WILLIAMS VS FCA US, LLC

In its Reply, FCA argues that the Opposition was untimely. FCA again argues that the fraud cause of action is time-barred. FCA again argue that the fraud claim is insufficiently pled, fails to allege a duty to disclose and is barred by the economic loss rule.

Demurrer

A party may object by demurrer to a complaint on grounds that the pleading does not state facts sufficient to constitute a cause of action. (CCP §430.10(e).) For the purposes of a demurrer, the allegations in the complaint must be accepted as true. (Del E. Webb Corp. v. Structural Materials Co. (1981) 123 Cal.App.3d 593, 604.) “In short, the ruling on a demurrer determines a legal issue on the basis of assumed facts, i.e., all those material, issuable facts properly pleaded in the complaint, regardless of whether they ultimately prove to be true.” (State of California ex rel.

Bowen v. Bank of America Corp. (2005) 126 Cal. App. 4th 225, 240.) However, a demurrer does not admit contentions, deductions or conclusions of fact or law. (Daar v. Yellow Cab Company (1967) 67 Cal.2d 695, 713.) In granting a demurrer, courts must only consider properly pleaded or implied factual allegations that appear on the face of the complaint as well as judicially noticed matters. (Blank v. Kirwan (1985) 39 Cal. 3d 311, 318)

If the complaint fails to state a cause of action, the court must grant the plaintiff leave to amend if there is a reasonable possibility that the defect can be cured by amendment. (Blank v. Kirwan (1985) 39 Cal.3d 311, 318.)

Statute of Limitations

Defendant argues that the fraud cause of action is time-barred. A demurrer based on a statute of limitations defense lies only where it appears clearly and affirmatively on the face of the complaint that the claim is barred. (Committee for Green Foothills v. Santa Barbara Bd. of Supervisors (2010) 48 Cal. 4th 32, 442.) “While a demurrer based on statute of limitations lies where the dates in question are shown on the face of the complaint, if those dates are missing, there is no ground for a general demurrer. (United Western Medical Centers v. Superior Court (1996) 42 Cal. App. 4th 500, 505.)

The statute of limitations for fraud is three years from the date of discovery. (CCP §338(d).) The discovery element under section 338(d) means “the discovery by the aggrieved party of the fraud or facts that would lead a reasonably prudent person to suspect fraud.” (Doe v. Roman Catholic Bishop (2010) 189 Cal.App.4th 1423, 1430.) “Because the discovery rule operates as an exception to the statute of limitations, ‘if an action is brought more than three years after commission of the fraud, plaintiff has the burden of pleading and proving that he did not make the discovery until within three years prior to the filing of his complaint.’” (Cansino v.

Bank of America (2014) 224 Cal. App. 4th 1462, 1472.) The plaintiff must plead detailed facts showing the time and surrounding circumstances of the discovery and what the discovery was so that the court can determine whether the fraud could have been discovered sooner. (Id.)

Here, Plaintiff asserts that she entered into a warranty agreement in connection with her purchase of the Subject Vehicle on July 26, 2018. (SAC, ¶ 7.) She contends that Defendant knew that vehicles, including the Subject Vehicle, equipped with a 9-speed transmission were defective prior to Plaintiff’s purchase. (Id ¶24.) However, the marketing and advertising material Plaintiff reviewed prior to purchasing the Subject Vehicle failed to disclose this transmission defect. (Id at ¶11.) Thus, the initial fraud occurred at the time of the purchase in 2018.

Plaintiff argues that she did not discover Defendant’s wrongful conduct until shortly before filing the Complaint as the Subject Vehicle continued to exhibit symptoms of defect following Defendant’s unsuccessful attempts to repair them. (FAC, ¶46.) This is the exact conclusory language asserted in the First Amended Complaint which the Court previously found to be insufficient. The only repair attempt alleged by Plaintiff occurred on June 8, 2022, after the statute of limitations had already run, and involved an engine repair. (SAC, ¶ 13.) It is not clear what representations were made regarding the transmission at that time. Overall, the allegations of discovery remain deficient under CCP § 338. As such, the fraud cause of action is time-barred.

Plaintiff argues that the statute of limitations was tolled by the class action matter of Milisits, et al. v. FCA US LLC, Case No. 4:20-cv-11578 (E.D. Mich.) (“Milisits Class Action”), filed June 15, 2020, which involves the identical 9-speed transmission defect at issue here. The statute of limitations is tolled from the time of commencement of a class action lawsuit to the time of denial of class certification as to all purported members of the class who either intervene in the surviving individual action or file their own individual actions. (American Pipe & Construction Co. v.

Utah (1973) 414 U.S. 538, 552-553; Jolly v. Eli Lilly & Co. (1998) 44 Cal. 3d 1103, 1119.) Underlying the tolling rule are two policy considerations: (1) the preservation of the efficiency and economy of the class action device from the filing of multiple complaints or motions to intervene to preserve the claims certification is denied; and (2) the effectuation of the purpose of the statute of limitation to bar claims of a plaintiff who has “slept on his rights”. (Id at 1121.) California generally follows the American Pipe rule. (Id at 1119.)

However, in California, the American Pipe tolling rule does not apply where the differences in issues of fact and law predominate. (Id at 1123-1124.)

The class in the Milisits Class Action is defined as “[a]ll individuals residing in the United States of America, including its territories, who purchased or leased any FCA vehicle beginning in Model Year 2016 equipped with the 9HP Automatic Transmission.” (SAC, Ex. B, ¶ 274.) This includes 2016-2020 Jeep Renegades. (Id at ¶1, FN 1.) Therefore, Plaintiff is a putative class member. The Complaint asserts a cause of action for Fraud by Omission or Fraudulent Concealment. (Id at ¶¶ 317-330.) This fraud cause of action appears to be based allegations as the present action. (Id.) It does not appear that certification of the class has been denied, or the action denied. Defendant does not fully address this issue. As such, Plaintiff has established that the statute of limitations has been tolled.

3rd Cause of Action - Fraudulent Concealment:

The elements of an action for fraud based on concealment are: (1) concealment of a material fact, (2) a duty to disclose the fact to the plaintiff, (3) the intent to defraud the plaintiff, (4) reliance, and (5) as a result of the concealment or suppression of the fact, the plaintiff must have sustained damage. (Lovejoy v. AT&T Corp. (2004) 119 Cal. App. 4th 151, 157-158.) Generally, a fraudbased cause of action must be pled with particularity, which requires pleading facts showing how, when, where, to whom, and by what means the false representations were tendered. (Lazar v.

Superior Court (1996) 12 Cal. 4th 631, 645.) As concealment is a species of fraud, it must also be pled with specificity. (Blickman Turkus, LP v. MF Downtown Sunnyvale, LLC (2008) 162 Cal.App.4th 858, 878.) “California courts apply the same specificity standard to evaluate the factual underpinnings of a fraudulent concealment claim at the pleading stage, even though the focus of inquiry shifts to the unique elements of the claim.” (Rattagan v. Uber Technologies, Inc. (2024) 17 Cal. 5th 1, 43.) “If the duty to disclose arose by virtue of the parties’ relationship and defendant’s exclusive knowledge or access to certain facts . . . the complaint must also include specific allegations establishing all of the required elements, including (1) the content of the omitted facts; (2) defendant’s awareness of the materiality of those facts, (3) the inaccessibility of the facts to plaintiff, (4) the general point at which the omitted facts should or could have been revealed, and (5) justifiable and actual reliance, either through action or forbearance, based on the defendant’s omission.” (Id at 43-44.)

Dhital v. Nissan North America, Inc. (2022) 84 Cal.App.5th 828 is instructive with respect to the pleading requirements for fraudulent concealment. In Dhital, the plaintiff alleged: (1) Nissan installed defective transmissions in numerous vehicles (including the plaintiff’s vehicle); (2) Nissan was aware of the defects and hazards they posed; (3) Nissan had exclusive knowledge of the defects but intentionally concealed and failed to disclose the information; (4) Nissan intended to deceive plaintiffs by concealing the transmission problems; (5) plaintiffs would not have purchased the car had they known of the defects; and (6) plaintiff suffered damages in the form of money paid to purchase the car. (Id at 843-44.) The court held that these allegations were sufficient to state a cause of action for fraudulent inducement. (Id. at 843-45.)

Here, Plaintiff’s allegations are similar to the facts alleged in Dhital. Plaintiff alleges that 2018 Jeep Renegade vehicles, including the Subject Vehicle, were equipped with a defective 9-speed transmission which is subject to hesitation on acceleration, loss of power, hard and/or harsh shifts, and/or jerking. (“Transmission Defect”) (SAC. ¶ 23-24.) She alleges that prior to her purchase of the Subject Vehicle, FCA knew of the Transmission Defect through sources unavailable to Plaintiff, including pre-production and post-production testing data; early consumer complaints about the Transmission Defect made directly to FCA and its network of dealers; aggregate warranty data compiled from FCA’s network of dealers; testing conducted in response to these complaints; as well as warranty repair and part replacements data received from FCA’s network of dealers, amongst other sources of internal information. (Id at ¶ 26-27.)

Plaintiff asserts that the failure to disclose was knowing and intentional. (Id at ¶ 79.) Plaintiff would not have purchased the Subject Vehicle, or would have paid less for it, had Plaintiff known of the Transmission Defect, given the unsafe nature of the Transmission Defect. (Id at ¶ 32, 82.) These facts are sufficient to state a cause of action under Dhital.

For fraudulent concealment to be actionable, defendant must have been under a duty to disclose the facts to plaintiff. (People v. Highland Fed. Sav. & Loan (1993) 14 Cal.App.4th 1692, 1718; Stevens v. Superior Court (1986) 180 Cal.App.3d 605, 608-610.) A duty to disclose may arise (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; or (4) when the defendant makes partial representations but also suppresses some material facts. (Hoffman v. 162 North Wolfe LLC (2014) /22-8 Cal.App.4th 1178, 1186.)

Failure to disclose is not actionable fraud unless there is some transactional relationship between the parties which gives rise to a duty to disclose known facts, such as between a seller and buyer. (Hoffman v. 162 North Wolfe LLC (2014) 228 Cal.App.4th 1178, 1187.) “Such a transaction must necessarily arise from direct dealings between the plaintiff and defendant; it cannot arise between the defendant and the public at large.” (Bigler-Engler v. Breg, Inc. (2017) 7 Cal. App. 5th 276, 311.) However, the relationship need not be direct where a manufacturer advertises to the plaintiff and obtains monetary benefits from the sale. (Bader v.

Johnson & Johnson (2022) 86 Cal. App. 5th 1094, 1132.)

On July 26, 2018, Plaintiff entered received a warranty agreement from FCA in connection with the purchase of the Subject Vehicle. (SAC ¶7.) Plaintiff alleges that FCA produced advertisements and marketing material concerning the Subject Vehicle, which she reviewed prior to the purchase. (Id at ¶ 11.) Moreover, Plaintiff asserts that FCA had exclusive or superior knowledge of the Transmission Defect based on sources unavailable to Plaintiff. (Id at ¶¶ 27, 30.) This is arguably sufficient to establish a duty to disclose.

The economic loss rule bars “a plaintiff’s tort recovery of economic damages unless such damages are accompanied by some form of physical harm (i.e. personal injury or property damage.)” (North American Chemical Co. v. Superior Court (1997) 59 Cal.App.4th 764, 777.) A purchaser may only recover in contract for purely economic loss due to disappointed expectations. (Robinson Helicopter Co. v. Dana Corp. (2004) 34 Cal. 4th 979, 988.) However, the rule does not apply where the conduct amounting to a breach of contract also violates a duty independent of the contract constituting a tort. (Erlich v.

Menezes (1999) 21 Cal. 4th 543, 551.) A tortious breach of contract may be found when the breach is accompanied by a traditional common law tort, such as fraud or conversion. (Robinson Helicopter, supra, 34 Cal. 4th at 990.) In such 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.)

In Rattagan v. Uber Technologies, Inc, supra, the California Supreme Court affirmed that “the economic loss rule does not apply to limit recovery for intentional tort claims like fraud. The doctrine only applies to bar tort recovery for negligently inflicted economic losses unaccompanied by physical or property damage...” (Rattagan, supra, 17 Cal. 5th 1, 38.) The Court held that:

[U]nder the economic loss rule, tort recovery for breach of a contract duty is generally barred [citations] unless two conditions are satisfied. A plaintiff must first demonstrate the defendant's injury-causing conduct violated a duty that is independent of the duties and rights assumed by the parties when they entered the contract. Second, the defendant's conduct must have caused injury to persons or property that was not reasonably contemplated by the parties when the contract was formed.

(Id at 20-21.) However, the holding was based on concealment committed during the contractual relationship and did not address whether the economic loss rule applies to claims of fraudulent concealment in the inducement. (Id at 41, fn 12.)

In Dhital v. Nissan North America, Inc, supra, the court expressly found that the economic loss rule did not apply to the fraudulent inducement by concealment claim for purposes of pleading. (Dhital, supra, 84 Cal. App. 5th at 89.) The court noted that Robinson, supra, expressly identified fraudulent inducement as an exception to the economic loss rule where the duty giving rise to the tort liability is either completely independent of the contract or arises from conduct with is intentional and intended to cause harm. (Id at 841.)

Fraudulently inducing someone to enter a contract by either affirmative misrepresentations or concealment is conduct that is independent and separate from the later breach of the contract. (Ibid.) Because fraudulent inducement by concealment, is an exception to the economic loss rule, Plaintiff’s fraud is not barred. Consequently, for pleading purposes, Plaintiff has adequate pled the fraudulent concealment cause of action. OVERRULED

10. CASE # CASE NAME HEARING NAME Motion to Strike Complaint on 2nd Amended Complaint for Breach of CVPS2509894 WILLIAMS VS FCA US, LLC Contract/Warranty (Over $35,000) of JASMINE WILLIAMS by FCA US, LLC

Tentative Ruling: Denied.

Responding party to provide notice pursuant to CCP 1019.5.

Defendant moves to strike the prayer for, and references to, punitive damages. FCAC argues that the allegations are conclusory and lack factual support. FCA argue that there are no allegations that the alleged fraud was ratified by a managing agent.

Plaintiff argues that the fraud allegations are alleged with sufficient particularity showing that FCA acted with conscious disregard for Plaintiff’s safety. Plaintiff argues that it is not necessary to name the managing agent who ratified the fraud because the corporate entity itself owes the duty to disclose.

In its Reply, Defendant again argues that the allegations of fraud, malice and oppression are conclusory and do not show the conduct was ratified by an officer, director or managing agent.

Motion to Strike:

Pursuant to CCP §436(a), the court may “strike out any irrelevant, false, or improper matter inserted in any pleading.” When ruling on a motion to strike, the allegations of the pleading are assumed to be true and read in their context. (Clauson v. Superior Court (1998) 67 Cal. App. 4th 1253, 1255.) A pleading is to be liberally construed. (CLD Construction v. City of Ramon (2004) 120 Cal. App. 4th 1141, 1146.)

A motion to strike is the proper procedure to attack a claim for punitive damages. (CCP §§ 435- 436; Truman v. Turning Point of Central Calif., Inc. (2010) 191 Cal.App.4th 53, 63.) A plaintiff may recover exemplary or punitive damages where it is proven that “the defendant has been guilty of oppression, fraud or malice.” (Civ. Code §3294(a).) As defined in the statute, malice is “conduct which is intended by the defendant to cause injury to the plaintiff or despicable conduct which is carried on by the defendant with a willful and conscious disregard of the rights or safety of others.” (Civ.

Code § 3294(c)(1).) Despicable conduct is conduct which is “so vile, base, contemptible, miserable, wretched or loathsome that it would be looked down upon and despised by ordinary decent people.” (American Airlines, Inc. v. Sheppard Mullin Richter & Hampton (2002) 96 Cal. App. 4th 1017, 1050.) Malice does not require actual intent to harm. Instead, the plaintiff may show “conscious disregard for the safety of others where the defendant is aware of the probable dangerous consequences of his or her conduct and here or she willfully fails to avoid such consequences.” (Angie M. v.

Superior Court (1995) 37 Cal. App. 4th 1217, 1228.) “Fraud” is defined as, “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(c)(3).)

Not only must there be circumstances of oppression, fraud or malice, but facts must be alleged in the pleading to support such a claim.” (Grieves v. Superior Court (1984) 157 Cal. App. 3d 159, 166.) “[A] conclusory characterization of defendant’s conduct as intentional, willful and fraudulent is a patently insufficient statement of ‘oppression, fraud, or malice, express or implied,’ within the meaning of section 3294.” (Brousseau v. Jarrett (1977) 73 Cal. App. 3d 864, 872.) The pleading must contain factual allegations of wrongful motive, intent, or purpose. (Cyrus v. Haveson (1976) 65 Cal. App. 3d 306, 317.)

Here, Plaintiff has adequately pled her fraud cause of action, she has established a claim for punitive damages based on that fraud. “A fraud cause of action seeking punitive damages need not include an allegation that the fraud was motivated by the malicious desire to inflict injury upon the victim. The pleading of fraud is sufficient.” (Stevens v. Superior Court (1986) 180 Cal.App.3d 605, 610.)

Defendant argues that the SAC does not establish corporate ratification. With respect to a corporate employer, the authorization, ratification or act of oppression, fraud, or malice must be on the part of an officer, director, or managing agent of the corporation.” (Civ. Code § 3294(b).) Officers, directors and managing agents are those employees of the corporation who “exercise substantial independent authority and judgment over decisions that ultimately determine corporate policy.” (White v. Ultamar (1999) 21 Cal. 4th 563, 573.) Acts of an ordinary supervisory level employees do not subject the corporation to punitive damages. (Ibid.) For the purpose of meeting a demurrer, it is sufficient to allege that the corporation authorized their agent’s wrongful acts. (O'Hara v. Western Seven Trees Corp. (1977) 75 Cal. App. 3d 798, 806.)

Plaintiff alleges that Defendant (and its agents, representatives, officers, directors, employees, affiliates, and/or dealerships) concealed the defects, minimized the scope, cause, and dangers of the defects with inadequate TSBs and/or Recalls, and refused to investigate, address, and remedy the defects as it pertains to all affected vehicles as set forth herein. (SAC, ¶61.) While Plaintiff does not identify any specific officer, directors or managing agents, less specificity is required when it appears from the nature of the allegations that the 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.) Since the identities of the specific individuals involved in the decisions to conceal the defects, issue inadequate TSBs and recalls and refuse to investigate or remedy the defect are in Defendant’s possession, Plaintiff has sufficiently alleged that officers, directors or managing agents were involved in or authorized the concealment. DENIED.