the demurrer with respect to the claims for rescission of the sales contract.

Plaintiff filed a second amended complaint (“SAC”) on 3/5/14 alleging the same six causes of action. Plaintiffs allege that defendant made misrepresentations and concealed facts as to the condition of the engine of a 2005 Ford F-250 truck purchased by plaintiffs in December 2004. Defendant has failed to remedy the defects despite several attempts to make repairs.

ANALYSIS:

Defendant demurs to the first, second, third, fourth, and fifth causes of action in the SAC on the ground that the SAC fails to allege sufficient facts because these claims are time-barred. Though the memorandum of points and authorities mentions the sixth cause of action, this cause of action is not addressed in the notice. (See Memo., p. 3:19.) Therefore, the Court assumes that the demurrer is only to the first through fifth causes of action.

“Where the dates alleged in the complaint show the action is barred by the statute of limitations, a general demurrer lies. (It is not ground for special demurrer.)” (Weil & Brown, Civ. Proc. Before Trial (The Rutter Group 2013) ¶ 7:50.) “The running of the statute must appear ‘clearly and affirmatively’ from the dates alleged. It is not enough that the complaint might be barred.” (Ibid. [italics in original].)

The statute of limitations for the fraud and misrepresentation causes of action is three years. (See Code Civ. Proc., § 338(d).) “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.) The first, second, and third causes of action are governed by a four-year statute of limitations to the extent that plaintiffs seek rescission of the sales contract due to fraud in the inducement. (See SAC ¶¶ 98, 123, 147; Code Civ. Proc., ¶ 337(3).) The CLRA cause of action is governed by a three-year statute of limitations. (See Civ. Code, § 1783.)

Plaintiffs allege that they purchased the vehicle in December 2004 and that it was defective at the time. (See SAC ¶¶ 9-10.) Plaintiffs did not commenced the instant action until July 2013.

Plaintiffs argue that the statutes of limitation are tolled by equitable estoppel and/or the discovery rule. “Equitable estoppel… comes into play only after the limitations period has run and addresses … the circumstances in which a party will be estopped from asserting the statute of limitations as a defense to an admittedly untimely action because his conduct has induced another into forbearing suit within the applicable limitations period.” (Lantzy v. Centex Homes (2003) 31 Cal.4th 363, 383.) Equitable estoppel is based on the principle that “[o]ne cannot justly or equitably lull his adversary into a false sense of security, and thereby cause his adversary to subject his claim to the bar of the statute of limitations, and then be permitted to plead the very delay caused by his course of conduct as a defense to the action when brought.” (Ibid. [internal quotations omitted]) “Before an estoppel to assert an applicable statute of limitations may be said to exist, certain conditions must be present: ‘[T]he party to be estopped must be apprised of the facts; the other party must be ignorant of the true state of facts, the party to be estopped must have intended that its conduct be acted upon, or so act that the other party had a right to believe that it was so intended; and the other party must rely on the conduct to its prejudice.’” (Hydro-Mill Co., Inc. v. Hayward, Tilton & Rolapp Ins. Associates, Inc. (2004) 115 Cal.App.4th 1145, 1165-1166 [quoting Muraoka v. Budget Rent-A-Car, Inc. (1984) 160 Cal.App.3d 107, 116].) “Estoppel most commonly results from misleading statements about the need for or advisability of a claim; actual fraud or the intent to mislead is not essential.” (John R. v. Oakland Unified School Dist. (1989) 48 Cal.3d 438, 445.)

Delayed discovery of the unlawful conduct may toll the statutes of limitations, so long as the facts pled show the time and manner of discovery and the inability to have made earlier discovery despite due diligence. (Fox v. Ethicon Endo-Surgery, Inc. (2005) 35 Cal.4th 797, 808.) Notably, “plaintiffs are required to conduct a reasonable investigation after becoming aware of an injury, and are charged with knowledge of the information that would have been revealed by such an investigation.” (Ibid.) “In order to adequately allege facts supporting a theory of delayed discovery, the plaintiff must plead that, despite diligent investigation of the circumstances of the injury, he or she could not have reasonably discovered facts supporting the cause of action within the applicable statute of limitations period.” (Id. at p. 809.)

Plaintiffs’ SAC now alleges that the last repair attempt on the vehicle under the express warranty was on 8/20/09; that the dealership assured plaintiffs that the vehicle had been repaired; and that plaintiffs did not discover until 9/27/10 that defendant could not repair the vehicle and that defendant had misrepresented the engine quality. (SAC ¶ 37.) This directly contradicts the FAC, which alleged that plaintiffs discovered these facts during their last visit to defendant’s repair facility “prior to the expiration of the warranty.” (FAC ¶ 37.) In the FAC, plaintiffs alleged that it was during the final repair attempt under warranty that they discovered the misrepresentations as to the quality of the vehicle and defendant’s ability to repair it. (See FAC ¶¶ 37, 39.) The FAC did not clearly allege when this visit took place, but indicated that it occurred “prior to the expiration of the warranty.” (See ibid.) Plaintiffs alleged that the warranty lasted five years or 100,000 miles, whichever occurred first. (See id., ¶¶ 17, 74.) Therefore, at the latest, the FAC alleged that plaintiffs discovered the facts five years from the purchase date, or December 3, 2009.

Defendant argues that the new allegations in paragraph 37 of the SAC should be disregarded and the previous allegations in the FAC should control. “Under the sham pleading doctrine, allegations in an original pleading that rendered it vulnerable to demurrer or other attack cannot simply be omitted without explanation. … The purpose of the doctrine is to enable the courts to prevent an abuse of process. … The doctrine is not intended to prevent honest complainants from correcting erroneous allegations or to prevent the correction of ambiguous facts.” (Hahn v. Mirda (2007 147 Cal.App.4th 740, 751.) “[T]he policy against sham pleading permits the court to take judicial notice of the prior pleadings and requires that the pleader explain the inconsistency.” (Owens v. Kings Supermarket (1988) 198 Cal.App.3d 379, 384.)

Plaintiffs fail to provide a satisfactory explanation for the inconsistency. There is no showing that plaintiffs were mistaken or did not know the facts when the FAC was filed. If the allegations in the SAC are correct, plaintiffs should have known of the correct discovery date well before the complaint was filed, and there is no explanation as to why a different discovery date was previously alleged. The explanation provided in the SAC and the opposition to this demurrer at most attempts to support the alleged delayed discovery, and merely illustrates the inconsistency with the previous allegations. (See FAC ¶ 37 [alleging plaintiffs discovered the facts during the last repair visit prior to the warranty explanation]; SAC ¶ 37 [alleging that plaintiffs could not have discovered the facts during this visit because defendant assured them that the vehicle was repaired].) In order to avoid the sham pleading doctrine, plaintiffs must explain why they previously alleged an earlier discovery date and failed to allege the later date. Without such an explanation, the new allegations of a later date are disregarded as a sham, and the allegations in the FAC are read into the SAC.

Thus, the allegations show that the latest plaintiffs could have discovered the facts giving rise to the causes of action was December 3, 2009. Plaintiffs commenced the instant action on July 16, 2013 – over three years and seven months later. To the extent that the first four causes of action are tort claims for fraud, they are time-barred. The fifth cause of action is also untimely.

Defendant does not clearly demur to the rescission claims or the sixth cause of action. For reasons discussed in the ruling on the demurrer to the FAC, these claims are not time-barred.

Accordingly, defendant’s demurrer to the first through third (to the extent they are based on a tort claim for fraud and not a claim for rescission of the sales agreement), fourth, and fifth causes of action is SUSTAINED without leave to amend.

With respect to the claim for rescission of the sales contract in the first, second, and third causes of action, the demurrer is OVERRULED.

Defendant has not filed a demurrer to the sixth cause of action; hence that cause of action stands.

Defendants to answer within 10 days.