Case Number: BC534606 Hearing Date: May 21, 2014 Dept: 58

Judge Rolf M. Treu
Department 58
Hearing Date: Wednesday, May 21, 2014
Calendar No.: 8
Case Name: Arriola, et al. v. Ford Motor Company
Case No.: BC534606
Motion: Demurrer and Motion to Strike
Moving Party: Defendant Ford Motor Company
Responding Party: Plaintiffs Luis Arriola and Rosa Arriola
Notice: OK

Tentative Ruling: Demurrer is overruled. Motion to strike is denied. Defendant to answer within 10 days.

Background –
On 1/28/14, Plaintiffs Luis Arriola and Rosa Arriola filed this action against Defendant Ford Motor Company arising out of the purchase of a new vehicle. On 3/5/14, prior to Defendant’s appearance, Plaintiffs filed a First Amended Complaint which asserts causes of action for (1) fraud in the inducement – intentional misrepresentation, (2) fraud in the inducement – concealment, (3) negligent misrepresentation, (4) fraud in the performance of contract – intentional misrepresentation, (5) violation of the Consumer Legal Remedies Act, and (6) violation of the Song-Beverly Act. Defendant has filed a demurrer and a motion to strike.

Request for Judicial Notice –
In opposition, Plaintiffs request judicial notice of other trial courts’ orders and rulings in cases filed against Defendant. The RJN is denied because other trial courts’ orders and rulings have no precedential value. See Schachter v. Citigroup, Inc. (2005) 126 Cal.App.4th 726, 738.

Factual Allegations of the FAC –
On 6/4/04, Plaintiffs purchased a new 2004 Ford F-350 (¶ 9), which had a defective 6.0 liter engine (¶ 8). Plaintiffs decided to purchase the vehicle based on written promotional materials which extolled the vehicle’s performance and towing capacity such as being the “longest lasting diesel” and “best in class.” ¶¶ 13-14. When Plaintiffs purchased the vehicle, they were offered a 5-year/100,000-mile warranty and purchased the vehicle from Sunrise Ford, an authorized agent of Defendant. ¶¶ 17-19. The vehicle has had ongoing problems because of consistent engine problems, which the dealership has attempted to fix and represented that the problems had been fixed after repairs but the problems persisted. ¶¶ 20-24.

Defendant has failed to disclose severe and pervasive quality defects for the 6.0 liter engines and adopted a “Band-Aid” strategy of offering minor, limited repairs which would not resolve the underlying defects until the applicable warranties expired. ¶¶ 26-27; see also ¶¶ 25-63 (describing internal discussions concerning issues with the 6.0 liter engine prior to and after introduction to the market and the failure to develop a repair plan or recall program to address the “root cause” and “usual suspects” of the issues).

It was not until Plaintiffs’ vehicle required another repair for similar problems after the express warranty had expired (around 6/15/11) that Plaintiffs first discovered or reasonably could have discovered that the previous repairs failed to conform to the express warranty. ¶ 64.

Demurrer –

1. Statute of Limitations
Defendant argues that the 1st through 5th COAs are barred by the applicable statute of limitations. The Court notes that Plaintiffs assert that the applicable statute of limitations is four years as provided by CCP § 337(3) which concerns rescission of a contract. However, the gravamen of Plaintiffs’ 1st through 4th COAs are all based on fraud (San Filippo v. Griffiths (1975) 51 Cal.Appp.3d 640, 645): therefore, they are subject to a three-year statute of limitations (see, e.g., Broberg v. Guardian Life Ins. Co. of America (2009) 171 Cal.App.4th 912, 920). The CLRA claim is also subject to a three-year statute of limitation. See Yumul v. Smart Balance, Inc. (C.D. Cal. 2010) 733 F.Supp.2d 1134, 1140.

However, Plaintiffs sufficiently allege facts to support delayed discovery (see Broberg, 171 Cal.App.4th at 921; Yumul, 733 F.Supp.2d at 1141; see also Fox v. Ethicon Endo-Surgery, Inc. (2005) 35 Cal.4th 797, 808) based on the allegations concerning the “Band-Aid” strategy that Defendant undertook. Because Plaintiffs have sufficiently alleged facts to support delayed discovery and the FAC does not reveal that the applicable statute of limitations necessarily bars the 1st through 5th COAs at the pleading stage (see Lockley v. Law Office of Cantrell, Green, Pekich, Cruz & McCort (2001) 91 Cal.App.4th 875, 881), the demurrer is overruled on this ground.

The Court notes that the parties have argued whether tolling applies based on American Pipe & Constr. Co. v. Utah (1974) 414 U.S. 538 (but see Jolly v. Eli Lilly & Co. (1988) 44 Cal.3d 1103, 1118-26 (holding that the American Pipe tolling rule is inapplicable to mass-tort cases); cf. San Francisco Unified School Dist. v. W.R. Grace & Co. (1995) 37 Cal.App.4th 1318, 1340 (distinguishing Jolly based on a plaintiff opting out of a federal class action that was certified)) because of the filing of a class action (see, e.g., FAC ¶¶ 69-75). The parties have also argued whether equitable tolling or equitable estoppel may apply. See Battuello v. Battuello (1998) 64 Cal.App.4th 842, 847-48 (discussing the difference between the distinct doctrines). The Court does not resolve these arguments as the delayed discovery rule is sufficient to support the timeliness of Plaintiffs’ action at the pleading stage.

2. Misrepresentation
Defendant argues that Plaintiffs misrepresentation claims are insufficient because Plaintiffs claims are based on non-actionable puffery (see, e.g., Consumer Advocates v. Echostar Satellite Corp. (2003) 113 Cal.App.4th 1351, 1361) and fails to allege facts with particularity (see, e.g., Stansfield v. Starkey (1990) 220 Cal.App.3d 59, 72-73). The Court disagrees. Plaintiffs’ misrepresentation claims are not based on whether the vehicle was “the longest lasting diesel” or the “best in class” but that these representations falsely stated that the vehicle was not defective. Additionally, Plaintiffs’ fraud claims are based on numerous statements in Defendant’s advertising campaign, and Plaintiffs’ provision of a representative selection of advertisements is sufficient (see Morgan v. AT & T Wireless Services, Inc. (2009) 177 Cal.App.4th 1235, 1262). The demurrer is overruled on this ground.

3. Concealment
Defendant argues that Plaintiffs fail to allege a duty to disclose. The Court disagrees. While a fraudulent concealment claim requires a duty to disclose (see, e.g., Linear Technology Corp. v. Applied Materials, Inc. (2007) 152 Cal.App.4th 115, 131), the duty to disclose arises as follows:
In transactions which do not involve fiduciary or confidential relations, a cause of action for non-disclosure of material facts may arise in at least three instances: (1) the defendant makes representations but does not disclose facts which materially qualify the facts disclosed, or which render his disclosure likely to mislead; (2) the facts are known or accessible only to defendant, and defendant knows they are not known to or reasonably discoverable by the plaintiff; (3) the defendant actively conceals discovery from the plaintiff.
Id. at 132 (quoting Warner Constr. Corp. v. City of Los Angeles (1970) 2 Cal.3d 285, 294).

Plaintiffs allege facts that Defendant had exclusive and superior knowledge of the inherent defects of the 6.0 liter engine and failed to disclose these issues and instead represented that the defects could be repaired. See FAC ¶¶ 223-228. This is sufficient to allege facts supporting a duty to disclose as to Defendant. The demurrer is overruled on this ground.

4. CLRA
Plaintiffs’ CLRA claim is dependent on the fraud-based claims. See, e.g., Daugherty v. American Honda Motor Co., Inc. (2006) 144 Cal.App.4th 824, 834-36. As discussed above, Plaintiffs’ fraud-based claims are sufficiently alleged.

Ruling –
The demurrer is overruled. The motion to strike is denied.