Case Number: 24STCV14186 Hearing Date: June 25, 2025 Dept: 19
24STCV14186
LISA S. CASTILLO, et al. vs GENERAL MOTORS, LLC, et al.
NATURE OF PROCEEDINGS: General Motors LLC’s Demurrer to Plaintiffs’ First Amended Complaint. General Motors LLC’s Motion to Strike Punitive Damages from Plaintiffs’ First Amended Complaint.
RULING:
The Demurrer is overruled.
The Motion to Strike is denied.
Twenty days to answer.
- BACKGROUND
On June 5, 2024, LISA S CASTILLO and CLEMENTE ARRIZON (Plaintiffs) filed the Complaint against GENERAL MOTORS, LLC (Defendant).
On November 26, 2024, Plaintiffs filed the First Amended Complaint (FAC) against (Defendant), alleging the following causes of action:
- Violation of Subdivision (D) of Civil Code Section 1793.2;
- Violation of Subdivision (B) of Civil Code Section 1793.2;
- Violation of Subdivision (A)(3) of Civil Code Section 1793.2;
- Breach of the Implied Warranty of Merchantability (Civ. Code, § 1791.1; § 1794; § 1795.5); and
- Fraudulent Inducement- Concealment.
Plaintiffs allege that, on or about May 22, 2018, Plaintiffs entered into a warranty contract with Defendant GM, regarding a pre-owned 2016 Cadillac Escalade (FAC, ¶ 6), subsequently discovered to have defects, including transmission, engine, electrical and body, remaining unrepaired after a reasonable number of attempts.
On January 22, 2025, Defendant filed the Demurrer to the FAC’s Cause of Action for Fraudulent Inducement-Concealment, on grounds (1) it is barred by the applicable statute of limitations, (2) it fails to state facts relevant to the claim elements and (3) it fails to allege a transactional relationship giving rise to a duty to disclose.
Additionally, Defendant filed the Motion to strike punitive damages allegations, because concealment is unsupportively alleged and the statutory claims cannot support punitive damages.
- LEGAL STANDARD
Demurrers are to be sustained where a pleading fails to plead adequately any essential element of the cause of action. (Cantu v. Resolution Trust Corp. (1992) 4 Cal.App.4th 857, 879-880.)
The grounds for a motion to strike are that the pleading has irrelevant, false or improper matter, or has not been drawn or filed in conformity with laws. (Code Civ. Proc., § 436.) The grounds for moving to strike must appear on the face of the pleading or by way of judicial notice. (Code Civ. Proc., § 437.)
III. ANALYSIS
- Demurrer
- Statute of Limitations
Defendant argues that the operative date alleged is May 22, 2018 – when Plaintiffs purchased the vehicle—but Plaintiffs did not file their Complaint until June 5, 2024.
“‘A demurrer on the ground of the bar of the statute of limitations will not lie where the action may be, but is not necessarily barred’…. It must appear clearly and affirmatively that, upon the face of the complaint, the right of action is necessarily barred…. This will not be the case unless the complaint alleges every fact which the defendant would be required to prove if he were to plead the bar of the applicable statute of limitation as an affirmative defense.” (Lockley v. Law Office of Cantrell, Green, Pekich, Cruz & McCort (2001) 91 Cal.App.4th 875, 881. Accord, State of Cal. ex rel. Metz v. CCC Information Services, Inc. (2007) 149 Cal.App.4th 402, 413; United W. Medical Ctrs. v. Superior Court (1996) 42 Cal.App.4th 500, 505.) “[T]o prevail on a demurrer based on the statute of limitations, a defendant must establish the entire cause of action is untimely.” (Pointe San Diego Residential Community, L.P. v. Procopio, Cory, Hargreaves & Savitch, LLP (2011) 195 Cal.App.4th 265, 274.)
“When a plaintiff relies on a theory of fraudulent concealment, delayed accrual, equitable tolling, or estoppel to save a cause of action that otherwise appears on its face to be time-barred, he or she must specifically plead facts which, if proved, would support the theory.” (Mills v. Forestex Co. (2003) 108 Cal.App.4th 625, 641.)
The Lemon Law Statute of Limitations is one year after the expiration of applicable express warranty, with exceptions. (See Code Civ. Proc., §§ 871.21, 871.24 [consumer prelawsuit notice requirements].)
The Statute of Limitations period for a cause of action for fraud is three years. (Broberg v. The Guardian Life Ins. Co. of Amer. (2009) 171 Cal.App.4th 912, 920 [citing Code Civ. Proc., § 338, subd. (d)].)
“Code of Civil Procedure section 338, subdivision (d), effectively codifies the delayed discovery rule in connection with actions for fraud, providing that a cause of action for fraud ‘is not to be deemed to have accrued until the discovery, by the aggrieved party, of the facts constituting the fraud or mistake.’” (Brandon G. v. Gray (2003) 111 Cal.App.4th 29, 35.)
Claims of fraud by operation of statute are deemed accrued upon the discovery of the facts constituting the fraud, which means when the plaintiff suspected or reasonably should have suspected that wrongdoing in their lay and not legal senses. (Kline v. Turner (4th Dist. 2001) 87 Cal.App.4th 1369, 1373-1374 (citing, e.g., Code Civ. Proc., § 338, subd. (d)). But see Brandon G. v. Gray (1st Dist. 2003) 111 Cal.App.4th 29, 35 [“Code of Civil Procedure section 338, subdivision (d), effectively codifies the delayed discovery rule in connection with actions for fraud….”].)
“‘There are no hard and fast rules for determining what facts or circumstances will compel inquiry by the injured party and render him chargeable with knowledge…. It is a question for the trier of fact.’… ‘However, whenever reasonable minds can draw only one conclusion from the evidence, the question becomes one of law.’” (E-Fab, Inc. v. Accountants, Inc. Services (2007) 153 Cal.App.4th 1308, 1320. See also Alexander v. Exxon Mobil (2013) 219 Cal.App.4th 1236, 1252 [court reversed as to sustaining a demurrer based upon determining the date of reasonable discovery as a matter of law].)
The existence of public records for giving constructive notice does not preclude the application of the delayed discovery doctrine. (Prudential Home Mort. Co. v. Superior Court (1998) 66 Cal.App.4th 1236, 1247; Weatherly v. Universal Music Publishing Group (2004) 125 Cal.App.4th 913, 919.)
Acts, misrepresentations, omissions or nondisclosures that cause plaintiffs to refrain from filing timely suits may support a claim of equitable estoppel in defense of the Statute of Limitations. (Vu v. Prudential Property & Casualty Ins. Co. (2001) 26 Cal.4th 1142, 1149-1153; Superior Dispatch, Inc. v. Insurance Corp. of New York (2010) 181 Cal.App.4th 175, 187.) A “‘defendant’s fraud in concealing a cause of action … tolls the applicable statute of limitations, … for that period during which the claim is undiscovered by plaintiff or until such time as plaintiff, by the exercise of reasonable diligence, should have discovered it.’” (Bernson v. Browning-Ferris Indus. (1994) 7 Cal.4th 926, 931.)
The commencement of a class action can toll the applicable statute of limitations as to all asserted class members who would have been parties to the class action had it continued. (California Restaurant Management Systems v. City of San Diego (2011) 195 Cal.App.4th 1581, 1600.)
Defendant cites federal rulings to support the contention that Defendant’s car repairs would not extend the Statute of Limitations. (Reply, pp. 3-4.) California appellate courts are not bound to follow decisions of lower federal courts. (People v. Superior Court (2002) 103 Cal.App.4th 409, 431.)
Here, the FAC unusually extensively anticipates the Statute of Limitations issues by including multiple theories that can extend the limit. (FAC, ¶¶ 22 (“equitable tolling, the discovery rule, equitable estoppel, the repair rule, and/or class action tolling”), 28 (delayed discovery after repairs), 29-30 (class action tolling), 31-35 (inability to discover sooner), 36-38 (warranty repairs delay), 39-42 and 72-73 (equitable estoppel due to concealment, and misleading statements such as denying the defect existed).)
Moreover, Plaintiffs do not admit an accrual date, but only an approximate one— “On or about May 22, 2018,…” (FAC, ¶ 6.) “On or about” allegations do not reveal the ground of the statute of limitations. (Childs v. State (1983) 144 Cal.App.3d 155, 160.)
The Demurrer is overruled as to the Statute of Limitations.
- Concealment Claim Elements
Defendant argues that affirmative misrepresentations and factual bases for intent to defraud are not alleged. (Reply, pp. 6-7.)
As to concealment, at least one cognizable type of duty is pled, which does not require fiduciary relations, such as partial disclosure, exclusive knowledge, or active concealment. (See, e.g., Linear Technology Corp. v. Applied Materials, Inc. (2007) 152 Cal.App.4th 115, 132 [“‘In transactions which do not involve fiduciary or confidential relations, a duty supporting 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; (3) the defendant actively conceals discovery from the plaintiff.’”].)
Further, Plaintiffs need not allege the requested detail as to concealment claims. (See Alfaro v. Community Housing Improvement System & Planning Assn., Inc. (2009) 171 Cal.App.4th 1356, 1384 [rule of specifically pleading how, when, where, to whom, and by what means, misrepresentations were communicated, is intended to apply to affirmative misrepresentations, and not to concealment]; Jones v. ConocoPhillips (2011) 198 Cal.App.4th 1187, 1200 [concealment is sufficiently pled when the complaint as a whole provides sufficient notice of the particular claims against defendants].)
In further support of a concealment claim, plaintiffs sufficiently allege a buyer-seller relationship with a vehicle manufacturer, by alleging that the manufacturers’ authorized dealerships are its agents for purposes of vehicle sales. (Dhital v. Nissan North America, Inc. (2022) 84 Cal.App.5th 828, 844.) The Dhital Court’s opinion concluded that concealment allegations sufficed, as follows: “plaintiffs alleged the CVT transmissions installed in numerous Nissan vehicles (including the one plaintiffs purchased) were defective; Nissan knew of the defects and the hazards they posed; Nissan had exclusive knowledge of the defects but intentionally concealed and failed to disclose that information; Nissan intended to deceive plaintiffs by concealing known transmission problems; plaintiffs would not have purchased the car if they had known of the defects; and plaintiffs suffered damages in the form of money paid to purchase the car.” (Ibid., 84 Cal.App.5th at p. 844.)
Defendant cites court opinions for the proposition that direct transactional privity is required to support a duty to not conceal. (Reply, pp. 3-4.) However, there are variations on that rule.
For example, to allege liability for indirect deception, complaints must allege ultimate facts of defendants’ intent or reason to expect reliance by plaintiffs, or a class of persons of which plaintiffs are members, upon deceit, or concealment. (Geernaert v. Mitchell (1995) 31 Cal.App.4th 601, 608 [notwithstanding lack of privity in a transaction, plaintiffs sufficiently alleged facts of fraud and concealment, based upon defendants’ reason to expect those aspects likely would be passed on to the class of plaintiffs].) One delivering an article known to be dangerous because of concealed defects is liable for any injury which may be reasonably contemplated as likely to result, to that person, or any other who is not in fault. (Lewis v. Terry (1896) 111 Cal. 39, 44-45.)
Further, “where a fraud claim is based upon numerous misrepresentations such as business advertising that is alleged to be misleading, plaintiffs need not allege the specific advertisements the individual plaintiffs relied upon; it is sufficient for the plaintiff to provide a representative selection of the advertisements or other statements to indicate the language upon which the implied misrepresentations are based.” (Morgan v. AT&T Wireless Services, Inc. (2009) 177 Cal.App.4th 1235, 1262 [finding sufficient allegations that defendant made misleading statements of referenced facts in advertisements and press releases].)
Defendant adds that Plaintiffs failed to specify damages such as cost of repairs. (Reply, 7:11-27). But Defendant cites federal rulings, whereas California courts do not follow federal procedure. California law is controlling with respect to matters of practice and procedure. (Gervase v. Superior Court (1995) 31 Cal.App.4th 1218, 1229, fn.6; Rosenthal v. Great Western Fin. Securities Corp. (1996) 14 Cal.4th 394, 409.)
Complainants must plead that fraud has caused damages. (Patrick v. Alacer (2008) 167 Cal.App.4th 995, 1016-1017.) As to fraud claims, the dollar sum of damages need not be alleged, but only the type of damage. (Furia v. Helm (2003) 111 Cal.App.4th 945, 956. But see Nagy v. Nagy (1989) 210 Cal.App.3d 1262, 1268 [“An allegation of a definite amount of damage is essential….”].)
Damages include entering into an agreement to buy a defective car that Plaintiff otherwise would not have bought. (See, e.g., Duncan v. McCaffrey Group, Inc. (2011) 200 Cal.App.4th 346, 367 [reliance exists where nondisclosure concerned material fact and was cause of harm, including that plaintiff probably would not have engaged in the conduct but for misrepresentation], overruled on other grounds by Riverisland Cold Storage, Inc. v. Fresno-Madera Prod. Credit Assn. (2013) 55 Cal.4th 1169, 1182.)
Concealment is sufficiently pled as to duty, by alleging that Defendant was in a superior position to know from internal sources the defects that Plaintiffs could not reasonably have been expected to learn of. (E.g., Complaint, ¶ 75).
- Motion to Strike Punitive Damages
Defendant asserts that punitive damages allegations must be stricken, because (1) Plaintiffs failed to plead a viable fraud claim, (2) they have not pled facts that Defendant acted with malice, oppression, or fraud and (3) punitive damages are not available under the statutory claims.
Plaintiffs respond that the concealment claim supports punitive damages, but also the statutory claims could according to federal trial court rulings, and the economic loss rule is inapposite.
“In order to survive a motion to strike an allegation of punitive damages, the ultimate facts showing an entitlement to such relief must be pled by a plaintiff.” (Clauson v. Superior Court (1998) 67 Cal.App.4th 1253, 1255. Accord, Spinks v. Equity Residential Briarwood Apartments (2009) 171 Cal.App.4th 1004, 1055; Blegen v. Superior Court (1981) 125 Cal.App.3d 959, 962.)
Fraudulent acts of concealment may support awards of punitive damages. (Werschkull v. United Cal. Bank (1978) 85 Cal.App.3d 981, 1004.)
Defendant cites an older case for the proposition that punitive damages and statutory penalties are unavailable– Troensegaard v. Silvercrest Industries, Inc. (1985) 175 Cal.App.3d 218, 228. (Reply, 5:8-18.) But a lot of applicable case law followed, sometimes distinguishing that opinion as involving only post-sale warranty fraud, and not presale fraud (as is alleged in the FAC).
Specifically, a car manufacturer’s presale fraud or concealment is distinct from its subsequent conduct in breaching statutory warranty obligations, such that plaintiffs can recover punitive damages with a penalty under the Song-Beverly Act. (See, e.g., Dhital v. Nissan N. Am., Inc. (2022) 84 Cal. App. 5th 828, 841; Bowser v. Ford Motor Co. (2022) 78 Cal.App.5th 587, 627 [“entitled to compensatory damages (and attorney fees) under the Song-Beverly Act as well as punitive damages for fraud.”]; Anderson v. Ford Motor Co. (2022) 74 Cal.App.5th 946, 967-973; Covert v. FCA USA, LLC (2022) 73 Cal.App.5th 821, 828 [“we assume … prayer for punitive damages was based on … cause of action for fraudulent concealment because the Song -Beverly Act provides for civil penalties, but not punitive damages.”]; Santana v. FCA US, LLC (2020) 56 Cal.App.5th 334, 350 [“In the case of fraud, the harm stems from a deception. And in the case of the Song-Beverly Act, it stems from the failure to honor the warranty.”].)
The economic loss rule is not revealed as to tort and punitive damages, and fails to bar all alleged damages as required in the demurrer procedure. (See, e.g., Greystone Homes, Inc. v. Midtec, Inc. (2008) 168 Cal.App.4th 1194, 1215 [economic loss rule is not a defense, but instead relates to the damages element of a tort cause of action]; County of Santa Clara v. Atlantic Richfield Co. (2006) 137 Cal.App.4th 292, 328 [economic loss rule is inapplicable to fraud actions]; Dhital v. Nissan North America, Inc. (2022) 84 Cal.App.5th 828, 840 [“concealment-based claims for fraudulent inducement are not barred by the economic loss rule.”]; Food Safety Net Services v. Eco Safe Systems USA, Inc. (2012) 209 Cal.App.4th 1118, 1130 [regarding the economic loss rule, “a party alleging fraud or deceit in connection with a contract must establish tortious conduct independent of a breach of the contract itself,…”]; Caliber Bodyworks, Inc. v. Sup. Ct. (2005) 134 Cal.App.4th 365, 384 [demurrer does not lie as to only one type of relief where some valid claim for relief is alleged].)
Here, Plaintiffs sufficiently alleged concealment elements, factually occurring before the vehicle purchase, and subsequent warranty breaches, as analyzed as to the demurrer, which support the remedy of punitive damages.
The Court denies the Motion’s request to strike punitive damages allegations.
- CONCLUSION
The Court overrules the Demurrer and denies the Motion, for reasons set forth above.