Case Number: EC061856    Hearing Date: July 25, 2014    Dept: NCD

TENTATIVE RULING (7-25-14)
#11
EC 061856
MERCEDES-BENZ FINANCIAL SERVICES, USA LLC v. HAROUN

Demurrer of Mercedes-Benz Financial Services USA LLC to Defendant’s Cross-Complaint

TENTATIVE:
Demurrer is OVERRULED as untimely and on its merits.
Ten days to answer.

CAUSES OF ACTION: from Cross-Complaint
1) Action Provided by Civil Code 1770 et seq.
2) Fraud
3) Relief Provided by Business & Professions Code sec. 17200
4) Action for Indemnity and Contribution
5) Action Apportionment of Fault

SUMMARY OF FACTS:
Plaintiff Mercedes-Benz Financial Services USA , LLC brings this action alleging that it is the assignee of a Motor Vehicle Lease Agreement entered between Calstar Motors and defendant Samir B. Haroun for the lease of a vehicle. The complaint alleges that defendant has defaulted in lease payments due under the agreement, as the result of which plaintiff is entitled to immediate possession of the vehicle as well as damages. The complaint alleges causes of action for breach of contract, common count, claim and deliver, and conversion.

Defendant Haroun has filed a cross-complaint against plaintiff and Calstar Motors alleging that during a transaction with Calstar, acting as the leasing agent for Mercedes Financial, cross-defendants represented that Haroun could trade in his recently purchased E350 vehicle for a ML350 leased vehicle pursuant to a Winter Sales Event rebate offer for a rebate of $4,000 and a waiver of the first five months lease payments. Cross-defendant Calstar told Haroun it would assist him in obtaining a buyer for the E350, and it would therefore not be necessary to trade in the vehicle. This was important to cross-complainant because he knew he could not afford the monthly payments on both vehicles. The cross-complaint alleges that cross-defendants then had him execute documents which did not include the E350 as a trade in and did not reflect the terms of the contract as he understood them, and have since repossessed the E350, sought to recover for an alleged deficiency balance as a result of the refusal of Calstar to assist in obtaining a buyer for the E350, and have modified the contract date in connection with the lease of the ML350.

ANALYSIS:
Procedural
Untimely Demurrer
CCP § 430.40(a) provides “A person against whom a complaint or cross-complaint has been filed may, within 30 days after service of the complaint or cross-complaint, demur to the complaint or cross-complaint.”

CRC Rule 3.110(d) provides:
“The parties may stipulate without leave of court to one 15-day extension beyond the 30-day time period prescribed for the response after service of the initial complaint.”

In this case, the FACC was served on February 18, 2014, by mail. The demurrer was filed on May 8, 2014, which was 78 days after service. Taking into account service by mail, this is 63, days late, well beyond any permitted period to respond. The demurrer is untimely and may be overruled on this ground.

Substantive
First Cause of Action— Action Provided by Civil Code 1770 et seq.
The cross-complaint here alleges that cross-defendants, expressly including Mercedes Financial, engaged in numerous violations of this statute, including representing the goods or serviced had characteristics or benefits they did not have, advertising goods with intent not to sell them as advertised, and representing facts concerning the transaction, in connection with the terms of the lease agreement, the alleged trade-in and agreement to assist in finding a buyer, and the contract date. [Para. 34].

The demurrer argues that the cross-complaint fails to sufficiently state a claim against Mercedes Financial which was not involved in the transaction, but was assigned the contract at a later date. This is not what is alleged in the pleading, however. The cross-complaint alleges that Calstar was acting as the leasing agent for MBFS. [Para. 24]. It is also alleged that the pre-printed form lease had been supplied to Calstar by defendant Mercedes Financial, and that “in making the representations concerning the terms of the lease, Cross-Defendant CALSTAR was acting as the agent of Cross-Defendant MERCEDES FINANCIAL.” [Para. 29].

This is sufficient to allege that Mercedes Financial was responsible for the conduct alleged to have been engaged in by Calstar in connection with the transaction. The demurrer relies on LaChapelle v. Toyota Motor Credit Corp. (2002) 102 Cal.Ap.4th 977, in which the court of appeal affirmed the judgment of dismissal entered by the trial court on a complaint for, among other claims, violation of the Consumer Legal Remedies Act, after the trail court granted a motion for summary judgment brought by a credit corporation in a vehicle leasing transaction. The court of appeal addressed the argument by the consumer that the dealer’s conduct in that case could be imputed to the financing agency on principles of agency, discussing the issue in pertinent part as follows:
“***the act of supplying a form for use by a dealer does not provide evidence of an agency relationship. Respondents, therefore, cannot be charged with having done something suggesting an agency relationship by supplying the form used by the dealer. Moreover, appellant never established that she in fact believed that the dealer was acting on behalf of respondents in negotiating the terms of the lease.”
LaChapelle, at 992.

As pointed out in the opposition, LaChapelle was determined on summary judgment, not on demurrer, based on a factual showing that basically established that the only agency evidence plaintiff possessed was that the dealer had used forms supplied by the financing agency. Here, it is not clear from the pleading that Mercedes Financial acted solely as a financing agency, nor that the only facts to support agency are that Mercedes supplied forms. The demurrer is overruled.

Second Cause of Action—Fraud
Generally, in a fraud cause of action, a plaintiff must allege specifically how, what, where, to whom and by what means a defendant made a misrepresentation. Stansfield v. Starkey (1990) 220 Cal.App.3d 59, 73. When such a claim is made against a corporation, the level of specificity required is even higher. Under Lazar v. Superior Court, (1996) 12 Cal.4th 631, 645, in fraud complaints against a corporation, a plaintiff must allege all of the following:
-the names of the persons who made the misrepresentation;
-their authority to speak for the corporation;
-to whom they spoke;
-what they said or wrote; and
-when it was said or written.

Cross-defendant argues that the claim is not alleged with specificity as to Mercedes Financial. The cause of action incorporates previous allegations, which in some detail state the representations which were made to plaintiff, by Jhonny Jabour of Cross-Defendant Calstar, when they were made, and what they were. [See paras. 10-15].

The argument is basically that there are insufficient allegations as to how Mercedes Financial is responsible for the representations of an employee of Calstar. Again, one inquiry to be addressed as this case proceeds will be the sufficiency of the evidence in support of cross-complainant’s agency allegations. That inquiry cannot properly be concluded at the demurrer stage. The demurrer is overruled.

Third Cause of Action—Relief Provided by Business & Professions Code § 17200
Mercedes Financial argues that since the Consumer Legal Remedies Act lacks merit, the UCL claim lacks merit. As noted above, the Consumer Legal Remedies Act has been sufficiently stated.