Case Name: Nathaniel Bell, et al. v. General Motors, LLC
Case No.: 17-CV-314040

Currently before the Court are the demurrer and motion to strike by defendant General Motors, LLC (“Defendant”).

Factual and Procedural Background

This is a lemon law action initiated by plaintiffs Nathaniel Bell and Barbara Bell (collectively, “Plaintiffs”) against Defendant. Plaintiffs filed their original complaint against Defendant on August 4, 2017, alleging causes of action for: (1) violation of Civil Code § 1793.2, subdivision (d); (2) violation of Civil Code § 1793.2, subdivision (b); (3) violation of Civil Code § 1793.2, subdivision (a)(3); (4) breach of express warranty; (5) breach of the implied warranty of merchantability; (6) violation of the Magnuson-Moss Warranty Act; and (7) fraud by omission.

Subsequently, Defendant filed a demurrer to the seventh cause of action of the complaint and a motion to strike Plaintiffs’ request for punitive damages.

On November 29, 2017, the Court issued its order on Defendants’ demurrer and motion to strike. With respect to the demurrer, the Court found that the vast majority of Defendants’ arguments lacked merit. However, the Court sustained the demurrer with 10 days’ leave to amend as it found that “Plaintiffs should be required to specifically allege where they purchased the Vehicle, i.e., at which dealership.” Regarding the motion to strike, the Court granted the motion with 10 days’ leave to amend because the fraud cause of action did not survive Defendants’ demurrer and the Song-Beverly Consumer Warranty Act and Magnuson Moss Act claims could not otherwise serve as bases for punitive damages.

Thereafter, Plaintiffs filed the operative first amended complaint (“FAC”) against Defendant, alleging claims for: (1) violation of Civil Code § 1793.2, subdivision (d); (2) violation of Civil Code § 1793.2, subdivision (b); (3) violation of Civil Code § 1793.2, subdivision (a)(3); (4) breach of express warranty; (5) breach of the implied warranty of merchantability; (6) violation of the Magnuson-Moss Warranty Act; and (7) fraud by omission.

According to the allegations of the FAC, “Defendant was engaged in the business of designing, manufacturing, constructing, assembling, marketing, distributing, and selling automobiles and other motor vehicles and motor vehicle components in Santa Clara County.” (FAC, ¶ 4.) On or about August 23, 2009, Plaintiffs purchased a 2010 GMC Acadia vehicle (“Vehicle”) from Watsonville Cadillac Buick GMC, “which was manufactured and or distributed by Defendant.” (Id. at ¶ 6.) In connection with the purchase, Plaintiffs received an express warranty in which Defendant undertook to preserve or maintain the utility or performance of the Vehicle, or to provide compensation if there were failures in those areas for a specified period of time. (Id. at ¶ 7.)

During the warranty period, the Vehicle contained or developed numerous defects including, but not limited to, those relating to: the coolant recovery reservoir; the low beam headlamp connectors; the water pump; coolant levels; the harness; the side belt tensioner cable covers; the steering system; the left front axle seal; the liftgate control module; the power steering gear; the front wheel drive shaft seal; the engine and/or engine mount; and the strut mount. (FAC, ¶ 8.) Despite having numerous opportunities to do so, Defendant and its representatives were unable to service or repair the Vehicle in conformance with the applicable express warranties, and failed to promptly replace the Vehicle or make restitution to Plaintiffs. (Id. at ¶¶ 9, 12, 16, 21, 24, 36.) In failing to repair the aforementioned defects and by virtue of their mere presence, Defendant also breached the terms of the written warranty and the implied warranty of merchantability. (Id. at ¶¶ 23-31.)

Finally, Defendant knew or should have known of the steering system defects in the Vehicle due to pre-production and post-production testing data, early consumer complaints about the defects made directly to Defendant and its network of dealers, aggregate warranty data compiled from the network of dealers, testing by Defendant in response to these complaints, as well as warranty repair and part replacements data received by Defendant from its network of dealers. (FAC, ¶¶ 46-51.) Plaintiffs assert that Defendant was aware of these defects in 2009, but concealed and failed to disclose them. (Ibid.) Had Plaintiffs known of the Vehicle’s defects, they would not have purchased it. (Id. at ¶ 51.)

After meeting and conferring with Plaintiffs regarding the foregoing allegations, Defendant filed the instant demurrer to the seventh cause of action of the FAC and motion to strike Plaintiffs’ request for punitive damages from the FAC on January 25, 2018. On May 9, 2018, Plaintiffs filed papers in opposition to both matters. Defendants subsequently filed reply papers on May 15, 2018.

Discussion

I. Demurrer

Defendant demurs to the seventh cause of action of the FAC on the grounds of uncertainty and failure to allege facts sufficient to constitute a cause of action. (See Code Civ. Proc., § 430.10, subds. (e) and (f).)

A. Legal Standard

The function of a demurrer is to test the legal sufficiency of a pleading. (Trs. Of Capital Wholesale Elec. Etc. Fund v. Shearson Lehman Bros. (1990) 221 Cal.App.3d 617, 621.) Consequently, “[a] demurrer reaches only to the contents of the pleading and such matters as may be considered under the doctrine of judicial notice.” (South Shore Land Co. v. Petersen (1964) 226 Cal.App.2d 725, 732, internal citations and quotations omitted; see also Code Civ. Proc., § 430.30, subd. (a).) “It is not the ordinary function of a demurrer to test the truth of the [ ] allegations [in the challenged pleading] or the accuracy with which [the plaintiff] describes the defendant’s conduct. [ ] Thus, [ ] the facts alleged in the pleading are deemed to be true, however improbable they may be.” (Align Technology, Inc. v. Tran (2009) 179 Cal.App.4th 949, 958, internal citations and quotations omitted.) However, while “[a] demurrer admits all facts properly pleaded, [it does] not [admit] contentions, deductions or conclusions of law or fact.” (George v. Automobile Club of Southern California (2011) 201 Cal.App.4th 1112, 1120.)

B. Uncertainty

Defendant demurs to the seventh cause of action for fraud by omission on the ground of uncertainty, but its memorandum of points and authorities is devoid of any argument specifying an allegation in the FAC that Defendant contends is uncertain, ambiguous, and/or unintelligible. Rather, Defendant’s arguments pertain to Plaintiffs’ purported failure to allege sufficient facts to state a claim. It appears that Defendant misunderstands the nature of uncertainty as a ground for demurrer. The law is settled that “[a] special demurrer for uncertainty is not intended to reach the failure to incorporate sufficient facts in the pleading but is directed at the uncertainty existing in the allegations already made.” (Butler v. Sequiera (1950) 100 Cal.App.2d 143, 145-146.) The “failure to specify the uncertain aspects of a complaint will defeat a demurrer based on the grounds of uncertainty.” (Fenton v. Groveland Community Services Dist. (1982) 135 Cal.App.3d 797, 809 overruled on other grounds by Katzberg v. Regents of University of California (2002) 29 Cal.4th 300, 328, fn. 30.)

Accordingly, the demurrer on the ground of uncertainty is OVERRULED.

C. Failure to Allege Facts Sufficient to State a Claim

Defendant asserts that the seventh cause of action for fraud by omission fails to allege facts sufficient to constitute a cause of action because: (1) the claim is time-barred by the applicable statute of limitations; (2) Plaintiffs’ allegations fail to establish a fraud by omission cause of action; (3) Plaintiffs’ concealment allegations are insufficient as a matter of law; (4) any alleged fraud lacks the requisite specificity; (5) concealment cannot be based on nonactionable puffery; and (6) the fraud claim is barred by the economic loss rule.

These arguments are identical to the arguments Defendant raised in its prior demurrer to the seventh cause of action of the complaint. As the Court previously articulated in its November 29, 2017 order, the vast majority of these arguments lack merit. The only argument that was not rejected by the Court related to the specificity of the fraud allegations. The Court found that the claim was deficient in this respect because “Plaintiffs should be required to specifically allege where they purchased the Vehicle, i.e., at which dealership.” Upon review of the FAC, Plaintiffs have cured this deficiency as they now allege that they purchased the Vehicle from Watsonville Cadillac Buick GMC in Watsonville, California. (FAC, ¶ 6.) As Defendant does not raise any new arguments and Plaintiffs cured the identified defect in the complaint, Defendant fails to demonstrate that the seventh cause of action does not state a claim for fraud by omission.

Accordingly, the demurrer on the ground of failure to allege sufficient facts to state a claim is OVERRULED.

II. Motion to Strike

With its motion to strike, Defendant moves to eliminate Plaintiffs’ request for punitive damages, arguing that (1) Plaintiffs have not sufficiently pleaded a fraud cause of action capable of supporting such damages and (2) punitive damages are not recoverable under the Song-Beverly Consumer Warranty Act and Magnuson Moss Act.

Defendant’s first argument is tied to the contention made in its demurrer that Plaintiffs have not stated a claim for fraud. Because the seventh cause of action survives Defendant’s demurrer, the claim may properly support Plaintiffs’ request for punitive damages. (See Stevens v. Super. Ct. (1986) 180 Cal.App.3d 605, 610 [a properly pleaded fraud claim will by itself support the recovery of punitive damages].)

Moreover, because the seventh cause of action by itself supports the request for punitive damages, it is immaterial that punitive damages are not recoverable under the Song-Beverly Consumer Warranty Act and Magnuson Moss Act.

Accordingly, the motion to strike the request for punitive damages is DENIED.