Case Name: Julian & Madeline Ponce v. General Motors, LLC, et al.
Case No.: 17CV317682

This is a lemon law action brought by Plaintiffs Julian Ponce and Madeline Ponce (collectively “Plaintiffs”) against General Motors, LLC (“Defendant”) and Does. This action is one of a series of such cases brought in the various law and motion departments of this Court in which nearly identical demurrers to nearly identical pleadings have been filed, with essentially the same arguments being made each time in each case.+

Plaintiffs’ Complaint, filed October 18, 2017, states claims for: (1) violation of Civil Code section 1793.2, subdivision (d), which is part of the Song-Beverly Consumer Warranty Act (“Song-Beverly Act”); (2) violation of Civil Code section 1793.2, subdivision (b); (3) violation of Civil Code section 1793.2, subdivision (a)(3); (4) breach of express written warranty; (5) breach of the implied warranty of merchantability; (6) violation of the Magnuson-Moss Warranty Act (“Magnuson-Moss Act”); and (7) fraud by omission.

Currently before the Court is 1) Defendant’s demurrer to the seventh cause of action only on grounds of uncertainty and failure to state sufficient facts, (see Notice of Demurrer and Demurrer at 2:2-12) and; 2) Defendant’s motion to strike the request for punitive damages in the Complaint’s prayer at f (see Notice of Motion at 2:1-3.).

Demurrer to the Complaint
In ruling on a demurrer, the Court treats it “as admitting all material facts properly pleaded, but not contentions, deductions or conclusions of fact or law.” (Piccinini v. Cal. Emergency Management Agency (2014) 226 Cal.App.4th 685, 688, citing Blank v. Kirwan (1985) 39 Cal.3d 311, 318.) “A demurrer tests only the legal sufficiency of the pleading. It admits the truth of all material factual allegations in the complaint; the question of plaintiff’s ability to prove these allegations, or the possible difficulty in making such proof does not concern the reviewing court.” (Committee on Children’s Television, Inc. v. General Foods Corp. (1983) 35 Cal.3d 197, 213-214.)

As an initial matter Defendant’s demurrer to the seventh cause of action on uncertainty grounds is OVERRULED. Uncertainty is a disfavored ground for demurrer and is typically sustained only where the pleading is so bad the responding party cannot reasonably respond. (See Khoury v. Maly’s of Cal., Inc. (1993) 14 Cal.App.4th 612, 616 [“A demurrer for uncertainty is strictly construed, even where a complaint is in some respects uncertain, because ambiguities can be clarified under modern discovery procedures.”]) Defendant has failed to make any argument in support of this ground for demurrer and its other arguments indicate it understands what is alleged.

Defendant’s demurrer to the seventh cause of action on the ground that it fails to state sufficient facts because it is time-barred under the three-year statute of limitations for fraud, Code of Civil Procedure (“CCP”) § 338(d) is OVERRULED. “A complaint showing on its face the cause of action is barred by the statute of limitations is subject to general demurrer.” (Iverson, Yoakum, Papiano & Hatch v. Berwald (1999) 76 Cal.App.4th 990, 995.) The running of the statute must appear clearly and affirmatively from the dates alleged—it is not enough that the complaint might be barred. (Committee for Green Foothills v. Santa Clara County Board of Supervisors (2010) 48 Cal.4th 32, 42.) Generally, the limitations period starts running when the last element of a cause of action is complete.” (NBCUniversal Media, LLC v. Super. Ct. (2014) 225 Cal.App.4th 1222, 1231.) Under CCP § 338(d), the cause of action accrues once the aggrieved party discovers the facts constituting the fraud. (Britton v. Girardi (2015) 235 Cal .App.4th 721, 734.)

Here the Complaint states (at 17) that the subject vehicle was purchased “[o]n or about December of 2010,” and states (at 74) that Plaintiffs discovered Defendant’s “wrongful conduct . . . at or around the time they requested a buyback of Vehicle” from Defendant “in or around January of 2017.” “When a plaintiff relies on a theory of fraudulent concealment, delayed accrual, equitable tolling, or estoppel to save a cause of action that otherwise appears on its face to be time-barred, he or she must specifically plead facts which, if proved, would support the theory.” (Mills v. Forestex Co. (2003) 108 Cal.App.4th 625, 641.) The Complaint also alleges (at 64-70) that in February 2013 Defendant took steps intended to conceal the existence of the alleged defect from vehicle owners and allay suspicions. As these factual allegations are accepted as true for purposes of demurrer, the statute of limitations defense is not clearly and affirmatively apparent from the face of the Complaint.

Next Defendant argues the seventh cause of action fails to state sufficient facts because it is barred by the economic loss rule, citing Robinson Helicopter Co., Inc. v. Dana Corp. (2004) 34 Cal.4th 979 (Robinson) and asserting 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. Defendant also claims that Plaintiffs fail to identify any damage independent of their contractual damages.

This is not persuasive. First, Robinson does not stand for the proposition that 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. As explained in Robinson, under the economic loss rule, a purchaser may only “recover in contract for purely economic loss due to disappointed expectations, unless he can demonstrate harm above and beyond a broken contractual promise.” (Robinson, supra, 34 Cal.4th at p. 988.) However, “[t]ort damages have been permitted in contract cases where a breach of duty directly causes physical injury; for breach of the covenant of good faith and fair dealing in insurance contracts; for wrongful discharge in violation of fundamental public policy; or where the contract was fraudulently induced” because in each of those 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.” (Id. at pp. 989-990 [internal citations omitted and emphasis added].) 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) citing Robinson, supra, 34 Cal.4th at p. 991 [“Because Dana’s affirmative intentional misrepresentations of fact (i.e., the issuance of the false certificates of conformance) are dispositive fraudulent conduct related to the performance of the contract, we need not address the issue of whether Dana’s intentional concealment constitutes an independent tort.”].)

In fact, “[t]he 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.” (NuCal, supra, 918 F.Supp.2d at p. 1031.) The 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.) “In short, the ‘economic loss rule is designed to limit liability in commercial activities that negligently or inadvertently go awry, not to reward malefactors who affirmatively misrepresent and put people at risk.’ ” (NuCal, supra, 918 F.Supp.2d at p. 1033 citing Robinson, supra, 34 Cal.4th at p. 991 n. 7.) Here, like in Robinson, but for the alleged conduct (i.e., the intentional fraudulent omissions), Plaintiffs would not have purchased the Vehicle. (See Complaint at 78; see also Robinson, supra, 34 Cal.4th at pp. 990–91 [“But for Dana’s affirmative misrepresentations by supplying the false certificates of conformance, Robinson would not have accepted delivery and used the nonconforming clutches over the course of several years ….”].) Therefore, Defendant’s alleged tortious conduct was separate from the breach of the express warranty. The demurrer to the seventh cause of action on the ground that it is barred by the economic loss rule is OVERRULED.

Finally, Defendant contends that the seventh cause of action fails to state sufficient facts in that it does not allege “fraud by omission” with the required specificity. Fraud requires a) misrepresentation (false representation, concealment or nondisclosure); b) Knowledge of falsity; c) intent to defraud/induce reliance; d) justifiable reliance; and e) resulting damage. (Philipson & Simon v. Gulsvig (2007) 154 Cal.App.4th 347, 363.) “[F]raud must be pled specifically; general and conclusory allegations do not suffice.” (Lazar v. Superior Court (1996) 12 Cal.4th 631, 645.) Defendant’s arguments that Plaintiffs do not adequately allege misrepresentation are inapplicable (and beg the question of how closely has Defendant read the Complaint) as the Complaint plainly alleges “fraud by omission.” “A failure to disclose a fact can constitute actionable fraud or deceit in four circumstances: (1) when the defendant is the plaintiff’s fiduciary; (2) when the defendant has exclusive knowledge of material facts not known or reasonably accessible to the plaintiff; (3) when the defendant actively conceals a material fact from the plaintiff; and (4) when the defendant makes partial representations that are misleading because some other material fact has not been disclosed.” (Collins v. eMachines, Inc. (2011) 202 Cal.App.4th 249, 255.)

Though the particularity requirement generally mandates that a plaintiff plead facts demonstrating “how, when, where, to whom and by what means” the fraud was made, this rule is relaxed in cases of fraudulent non-disclosure because, as one court explained, “[h]ow does one show ‘how’ and ‘by what means’ something didn’t happen, or ‘when’ it never happened, or ‘where’ it never happened?” (Alfaro v. Community Housing Imp. System & Planning Ass’n., Inc. (2009) 171 Cal.App.4th 1356, 1384.)

Defendant argues that because no fiduciary relationship is alleged to exist, in order to state sufficient facts Plaintiff must specifically plead that misleading partial misrepresentations were made. This is simply incorrect, a fraudulent nondisclosure claim can be based on a failure to disclose material facts exclusively known to a defendant and not reasonably accessible to a plaintiff. (See Collins, supra.) The seventh cause of action (Complaint at 57-80) adequately alleges this.

Defendant also argues that the Complaint fails to allege with adequate specificity its knowledge of the purported defect and intent to conceal it. This is also unpersuasive. While the general rule is that all elements of fraud must be pled with specificity, in practice this is not the case. Because a Defendant’s knowledge of falsity is a fact, it may be generally pled. (See 5 Witkin, Cal. Procedure (5th Ed., 2008) Pleading §726.) “Intent, like knowledge, is a fact. Hence, the averment that the representation was made with the intent to deceive the plaintiff, or any other general allegation with similar purport, is sufficient.” (Id., at §728, emphasis added.) The seventh cause of action adequately alleges that at the time the subject vehicle was purchased Defendant itself knew of the purported defect and later took steps (such as attempting to hide it with a software update) to conceal it from customers such as Plaintiff. (See Complaint at 57-80.) Plaintiffs’ ability to prove these allegations is irrelevant on demurrer.

However, Defendant does also point out that the Complaint fails to even allege where and from whom the subject vehicle was purchased. Plaintiffs do not allege that they purchased the subject vehicle from Defendant. The Complaint (at 17) merely alleges that Plaintiffs “purchased the Vehicle from a person or entity engaged in the business of manufacturing, distributing, or selling consumer goods at retail.” This is not sufficient. While the specific pleading requirement is relaxed where fraudulent non-disclosure is alleged, it is not eliminated, and where and from whom the vehicle was purchased are facts within Plaintiffs’ knowledge that should be alleged. Accordingly the demurrer to the seventh cause of action on the ground of failure to state sufficient facts is SUSTAINED with 10 days’ leave to amend solely on the basis that Plaintiffs must alleges where and from whom the subject vehicle was purchased.

Motion to Strike Complaint’s request for punitive damages
Pursuant to CCP § 436 the Court may strike out any irrelevant, false, or improper matter inserted into any pleading or strike out all or part of any pleading not drawn or filed in conformity with the laws of this state, a court rule, or an order of the court. The grounds for a motion to strike must appear on the face of the challenged pleading or from matters of which the court may take judicial notice. (CCP § 437, subd. (a).)

As previously noted, Defendant moves to strike the request for punitive damages in the Complaint’s prayer at “f” (see Notice of Motion at 2:1-3.) Defendant claims that Plaintiffs have not sufficiently pled a cause of action that would support an award of punitive damages. The request for punitive damages in the Complaint’s prayer is not tied to any particular cause of action.

To recover punitive damages, a plaintiff must plead facts sufficient to show that the defendant is guilty of oppression, fraud, or malice. (See Civ. Code §3294.) “‘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 intentional misrepresentation or fraud will support recovery of punitive damages. (See Stevens v. Sup. Ct. (St. Francis Med. Ctr.) (1986) 180 Cal.App.3d 605, 610; Alliance Mortgage Co. v. Rothwell (1995) 10 Cal.4th 1226, 1241 [stating that punitive damages recoverable for fraud actions involving intentional, but not negligent, misrepresentations].)

As the demurrer to the seventh cause of action has been sustained with leave to amend, the “fraud by omission” claim does not currently support the request for punitive damages. If Plaintiff amends to allege where and from whom the subject vehicle was purchased the seventh cause of action will then be adequately pled and will support a request for punitive damages. Unless and until that happens the Complaint does not state any other basis for punitive damages. The Song-Beverly Act allows for the imposition of a civil penalty but this is distinct from an award of punitive damages. (See Troensegaard v. Silvercrest Industries, Inc. (1985) 175 Cal.App.3d 218, 226, 228.) Arguably, by seeking a civil penalty and attorney’s fees as allowed by Civil Code § 1794, Plaintiffs have elected to waive any punitive damages potentially available. (See Troensegaard, supra, at p. 228.) Punitive damages are also not independently available under the federal Magnusson-Moss Act.

Accordingly the motion to strike paragraph “f.” of the Complaint’s prayer is GRANTED with 10 days’ leave to amend.