Case Name:??? Jason Horner v. Kow Loon Auto Sales, Inc.?? ?????????????
Case No.:??????? 2015-1-CV-279427
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 Jason Horner (?Plaintiff?).? Defendant Western Surety Company (?Western?) is the surety on the seller?s bond for Plaintiff?s vehicle.? Defendant Bank of Stockton (?BOS?)?a ?financial institution engaged in the business of holding conditional sale contracts and collecting payments made by consumers pursuant to such contracts??was allegedly assigned the written Retail Installment Sales Contract (the ?Contract?) pertaining to Plaintiff?s vehicle.
On or about April 25, 2012, Plaintiff purchased a vehicle from Kow Loon pursuant to the Contract.? Plaintiff alleges that Kow Loon made various misrepresentations of fact and/or failed to disclose that the vehicle had prior damage, had been in an accident, had frame/unibody damage or had been branded as having frame/unibody damage.? Plaintiff relied on Kow Loon?s representations when he entered into the Contract and he would not have purchased the vehicle if he had been aware of its true condition.? Sometime after the purchase of the vehicle, Plaintiff discovered that the vehicle had previously been damaged, involved in an accident, and/or sustained substantial frame damage.
On February 16, 2016, Plaintiff filed the operative third amended complaint (?TAC?) against Kow Loon, Western, and BOS, 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) negligent misrepresentation (against Kow Loon), (4) claim against holder (against BOS), and (5) claim against dealer bond (against Western).
Currently before the Court are: (1) the demurrer by Western to the TAC; (2) the motion by Western to strike portions of the TAC; and (3) the motion by BOS to strike portions of the TAC.[1]? Plaintiff filed written oppositions.? Western and BOS 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 the ground that Plaintiff fails to state a valid claim.? (Code Civ. Proc., ? 430.10, subd. (e).)? 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 TAC, Plaintiff now alleges that a writing (the Contract, attached as Exhibit 1 to the TAC) 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 TAC at ? 83.)? Plaintiff alleges that, ?by virtue of the vehicle being tagged frame damage, the purchase price is not the fair market price of the vehicle.?? (Id. at ? 84.)? The stipulated provision was a representation made by Kow Loon which was false and material.? (Id. at ? 85.)
Here, Plaintiff refers to a single stipulated written provision which allegedly states that the purchase price of the vehicle is the fair market price of the vehicle.? (See TAC at ? 83.)? Plaintiff alleges that this particular provision was false and material.? (Id. at ? 85.)? However, as Western points out, this alleged provision is not incorporated into the Contract attached as Exhibit 1 to the TAC.? While the Contract does refer to ?Total Cash Price,? it fails to mention the term ?fair market price? to support Plaintiff?s cause of action.? Nor does the Contract define ?Total Cash Price? to mean ?fair market price.?? The opposition fails to dispute this argument but instead mistakenly relies upon oral representations made by Kow Loon regarding the vehicle which are not incorporated in the written document.? Therefore, the Court finds that Plaintiff fails to allege any stipulated written provisions to support a claim under Vehicle Code section 11711.? (See Dodd v. Citizens Bank of Costa Mesa (1990) 222 Cal.App.3d 1624, 1627 [?facts appearing in exhibits attached to the complaint will also be accepted as true and, if contrary to the allegations in the pleading, will be given precedence?].)? The opposition does not provide any basis for further amendment.? (See Goodman v. Kennedy (1976) 18 Cal.3d 335, 349 [plaintiff must show in what manner he can amend his complaint and how that amendment will change the legal effect of his pleading].)
Accordingly, the demurrer to the fifth cause of action is SUSTAINED WITHOUT LEAVE TO AMEND for failure to state a claim.
Western?s Motion to Strike?
Western moves to strike Plaintiff?s request for injunctive relief and punitive damages alleged in paragraph 61 of the TAC and incorporated by reference into the fifth cause of action.? As the only cause of action against Western?the fifth cause of action?does not survive demurrer, the motion to strike is MOOT.
BOS?s Motion to Strike
BOS moves to strike paragraph 61 of the TAC to the extent it seeks to impose punitive damages against BOS as incorporated by reference into the fourth cause of action and item no. 4 in the prayer seeking punitive damages against BOS.
Legal Standard
A court may strike out any irrelevant, false, or improper matter asserted in a pleading. ?(Code Civ. Proc., ? 436, subd. (a).)? A court may also strike out all or any part of a pleading not filed in conformity with the laws of the State of California.? (Code Civ. Proc., ? 436, subd. (b).)? The grounds for a motion to strike shall appear on the face of the challenged pleading or from any matter of which the court is required to take judicial notice.? (Code Civ. Proc., ? 437, subd. (a).)
Analysis
?In order to state a prima facie claim for punitive damages, a complaint must set forth the elements as stated in the general punitive damage statute, Civil Code section 3294.? These statutory elements include allegations that the defendant has been guilty of oppression, fraud, or malice.? ?Malice? is defined in the statute as conduct ?intended by the defendant to cause injury to the plaintiff or despicable conduct which is carried on by the defendant with a willful and conscious disregard of the rights or safety of others.???? ?Oppression? means despicable conduct that subjects a person to cruel and unjust hardship in conscious disregard of that person?s rights.? ?Fraud? is ?an intentional misrepresentation, deceit, or concealment of a material fact known to the defendant with the intention on the part of the defendant of thereby depriving a person of property or legal rights or otherwise causing injury.??? (Turman v. Turning Point of Central California, Inc. (2010) 191 Cal.App.4th 53, 63 [internal citations omitted].)
The Court previously granted the motion to strike punitive damages with leave to amend as Plaintiff failed to allege specific facts demonstrating that BOS acted with fraud, oppression, or malice.? Rather, Plaintiff alleges fraud on the part of defendant Kow Loon.? Plaintiff has failed to amend his pleading to add any specific facts showing that BOS acted with fraud, oppression, or malice to support an award of punitive damages.? Plaintiff appears to concede this point as he fails to address this argument in opposition to the motion.
Therefore, the motion to strike the request for punitive damages is GRANTED WITHOUT LEAVE TO AMEND.
Footnotes:
[1] The Court notes that defense counsel for Western failed to attach a meet and confer declaration to the demurrer in accordance with Code of Civil Procedure section 430.41.? However, the Court will overlook this procedural deficiency with respect to the motion.? Counsel is admonished to comply with court rules and procedures and include a meet and confer declaration with any future demurrers.