Machado v. General Motors, LLC, et al

The complaint is also to be liberally construed. (Code of Civ. Proc. §452.) General Demurrer A general demurrer challenges a complaint for failure to state a cause of action under Code of Civil Procedure section 430.10, subdivision (e). It is granted only where the facts alleged on the fact of the complaint fail to state a valid claim under any possible legal theory entitling the plaintiff to relief against the demurring defendant. (Sheehan v. San Francisco 49ers, Ltd. (2009) 45 Cal.4th 992, 998.)

The plaintiff may be mistaken as to the nature of the case or the legal theory on which he or she can prevail, but if the essential facts of some valid cause of action are alleged, the complaint is good against a general demurrer. (Weil & Brown, Cal. Prac. Guide: Civ. Proc. Before Trial § 7:41 (hereafter Weil & Brown), citing Quelimane Co. v. Stewart Tile Guaranty Co. (1989) 19 Cal.4th 26, 38-39.) All that is necessary as against a general demurrer is to plead facts showing that the plaintiff may be entitled to some relief.

In passing upon the sufficiency of a pleading, its allegations must be liberally construed with a view to substantial justice between the parties.” (Fundin v. Chicago Pneumatic Tool Co. (1984) 152 Cal.App.3d 951, 955; Michaelian v. State Compensation Insurance Fund (1996) 50 Cal.App.4th 1093, 1104-1105.) The complaint includes matters shown in attached exhibits and incorporated by reference. (Frantz v. Blackwell (1987) 189 Cal.App.3d 91, 94.) No other extrinsic evidence can be considered. (Ion Equipment Corp. v.

Nelson (1980) 110 Cal.App.3d 868, 881.) A demurrer predicated on a complaint’s failure to state facts sufficient to constitute a cause of action (Code of Civ. Proc. §430.10, subd. (e)) should be granted only when the facts alleged on the face of the complaint fail to state any valid claim entitled to the plaintiff or disclose a complete defense to relief. Even if a plaintiff is mistaken as to the nature of the case or the legal theory on which he/she

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could prevail, the complaint is good against a general demurrer if the essential facts allege some valid cause of action. (Gruenberg v. Aetna Ins. Co. (1973) 9 Cal.3d 566, 572.) The Fifth Cause of Action for Fraud “[T]he elements of an action for fraud and deceit based on a concealment are: (1) the defendant must have concealed or suppressed a material fact, (2) the defendant must have been under a duty to disclose the fact to the plaintiff, (3) the defendant must have intentionally concealed or suppressed the fact with the intent to defraud the plaintiff, (4) the plaintiff must have been unaware of the fact and would not have acted as he did if he had known of the concealed or suppressed fact, and (5) as a result of the concealment or suppression of the fact, the plaintiff must have sustained damage.” (Boschma v.

Home Loan Center, Inc. (2011) 198 Cal.App.4th 230, 248.) Fraud claims must be alleged with particularity. In the affirmative representation context, that requirement “necessitates pleading facts which ‘show how, when, where, to whom, and by what means the representations were tendered.’ ” (Rattagan v. Uber Technologies, Inc. (2024) 17 Cal.5th 1, 43.) The pleading standard is not weakened in concealment claims, however, as the “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.” (Ibid.)

For instance, “the court must determine whether the plaintiff has alleged a sufficient factual basis for establishing a duty of disclosure on the part of the defendant independent of the parties’ contract. If the duty allegedly 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 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. ‘[M]ere conclusionary allegations that the omissions were intentional and for the purpose of defrauding and deceiving plaintiff[] ... are insufficient for the foregoing purposes.’ ” (Rattagan, supra, 17 Cal.5th at pp. 43–44.)

A duty to disclose 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

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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].)

However, “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.) The court of appeal in Shapiro, supra, cited several examples of viable fraud claims involving indirect privity.

The FAC alleges that GM knowingly and intentionally concealed the defective nature of the transmission all while promoting marketing materials that did not disclose the defect. (FAC at ¶¶ 63, 67, and 70.) However, it is not clearly alleged that the concealment was specifically perpetrated with the intent to induce reliance. Furthermore, to the extent the marketing materials are used as a basis for the duty to disclose the contents and specifics of the marketing materials are not particularized in the FAC.

This lack of specificity is fatal. The pleading also does not clearly indicate who should have disclosed the truth to Machado, but less particularity is required at the pleading stage when the defendant may be assumed to possess knowledge of the facts at least equal, if not superior, to that possessed by the plaintiff. (Dino, Inc. v. Boreta Enterprises, Inc. (1964) 226 Cal.App.2d 336, 340.) Naturally, GM would know better than Machado who was in charge of the marketing materials and who should have made corrections to any misleading statements.

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Statute of Limitations Defense Under Code of Civil Procedure section 338, subdivision (d), the statute of limitations on “[a]n action for relief on the ground of fraud or mistake” is three years, but “[t]he cause of action in that case is not deemed to have accrued until the discovery, by the aggrieved party, of the facts constituting the fraud or mistake.” The statute “effectively codifies the delayed discovery rule in connection with actions for fraud, providing that a cause of action for fraud ‘is not to be deemed to have accrued until the discovery, by the aggrieved party, of the facts constituting the fraud or mistake.’” (Brandon G. v.

Gray (2003) 111 Cal.App.4th 29, 35.) A plaintiff whose complaint shows on its face that the claim would be barred without the benefit of the discovery rule must specifically plead facts to show (1) the time and manner of discovery and (2) the inability to have made earlier discovery despite reasonable diligence. The burden is on the plaintiff to show diligence, and conclusory allegations will not withstand demurrer. (CAMSI IV v. Hunter Technology Corp. (1991) 230 Cal.App.3d 1525, 1536-1537.) The limitations period begins when the plaintiff “suspects or should suspect that [the] injury was caused by wrongdoing, that someone has done something wrong....” (Jolly v.

Eli Lilly & Co. (1988) 44 Cal.3d 1103, 1110.) The limitations period begins once the plaintiff “has notice or information of circumstances to put a reasonable person on inquiry” and “[a] plaintiff need not be aware of the specific ‘facts’ necessary to establish the claim.” (Id. at pp. 1110-1111.) “Once the plaintiff has a suspicion of wrongdoing, and therefore an incentive to sue, [plaintiff] must decide whether to file suit or sit on [plaintiff’s] rights. So long as a suspicion exists, it is clear that the plaintiff must go find the fact; [plaintiff] cannot wait for the facts to find [plaintiff].” (Id. at p. 1111.) “The plaintiff is charged with this awareness as of the date he or she suspects or should suspect that the injury was caused by someone’s wrongful act.” (Brandon G. v.

Gray, supra, 111 Cal.App.4th at p. 35.) GM contends the fraud occurred when the vehicle was purchased on August 22, 2020 and since the litigation was not commenced November 21, 2024 it is barred by the applicable statute of limitations. However, the FAC does not indicate when the vehicle was purchased. The date of the purchase of the vehicle itself is not alleged and that date could be different from the date of the warranty contract. Furthermore, Machado would not necessarily have reason to suspect the fraud until after he began experiencing problems or after the problems were significant enough that they could not be repaired within a reasonable number of attempts.

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The facts alleged in this case suggest that the delayed discovery rule applies because Machado alleges he did not experience symptoms with the vehicle until it had 28,000 miles; he did not discover the alleged wrongful conduct until shortly before filing suit; and he otherwise had no way of knowing until GM was unable to repair the vehicle after a reasonable number of attempts. (FAC at ¶¶ 21, 23, and 26.) The issue would also largely be a factual dispute for the trier of fact. (See People ex rel.

Allstate Ins. Co. v. Discovery Radiology Physicians, P.C. (2023) 94 Cal.App.5th 521, 552 [“When a plaintiff reasonably should have discovered facts for purposes of the accrual of a cause of action or application of the delayed discovery rule is generally a question of fact, properly decided as a matter of law only if the evidence (or, in the case of a demurrer, the allegations in the complaint and facts properly subject to judicial notice) can support only one reasonable conclusion”].) Motion to Strike Code of Civil Procedure section 436, subdivision (a) states that matters that are “irrelevant, false or improper” are subject to a motion to strike. “Irrelevant” means any immaterial allegation in the complaint, and “immaterial” means (i) an allegation that is not essential to the statement of a claim or defense, (ii) an allegation that is neither pertinent to nor supported by an otherwise sufficient claim or defense, and (iii) a demand for judgment requesting relief not supported by the allegations of the complaint or cross-complaint. (Code Civ.

Proc., §431.10, subs. (b)-(c).) Additionally, all or part of a pleading that is not drawn or filed in conformity with the laws of this state, a court rule, or order of the court may be stricken. (Code Civ. Proc., §436, subd. (b).) The grounds to strike shall appear either on the face of the challenged pleading or from matters that are judicially noticed. (Code Civ. Proc., §437.) Additionally, the court reads the allegations as a whole, with all parts in their context, and assumes their truth. (Spielholz v.

Superior Court (Los Angeles Cellular Telephone Company) (2001) 86 Cal.App.4th 1366, 1371.) Before filing a strike motion, the moving party shall meet and confer, at least 5 days before a responsive pleading is due, in person or by telephone, with the opposing party to see if a resolution can be reached on the objections to the pleading. (Code Civ. Proc., §435.5, subd. (a)(1)-(2).) With the strike motion, the moving party shall submit a declaration stating (a) how the parties met and conferred and no resolution was reached, or (b) the opposing party failed to respond to the demurring party’s meet and confer requests or failed to meet and confer in good faith. (Code Civ.

Proc., §435.5, subd. (a)(3))

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Punitive Damages

Civil Code section 3294, where it is proven that the defendant is guilty of oppression, fraud,

or malice, the plaintiff may recover punitive damages. It does not, however, automatically follow

that because plaintiff is entitled to compensatory damages that she is also entitled to exemplary

damages. (Silberg v. California Life Ins. Co. (1974) 11 Cal.3d 452, 461.) A motion to strike may

lie where the facts alleged do not rise to the level of “malice, fraud or oppression” required to

support a punitive damages award. (Turman v. Turning Point of Central Calif., Inc. (2010) 191

Cal.App.4th 53, 63.)

In a motion to strike punitive damages allegations, the “ultimate facts showing entitlement

to such relief must be pled by the Plaintiff.” (Clauson v. Superior Court (1998) 67 Cal.App.4th

1253, 1255.) Facts of oppression, fraud, or malice must be alleged. (Grieves v. Superior Court

(1984) 157 Cal.App.3rd 159, 166.) The necessary facts can be stated as ultimate facts or

conclusions of law, as long as they are read in context with the other facts alleged as to defendant’s

conduct so as to “adequately plead the evil motive requisite to recovery of punitive damages.”

(Monge v. Superior Court (1986) 176 Cal.App.3d 503, 510.)

“Malice” is defined by statute as conduct “intended by the defendant to cause injury to

plaintiff, or despicable conduct that is carried on by the defendant with a willful and conscious

disregard for the rights or safety of others.” (Civil Code, section 3294, subd. (c)(1).) “Oppression”

means despicable conduct that subjects a person to cruel and unjust hardship in conscious disregard

of that person’s rights.” (Civil Code, section 3294, subd. (c)(2).) In Tomaselli v. Transamerica Ins.

Co. (1994) 25 Cal.App.4th 1269, 1287, the Court of Appeal instructed:

“Despicable conduct” is defined in BAJI No. 14.72.1 (1989 rev.) as “conduct which is so vile, base, contemptible, miserable, wretched or loathsome that it would be looked down upon and despised by ordinary decent people.” Such conduct has been described as “[having] the character of outrage frequently associated with crime.” Taylor v.

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Superior Court (1979) 24 Cal.3d 890, 894... The wrongdoer “must act with the intent to vex, injure, or annoy, or with a conscious disregard of the plaintiff's rights. [Citations.]” Punitive damages are appropriate if the defendant’s acts are reprehensible, fraudulent or in blatant violation of law or policy. The mere carelessness or ignorance of the defendant does not justify the imposition of punitive damages.... Punitive damages are proper only when the tortious conduct rises to levels of extreme indifference to the plaintiff's rights, a level which decent citizens should not have to tolerate.”

A claim for punitive damages cannot be pleaded generally. Specific factual allegations are required to support a claim for punitive damages, allegations a defendant acted with oppression, fraud, and malice are merely legal conclusions. (Brousseau v. Jarrett (1977) 73 Cal.App.3d 864.) In actions against a corporate employer, the employer’s actions must be on the part of an officer, director, or managing agent for punitive damages to be recoverable. (White v. Ultramar, Inc. (1999) 21 Cal.4th 563, 573.)

In the case at hand, Machado’s fraud claim is insufficiently stated, and it therefore cannot serve as the basis for a request for punitive damages. While the prayer for relief is not tied to any particular claim, the claims beyond the fifth cause of action for fraud also do not support punitive damages. At the alleged conduct could support civil penalties under the Song-Beverly Act, however the allegations do not show malice, oppression, or fraud, as defined above for purposes of punitive damages.

Leave to Amend Courts are very liberal in permitting amendments, not only where a complaint is defective in form, but also where substantive defects are apparent: “Liberality in permitting amendment is the rule, if a fair opportunity to correct any defect has not been given.” (Angie M. v. Superior Court (1995) 37 Cal.App.4th 1217, 1227.) It is an abuse of discretion for the court to deny leave to amend where there is any reasonable possibility that plaintiff can state a good cause of action. (Bounds v.

Superior Court (2014) 229 Cal.App.4th 468, 484 [court should grant leave to amend if in all probability plaintiff will cure defect].) However, no abuse of discretion will be found unless a potentially effective amendment is “both apparent and consistent with the plaintiff’s theory of the case.” (Camsi IV v. Hunter Technology Corp. (1991) 230 Cal.App.3d 1525, 1542.) “Leave to amend should be denied where the facts are not in dispute and the nature of the claim is clear, but no liability exists under substantive law.” (Lawrence v.

Bank of America (1985) 163 Cal.App.3d 431, 436 (emphasis

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added); Schonfeldt v. State of Calif. (1998) 61 Cal.App.4th 1462, 1465 [if no liability as a matter of law, leave to amend should not be granted].) RULING 1. Defendant’s Demurrer to the Fifth Cause of Action is SUSTAINED WITH LEAVE TO AMEND.

2. Defendant’s Demurrer on the Statue of Limitations is OVERRULED.

3. Defendant’s Motion to Strike Punitive Damage is GRANTED WITH LEAVE TO AMEND.

4. Defendant shall have 20 days to amend the pleadings.

5. Movant to give Notice.

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