Charles Puth vs Ford Motor Company et al

Case Number

24CV06911

Case Type

Hearing Date / Time

Fri, 10/03/2025 - 10:00

Nature of Proceedings

CMC; Demurrer

Tentative Ruling

For the reasons set forth herein, the demurrer of defendant Ford Motor Company to plaintiff’s first amended complaint is overruled. Defendant shall, on or before October 17, 2025, file and serve its answer to the first amended complaint.

Background:

On December 10, 2024, plaintiff Charles Puth filed a complaint against defendants Ford Motor Company (Ford) and Perry Ford Mazda (Perry), alleging seven causes of action: (1) violation of subdivision (d) of Civil Code section 1793.2 (against Ford only); (2) violation of subdivision (b) of Civil Code section 1793.2 (against Ford only); (3) violation of subdivision (a)(3) of Civil Code section 1793.2 (against Ford only); (4) breach of the implied warranty of merchantability (Civ. Code, §§ 1791.1, 1794 & 1795.5) (against Ford only); (5) violation of the Magnuson-Moss Warranty Act (against Ford only); (6) fraudulent inducement – concealment (against Ford only); (7) negligent repair (against Perry only).

On February 3, 2025, Ford filed a demurrer to the fifth and sixth causes of action alleged in the complaint, which was set for hearing on April 18, 2025.

On April 7, 2025, plaintiff filed a first amended complaint (the FAC) alleging the same seven causes of action described above.

On April 11, 2025, Ford filed a notice of withdrawal of its demurrer to the complaint.

As alleged in the operative FAC:

Plaintiff purchased a 2022 Ford F150 (the vehicle) from Ford’s authorized dealership AutoNation Ford. (FAC, ¶ 11.) The vehicle was manufactured and distributed by Ford. (FAC, ¶ 9.) On March 19, 2022, plaintiff entered into a warranty contract with Ford regarding the vehicle, which included bumper-bumper, powertrain, and emission warranties. (FAC, ¶¶ 9-10 & Exh. A.)

Prior to purchasing the vehicle, Ford knew that vehicles equipped with the same transmission suffered from defects (collectively, the defect) that cause the vehicles and their transmissions to experience hesitation or delayed acceleration, harsh or hard shifting, jerking, shuddering, or juddering. (FAC, ¶ 29.) Ford acquired this knowledge from pre-production testing, pre-production design failure mode and analysis data, production failure mode and analysis data, early consumer complaints made to Ford’s network of dealers and directly to Ford, warranty data compiled from Ford’s network of dealers, testing conducted by Ford in response to consumer complaints, and repair order and parts data received by Ford from Ford’s network of dealers. (FAC, ¶ 30.) Ford subsequently issued technical service bulletins or “TSBs” concerning the defect. (FAC, ¶¶ 31-37.)

Plaintiff reviewed Ford’s marketing and advertising materials, conferred with sales representatives, viewed the vehicle’s window sticker, and took the vehicle for a test drive before purchasing the vehicle but was never advised that the vehicle or its transmission were defective. (FAC, ¶ 12.) Plaintiff would not have purchased, or would have paid less for, the vehicle if plaintiff knew of the defect given its unsafe nature. (FAC, ¶ 39.)

On May 9, 2025, Ford filed a demurrer to the FAC, which is made on the grounds that plaintiff has failed to allege compliance with pre-suit requirements to bring a claim for violation of the Magnuson-Moss Warranty Act (the Act) (15 U.S.C. § 2301 et seq.), and that plaintiff has failed to sufficient plead the essential elements of a claim for fraudulent concealment, which Ford also contends is barred by the economic loss rule. For these reasons, Ford argues, plaintiff has failed to allege facts sufficient to state the fifth and sixth causes of action alleged in the FAC.

Plaintiff opposes the demurrer.

Analysis:

“In reviewing the sufficiency of a complaint against a general demurrer, we are guided by long-settled rules. ‘We treat the demurrer as admitting all material facts properly pleaded, but not contentions, deductions or conclusions of fact or law. [Citation.] We also consider matters which may be judicially noticed.’ [Citation.] Further, we give the complaint a reasonable interpretation, reading it as a whole and its parts in their context.” (Blank v. Kirwan (1985) 39 Cal.3d 311, 318.) “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).)

Demurrer to the fifth cause of action:

As to the fifth cause of action for violation of the Act, Ford asserts that the warranty attached to the FAC shows that Ford maintains a third-party dispute resolution procedure to resolve warranty disputes. Ford further asserts that the FAC fails to allege compliance with this procedure, and that allegations that Ford does not maintain this procedure are contradicted by the terms of the warranty. For these reasons, Ford argues, plaintiff has failed to state a cause of action for violation of the Act.

Plaintiff contends in the opposition to the demurrer that, to the extent Ford has established an informal dispute resolution procedure, that procedure fails to meet the requirements of the Act because it is not clearly or conspicuously disclosed on the first page of the warranty, is voluntary, and because plaintiff has alleged that participation in the procedure would be futile.

The Act provides that a warrantor such as Ford “may establish an informal dispute settlement procedure which meets the requirements of the [Federal Trade] Commission’s rules under paragraph (2). If—

“(A) a warrantor establishes such a procedure,

“(B) such procedure, and its implementation, meets the requirements of such rules, and

“(C) he incorporates in a written warranty a requirement that the consumer resort to such procedure before pursuing any legal remedy under this section respecting such warranty....” (15 U.S.C. § 2310(a)(3)(A)-(C); see also § 2301(2) [definition of “Commission”].)

The Act further provides that if the warrantor establishes an informal dispute settlement procedure which meets the requirements described above, then a consumer such as plaintiff “may not commence a civil action (other than a class action) under subsection (d) of this section unless he initially resorts to such procedure....” (15 U.S.C. § 2310(3).)

The parties do not appear to dispute that the relevant provisions of the Act set forth above require Ford to “disclose clearly and conspicuously at least the following information on the face of the written warranty:

“(1) A statement of the availability of the informal dispute settlement mechanism;

“(2) The name and address of the Mechanism, or the name and a telephone number of the Mechanism which consumers may use without charge;

“(3) A statement of any requirement that the consumer resort to the Mechanism before exercising rights or seeking remedies created by Title I of the Act; together with the disclosure that if a consumer chooses to seek redress by pursuing rights and remedies not created by Title I of the Act, resort to the Mechanism would not be required by any provision of the Act; and

“(4) A statement, if applicable, indicating where further information on the Mechanism can be found in materials accompanying the product, as provided in § 703.2(c) of this section.” (16 C.F.R. § 703.2(b).)

Under the circumstances present here, considering that the warranty attached to the FAC does not appear to consist of “a single sheet with printing on both sides of the sheet” but “is included as part of a longer document”, the terms “on the face of the warranty” means “the page on which the warranty text begins....” (16 C.F.R. § 703.1(h).)

Noted above, plaintiff alleges that the warranty is attached to the FAC as exhibit A. (FAC, ¶ 10.) Plaintiff further alleges in the fifth cause of action that plaintiff has met all “obligations and preconditions to bring this claim, or alternatively it would have been futile for [p]laintiff to do so.” (FAC, ¶ 66.) Plaintiff also and alternatively alleges, among other things, that Ford “does not maintain an informal dispute resolution process for resolving express warranty claims that complies with the requirements of [the Act] and the rules and regulations adopted pursuant thereto by the Federal Trade Commission.” (FAC, ¶ 67.)

On demurrer, the court may consider “evidentiary facts found in recitals of exhibits attached to a complaint....” (Frantz v. Blackwell (1987) 189 Cal.App.3d 91, 94.) “Additionally, to the extent the factual allegations conflict with the content of the exhibits to the complaint, we rely on and accept as true the contents of the exhibits and treat as surplusage the pleader’s allegations as to the legal effect of the exhibits.” (Barnett v. Fireman’s Fund Ins. Co. (2001) 90 Cal.App.4th 500, 505.)

Ford does not appear to dispute that the information required under the Act regarding its informal dispute resolution procedure, which Ford must clearly and conspicuously disclose, appears on page 7 of the warranty attached to the FAC. (Demurrer at p. 10, ll. 1-4.) Ford fails to explain, with reasoned argument, the page on which the warranty text begins. Absent a dispute from Ford, a reasonable interpretation of exhibit A shows or suggest that the warranty text begins on page 5, which is titled “The New Vehicle Limited Warranty for your 2022-model vehicle”. (FAC, Exh. A at p. 5; see also pdf p. 22 [“Table of Contents” showing or indicating that new vehicle limited warranty appears on page 5]; 16 C.F.R. § 703.1(h).).)

As the information regarding Ford’s informal dispute resolution program appears on page 7 of the warranty, and not page 5 where the warranty text begins, the FAC shows that the required information does not appear on the face of the warranty in compliance with the Act.

Though in reply, Ford asserts, generally, that information regarding Ford’s dispute resolution procedure also appears on page 2 of the warranty, the language appearing on that page of the warranty states only that an eligible customer “may use - at no cost - the services of the ... program.” (FAC, Exh. A at p. 2.) This language does not, as required by the Act, include a statement of any requirement that the consumer resort to the procedure before seeking remedies created by the Act. For these and all further reasons discussed above, page 2 of the warranty fails to clearly and conspicuously disclose all information required under the Act.

For all reasons discussed above, the required information about Ford’s informal dispute resolution procedure does not appear clearly and conspicuously on the face of the warranty. Therefore, Ford has failed to show why plaintiff is required under the Act to allege that plaintiff initially resorted to this procedure before commencing this action. For these and all further reasons discussed above, the court will overrule the demurrer to the fifth cause of action alleged in the FAC.

Demurrer to the sixth cause of action:

As grounds for its demurrer to the sixth cause of action for fraudulent inducement-concealment alleged in the FAC, Ford contends that plaintiff has failed to allege facts sufficient to establish a transactional relationship between the parties.

All fraud claims “must be pleaded with specificity.” (Linear Technology Corp. v. Applied Materials, Inc. (2007) 152 Cal.App.4th 115, 132 (Linear).) “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.)

“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.) 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).)

Plaintiff does not appear to contend that the FAC alleges facts sufficient to show that Ford was in a fiduciary relationship with plaintiff. 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, supra, 152 Cal.App.4th at p. 132.)

Each of the three circumstances described above assumes “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.)

The allegation that plaintiff purchased the vehicle through Ford’s authorized dealership AutoNation Ford shows the existence of “direct dealings” with Ford sufficient for pleading purposes to give rise to a duty to disclose. (Bigler-Engler v. Breg, Inc. (2017) 7 Cal.App.5th 276, 312; Dhital v. Nissan North America, Inc. (2022) 84 Cal.App.5th 828, 844 (Dhital).) For these reasons, Ford has failed to show why the FAC does not allege facts sufficient to establish a transactional relationship between the parties.

Ford further contends that plaintiff has failed to allege the content of the omitted facts, the identity of the individual who made the alleged omissions, that Ford had exclusive knowledge of the purported defect, that Ford actively concealed the defect, or plaintiff’s justifiable reliance.

In addition to allegations describing the nature of the defect which was allegedly known to and intentionally concealed by Ford at the time plaintiff purchased the vehicle from Ford’s authorized dealership, as further detailed above, plaintiff also alleges that he experienced the following symptoms associated with the defect: “hard shifts, slipping in gear, and not going into gear.” (FAC, ¶ 14.) These allegations are, at this stage of the proceedings, sufficient to show the nature of the defect at issue. (Dhital, supra, 84 Cal.App.5th at p. 844.)

The allegation that Ford intentionally concealed material facts regarding the defect is also sufficient for present purposes. (FAC, ¶ 83; Hall v. Mitchell (1922) 59 Cal.App. 743, 749 [intent may be set forth with a “simple and direct” allegation].)

Plaintiff has also alleged facts which show the internal sources from which Ford purportedly obtained knowledge of the defect, which allegedly include testing and warranty data, consumer complaints, and repair and replacement data. (FAC, ¶ 81.) These allegations are sufficient to show Ford’s knowledge of the defect notwithstanding whether plaintiff has alleged the manner in which any particular internal source revealed the defect. (City of Pomona v. Superior Court (2001) 89 Cal.App.4th 793, 803 [“[a]llegations of the defendant’s knowledge … may use conclusive language”].) The court further notes that, “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.)

Though plaintiff does not specifically allege the identity of individuals at Ford’s authorized dealership who purportedly failed to disclose material facts regarding the defect, the requirement of specificity in pleading a fraud claim is intended to apply to affirmative representations and not concealment. (Alfaro v. Community Housing Improvement System & Planning Assn., Inc. (2009) 171 Cal.App.4th 1356, 1384; see also Jones v. ConocoPhillips Co. (2011) 198 Cal.App.4th 1187, 1200 [fraudulent concealment claim was sufficiently pled when the complaint, read as a whole, provided defendants with sufficient notice of the claims against them].) The FAC does not allege the making of any affirmative representation by Ford or its authorized dealer. Instead, and as further detailed above, the sixth cause of action arises from a purported concealment of the defect.

Moreover, to the extent there exists some uncertainty regarding the defect or the manner in which Ford acquired its knowledge of the defect, these “ambiguities can be clarified under modern discovery procedures.” (Khoury v. Maly’s of California, Inc. (1993) 14 Cal.App.4th 612, 616.)

For all reasons discussed above, plaintiff has, for present pleading purposes, sufficiently alleged the existence of a transactional relationship giving rise to a duty of disclosure on the part of Ford with respect to the defect which was purportedly known only to Ford. Plaintiff has also sufficiently alleged facts showing “(1) the content of the omitted facts, (2) [Ford’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 [Ford’s] omission.” (Rattagan v. Uber Technologies, Inc. (2024) 17 Cal.5th 1, 43-44 (Rattagan).) For these reasons, the FAC alleges facts sufficient to state a cause of action for fraudulent concealment.

As to Ford’s contention that the economic loss rule bars the sixth 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”].)

Notwithstanding whether the damages alleged in the FAC constitute economic loss, the sixth cause of action is not limited to and does not appear to arise from any breach of the warranty by Ford. As further described above, the sixth cause of action arises from Ford’s purported knowledge of the defect in vehicles with the same transmission prior to the time plaintiff acquired the vehicle through Ford’s authorized dealership, and purported failure to disclose its existence including at the time of sale. (FAC, ¶¶ 73-86.) Plaintiff further alleges that plaintiff would not have purchased the vehicle if plaintiff had known of the defect, or would have paid less for the vehicle. (FAC, ¶¶ 39 & 87.)

There are no allegations appearing in the FAC from which it can be inferred that any alleged concealment of material fact with respect to the defect was contemplated or provided for by the parties in any contract for sale of the vehicle. Furthermore, plaintiff has alleged facts sufficient to show that the fraudulent conduct at issue “is independent of [Ford’s] alleged warranty breaches.” (Dhital, supra, 84 Cal.App.5th at p. 843, fn. omitted.) For these and all further reasons discussed above, for pleading purposes, the FAC does not show that the economic loss rule bars the sixth cause of action for fraudulent inducement-concealment. (See Erlich, supra, 21 Cal.4th at pp. 552-554; Rattagan, supra, 17 Cal.5th at pp. 20-21, 26, 38 [also noting that “the economic loss rule does not apply to limit recovery for intentional tort claims like fraud”].)

For all reasons discussed above, plaintiff has alleged facts sufficient to state a viable cause of action for fraudulent concealment which is not, on the face of the FAC, barred by the economic loss rule. Therefore, the court will overrule the demurrer to the sixth cause of action alleged in the FAC.