Steven Mendoza v. FCA US LLC

“ ‘ “[W]hile a statute of limitations normally sets the time within which proceedings must be commenced once a cause of action accrues, [a] statute of repose limits the time within which an action may be brought and is not related to accrual. Indeed, ‘the injury need not have occurred, much less have been discovered. Unlike an ordinary statute of limitations which begins running upon accrual of the claim, [the] period contained in a statute of repose begins when a special event occurs, regardless of whether a cause of action has accrued or whether any injury has resulted.’ [Citation.]” ’ [Citations.]” (PGA West Residential Assn., Inc. v. Hulven Internat., Inc. (2017) 14 Cal.App.5th 156, 177.)

The statute imposes a six-year limitations period for product liability actions involving motor vehicles, measured from the date of original delivery. (§ 871.21, subd. (b).) Here, Plaintiff entered into a warranty contract with defendant FCA for the vehicle on March 12, 2017. (First Amended Complaint [“FAC”] at ¶ 7.) But, after the vehicle developed transmission, engine, and electrical defects, Plaintiff did not file this action under the Song-Beverly Act until February 11, 2025, beyond the six-year limitations period. Thus, FCA contends these causes of action are time barred under the statute.

As a preliminary matter, the third cause of action addresses violations under Civil Code section 1793.2, subdivision (a)(3). But, section 871.20, by its terms, plainly states that it applies to a violation of Civil Code section 1793.2, subdivisions (b) or (d). Nothing in the statute suggests that it is applicable to violations under Civil Code section 1793.2, subdivision (a)(3).

Also, in order for FCA to rely on sections 871.20 or 871.21, it needs to have “elect[ed] to be governed by this chapter for all actions described in subdivision (a) of Section 871.20 with respect to all of its motor vehicles.” (§§ 871.29, subd. (b), 871.30, subd. (c).) FCA contends, as a manufacturer, it has opted into the statute and thus is entitled to protections under the statute. (See Demurrer at p. 13:19-21.) But, a demurrer is limited to the operative complaint’s four corners, attached exhibits, and judicially noticeable matters. (Hoffman v. Smithwoods RV Park, LLC (2009) 179 Cal.App.4th 390, 400.) Here, the FAC does not allege that FCA made any such election and FCA does not request judicial notice of any election, thereby failing to demonstrate that either section 870.20 or 871.21 is applicable to this action.

Therefore, the demurrer to the first, second, third, and fourth causes of action on the ground that the claims are barred by the six-year statute of repose is OVERRULED.

2 Further unspecified statutory references are to the Code of Civil Procedure.

Statute of Limitations

Defendant FCA asserts the first, second, third, and fourth causes of action are time barred by the statute of limitations under Commercial Code section 2725.

“ ‘Statute of limitations’ is the collective term applied to acts or parts of acts that prescribe the periods beyond which a plaintiff may not bring a cause of action. [Citations.]” (Fox v. Ethicon Endo-Surgery, Inc. (2005) 35 Cal.4th 797, 806.) “A statute of limitations strikes a balance among conflicting interests. If it is unfair to bar a plaintiff from recovering on a meritorious claim, it is also unfair to require a defendant to defend against possibly false allegations concerning long-forgotten events, when important evidence may no longer be available.” (Pooshs v. Philip Morris USA, Inc. (2011) 51 Cal.4th 788, 797.)

“ ‘A plaintiff must bring a claim within the limitations period after accrual of the cause of action. [Citations.] In other words, statutes of limitation do not begin to run until a cause of action accrues. [Citation.] [¶] Generally speaking, a cause of action accrues at “the time when the cause of action is complete with all of its elements.” [Citations.]’ ” (V.C. v. Los Angeles Unified School Dist. (2006) 139 Cal.App.4th 499, 509-510.)

“ ‘The defense of statute of limitations may be asserted by general demurrer if the complaint shows on its face that the statute bars the action.’ [Citations.]” (E-Fab, Inc. v. Accountants, Inc. Services (2007) 153 Cal.App.4th 1308, 1315 (E-Fab, Inc.).) But, “ ‘[i]n order for the bar of the statute of limitations to be raised by demurrer, the defect must clearly and affirmatively appear on the face of the complaint; it is not enough that the complaint shows merely that the action may be barred.’ [Citations.]” (Id. at pp. 1315-1316.)

If a demurrer demonstrates that a pleading is untimely on its face, it becomes the plaintiff’s burden “even at the pleading stage” to establish an exception to the limitations period. (Aryeh v. Cannon Business Solutions, Inc. (2013) 55 Cal.4th 1185, 1197.)

When evaluating whether a claim is time-barred, a court must determine (1) which statute of limitations applies and (2) when the claim accrued. (E-Fab, Inc., supra, 153 Cal.App.4th at p. 1316.)

Commercial Code section 2725 provides in relevant part:

(1) An action for breach of any contract for sale must be commenced within four years after the cause of action has accrued. By the original agreement the parties may reduce the period of limitation to not less than one year but may not extend it.

(2) A cause of action accrues when the breach occurs, regardless of the aggrieved party’s lack of knowledge of the breach. A breach of warranty occurs when tender of delivery is made, except that where a warranty explicitly extends to future performance of the goods and discovery of the breach must await the time of such performance the cause of action accrues when the breach is or should have been discovered. (Comm. Code, § 2725, subd. (1) – (2).)

As stated above, Plaintiff purchased the vehicle on March 12, 2017 but did not file this lawsuit until February 11, 2025, beyond the four-year limitations period. Plaintiff however alleges the statute of limitations were tolled, at least in part, by the class action tolling rule articulated in Am. Pipe & Const. Co. v. Utah (1974) 414 U.S. 538 (American Pipe) and fraudulent concealing tolling. (See FAC at ¶¶ 50-52, 63-67.) Defendant FCA does not refute these tolling allegations in their moving papers and thus the court cannot resolve the statute of limitations defense for purposes of this demurrer.

Accordingly, the demurrer to the first, second, third, and fourth causes of action on the ground that the claims are barred by the four-year statute of limitations is OVERRULED.

Sixth Cause of Action: Fraudulent Inducement - Concealment

Statute of Limitations

Defendant FCA argues the sixth cause of action is barred by the three-year statute of limitations.

The limitations period for a claim predicated on fraud is three years from the date of “the discovery, by the aggrieved party, of the facts constituting the fraud.” (Code Civ. Proc., § 338, subd. (d); Britton v. Girardi (2015) 235 Cal.App.4th 721, 734.) Defendant FCA presumes the limitations period for this claim began to run on the date of purchase, but there is nothing in the FAC which indicates Plaintiff discovered facts constituting the fraud on that date. (See Coalition for Clean Air v. City of Visalia (2012) 209 Cal.App.4th 408, 420 [“[F]or a demurrer based on the statute of limitations to be sustained, the untimeliness of the lawsuit must clearly and affirmatively appear on the face of the complaint and matters judicially noticed.”].)

In fact, Plaintiff did not know about the Transmission Defect at the time of sale which must be accepted as true on demurrer. (See FAC at ¶¶ 19, 33, 92, 95, 97-98; see also Olson v. Toy (1996) 46 Cal.App.4th 818, 823 [for purposes of demurrer, we accept these allegations as true].)

Specificity

Defendant FCA contends the fraud claim has not been pled with specificity. But, this contention is not persuasive as Plaintiff alleges sufficient facts identifying the concealed defect (i.e. Transmission Defect). (See FAC at ¶¶ 12, 27-29, 36, 92-94; see also Dhital v. Nissan North America, Inc. (2022) 84 Cal.App.5th 828, 844 (Dhital) [“Nissan also contends plaintiffs did not provide specifics about what Nissan should have disclosed. But plaintiffs alleged the CVT transmissions were defective in that they caused such problems as hesitation, shaking, jerking, and failure to function. The SAC also alleged Nissan was aware of the defects as a result of premarket testing and consumer complaints that were made both to the National Highway Traffic Safety Administration and to Nissan and its dealers. It is not clear what additional information Nissan believes should have been included.”].)

Also, it is much more difficult to apply the particularity requirement rule in a case of nondisclosure. (See Alfaro v. Community Housing Imp. System & Planning Ass’n., Inc. (2009) 171 Cal.App.4th 1356, 1384.) And, “[l]ess particularity is required when it appears that defendant has superior knowledge of the facts, so long as the pleading gives notice of the issues sufficient to enable preparation of a defense.” (Okun v. Super. Ct. (1981) 29 Cal.3d 442,

458; see Committee on Children’s Television, Inc. v. General Foods Corp. (1983) 35 Cal.3d 197, 217 [“[even] under the strict rules of common law pleading, one of the canons was that less particularity is required when the facts lie more in the knowledge of the opposite party”].) Such is the circumstance here, when defendant FCA is alleged to possess exclusive knowledge regarding the Transmission Defect in the vehicle. (FAC at ¶¶ 34-38, 92, 95.) In this vein, the court finds the concealment claim has been pled with the requisite specificity.

Defendant FCA also asserts the fraud claim lacks the required element of intent to defraud. But, this assertion does not appear to be well-taken. Intent is a fact and, thus, the averment that a defendant knowingly failed to disclose a material fact with the intent to deceive the plaintiff, or any other general allegation with similar purport, is sufficient for pleading purposes. (Woodroof v. Howes (1891) 88 Cal. 184, 190; Wennerholm v. Stanford University School of Medicine (1942) 20 Cal.2d 713, 716.) Here, Plaintiff alleges that in concealing the Transmission Defect, FCA intended to deceive him. (See FAC at ¶ 96.) This is sufficient to plead the element of intent.

Duty to Disclose

Defendant FCA argues there are no facts pled showing a transactional relationship between FCA and Plaintiff to establish a duty to disclose.

“To maintain a cause of action for fraud through nondisclosure or concealment of facts, there must be allegations demonstrating that the defendant was under a legal duty to disclose those facts.” (Los Angeles Memorial Coliseum Commission, et al. v. Insomniac, Inc., et al. (2015) 233 Cal.App.4th 803, 831.)

“A duty to disclose a material fact can arise if (1) it is imposed by statute; (2) the defendant is acting as the plaintiff’s fiduciary or is in some other confidential relationship with the plaintiff that imposes a disclosure duty under the circumstances; (3) the material facts are known or accessible only to the defendant, and the defendant knows those facts are not known or reasonably discoverable by the plaintiff (i.e., exclusive knowledge); (4) the defendant makes representations but fails to disclose other facts that materially qualify the facts disclosed or render the disclosure misleading (i.e. partial concealment); or (5) the defendant actively conceals discovery of material fact from the plaintiff (i.e., active concealment).” (Rattagan v. Uber Technologies, Inc. (2024) 17 Cal.5th 1, 40 (Rattagan).)

Here, even though Plaintiff does not allege he directly purchased the vehicle from defendant FCA, he alleges the existence of a contractual agreement (express written warranty) with FCA and thus, a basis upon which a duty to disclose arises. (See FAC at ¶¶ 7-10, Ex. A; Rattagan, supra, 17 Cal.5th at pp. 40-41; Bigler-Engler v. Breg, Inc. (2017) 7 Cal.App.5th 276, 311; Dhital, supra, 84 Cal.App.5th at p. 844 [appellate court determined duty to disclose existed in part based on allegation that vehicle was backed by an express warranty].)

Economic Loss Rule

Finally, the sixth cause of action is not barred by the economic loss rule as long-standing case law provides that claims for fraudulent inducement are not barred by the economic loss rule. (See Lazar v. Super. Ct. (1996) 12 Cal.4th 631, 645 [“[F]raudulent inducement of contract—as the very phrase suggests—is not a context where the ‘traditional separation of tort and contract

law’ [citation] obtains. To the contrary, this area of the law traditionally has involved both contract and tort principles and procedures.”]; Erlich v. Menezes (1999) 21 Cal.4th 543, 551- 552 [“Tort damages have been permitted in contract cases ... where the contract was fraudulently induced.”]; United Guar. Mortg. Indem. Co. v. Countrywide Fin. Corp. (C.D. Cal. 2009) 660 F.Supp.2d 1163, 1188 [“The economic loss rule poses no barrier to a properly pled fraudulent inducement claim[.]”]; see also Dhital, supra, 84 Cal.App.5th at p. 843 [“Fraudulent inducement claims fall within an exception to the economic loss rule recognized by our Supreme Court.”].)

Consequently, the demurrer to the sixth cause of action is OVERRULED in its entirety.

Motion to Strike Claim for Punitive Damages

Defendant FCA separately moves to strike the punitive damages claim in the FAC. As explained above, the court overruled the demurrer with respect to the fraud cause of action. Thus, the FAC properly supports Plaintiff’s claim for punitive damages. (See Stevens v. Super. Ct. (1986) 180 Cal.App.3d 605, 610 [pleading of fraud is sufficient for punitive damages].)

Therefore, the motion to strike the claim for punitive damages is DENIED.

Disposition

The demurrer to the first, second, third, fourth, and sixth causes of action is OVERRULED in its entirety.

The motion to strike the claim for punitive damages is DENIED.

The court will prepare the Order.

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