JACKSON, et al. vs BMW OF NORTH AMERICA, LLC., et al.

A Stipulation and Appointment of Official Reporter Pro Tempore (CV/E-206) is required to be signed by each party, the private court reporter, and the Judge prior to the hearing, if not using a reporter from the Court’s Approved Official Reporter Pro Tempore list.

Once the form is signed it must be filed with the clerk. If a litigant has been granted a fee waiver and requests a court reporter, the party must submit a Request for Court Reporter by a Party with a Fee Waiver (CV/E-211) and it must be filed with the clerk at least 10 days prior to the hearing or at the time the proceeding is scheduled if less than 10 days away. Once approved, the clerk will be forward the form to the Court Reporter’s Office and an official reporter will be provided.

TENTATIVE RULING:

*** The Notice of Motion does not provide notice of the Court’s tentative ruling system, as required by Local Rule 1.06(D). Moving counsel is directed to contact opposing counsel forthwith to advise counsel of Local Rule 1.06 and the Court’s tentative ruling procedure. If moving counsel is unable to contact opposing counsel prior to the hearing, they shall be available at the hearing in the event opposing counsel appears without following the procedures set forth in Local Rule 1.06(B). ***

Defendant BMW of North America, LLC’s (“BMW”) motion for judgment on the pleadings as to the fourth and sixth causes of action in Plaintiffs Latoya Jackson and James Durrah’s (“Plaintiff”) Complaint is DENIED as follows.

Background

This is a Lemon Law action arising out of Plaintiffs’ 2023 purchase of a Certified Pre- Owned 220 BMW 530 (the “Vehicle”). (Compl. ¶ 7.)

SUPERIOR COURT OF CALIFORNIA COUNTY OF SACRAMENTO

24CV026518: JACKSON, et al. vs BMW OF NORTH AMERICA, LLC., et al. 10/29/2025 Hearing on Motion for Judgment on the Pleadings in Department 54

On December 26, 2024, Plaintiffs filed the Complaint, alleging causes of action for violations of the Song-Beverly Consumer Warranty Act (the “Act”) and a fraudulent inducement-concealment cause of action against BMW and a negligent repair cause of action against Defendant BMW of Visalia.

Plaintiffs allege in pertinent part as follows.

On March 20, 2023, Plaintiffs entered into a warranty contract with BWM regarding the Vehicle, which was manufactured and/or distributed by BWM. (Compl. ¶ 7.) Defects and nonconformities to warranty manifested themselves within the applicable express warranty period, including but not limited to, engine defects, transmission defects, electrical defects, and other defects and non-conformities. (Compl. ¶ 12.)

The 2.0L engine and/or its related components installed in the Vehicle suffer from one or more defects that can result in loss of power, stalling, engine running rough, engine misfire(s), and failure of the engine (the “Engine Defect”). (Compl. ¶ 53.) The Engine Defect causes unsafe conditions, including the engine losing power while driving. (Compl. ¶ 55.) These conditions present a safety hazard because they severely affect the driver’s ability to control the vehicle, and substantially increase the likelihood that the engine will fail, lose power, and/or cut off during operation, thereby resulting in accidents involving property damage, personal injury and even death. (Ibid.)

Prior to sale of the Vehicle, BMW knew, or should have known, about the Engine Defect through its exclusive knowledge of non-public, internal data about the Engine Defect, including: pre-releasing testing data; early consumer complaints about the Engine Defect to Defendant BMW’s dealers who are BMW’s agents for vehicle repairs; dealership repair orders; testing conducted in response to those complaints; and other internal sources of information possessed exclusively by BMW and its agents. (Compl. ¶ 57.)

Nevertheless, BMW and its agents have actively concealed the Engine Defect and failed to disclose this defect to Plaintiffs at the time of purchase of the Vehicle or thereafter. (Ibid.) In fact, instead of repairing the defects in the 2.0L engine, BMW either refused to acknowledge their existence, or performed superficial and ineffectual repairs that simply masked the symptoms of the Engine Defect. (Compl. ¶ 59.)

If Plaintiffs knew about these defects at the time of sale, they would not have purchased the Vehicle. (Compl. ¶ 60.) As a result of Plaintiffs’ reliance on BMW and its agent’s omissions and/or concealment of the Engine Defect, Plaintiffs suffered an ascertainable loss of money, property, and value to the Subject Vehicle, which is de minimis. (Compl. ¶ 61.) Additionally, as a result of the Engine Defect, Plaintiffs were harmed and suffered actual damages in that the Subject Vehicle’s engine is substantially certain to fail before its expected useful life has run. (Ibid.)

SUPERIOR COURT OF CALIFORNIA COUNTY OF SACRAMENTO

24CV026518: JACKSON, et al. vs BMW OF NORTH AMERICA, LLC., et al. 10/29/2025 Hearing on Motion for Judgment on the Pleadings in Department 54

BMW had superior and exclusive knowledge of the Engine Defect and knew or should have known that the Engine Defect was not known or reasonably discoverable by Plaintiffs before Plaintiffs purchased the Subject Vehicle. (Compl. ¶ 62.) The existence of the Engine Defect is a material fact that a reasonable consumer would consider when deciding whether to purchase or lease a vehicle equipped with a 2.0L Engine. (Compl. ¶ 66.)

BMW’s failure to notify consumers, dealerships, or auto-technicians of the Engine Defect prevents it from being efficiently diagnosed. (Compl. ¶ 70.) Drivers are led to believe that the problems they are experiencing with the engines in their vehicles are actually “normal characteristics” of the engine. (Ibid.) Likewise, the lack of information makes it less likely that dealerships and auto-technicians will be able to diagnose and fix the Engine Defect or advise Plaintiffs about the dangers of driving the Vehicle. (Ibid.)

Despite BMW’s knowledge of the Engine Defect, it continued to represent that the vehicles equipped with the 2.0L Engine were of high quality and trained its dealers throughout the country to specifically tout the supposedly superior attributes of the 2.0L Engine, without ever mentioning its troubling Engine Defect. (Compl. ¶ 72.) BMW continued to conceal its knowledge of the defective 2.0L Engine in its marketing materials, relied upon by Plaintiffs. (Ibid.) BMW still has not notified Plaintiffs that the Subject Vehicle suffers from a systemic defect that causes the engine to malfunction. (Compl. ¶ 79.) As a result of BMW’s misconduct, Plaintiffs have suffered and will continue to suffer actual damages. (Compl. ¶ 80.)

Legal Standard

A defendant may move for judgment on the pleadings if the operative complaint does not state facts sufficient to constitute a cause of action against that defendant. (See Code Civ. Proc., § 438, subds. (b)(1), (c)(1)(B)(ii).) Except as provided by statute, a motion for judgment on the pleadings is analyzed like a general demurrer. (Cloud v. Northrop Grumman Corp. (1998) 67 Cal.App.4th 995, 999.)

“Both a demurrer and a motion for judgment on the pleadings accept as true all material factual allegations of the challenged pleading, unless contrary to law or to facts of which a court may take judicial notice.” (Tung v. Chicago Title Co. (2021) 63 Cal.App.5th 734, 743-744; see also Code Civ. Proc., § 438, subd. (d) [“The grounds for motion provided for in this section shall appear on the face of the challenged pleading or from any matter of which the court is required to take judicial notice. Where the motion is based on a matter of which the court may take judicial notice pursuant to Section 452 or 453 of the Evidence Code, the matter shall be specified in the notice of motion, or in the supporting points and authorities, except as the court may otherwise permit.].)

SUPERIOR COURT OF CALIFORNIA COUNTY OF SACRAMENTO

24CV026518: JACKSON, et al. vs BMW OF NORTH AMERICA, LLC., et al. 10/29/2025 Hearing on Motion for Judgment on the Pleadings in Department 54

Request for Judicial Notice

BMW requests that the Court take judicial notice of its Statement of Information filed with the State of California, Office of the Secretary of State, dated November 11, 2024. The Court grants the request as to the existence of the document, but not its contents under Evidence Code section 452, subdivisions (c). (See StorMedia Inc. v. Super. Ct. (1999) 20 Cal.4th 449, 457 fn. 9 [“When judicial notice is taken of a document, . . . the truthfulness and proper interpretation of the document are disputable.”]; accord Ragland v. U.S. Bank Nat’l Ass’n (2012) 209 Cal.App.4th 182, 193 [“Although the audit report is a government document, we may not judicially notice the truth of its contents.”].)

Discussion

Fourth Cause of Action for the Breach of the Implied Warranty of Merchantability

BMW argues that Plaintiffs’ fourth cause of action for breach of the implied warranty of merchantability cause of action fails because BWM is a distributor, not a manufacturer or a retail seller under the Act. (Mem. of P.&A. ISO Mot.[1] (“MPA”) 2:19-20.) This argument is premised wholly upon the Court’s consideration of BMW’s Statement of Information, in which BMW states its “Type of Business” is “Importer/wholesaler of motor vehicles, motorcycles, parts and accessories.” (See Statement of Information, attached as Ex. 1 to the Declaration of Hanqiu Liu ISO Mot.)

However, the Court may only take judicial notice of the document’s existence, not the truth of the information contained therein. And Plaintiffs allege in the Complaint that the Vehicle was “manufactured and or distributed by Defendant.” (Compl. ¶ 7 [emphasis added].) On a motion for judgment on the pleadings, the Court must accept a true all material facts alleged in the challenged pleading. (Ventura Coastal, LLC v. Occupational Safety & Health Appeals Bd. (2020) 58 Cal.App.5th 1, 14.)

Accordingly, BMW’s motion for judgment on the pleadings is denied as to the fourth cause of action. In light of this ruling, the Court need not address the additional arguments Plaintiffs raise in their opposition.

Sixth Cause of Action for Fraudulent Inducement-Concealment

BMW argues Plaintiffs’ fraudulent inducement-concealment cause of action fails because (1) BMW did not owe Plaintiffs a duty of disclosure, and (2) the claim is barred by the economic loss rule. (MPA 1:7-9.)

The Court addresses BMW’s arguments in turn.

///

SUPERIOR COURT OF CALIFORNIA COUNTY OF SACRAMENTO

24CV026518: JACKSON, et al. vs BMW OF NORTH AMERICA, LLC., et al. 10/29/2025 Hearing on Motion for Judgment on the Pleadings in Department 54

A. Duty of Disclosure

BMW first argues that the fraudulent inducement-concealment cause of action fails because “California law does not permit a cause of action for concealment that did not arise in a fiduciary relationship, or from a transaction involving ‘direct dealings’ between plaintiff and defendant[,]” and “[b]ecause the Complaint . . . does not contain well-pleaded allegations that Plaintiffs purchased the [Vehicle] directly from [BMW] or that Plaintiffs otherwise entered into a transaction with [BMW], Plaintiffs have not alleged (and cannot allege) facts supporting a concealment claim.” (MPA 2:10- 15.)

BMW’s argument lacks merit for at least two reasons.

First, while it may be true that Plaintiffs did not purchase the Vehicle directly from BMW, paragraph 7 of the Complaint expressly alleges that Plaintiffs entered into a warranty contract with Defendant BMW on or about March 20, 2023. This allegation must be accepted as true for purposes of this motion and is in the Court’s view sufficient, in and of itself, to establish a direct “transactional relationship” between Plaintiffs and BMW. Additionally, paragraph 8 indicates that the warranty contract is attached to the Complaint as Exhibit A, and this exhibit, by its own terms, appears to bear out Plaintiffs’ allegation that the warranty was indeed issued by BMW.

Second, as the Court has repeatedly explained in its rulings on several prior demurrers and motions for judgment on the pleadings filed in other Lemon Law actions pending in the Sacramento Superior Court, no “transactional relationship” is necessary to bring a fraudulent concealment claim since a product’s vendor has a duty to disclose material facts not only to immediate purchasers but also to subsequent purchasers when the vendor has reason to know that the subject product will be resold. (See, e.g., OCM Principal Opportunities Fund v. CIBC World Markets Corp. (2007) 157 Cal.App.4th 835, 859-860.) This is essentially what Plaintiffs have alleged in the Complaint, separate and apart from the allegation of a direct contractual relationship between Plaintiffs and BMW in the form of the Vehicle’s warranty.

Moreover, the legal authorities advanced in BMW’s moving papers (MPA 5:8-6:5), do not involve the factual scenario presented in the case at bar. In fact, the appellate precedent on which BMW primarily relies, i.e., Bigler-Engler v. Breg, Inc. (2017) 7 Cal.App.5th 276, is factually distinguishable from this case since the manufacturer in Bigler-Engler was not aware that its product (a medical device) was provided to the plaintiff, and in any event, the primary issues on appeal related to the sufficiency of evidence at trial. (Bigler-Engler, at pp.312-313.) In addition, BMW’s reliance on the lack of direct “transactional relationship” ignores the Act’s provisions which treat a vehicle

SUPERIOR COURT OF CALIFORNIA COUNTY OF SACRAMENTO

24CV026518: JACKSON, et al. vs BMW OF NORTH AMERICA, LLC., et al. 10/29/2025 Hearing on Motion for Judgment on the Pleadings in Department 54

manufacturer and its representatives in “this state” as a single entity. (Ibrahim v. Ford Motor Co. (1989) 214 Cal.App.3d 878, 889.) Thus, the Court finds that the Complaint’s current allegations are sufficient to withstand BMW’s motion based on the absence of a “transactional relationship.”

B. Economic Loss Rule

BMW next argues that the cause of action for fraudulent inducement-concealment is barred by the economic loss rule (“ELR”).[2] According to BMW, the ELR “requires a purchaser to recover in contract for purely economic loss due to disappointed expectations, unless he can demonstrate harm above and beyond a broken contractual promise” so as to prevent “the law of contract and the law of tort from dissolving one into the other.” (MPA 6:26-7:6.) BMW insists that under Rattagan v. Uber Technologies, Inc., fraudulent concealment can form the basis of a tort action only if “1) the elements of the claim can be established independently of the parties’ contractual rights and obligations; and 2) the tortious conduct exposes the plaintiff to a risk of harm beyond the reasonable contemplation of the parties when they entered into the contract.” (MPA 7:14-18.)

BMW maintains the Complaint does not allege facts to satisfy either element.

BMW argues:

Here, Plaintiffs’ Complaint makes broad, generalized assertions that [BMW] concealed or suppressed material facts it was allegedly bound to disclose, intending to mislead and defraud Plaintiffs. However, Plaintiff[s] did not purchase the Subject Vehicle from [BMW]; and there is no contractual relationship alleged between Plaintiff[s] and [BMW]. Plaintiffs’ allegations amount to nothing more than a claim for non-performance, failing to establish a duty separate from any contractual obligations. Additionally, Plaintiffs’ Complaint lacks factual support to demonstrate that [BMW] had a duty to disclose.

Without an independent duty, the fraudulent concealment claim is inseparable from the warranty context. Plaintiffs cannot establish the first prong of the rule stated in Rattagan. As such, the economic loss rule bars Plaintiffs’ fraudulent concealment claims. In addition, Plaintiffs cannot establish the second prong either, which requires the tortious conduct to expose the plaintiff to a risk of harm beyond what the parties could reasonably contemplate. . . .

SUPERIOR COURT OF CALIFORNIA COUNTY OF SACRAMENTO

24CV026518: JACKSON, et al. vs BMW OF NORTH AMERICA, LLC., et al. 10/29/2025 Hearing on Motion for Judgment on the Pleadings in Department 54

(MPA 8:10-23.)

The Court disagrees.

First, as discussed above, Plaintiffs have sufficiently alleged the basis of a duty to disclose by BMW.

Second, the Complaint’s allegations that BMW actively concealed the Engine Defect must be accepted as true for purposes of this motion, and, notably, the Complaint does not merely allege that Plaintiffs received a defective vehicle in violation of the express and implied warranties. Instead, the Complaint specifically alleges that BMW knew of the Engine Defect, which is alleged to present a safety hazard, actively concealed this information from Plaintiffs, Plaintiffs would not have purchased the Vehicle if they had known about the Engine Defect, and Plaintiffs were harmed by the concealment.

Under Rattagan, these allegations of intentional, fraudulent conduct on the part of BMW which, according to the Complaint, caused harm that was not reasonably contemplated by the parties at the time Plaintiffs acquired the Vehicle, elevates the sixth cause of action above and beyond any potential bar otherwise posed by the ELR on which this motion is based.

In short, Plaintiff’s sixth cause of action satisfies both requirements found in Rattagan. Thus, BMW’s motion based on the ELR is overruled.

Conclusion

For the stated reasons, BMW’s motion for judgment on the pleadings is denied in its entirety.

This minute order is effective immediately. No formal order or other notice is required. (Code Civ. Proc., § 1019.5; Cal. Rules of Court, rule 3.1312.)

[1] The Court notes that BMW filed its motion and supporting memorandum of points and authorities (“MPA”) as a single document. However, it paginated the two sections of the single document separately. Therefore, the Court cites to the MPA as though it is a separate document. [2] “The economic loss rule is a device, among others, that courts have developed to address and protect the often elusive boundary line between tort and contract law.” (Rattagan v. Uber Technologies, Inc. (2024) 17 Cal.5th 1, 19.)