2013-00156674-CU-BC

Mark Bogdan vs. Ford Motor Company

Nature of Proceeding: Hearing on Demurrer

Filed By: Tully, Kevin J.

Defendant Ford Motor Company’s demurrer to Plaintiff Mark Bogdan, et al.’s complaint
is overruled.

Ford’s request for judicial notice is granted.

In this lemon law action Plaintiffs allege causes of action for breach of express and
implied warranties, fraud, violation of Business & Professions Code § 17200 et seq.,
violation of the False Advertising Law arising out of allegations that their Ford vehicles
equipped with the 6.0 liter PowerStroke diesel engine were defective.

The Court addresses Ford’s arguments in the order presented.

Class Action

Ford first argues that all claims in this lawsuit were resolved in the multi-district class
action lawsuit In re Navistar Diesel Engine Products Liability Litigation (“MDL Class
Action) because Plaintiffs were members of the class and are bound by the settlement
reached in the matter. The demurrer on this basis is overruled.

Ford submitted a request for judicial notice containing the MDL Settlement and Final
Order and Judgment which dismissed the MDL class action and dismissed “all claims
that any settlement class members alleged or could have alleged against the released
parties in any complaint, action, or litigation based upon the 6.0-liter engines in the
class vehicles.” (RJN, Exh. D.) Ford asserts that Plaintiff did not request exclusion
from the class. The Court notes that the Final Order and Judgment contains a very
lengthy list of class members who opted out of the settlement, including numerous
pages which identify members only by the VIN# of the vehicle. Ford simply states that

Plaintiffs did not request exclusion but provides no reference to any specific page in
the opt out list.

In opposition, Plaintiffs submit copies of their requests for exclusion and argue that
they are not bound by the MDL settlement because they opted out. Ford contends in
reply that the Plaintiffs are not listed on the 116 page single spaced list of members
who requested exclusion. In sum, this is an evidentiary conflict that is not
appropriately resolved on demurrer. Indeed, while the Court can and did take judicial
notice of the Final Order and Judgment from the MDL Class Action, resolution of
whether Plaintiffs opted out of the settlement depends on factual matters that are not
appropriately resolved on demurrer. The Court will not scour the lengthy opt out list to
try and determine whether Plaintiffs are on the list (either by name or VIN number) and
if they are not then resolve the validity of the requests for exclusion that Plaintiffs
submitted with their opposition to Ford’s demurrer which they claim to have submitted.
Indeed, to do so would turn the demurrer into a contested evidentiary hearing, which is
improper. A hearing on a demurrer cannot be turned into a contested evidentiary
hearing through the guise of having the court take judicial notice of documents whose
truthfulness or proper interpretation are disputable. ( Unruh-Haxton v. Regents of Univ.
of Cal. (2008) 162 Cal.App.4th 343, 365.)

Indeed, the evidentiary nature of the issue is confirmed by Defendant in reply as it
argues that “further investigation” revealed that Plaintiff Bogdan successfully opted out
of the MDL class action but then makes specific reference, for the first time, to
excerpts of the 116 page opt out list in an attempt to show that the three other Plaintiffs
did not successfully opt out. This issue is appropriately resolved through an
evidentiary motion, not a challenge to the pleadings.

As a result, the demurrer on the basis that each of Plaintiffs’ causes of action were
resolved in the MDL Class Action is overruled.

In addition, the demurrer based on res judicata is overruled. This argument is simply a
variation of the above. Indeed, the success or failure of this argument turns on
whether Plaintiffs were parties to the MDL Class Action. As seen above, such issues
is not appropriately resolved on this demurrer. Indeed, res judicata will only apply
where the party against whom the plea is raised was a party or was in privity with a
party to the prior adjudication. (Lyons v. Security Pacific Nat’l Bank (1995) 40
th
Cal.App.4 1001, 1015.)

Second Cause of Action (Breach of Implied Warranty)

Ford also demurs to the second cause of action on the basis that it is barred by the
statute of limitations in the event the Court concludes, as it did above (at least for
pleading purposes), that the claims were not barred by the MDL Class Action
settlement.

The Song-Beverly Consumer Warranty Act provides that an implied warranty is at
most one year following the sale of consumer goods. (Civ. Code § 1791.1(c).) The
Commercial Code provides a four year statute of limitations with respect to breach of
warranty claims. (Comm. Code. § 2725.) As seen from the complaint, Plaintiffs
purchased their vehicles on April 19, 2005 (Bogdan), May 27, 2005 (Ferguson),
January 11, 2005 (Nicks), and July 22, 2005 (Rohmann), meaning that the implied
warranties expired on April 19, 2006, May 27, 2006, January 11, 2006, and July 22,

2006, respectively. Ford reasons that Plaintiffs were required to bring the instant
cause of action no later than four years after the respective implied warranties expired.
It reasons that the complaint filed in November 2013 is untimely.

Plaintiffs first argue that the statute of limitations was tolled as a result of two class
actions involving the 6.0-liter PowerStroke diesel engines. Plaintiffs alleged that “all
limitations periods were tolled from the April 21, 2006 filing date of Cox House Moving
Inc. v. Ford Motor Company (Case No. 7:06-cv-0218-HMH, S.D.C.), until November 6,
2006, the date class certification was denied, then tolled again from January 8, 2010 to
present, by the filing of Custom Underground, Inc. et. al., v. Ford Motor Company
(Case No. 1:10-cv-00127, N.D. Ill.)) (Comp. ¶ 81.) The United States Supreme Court
has held that “the commencement of a class action suspends the applicable statute of
limitations” for a later filed individual action. (American Pipe & Construction Co. v.
Utah (1974) 414 U.S. 538, 554.) For example, the statute of limitations with respect to
a plaintiff’s lawsuit for damage to property in state court was tolled while the plaintiff
was a member of a nationwide asbestos class action, from the inception of the class
action until plaintiff opted out. (San Francisco Unified School Dist. v. W.R. Grace & Co
th
. (1995) 37 Cal.App.4 1318, 1337.) Here, however, Plaintiffs have not alleged any
facts regarding the two specific class actions to show that they involved the 6.0-liter
PowerStroke diesel engines and/or that they were members of the classes such that
the American Pipe doctrine would apply. Nor did they request judicial notice of any
document from either class action which might supply such information. Absent such
information, the Court cannot determine that the statute of limitations was tolled
pursuant to American Pipe .

Plaintiffs also argue that the discovery rule applies because Ford prevented Plaintiffs
from knowing they were harmed because it actively concealed its knowledge that
regarding the inherent defects in the 6.0-liter engine and its inability to remedy such
defects. The discovery rule provides that the statute of limitations should not begin to
run until a plaintiff discovers or reasonably should have discovered the facts giving rise
to the cause of action. (Hebrew Academy of San Francisco v. Goldman (2007) 42
Cal.4th 883, 894.) Here, Plaintiffs allegations are sufficient as they have alleged that
Ford “wrongfully concealed the fact (1) that it was equipping vehicles with defective
engines that Ford was unable and/or unwilling to repair, and (2) that its dealerships
were making inadequate repairs incapable of addressing the root cause of the
vehicles’ malfunctions. Plaintiff did not discover the operative facts that are the basis
of their claims because they were concealed in confidential and privileged documents.
No amount of diligence by Plaintiff could have led to the discovery of these facts
because they were kept top secret by Ford and, therefore, Plaintiff was not at fault for
failing to discover these facts, nor did they have actual or presumptive knowledge of
facts sufficient to put them on inquiry.” (Comp. ¶ 82.) Ford failed to specifically
address these tolling allegations in the demurrer and also failed to address Plaintiffs’
arguments in its reply. The Court finds that for pleading purposes, Plaintiffs have
alleged facts to show that the statute of limitations was tolled by the discovery rule.

In addition, the Court finds that Plaintiffs alleged facts that Ford is estopped from
asserting the statute of limitations because it fraudulently concealed known defects in
their vehicles. A defendant may be estopped from asserting the statute of limitations,
for example, when they fraudulently conceal their identity. Such fraud tolls the
applicable statute of limitations during the time which the claim is undiscovered by
plaintiff or until such time as plaintiff, should have discovered it through the exercise of
reasonable diligence. (Bernson v. Browning-Ferris Industries of California, Inc. (1994)
th

th
7 Cal.4 926, 933-934.) As set forth above, Plaintiffs alleged that Ford concealed that
it was equipping vehicles with defective engines and that its dealers were making
inadequate repairs incapable of addressing the root cause of the vehicles’
malfunctions. Further, they alleged that when they took their vehicles in for repairs,
Ford’s representatives assured them that the problems could be repaired and then
authorized repairs they knew could not repair the engines. (Comp. ¶ 92-97.) These
allegations are sufficient for pleading purposes to show Ford is estopped from raising
the statute of limitations. Again, Ford did not specifically address these allegations in
its demurrer or respond to Plaintiffs’ arguments in its reply.

The Court notes that Ford argued in its demurrer that the implied warranty claim is
untimely because a manufacturer cannot be liable for breach of an implied warranty for
a latent defect that manifest outside the one year warranty period and that Plaintiffs
cannot rely on Mexia v. Rinker Boat Co. (2009) 174 Cal.App.4th 1297 wherein the
court held that latent defects that manifest outside the first year are covered by the
implied warranty. In Mexia, the plaintiff purchased a boat containing a latent defect
involving corrosion of the engine that did not surface until two years after the purchase.
The Mexia court, interpreting the legislative history of the statute, held that the claim
was not barred. The Court rejects Ford’s argument that its own interpretation of the
legislative history requires the Court to ignore the Mexia holding. Further, an absurd
and unjust result should not be ascribed to the legislature. As noted in Mexia, in order
to provide greater protections and remedies for consumers, the Legislature enacted
the Song-Beverly Act. (Robertson v. Fleetwood Travel Trailers of California, Inc.
(2006) 144 Cal.App.4th 785, 801 It “is strongly pro-consumer” and “makes clear its pro
-consumer remedies are in addition to those available to a consumer pursuant to the
[Uniform] Commercial Code … .” (Murillo v. Fleetwood Enterprises, Inc. (1998) 17
Cal.4th 985, 990 .) To “the extent that the [Song-Beverly] Act gives rights to the
buyers of consumer goods, it prevails over conflicting provisions of the Uniform
Commercial Code.” (4 Witkin, Summary of Cal. Law (10th ed. 2005) Sales, § 52, p. 63,
citing Civ. Code, § 1790.3.)

One innovation of the Song-Beverly Act is an express provision for a duration of the
implied warranty of merchantability. (Civ. Code, § 1791.1, subd. (c).) The Uniform
Commercial Code, by contrast, did not expressly set forth a duration of the warranty.
However, in order to prove a breach of the implied warranty, the purchaser was
required to show that the defect existed at the time the product was sold or delivered.
(1 White & Summers, Uniform Commercial Code (5th ed. 2006) § 9-12, pp. 657-658;
see, e.g., Makuc v. American Honda Motor Co. (1st Cir. 1987) 835 F.2d 389, 392-393;
Hargett v. Midas International Corp. (Miss. 1987) 508 So.2d 663, 665.) In effect,
therefore, there is no “duration” of the implied warranty under the Uniform Commercial
Code in any meaningful sense; the product is either merchantable or not (and a breach
of the implied warranty occurs or not) only at the time of delivery. (See Cal. U. Com.
Code, § 2725, subd. (2).) Indeed, as noted in the decision, the implied warranty of
merchantability may be breached by a latent defect undiscoverable at the time of sale.
(See Moore v. Hubbard & Johnson Lumber Co. (1957) 149 Cal.App.2d 236, 241;
Brittalia Ventures v. Stuke Nursery Co., Inc. (2007) 153 Cal.App.4th 17, 24; Garlock
Sealing Technologies, LLC v. NAK Sealing Technologies Corp. (2007) 148
Cal.App.4th 937, 950-952.) Indeed, “[u]ndisclosed latent defects … are the very evil
that the implied warranty of merchantability was designed to remedy.” ( Willis Mining,
Inc. v. Noggle (1998) 235 Ga.App. 747, 749. Mexia, supra, at pp. 1304-1305.

The Court need not address Plaintiffs’ additional arguments in opposition regarding the

statute of limitations.

In sum, the demurrer to the second cause of action on the basis that it is barred by the
four year statute of limitations in Civil Code § 2725 is overruled.

First Cause of Action (Express Warranty)

Ford demurs to this cause of action on the basis that it too is barred by the four year
statute of limitations set forth in Commercial Code § 2725. It argues that the express
warranties for each Plaintiff was three years in length and expired three years from the
date of each Plaintiff’s purchase of their respective vehicle. As seen from the
complaint, Plaintiffs purchased their vehicles on April 19, 2005 (Bogdan), May 27,
2005 (Ferguson), January 11, 2005 (Nicks), and July 22, 2005 (Rohmann), meaning
that the express warranties expired on April 19, 2008, May 27, 2008, January 11,
2008, and July 22, 2008, respectively. Ford reasons that Plaintiffs were required to
bring the instant cause of action no later than four years after the respective express
warranties expired meaning that the action filed in November 2013 was untimely. The
demurrer is overruled for the same reasons it was overruled in connection with the
second cause of action.

Third, Fourth, Fifth, Sixth and Seventh Causes of Action (Declaratory Relief,
Fraudulent Misrepresentation, Violation of the Consumer Remedies Act, Business and
Professions Code § 17200, and Unjust Enrichment)

Ford demurs to these causes of action on the basis that they are premised on
Plaintiffs’ first two causes of action dealing with violations of the Song-Beverly Act and
thus are similarly barred by the statute of limitations. The demurrer is overruled for the
same reasons discussed above in connection with those causes of action.

Ford shall file and serve its answer no later than May 5, 2014.

The notice of demurrer does not provide notice of the Court’s tentative ruling system
as required by Local Rule 1.06(D). Defendant’s counsel is ordered to notify Plaintiffs’
counsel immediately of the tentative ruling system and to be available at the hearing,
in person or by telephone, in the event Plaintiffs’ counsel appears without following the
procedures set forth in Local Rule 1.06(B).

The minute order is effective immediately. No formal order pursuant to CRC Rule
3.1312 or further notice is required.