Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-casd-3_19-cv-00038/USCOURTS-casd-3_19-cv-00038-0/pdf.json

Nature of Suit Code: 190
Nature of Suit: Other Contract Actions
Cause of Action: 28:1332 Diversity Action

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UNITED STATES DISTRICT COURT 

SOUTHERN DISTRICT OF CALIFORNIA 

SOFIA E. PEREZ, 

Plaintiff, 

v. 

GENERAL MOTORS LLC, a Delaware 

Limited Liability Company, and DOES 1 

through 10, inclusive, 

Defendants. 

Case No.: 3:19-cv-00038-L-NLS 

ORDER GRANTING 

DEFENDANT’S MOTION TO 

DISMISS [Doc. 3]

In this action alleging violations of the California Song-Beverly Act and Fraudulent 

Inducement by Concealment, Defendant General Motors LLC (“Defendant”) filed a 

motion to dismiss for failure to state a claim only as to the Fraudulent Inducement claim. 

Plaintiff Sofia E. Perez (“Plaintiff”) opposed, and Defendant replied. The Court decides 

this matter on the briefs without oral argument. See Civ. L. R. 7.1.d.1. For the reasons 

stated below, Defendant’s motion is granted with leave to amend. 

I. BACKGROUND

On January 13, 2013, Plaintiff purchased a used 2011 Chevrolet Equinox

(“Vehicle”). [ECF No. 1-1 (“Compl.”) ¶ 8]. The Vehicle was covered by express and 

implied warranties but was delivered with serious defects and nonconformities (“Defects”). 

Compl. ¶ 9. Much of Plaintiff’s complaint chronicles the Defects in detail. See generally

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Compl. Plaintiff claims the Defendant was aware of the Defects before Plaintiff purchased 

the Vehicle. Id. ¶ 35. Plaintiff alleges she was not aware of the Defects until November 

30, 2016. Id. ¶ 95. 

Plaintiff filed this action in state court, and Defendant removed on January 7, 2019. The 

Court has subject matter jurisdiction pursuant to 28 U.S.C. § 1332. Defendant moves to 

dismiss Plaintiff’s fraudulent inducement claim for three reasons: (1) the claim is timebarred, (2) the claim violates the economic loss rule, and (3) Plaintiff failed to sufficiently 

plead the elements of a fraud cause of action. 

II. LEGAL STANDARD 

A motion under Rule 12(b)(6) tests the sufficiency of the complaint. Navarro v. 

Block, 250 F.3d 729, 732 (9th Cir. 2001). Dismissal is warranted where the complaint 

lacks a cognizable legal theory. Shroyer v. New Cingular Wireless Serv., Inc., 622 F.3d 

1035, 1041 (9th Cir. 2010) (internal quotation marks and citation omitted). Alternatively, 

a complaint may be dismissed where it presents a cognizable legal theory yet fails to plead 

essential facts under that theory. Robertson v. Dean Witter Reynolds, Inc., 749 F.2d 530, 

534 (9th Cir. 1984). 

In reviewing a Rule 12(b)(6) motion, the Court must assume the truth of all factual 

allegations and construe them most favorably to the nonmoving party. Huynh v. Chase 

Manhattan Bank, 465 F.3d 992, 997, 999 n.3 (9th Cir. 2006). However, legal conclusions 

need not be taken as true merely because they are couched as factual allegations. Bell 

Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007). Similarly, “conclusory allegations 

of law and unwarranted inferences are not sufficient to defeat a motion to dismiss.” Pareto 

v. Fed. Deposit Ins. Corp., 139 F.3d 696, 699 (9th Cir. 1998). 

III. DISCUSSION 

A. Whether Plaintiff’s Fraudulent Inducement Claim is Time-Barred by the 

Applicable Statute of Limitations. 

Generally, a defendant cannot raise an affirmative defense using a Rule 12(b)(6). “A 

claim may be dismissed under Rule 12(b)(6) on the ground that it is barred by the applicable 

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statute of limitations only when the running of the statute is apparent on the face of the 

complaint.” Von Saher v. Norton Simon Museum of Art at Pasadena, 592 F.3d 954, 969 

(9th Cir. 2010) (internal quotation marks and citation omitted). Dismissal “based on the 

running of the statute of limitations[] can be granted only if the assertions of the complaint, 

read with the required liberality, would not permit the plaintiff to prove that the statute [had 

been] tolled.” Cervantes v. City of San Diego, 5 F.3d 1273, 1275 (9th Cir. 1993) (emphasis 

added; internal quotes omitted). 

A federal court sitting in a diversity case will apply state substantive law and federal 

procedural law. Feldman v. Allstate Ins. Co., 322 F.3d 660, 666 (9th Cir. 2016) (citing 

Erie R.R. Co. v. Tompkins, 304 U.S. 64 (1938)). Statutes of limitations are deemed 

substantive for Erie doctrine purposes, therefore, in diversity cases, federal courts apply 

the same statute of limitations as would be applied in a state court. See Guaranty Trust Co. 

of New York v. York, 326 U.S. 99, 110, (1945) (“As to consequences that so intimately 

affect recovery or non-recovery a federal court in a diversity case should follow State 

law”). 

Under California law, “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.’” Platt Elec. Supply, Inc. v. EOFF Elec., Inc., 552 F.3d 1049, 1055 (9th Cir. 

2008) (quoting Cal. Civ. Proc. Code § 338(d)). 

Here, Plaintiff purchased the Vehicle on January 13, 2013, which is when the alleged 

concealment occurred, but did not file her complaint until January 7, 2019. The running 

of the statute of limitations is therefore apparent on the face of the complaint. Plaintiff 

alleges her action is timely based on the discovery rule and fraudulent concealment. 

1. The Discovery Rule 

Generally, “a cause of action accrues at the time when the cause of action is complete 

with all of its elements.” Fox v. Ethicon Endo-Surgery, Inc., 35 Cal. 4th 797, 807 (2005) 

(internal quotation marks and citation omitted). “An important exception to the general 

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rule of accrual is the ‘discovery rule,’ which postpones accrual of a cause of action until 

the plaintiff discovers, or has reason to discover, the cause of action.” Id. Discovery occurs 

when the plaintiff obtains knowledge of facts sufficient to make a reasonably prudent 

person suspicious of a wrongdoing. Jolly v. Eli Lilly & Co., 44 Cal.3d 1103, 1111 (1988). 

To apply the delayed discovery rule in cases which would otherwise be barred, a 

plaintiff “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.” Fox, 35 Cal. 

4th at 808. The plaintiff bears the burden of showing that reasonable diligence would not 

have led to an earlier discovery; “conclusory allegations will not withstand demurrer.” Id. 

To adequately allege that the delayed discovery rule is applicable, “the plaintiff must plead 

that, despite diligent investigation of the circumstances of the injury, he or she could not 

have reasonably discovered facts supporting the cause of action within the applicable 

statute of limitations period.” Id. at 809. 

Plaintiff failed to sufficiently plead facts to allege the time and manner of discovery to 

satisfy the first requirement of the delayed discovery. Here, Plaintiff alleges the fraud was 

discovered on November 30, 2016, but Plaintiff does not allege the manner or 

circumstances surrounding her discovery. Compl. ¶ 95. Plaintiff contends that November 

30, 2016, “was the first out-of-warranty repair and the earliest date that Plaintiff could have 

had any sort of notice of the facts which gave rise to Plaintiff’s fraud causes of action.” Id. 

However, Plaintiff does not allege facts surrounding the manner of discovery. Plaintiff’s 

allegation is too general to glean what about the November 30, 2016 repair visit made her 

more aware of Defendant’s fraudulent conduct then than earlier repair visits. As currently 

pled, the Complaint fails to demonstrate the manner in which the fraud was brought to 

Plaintiff’s attention. Without such information, the Court cannot make a determination on 

whether the discovery rule applies here. Thus, Plaintiff must provide further, detailed 

allegations regarding the manner in which Defendant’s alleged fraudulent conduct was 

discovered. 

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Plaintiff alleges several facts related to her inability to discover the fraud before 

November 30, 2016. The allegations simply are not particularized enough to be found as 

anything but general and conclusory. See Denholm v. Houghton Mifflin Co., 912 F.2d 357, 

362 (9th Cir. 1990) (citing Orange Cty. Rock v. Cook Bros. Equip. Co., 246 Cal.App.2d 

698, 703 (1966) (“Formal averments or general conclusions to the effect that the facts were 

not discovered until a stated date, and that the plaintiff could not reasonably have made an 

earlier discovery, are useless.”); Jackson v. Master Holding Corp., 16 Cal.2d 824, 828 

(1940) (“[Where] there is no showing of any inquiry at all, and no explanation is offered 

for the failure to make it except the vague averment that the facts were ‘concealed’ . . .[t]he 

pleading simply fails to meet the minimum requirements of a complaint for fraud which is 

filed more than three years after its commission.”). Plaintiff claims that “[n]o amount of 

diligence by Plaintiff could have led to the discovery of [the Defects] because they were 

kept secret by [Defendant] and, therefore, Plaintiff was not at fault for failing to discover 

[the Defects].” Compl. ¶ 98. Plaintiff alleges there were four sources through which 

Defendant learned of the Defects prior to 2010. See Compl. ¶ 35 (the four sources include 

pre-release testing data; early consumer complaints; tests conducted as a result of the 

consumer complaints; and data from Defendant’s dealers, including high warranty 

reimbursement rates). Plaintiff alleges she had neither actual nor constructive knowledge 

of the Defects because Defendant “kept this information highly confidential.” Compl. ¶ 

99. Additionally, Plaintiff alleges that Defendant continuously withheld information 

regarding the defect and falsely assured Plaintiff that Defendant and its dealers would be 

able to repair any issues with the engine. Compl. ¶ 95. The allegations fail to reveal any 

efforts Plaintiff undertook to investigate the Defects beyond repair visits, which could raise 

suspicion of a larger issue upon repeated visits for the same defects. As such, the Court 

finds that Plaintiff failed to sufficiently plead facts related to her inability to discover the 

fraud before November 30, 2016. 

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Accordingly, for purposes of the discovery rule, Plaintiff has not sufficiently pleaded 

that the statute of limitations for her fraudulent inducement claim did not accrue until 

November 30, 2016. 

2. Fraudulent Concealment 

Additionally, Plaintiff contends the doctrine of fraudulent concealment tolled the statute 

of limitations for her action. “The doctrine of fraudulent concealment tolls the statute of 

limitations where a defendant, through deceptive conduct, has caused a claim to grow 

stale.” Aryeh v. Canon Bus. Solutions, Inc., 55 Cal.4th 1185, 1192 (2013). Tolling applies 

“only for that period during which the claim is undiscovered by plaintiff or until such time 

as plaintiff, by exercise of reasonable diligence, should have discovered it.” Bernson v. 

Browning-Ferris Indus., 7 Cal.4th 926, 931 (1994). 

To toll the statute of limitations in cases of fraudulent concealment, a plaintiff’s 

complaint must show: “(1) when the fraud was discovered; (2) the circumstances under 

which it was discovered; and (3) that the plaintiff was not at fault for failing to discover it 

or had no actual or presumptive knowledge of facts sufficient to put him on inquiry.” Baker 

v. Beech Aircraft Corp., 39 Cal. App. 3d 315, 321 (1974) (citing Kimball v. Pacific Gas & 

Elec. Co., 220 Cal. 203, 215 (1934)). Like the discovery rule, fraudulent concealment 

requires a plaintiff to plead facts describing the manner or circumstances under which 

plaintiff discovered Defendant’s fraud. As discussed above, Plaintiff failed to sufficiently 

allege the manner in which Defendant’s fraud was discovered. At this point, application 

of the fraudulent concealment doctrine is, therefore, also inappropriate for Plaintiff’s 

fraudulent inducement claim. 

Plaintiff has not alleged how she discovered Defendant’s alleged fraud or any of the 

circumstances surrounding her discovery. Plaintiff has therefore failed to allege tolling 

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of the statute of limitations.1

 Accordingly, Defendant’s motion to dismiss the fraudulent 

inducement by concealment claim is granted.2

 

B. Leave to Amend 

The Court next considers whether to grant leave to amend. Plaintiff requested leave to 

amend “The court should freely give leave [to amend] when justice so requires.” Fed. R. 

Civ. P. 15(a)(2). The Court has “broad discretion in deciding whether to grant leave to 

amend and whether to dismiss an action with or without prejudice.” WPP Lux. Gamma 

Three Sarl v. Spot Runner, Inc., 655 F.3d 1039, 1058 (9th Cir. 2011) (overruled in part by 

Lorenzo v. SEC, 139 S. Ct. 1094, 1100 (2019)). “[C]ourts are only required to grant leave 

to amend if a complaint can possibly be saved.” Lopez v. Smith, 203 F.3d 1122, 1129 (9th. 

Cir. 2000) (internal quotation marks and citations omitted). The Court here finds that 

Plaintiff may be able to sufficiently allege tolling under the delayed discovery rule and 

fraudulent concealment doctrine through revision of the Complaint. Thus, Plaintiff’s 

request for leave to amend is granted. 

III. CONCLUSION 

For the reasons stated above, Defendant's motion to dismiss is GRANTED without 

prejudice. Plaintiff’s request for leave to amend is GRANTED. Accordingly, Plaintiff 

shall amend her Complaint within 14 days of service of this order. 

IT IS SO ORDERED.

Dated: August 9, 2019 

                                              

1

 Because Defendant’s motion is granted on the ground that Plaintiff fails to allege that the statute of 

limitations did not accrue until November 30, 2016, the Court will not discuss equitable tolling and the 

American Pipe doctrine. 

2

 The Court reserves discussion of the economic loss rule. 

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