Case Name: Chaviers v. General Motors LLC
Case No.: 17-CV-312353

This is a lemon law action initiated by plaintiff Richard Chaviers (“Plaintiff”) against defendant General Motors LLC (“Defendant”).

According to the allegations of the complaint (“Complaint”), in April 2013, Plaintiff purchased a 2013 Chevrolet Equinox vehicle (“Vehicle”), which was manufactured and/or distributed by Defendant. (Complaint, ¶ 7.) In connection with the purchase, Plaintiff received an express warranty providing that Defendant would preserve or maintain the utility and performance of the Vehicle or provide compensation if there were a failure in those areas for a specific amount of time. (Id. at ¶ 8.) During the warranty period, the Vehicle developed certain defects, including those causing an abnormal ping noise coming from the engine, excessive amounts of oil to be used, the catalytic converter to prematurely fail, the exhaust manifold to prematurely fail, the engine to prematurely fail, and the engine to necessitate rebuilding. (Id. at ¶ 9.) Defendant did not service and/or repair the Vehicle to conform to the applicable express warranties, or replace it. (Id. at ¶ 10.)

Plaintiff asserts causes of action for violations of the Song-Beverly Consumer Warranty Act, breach of express written warranty, breach of the implied warranty of merchantability, violation of the Magnuson-Moss Warranty Act, and fraud by omission.
Defendant presently demurs to the seventh cause of action for fraud by omission on the ground of failure to state sufficient facts to constitute a cause of action and moves to strike portions of the pleading.

I. Request for Judicial Notice

In opposition, Plaintiff requests judicial notice of three unrelated federal district court decisions involving car manufacturers pursuant to Evidence Code sections 452 and 453. A precondition to taking judicial notice of any matter is its relevance to a material issue under review. (Silverado Modjeska Recreation and Park Dist. v. County of Orange (2011) 197 Cal.App.4th 282, 307, fn. 18.) Plaintiff fails to demonstrate how court documents from unrelated cases are relevant to a matter under review. Moreover, the Court is not bound by the rulings of other trial court judges. (Pereira-Goodman v. Anderson (1997) 54 Cal.App.4th 864, 872, fn. 5.) The request for judicial notice is therefore DENIED.

II. Demurrer

The seventh cause of action for fraud by omission alleges Defendant engaged in fraud by selling the Vehicle knowing it had a defective engine and failing to disclose as much to Plaintiff. (Complaint, ¶¶ 48-50.)
Defendant argues Plaintiff fails to state a claim because: (1) the cause of action is barred by the statute of limitations; (2) the cause of action is barred by the economic loss rule; and (3) he fails to adequately plead the elements of a fraudulent concealment claim.

A. Statute of Limitations

Defendant contends the seventh cause of action is time-barred. Defendant asserts the applicable limitations period set forth in Code of Civil Procedure section 338, subdivision (d) (“Section 338(d)”) required Plaintiff to initiate this action within three years of purchasing the Vehicle in April 2013 and he failed to do so since he only filed the Complaint on June 28, 2017, over one year after the limitations period elapsed in April 2016.

A general demurrer will lie where a statute of limitations defense appears clearly and affirmatively from the face of the complaint. (E-Fab, supra, 153 Cal.App.4th at pp. 1315-16.) A demurrer is not sustainable if there is only a possibility the cause of action is time-barred. (Ibid.) “In assessing whether [a] plaintiff’s claims against defendant are time-barred, two basic questions drive [the] analysis: (a) What statutes of limitations govern the plaintiff’s claims? (b) When did the plaintiff’s causes of action accrue?” (Id. at p. 1316.)

As to the applicable statute of limitations, Defendant aptly argues this claim is governed by the limitations period set forth in Section 338(d). Plaintiff does not dispute Section 338(d) applies here. That section provides the statute of limitations for any cause of action based on fraud is three years from the date of the discovery of the facts constituting the fraud. (Code Civ. Proc., § 338, subd. (d); Britton v. Girardi (2015) 235 Cal.App.4th 721, 734.)

The delayed discovery rule is codified in Section 338(d). (Cansino v. Bank of America (2014) 224 Cal.App.4th 1462, 1472.) “Under the delayed discovery rule, the limitations period does not begin to run until a plaintiff discovers or could have discovered through the exercise of reasonable diligence all facts essential to her cause of action.” (Sylve v. Riley (1993) 15 Cal.App.4th 23, 26.) To benefit from the delayed discovery rule, a plaintiff “must specifically plead facts to show (1) the time and manner of discovery and (2) the inability to have made earlier discovery despite reasonable diligence. The burden is on the plaintiff to show diligence, and conclusory allegations will not withstand demurrer.” (E-Fab, supra, 153 Cal.App.4th at p. 1319, original italics, citation and quotation marks removed.)

Defendant argues that since Plaintiff initiated this action more than three years after purchasing the Vehicle, he must plead facts reflecting his discovery of the fraud and why he did not discover it sooner. Defendant asserts Plaintiff only alleges the date of purchase and otherwise fails to allege any dates or method of discovery of the fraud.

Plaintiff responds that the face of the pleading itself does not reflect when he discovered the fraud, and therefore there are no facts suggesting when the cause of action actually accrued. Plaintiff maintains that he does not need to plead such facts. Plaintiff additionally argues the Complaint does not affirmatively indicate when the limitations period started running as Defendant’s omissions continued throughout various repair service visits to repair facilities. Plaintiffs urge the Court to apply the principle that the statute of limitations on a continuing tort cause of action does not begin to run until the commission of the last overt act in order to find they were not required to plead facts supporting delayed discovery with specificity.

Plaintiff’s continuing tort theory is underdeveloped and otherwise unpersuasive. For purposes of the statute of limitations, “[t]he continuing violation doctrine aggregates a series of wrongs or injuries . . ., treating the limitations period as accruing for all of them upon commission or sufferance of the last of them.” (Aryeh v. Canon Business Solutions (2013) 55 Cal.4th 1185, 1192.) Nothing in the Complaint, however, reflects the presence of factors warranting the application of this doctrine; there is only a bare allegation that the fraud occurred at the time of the sale and thereafter. The proposition that the statute of limitations for fraudulent concealment could be extended indefinitely despite actual or constructive knowledge of the fraud is incongruous.

Plaintiff otherwise misunderstands the application of Section 338(d). “Because the discovery rule operates as an exception to the statute of limitations, if an action is brought more than three years after commission of the fraud, [a] plaintiff has the burden of pleading and proving that he did not make the discovery until within three years prior to the filing of his complaint. To excuse failure to discover the fraud within three years after its commission, a plaintiff also must plead facts showing that he was not negligent in failing to make the discovery sooner and that he had no actual or presumptive knowledge of facts sufficient to put him on inquiry.” (Cansino, supra, 224 Cal.App.4th at p. 1472, internal citations and quotation marks omitted.) Because Plaintiff alleges the fraud occurred in April 2013 and he filed this action more than three years later, he must plead the statute of limitations was tolled in order to state a claim. To that end, Plaintiff asserts the limitations period was tolled for two reasons.

First, Plaintiff argues any person could not have discovered these defects until after a reasonable number of attempted repairs and the statute of limitations did not begin to run until he had attempted to repair the Vehicle shortly prior to initiating this action. If this is Plaintiff’s reason for not discovering the fraud sooner and how he discovered the fraud, he must allege as much in the Complaint. (See E-Fab, supra, 153 Cal.App.4th at p. 1319.) As stated above, these facts are not alleged in the pleading. As such, Plaintiff fails to plead facts reflecting the delayed discovery rule applies here.

Next, Plaintiff contends the Parenteau v. General Motors, LLC (C.D. Cal. No. 14-04961) (“Parenteau”) class action tolled the limitations period from June 25, 2014, the date that case was filed, until September 17, 2015, when it was dismissed. In support, Plaintiff cites American Pipe & Construction Co. v. Utah (1974) 414 U.S. 538 (“American Pipe”) for the proposition that “a statute of limitations is tolled during that time in which a class action, of which the plaintiffs are potential members, is awaiting certification.” (Opp., p. 15:2-3.)

In American Pipe, the court ruled the initiation of a class action tolls the limitations period for similar individual actions of each member of the purported class until certification is denied. (American Pipe, supra, 414 U.S. at p. 553.) This doctrine is narrowly applied in California; whether it applies is decided on a case-by-case basis as to “whether claims asserted in the class action have placed the defendant on notice of the claims at issue in the individual action” and whether it serves to further the economy and efficiency of litigation. (San Francisco Unified School District v. W.R. Grace & Co. (1995) 37 Cal.App.4th 1318, 1337, internal citation omitted.)

Plaintiff’s argument is problematic for several reasons. First, in ruling on a demurrer, a court may only review facts within the four corners of the pleading and any judicially noticeable material. (See Smiley v. Citibank (South Dakota) N.A. (1995) 11 Cal.4th 138, 146.) Plaintiff’s argument is based on extrinsic facts because he does not allege or request judicial notice of Parenteau or any facts reflecting how Parenteau affects the timeliness of his claim, such as facts as to when the action was initially filed, certified, or ultimately dismissed. Mere mention of these facts in an opposition memorandum is insufficient to establish that the filing of the Parenteau class action tolled the applicable limitations period for the fraud claim. Next, Plaintiff provides an inadequate explanation for the application of American Pipe tolling here. Plaintiff does not even assert Parenteau involved the same purported defects as in the instant case. Further, although Plaintiff argues the limitations period was tolled from June 25, 2014 to September 17, 2015, he does not explain the consequence of the tolling or how such tolling would render this action timely filed. As such, Plaintiff fails to plead facts demonstrating the statute of limitations was tolled based on the American Pipe tolling doctrine.

In sum, this action was initiated more than three years after Plaintiff allegedly purchased the Vehicle and the fraud was committed. Plaintiff failed to allege any tolling doctrine applies here. Consequently, the pleading reflects the seventh cause of action is time-barred.

B. Economic Loss Rule

Defendant contends the economic loss rule bars Plaintiff’s claim for fraud by omission. The economic loss rule provides that “where a purchaser’s expectations in a sale are frustrated because the product he bought is not working properly, his remedy is said to be in contract alone, for he has suffered only economic losses.” (Robinson Helicopter Co., Inc. v. Dana Corp. (2004) 34 Cal.4th 979, 988 (“Robinson”), internal citations and quotation marks omitted.) This doctrine hinges on a “distinction drawn between transactions involving the sales of goods for commercial purposes where economic expectations are protected by commercial and contract law, and those involving the sale of defective products to individual consumers who are injured in a manner which has traditionally been remedied by resort to the law of torts.” (Ibid., internal citations omitted.) The rule requires a purchaser to recover solely in contract for purely economic loss due to disappointed expectations unless he can demonstrate harm above and beyond a broken contractual promise. (Ibid.)

In Robinson, the California Supreme Court carved out an exception to the economic loss doctrine, holding it does not bar claims for fraud which are independent of the alleged breach of contract. (Robinson, supra, 34 Cal.4th at p. 991.) The court reasoned that a breach of contract remedy assumes the parties to a contract can negotiate the risk occasioned by a breach; given this negotiation, it is “appropriate to enforce only such obligations as each party voluntarily assumed, and to give him only such benefits as he expected to receive ….” (Ibid., citing Applied Equipment Corp. v. Litton Saudi Arabia Ltd. (1994) 7 Cal.4th 503, 517.) However, because a party to a contract could not “rationally calculate the possibility that the other party will deliberately misrepresent terms critical to that contract,” the court explained that public policy demanded that the party who is deceived be permitted to recover damages not limited to the contract. (Ibid.) Thus, where one party commits fraud during the contract formation or performance, the injured party may recover in contract and tort. (Ibid.; see also Harris v. Atlantic Richfield Co. (1993) 14 Cal.App.4th 79, 78.)

Defendant contends this exception does not apply here because it is only implicated in fraud claims based on affirmative misrepresentations and not omissions. This argument is not well-taken; Robinson does not stand for the proposition that a fraud cause of cause may only be brought when a plaintiff relies on a defendant’s affirmative representations when entering into a contract. The court in Robinson explicitly did not address the question whether a case involving material omissions, rather than affirmative misrepresentation, would similarly be exempt from the economic loss rule. (NuCal Foods, Inc. v. Quality Egg LLC (E.D. Cal. 2013) 918 F.Supp.2d 1023, 1031 (“NuCal”).) “The opinion strongly suggests no meaningful distinction exists between intentional concealment and intentional misrepresentation; rather, the material distinction is whether the tortious conduct was intentional or negligent.” (Ibid.) The Supreme Court in Robinson noted that in each instance where tort damages were allowed in breach of contract cases, “the duty that gives rise to tort liability is either completely independent of the contract or arises from conduct which is both intentional and intended to harm. [Citation.]” (Robinson, supra, 34 Cal.4th at p. 990.)

Here, like in Robinson, Plaintiff alleges that but for the alleged conduct, i.e., the fraudulent omissions, he would not have purchased the Vehicle. (Complaint, ¶ 56.) As such, Plaintiff alleges the contract was fraudulently induced and, therefore, the economic loss rule does not apply. Accordingly, the demurrer is not sustainable on the basis the seventh cause of action is barred by the economic loss rule.

C. Elements of the Claim

Defendant also contends Plaintiff fails to plead each element of his claim for fraud by omission and, to the extent he does plead such elements, they lack specificity. Defendant advances four arguments to that point.

First, Defendant argues Plaintiff fails to state a claim because he does not allege an actionable misrepresentation. Defendant appears to fundamentally misunderstand the nature of this claim. A fraudulent concealment claim is not based on an affirmative representation, but rather the concealment of a material fact. (See Jones v. ConocoPhillips (2011) 198 Cal.App.4th 1187, 1198 (“Jones”) [stating elements of fraudulent concealment claim].) Thus, the fact Plaintiff does not allege Defendant made any affirmative misrepresentations does not render this claim defective.

Second, Defendant contends Plaintiff failed to plead the claim with requisite specificity. Defendant asserts Plaintiff only makes conclusory allegations without providing evidentiary support that it was concealing material facts. Defendants argue Plaintiff must allege how, when, where, to whom, and by what means representations were tendered. Defendant believes Plaintiff is required to plead an array of supporting facts, such as: how it failed to repurchase the Vehicle, what facts support the Vehicle is unsafe, what specific repairs were made during the warranty period, where he purchased the Vehicle, who sold him the Vehicle, and how a threat of serious bodily injury is attributable to the alleged defect. Defendant also insists Plaintiff is required to allege facts supporting the allegation Defendant intended to defraud him and that he was damaged as a result of the concealment, which are two elements of a fraudulent concealment claim. (Jones, supra, 198 Cal.App.4th at p. 1198 [stating elements].) In opposition, Plaintiff responds that he adequately alleges all elements with requisite particularity.

Actions sounding in fraud must be pleaded with specificity. (West v. JPMorgan Chase Bank, N.A. (2013) 214 Cal.App.4th 780, 793.) This requirement applies to claims for fraudulent concealment. (Blickman Turkus, LP v. MF Downtown Sunnyvale, LLC (2008) 162 Cal.App.4th 858, 868.) This standard requires alleging more than a conclusion that fraud occurred; the allegations of fraud must be factual and specific. (Committee On Children’s Television, Inc. v. General Foods Corp. (1983) 35 Cal.3d 197, 216.) This heightened pleading standard has two purposes. The first purpose is to give the defendant notice of sufficiently definite charges so he or she can meet them. (Ibid.) The second is to permit a court to weed out meritless fraud claims at the pleading stage; thus, the pleading should be sufficient to enable the court to determine whether, on the facts pleaded, there is any foundation for the charge of fraud. (Ibid.)

Contrary to Defendant’s assertion, Plaintiff is not required to plead all details of who, when, where, how, and why any representation was made. Though the particularity requirement generally mandates that a plaintiff plead facts establishing the aforementioned items, a plaintiff asserting a cause of action for fraud by omission is not required to do so. (Alfaro v. Community Housing Imp. System & Planning Ass’n, Inc. (2009) 171 Cal.App.4th 1356, 1384.) This is because it is much more difficult to allege such details in a case of non-disclosure; “[h]ow does one show ‘how’ and ‘by what means’ something didn’t happen, or ‘when’ it never happened, or ‘where’ it never happened?” (Ibid.) Because Plaintiff’s claim is based on nondisclosure, he is not required to plead such facts. There is similarly no support for the proposition that Plaintiff must plead how Defendant failed to repurchase the Vehicle, what specific repairs were made during the warranty period, and how a threat of serious bodily injury is attributable to the alleged defect. Some of these facts, such as Defendant’s failure to repurchase the Vehicle, have no apparent connection to the fraud cause of action. The fraud claim is only predicated on Defendant’s concealment of the engine defects. Further, though not required to do so, Plaintiff alleges some of these facts. For example, Plaintiff pleads the defects are likely to pose a serious safety risk because they cause the Vehicle to randomly break down. (Complaint, ¶ 50.) Consequently, Defendant overstates the facts Plaintiff must allege to meet the heightened particularity standard.

Defendant’s argument is also problematic because Plaintiff adequately alleges the element of intent. Intent is a fact and not a legal conclusion; thus, the averment that a nondisclosure of a material fact was made with the intent to deceive the plaintiff, or any other general allegation with similar purport, is sufficient for pleading purposes. (Rosin v. Superior Court (1960) 181 Cal.App.2d 486, 490; Wennerholm v. Stanford University School of Medicine (1942) 20 Cal.3d 713, 716.) Here, Plaintiff alleges that “in failing to disclose the defects in the Vehicle’s 2.4L engine, Defendant has knowingly and intentionally concealed material facts and breached its duty not to do so.” (Complaint, ¶ 55.) This allegation is sufficient to plead the element of intent.

With that said, Plaintiff fails to plead his fraud claim with requisite specificity because he does not allege sufficient factual detail giving Defendant notice of his claim, such as exactly when and where he even purchased the Vehicle to enable it to determine when the fraud allegedly occurred. Plaintiff additionally fails to plead the element of damages with requisite particularity. He simply alleges he suffered damages as a result of Defendant’s concealment, but does not support that general and conclusory allegation with factual and specific allegations. (Complaint, ¶ 58.) As such, Plaintiff fails to plead all elements of his claim with particularity.

Third, Defendant insists Plaintiff fails to plead it had a duty to disclose any facts, which is an element of a fraudulent concealment claim. (Jones, supra, 198 Cal.App.4th at p. 1198.) There are four circumstances in which nondisclosure or concealment may constitute actionable fraud: “(1) when the defendant is in a fiduciary relationship with the plaintiff; (2) when the defendant had exclusive knowledge of material facts not known to the plaintiff; (3) when the defendant actively conceals a material fact from the plaintiff; and (4) when the defendant makes partial representations but also suppresses some material facts.” (LiMandri v. Judkins (1997) 52 Cal.App.4th 326, 336.) Defendant avers Plaintiff does not allege any facts reflecting any of these circumstances occurred. However, Plaintiff sufficiently alleges Defendant had exclusive knowledge of material facts not known to him, such as the existence of the Vehicle’s alleged engine and oil consumption defects. (Complaint, ¶¶ 51-52.) Thus, Plaintiff adequately alleges Defendant was under a duty to disclose facts relating to the Vehicle’s defects.

Last, Defendant argues a “concealment cannot be based upon nonactionable puffery,” which includes sales talk and forward-looking statements. (Mem. Ps. & As., p. 12:23-25.) Defendant admits the Complaint does not allege any statements made by its representatives whatsoever, but nonetheless insists that, to the extent Plaintiff may have relied on puffery, those statements are not actionable. Defendant’s argument is misguided because, as it recognizes, the face of the Complaint does not reflect Plaintiff relied on any “puffery” or affirmative statements. This is therefore not a basis for sustaining the demurrer.
In sum, Plaintiff fails to adequately state a claim for fraud by omission because he does not allege it with requisite particularity.

D. Conclusion

Accordingly, the demurrer to the seventh cause of action on the ground of failure to state sufficient facts to constitute a cause of action is SUSTAINED with 10 days leave to amend on the bases it is time-barred and not pleaded with requisite particularity.

III. Motion to Strike

Defendant moves to strike the request for punitive damages in paragraph f of the prayer for relief.

On a motion to strike portions of a pleading under Code of Civil Procedure section 435, a court may strike out any irrelevant or improper matter inserted in the pleading. (Code Civ. Proc., § 436, subd. (a).) Irrelevant matter includes a demand for judgment requesting relief not supported by the allegations of the complaint. (Code of Civ. Proc., § 431.10, subds. (b), (c).)

Section 3294, subdivision (a) provides punitive damages are recoverable where the defendant is guilty of malice, oppression or fraud. In order “[t]o support punitive damages, the complaint . . . must allege ultimate facts of the defendant’s oppression, fraud, or malice.” (Cyrus v. Havenson (1976) 65 Cal.App.3d 306, 316-317, internal citations omitted.) Simply pleading the terms malice, oppression or fraud by themselves is insufficient to support a claim for punitive damages; a plaintiff must allege sufficient facts supporting that existence of malice, oppression, or fraud. (Blegen v. Superior Court (1981) 125 Cal.App.3d 959, 963.) Plaintiff does not allege whether his request for punitive damages is predicated on malice, oppression, or fraud. In opposition to this motion, Plaintiff asserts he is entitled to an award of punitive damages based on his fraud claim and the causes of action for violations of the Song-Beverly Consumer Warranty Act (“Song-Beverly Act”) and Magnuson-Moss Act.

First, Defendant argues Plaintiff fails to allege entitlement to punitive damages based on his fraud claim because he failed to state a claim for fraud. Fraud “means an intentional misrepresentation, deceit, or concealment of a material fact known to the defendant with the intention on the part of the defendant of thereby depriving a person of property or legal rights or otherwise causing injury.” (Civ. Code, § 3294, subd. (c)(3).) Any properly pleaded claim for fraud will support recovery of punitive damages. (Stevens v. Superior Court (1986) 180 Cal.App.3d 605, 610.) As discussed above, Plaintiff failed to adequately plead a fraud cause of action. Therefore, Plaintiff does not plead facts reflecting entitlement to punitive damages based on that fraud. (See Blegen v. Superior Court, supra, 125 Cal.App.3d at p. 963 [entitlement to damages may not be generally pleaded].)

Second, Defendant contends Plaintiff is not entitled to an award of punitive damages based on his causes of action for violations of the Song-Beverly Act and the Magnuson-Moss Act because they do not authorize the recovery of punitive damages.

Under the Song-Beverly Act, a plaintiff is expressly permitted to recover actual damages plus a civil penalty of up to two times those actual damages if the statutory violations are willful or if a manufacturer breaches an express warranty by refusing to make restitution after reasonable repair attempts fail. (Civ. Code, § 1794, subds. (c) and (e).) It is well-settled that the civil penalty provided under the Song-Beverly Act is distinct from punitive damages available under Civil Code section 3294. (Troensegaard v. Silvercrest Industries, Inc., 175 Cal.App.3d 218, 226, 228.) As such, the Song-Beverly Act does not authorize an award of punitive damages.

Next, the Magnuson-Moss Act provides for a federal cause of action for state law express and implied warranty claims. (15 U.S.C. §§ 2301-2312.) The Act does not provide an independent basis for recovery of punitive damages; instead, the underlying state law must entitle a plaintiff to an award of punitive damages. (See Kelly v. Fleetwood Enter. (9th Cir. 2004) 377 F.3d 1034; Romo v. FFG Ins. Co. (C.D. Cal. 2005) 397 F.Supp.2d 1237, 1241.) Because the Song-Beverly Act does not provide a basis for awarding punitive damages here, neither does the Magnuson-Moss Act.

Accordingly, the motion to strike the request for punitive damages is GRANTED with 10 days leave to amend. Paragraph f of the prayer for relief is hereby stricken.

The Court shall prepare the Order.