Case Number: BC719448 Hearing Date: January 07, 2019 Dept: 78

Superior Court of California

County of Los Angeles

Department 78

ERIC ESCORSIA;

 

Plaintiff,

 

vs.

 

KIA MOTORS AMERICA, INC., et al.;

 

Defendants.

Case No.: BC 719448
Hearing Date: January 7, 2019
   
RULING RE:

 

DEFENDANT KIA MOTORS AMERICA, INC.’S DEMURRER AND MOTION TO STRIKE PORTIONS OF THE FIRST AMENDED COMPLAINT.

 

Defendant Kia Motors America, Inc.’s Demurrer to the First Amended Complaint is SUSTAINED, without leave to amend, as to the Fifth Cause of Action for Breach of Implied Warranty of Merchantability, SUSTAINED with leave to amend as to the Sixth and Seventh Causes of Action for Fraud by Omission and Fraudulent Inducement, and OVERRULED as to the Third and Fourth Causes of Action.

Defendant Kia Motors America, Inc.’s Motion to Strike Portions of the First Amended Complaint is GRANTED, with leave to amend, with respect to the prayer for punitive damages.

FACTUAL BACKGROUND

This is a Lemon Law case. The First Amended Complaint (“FAC”) alleges as follows. In September 2012, Plaintiff Eric Escorsia (“Escorsia”) purchased a 2012 Kia Optima with an express warranty. (FAC ¶¶ 6–7.) During the warranty period, the vehicle developed various engine defects. (FAC ¶ 8.) Defendant Kia Motors America, Inc. (“Kia”) knew before Escorsia purchased the vehicle that a certain engine defect was common in this type of vehicle yet failed to disclose it. (FAC ¶ 15.) Kia has failed to re-purchase the vehicle or offer restitution. (FAC ¶¶ 46–47.)

PROCEDURAL HISTORY

Escorsia filed the original Complaint on August 27, 2018, and filed the FAC on October 5, 2018, alleging seven causes of action:

  1. VIOLATION OF SUBDIVISION (D) OF CIVIL CODE SECTION 1793.2
  2. VIOLATION OF SUBDIVISION (B) OF CIVIL CODE SECTION 1793.2
  3. VIOLATION OF SUBDIVISION (A)(3) OF CIVIL CODE SECTION 1793.2
  4. BREACH OF EXPRESS WRITTEN WARRANTY
  5. BREACH OF THE IMPLIED WARRANTY OF MERCHANTABILITY
  6. FRAUD BY OMISSION
  7. FRAUDULENT INDUCEMENT

Kia filed the present Demurrer and Motion to Strike on November 9, 2018.

Escorsia filed Oppositions on December 21, 2018.

DISCUSSION

 

  • DEMURRER

 

A demurrer should be sustained only where the defects appear on the face of the pleading or are judicially noticed. (Code Civ. Pro., §§ 430.30, et seq.) In particular, as is relevant here, a court should sustain a demurrer if a complaint does not allege facts that are legally sufficient to constitute a cause of action. (See id. § 430.10, subd. (e).) As the Supreme Court held in Blank v. Kirwan (1985) Cal.3d 311: “We treat the demurrer as admitting all material facts properly pleaded, but not contentions, deductions or conclusions of fact or law. . . . Further, we give the complaint a reasonable interpretation, reading it as a whole and its parts in their context.” (Id. at p. 318; see alsoHahn. v. Mirda (2007) 147 Cal.App.4th 740, 747 [“A demurrer tests the pleadings alone and not the evidence or other extrinsic matters. Therefore, it lies only where the defects appear on the face of the pleading or are judicially noticed. [Citation.]”)

“In determining whether the complaint is sufficient as against the demurrer … if on consideration of all the facts stated it appears the plaintiff is entitled to any relief at the hands of the court against the defendants the complaint will be held good although the facts may not be clearly stated.” (Gressley v. Williams (1961) 193 Cal.App.2d 636, 639.)

“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.” (Khoury v. Maly’s of Cal., Inc. (1993) 14 Cal.App.4th 612, 616.) Such demurrers “are disfavored, and are granted only if the pleading is so incomprehensible that a defendant cannot reasonably respond.” (Mahan v. Charles W. Chan Insurance Agency, Inc. (2017) 14 Cal.App.5th 841, 848.)

A demurrer should not be sustained without leave to amend if the complaint, liberally construed, can state a cause of action under any theory or if there is a reasonable possibility the defect can be cured by amendment. (Schifando v. City of Los Angeles, supra, 31 Cal.4th at p. 1081.) The demurrer also may be sustained without leave to amend where the nature of the defects and previous unsuccessful attempts to plead render it probable plaintiff cannot state a cause of action. (Krawitz v. Rusch (1989) 209 Cal.App.3d 957, 967.)

  1. FRAUD — SIXTH AND SEVENTH CAUSES OF ACTION

Kia first argues that Plaintiffs’ Sixth and Seventh Causes of Action for fraud are barred by the statute of limitations. (Demurrer at pp. 11–14.)

There is a three-year statute of limitations for “[a]n action for relief on the ground of fraud or mistake. The cause of action in that case is not deemed to have accrued until the discovery, by the aggrieved party, of the facts constituting the fraud or mistake.” (Code Civ. Proc., § 338, subd. (d.)

The “discovery rule. . . postpones accrual of a cause of action until the plaintiff discovers, or has reason to discover, the cause of action.” (Fox v. Ethicon Endo-Surgery, Inc. (2005) 35 Cal.4th 797, 807.) “A plaintiff has reason to discover a cause of action when he or she ‘has reason at least to suspect a factual basis for its elements.’” (Ibid..) Courts “look to whether the plaintiffs have reason to at least suspect that a type of wrongdoing has injured them.” (Ibid.) The accrual of a cause of action in relation to the discovery rule is normally a question of fact. (Id. at p. 810.)

On a demurrer, the court must take as true statements such as that as plaintiff “did not discover, nor suspect, nor was there any means through which her reasonable diligence would have revealed, or through which she would have suspected,” the cause of an injury was the defendant in question. (Id. at p. 811.) However: “A plaintiff whose complaint shows on its face that his claim would be barred without the benefit of the discovery rule must specifically plead facts to show (1) the time and manner of discovery and (2) the inability to have made earlier discovery despite reasonable diligence.” (Id. at p. 808.) The burden is on the plaintiff to show diligence, and conclusory allegations will not withstand demurrer. (Ibid.)

Here, the alleged fraud would have taken place on September 1, 2012, when Escorsia purchased the vehicle at issue. (FAC ¶ 7.) The limitations period from this date would have run without the discovery rule by September 1, 2015. The original Complaint was filed on August 27, 2018, almost three years beyond the facially applicable limitations period. Because the fraud claim would be barred without the benefit of the discovery rule, Escorsia must specifically plead facts to show that the discovery rule applies. But the only facts in the FAC regarding discovery are contained in a short paragraph stating in conclusory fashion that Escorsia discovered the wrongful conduct in October 2017, and could not have discovered the defect until “well after” he had purchased the vehicle. (FAC ¶¶ 47, 86c.)

Escorsia argues that the FAC does not indicate that the limitations period has necessarily run, because Kia engaged in a continuing pattern of concealment that was not complete with the purchase of the vehicle. (Opposition at pp. 6–7.) “Generally speaking, a cause of action accrues at “the time when the cause of action is complete with all of its elements.” (Fox, supra, 35 Cal.4th at p. 806.) Here, Escorsia’s fraud allegations — concealment, knowledge of falsity, justifiable reliance, and injury — effectively coalesced into a complete cause of action when he purchased the vehicle with its alleged defects. Although continued fraudulent concealment may in some circumstances toll the statute of limitations, “[t]he theory for tolling a statute of limitations for intentional concealment is that the defendant’s false representations prevent the plaintiff from bringing the action before the period of limitations has run.” (Trantafello v. Medical Center of Tarzana (1986) 182 Cal.App.3d 315, 321 fn. 4.) An extension of the limitations period under this theory thus “requires something more than a mere continuation of the prior nondisclosure,” which prevents the plaintiff from bringing a timely action. (Id. at p. 321.)

Escorsia finally argues that the applicable limitations period was tolled from June 2, 2016 to November 7, 2016 — about four months — during the pendency of the federal class action Wallis et al. v. Kia Motors America, Inc., (C.D. Cal. No. 8:16-cv-01033). (Opposition at pp. 9–10.) However, even assuming that the statute of limitations may be tolled for four months under the rule announced inAmerican Pipe & Construction Co. v. Utah (1974) 414 U.S. 156, cited in San Francisco Unified School Dist. v. W.R. Grace & Co.(1995) 37 Cal.App.4th 1318, 1336–37, that four month period would not cure the nigh-three-year latency of Escorsia’s fraud claims.

The Demurrer to the Sixth and Seventh Causes of Action is SUSTAINED, with leave to amend. Because the Court sustains the demurrer by reference to the applicable limitations period, the Court does not address Kia’s argument that the fraud claims are inadequately pleaded and barred by the economic loss rule. 15–20.)

 

  • IMPLIED WARRANTY OF MERCHANTABILITY — FIFTH CAUSE OF ACTION

 

Kia argues that the Fifth Cause of Action for Breach of the Implied Warranty of Merchantability is time-barred. (Demurrer at pp. 20–23.)

“An action for breach of any contract for sale must be commenced within four years after the cause of action has accrued.” (Com. Code § 2725, subd. (1).) “A breach of warranty occurs when tender of delivery is made, except that where a warranty explicitly extends to future performance of the goods and discovery of the breach must await the time of such performance the cause of action accrues when the breach is or should have been discovered.” (Com. Code § 2725, subd. (2).) This statute applies to Song-Beverly claims. (See Krieger v. Nick Alexander Imports, Inc. (1991) 234 Cal.App.3d 205, 214.)

The length of an implied warranty of merchantability is “coextensive in duration with an express warranty which accompanies the consumer goods, . . . but in no event shall such implied warranty have a duration of less than 60 days nor more than one year following the sale of new consumer goods to a retail buyer.” (Civ. Code § 1791.1, subd. (c).)

Kia’s argument is this. Tender of the vehicle was made on September 1, 2012, meaning that the warranty period lasted until September 1, 2013, one year later. The limitations period in which to bring a claim was four years from the date of tender, or September 1, 2016. Even assuming the period ran from the last date of the warranty period, this would only extend the deadline to September 1, 2017, almost a year before the present action was brought. (Demurrer at pp. 20–21.)

Escorsia responds that although he purchased the vehicle in September 2012, he only discovered Defendants’ wrongful conduct when she requested repurchase of the vehicle from Kia in 2017. Because the Commercial Code states that a cause “accrues when the breach is or should have been discovered” in cases where “a warranty explicitly extends to future performance of the goods,” Escorsia argues that the discovery rule tolled the accrual of his implied warranty claim here. (Opposition at pp. 13–14.) Escorsia also argues that the limitations period is tolled by Kia’s fraudulent concealment and by the Wallis action, as with the fraud claim. (Opposition at p. 14.)

Putting aside for the moment that the defects in Escorsia’s discovery allegations apply just as well here as to his fraud claims, the Court concludes that Escorsia’s implied warranty claim is time-barred as a matter of law. This is because the discovery rule stated in Commercial Code § 2725 does not apply to implied warranty claims, such as Escorsia’s Fifth Cause of Action. The language of the discovery exception is that a cause accrues upon delivery of the good, “except that where a warranty explicitly extends to future performance of the goods.” (Com. Code § 2725, subd. (2), emphasis added.) An implied warranty by definition cannot “explicitly extend to future performance of the goods,” because an implied warranty contains no explicit terms. Courts have accordingly held that “the exception must be narrowly construed, and that it applies only when the seller has expressly agreed to warrant its product for a specific and defined period of time.” (Cardinal Health 301, Inc. v. Tyco Electronics Corp. (2008) 169 Cal.App.4th 116, 130.) “Because an implied warranty is one that arises by operation of law rather than by an express agreement of the parties, courts have consistently held it is not a warranty that ‘explicitly extends to future performance of the goods.’” (Id. at p. 134.) The fact that Kia gave Escorsia an express warranty is thus relevant to extend the time for filing claims based on that warranty, but they do not extend the time for claiming a breach of a different warranty with no express terms.[1]

The Demurrer to the Fifth Cause of Action is SUSTAINED, without leave to amend.

 

  • CIVIL CODE § 1793.2, SUBD. (A)(3) — THIRD CAUSE OF ACTION

Kia argues that Escorsia has pleaded only conclusory facts to support his claim for breach of Civil Code § 1793.2, subd. (a)(3). (Demurrer at p. 23.)

Civil Code § 1793.2, subd. (a)(3) states, “Every manufacturer of consumer goods sold in this state and for which the manufacturer has made an express warranty shall . . . [m]ake available to authorized service and repair facilities sufficient service literature and replacement parts to effect repairs during the express warranty period.” The Complaint here alleges that Kia “failed to make available to its authorized service and repair facilities sufficient service literature and replacement parts to effect repairs during the warranty period.” (FAC ¶ 73.)

The Court finds this allegation adequate to support a claim for violation of Civil Code § 1793.2, subd. (a)(3).

The Demurrer to the Third Cause of Action is therefore OVERRULED.

 

  • BREACH OF EXPRESS WARRANTY — FOURTH CAUSE OF ACTION

 

Kia argues that the Fourth Cause of Action for Breach of Express Warranty must be dismissed because it fails to adequately plead the terms of the warranty, and because it is merely duplicative of the First Cause of Action for Violation of Civil Code § 1793.2, subd. (d). (Demurrer at pp. 23–24.)

Both arguments fail. Generally, a plaintiff pleading breach of contract must either attach a copy to the complaint, state its terms verbatim, or plead its legal effect. (See Miles v. Deutsche Bank National Trust Co. (2015) 236 Cal.App.4th 394, 401–02.) The existence and coverage of the relevant warranties are pleaded in the FAC. (FAC ¶ 7.)

Nor is the Fourth Cause of Action duplicative of the First. The former involves Kia’s failure to repair the vehicle to conform it to warranty, while the latter involves Kia’s failure to make restitution following this failure. Kia does not explain how they are duplicative or offer any corroborating authority for its argument.

The Demurrer to the Fourth Cause of Action is OVERRULED.

 

  • MOTION TO STRIKE

 

Any party, within the time allowed to respond to a pleading, may serve and file a notice of motion to strike the whole or any part thereof. (Code Civ. Proc., § 435(b)(1)). The notice of motion to strike a portion of a pleading shall quote in full the portions sought to be stricken except where the motion is to strike an entire paragraph, cause of action, count or defense. (California Rules of Court Rule 3.1322.)

The grounds for a motion to strike shall appear on the face of the challenged pleading or form any matter of which the court is required to take judicial notice. (Code Civ. Proc., § 437(a)). The court then may strike out any irrelevant, false, or improper matter inserted in any pleading and strike out all or any part of any pleading not drawn or filed in conformity with the laws of this state, a court rule, or an order of the court. (Code Civ. Proc., § 436.) When the defect which justifies striking a complaint is capable of cure, the court should allow leave to amend. (Perlman v. Municipal Court (1979) 99 Cal.App.3d 568, 575.)

Kia moves to strike the prayer for punitive damages. (Motion at p. 4–7.)

Punitive damages are allowed in non-contract cases when a defendant is guilty of “oppression, fraud, or malice . . . .” (Civ. Code § 3294.) The terms are defined as:

  1. “Malice” means conduct which is 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.
  2. “Oppression” means despicable conduct that subjects a person to cruel and unjust hardship in conscious disregard of that person’s rights.
  3. “Fraud” means 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.

Something more than the mere commission of a tort is always required for punitive damages. (Taylor v. Superior Court (1979) 24 Cal.3d 890, 894.) Proof of negligence, gross negligence, or recklessness is insufficient to warrant an award of punitive damages. (Dawes v. Sup.Ct. (Mardian) (1980) 111 Cal.App.3d 82, 88–89.) Punitive damages may be recovered in an action for negligence or other nonintentional torts if the plaintiff pleads and proves that the defendant acted with the state of mind described as “conscious disregard” of the potential dangers to others. (Pfeifer v. John Crane, Inc. (2013) 220 Cal.App.4th 1270, 1299.) When malice is based on a defendant’s conscious disregard of Plaintiff’s rights, the conduct must be both despicable and willful. (College Hospital v. Superior Court (1994) 8 Cal.4th 794, 713 (“College Hospital”).)

Escorsia argues that punitive damages are available for malicious and fraudulent conduct. (Opposition at pp. 2–5.) This is true, but this court has sustained the demurrer against Escorsia’s fraud claims for falling outside the limitations period. Accordingly, Escorsia’s fraud claim alone cannot sustain a punitive damages request at this time.

Escorsia also argues that punitive damages are available under the Song-Beverly Act and Magnuson-Moss Act. (Opposition at pp. 5–6.) But punitive damages are not available under the Magnusson-Moss Act. (See Walsh v. Ford Motor Co. (D.D.C. 1986) 627 F.Supp. 1519, 1524.) And the Song Beverly Act on its face provides only for the recovery of damages, attorneys’ fees, and a civil penalty in the event of a willful violation. (Civ. Code § 1794, subd. (e)(1).) Some courts have held the civil penalties are “akin to punitive damages” because “like other civil penalties, [the penalty] imposed as punishment or deterrence of the defendant, rather than to compensate the plaintiff.” (Kwan v. Mercedes-Benz of North America, Inc. (1994) 23 Cal.App.4th 174, 184.) But that a civil penalty is “akin” to punitive damages is not a basis for pleading punitive damages separately from the civil penalty.

Kia’s Motion to Strike the prayer for punitive damages is therefore GRANTED, with leave to amend.

Defendant to provide notice.

DATED: January 7, 2019 ________________________________

Hon. Robert S. Draper

Judge of the Superior Court

[1] The brief analysis of the federal district court to the contrary in Ehrlich v. BMW of North America, LLC (C.D. Cal. 2010) 801 F.Supp.2d 908, 925, is unpersuasive and contrary to the holding of Cardinal Health. (Opposition at p. 13.)