Gregory Novak et al vs General Motors LLC

Case Number

24CV05388

Case Type

Hearing Date / Time

Mon, 02/03/2025 - 10:00

Nature of Proceedings

Demurrer; Motion: Strike

Tentative Ruling

Gregory Novak, et al. vs. General Motors, LLC                   

Case No. 24CV05388

           

Hearing Date: February 3, 2025                                                        

MATTERS:             (1) Defendant’s Motion To Strike Punitive Damages From Plaintiffs’ Complaint

                                    (2) Demurrer To Plaintiffs’ Complaint

                                   

ATTORNEYS:        For Plaintiffs Gregory Novak and Karen Novak: Eric K. Yaeckel, Ryan T. Kuhn, Karoline D. Kitlowski, Sullivan & Yaeckel Law Group, APC

For Defendant General Motors, LLC: Mary Arens McBride, Kyle Roybal, Erskine Law Group, PC

TENTATIVE RULING:

(1) The motion of defendant General Motors, LLC, to strike punitive damages from plaintiffs’ complaint is denied.

(2) The demurrer of defendant to plaintiffs’ complaint is overruled.

(3) On or before February 14, 2025, defendant General Motors, LLC, shall file and serve its answer to plaintiffs’ complaint.

Background:

Plaintiffs Gregory Novak and Karen Novak (collectively, plaintiffs) filed their complaint in this action on September 30, 2024, alleging four causes of action against defendant General Motors, LLC (GM): (1) violation of Business and Professions Code section 17500 et seq.; (2) violation of Business and Professions Code section 17200 et seq.; (3) common law fraud; and (4) breach of express warranty (California Commercial Code sections 2313 and 10210). As alleged in plaintiffs’ complaint:

On January 6, 2016, GM’s “Chair and CEO Mary Barra” unveiled the 2017 Chevy Bolt (the 2017 Bolt) and touted the vehicle’s 200 plus mile range and comparatively low charging time. (Compl., ¶ 19.) GM partnered with LG Corporation and its subsidiaries to develop and manufacture a battery pack offering a 200 mile range, and Green Car Reports, which stated that the “most important thing” in 2017 Bolt was “how far you can go on a single charge”, noted that the 2017 Bolt offered “the range of a Tesla, for roughly half the price.” (Ibid.) The 2017 Bolt was advertised as an affordable 200 mile range electric vehicle. (Ibid.)

Soon after the release, 2017 Bolt drivers reported issues with the battery which GM has been aware of since 2016. (Compl., ¶ 20.)

On April 3, 2018, GM issued a customer satisfaction notice instructing certain owners and lessees of the 2017 Bolt to get a dealer-installed software update because otherwise the vehicle may experience a loss of propulsion due to low battery charge. (Compl., ¶ 20.) On April 19, 2018, GM published a manufacturer communication entitled “Vehicle No Start Due to Dead Battery.” (Id. at ¶ 21.) In 2019, Tim Grewe, who is GM’s chief engineer of electric propulsion systems, publicly acknowledged the battery issues, including reduced range and loss of propulsion, resulted from a battery imbalance problem. (Id. at ¶ 20.)

In 2019, drivers began experiencing fires when charging their vehicles to full or near-full charge, and between July 20 and August 26, 2020, at least four drivers submitted claims to GM stating the Chevy Bolt battery pack caused a fire. (Compl., ¶ 21.) GM did not address the widespread battery issues, and instead treated individually affected vehicles as individual errors. (Ibid.)

Plaintiffs began leasing a 2020 Chevy Bolt electric vehicle manufactured and distributed by GM (the vehicle) on December 20, 2019, from Bunnin Chevrolet Cadillac (the dealership) in Santa Barbara, California, and purchased the vehicle on December 2, 2022. (Compl., ¶¶ 5-6.) Plaintiffs leased and purchased the vehicle based on an assumption that they could safely store, operate, and manage the vehicle to the fullest battery and mileage capacity as needed. (Id. at ¶ 5)

In September 2021, GM sent plaintiffs a first recall notice for the vehicle stating that its batteries may ignite when nearing a full charge. (Compl., ¶ 15.) GM informed plaintiffs that it would replace the defective battery at no charge, but that GM was not aware when a replacement battery would become available. (Ibid.)

In December 2021, GM instructed plaintiffs to bring the vehicle to the dealership to have diagnostic software installed which would reduce the charge, and subsequently the vehicle’s driving range, to 80 percent. (Compl., ¶ 16.) Plaintiffs were also advised not to park the vehicle in a garage or other structure in case the vehicle caught fire. (Ibid.) Plaintiffs were told this was a temporary remedy, and that GM would notify them when the replacement battery was available. (Ibid.)

When Plaintiffs called the dealership to schedule an appointment to have the software installed, plaintiffs were informed they did not need the software but instead should limit the charge to 80 percent, by which plaintiffs abided. (Compl., ¶ 17.)

In June 2023, GM sent plaintiffs a final recall in which GM notified plaintiffs that they would not be replacing the battery but instead would install software to monitor the battery’s function and limit its charge to 80 percent for the next 6,024 miles, which would result in the driving range of the vehicle being reduced to 80 percent. (Compl., ¶ 18.) To the extent no faults were found, the battery would automatically reverse to full charge. (Ibid.)

Since December 2021, plaintiffs have had to limit their battery charge to 80 percent, and have not been able to use the full driving range of their vehicle as advertised since December 2021. (Compl., ¶ 18.) Plaintiffs have also been unable to park the vehicle in a garage. (Id. at ¶ 22.) Plaintiffs did not receive a new battery until May 10, 2024. (Ibid.)

On November 5, 2024, GM filed a motion to strike matters appearing in paragraph 3(c) of the Civil Case Cover Sheet filed by plaintiffs in which plaintiffs state that they seek punitive remedies in this case, and a demurrer to the complaint on the grounds that plaintiffs have failed to allege facts sufficient to state a cause of action, and that the causes of action are barred by the economic loss rule.

The motion to strike and demurrer are each opposed by plaintiffs.

Analysis:

(1) Motion To Strike

As further discussed above, the motion to strike is directed to matters appearing in the Civil Case Cover Sheet filed by plaintiffs concurrently with the complaint. In the motion to strike, GM concedes, and plaintiffs do not dispute, that plaintiffs do not request an award of punitive damages in the complaint.

Code of Civil Procedure section 435, subdivision (b)(1), authorizes the filing of a motion to strike the whole or any part of a “pleading”, which is defined as “a demurrer, answer, complaint, or cross-complaint.” (Code Civ. Proc., § 435, subd. (a)(2).) Pursuant to California Rules of Court, rule 3.220(a), a case cover sheet such as the Civil Case Cover Sheet filed by plaintiffs in this action is used for statistical purposes and, subject to exceptions, must accompany but is not required to be served with the first paper filed in an action.

For reasons further discussed above, the Civil Case Cover Sheet filed by plaintiffs does not constitute a “pleading”. In addition, GM concedes that the asserted grounds for the motion do not appear on the face of the complaint as required under subdivision (a) of Code of Civil Procedure section 437. For these reasons, the motion to strike is procedurally inappropriate and without merit. Therefore, the Court will deny the motion.

(2) Demurrer

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).)

The demurrer of GM is directed to the first cause of action for violation of Business and Professions Code section 17500 et seq. (the False Advertising Law or FAL), the second cause of action for violation of Business and Professions Code section 17200 et seq. (the Unfair Competition Law or UCL), and the third cause of action for common law fraud.

To the extent that plaintiffs have alleged facts sufficient to constitute a cause of action for fraud, plaintiffs have also sufficiently alleged a cause of action under the UCL. (Bus. & Prof. Code, § 17200 [defining “unfair competition” to include “any … fraudulent business act or practice and … deceptive, untrue or misleading advertising …”]; Pfizer Inc. v. Superior Court (2010) 182 Cal.App.4th 622, 629-630 [unfair competition for purposes of the UCL includes “practices which are unlawful, unfair or fraudulent”].) Moreover, “[a] violation of the UCL’s fraud prong is also a violation of the [FAL]”. (Id. at p. 630, fn. 4.) For these reasons, the Court will first determine the demurrer as to the third cause of action for fraud. (Quelimane, supra, 19 Cal.4th at p. 38.)

As grounds for its demurrer to the third cause of action, GM contends that plaintiffs have failed to allege which facts GM failed to disclose, that GM know of these facts at the time plaintiffs purchased the vehicle, which materials plaintiffs reviewed or relied on and when, the method or manner in which GM could or should have disclosed any omitted facts, and whether any materials reviewed or relied on by plaintiffs were prepared by GM or a third party. GM also contends that plaintiffs have failed to plead facts showing that GM intended to defraud them either by an affirmative statement or a failure to disclose material facts.

GM further asserts that, to the extent the third cause of action arises from any concealment of material facts by GM, plaintiffs have failed to allege either a fiduciary or transactional relationship between plaintiffs and GM which would give rise to a duty by GM to disclose any material facts. Further, GM asserts that plaintiffs’ fraud claim is barred by the economic loss rule.

The theory of liability alleged in the third cause of action arises from what plaintiffs contend constitutes a purportedly willful, knowing, deceptive, or false marketing or advertising of the vehicle by GM as “having the range capability to reach 259-miles on a full charge”, in which GM communicated to plaintiffs that the vehicle was, among other things, “capable of long-range use.” (Compl., ¶ 40.) Plaintiffs further allege that facts regarding the range capability of the vehicle were “material” because “mileage range is essential to the reasonable consumer’s decision making process when purchasing a vehicle”. (Id. at ¶ 41.) Plaintiffs assert or effectively assert in the complaint that GM’s advertising or marketing communications were false because the vehicle’s battery overheats during prolonged use “resulting in a substantial reduction in the range capability of the vehicle.” (Ibid.)

Plaintiffs also allege that they decided to lease and purchase the vehicle based on the purportedly false and misleading representations made by GM regarding the vehicle’s driving range on a single battery charge, and presumably safe battery, which, according to plaintiffs, was the “centerpiece” of GM’s marketing and advertising efforts which included print and television “advertisements”, “consumer communications”, “representations at the point of sale”, “vehicle brochures”, and GM’s website, in which GM “pervasively and consistently” made the alleged representations regarding mileage range and battery. (Compl., ¶ 43.)

Plaintiffs further allege that GM “concealed and suppressed” the fact that the vehicle could not achieve its expected range due to a defective battery, a fact which plaintiffs did not know and could not have discovered. (Compl., ¶¶ 42 & 45.)

“The elements of fraud, which give rise to the tort action for deceit, are (a) misrepresentation (false representation, concealment, or nondisclosure); (b) knowledge of falsity (or ‘scienter’); (c) intent to defraud, i.e., to induce reliance; (d) justifiable reliance; and (e) resulting damage.” (Lazar v. Superior Court (1996) 12 Cal.4th 631, 638.) “In California, fraud must be pled specifically; general and conclusory allegations do not suffice. [Citations.] … [¶] This particularity requirement necessitates pleading facts which ‘show how, when, where, to whom, and by what means the representations were tendered.’ [Citation.]” (Id. at p. 645, original italics, internal quotation marks omitted.)

Giving the complaint a reasonable interpretation and assuming the truth of its allegations, plaintiffs have sufficiently alleged facts showing the specific and allegedly false representations made by GM with respect to the vehicle’s driving range and battery, on which plaintiffs allege they relied to lease and purchase the vehicle. Plaintiffs have also alleged facts sufficient to show that the purportedly false representations were made by GM in its advertisements, brochures, and other marketing materials, and that the representations were made by GM in 2016.

The allegations of the complaint are also sufficient to show that GM was aware of the reduced driving range caused by the purported battery deficiencies. (City of Pomona v. Superior Court (2001) 89 Cal.App.4th 793, 803 [“[a]llegations of the defendant’s knowledge … may use conclusive language”].) Though GM contends that plaintiffs have failed to allege facts sufficient to demonstrate an intent by GM to defraud plaintiffs, “[a]llegations of [GM’s] … intent to deceive may [also] use conclusive language ….” (Ibid.; see also Hall v. Mitchell (1922) 59 Cal.App. 743, 749 [intent may be set forth with a “simple and direct” allegation].) For these reasons, plaintiffs have also sufficiently alleged the elements of knowledge and intent based on the allegations further described above.

Furthermore, to the extent the complaint lacks some detail as to each specific instance in which GM made advertising representations regarding the driving range of the vehicle, “even in the pleading of fraud, the rule [of particularity in pleading] 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.) It can be reasonably inferred from the allegations of the complaint that plaintiffs allege the existence of a “scheme” to mislead by misrepresentations made in GM’s advertising or marketing materials regarding the vehicle’s range and battery safety. GM has failed to explain why plaintiffs are required to allege each deceptive or misleading advertisement with greater specificity. (See, e.g., Committee On Children’s Television, Inc. v. General Foods Corp. (1983) 35 Cal.3d 197, 214 (Children’s Television), superseded by statute on another ground as stated in Branick v. Downey Savings & Loan Assn. (2006) 39 Cal.4th 235, 242 [“to require plaintiffs to plead the specifics of each advertisement would render a suit challenging the overall program impractical”].)
 

It can also be inferred from the allegations of the complaint that the chairman and chief executive officer of GM made or caused to be made purportedly false representations regarding the vehicle’s driving range, which, though sparse, is sufficient at the pleading stage. (Tenet Healthsystem Desert, Inc. v. Blue Cross of California (2016) 245 Cal.App.4th 821, 838.) Further, with respect to purportedly false representations made in advertisements or other consumer materials, the identity of persons who drafted or disseminated the advertising or marketing materials would ostensibly be within GM, and not plaintiffs’ knowledge. (Children’s Television, supra, 35 Cal.3d at p. 214.) Any ambiguities as to these facts “can be clarified under modern discovery procedures.” (Khoury v. Maly’s of California, Inc. (1993) 14 Cal.App.4th 612, 616.)

For all reasons further discussed above, plaintiffs’ allegations are sufficient for present purposes to meet the heightened pleading requirements for fraud based on purportedly false representations regarding the vehicle’s range capability made by GM in its advertising and marketing materials as further discussed above. Therefore, it is not necessary for the Court to determine whether plaintiffs have also alleged facts sufficient to constitute a cause of action for fraudulent concealment. (Quelimane, supra, 19 Cal.4th at p 38.) Further, “a demurrer cannot rightfully be sustained to part of a cause of action ….” (Kong v. City of Hawaiian Gardens Redevelopment Agency (2002) 108 Cal.App.4th 1028, 1047 (Kong).)

As to GM’s contention that the economic loss rule bars the third cause of action, in some instances, tort damages are permitted in cases involving a breach of contract. (Erlich v. Menezes (1999) 21 Cal.4th 543, 551-554 (Erlich) [“[c]onduct amounting to a breach of contract becomes tortious only when it also violates a duty independent of the contract arising from principles of tort law”].) For example, tort damages are permissible in contract cases where the contract was fraudulently induced. (Las Palmas Associates v. Las Palmas Center Associates (1991) 235 Cal.App.3d 1220, 1238-1239 [also noting “no public policy is served by permitting a party who never intended to fulfill his obligations to fraudulently induce another to enter into an agreement”].) Further, “when one party commits a fraud during the contract formation or performance, the injured party may recover in contract and tort.” (Harris v. Atlantic Richfield Co. (1993) 14 Cal.App.4th 70, 78.)

Though plaintiffs seek damages which constitute economic loss, GM fails to explain why plaintiffs’ fraud cause of action, which arises from misrepresentations purportedly made in advertising and marketing materials which are not alleged to be part of any contract between GM and plaintiffs, is predicated on a breach of contract obligations by GM. (See Erlich, supra, 21 Cal.4th at pp. 552-554.) Furthermore, to the extent the allegations of the complaint are sufficient to show that any contract was fraudulently induced as a result of the purportedly false advertisements or marketing materials disseminated by GM, GM fails to sufficiently explain why the economic loss rule would bar the third cause of action. (Robinson Helicopter Co., Inc. v. Dana Corp. (2004) 34 Cal.4th 979, 989-990 [general discussion].)

For all reasons further discussed above, the allegations of the complaint are sufficient for present purposes to overcome the demurrer of GM to the third cause of action for fraud. Therefore, and for all reasons further discussed above, the allegations of the complaint are also sufficient state a cause of action for violations of the FAL and UCL, notwithstanding whether plaintiffs have alleged facts sufficient to show plaintiffs sustained damage or are entitled to injunctive relief under these statutes. (Kong, supra, 108 Cal.App.4th at p. 1047.) Accordingly, the Court will overrule the demurrer of GM.

Plaintiffs contend that GM failed meet and confer at least 5 days before the date GM’s responsive pleading was due. (Code Civ. Proc., § 430.41, subd. (a)(2).) The declaration of GM’s counsel, Kyle Roybal, demonstrates that GM attempted to meet and confer with plaintiffs less than one day prior to the date GM filed the demurrer, and not within the time prescribed under Code of Civil Procedure section 430.41. (Roybal Decl., ¶ 2 [stating that counsel attempted to meet and confer with plaintiffs’ counsel at 4:46 p.m. on November 4, 2024].)

Though the Court may not overrule or sustain the demurrer based on a determination that the meet and confer process was insufficient, a failure to meet and confer is grounds to order the demurrer off-calendar or continue its hearing date. (Code Civ. Proc., § 430.41, subd. (a)(4); Dumas v. Los Angeles County Bd. of Supervisors (2020) 45 Cal.App.5th 348, 356, fn. 3 [“trial courts are not required to ignore defects in the meet and confer process”].) Under the circumstances present here, considering that plaintiffs opposed the demurrer and did not file an amended pleading, it appears that a sufficient meet and confer process would not have changed the effect or outcome of the demurrer. Though the Court declines to overrule the demurrer based on any failure by GM to sufficiently meet and confer with plaintiffs, GM and its counsel are reminded of their obligations to comply with statutory requirements.