Randy Kohn vs Ford Motor Company et al

Case Number

24CV03205

Case Type

Hearing Date / Time

Fri, 10/11/2024 - 10:00

Nature of Proceedings

Demurrer

Tentative Ruling

For all reasons discussed herein, the demurrer of defendant Ford Motor Company to the sixth cause of action alleged in plaintiff’s complaint is sustained with leave to amend. Plaintiff shall file and serve a first amended complaint as authorized herein on or before October 21, 2024.

Background:

On July 12, 2024, plaintiff Randy Kohn commenced this action by filing a complaint alleging six causes of action: (1) violation of subdivision (d) of Civil Code section 1793.2 (against defendant Ford Motor Company only [FMC]); (2) violation of subdivision (b) of Civil Code section 1793.2 (against FMC); (3) violation of subdivision (a)(3) of Civil Code section 1793.2 (against FMC); (4) breach of the implied warranty of merchantability (against FMC); (5) negligent repair (against defendant Perry Ford Mazda [Perry Ford]; and (6) fraudulent inducement – concealment (against FMC). As alleged in plaintiff’s complaint:

On November 5, 2021, plaintiff entered into a warranty contract (the warranty contract) with FMC regarding a 2021 Ford F150 (the vehicle) manufactured and distributed by FMC. (Compl., ¶ 7.) The warranty contract included bumper-bumper, powertrain, and emission warranties. (Id. at ¶ 8 & Exh. A.)

Before plaintiff’s purchase of the vehicle, FMC knew that other vehicles equipped with the same 10-speed transmission suffered from defects that can cause the vehicles and their transmissions to experience hesitation, delayed acceleration, harsh or hard shifting, jerking, shuddering, or juddering (collectively, the Transmission Defects). (Compl., ¶ 24.) FMC acquired knowledge of the Transmission Defects through pre-production testing; design failure mode and analysis data; production failure mode and analysis data; consumer complaints made to FMC’s network of dealers and directly to FMC; warranty data compiled from FMC’s network of dealers; testing conducted by FMC in response to consumer complaints; and repair order and parts data received by FMC from its network of dealers. (Id. at ¶ 25.) As a result of its internal knowledge and investigations of the Transmission Defects, FMC issued technical service bulletins or TSBs which failed to fix the Transmission Defects. (Id. at ¶¶ 26-33.)

Defects, including the Transmission Defects, manifested in the vehicle during the warranty period which impair its use, value, and safety. (Compl., ¶¶ 12-13.) Plaintiff delivered the vehicle to Perry Ford for repairs but Perry Ford failed to repair the vehicle in accordance with industry standards. (Id. at ¶¶ 70-71.) FMC failed to conform the vehicle to the terms of the warranty after a reasonable number of repair attempts, and failed to replace the vehicle or make restitution. (Id. at ¶¶ 15-16.)

Although it was aware of the Transmission Defects at the time of purchase and repair of the vehicle, FMC concealed from plaintiff the existence and nature of the Transmission Defects. (Compl., ¶ 35.) Given the unsafe nature of the Transmission Defects, plaintiff would not have purchased or would have paid less for the vehicle had plaintiff known of the Transmission Defects. (Id. at ¶ 34.)

On July 12, 2024, FMC filed a demurrer to the sixth causes of action alleged in the complaint, which is opposed by plaintiff.

Analysis:

In ruling on a demurrer, the court determines whether the complaint states a cause of action. (Moore v. Regents of University of California (1990) 51 Cal.3d 120, 125.) The pleading subject to demurrer is given a reasonable interpretation and read as a whole, with all its parts in their context. (Ibid.) A demurrer assumes the truth of properly pleaded material allegations including facts which may be inferred from those expressly alleged, but not of contentions, deductions, or conclusions of fact or law. (Ibid.; McMahon v. Craig (2009) 176 Cal.App.4th 1502, 1509.) “If the complaint states a cause of action under any theory, regardless of the title under which the factual basis for relief is stated, that aspect of the complaint is good against a demurrer.” (Quelimane Co. v. Stewart Title Guaranty Co. (1998) 19 Cal.4th 26, 38 (Quelimane).)

To support its arguments on demurrer, FMC relies on federal court opinions, some of which are not reported. For example, in the memorandum, FMC cites the following unreported federal opinions: Pilgrim v. General Motors Company (C.D. Cal., Nov. 19, 2020, No. CV 15-8047-JFW (EX)) 2020 WL 7222098; Kelsey v. Nissan North America (C.D. Cal., July 15, 2020, No. CV 20-4835 MRW) 2020 WL 4592744; and Catherine Petersen v. FCA US LLC (C.D. Cal., July 8, 2021, No. CV 21-1386 DSF (EX)) 2021 WL 3207960. (Memorandum at pp. 15-16.) FMC also presents information regarding allegations and causes of action asserted in complaints filed by counsel for plaintiff in unrelated matters. (Liu Decl., ¶ 2 & Exhs. A-C.)

The Court does not consider extrinsic matters such as complaints filed by plaintiff’s counsel in unrelated matters, which are irrelevant to the issues presented in the demurrer. In addition, “[i]t should not be assumed that the standards governing motions to dismiss in federal court and demurrers in state court are the same…. [T]rial courts should be cognizant that federal district judges have more latitude to dismiss claims at the pleading stage … than California trial judges have under our traditional notice pleading standards.” (Morris v. JPMorgan Chase Bank, N.A. (2022) 78 Cal.App.5th 279, 305, fn. 14.) Furthermore, “a federal court’s interpretation of California state law”, and decisions of lower federal courts, though persuasive, “ ‘are not binding on state courts….’ [Citation.]” (People v. Alorica Inc. (2022) 77 Cal.App.5th 60, 67; In re Marriage of Padgett (2009) 172 Cal.App.4th 830, 839.)

As grounds for its demurrer to the sixth cause of action for fraudulent inducement-concealment alleged solely against FMC, FMC contends that plaintiff has failed to allege with the requisite particularity: the specific defect that FMC concealed from plaintiff; the identity of the person who made any omissions when plaintiff purchased the vehicle; facts giving rise to a duty by FMC to disclose any alleged defects; facts establishing a direct transaction relationship between plaintiff and FMC; facts showing that FMC had exclusive knowledge of the defects; facts showing the manner in which FMC obtained knowledge of the alleged defects; facts demonstrating active concealment of any defects by FMC; and facts showing that FMC made any partial representations to plaintiff.

 “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.” (Graham v. Bank of America, N.A. (2014) 226 Cal.App.4th 594, 606.) All fraud claims “must be pleaded with specificity.” (Linear Technology Corp. v. Applied Materials, Inc. (2007) 152 Cal.App.4th 115, 132 (Linear Technology).)

“A fraud claim based upon the suppression or concealment of a material fact must involve a defendant who had a legal duty to disclose the fact.” (Hoffman v. 162 North Wolfe LLC (2014) 228 Cal.App.4th 1178, 1186 (Hoffman).) There exist “ ‘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. [Citation.]’ [Citation.]” (LiMandri v. Judkins (1997) 52 Cal.App.4th 326, 336 (LiMandri).)

In the complaint, plaintiff does not allege and does not appear to contend for present purposes that there exists a fiduciary relationship between plaintiff and FMC. Where, as here, a fiduciary relationship is not alleged, “ ‘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; [or] (3) the defendant actively conceals discovery from the plaintiff.” [Citation.]’” (Linear Technology, supra, 152 Cal.App.4th at p. 132.) Each of these circumstances “presupposes the existence of some other relationship between the plaintiff and defendant in which a duty to disclose can arise …. [¶] As a matter of common sense, such a relationship can only come into being as a result of some sort of transaction between the parties…. Thus, a duty to disclose may arise from the relationship between seller and buyer, employer and prospective employee, doctor and patient, or parties entering into any kind of contractual agreement.” (LiMandri, supra, 52 Cal.App.4th at pp. 336-337, original italics; see also Hoffman, supra, 228 Cal.App.4th at p. 1187 [if there exists no relationship based on a transaction giving rise to a duty to disclose, a fact finder must determine if a relationship existed].)

Giving the complaint a reasonable interpretation and assuming the truth of its allegations, plaintiff alleges no facts from which it can be inferred that a transactional relationship, such as a buyer and seller agreement, exists between FMC and plaintiff. For example, there are no facts alleged in the complaint which show the existence of any “direct dealings” with FMC, or any of its authorized dealerships, other than the issuance of the warranty contract under undisclosed circumstances. (Bigler-Engler v. Breg, Inc. (2017) 7 Cal.App.5th 276, 312 (Bigler-Engler) [also noting that the requisite transaction “cannot arise between the defendant and the public at large”].)

In addition, allegations that plaintiff entered into a warranty contract with FMC is, without more, insufficient to demonstrate the type of relationship that may give rise to a duty to disclose. Further, to the extent plaintiff’s fraud claim arises from a breach of the warranty contract by FMC by, for example, failing to conform the vehicle to the terms of warranty, it would appear that the economic loss rule further discussed above may operate, under the facts alleged in the complaint, as a bar to sixth cause of action. (Erlich v. Menezes (1999) 21 Cal.4th 543, 552 [“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”]; Rattagan v. Uber Technologies, Inc. (Cal. 2024) 324 Cal.Rptr.3d 433, 460.)

There are also no facts alleged in the complaint demonstrating that FMC “actively advised potential purchasers regarding” the type of vehicle at issue here. (OCM Principal Opportunities Fund, L.P. v. CIBC World Markets Corp. (2007) 157 Cal.App.4th 835, 860.) The allegations of the complaint also do not show, apart from the warranty contract, that FMC was the vendor or otherwise involved in plaintiff’s purchase of the vehicle sufficient to give rise to a duty by FMC to disclose any purported defects in the vehicle under the circumstances alleged in the complaint. (See, e.g., Barnhouse v. City of Pinole (1982) 133 Cal.App.3d 171, 187-188.) Plaintiff also does not allege a theory of recovery based on strict products liability or facts that would give rise to a duty by FMC to warn consumers notwithstanding whether there exists a relationship between FMC and plaintiff. (Bigler-Engler, supra, 7 Cal.App.5th at p. 312 [general discussion of products liability law and underlying duties which are not “directly applicable” to fraud].)

The examples offered above are intended to be illustrative but not exhaustive. For all reasons discussed above, plaintiff has failed to allege facts giving rise to a duty owed by FMC under the circumstances purportedly present here. Because plaintiff has failed to allege facts sufficient to state a cause of action for fraudulent concealment-inducement, the Court will sustain the demurrer to the sixth cause of action. Though plaintiff offers no reasoned argument demonstrating the manner in which the deficiencies discussed herein may be cured, the Court will grant plaintiff leave to amend. (Eghtesad v. State Farm General Insurance Company (2020) 51 Cal.App.5th 406, 411-412.)

Though it is not presently necessary for the Court to consider the remaining grounds for demurrer, the Court notes that plaintiff has sufficiently alleged the nature of the defects that Ford purportedly concealed. Moreover, “even in the pleading of fraud, the rule is relaxed when it is apparent from the allegations that the defendant necessarily possesses knowledge of the facts.” (Quelimane, supra, 19 Cal.4th at p. 47.)