Hai Bui v. Toyota Motor Sales, U.S.A., Inc., et al.

According to the facts alleged in the FAC, on November 12, 2021, Plaintiff entered into a warranty contract with TMS regarding a Lexus vehicle (“Subject Vehicle”) that was manufactured and/or distributed by TMS. (First Amended Complaint (“FAC”), ¶ 7; Exhibit A [relevant warranty].) Prior to purchasing the vehicle, Plaintiff reviewed TMS’s marketing materials, vehicle-specific window sticker, and took the Subject Vehicle for a test drive. (Id. at ¶ 10.) Plaintiff was never advised of any defects with the Subject Vehicle’s engine but did experience several defects including failure to start, abnormal rattling, and excess and/or unexpected battery drain. (Id. at ¶ 11.)

Plaintiff presented the Subject Vehicle to TMS’s authorized repair facilities on multiple occasions where a TMS technician inspected the vehicle and then represented that it had been repaired and/or was working as designed. (FAC, ¶ 12.) Despite these representations, Plaintiff continued to experience unsafe defects. (FAC, ¶ 13.)

On March 28, 2025, Plaintiff filed the initial Complaint. On August 6, 2025, Plaintiff filed the operative FAC, asserting the following causes of action:

1) Violation of Civil Code section 1793.2, subdivision (d); 2) Violation of Civil Code section 1793.2, subdivision (b); 3) Violation of Civil Code section 1793.2, subdivision (a)(3); 4) Breach of the Implied Warranty of Merchantability; 5) Negligent Repair; and 6) Fraudulent Inducement – Concealment.

On October 14, 2025, TMS filed the Demurrer to the FAC’s sixth cause of action. Plaintiff opposes the Demurrer, and TMS filed a reply.

On October 20, 2025, TMS filed the Motion to Strike Plaintiff’s claim for punitive damages from the FAC. This Motion to Strike is also opposed and TMS filed a reply.

The Court addresses the Demurrer and the Motion to Strike now.

I. Analysis of TMS’s Demurrer

TMS demurs generally to the sixth cause of action on the ground it fails to state sufficient facts to constitute a cause of action pursuant to Code of Civil Procedure section 430.10, subdivision (e).

a. Legal Standard on Demurrer

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 (Blank).) “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.)

b. Analysis of the Demurrer

In support of its demurrer, TMS argues: 1) Plaintiff fails to allege an actionable omission or concealment and fails to plead the fraud claim with the requisite specificity; and 2) the fraudulent concealment claim is barred by the economic loss doctrine. While the notice of demurrer indicates that it is also being made on the grounds of uncertainty, the supporting memorandum of points and authorities is completely silent as to that ground, so the Court declines to address the unsupported uncertainty ground.

i. The FAC pleads facts sufficient to constitute the Sixth Cause of Action for Fraudulent Inducement-Concealment.

Plaintiff’s Sixth Cause of Action of the FAC is fraudulent inducement by concealment. “The elements of fraudulent concealment are: (1) the defendant concealed or suppressed a material fact; (2) the defendant was under a duty to disclose the fact to

the plaintiff; (3) the defendant intentionally concealed or suppressed the fact with the intent to defraud the plaintiff; (4) the plaintiff was unaware of the fact and would not have acted as he or she did if the plaintiff had known of the concealed or suppressed fact; and (5) as a result of the concealment or suppression of the fact, the plaintiff sustained damage.” (Burch v. CertainTeed Corp. (2019) 34 Cal.App.5th 341, 348.)

“With respect to concealment, 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. The latter three circumstances presuppose the existence of some other relationship between the plaintiff and defendant in which a duty to disclose can arise.

This relationship has been described as a transaction, such as that between seller and buyer . . . or parties entering into any kind of contractual arrangement.” (Id. at pp. 349-350 [internal quotations and citations omitted]; LiMandri v. Judkins (1997) 52 Cal. App. 4th 326, 336.)

As a general rule, each element in a fraud cause of action must be pleaded with specificity. (See Lazar v. Superior Court (1996) 12 Cal.4th 631, 645.) That said, the specific pleading requirement can be significantly relaxed in the case of fraud by concealment because, as one court has 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.)

TMS argues that Plaintiff has failed to plead the essential element of a duty to disclose with the requisite specificity for a fraud claim. (Motion, p. 6:21-24.) The demurrer conclusively asserts that there are zero allegations supporting a fiduciary relationship between TMS and Plaintiff and thus, Plaintiff cannot allege a duty to disclose. (Id. at p. 7:3-5.)

“No liability for concealment exists unless there is a duty to disclose.” (Nissan Motor Acceptance Cases (2021) 63 Cal.App.5th 793, 826.) “Where material facts are known to one party and not to the other, failure to disclose them is not actionable fraud unless there is some relationship between the parties which gives rise to a duty to disclose such known facts.” (Ibid. [emphasis original, internal citations and quotations omitted].) While a fiduciary relationship does create a duty to disclose, other relationships that arise because of a transaction may also impose disclosure duties. (Ibid.)

On similar facts, in Dhital v. Nissan North America, Inc. (2022) 84 Cal.App.5th 828, 832 (Nissan), the trial court sustained, without leave to amend, defendant Nissan’s demurrer to the fraud claim, where the plaintiffs alleged: that Nissan and its agents intentionally concealed and failed to disclose facts relating to a defective transmission, Nissan had exclusive knowledge of the defect and did not disclose that to plaintiffs in an effort to sell the vehicle, and if plaintiffs had known of the defects they would not have purchased the vehicle. (Id. at p. 834.) The Court of Appeal disagreed, holding that at the

pleading stage, plaintiffs’ allegations that they bought the car from a Nissan dealership, Nissan backed the car with an express warranty, and Nissan’s authorized dealerships were agents for purposes of the sale of Nissan vehicles to consumers, were sufficient to state a fraudulent inducement by concealment claim. (Id. at p. 844 [“In light of these allegations, we decline to hold plaintiffs’ claim is barred on the ground there was no relationship requiring Nissan to disclose known defects.”].)

Here, the FAC alleges that TMS manufactured and/or distributed the Subject Vehicle, Plaintiff entered into a warranty contract with TMS, and the dealership where Plaintiff purchased the vehicle was authorized by TMS. (FAC, ¶¶ 7, 9.) TMS concealed a known defect that causes unsafe conditions. (Id. at ¶ 59.) Further, Plaintiff presented the Subject Vehicle for repairs to TMS authorized repair facilities with TMS technicians. (Id. at ¶ 12.) TMS and its agents actively concealed the engine defect and failed to disclose this to Plaintiff at the time of purchase or thereafter. (Id. at ¶ 62.) These allegations are sufficient to state a duty to disclose.

TMS next argues the allegations are insufficient because Plaintiff does not adequately allege it had pre-sale knowledge of the alleged defect. (Motion, p. 7:6-7.) This argument is unpersuasive. As noted above, the specificity requirement for a fraud by concealment claim is significantly relaxed and here, Plaintiff alleges TMS knew about the defect through internal data, pre-releasing testing data, early consumer complaints, dealership repair orders, testing conducted in response to complaints, and other internal sources of information possessed exclusively by TMS and its agents. (FAC, ¶ 62; See Committee on Children’s Television, Inc. v.

General Foods Corp. (1983) 35 Cal.3d 197, 217 [less specificity is required when it appears from the nature of the allegations the defendant necessarily possesses full information concerning the facts of the controversy][superseded by statute on other grounds].) These allegations are sufficient; they are well pleaded. Similarly, TMS’s next two arguments are likewise not well-taken as the FAC adequately pleads active concealment and TMS’s disclosures. (See FAC, ¶¶ 10, 12- 13, 62, 63.)

Accordingly, the Demurrer to the sixth cause of action on the ground it fails to allege sufficient facts to constitute a cause of action is OVERRULED.

ii. The Sixth Cause of Action is Not Barred by the Economic Loss Rule.

TMS next asserts that Plaintiff fails to plead that it violated a duty from a tort obligation rather than from contract and the claim therefore fails under the economic loss rule. (Motion, p. 10:20-22.)

The economic loss rule provides that “where a purchaser’s expectations in a sale are frustrated because the product he brought is not working properly, his remedy is said to be in contract alone, for he has suffered only economic losses.” (Robinson Helicopter Company v. Dana Corporation (2004) 34 Cal.4th 979, 988 (Robinson).) But “the economic loss rule does not apply to limit recovery for intentional tort claims like fraud.” (Rattagan v. Uber Technologies, Inc. (2024) 17 Cal.5th 1, 38.) More specifically,

the economic loss rule does not apply to fraudulent inducement of a contract. (Robinson, supra, 34 Cal.4th at pp. 989-990; County of Santa Clara v. Atlantic Richfield Co. (2006) 137 Cal.App.4th 292, 328-329 [“The analysis [in Robinson] suggested that fraud itself is immune from application of the economic loss rule because fraud is particularly blameworthy and therefore unlike both contract causes of action and products liability causes of action.”] [internal citation omitted, emphasis in original].) Tort damages have been permitted in contract cases where a contract is fraudulently induced and where “‘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.’” (Robinson, supra, at p. 989-990.)

The Nissan Court explained that the independence from the contract, detailed in Robinson, is present in the case of fraudulent inducement, “because a defendant’s conduct in fraudulently inducing someone to enter a contract is separate from the defendant’s later breach of the contract or warranty provisions that were agreed to.” (Nissan, supra, 84 Cal.App.5th at p. 841 [stating also “plaintiffs’ fraudulent inducement claim alleges presale conduct by Nissan (concealment) that is distinct from Nissan’s alleged subsequent conduct in breaching its warranty obligations”].) The same is true in this case where the FAC alleges both presale conduct and subsequent conduct breaching the express warranty. At the pleading stage, the Court does not find that the economic loss rule bars Plaintiff’s claim.

Accordingly, the demurrer on the ground the sixth cause of action is barred by the economic loss rule is OVERRULED.

II. TMS’s Motion to Strike the Punitive Damages Claim

TMS moves to strike Plaintiff’s punitive damages claim as improper under Code of Civil Procedure sections 435 and 435 because the FAC fails to allege sufficient facts capable of supporting a punitive damages award. (Motion to Strike, p. 1:13-20.)

a. Legal Standard on Motion to Strike

A court may strike out any irrelevant, false, or improper matter asserted in a 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. (Code Civ. Proc., § 436, subd. (a).) The grounds for a motion to strike must appear on the face of the challenged pleading or from any matter of which the court is required to take judicial notice. (Code Civ. Proc., § 437, subd. (a).) In ruling on a motion to strike, a court reads the complaint as a whole, all parts in their context, and assumes the truth of all well-pleaded allegations. (Clauson v. Superior Ct. (1998) 67 Cal.App.4th 1253, 1255.)

b. Analysis of the Motion to Strike

“[T]o state a prima facie claim for punitive damages, a complaint must set forth the elements as stated in the general punitive damage statute, Civil Code section 3294.” (Turman v. Turning Point of Central California, Inc. (2010) 191 Cal.App.4th at p. 63.)

Under Civil Code Section 3294(a), punitive damages are available where “defendant has been guilty of oppression, fraud, or malice[.]” (Civil Code § 3294(a) (emphasis added)). In this context, fraud means “an intentional misrepresentation, deceit, or concealment of a material fact known to defendant with the intention of depriving plaintiff of property or legal rights or otherwise causing injury.” (Id. at subd. (c)(3).)

Here, while Plaintiff’s request for punitive damages is not strictly tied to any specific cause of action, Plaintiff’s Sixth Cause of Action in the FAC for fraud remains alive and well after the Court overruled Defendant’s Demurrer above. So as Plaintiff’s cause of action for fraud in the FAC remains viable, so does Plaintiff’s request for punitive damages in the prayer of the FAC. (See Stevens v. Super. Ct. (1986) 180 Cal.App.3d 605, 610 [properly pleaded fraud claim is sufficient by itself to support a request for punitive damages].)

Accordingly, Defendant’s Motion to Strike is DENIED.

III. Conclusion and Order

For all the reasons explained above, Defendant’s Demurrer is OVERRULED and Defendant’s Motion to Strike is DENIED.

SO ORDERED.

Date: June 24, 2026 Hon. Vincent I. Parrett Superior Court of the State of California, County of Santa Clara

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Case Name: Hai Bui v. Toyota Motor Sales, U.S.A., Inc., et al. Case No.: 25CV462169

See Line 6 above for complete tentative ruling on both the Demurrer and Motion to Strike.

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