2018-00234006-CU-TT

Seanne Villanueva vs. 3M Company

Nature of Proceeding: Hearing on Demurrer to Complaint

Filed By: Subramanian, Vikram

Defendant PressTek, LLC’s (“PTL”) demurrer to the complaint is ruled on as follows.

The notice of demurrer does not provide notice of the court’s tentative ruling system, as required by Local Rule 1.06. Moving counsel is directed to contact opposing counsel and advise him/her of Local Rule 1.06 and the court’s tentative ruling procedure and the manner to request a hearing. If moving counsel is unable to contact opposing counsel prior to hearing, moving counsel is ordered to appear at the hearing in person or by telephone.

Opposing counsel failed to comply with CRC Rule 3.1110(b)(3)-(4).

Factual Background

This is a personal injury action. Plaintiffs Seanne and Steven Villanueva allege that Seanne has worked as a graphic designer for California Professional Firefighters since 1986 and during her employment, she has been exposed to hazardous chemicals which have caused injuries to her internal organs, including multiple myeloma. Plaintiffs bring causes of action against multiple defendants including PTL for (1) negligence, (2) failure to warn, (3) design defect, (4) fraudulent concealment, (5) breach of implied warranties, and (6) loss of consortium.

PTL now demurs only to the fraudulent concealment cause of action on the ground it fails to state sufficient facts and is also fatally uncertain. More specifically, PTL insists plaintiffs failed to plead facts which establish that PTL had a duty of disclosure particularly in the absence of any allegation of a “transaction” involving plaintiffs and PTL or a fiduciary relationship between them, citing the Fourth District Court of Appeal’s decision of Bigler-Engler v. Breg, Inc. (2017) 7 Cal.App.5th 276.

Plaintiffs oppose, arguing that the present demurrer (like the recent demurrer by defendant Grafsolve LLC) should be overruled based on the Jones v. ConocoPhillips Co. (2011) 198 Cal.App.4th 1187, a Second District Court of Appeal decision, and this court’s prior determination that the complaint adequately pleads each element essential to pleading a fraudulent concealment claim, especially when a relaxed pleading standard is appropriate in light of the assertion that defendants necessarily possess knowledge of the facts.

Analysis

At the outset, the court recognizes that the specific argument now advanced by PTL ( i.e., plaintiffs failed to plead facts sufficient to establish PTL owed a duty of disclosure) was not explicitly raised in defendant Grafsolve’s recent demurrer, which instead asserted in pertinent part that plaintiffs’ boilerplate conclusory allegations were insufficient to satisfy the more rigorous pleading standard applicable to all fraud claims inasmuch as the complaint does not (1) identify any specific act or omission by Grafsolve, (2) allege Grafsolve intentionally concealed any particular material fact from plaintiffs or did so with the intent to defraud, and (3) provide facts demonstrating Grafsolve’s concealment was a substantial factor in plaintiff’s decision to use Grafsolve’s products. It is worth noting that the Bigler-Engler decision on which PTL now relies was cited in neither Grafsolve’s moving nor reply papers and perhaps more importantly, was not even considered by this court in ruling on Grafsolve’s earlier demurrer.

The court has reviewed and considered both the Bigler-Engler and Jones decisions on which the parties primarily rely, finding that they are fundamentally in conflict on the question of whether the defendant who provided the product allegedly causing injury had a duty to disclose, a prima facie element of a fraudulent concealment cause of action. Curiously, both the Second and Fourth Districts’ analysis on the issue of duty of disclosure appear to be predicated on the same precedent: LiMandri v. Judkins (1997) 52 Cal.App.4th 326, itself a Fourth District Court of Appeal opinion. Because this court has been unable to locate any decision from the Third District Court of Appeal which either addresses the circumstances when a duty to disclose may arise or otherwise resolves the split of authority, this court is tasked with determining whether to follow the guidance of Bigler-Engler or Jones.

Jones v. ConocoPhillips Co. Factually, it was alleged in Jones that the decedent was injured during his employment as a result of exposure to various toxic chemicals manufactured by the defendants, who successfully demurred to the complaint alleging products liability and other claims on the grounds there were no specific facts pled regarding the particular toxins and products involved. The Second District Court of Appeal reversed, explaining that the conclusory allegations were sufficient establish the element of causation attributed to harmful long-term exposure to multiple toxins absent knowledge of the precise cause of injury. The appellate court also determined that the allegations about each manufacturer concealing or failing to disclose the toxic properties of its product was enough to plead a claim for fraudulent concealment and that because the decedent was employed by purchasers of the hazardous products for use in the workplace, the breach of implied warranty claim was not barred by the usual requirement of privity.

With respect to the question of the defendants’ duty to disclose, Jones acknowledged that such a duty typically arises where there is a fiduciary relationship but may also be found arise when a defendant possesses or exerts control over material facts not readily available to the plaintiff, citing Magpali v. Farmers Group, Inc. (1996) 48 Cal.App.4th 471, 482 [“‘[t]he duty to disclose may arise without any confidential relationship where the defendant alone has knowledge of material facts which are not accessible to the plaintiff’”].) The Jones court then considered LiMandri, concluding that all of the circumstances cited in LiMandri under which a duty to disclose may exist in the absence of a fiduciary relationship concern[] the defendant’s exertion of control over material facts that were not disclosed to the plaintiff, that is, “ ‘when the defendant ha[s] exclusive knowledge of material facts not known to the plaintiff’ ”; “ ‘when the

defendant actively conceals a material fact from the plaintiff’ ”; or “ ‘when the defendant makes partial representations but also suppresses some material facts.’ ” (Jones, at 1199 (citing LiMandri, at 336).) In light of this precedent, the Second District held that the conclusory allegations in the Jones complaint that the defendants were “aware of the toxic nature of their products;” “owed a duty to disclose the toxic properties of their products to [the decedent] because [the defendants] alone had knowledge of material facts, to wit the toxic properties of their products, which were not available to [the decedent];” and owed a duty to disclose because they “made representations regarding their products, but failed to disclose additional facts which materially qualify the facts disclosed, and/or which rendered the disclosures made likely to mislead [the decedent]” were sufficient to state a viable claim for fraudulent concealment. (Jones, at 1199-1200.)

Bigler-Engler v. Breg, Inc. This case arose from injuries suffered as a result of a youth’s use of a “cold therapy” medical device following knee surgery, with the plaintiff ultimately prevailing against the manufacturer of the device based on claims of design defect, failure to warn, misrepresentation and concealment, as well as malpractice claims against the doctor prescribing the device. On appeal, the defendants raised numerous challenges to the judgment and as to the concealment claim, the manufacturer argued it had no duty to disclose “because there was no transactional relationship” between [it and the plaintiff].” (Bigler-Engler, at 284, 311.) The Fourth District Court of Appeal cited its earlier decision in LiMandri, which found four situations in which nondisclosure 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. (Bigler-Engler, at 311 (citing LiMandri, at 336).)

In short, in the absence of a fiduciary relationship, the Fourth District concluded there is no liability for nondisclosure unless one of the latter three scenarios exists but each of the three “presuppose[s] the existence of some other relationship between the plaintiff and defendant in which a duty to disclose can arise.” (Id. (underline added for emphasis).) Cited as additional support for this proposition was not only Shin v. Kong (2000) 80 Cal.App.4th 498, where the First District Court of Appeal explained that a duty to disclose facts arises only when the parties are in a relationship that gives rise to the duty (e.g., seller and buyer, employer and prospective employee, doctor and patient, parties to a contract) but also Warner Construction Corp. v. City of Los Angeles (1970) 2 Cal.3d 285, where the California Supreme Court described the relationship necessary to give rise to a duty to disclose as a “transaction” between the plaintiff and the defendant. (Id.) More specifically, the High Court stated in pertinent part:

“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.”

(Bigler-Engler, at 311 (citing Warner Construction Corp., at 294); see also, LiMandri, at 337 [“As a matter of common sense, such a relationship can only come into being as a result of some sort of transaction between the parties.”].)

Consequently, Bigler-Engler concluded that such a “transaction” cannot arise between a defendant and the public at large but instead “must necessarily arise from direct dealings between the plaintiff and the defendant.” (Bigler-Engler, at 312 (underline added for emphasis).)

In response to the plaintiff’s argument that other legal doctrines permit the imposition of liability for nondisclosures without evidence of any “transaction” between the plaintiff and the defendant such as a manufacturer’s duty to warn consumers about its product’s hazards, the Fourth District clarified that the examples which the plaintiff proffered all involved claims based on strict liability for product defect rather than claims based on fraud by concealment and found no justification for extending any duty existing in the product liability context to a cause of action for fraudulent concealment, given their different circumstances, elements, doctrines and policy considerations. (Id.)

Bigler-Engler Is More Persuasive. This trial court finds that the analysis and reasoning of the Bigler-Engler decision to be more persuasive than that found in Jones

. Although Jones may be more procedurally similar to the case at bar, the Second District Court of Appeal appears to have overlooked a critical limitation which was set forth not only in LiMandri and other appellate decisions like Shin v. Kong but also in the California Supreme Court’s Warner Construction Corp. opinion. While Jones broadly suggests that a duty to disclose may exist without a fiduciary relationship whenever the defendant exerts some control over material facts that were not disclosed to the plaintiff (by virtue of exclusive knowledge of material facts not known to the plaintiff, active concealment of material facts or partial suppression of material facts), Bigler-Engler followed LiMandri by considering whether the defendant had either a transaction or other relationship with the injured plaintiff which might give rise to a duty to disclose and the imposition of liability on a fraudulent concealment theory, as distinguished from a less onerous product defect theory.

As pointed out above, LiMandri stands for the proposition that before a defendant’s nondisclosure of a material fact may constitute actionable fraud, it must be established that the defendant owed a fiduciary duty to the plaintiff or had some other transactional relationship with the plaintiff which warrants the imposition of a duty to disclose, such as seller/buyer, employer/prospective employee, doctor/patient, etc. (Bigler-Engler, at 311 (citing LiMandri, at 336; Shin, at 509).) However, this requirement of a transactional relationship giving rise to a duty to disclose was not conceived by the Fourth District but rather has its roots in California Supreme Court precedent. In Warner Construction Corp., the High Court emphasized the necessity of either a fiduciary relationship or some other “transaction” between the plaintiff and the defendant in order for the latter to liable for nondisclosure (Bigler-Engler, at 311 (citing Warner Construction Corp., at 294), and the Fourth District reasoned that the requisite transactional relationship “must necessarily arise from direct dealings between the plaintiff and the defendant.” (Bigler-Engler, at 312 (underline added for emphasis).)

Since the complaint at issue in the present demurrer and more specifically, the fourth

cause of action for fraudulent concealment, does not currently allege facts which establish the existence of any particular “transaction” between plaintiffs and PTL or a fiduciary relationship between them, this court will sustain PTL’s demurrer to the fraudulent concealment claim pursuant to the reasoning set forth in Bigler-Engler.

Conclusion

Based on the foregoing, PTL’s demurrer to complaint is sustained.

As this is the first challenge to the complaint, leave to amend is granted. Plaintiffs may file and serve an amended complaint no later than 12/14/2018. Although not required by court rule or statute, plaintiffs are directed to present a copy of this order when the amended complaint is presented for filing.

PTL to respond within 30 days if the amended complaint is personally served, 35 days if served by mail.

This minute order is effective immediately. No formal order or other notice is required. (Code Civ. Proc. §1019.5; CRC Rule 3.1312.)