In Sheen, the court held that tort claims for monetary losses between contractual parties are barred by the economic loss rule when they arise from or are not independent of the parties’ underlying contracts. (Sheen v. Wells Fargo Bank, N.A. (2022) 12 Cal.5th 905, 922, 923-925). However, the Sheen Court acknowledged the “recognized exception to the economic loss rule for consumers who contract for certain kinds of professional services.” (Id. at 933.)

Under the factors considered in North American Chemical, the court does not find that the economic loss rule bars a negligent repair cause of action.

The demurrer to the fifth cause of action is overruled.

Moving Defendants to give notice. 7 Cvejkus vs. Volkswagen Group of America, Notices of Withdrawal of Motion (ROA 90, ROA 88, ROA 82, and ROA 80) Inc.

8 Qazi vs. Avenue Motion to Be Relieved As Counsel of Record is off calendar One Community Association, Inc. The Request for Dismissal of Entire Action was filed 06/26/2026.

9 Cunningham vs. Defendant FCA US, LLC’s Demurrer to Plaintiffs’ First Amended FCA US LLC Complaint is OVERRULED. Defendant’s Motion to Strike Plaintiffs’ Claim for Punitive Damages in First Amended Complaint is DENIED.

Demurrer

Breach of the Implied Warranty of Merchantability

“The duration of the implied warranty of merchantability and where present the implied warranty of fitness shall be coextensive in duration with an express warranty which accompanies the consumer goods, provided the duration of the express warranty is reasonable; but in no event shall such implied warranty have a duration of less than 60 days nor more than one year following the sale of new consumer goods to a retail buyer. Where no duration for an express warranty is stated with respect to consumer goods, or parts thereof, the duration of the implied warranty shall be the maximum period prescribed above.” (Civ. Code, § 1791.1, subd. (c).)

However, the duration provision of the Song-Beverly Act does not bar “an action for breach of the implied warranty of merchantability when the purchaser fails to discover and report the defect to the seller within the time period specified in that provision.” Instead, and “particularly in light of the consumer protection policies supporting the Song–Beverly Act, ... the statute merely creates a limited, prospective duration for the implied warranty of merchantability; it does not create a deadline for discovering

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latent defects or for giving notice to the seller.” (Mexia v. Rinker Boat Co., Inc. (2009) 174 Cal.App.4th 1297, 1301.)

“The implied warranty of merchantability may be breached by a latent defect undiscoverable at the time of sale. [Citations.] Indeed, ‘[u]ndisclosed latent defects ... are the very evil that the implied warranty of merchantability was designed to remedy.’ [Citation.] In the case of a latent defect, a product is rendered unmerchantable, and the warranty of merchantability is breached, by the existence of the unseen defect, not by its subsequent discovery.” (Mexia v. Rinker Boat Co., Inc. (2009) 174 Cal.App.4th 1297, 1304–1305; see Jones v. Credit Auto Center, Inc. (2015) 237 Cal.App.4th Supp. 1, 9 [“breach of the implied warranty of merchantability may be based on a defect which becomes known after a sale or delivery to a buyer”].)

Defendant demurs to the fourth cause of action, arguing the cause of action is time-barred because Plaintiffs purchased the vehicle on March 16, 2021, yet they did not file their lawsuit until May 29, 2025.

However, Plaintiffs allege the engine defect constituted a latent defect because, first, every time Plaintiffs presented the vehicle for repair, they were assured the vehicle had been repaired, and that it was working as designed, and second, Defendant was aware that its vehicles, including the Plaintiffs’ vehicle, were equipped with a defective engine. Despite this knowledge, Defendant actively concealed the engine defect from consumers such as Plaintiffs, such that Plaintiffs were unaware of the existence of these latent defects until shortly before filing their Complaint.

Defendant maintains that “Plaintiffs do not allege that any latent defects were known or discoverable during the one-year implied warranty period, as required to support a breach of implied warranty claim.” Relatedly, it also argues that Plaintiffs have not alleged the latent defects manifested within the one-year implied warranty period.

This is inaccurate, as Plaintiffs repeatedly allege that a latent defect – the engine defect – always existed. Again, Defendant knew of the existence of the latent defect, yet it concealed its existence, in part by performing ineffective repairs that did not address the root cause of the defect.

In its Demurrer, Defendant cites to Daugherty v. American Honda Motor Co., Inc. (2006) 144 Cal.App.4th 824, 830 for the proposition that “[t]he Song-Beverly Act does not extend the implied warranty period for repairs made, or for latent defects that manifest themselves after the warranty has expired, nor does it create a perpetual warranty for recurring issues.”

Daugherty is inapplicable because the passage Defendant relies on addressed tolling of express warranties, rather than implied warranties. (See Krug v. Board of Trustees of California State University (2025) 110

Cal.App.5th 234, 249 [“The case cannot stand for a principle never addressed”].)

Defendant also demurs on the ground that the claim fails for lack of privity. However, a number of courts have held that, in the context of the Song- Beverly Act, privity is not required to maintain an implied warranty claim. (See Mega RV Corp. v. HWH Corp. (2014) 225 Cal.App.4th 1318, 1333, fn. 11 [while plaintiff may not be able to sue for breach of implied warranty under the Commercial Code due to a lack of privity, “under the [Song- Beverly] Act, the buyer can sue ‘the manufacturer for breach of the implied warranty of merchantability despite a lack of privity”]; see Ballesteros v.

Ford Motor Co. (2025) 109 Cal.App.5th 1196, 1218 [Song-Beverly Act explicitly governs manufacturer warranties, which does not require privity]; see Davis v. Nissan North America, Inc. (2024) 100 Cal.App.5th 825, 842 [claims against manufacturer under the Song-Beverly Act are not privitybased warranty claims arising under the UCC, as the plaintiff’s claims are based upon the manufacturer’s statutory obligations]; see Civ. Code, § 1792 [“every sale of consumer goods that are sold at retail in this state shall be accompanied by the manufacturer’s and the retail seller’s implied warranty that the goods are merchantable”].)

Neither Burr v. Sherwin Williams Co. (1954) 42 Cal.2d 682 nor All West Electronics, Inc. v. M-B-W, Inc. (1998) 64 Cal.App.4th 717, which Defendant cites in its Demurrer, addressed a breach of implied warranty in the context of the Song-Beverly Act. Thus, both are inapposite.

Thus, the Court shall overrule the Demurrer to the fourth cause of action for Breach of the Implied Warranty of Merchantability.

Fraudulent Inducement Concealment

Defendant argues the fraudulent concealment claim fails because it lacks factual specificity.

From a pleading perspective, the facts that constitute fraud must be alleged fully, factually, and specifically. (Wilhelm v. Pray, Price, Williams & Russell (1986)186 Cal.App.3d 1324, 1331; see Dhital v. Nissan North America, Inc. (2022) 84 Cal.App.5th 828, 843-844 [Fraud, including concealment, must be pleaded with specificity].)

The particularity requirement necessitates the pleading of facts that show how, when, where, to whom and by what means the representation was tendered, and pleading specifically the detriment proximately caused by the defendant’s conduct. (Service of Medallion, Inc. v. Clorox Co. (1996) 44 Cal.App.4th 1807, 1818; Stansfield v. Starkey (1990) 220 Cal.App.3d 59, 73.) “[H]owever ... fraud is the only remaining cause of action in which specific pleading is required to enable the court to determine on the basis of 19

the pleadings alone whether a foundation existed for the charge and, even in the pleading of fraud, the rule is relaxed when it is apparent from the allegations that the defendant necessarily possesses knowledge of the facts.” (Quelimane Co. v. Stewart Title Guaranty Co. (1998) 19 Cal.4th 26, 47.)

An exception to the strict pleading standard is recognized when it appears the facts lie more within defendant’s knowledge than plaintiff’s, i.e., less specificity is required where “defendant must necessarily possess full information concerning the facts of the controversy.” (Committee on Children's Television, Inc. v. General Foods Corp. (1983) 35 Cal.3d 197, 216, superseded by statute, on other grounds, as discussed in Sanchez v. Bear Stearns Residential Mortg. Corp. (S.D.Cal. May 11, 2010, No. 09-CV- 2056 JLS (CAB)) 2010 U.S.Dist.LEXIS 46043, at *18, fn. 4; see Miles v. Deutsche Bank Nat'l Trust Co. (2015) 236 Cal.App.4th 394, 403-404 [omission of names of mortgage servicer employees and their authority to speak not fatal to fraud claim where defendants had more knowledge of the facts than did plaintiffs].)

Defendant maintains “the First Amended Complaint simply asserts conclusory allegations that FCA US concealed facts without naming individuals, providing details about representations, or specifying dates.” It also contends that “Plaintiffs’ use of ‘information and belief’ suggests speculation rather than factual allegations.” Relatedly, Defendant makes the argument that Plaintiffs’ broad references to data are not sufficient to prove its actual knowledge of a defect. In Defendant’s view, its possession of data does not equate to actual knowledge of a material defect, or of an intent to conceal same from Plaintiffs.

This argument is not persuasive. Plaintiffs allege that, prior to acquiring the vehicle, they reviewed Defendant’s marketing and advertising materials, they viewed defendant’s vehicle-specific window sticker, and they took the vehicle for a test drive. However, at no point prior to purchase were Plaintiffs advised – whether by Defendant or the dealership – the vehicle was equipped with a defective engine.

Plaintiff goes on to allege that Defendant knew vehicles equipped with a 3.6L engine, including Plaintiffs’ vehicle, were defective and at risk of a catastrophic failure while the vehicle was in motion. Despite this knowledge, Defendant chose to conceal this defect from consumers such as Plaintiff. Plaintiffs further allege that they would not have purchased the vehicle had they known it was equipped with a defective engine.

Plaintiffs’ allegations are similar to those alleged in Dhital, where the plaintiffs alleged Nissan manufactured and distributed vehicles with a defective CVT transmission that caused a potential safety hazard, which it had exclusive knowledge of, yet which it intentionally concealed from consumers in order to induce consumers to purchase vehicles equipped with the defective transmission. (Dhital v. Nissan North America, Inc. (2022) 84 Cal.App.5th 828, 833-834.) On appeal, the Dhital court held that, “[a]t the 20

pleading stage ..., we conclude plaintiffs’ allegations are sufficient,” and it “decline[d] to hold ... that plaintiffs were required to include in the SAC more detailed allegations about the alleged defects in the CVT transmissions. We conclude plaintiffs’ fraud claim was adequately pleaded.” (Id. at p. 844.)

Contrary to Defendant’s claims, Plaintiffs’ allegations regarding fraud did not lack the requisite specificity.

Defendant is also critical of Plaintiffs’ counsel’s alleged practice of drafting “boilerplate” or “cut-and-paste” Complaints, which it argues does not meet the specificity requirements since the Complaints are not grounded in the unique circumstances of the case.

However, as noted, Plaintiffs have pled more than sufficiently specific facts to support their fraud claim. Moreover, in considering a Demurrer, the trial court must accept as true all material facts properly pleaded in plaintiff’s petition, disregarding only conclusions of law and allegations contrary to judicially noticed facts. (Burt v. County of Orange (2004) 120 Cal.App.4th 273, 277.) “‘A general demurrer admits the truth of all material factual allegations in the complaint [citation]; ... the question of plaintiff’s ability to prove these allegations, or the possible difficulty in making such proof does not concern the reviewing court.’ [Citations.]” (Concerned Citizens of Costa Mesa, Inc. v. 32nd Dist. Agricultural Assn. (1986) 42 Cal.3d 929, 936.)

Despite the foregoing law, Defendant’s Demurrer implies that Plaintiffs must somehow prove the truth of their obligations. For example, Defendant contends that “broad references to data do not suffice to prove FCA US’s actual knowledge of a defect.” It also argues Plaintiffs must provide evidence that Defendant had an intent to defraud.

However, Plaintiffs do not need to establish the validity of their allegations at this juncture. Instead, they only need to plead sufficiently specific facts to support their fraud claim. They have done so.

Thus, the Court rejects Defendant’s contention that the fraud claim lacks the requisite specificity.

Defendant also argues the fraud claim fails because it did not have a duty to disclose material facts to Plaintiffs.

Not so, because Plaintiff alleges he entered into a warranty contract with Defendant, which issued an express written warranty. (See Dhital v. Nissan North America, Inc. (2022) 84 Cal.App.5th 828, 844 [rejecting Nissan’s similar arguments because plaintiffs alleged the manufacturer backed the car with an express warranty]; see Kiluk v. Mercedes-Benz USA, LLC 21

(2019) 43 Cal.App.5th 334, 337, 343 [manufacturer stepped into the role of the distributor and retail seller by issuing an express warranty]; see Fortune v. Nissan North America, Inc. (N.D. Cal., Feb. 16, 2023, No. 22-CV-05247- KAW) 2023 WL 2065043, at *5 [transactional relationship where manufacturer issued a warranty].)

In any event, and contrary to Defendant’s position that a “direct transaction” between Plaintiffs and Defendant must be present, “it is clear in California that an action for deceit does not require contractual privity.” (Shapiro v. Sutherland (1998) 64 Cal.App.4th 1534, 1549.) This is true because “a defendant cannot escape liability if he or she makes a representation to one person while intending or having reason to expect that it will be repeated to and acted upon by the plaintiff.” (Id. at p. 1548.)

Further, “a fiduciary relationship is not an indispensable element of a fraud action, although the existence of that relationship gives rise to special obligations.” (Lewis v. LeBaron (1967) 254 Cal.App.2d 270, 281.) A fiduciary relationship or duty to disclose is only required where the plaintiff’s cause of action for fraud is based on concealment. (Blickman Turkus, LP v MF Downtown Sunnyvale, LLC (2008) 162 Cal.App.4th 858, 868; Williams v. Wraxall (1995) 33 Cal.App.4th 120, 131, fn. 9.)

A duty to disclose material facts arises in four situations: (1) the defendant is under statutory or other prescriptive legal obligation, (2) the defendant voluntarily assumed the duty due to a contractual undertaking, (3) a relationship exists between the defendant and the plaintiff, and (4) the defendant engaged in other conduct making it wrongful to remain silent. (SCC Acquisitions, Inc. v. Central Pacific Bank (2012) 207 Cal.App.4th 859, 864.) The relationship necessary to impose a duty to disclose is described as transactional:

“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 v. Breg, Inc. (2017) 7 Cal.App.5th 276, 311 [citing Warner Construction Corp. v. City of Los Angeles (1970) 2 Cal.3d 285, 294]; see In re MyFord Touch Consumer Litigation (N.D. Cal. 2014) 46 F.Supp.3d 936, 960 [duty to disclose where defendant knew of a defect while the plaintiffs did not, and given the nature of the defect, it was difficult to discover].)

As noted, Plaintiffs allege Defendant was aware the vehicle was equipped with a defective engine, yet it actively concealed this material fact from 22

consumers such as Plaintiff. Contrary to Defendant’s position, a direct transaction is not required where, as here, Defendant allegedly had exclusive knowledge of the engine defect, which it then actively concealed from Plaintiffs.

Defendant also argues the First Amended Complaint relies on vague references to Defendant’s internal data collection, yet Plaintiffs do not show how this information is relevant or material. It also contends “such internal information is preliminary and non-conclusive, not rising to the level of material defects.”

The allegations Defendant refers to as “internal data collection” are relevant and material because they allege one of the ways Defendant obtained exclusive or superior knowledge of the engine defect. At this juncture, it is irrelevant whether the internal information confirmed the existence of the engine defect, or whether this was merely preliminary data that Defendant had yet to confirm. This is because as noted, in ruling on a Demurrer, the Court accepts as true all material facts properly pled, and it does not consider the question of Plaintiffs’ ability to prove these allegations. (Burt v. County of Orange (2004) 120 Cal.App.4th 273, 277; Concerned Citizens of Costa Mesa, Inc. v. 32nd Dist. Agricultural Assn. (1986) 42 Cal.3d 929, 936.)

Defendant also makes the argument that “Plaintiffs also fail to assert how knowledge held across FCA US’s organization and third-party dealerships can be automatically imputed to FCA US as a corporate entity.” Relatedly, it maintains that authorized dealerships are not its agents. This argument lacks merit because it is alleged Defendant itself, not its third-party dealerships or other related entities, had actual knowledge of the alleged engine defect.

Given the foregoing allegations, Plaintiffs have alleged sufficient facts that Defendant had a duty to disclose the alleged defect with the Vehicle and its defective engine.

Finally, Defendant contends the fraudulent inducement claim is barred by the economic loss doctrine.

However, the Court of Appeal for Division Four of the First District held, “we conclude plaintiffs’ claims for fraudulent inducement by concealment is not subject to demurrer on the ground it is barred by the economic loss rule.” (Dhital v. Nissan North America, Inc. (2022) 84 Cal.App.5th 828, 840; see County of Santa Clara v. Atlantic Richfield Co. (2006) 137 Cal.App.4th 292, 331 [alleged misrepresentations refuting and concealing evidence that low levels of lead exposure could be hazardous were sufficient to support a fraud cause of action, notwithstanding the economic loss rule]; see also Harris v. Atlantic Richfield Co. (1993) 14 Cal.App.4th 23

70, 78 [knowing nondisclosure during the contract formation, or the performance of the contract, allows the injured party to recover in both contract and tort].)

Contrary to Defendant’s claim that “the weight of authority within the Ninth Circuit also concurs that the ELD bars recovery for purely economic damages,” a number of Federal District Courts in California have since followed Dhital in finding that the economic loss rule does not bar a plaintiff’s fraudulent concealment claim as a matter of law. (Pirtle v. FCA US, LLC (C.D. Cal., Dec. 8, 2025, 2:25-cv-03257-JAK (MARx)) 2025 WL 4058236, at *12-13; Ramos v. Ford Motor Company (C.D. Cal., Apr. 16, 2025, No. 2:24-CV-04066-AH-(JPRX)) 2025 WL 1606917, at *4-5; Ladanowsky v.

FCA US LLC (N.D. Cal., Dec. 30, 2024, No. 24-CV-07197- JST) 2024 WL 5250357, at *4-5; Antonov v. General Motors LLC (C.D. Cal., Jan. 19, 2024, No. 823CV01593FWSMJR) 2024 WL 217825, at *9; Wilson v. Hyundai Motor America (C.D. Cal., Mar. 14, 2023, No. 822CV00771JLSJDE) 2023 WL 3025376, at *4; Fortune v. Nissan North America, Inc. (N.D. Cal., Feb. 16, 2023, No. 22-CV-05247-KAW) 2023 WL 2065043, at *4; Olguin v. FCA US LLC (E.D. Cal., Feb. 13, 2023, No. 1:21-CV-1789 JLT CDB) 2023 WL 1972223, at *7; Lewis v.

Ford Motor Company (E.D. Cal., Feb. 8, 2023, No. 221CV02367TLNJDP) 2023 WL 1823760, at *4; Kroutilin v. FCA US, LLC (C.D. Cal., Dec. 7, 2022, No. 822CV00929FWSDFM) 2022 WL 18278602, at *4-5; Flier v. FCA US LLC (N.D. Cal., Nov. 8, 2022, No. 21-CV-02553-CRB) 2022 WL 16823042, at *6-7; Zurba v. FCA US LLC (C.D. Cal., Nov. 10, 2022, No. 521CV01824JLSSHK) 2022 WL 17363073, at *6–7; see de Lozano v. Nissan North America, Inc. (C.D. Cal., Apr. 20, 2023, No. 5:22-CV-01887- RGK-SP) 2023 WL 3432240, at *4 [finding Dhital to be well-reasoned]; see Gold Flora, LLC v.

Constellation Newenergy, Inc. (C.D. Cal., Mar. 14, 2023, No. 822CV02088JVSJDEX) 2023 WL 3149275, at *10 [agreeing with Dhital’s holding that the duty giving rise to tort liability is either completely independent of the contract, or arises from conduct which is both intentional and intended to harm].)

In its Demurrer, Defendant maintains that, in Rattagan v. Uber Technologies, Inc. (2024) 17 Cal.5th 1, “[t]he California Supreme Court’s recent dismissals of Dhital .. and Kia America ... reinforce the application of the ELD to bar claims like Plaintiffs.” It also contends that Rattagan, rather than Dhittal, controls the analysis regarding the economic loss rule.

However, Rattagan examined tort claims that were “based on alleged conduct committed during the contractual relationship” (Rattagan v. Uber Technologies, Inc. (2024) 17 Cal.5th 1, 41, fn. 12), whereas Dhital involved claims that the plaintiff was fraudulently induced to enter into the contract.

This distinction was recently recognized by two Federal District Courts. “ ‘By expressly calling out the distinction between Rattagan’s facts and the fraudulent inducement cases and then dismissing the appeal of Dhital without vacating, reversing, or otherwise altering the court of appeal’s 24

opinion, the California Supreme Court indicated that the reasoning in Dhital should guide claims...of fraudulent inducement by omission.’ [Citation.] ‘With the benefit of that dismissal, which leaves Dhital’s reasoning and conclusion intact, this Court concludes that the California Supreme Court’s three-step analysis from Rattagan controls fraudulent concealment within contractual relationships, whereas Dhital controls fraudulent concealment inducing the formation of a contractual relationship.’ [Citation.]” (Ramos v. Ford Motor Company (C.D. Cal., Apr. 16, 2025, No. 2:24-CV-04066-AH- (JPRX)) 2025 WL 1606917, at *5, citing to Moore v. American Honda Motor Co., Inc. (N.D. Cal., Mar. 28, 2025, No. 5:23-CV-05011-BLF) 2025 WL 948114, at *7.)

In sum, Dhital supports a finding, particularly at the pleading stage, that Plaintiff’s fraudulent inducement claim is not barred by the economic loss rule. The Court also rejects Defendant’s description of Dhital as an “outlier decision” that should somehow be disregarded.

Plaintiffs have asserted a viable cause of action for Fraudulent Concealment, and punitive damages are available where a defendant is guilty of fraud. (Civ. Code, § 3294, subd. (a); see Dhital v. Nissan North America, Inc. (2022) 84 Cal.App.5th 828, 845 [reversing trial court’s order granting motion to strike punitive damages allegations where the plaintiff stated a viable fraud claim]; see Nissan Motor Acceptance Cases (2021) 63 Cal.App.5th 793, 829 [“Of course, fraudulent concealment is an intentional tort that may support a punitive damage award”].)

Contrary to the arguments made in the Motion to Strike, Plaintiffs have met pled sufficient facts to support their fraud claim, and they have satisfied the pleading standard for punitive damages.

While Plaintiffs may not have specifically identified a corporate officer, director, or managing agent who authorized, ratified, or was personally involved in the alleged misconduct, a corporation may itself be guilty of oppression and malice based on its corporate policies. (See Samantha B. v. Aurora Vista Del Mar, LLC (2022) 77 Cal.App.5th 85, 106 [corporation personally guilty of oppression and malice where it set the policies that made sexual predation of patients almost inevitable, and, in setting those policies, the corporation acted willfully and with a conscious disregard for the safety of others].)

Here, Plaintiffs have alleged that Defendant had a practice of concealing information regarding the potential engine defect, even though it had abundant information regarding its existence. As pled, Plaintiffs have alleged sufficient facts to support their punitive damage allegations.

Thus, the Court shall deny Defendant’s Motion to Strike.

Plaintiffs are ordered to give notice of the Court’s ruling.