Case Name:??? Michael Partsch v. Kow Loon Auto Sales, Inc.?? ?????????????
Case No.:??????? 2013-1-CV-247883
Factual and Procedural Background
This action arises out of defendant Kow Loon Auto Sales, Inc.?s (?Kow Loon?) sale of a used vehicle to plaintiff Michael Partsch (?Plaintiff?). Defendant Western Surety Company (?Western?) is the surety on the seller?s bond for Plaintiff?s vehicle.
On or about October 30, 2011, after viewing an advertisement online for a used 2007 Toyota 4 Runner, Plaintiff visited Kow Loon?s auto dealership.? At the dealership, Plaintiff specifically asked Kow Loon?s salesperson about the vehicle?s history and condition.? The salesperson represented that the vehicle was in good condition and free from any mechanical and/or structural defects or damage.? The salesperson did not disclose that the vehicle was purchased at an auction, where it was announced that the vehicle had sustained frame damage.? Based on the salesperson?s representations, Plaintiff purchased the vehicle for $17,400.? Several years later, Plaintiff discovered that the vehicle had been involved in an accident and sustained substantial frame damage.
On February 16, 2016, Plaintiff filed the operative fourth amended complaint (?4AC?) against Kow Loon and Western, alleging causes of action for (1) violation of the Consumers Legal Remedies Act (against Kow Loon), (2) violation of Business and Professions Code ? 17200, et seq. (against Kow Loon), (3) fraudulent misrepresentation (against Kow Loon), (4) negligent misrepresentation (against Kow Loon), and (5) claim against dealer bond (against Western).
Currently before the Court are: (1) the demurrer by Western to the 4AC; and (2) the demurrer by Kow Loon to the 4AC.[1]? Plaintiff filed written oppositions.? Western and Kow Loon filed reply papers.
Western?s Demurrer
Legal Standard
?In reviewing the sufficiency of a complaint against a general demurer, 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.? We also consider matters which may be judicially noticed.??? (Blank v. Kirwan (1985) 39 Cal.3d 311, 318.)? ?A demurrer tests only the legal sufficiency of the pleading.? It admits the truth of all material factual allegations in the complaint; the question of plaintiff?s ability to prove these allegations, or the possible difficulty in making such proof does not concern the reviewing court.?? (Committee on Children?s Television, Inc. v. General Foods Corp. (1983) 35 Cal.3d 197, 213?214.)
?The reviewing court gives the complaint a reasonable interpretation, and treats the demurrer as admitting all material facts properly pleaded.? The court does not, however, assume the truth of contentions, deductions or conclusions of law.? ?? [I]t is error for a trial court to sustain a demurrer when the plaintiff has stated a cause of action under any possible legal theory.? And it is an abuse of discretion to sustain a demurrer without leave to amend if the plaintiff shows there is a reasonable possibility any defect identified by the defendant can be cured by amendment.?? (Gregory v. Albertson?s, Inc. (2002) 104 Cal.App.4th 845, 850.)
Fifth Cause of Action
With respect to the fifth cause of action [claim against dealer bond], Western demurs on grounds that it does not state a valid claim and fails for uncertainty.? (Code Civ. Proc., ? 430.10, subd. (e), (f).)? In particular, Western argues that Plaintiff fails to allege ?a written instrument furnished by the licensee, containing stipulated provisions and guarantees which the person believes have been violated by the licensee?? to state a claim under Vehicle Code section 11711.
Vehicle Code section 11711, subdivision (a) states:
If any person (1) shall suffer any loss or damage by reason of any fraud practiced on him or fraudulent representation made to him by a licensed dealer or one of such dealer?s salesmen acting for the dealer, in his behalf, or within the scope of the employment of such salesman and such person has possession of a written instrument furnished by the licensee, containing stipulated provisions and guarantees which the person believes have been violated by the licensee, or (2) if any person shall suffer any loss or damage by reason of the violation by such dealer or salesman of any of the provisions of Division 3 (commencing with Section 4000) of this code, or (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.
?A reading of section 11711 readily discloses that in order to recover for loss or damage by reason of any fraud practiced on him or fraudulent representation made to him by a licensed bonded dealer, the plaintiff must have a writing furnished by the licensee containing stipulated provisions and guarantees which plaintiff believes have been violated by the licensee.?? (Krebs v. Travelers Indem. Co. (1961) 192 Cal.App.2d 83, 85 (?Krebs?).)
In Krebs, the appellate court affirmed a judgment entered against a consumer following his failure to amend his complaint after a demurrer was sustained with leave to amend.? The demurrer had been previously sustained because the consumer failed to allege that the guarantees made by the dealer were put in writing in order to bring him within the statute.? (Krebs, surpa, 192 Cal.App.2d at p. 85.)? The court went on to state ?It is apparent that the section requires that he allege that the guarantees breached were in writing.?? (Id. at p. 86.)
The Court previously sustained the demurrer with leave to amend as Plaintiff failed to allege any representations and/or guarantees made by Kow Loon, the dealer, that were reduced to writing.? In the 4AC, Plaintiff now alleges that a writing (the RISC, attached as Exhibit 1 to the 4AC) exists between Kow Loon and Plaintiff, which contains stipulated provisions, namely that the purchase price of the vehicle is the fair market price of the vehicle.? (See 4AC at ? 78.)? Plaintiff also alleges a second writing, a Carfax, which Kow Loon gave to him, which makes representations as to conditions of the vehicle.? (Id. at ? 79.)? Both writings contain stipulated provisions and representations which were false and material made by Kow Loon.? (Id. at ?? 80-81.)
To the extent that Western demurs to the fifth cause of action for failure to state a claim, it addresses only the RISC document, not the Carfax writing.? (See Memo of P?s & A?s at p. 7:5-10:7.)? Since a party cannot demur to a portion of a cause of action, this argument fails to provide a basis for general demurrer.? (See Kong v. City of Hawaiian Gardens Redevelopment Agency (2002) 108 Cal.App.4th 1028, 1047 [a demurrer cannot rightfully be sustained to part of a cause of action]; see also PH II, Inc. v. Superior Court (1995) 33 Cal.App.4th 1680, 1682 [?A demurrer does not lie to a portion of a cause of action.?].)
Western directs its special demurrer for uncertainty to the Carfax writing.? In doing so, Western claims that: (1) Plaintiff fails to allege the written guarantee or stipulation in the Carfax; (2) Plaintiff fails to attach the Carfax writing to the 4AC; and (3) the Carfax writing is not a written instrument between Plaintiff and defendant containing written stipulations or guarantees made by Kow Loon to Plaintiff.
These arguments are not well-taken given that any pleading ambiguities can be clarified using modern discovery tools.? (See Khoury v. Maly?s of Calif., Inc. (1993) 14 Cal.App.4th 612, 616 [?A demurrer for uncertainty is strictly construed, even where a complaint is in some respects uncertain, because ambiguities can be clarified under modern discovery procedures.?].)? In fact, Western admits that it has already received a copy of the Carfax report from Plaintiff.? (See Reply Brief at p. 3, fn. 1.)? However, Western cannot use the Carfax report to challenge the 4AC on demurrer as it does not constitute an exhibit attached to the pleading or a judicially noticed document.? This does not preclude Western from later addressing these allegations with evidence on a motion for summary judgment or during trial.? Finally, Western fails to cite any legal authority for the proposition that a claim under Vehicle Code section 11711 requires a writing between a plaintiff and defendant.? (See Quantum Cooking Concepts, Inc. v. LV Associates, Inc. (2011) 197 Cal.App.4th 927, 934 [stating that the trial court has no ?obligation to comb the record and the law for factual or legal support that a party has failed to identify or provide?].)? Therefore, the argument for uncertainty also fails on demurrer.
Accordingly, the demurrer to the fifth cause of action is OVERRULED in its entirety.
Kow Loon?s Demurrer
With respect to the third cause of action [fraudulent misrepresentation], Kow Loon argues that the fraud claim has not been pled with the required specificity.? In particular, Kow Loon asserts that Plaintiff fails to allege: (1) knowledge of falsity; (2) intent to induce reliance; (3) the names of the persons who made the allegedly fraudulent misrepresentations; (4) their authority to speak; (5) to whom they spoke; (6) what was said or written; and (7) when it was said or written.
?The elements of fraud are (1) the defendant made a false representation as to a past or existing material fact; (2) the defendant knew the representation was false at the time it was made; (3) in making the representation, the defendant intended to deceive the plaintiff; (4) the plaintiff justifiably relied on the representation; and (5) the plaintiff suffered resulting damages.?? (West v. JPMorgan Chase Bank, N.A. (2013) 214 Cal.App.4th 780, 792 [citation omitted].)
?Fraud must be pleaded with specificity rather than with general and conclusory allegations.? The specificity requirement means a plaintiff must allege facts showing how, when, where, to whom, and by what means the representations were made, and, in the case of a corporate defendant, the plaintiff must allege the names of the persons who made the representations, their authority to speak on behalf of the corporation, to whom they spoke, what they said or wrote, and when the representation was made.?? (West v. JPMorgan Chase Bank, N.A., supra, 214 Cal.App.4th at p. 793 [citation and quotation marks omitted].)
Kow Loon?s arguments appear to be well-taken as Plaintiff fails to allege the elements of knowing falsity and intent to defraud to support a fraud cause of action.? Even though this is now the 4AC, Plaintiff?s opposition includes facts which make it possible for him to further amend his fraud cause of action.? (See Goodman v. Kennedy (1976) 18 Cal.3d 335, 349 [?Generally, it is an abuse of discretion to sustain a demurrer without leave to amend if there is any reasonable possibility that the defect can be cured by amendment.?].)
Therefore, the demurrer to the third cause of action is SUSTAINED WITH 10 DAYS? LEAVE TO AMEND for failure to state a claim.
Footnotes:
[1] The Court notes that defense counsel for Western and Kow Loon failed to attach a meet and confer declaration to the demurrers in accordance with Code of Civil Procedure section 430.41.? However, the Court will overlook this procedural deficiency with respect to the motions.? Counsel is admonished to comply with court rules and procedures and include a meet and confer declaration with any future demurrers.