Demurrer by Defendant, Western Surety Company, to the First Amended Complaint

Opposition

Reply

Request for Judicial Notice – no opposition – grant

Tentative: Sustain – with or without leave to amend?

This is the first opportunity for a court to review the pleading. Plaintiffs filed a First Amended Complaint before the hearing on defendant’s demurrer to the original complaint.

This lawsuit appears based on Vehicle Code section 11711, subdivision (3): “if any person is not paid for a vehicle sold to and purchased by a licensee, then any such person shall have a right of action against such dealer, his salesman, and the surety upon the dealer’s bond, in an amount not to exceed the value of the vehicle purchased from or sold to the dealer.” The FAC does allege defendant Western Surety Bond provided a dealer’s surety bond no. 15100900 to LA Auto Plaza for an unspecified period.

 

The effective date of the bond is not alleged, although the DMV “Final Notice” of termination document, which defendant has requested the court judicially notice, suggests bond no. 15100900 was effective from February 18, 2008 to February 18, 2009.

 

The complaint’s allegations that LA Auto Plaza committed fraud sometime between “2006 and 2010” is too uncertain to withstand this demurrer. How many vehicles did LA Auto purchase? What is the description of the vehicle(s) and the date(s) of purchase? Were plaintiffs the sellers? What was the nature of the fraud? Was the fraud concealed for a time?

 

The bottom line to the pleading appears to be that plaintiffs obtained a default judgment on February 26, 2015 against LA Auto Plaza and others and is now suing LA Auto’s surety, Western Surety, to collect. This action was initiated on February 25, 2016, within one year of the default judgment. The court cannot determine if this pleading is timely as to Western Surety, so the demurrer to this uncertain pleading cannot be sustained based on the statute of limitations. Nor can the court determine whether defendant’s duty to pay has been triggered. (See, e.g., Schmitt v. Insurance Co. of North America (1991) 230 Cal.App.3d 245, 257 [“The surety’s duty to pay arises only if the principal is unable to make full payment. The surety’s duty does not extend any further. The bond does not insure the principal against liability.”].)

 

Whether plaintiff is given leave to amend and whether allegations in a new pleading provide a basis for a statute of limitations challenge remain to be seen. Plaintiffs have asked for leave to amend, but they argue the FAC is sufficient and have not suggested how it may be amended.