Eric Koopmans et al vs General Motors LLC

Case Number

22CV04365

Case Type

Hearing Date / Time

Fri, 11/03/2023 - 10:00

Nature of Proceedings

CMC; Demurrer and Motion to Strike

Tentative Ruling

Eric Koopmans, et al. v. General Motors, LLC.                     

Case No. 22CV04365

           

Hearing Date: November 3, 2023                                           

HEARING:              (1) Defendant General Motors, LLC’s Demurrer to Plaintiffs’ First Amended Complaint;

                             (2) Defendant General Motors, LLC’s Motion to Strike Punitive Damages from Plaintiffs’ First Amended Complaint

ATTORNEYS:        For Plaintiffs Eric Koopmans and Lynda Koopmans: Jacob Lister and Tionna Dolin

                                    For Defendant General Motors, LLC: Ryan Kay and Mary Arens McBride                       

TENTATIVE RULING:

Defendant’s demurrer to plaintiff’s first amended complaint is overruled. Defendant’s motion to strike punitive damages from plaintiff’s first amended complaint is denied. Defendant shall file and serve an Answer to the first amended complaint no later than November 24, 2023.

Background:

This action was commenced on November 4, 2022, by the filing of the complaint for violation of statutory obligations by Eric Koopmans and Lynda Koopmans (collectively “plaintiffs”) against General Motors, LLC (“defendant”).

Defendant demurred to the complaint and filed a motion to strike punitive damages. On April 21, 2023, the court sustained the demurrer and granted the motion to strike with leave to amend.

On June 30, 2023, plaintiffs filed the operative first amended complaint (“FAC”). As with the original complaint, the FAC contains the following causes of action: (1) Violation of Civil Code section 1793.2, subdivision (d); (2) Violation of Civil Code section, 1793.2 subdivision (b); (3) Violation of Civil Code section 1793.2, subdivision (a)(3); (4) Breach of the Implied Warranty of Merchantability; and (5) Fraudulent Inducement – Concealment.

As alleged in the FAC: On January 25, 2018, plaintiffs entered into a warranty contract with defendant regarding a 2018 Chevrolet Silverado 1500 that was manufactured and distributed by defendant. (FAC, ¶ 7.) The warranty included a bumper-to-bumper warranty, a powertrain warranty, and an emission warranty. (Id. at ¶ 8 & Exh. A.) “Defects and nonconformities to warranty manifested themselves within the applicable express warranty period, including but not limited to, transmission defects; engine defects; among other defects and non-conformities.” (Id. at ¶ 12.) The defects and nonconformities “substantially impair the use, value, or safety of the vehicle.” (Id. at ¶ 13.) The value of the vehicle is worthless or de minimis. (Id. at ¶ 14.) Defendant had an affirmative duty to promptly offer to repurchase or replace the vehicle at the time it failed to conform the vehicle to the terms of the express warranty after a reasonable number of repair attempts. (Id. at ¶ 15.) Defendant has failed to either promptly replace the vehicle or to promptly make restitution. (Id. at ¶ 16.)

Defendant demurs to the fifth cause of action for fraudulent inducement on the grounds that it is barred by the statute of limitations, that it fails to state facts relevant to the elements of the claim, and that it fails to allege a transactional relationship giving rise to a duty to disclose.

Defendant also seeks to strike plaintiffs’ prayer for punitive damages.

Plaintiffs oppose both the demurrer and motion to strike.

Analysis:

“[A] court must treat a demurrer as admitting all material facts properly pleaded, it does not, however, assume the truth of contentions, deductions or conclusions of law.” (Travelers Indem. Co. of Connecticut v. Navigators Specialty Ins. Co. (2021) 70 Cal.App.5th 341, 358, citing Aubry v. Tri-City Hospital Dist. (1992) 2 Cal.4th 962, 967.)

A demurrer searches for defects in the allegations of the pleading. “A demurrer is simply not the appropriate procedure for determining the truth of disputed facts.” (Ramsden v. Western Union (1977) 71 Cal.App.3d 873, 879.)

“Although a general demurrer does not ordinarily reach affirmative defenses, it “ ‘will lie where the complaint ‘ “has included allegations that clearly disclose some defense or bar to recovery.” ’ ” [Citations.] “ ‘Thus, a demurrer based on an affirmative defense will be sustained only where the face of the complaint discloses that the action is necessarily barred by the defense.’ [Citations.]” (Ivanoff v. Bank of America, N.A. (2017) 9 Cal.App.5th 719, 726.)

            Statute of Limitations

Defendant argues that the fifth cause of action is barred by Code of Civil Procedure section 338, subdivision (d) which imposes a three-year statute of limitations on “an action for relief on the ground of fraud or mistake. The 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.” Defendant argues that the statute of limitations barred the action from being brought after January 25, 2021, which is three years following the purchase of the vehicle.

“Under Code of Civil Procedure section 430.30, subdivision (a), when ‘any ground for objection to a complaint . . . appears on the face thereof, or from any matter of which the court is required to or may take judicial notice, the objection on that ground may be taken by a demurrer to the pleading.’ The statute of limitations is a ‘ground for objection to a complaint’ for purposes of this provision and, therefore, may be raised in a demurrer. [Citation.]” (Cavey v. Tualla (2021 69 Cal.App.5th 310, 325.)
 

“Generally speaking, a cause of action accrues at “ ‘the time when the cause of action is complete with all of its elements.’ ” [Citations.] An important exception to the general rule of accrual is the “ ‘discovery rule,’ ” which postpones accrual of a cause of action until the plaintiff discovers, or has reason to discover, the cause of action. [Citations.]” (Fox v. Ethicon Endo-Surgery, Inc. (2005) 35 Cal.4th 797, 806-807 (Fox).)

As they did in opposition to the first demurrer, plaintiffs rely on the discovery rule in arguing that the action is not barred by the three-year statute of limitations. Plaintiffs allege that they “discovered defendant’s wrongful conduct . . . shortly before the filing of the complaint, as the vehicle continued to exhibit symptoms of defects following [defendant’s] unsuccessful attempts to repair them.” (FAC, ¶¶ 25, 39, 43.) This again appears to contradict plaintiffs’ allegations that the “[d]efects and nonconformities to warranty manifested themselves within the applicable express warranty period.” (FAC, ¶ 12.) Plaintiffs also allege that defendant’s fraud continued because they concealed the transmission defect each time plaintiffs returned to GM’s dealership for repair. (FAC, ¶¶ 69, 69, 72-73, 76-77, 79.)

With respect to pleading delayed discovery of the fraudulent concealment: “In order to rely on the discovery rule for delayed accrual of a cause of action, “ ‘[a] plaintiff whose complaint shows on its face that his 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.’ ” [Citation.] In assessing the sufficiency of the allegations of delayed discovery, the court places the burden on the plaintiff to “ ‘show diligence’ ”; “ ‘conclusory allegations will not withstand demurrer.’ ” (Fox, supra, 35 Cal.4th at p. 808, italics added.)

Despite plaintiffs’ argument to the contrary, as with the original complaint, the FAC shows on its face that the action would be barred without the benefit of the discovery rule. Therefore, they must plead specific facts showing why the discovery rule is applicable.

Here, the FAC sets forth dates, miles on the subject vehicle, and when the vehicle was taken to defendant’s authorized repair facility for warranty repairs. Those dates include October 15, 2019, June 2, 2022, August 25, 2022, and September 12, 2022. Each time, defendants allegedly fraudulently represented to plaintiffs that the vehicle had been repaired. (FAC, ¶¶ 27-31.)

“The doctrine of fraudulent concealment tolls the statute of limitations where a defendant, through deceptive conduct, has caused a claim to grow stale. [Citation.] The continuing violation doctrine aggregates a series of wrongs or injuries for purposes of the statute of limitations, treating the limitations period as accruing for all of them upon commission or sufferance of the last of them. [Citations.] Finally, under the theory of continuous accrual, a series of wrongs or injuries may be viewed as each triggering its own limitations period, such that a suit for relief may be partially time-barred as to older events but timely as to those within the applicable limitations period.” (Aryeh v. Canon Business Solutions, Inc. (2013) 55 Cal.4th 1185, 1192.)

“In 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 that the action may be barred.” (Marshall v. Gibson, Dunn & Crutcher (1995) 37 Cal.App.4th 1397, 1403.) Here, the face of the complaint does show that the cause of action may be barred. It does not show that it is barred.

The demurrer to the fifth cause of action, based on the statute of limitations, will be overruled.

            Pleading with Specificity

Defendant again argues that the complaint lacks the requisite specificity required for pleading a fraud cause of action because it does not identify the individuals who allegedly concealed material facts or made untrue representations about the vehicle, did not allege the individual’s authority to speak or act on behalf of defendant, did not allege defendant’s knowledge of defects in the vehicle, did not allege any interactions with defendant before or during the purchase of the vehicle, or allege defendant’s intent to induce reliance. (Demurrer, p. 9, ll. 6-11.)

“ ‘The required elements for fraudulent concealment are (1) concealment or suppression of a material fact; (2) by a defendant with a duty to disclose the fact to the plaintiff; (3) the defendant intended to defraud the plaintiff by intentionally concealing or suppressing the fact; (4) the plaintiff was unaware of the fact and would not have acted as he or she did if he or she had known of the concealed or suppressed fact; and (5) plaintiff sustained damage as a result of the concealment or suppression of the fact. [Citation.]’ ” (Hambrick v. Healthcare Partners Medical Group, Inc. (2015) 238 Cal.App.4th 124, 162.)

“[F]raud must be pled specifically; general and conclusory allegations do not suffice. . . . This particularity requirement necessitates pleading facts which show how, when, where, to whom, and by what means the representations were tendered.” (Lazar v. Superior Court (1996) 12 Cal.4th 631, 645.)

“Less specificity should be required of fraud claims “ ‘when ‘it appears from the nature of the allegations that the defendant must necessarily possess full information concerning the facts of the controversy,’ ” [citation]; “ ‘[e]ven 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. . . .’ ” [Citation.] (Alfaro v. Community Housing Improvement System & Planning Assn., Inc. (2009) 171 Cal.App.4th 1356, 1384.)

Plaintiffs’ allegations essentially mimic the allegations at issue in Dhital v. Nissan North America, Inc. (2022) 84 Cal.App.5th 828, review granted February 1, 2023, (Dhital).

In ruling on defendant’s demurrer to the original complaint on these grounds, the court found that plaintiffs pled sufficient facts “which show how, when, where, to whom, and by what means the representations were tendered.” Here, plaintiffs have included additional facts in the FAC. As such, the demurrer based on lack of specificity will be overruled for the same reasons that defendant’s argument regarding specificity was rejected in ruling on the last demurrer.

            Transactional Relationship Between Plaintiffs and Defendant

As with the demurrer to the original complaint, defendant next argues that the fifth cause of action for fraudulent concealment fails because plaintiffs do not allege a transactional relationship between themselves and defendant giving rise to a duty to disclose.

The same argument that defendant makes was made in Dhital. The Dhital court held that “[a]t the pleading stage (and in the absence of a more developed argument by Nissan on this point), we conclude plaintiffs’ allegations are sufficient. Plaintiffs alleged that they bought the car from a Nissan dealership, that Nissan backed the car with an express warranty, and that Nissan’s authorized dealerships are its agents for purposes of the sale of Nissan vehicles to consumers. In light of these allegations, we decline to hold plaintiffs’ claim is barred on the ground there was no relationship requiring Nissan to disclose known defects.”

“Under California law, a vendor has a duty to disclose material facts not only to immediate purchasers, but also to subsequent purchasers when the vendor has reason to expect that the item will be resold.” (OCM Principal Opportunities Fund, L.P. v. CIBC World Markets Corp. (2007) 157 Cal.App.4th 835, 859.)

There are “four circumstances in which nondisclosure or concealment may constitute actionable fraud: (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; and (4) when the defendant makes partial representations but also suppresses some material facts.” (Heliotis v. Schuman (1986) 181 Cal.App.3d 646, 651.)

As explained to defendant in ruling on the demurrer to the original complaint: A “transactional relationship” is not required. Even if it were, the warranty itself evidences a transactional relationship between the parties with respect to the vehicle.

Plaintiffs have alleged that defendant had exclusive knowledge of material facts not known to plaintiffs and that defendant actively concealed material facts from plaintiffs. At the pleading stage, plaintiffs have alleged sufficient facts to overcome demurrer on these grounds. The demurrer, based on lack of a transactional relationship, will be overruled.

Motion to Strike

“The court may, upon a motion made pursuant to Section 435, or at any time in its discretion, and upon terms it deems proper: (a) Strike out any irrelevant, false, or improper matter inserted in any pleading.” (Code Civ. Proc., § 436.) “Irrelevant matter” includes a “demand for judgment requesting relief not supported by the allegations of the complaint.” (Code Civ. Proc., § 431.10, subds. (b)(3), (c).) “The grounds for a motion to strike shall appear on the face of the challenged pleading or from any matter of which the court is required to take judicial notice.” (Code Civ. Proc., § 437, subd. (a).)

Defendant moves to strike the demand for punitive damages in plaintiffs’ prayer for relief.

“[F]raudulent concealment is an intentional tort that may support a punitive damage award.” (Nissan Motor Acceptance Cases (2021) 63 Cal.App.5th 793, 829.) None of plaintiffs’ other causes of action support punitive damages and plaintiffs do not allege that they do.

Defendant relies on Troensegaard v. Silvercrest Industries, Inc. (1985) 175 Cal.App.3d 218 (Troensegaard), in support of their argument that plaintiffs are precluded from seeking both punitive damages and civil penalties under Song-Beverly. “We are of the opinion that had the Legislature, by Civil Code sections 3294 (permitting punitive damages) and 1794 (permitting a civil penalty), intended a double recovery of punitive and penal damages for the same willful, oppressive, malicious, and oppressive acts, it would in some appropriate manner have said so. And we believe that by seeking a ‘civil penalty’ and also attorney’s fees and all reasonable expenses as allowed by Civil Code section 1794, plaintiff had in effect elected to waive punitive damages under section 3294.” (Id. at p. 228.)

Plaintiffs rely on Anderson v. Ford Motor Co. (2022) 74 Cal.App.5th 946 (Anderson), to support their argument that they may recover both punitive damages and Song-Beverly penalties because the claims arise from different conduct that occurred at different times.

In Anderson, plaintiffs were able to recover both punitive damages and civil penalties under Song-Beverly because “the punitive damages and statutory penalties were based on different conduct that took place at different times. The punitive damages were based on conduct underlying the fraud/CLRA causes of action and took place before the sale. The civil penalty was based on defendant’s post-sale failure to comply with its Song-Beverly Act obligations to replace the vehicle or make restitution when reasonable attempts to repair had failed.” (Id. at p. 966.) Anderson discusses why there is a difference in outcome in Troensegaard. “The Troensegaard court’s description of the conduct underlying each award demonstrates that the conduct was identical, not merely substantially the same.” (Id. at p. 965, fn. 10.)

At the pleading stage, the court would have to improperly weigh disputed evidence to determine that the prayer for civil penalties and the prayer for punitive damages arise from identical conduct.

As pled, plaintiffs have alleged sufficient facts, with the required specificity for seeking punitive damages, to overcome defendant’s motion to strike.

Defendant’s motion to strike plaintiff’s prayer for punitive damages is denied.