Opinion
2:21-cv-09151-MEMF-PVCx
11-29-2022
JERRY A. GUZZETTA, et al., Plaintiffs, v. FORD MOTOR COMPANY, et al., Defendants.
AMENDED [*] ORDER GRANTING MOTION FOR JUDGMENT ON THE PLEADINGS [ECF NO. 30]
MAAME EWUSI-MENSAH FRIMPONG UNITED STATES DISTRICT JUDGE
Before the Court is the Motion for Judgment on the Pleadings filed by Defendant Ford Motor Company. ECF No. 30. For the reasons stated herein, the Court hereby GRANTS the Motion for Judgment on the Pleadings as to Claims 1-6 WITH LEAVE TO AMEND. Plaintiffs Jerry and Lynn Guzzetta are ORDERED to file a First Amended Complaint within thirty (30) days of the date of this Order if they still desire to pursue any of the claims being dismissed with leave to amend.
I. Background
Unless otherwise indicated, the following factual background is derived from the Complaint. Complaint, ECF No. 1-2 (“Compl.”).
Plaintiffs Jerry A. Guzzetta and Lynn Guzzetta (collectively, the “Guzzetta Plaintiffs”) allege that they leased a 2019 Ford F-150 vehicle (“the Vehicle”) on or about February 4, 2019, that had been manufactured or distributed by Defendant Ford Motor Company (“Ford”). Compl. ¶ 9. The Guzzetta Plaintiffs allege that during the applicable warranty periods, the Vehicle developed multiple defects related to the transmission, engine, and other parts that substantially impaired the use, value, or safety of the Vehicle. Id. ¶ 12. The Complaint states that “Plaintiffs suffered damages in a sum to be proven at trial in an amount that is not less than $25,001.00.” Id. ¶ 13.
B. Procedural History
On June 30, 2021, the Guzzetta Plaintiffs filed this action in the Superior Court of California, County of Los Angeles, alleging: (1) violation of Cal. Civ. Code § 1793.2(d); (2) violation of Cal. Civ. Code § 1793.2(b); (3) violation of Cal. Civ. Code § 1793.2(A)(3); (4) breach of express warranty; (5) breach of implied warranty of merchantability; (6) fraudulent omission; and (7) negligent repair. See generally Compl. The Guzzetta Plaintiffs' prayer for relief also requests punitive damages. Id. at Prayer. Ford was served on May 6, 2021, and removed this action to federal court on July 7, 2021, citing diversity jurisdiction under 28 U.S.C. § 1441(b). ECF No. 1-1. On October 27, 2021, the Guzzetta Plaintiffs dismissed defendant Norm Reeves Ford Superstore from this action, resulting in the dismissal of the negligent repair claim; the Court entered dismissal on October 28, 2021. ECF No. 1-5. On September 8, 2022, Ford filed the instant Motion for Judgment on the Pleadings. ECF No. 30 (“Motion” or “Mot.”). The Motion was fully briefed on September 22, 2022. ECF Nos. 31 (“Opposition” or “Opp'n”), 32 (“Reply”). On November 29, 2022, the Court found the matter appropriate for resolution without oral argument and took the motion under submission. ECF No. 41.
In its Motion, Ford again requests that the Court take judicial notice of the Lease Agreement between the parties. Mot. at 2 n.1. Even where documents are not physically attached to the complaint, courts may nonetheless consider such documents if the documents' authenticity is not contested, and the plaintiff's complaint necessarily relies on them. Lee v. City of Los Angeles, 250 F.3d 668, 688 (9th Cir. 2001). Here, the parties' Lease Agreement falls into the category of authentic documents necessarily relied upon by the complaint that courts have deemed proper for judicial notice. The Court therefore GRANTS Ford's unopposed Request to take judicial notice of the parties' Lease Agreement. However, the Court requests that to the extent Ford makes additional requests, it do so in a separately filed Request for Judicial Notice or in the body of its moving papers, rather than in a footnote.
II. Applicable Law
A. Standard Governing 12(c) Motions
Rule 12(c) of the Federal Rules of Civil Procedure provides that “[a]fter the pleadings are closed-but early enough not to delay trial-a party may move for judgment on the pleadings.” Fed.R.Civ.P. 12(c). “Judgment on the pleadings is properly granted when, accepting all factual allegations in the complaint as true, there is no issue of material fact in dispute, and the moving party is entitled to judgment as a matter of law.” Chavez v. United States, 683 F.3d 1102, 1108 (9th Cir. 2012) (internal quotation marks omitted). A court must construe all factual allegations in the pleadings in the light most favorable to the non-moving party. Fleming v. Pickard, 581 F.3d 922, 925 (9th Cir. 2009).
A motion under Rule 12(c) is considered “functionally identical” to a motion under Rule 12(b)(6). Lyon v. Chase Bank USA, N.A., 656 F.3d 877, 883 (9th Cir. 2011) (citing Dworkin v. Hustler Mag. Inc., 867 F.2d 1188, 1192 (9th Cir. 1989)). The key difference between these two motions is just the timing of the filing. See Dworkin, 867 F.2d at 1192. Accordingly, judgment on the pleadings should be entered when a complaint does not plead “enough facts to state a claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). A claim is factually plausible when “the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009).
If judgment on the pleadings is appropriate, a court may grant the non-moving party leave to amend, grant dismissal, or enter a judgment. Leave to amend may be denied when “the court determines that the allegation of other facts consistent with the challenged pleading could not possibly cure the deficiency.” Schreiber Distrib. Co. v. Serv-Well Furniture Co., 806 F.2d 1393, 1401 (9th Cir. 1986). Thus, leave to amend “is properly denied . . . if amendment would be futile.” Carrico v. City & Cnty. of San Francisco, 656 F.3d 1002, 1008 (9th Cir. 2011).
B. Rule 9(b)
Moreover, Federal Rule of Civil Procedure 9(b) states that an allegation of “fraud or mistake must state with particularity the circumstances constituting fraud.” Fed.R.Civ.P. 9(b). Specifically, the “circumstances” required by Rule 9(b) are the “who, what, when, where, and how” of the fraudulent activity. Vess v. Ciba-Geigy Corp. USA, 317 F.3d 1097, 1106 (9th Cir. 2003); Neubronner v. Milken, 6 F.3d 666, 672 (9th Cir. 1993) (“[Rule 9(b) requires] the times, dates, places, benefits received, and other details of the alleged fraudulent activity.”). Additionally, the allegation “must set forth what is false or misleading about a statement, and why it is false.” Vess, 317 F.3d at 1106 (quoting In re Glenfed, Inc. Secs. Litig., 42 F.3d 1541, 1548 (9th Cir. 1994)). Rule 9(b)'s heightened pleading standard applies not only to federal claims, but also to state law claims brought in federal court. Id. at 1103.
C. Leave to Amend
A district court should generally grant leave to amend freely. Cervantes v. Countrywide Home Loans, Inc., 656 F.3d 1034, 1041 (9th Cir. 2011). However, “a district court may dismiss without leave where a plaintiff's proposed amendments would fail to cure the pleading deficiencies and amendment would be futile.” Id. at 1041.
III. Discussion
Ford contends that the Court should grant its Motion for Judgment on the Pleadings because: (1) the Guzzetta Plaintiffs fail to properly state a claim for Counts 1-5 under Cal. Civ. Code §§ 1793.2 (d), 1793.2(b), 1793(a)(3), breach of express warranty, and breach of implied warranty of merchantability; (2) the fraud by omission claim is barred by the economic loss rule; and (3) the Guzzetta Plaintiffs failed to plead facts sufficient to support their fraud claim with the requisite particularity under Fed.R.Civ.P. 9(b).
A. The Guzzetta Plaintiffs failed to properly state a claim for breach of express warranty in violation of Cal. Civ. Code § 1793.2(d) (Claim 1), 1791.2(a) (Claim 4), and 1794 (Claim 4).
Both parties appear to concede that the Guzzetta Plaintiffs' first cause of action for breach of express warranty under Cal. Civ. Code § 1793.2(d) is duplicative of their fourth cause of action for breach of express written warranty under §§ 1791.2(a) and 1794. Mot. at 6-7; Opp'n at 1. As a result, the Court will analyze both causes of action together.
Ford contends that the Guzzetta Plaintiffs failed to state a claim for a breach of express warranty in violation of Cal. Civ. Code §§ 1793.2(d), 1791.2(a), and 1794. A plaintiff bringing suit for breach of express warranty:
has the burden to prove that (1) the vehicle had a nonconformity covered by the express warranty that substantially impaired the use, value or safety of the vehicle (the nonconformity element); (2) the vehicle was presented to an authorized representative of the manufacturer of the vehicle for repair (the presentation element); and (3) the manufacturer or his representative did not repair the nonconformity after a reasonable number of repair attempts (the failure to repair element).Donlen v. Ford Motor Co., 158 Cal.Rptr.3d 180, 191 (Ct. App. 2013) (emphasis added).
With respect to express warranties, the Guzzetta Plaintiffs allege the following in their Complaint:
11. In connection with the purchase, Plaintiff received various warranties, inter alia, a 3-year/36,000 mile express bumper to bumper warranty, a 5-year/60,000 mile powertrain warranty which, inter alia, covers the engine and the transmission, as well as various emissions warranties that exceed the time and mileage limitations of the bumper to bumper and powertrain warranties. Defendants undertook to preserve or maintain the utility or performance of the Vehicle or to provide compensation if there is a failure in utility or performance for a specified period. The warranty provided, in relevant part, that in the event a defect developed with the Vehicle during the warranty period, Plaintiffs could deliver the Vehicle for repair services to Defendant's representative and the Subject Vehicle would be repaired. . . .
12. During the warranty period, the Vehicle contained or developed defects, including but not limited to, defects related to the engine; defects related to the transmission; defects causing the navigation system to malfunction; defects
causing the auto start/stop feature to malfunction; defects causing the Vehicle to stall upon acceleration; defects causing the SYNC voice command to be inoperable; defects requiring the performance of Recall 19N06; defects causing the driver side blinker to blink really fast; defects causing abnormal shifting; defects causing harsh engagements of the transmission; defects causing the storage of Diagnostic Trouble Code (“DTC”) B1543; defects causing the failure and/or replacement of the left upper turn signal/brake light bulb; defects requiring the battery to be charged; defects causing the Vehicle to lurch forward; and/or any other defects described in the Vehicle's repair history. Said defects substantially impair the use, value, or safety of the Vehicle.
15. Defendant and its representatives in this state have been unable to service or repair the Vehicle to conform to the applicable express warranties after a reasonable number of opportunities. Despite this fact, Defendant failed to promptly replace the Vehicle or make restitution to Plaintiffs as required by Civil Code section 1793.2, subdivision (d) and Civil Code section 1793.1, subdivision (a)(2).
18. Defendant's failure to comply with its obligations under Civil Code section 1793.2, subdivision (d) was willful, in that Defendant and its representative were aware that they were unable to service or repair the Vehicle to conform to the applicable express warranties after a reasonable number of repair attempts, yet Defendant failed and refused to promptly replace the Vehicle or make restitution. Accordingly, Plaintiffs are entitled to a civil penalty of two times Plaintiffs' actual damages pursuant to Civil Code section 1794, subdivision (c).
30. In accordance with Defendant's warranty, Plaintiffs delivered the Vehicle to Defendant's representative in this state to perform warranty repairs. Plaintiffs did so within a reasonable time. Each time Plaintiffs delivered the Vehicle, Plaintiffs notified Defendant and its representative of the characteristics of the Defects. However, the representative failed to repair the Vehicle, breaching the terms of the written warranty on each occasion.Compl. ¶¶ 11-12, 15, 18, 30 (emphasis added). Ford contends that the Guzzetta Plaintiffs' claim is defective because (1) they failed to plead the nonconformity element; (2) they failed to plead facts to establish the presentation element; and (3) they failed to plead failure to repair. Mot. at 4-5.
i. The Guzzetta Plaintiffs properly pleaded the nonconformity element.
The Guzzetta Plaintiffs properly pleaded the nonconformity element, notably in paragraph 12 of the complaint. The defects included, but were not limited to,
defects related to the engine; defects related to the transmission; defects causing the navigation system to malfunction; defects causing the auto start/stop feature to
malfunction; defects causing the Vehicle to stall upon acceleration; defects causing the SYNC voice command to be inoperable; defects requiring the performance of Recall 19N06; defects causing the driver side blinker to blink really fast; defects causing abnormal shifting; defects causing harsh engagements of the transmission; defects causing the storage of Diagnostic Trouble Code (“DTC”) B1543; defects causing the failure and/or replacement of the left upper turn signal/brake light bulb; defects requiring the battery to be charged; defects causing the Vehicle to lurch forward; and/or any other defects described in the Vehicle's repair history.Compl. ¶ 12. Moreover, the Complaint states that these defects “substantially impair the use, value, or safety of the Vehicle.” Id. Although Ford characterizes the language in the Complaint as “general[]” and contends that it “pleads no facts establishing the nature, source, of symptoms of the defects,” Mot. at 4-5, the Court finds that the level of detail Ford demands goes beyond what is required of a plaintiff alleging a Song-Beverly Act claim. See Donlen v. Ford Motor Co., 158 Cal.Rptr.3d 180, 189 (Ct. App. 2013) (“[T]he plaintiff [alleging a violation of the Song-Beverly Act] is not obligated to identify or prove the cause of the car's defect. Rather, he is only required to prove the car did not conform to the express warranty.”); Oregel v. Am. Isuzu Motors, Inc., 109 Cal.Rptr.2d 583, 588 n.8 (Ct. App. 2001) (noting that Song-Beverly Act does not require consumer to “do what the manufacturer, with its presumably greater expertise, was incapable of doing, i.e. identify the source of the leak”).
The California Court of Appeal in Oregel rejected the defendant's assertion that the plaintiff was obligated to introduce expert testimony to prove the alleged nonconformity, stating that “[i]t is within the realm of common knowledge that a new car with an unremediable oil leak does not conform to its warranty.” Oregel, 109 Cal.Rptr.2d at 588 n.8. Although Ford does not demand that the Guzzetta Plaintiffs provide expert testimony to establish their claim, what Ford does demand is similarly more than what is required of the Guzzetta Plaintiffs at this stage. As in Oregel, “[i]t is within the realm of common knowledge that a new car [with defects related to the transmission, engine, navigation system, start/stop feature, acceleration, blinker, batteries, turn signal, and brake light] does not conform to its warranty.” Id. As a result, the Guzzetta Plaintiffs properly pleaded the nonconformity element.
Ford compares the Guzzetta Plaintiffs' allegations to those in Dean-Adolph v. Mercedes-Benz USA, LLC, in which the Court concluded that the plaintiff failed to allege the nonconformity element with “factual specificity.” 2022 WL 815856, at *2 (C.D. Cal. Mar. 17, 2022). Although the Guzzetta Plaintiffs' allegations that the car suffered from “defects related to the engine; defects related to the transmission; defects causing the navigation system to malfunction,” Compl. ¶ 12, may lack specificity, the Complaint thereafter provides further allegations, including that the car suffered from defects “causing the Vehicle to stall upon acceleration,” “causing the driver side blinker to blink really fast,” “causing abnormal shifting,” “causing harsh engagements of the transmission,” “causing the failure and/or replacement of the left upper turn signal/brake light bulb,” “requiring the battery to be charged,” and “causing the Vehicle to lurch forward,” id. As a result, these allegations are distinguishable from those made in Dean-Adolph, wherein the complaint simply stated that there were defects with the “engine, structural, suspension, steering, and electrical system defects.” Dean-Adolph, 2022 WL 815856, at *2.
ii. The Guzzetta Plaintiffs properly alleged the presentation element.
To properly plead the presentation element, the Guzzetta Plaintiffs must allege facts showing that “the vehicle was presented to an authorized representative of the manufacturer of the vehicle for repair.” Donlen, 158 Cal.Rptr.3d at 191. With respect to the presentation element, the Guzzetta Plaintiffs allege that they “delivered the Vehicle to Defendant's representative in this state to perform warranty repairs” within “a reasonable time.” Compl. ¶ 30. They further allege that “[e]ach time Plaintiffs delivered the Vehicle, Plaintiffs notified Defendant and its representative of the characteristics of the Defects.” Id. The Court finds the Guzzetta Plaintiffs' allegations to be sufficient to properly plead the presentation element.
iii. The Guzzetta Plaintiffs failed to properly allege the failure to repair element.
To properly plead the failure to repair element, the Guzzetta Plaintiffs must allege facts showing that “the manufacturer or his representative did not repair the nonconformity after a reasonable number of repair attempts.” Id. With respect to the failure to repair element, the Guzzetta Plaintiffs allege that, although they presented the Vehicle to Ford's representatives, Ford “ha[s] been unable to service or repair the Vehicle to conform to the applicable express warranties after a reasonable number of opportunities.” Id. ¶ 15; see also ¶ 18 (“. . . Defendant and its representative were aware that they were unable to service or repair the Vehicle to conform to the applicable express warranties after a reasonable number of repair attempts . . . .”).
“The reasonableness of the number of repair attempts is a question of fact to be determined in light of the circumstances, but at a minimum, there must be more than one opportunity to fix the nonconformity.” Robertson v. Fleetwood Travel Trailers of Cal., Inc., 50 Cal.Rptr.3d 731, 741 (Ct. App. 2006). “Suffice it to say that the critical question of whether a reasonable number of attempts were provided, thereby allowing the consumer to forego further repair attempts and pursue a ‘replace-or-repurchase' remedy, depends upon the facts and circumstances of each case.” Id. at 744.
The Court finds the Guzzetta Plaintiffs' allegations to be “naked assertions” and a “formulaic recitation of a cause of action's elements.” Twombly, 550 U.S. at 545, 557. In reviewing the Complaint, the Court cannot determine the number of times the Vehicle was presented to Ford for repair or whether the issues presented for repair were for the same defect, unrelated defects, or potentially related defects. As a result, it is unclear, from the face of the Complaint, whether Ford truly was given a “reasonable number” of attempts to repair the nonconformity, as the Guzzetta Plaintiffs conclusorily allege. The Court concludes that the Guzzetta Plaintiffs failed to adequately allege the failure to repair element.
The Court therefore GRANTS the Motion for Judgment on the Pleadings with respect to the Guzzetta Plaintiffs' claim under Cal. Civ. Code §§ 1793.2(d), 1791.2(a), and 1794. However, because the Court finds that the defects that exist may be curable through amendment, the Court GRANTS Leave to Amend. See Schreiber, 806 F.2d at 1401.
B. The Guzzetta Plaintiffs failed to properly state a claim for violation of Cal. Civ. Code § 1793.2(b) (Claim 2).
Ford further contends that the Guzzetta Plaintiffs failed to properly state a claim for violation of Cal. Civ. Code § 1793.2(b). Under Section 1793.2(b), where “service or repair of the goods is necessary because they do not conform with the applicable express warranties,” a defendant must “service[] or repair[]” the applicable goods “so as to conform to the applicable warranties within 30 days.” Cal. Civ. Code § 1793.2(b). With respect to this claim, the Guzzetta Plaintiffs allege the following in their Complaint:
Although Plaintiffs presented the Vehicle to Defendant's representative in this state, Defendant and its representative failed to commence the service or repairs within a reasonable time and failed to service or repair the Vehicle so as to conform to the applicable warranties within 30 days, in violation of Civil Code section 1793.2, subdivision (b). Plaintiffs did not extend the time for completion of repairs beyond the 30-day requirement.Compl. ¶ 22 (emphasis added). The Court again finds such allegations to be “naked assertions” and a “formulaic recitation of a cause of action's elements.” Twombly, 550 U.S. at 545, 557. The Complaint fails to indicate, for example, when the Vehicle was presented to Ford and its representatives for repair and what defects were at issue. The Court therefore GRANTS the Motion for Judgment on the Pleadings with respect to the Guzzetta Plaintiffs' claim under Cal. Civ. Code § 1793.2(b). However, because the Court finds that the defects that exist may be curable through amendment, the Court GRANTS Leave to Amend. See Schreiber, 806 F.2d at 1401.
The Guzzetta Plaintiffs also contend that Section 1793.2(b) can be violated by a failure to commence repairs within a reasonable time or where plaintiff justifiably revokes acceptance of the vehicle. With respect to this first avenue of violation-failure to commence repairs within a reasonable time-the Guzzetta Plaintiffs alleged, in a conclusory fashion, that “Defendant and its representative failed to commence the service or repairs within a reasonable time.” Compl. ¶ 22. However, without more details, such as when the Vehicle was presented to Ford's representative relative to the filing of the Complaint, it is unclear whether Ford indeed failed to commence the service or repairs within a reasonable time. Similarly, the Guzzetta Plaintiffs allege that they “have rightfully rejected and/or justifiably revoked acceptance of the Vehicle and have exercised a right to cancel the purchase.” Id. ¶ 24. However, the Complaint provides no further information regarding how the Guzzetta Plaintiffs rejected or revoked acceptance of the Vehicle, nor any information to allow the Court to determine whether such rejection or revocation was justified. The Court therefore finds that, even under these alternate theories, the Guzzetta Plaintiffs failed to state a claim for relief.
C. The Guzzetta Plaintiffs failed to properly state a claim for violation of Cal. Civ. Code § 1793.2(a)(3) (Claim 3).
Ford also further contends that the Guzzetta Plaintiffs failed to properly state a claim for violation of Cal. Civ. Code § 1793.2(a)(3). Under Section 1793.2(a)(3), “[e]very 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.” Cal. Civ. Code § 1793.2(a)(3). The Guzzetta Plaintiffs contend that they properly allege that (1) with respect to insufficient literature, “Ford's authorized repair facilities performed repairs on the Vehicle pursuant to a Ford-issued technical service bulletin, namely TSB 20-2100, but that these repairs failed to conform the Vehicle to warranty,” Opp'n at 6 (citing Compl. ¶¶ 12, 13); and (2) with respect to insufficient parts, “Defendant's repair facilities replaced various parts, including without limitation, the left upper turn signal/brake light bulb. These parts failed to conform the Vehicle to warranty.” Id. at 6-7 (citing Compl. ¶¶ 12, 15). The paragraphs that the Guzzetta Plaintiffs cite in support of their argument state:
12. During the warranty period, the Vehicle contained or developed defects, including but not limited to, defects related to the engine; defects related to the transmission; defects causing the navigation system to malfunction; defects causing the auto start/stop feature to malfunction; defects causing the Vehicle to stall upon acceleration; defects causing the SYNC voice command to be inoperable; defects requiring the performance of Recall 19N06; defects causing the driver side blinker to blink really fast; defects causing abnormal shifting; defects causing harsh engagements of the transmission; defects causing the storage of Diagnostic Trouble Code (“DTC”) B1543; defects causing the failure and/or replacement of the left upper turn signal/brake light bulb; defects requiring the battery to be charged; defects causing the Vehicle to lurch forward; and/or any other defects described in the Vehicle's repair history. Said defects substantially impair the use, value, or safety of the Vehicle.
13. Plaintiffs suffered damages in a sum to be proven at trial in an amount that is not less than $25,001.00.
15. Defendant and its representatives in this state have been unable to service or repair the Vehicle to conform to the applicable express warranties after a reasonable number of opportunities. Despite this fact, Defendant failed to promptly replace the Vehicle or make restitution to Plaintiffs as required by Civil Code section 1793.2, subdivision (d) and Civil Code section 1793.1, subdivision (a)(2).Compl. ¶¶ 12, 13, 15.
As an initial matter, the Court notes that the Guzzetta Plaintiffs' characterization of the allegations in their own Complaint appears to be inaccurate. For one, none of the paragraphs cited contain any discussion of TSB 20-2100-nor do any of the paragraphs in the complaint, for that matter. Rather, the Court finds that the Complaint is devoid of any allegations sufficient to establish that Ford failed to provide the repair facilities with sufficient literature or parts to effect repairs. The Court therefore GRANTS the Motion for Judgment on the Pleadings with respect to the Guzzetta Plaintiffs' claim under Cal. Civ. Code § 1793.2(a)(3). However, because the Court finds that the defects that exist may be curable through amendment, the Court GRANTS Leave to Amend. See Schreiber, 806 F.2d at 1401.
D. The Guzzetta Plaintiffs failed to properly state a claim for breach of implied warranty of merchantability (Claim 5).
Ford also argues that the Guzzetta Plaintiffs failed to properly state a claim for breach of implied warranty of merchantability. The implied warranty of merchantability under the Song- Beverly Act requires that consumer goods:
(1) Pass without objection in the trade under the contract description. (2) Are fit for the ordinary purposes for which such goods are used. (3) Are adequately contained, packaged, and labeled. (4) Conform to the promises or affirmations of fact made on the container or label.Cal. Civ. Code § 1791.1(a); see also U.C.C. § 2-314 (setting forth virtually identical requirements). “The core test of merchantability is fitness for the ordinary purpose for which goods are used.” Isip v. Mercedes-Benz USA, LLC, 65 Cal.Rptr.3d 695, 700 (Ct. App. 2007). “Such fitness is shown if the product is ‘in safe condition and substantially free of defects.'” Mexia v. Rinker Boat Co., 95 Cal.Rptr.3d 285, 289 (Ct. App. 2009) (quoting Isip, 65 Cal.Rptr.3d at 700). The Guzzetta Plaintiffs' Complaint alleges, in relevant part:
The Vehicle contained or developed the defects set forth above. The existence of each of these defects constitutes a breach of the implied warranty because the Vehicle (1) does not pass without objection in the trade under the contract description, (2) is not fit for the ordinary purposes for which such goods are used, (3) is not adequately contained, packaged, and labelled, and (4) does not conform to the promises or affirmations of fact made on the container or label.Compl. ¶ 36 (emphasis added). With respect to the second element-fitness for ordinary purposes for which the good is used-at the very least, it seems beyond reasonable dispute that the ordinary purpose for which a passenger vehicle is used is the safe, reliable transportation of passengers on public roads. It also seems beyond reasonable dispute that problems such as defects causing the auto start/stop feature to malfunction or the car to stall upon acceleration can raise significant safety and reliability concerns, as consumers reasonably expect that a vehicle will accelerate and decelerate on command. However, with respect to the remaining elements, [t]he Court again finds such allegations to be “naked assertions” and a “formulaic recitation of a cause of action's elements.” Twombly, 550 U.S. at 545, 557. Rather than allege facts supporting the breach of implied warranty claim, the Guzzetta Plaintiffs merely recite the remaining elements. “Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements,” are insufficient to constitute well-pleaded allegations under Rule 12(b)(6). Iqbal, 556 U.S. at 678. The Court therefore GRANTS the Motion for Judgment on the Pleadings with respect to the Guzzetta Plaintiffs' claim for breach of implied warranty. However, because the Court finds that the defects that exist may be curable through amendment, the Court GRANTS Leave to Amend. See Schreiber, 806 F.2d at 1401.
E. The Guzzetta Plaintiffs failed to properly plead their fraud by omission claim (Claim 6).
Last, Ford requests that the Guzetta Plaintiffs' fraud by omission claim be dismissed because: (1) the claim is not pleaded with sufficient particularity under Rule 9(b); and (2) it is barred by the economic loss rule. Mot. at 8-10.
i. The Guzzetta Plaintiffs failed to properly plead their fraud by omission claim.
To allege a claim for fraud by omission or concealment, a plaintiff must allege that: (1) the defendant concealed or suppressed a material fact; (2) the defendant was under a duty to disclose the fact to the plaintiff; (3) the defendant intentionally concealed or suppressed the fact with the intent to defraud the plaintiff; (4) the plaintiff was unaware of the fact and would not have acted as he did if he had known of the concealed or suppressed fact; and (5) as a result of the concealment or suppression of the fact, the plaintiff sustained damage. Boschma v. Home Loan Ctr., 129 Cal.Rptr.3d 874, 890 (Ct. App. 2011). Ford contends that the Guzzetta Plaintiffs' Complaint is deficient because they failed to allege with particularity: (1) the defect Ford is alleged to have concealed; (2) facts sufficient to plead a duty to disclose; and (3) actual or justifiable reliance. Mot. at 10-17.
The Guzzetta Plaintiffs allege the following with respect to their fraud by omission claim:
40. DEFENDANT FMC committed fraud by allowing the Subject Vehicle to be sold to Plaintiffs without disclosing that the Subject Vehicle and its transmission was defective and susceptible to sudden and premature failure.
41. In particular, the Plaintiffs are informed, believe and thereon allege that prior to Plaintiffs acquiring the Vehicle, FMC was well aware and knew that the transmission installed in the Vehicle was defective but failed to disclose this fact to the Plaintiffs at the time of the sale and thereafter.
42. Specifically, FMC knew (or should have known) that the transmission had one or more defects that can result in various problems, including, but not limited to slipping of the transmission, hesitation on acceleration, improper transmission engagement and/ or harsh and/or hard shifts (“Transmission Defects”). These conditions present a safety hazard and are unreasonably dangerous to consumers because they can suddenly and unexpectedly affect the driver's ability to control the vehicle's speed, acceleration, deceleration, and/ or overall responsiveness of the vehicle in various driving conditions.
43. Plaintiffs are informed, believe and thereon allege that FMC acquired its knowledge of the Transmission Defect prior to Plaintiffs acquiring the Subject Vehicle, through sources not available to consumers such as Plaintiffs, including but not limited to pre-production and post-production testing data, early consumer complaints about the transmission defect made directly to FMC and its network of dealers, aggregate warranty data compiled from FMC's network of dealers, testing conducted by FMC in response to these complaints, as well warranty repair and part replacements data received by FMC from FMC's network of dealers, amongst other sources of internal information.
44. Plaintiffs are informed, believe, and thereon allege that while Defendant knew about the Transmission Defect, and its safety risks since prior to Plaintiffs' purchase of the Vehicle, if not before, Defendant nevertheless concealed and failed to disclose the defective nature of the Vehicle and its transmission to Plaintiffs at the time of sale, repair, and thereafter. Had Plaintiffs known that the Subject Vehicle suffered from the Transmission Defect, he would not have purchased the Subject Vehicle.
45. Indeed, Plaintiffs allege that Defendant knew that the Vehicle and its transmission suffered from an inherent defect, was defective, would fail prematurely, and was not suitable for its intended use.
46. DEFENDANT FMC was under a duty to Plaintiffs to disclose the defective nature of the Subject Vehicle and its transmission, its safety consequences and/or the associated repair costs because:
a. DEFENDANT FMC acquired its knowledge of the Transmission Defect and its potential consequences prior to Plaintiffs acquiring the Vehicle, through sources not available to consumers such as Plaintiffs, including but not limited to pre-production testing data, early consumer complaints about the Transmission Defect made directly to DEFENDANT FMC and its network of dealers, aggregate warranty data compiled from DEFENDANT FMC's network of dealers, testing conducted by DEFENDANT FMC in response to these complaints, as well as warranty repair and part replacements data received by DEFENDANT FMC from
DEFENDANT FMC's network of dealers, amongst other sources of internal information;
b. DEFENDANT FMC was in a superior position from various internal sources to know (or should have known) the true state of facts about the material defects contained in vehicle equipped with the defective transmission; and;
c. As early as January 19, 2018, consumers have been complaining to NHTSA regarding symptoms of the Transmission Defect in 2018 Ford F-150 vehicles; and
d. Plaintiffs could not reasonably have been expected to learn or discover of the Vehicle's Transmission Defect and its potential consequences until well after Plaintiffs purchased the Vehicle.
47. In failing to disclose the defects in the Vehicle's transmission, DEFENDANT FMC has knowingly and intentionally concealed material facts and breached its duty not to do so.
48. The facts concealed or not disclosed by DEFENDANT FMC to Plaintiffs are material in that a reasonable person would have considered them to be important in deciding whether or not to purchase the Subject Vehicle. Had Plaintiffs known that the Subject Vehicle and its transmissions were defective at the time of sale, they would not have purchased the Subject Vehicle.
49. Plaintiffs are reasonable consumers who do not expect their transmission to fail and not work properly. Plaintiffs further expect and assume that Defendant FMC will not sell or lease vehicles with know [sic] material defect, including but not limited to those involving the vehicle's transmission and will disclose any sch [sic] defect to it's [sic] consumer before selling such vehicle.
52. Plaintiffs were harmed by purchasing a vehicle that Plaintiffs would not have leased and/or purchased had Plaintiffs known the true facts about the Transmission Defect. Furthermore, Plaintiffs unknowingly exposed themselves to the risk of liability, accident, and injury as a result of Defendant's fraudulent omission of the Transmission Defect.
53. Plaintiffs were harmed by purchasing a vehicle that Plaintiffs would not have leased and/or purchased had Plaintiffs known the true facts about the Transmission Defect. Furthermore, Plaintiffs unknowingly exposed himself to the risk of liability, accident and injury as a result of Defendant's fraudulent concealment of the Transmission Defect.Compl. ¶¶ 40-53 (emphasis added).
1. The Guzzetta Plaintiffs properly pleaded the existence of a concealed defect with sufficient particularity.
Ford contends that the Guzzetta Plaintiffs' Complaint is defective because it “merely describes a list of ways in which transmissions can be defective without even alleging that such issues arose in this particular vehicle.” Mot. at 11. However, upon close review of the Complaint, the Court finds that it in fact does plead specific defects that arose within the Guzzetta Plaintiffs' Vehicle. The Complaint alleges, in relevant part: “FMC was well aware and knew that the transmission installed in the Vehicle was defective but failed to disclose this fact to the Plaintiffs at the time of the sale and thereafter. Specifically, FMC knew (or should have known) that the transmission had one or more defects that can result in various problems, including, but not limited to slipping of the transmission, hesitation on acceleration, improper transmission engagement and/ or harsh and/or hard shifts.” Compl. ¶¶ 41-42 (emphasis added). Here, the Complaint specifically alleges that “the transmission installed in the [Guzzetta Plaintiffs'] Vehicle” experienced the relevant defects. Id. ¶ 41. Ford further contends that these “allegations cannot be particular as they are the exact same allegations that Plaintiffs' counsel uses in every complaint concerning different vehicles and different manufacturers.” Mot. at 12. However, the fact that the same allegations appear in other complaints does not necessarily indicate that such allegations are not sufficiently particular. Indeed, it is entirely possible that the same allegations-in this case, the characterization of alleged defects-are true for different vehicles created by different manufacturers. As a result, the Court rejects this argument.
The Court therefore finds that the Guzzetta Plaintiffs sufficiently pleaded the existence of a concealed defect.
2. The Guzzetta Plaintiffs failed to properly plead a duty to disclose.
Ford argues that the Guzzetta Plaintiffs fail to plead a duty to disclose. Mot. at 12-17. A duty to disclose arises under four circumstances:
(1) when the defendant is in a fiduciary relationship with the Plaintiffs; (2) when the defendant had exclusive knowledge of material facts not known to the Plaintiffs; (3) when the defendant actively conceals a material fact from the Plaintiffs; and (4) when the defendant makes partial representations but also suppresses some material facts.LiMandri v. Judkins, 60 Cal.Rptr.2d 539, 543 (Ct. App. 1997). The Guzzetta Plaintiffs, on the other hand, claim that they sufficiently pleaded a duty to disclose by alleging facts sufficient to establish that: (1) Ford possessed superior knowledge of material facts; and (2) Ford actively concealed material facts. Opp'n at 11-13.
a. The Guzzetta Plaintiffs have not sufficiently alleged that Ford had exclusive knowledge of material facts not known to them.
With respect to the second Judkins factor, “exclusive knowledge,” the Complaint alleges:
46. DEFENDANT FMC was under a duty to Plaintiffs to disclose the defective nature of the Subject Vehicle and its transmission, its safety consequences and/or the associated repair costs because:
a. DEFENDANT FMC acquired its knowledge of the Transmission Defect and its potential consequences prior to Plaintiffs acquiring the Vehicle, through sources not available to consumers such as Plaintiffs, including but not limited to pre-production testing data, early consumer complaints about the Transmission Defect made directly to DEFENDANT FMC and its network of dealers, aggregate warranty data compiled from DEFENDANT FMC's network of dealers, testing conducted by DEFENDANT FMC in response to these complaints, as well as warranty repair and part replacements data received by DEFENDANT FMC from DEFENDANT FMC's network of dealers, amongst other sources of internal information;
b. DEFENDANT FMC was in a superior position from various internal sources to know (or should have known) the true state of facts about the material defects contained in vehicle equipped with the defective transmission; and;
c. As early as January 19, 2018, consumers have been complaining to NHTSA regarding symptoms of the Transmission Defect in 2018 Ford F-150 vehicles; and
d. Plaintiffs could not reasonably have been expected to learn or discover of the Vehicle's Transmission Defect and its potential consequences until well after Plaintiffs purchased the Vehicle.Compl. ¶ 46 (emphasis added).
The Court does not find, however, that the Guzzetta Plaintiffs have sufficiently established that Ford had knowledge of said material fact. The Guzzetta Plaintiffs contend that Ford obtained information regarding the defect through: “pre-production testing data, early consumer complaints about the Transmission Defect made directly to DEFENDANT FMC and its network of dealers, aggregate warranty data compiled from DEFENDANT FMC's network of dealers, testing conducted by DEFENDANT FMC in response to these complaints, as well as warranty repair and part replacements data received by DEFENDANT FMC from DEFENDANT FMC's network of dealers.” Id. It is unclear whether the vehicles in the mentioned data and complaints are of the same make and model as the Vehicle. Cf. Falk v. Gen. Motors Corp., 496 F.Supp.2d 1088, 1096 (N.D. Cal. 2007) (where, at the very least, the consumer complaints involved defects in vehicles bought in the same year that plaintiffs purchased his vehicle up to the year of the filing of the complaint).
Although the Complaint goes on to specify that “[a]s early as January 19, 2018, consumers have been complaining to NHTSA regarding symptoms of the Transmission Defect in 2018 Ford F-150 vehicles,” Compl. ¶ 46, the Court notes that the Vehicle purchased by the Guzzetta Plaintiffs was of a different model year-2019, versus the 2018 model that is the subject of the alleged complaints dating back to January 2018. As a result, the Guzzetta Plaintiffs failed to establish that Ford had knowledge of the alleged Transmission Defect in their particular Vehicle and, thus, their allegations are insufficient to satisfy the Rule 9(b) standard. And while courts consider consumer complaints as evidence of knowledge, such consideration is only appropriate when there is an “unusual volume” of complaints and the complaints predate the plaintiff's purchase of the vehicle. See Williams v. Yamaha Motor Co., 851 F.3d 1015, 1027 n.8 (9th Cir. 2017). Here, the Guzzetta Plaintiffs do not provide a total estimated number of consumer complaints, but instead simply state generally that “consumers have been complaining to NHTSA regarding symptoms of the Transmission Defect.” Compl. ¶ 46. Because the Guzzetta Plaintiffs fail to provide the Court with the number of complaints received, if any, concerning the Transmission Defect as it exists in the vehicles of the same make and model as the Vehicle, the Court is unable to determine whether the complaints reached an “unusual” volume. See Williams, 851 F.3d at 1027 n.8 (collecting cases). It does not follow that the Guzzetta Plaintiffs can allege that Ford had exclusive knowledge of the Transmission Defect if Ford did not have knowledge of the defect at all. Accordingly, the Court finds that these allegations fall short of the specificity required under the second Judkins factor.
b. The Guzzetta Plaintiffs have not sufficiently alleged that Ford actively concealed or omitted the Transmission Defect.
The Court next evaluates the third Judkins factor-whether “the defendant actively conceal[ed] a material fact from the plaintiff.” Judkins, 60 Cal.Rptr.2d at 543. To bring a claim under this factor, a plaintiff must allege specific “affirmative acts on the part of the defendants in hiding, concealing or covering up the matters complained of.” Lingsch v. Savage, 29 Cal.Rptr. 201, 204 (Ct. App. 1963). As previously stated, the Guzzetta Plaintiffs fail to properly allege that Ford had any knowledge of the Transmission Defect. Even if the Guzzetta Plaintiffs had been able to sufficiently establish that Ford was aware of the Transmission Defect, the Complaint is devoid of any allegations suggesting that Ford took any affirmative steps to hide or otherwise conceal the existence of the Transmission Defect. Accordingly, the Guzzetta Plaintiffs are unable to establish a duty to disclose under the third Judkins factor.
The Court therefore GRANTS the Motion for Judgment on the Pleadings with respect to the fraudulent omission claim. However, because the Court finds that the defects that exist may be curable through amendment, the Court GRANTS Leave to Amend. See Schreiber, 806 F.2d at 1401.
Because the Court grants the Motion to Dismiss with prejudice on the basis that the fraudulent omission claim was not pleaded with particularity under Rule 9(b), it need not consider Ford's alternative argument that the claim is barred by the economic loss rule.
IV. Conclusion
For the foregoing reasons, the Court hereby ORDERS as follows:
1. The Motion for Judgment on the Pleadings is GRANTED as to the violations of Cal. Civ. Code §§ 1793.2(a)(3), (b), (d), breach of express warranty, breach of implied warranty, and fraudulent omission claims (Claims 1-6) WITH LEAVE TO AMEND: and
2. The Guzzetta Plaintiffs are ORDERED to file a Fust Amended Complaint within thirty (30) days of the date of this Order if they still desire to pursue any of the claims being dismissed with leave to amend.
IT IS SO ORDERED.
[*]The Court notes that the following clerical errors, found in the original Order Granting Motion for Judgment on the Pleadings (ECF No. 42) are being corrected in this Amended Order being issued June 14, 2023: (1) a typographical error in the paragraph on Pg. 5 of the original order quoting Paragraph 11 of the original Complaint, (2) on Pg. 9 of the original order, there was an incorrect citation to the California Civil Code that should have been a citation to the Complaint, (3) on Pg. 11 of the original order, an additional apostrophe has been removed, (4) Pgs. 13-17 of the original order contained improperly highlighted material, (5) a typographic error found on Line 11 of Pg. 16 of the original order, and (6) a missing space was added after the sentence ending on line 4 on Pg. 18 of the original order.