Superior Court of California

EDITH ANNE PETRUCCI and robert petrucci, Plaintiff, v. 7-eleven distribution company, et al. Defendants.

Case No.: BC695450

Hearing Date: August 7, 2019

[TENTATIVE] order RE:

Defendants’ demurrers to and motions to strike portions of the second amended complaint

BACKGROUND

On February 26, 2018, Plaintiffs Edith Anne Petrucci (“Plaintiff Edith”) and Robert Petrucci (“Plaintiff Robert”) (collectively, “Plaintiffs”), a married couple, initiated this action arising out of Plaintiff Edith’s alleged exposure to toxic chemicals and injuries suffered from using of e-cigarettes, vaporizers, vapor juices, liquids, and other chemical products manufactured and delivered by Defendants 7-Eleven Distribution Company (“7-Eleven”), Almond Corporation, Blue Label Elixir, Cosmic Fog Vapors, LLC (“Cosmic Fog”), Costco Wholesale Corporation (“Costco”), Cuttwood, LLC (“Cuttwood”), Fontem US, Inc. (“Fontem”), Louis Peick (“Peick”), individually as owner and operator of Unique Vapors, Lost Art Liquids, LLC, Mr. Good Vape, Inc., Njoy, Inc. dba Njoy Ends, Nu Mark, LLC (“Nu Mark”), SGL Global Inc., Smokeless Image, LLC, The Vape Lodge, LLC, Vapewild, LLC dba Vapewild Retail Operations, LLC (“Vapewild”), Vaping Birdy, LLC (“Vaping Birdy”), and VGOD, Inc. (collectively, “Defendants”).

After the Court sustained demurrers to and granted motions to strike punitive damages from the complaint and first amended complaint brought by some of the Defendants, Plaintiffs filed the operative Second Amended Complaint (the “SAC”) on February 1, 2019, asserting eight causes of action for: (1) negligence, (2) strict liability – failure to warn; (3) strict liability – design defect; (4) fraudulent concealment; (5) intentional misrepresentation; (6) negligent misrepresentation; (7) breach of implied warranties; and (8) loss of consortium. The first seven causes of action are brought by Plaintiff Edith, and the eighth cause of action is brought by Plaintiff Robert.

In response, 7-Eleven and Nu Mark separately filed their Demurrers to and Motions to Strike portions of the SAC on February 28, 2019. On March 4, 2019, Fontem and Costco, jointly, Peick, and Cosmic Fog filed their Demurrers to and Motions to Strike portions of the SAC. On March 5, 2019, Vaping Birdy filed a Motion to Strike portions of the SAC. On May 20, 2019, Vapewild filed a Demurrer to and Motion to Strike portions of the SAC. Cuttwood filed Demurrers to and Motions to Strike portions of the SAC on March 4, 2019, and, again, on June 7, 2019; the Court considers the June 7 papers instead of the ones from March 4.

Plaintiffs filed their consolidated Opposition Papers to the Demurrers and Motions to Strike on March 13, 2019, and, again, on July 16, 2019; the Court considers the later-filed Opposition Papers. The Court notes that the Opposition Papers to the Motions to Strike do not specify that Plaintiffs are responding to Vaping Birdy’s Motion to Strike. (See 7/16/19 Oppo. to Motion to Strike p. 1.) Reply Papers were filed by Nu Mark on March 19, 2019, and by 7-Eleven, Fontem and Costco, jointly, Peick, Cuttwood, Cosmic Fog, and Vapewild on July 19, 2019. Vaping Birdy has not filed a reply.

REQUESTS FOR JUDICIAL NOTICE

The Court treats a “demurrer as admitting all material facts properly pleaded, but not contentions, deductions or conclusions of fact or law.’’ [Citation.] In addition to the complaint’s allegations, [the Court] consider[s] matters that must or may be judicially noticed. [Citations.]” (Hoffman v. Smithwoods RV Park, LLC (2009) 179 Cal.App.4th 390, 400.) “Judicial notice may not be taken of any matter unless authorized or required by law.” (Evid. Code § 450.) Evid. Code §§ 451 and 452 list matters that are subject to judicial notice.

Three Defendants ask the Court to take judicial notice of certain documents. First, Cuttwood asks the Court to take judicial notice of this Court’s tentative rulings on its Demurrers and Motions to Strike portions of Plaintiffs’ complaint and first amended complaint, Federal Register, Vol. 81, No. 90, and Federal Register, Vol. 82, No. 92. (3/4/19 Cuttwood’s RJN.) Second, Peick asks the Court to take judicial notice of Plaintiffs’ complaint, Cuttwood’s notice of ruling and accompanying court order dated October 16, 2018, Plaintiffs’ first amended complaint, Nu Mark’s notice of ruling and accompanying court order dated January 9, 2019, and the SAC. (3/4/19 Peick’s RJN.) Third, Vapewild asks the Court to take judicial notice of Plaintiffs’ complaint (Exhibit “A”), its motion to quash service of summons filed on April 23, 2018 (Exhibit “B”), Plaintiffs’ first amended complaint (Exhibit “C”), the SAC (Exhibit “D”), its filings with the United States Patent and Trademark Office and Texas Secretary of State (Exhibits “E” and “F”), Plaintiffs’ opposition to Vapewild’s motion to quash service of summons (Exhibit “G”), and a transcript of the hearing on Vapewild’s motion to quash service of summons on March 1, 2019 (Exhibit “H”). (5/20/19 Vapewild’s RJN.)

Plaintiffs do not object to Cuttwood’s and Peick’s requests for judicial notice but do object to Vapewild’s request for judicial notice of Exhibits “E” and “F” for lack of relevance and Exhibit “G” for lack of reliability and for how reasonably disputed it is. Plaintiffs’ objections, however, are OVERRULED. The Court may take judicial notice of Exhibit “E” and “F,” but need not consider them if they are irrelevant—taking judicial notice and relevancy are different issues, and the latter does not necessarily defeat the former. In addition, because Exhibit “G” is a document already in the court record, taking judicial notice of it is proper. (Richtek USA, Inc. v. uPI Semiconductor Corp. (2015) 242 Cal.App.4th 651, 658 [“[W]hile courts are free to take judicial notice of the existence of each document in a court file, including the truth of results reached, they may not take judicial notice of the truth of hearsay statements in decisions and court files.’”‘].) The Court GRANTS all the requests for judicial notice, but “[t]aking judicial notice of a document is not the same as accepting the truth of its contents or accepting a particular interpretation of its meaning.” (Fremont Indem. Co. v. Fremont General Corp. (2007) 148 Cal.App.4th 97, 113–14; see also Arce v. Kaiser Foundation Health Plan, Inc. (2010) 181 Cal.App.4th 471, 483 [“[W]e do not take judicial notice of the truth of any factual assertions appearing in the documents.”].)

LEGAL STANDARD

A demurrer can be used only to challenge defects that appear on the face of the pleading under attack; or from matters outside the pleading that are judicially noticeable. (Blank v. Kirwan (1985) 39 Cal 3d 311, 318.) No other extrinsic evidence can be considered (i.e., no “speaking demurrers”).

A demurrer for sufficiency tests whether the complaint states a cause of action. (Hahn v. Mirda (2007) 147 Cal. App. 4th 740, 747.) When considering demurrers, courts read the allegations liberally and in context. (Taylor v. City of Los Angeles Dep’t of Water & Power (2006) 144 Cal. App. 4th 1216, 1228.) In a demurrer proceeding, the defects must be apparent on the face of the pleading or via proper judicial notice. (Donabedian v. Mercury Ins. Co. (2004) 116 Cal. App. 4th 968, 994.) “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.” (SKF Farms v. Superior Ct. (1984) 153 Cal. App. 3d 902, 905.) “The only issue involved in a demurrer hearing is whether the complaint, as it stands, unconnected with extraneous matters, states a cause of action.” (Hahn, supra, 147 Cal.App.4th at 747.)

Discussion

A. Meet and Confer

Before filing a demurrer or motion to strike, the moving party must meet and confer in good faith with the responding party. (CCP §§ 430.41(a), 435.5(a) [italic added].)

Having reviewed Moving Defendants’ declarations in support of the Demurrers and Motions to Strike, the Court is satisfied that Defendants have complied with the meet and confer requirements. Plaintiffs do not dispute the sufficiency of the meet-and-confer efforts.

B. Demurrer to SAC

Fontem and Costco, jointly, Peick, and Vapewild demur to the fourth, fifth, and sixth causes of action for fraudulent concealment, intentional misrepresentation, and negligent misrepresentation, respectively. Cuttwood and Cosmic Fog demur to the fourth and fifth causes of action for fraudulent concealment and intentional misrepresentation, respectively. 7-Eleven and Nu Mark demur only to the fifth cause of action for intentional misrepresentation.

i. Vapewild’s Demurrer Based on the Statute of Limitations

“‘A complaint disclosing on its face that the limitations period has expired in connection with one or more counts is subject to demurrer. [Citation.]’ [Citation.]” (Alexander v. Exxon Mobil (2013) 219 Cal.App.4th 1236, 1250.) “The toxic exposure statute, section 340.8, subdivision (a), states: ‘In any civil action for injury or illness based upon exposure to a hazardous material or toxic substance, the time for commencement of the action shall be no later than either two years from the date of injury, or two years after the plaintiff becomes aware of, or reasonably should have become aware of, (1) an injury, (2) the physical cause of the injury, and (3) sufficient facts to put a reasonable person on inquiry notice that the injury was caused or contributed to by the wrongful act of another, whichever occurs later.’” (Lopez v. Sony Electronics, Inc. (2018) 5 Cal.5th 627, 633.)

Vapewild contends that the two-year statute of limitation prescribed by CCP § 340.8(a) applies here and bars the instant action against Vapewild. (Vapewild’s Demurrer p. 10.) The original Complaint named “VapeWild, LLC” and Does 1 to 100 as Defendants, but not “Vapewild Wholesale, Inc.,” the correct name of Vapewild here. “Vapewild Wholesale, Inc.” was not formally named as a Defendant until the First Amended Complaint was filed on November 13, 2018.

“‘‘A demurrer based on a statute of limitations will not lie where the action may be, but is not necessarily, barred. [Citation.] In order for the bar . . . to be raised by demurrer, the defect must clearly and affirmatively appear on the face of the complaint; it is not enough that the complaint shows that the action may be barred.’’” (Committee for Green Foothills v. Santa Clara County Bd. of Supervisors (2010) 48 Cal.4th 32, 42 [italics added].)

Here, the two-year statute of limitation does not run until “plaintiff becomes aware of, or reasonably should have become aware of, (1) an injury, (2) the physical cause of the injury, and (3) sufficient facts to put a reasonable person on inquiry notice that the injury was caused or contributed to by the wrongful act of another, whichever occurs later.” (CCP § 340.8(a).) The SAC alleges that it was not until about May 12, 2016 that Plaintiffs became aware that Plaintiff Edith had sustained any injury, and the first time that Plaintiffs suspected that Plaintiff Edith’s Bronchiolitis Obliterans Organizing Pneumonia might be related to her use of vaporizers was on the same date of May 12, 2016. (SAC ¶¶ 27, 29.) Application of the two-year statute of limitation prescribed by CCP § 340.8(a) would mean that the statute of limitations ran on May 12, 2018. Plaintiffs filed the original complaint on February 26, 2018 – within the limitations period.

Given that Vapewild was not named in the original Complaint and was later named as defendant “DOE 1” in the First Amended Complaint, the Court finds that Code of Civil Procedure § 474 applies. “‘Doe practice’ is permitted by statute (Civ. Proc. Code, § 474), and a plaintiff may use such a fictitious name if ‘ignorant of the name of a defendant.’ [Citations.]” (Pierce v. San Mateo County Sheriff’s Dept. (2014) 232 Cal.App.4th 995, 1020.) “When a defendant is properly named under section 474, the amendment relates back to the filing date of the original complaint. [Citation.]” (McClatchy v. Coblentz, Patch, Duffy & Bass, LLP (2016) 247 Cal.App.4th 368, 371.) “Code of Civil Procedure section 474 is to be liberally construed.” (Fireman’s Fund, supra, 114 Cal.App.4th at 1144.)

Designating a defendant by a fictitious name is proper only if plaintiff is genuinely ignorant of the defendant's true name or the facts rendering defendant liable when the complaint was filed. (Rutter, Cal. Prac. Guide Civ. Pro. Before Trial Ch. 6-B, § 6:80 [citing McClatchy v. Coblentz, Patch, Duffy & Bass, LLP (2016) 247 CA4th 368, 371-372; Woo v. Sup.Ct. (Zarabi) (1999) 75 CA4th 169, 177; Taito v. Owens Corning (1992) 7 CA4th 798, 802, fn. 4].) Here, Plaintiffs alleged in the original complaint that Does 1 through 100 were in some manner responsible and proximately caused Plaintiffs’ damages, but the true names and capacities of defendants Does 1 through 100 were unknown to Plaintiffs, who therefore sued them by fictitious names. (Complaint ¶ 20.) For purposes of demurrer, the Court must take these allegations as true. Upon learning that VapeWild, LLC had been incorrectly named in the original complaint, Plaintiffs dismissed that defendant on July 3, 2018. The amendment identifying VapeWild Wholesale, Inc. as “Doe 1” in the First Amended Complaint relates back to the filing date of the original complaint – February 26, 2018. (First Amended Complaint ¶ 17.)

Vapewild points to statements made by Plaintiffs’ counsel at a hearing before Judge Byrdsong on March 1, 2019 to show that Plaintiffs knew that “Vapewild Wholesale, Inc.” was the correct Defendant and not “VapeWild, LLC” prior to the filing of the First Amended Complaint. (Vapewild’s Demurrer p. 12.) Having reviewed the transcript of the hearing, the Court finds that it does not show when Plaintiffs had knowledge or reasonably should have known that “Vapewild Wholesale, Inc.” was the true name of Vapewild. Nor can the Court take judicial notice of the truth of statements made by counsel at a hearing for purposes of a demurrer. Vapewild also argues that Plaintiffs should have known about “Vapewild Wholesale, Inc.” had Plaintiffs reviewed Vapewild’s website and searched for its trademark and registered agents. (Id.) The Court, however, cannot take judicial notice of the truth of matters on the website. Even if the Court does take judicial notice as requested, the argument is unpersuasive.

Mere evidence showing that Plaintiffs should have realized “Vapewild Wholesale, Inc.’s” identity earlier is insufficient, and “‘[t]he fact that the plaintiff had the means to obtain knowledge is irrelevant.’ [Citation.] ‘In short, section 474 does not impose upon the plaintiff a duty to go in search of facts she does not actually have at the time she files her original pleading.’ [Citation.]” (McOwen v. Grossman (2007) 153 Cal.App.4th 937, 943-944.) “[I]t is now well established that even though the plaintiff knows of the existence of the defendant sued by a fictitious name, and even though the plaintiff knows the defendant’s actual identity (that is, his name), the plaintiff is ‘ignorant’ within the meaning of the statute if he lacks knowledge of that person’s connection with the case or with his injuries.’ [Citation.]” (McOwen v. Grossman, 153 Cal.App.4th at 942; see also Balon v. Drost (1993) 20 Cal.App.4th 483 [amended complaint naming defendant related back to original complaint which named “Doe” defendant, even though plaintiff may have acted negligently in forgetting defendant's name or never inquiring about it following automobile accident; plaintiff's conduct in forgetting name of other driver involved in accident demonstrated carelessness, but not willful misuse of provision of Code of Civil Procedure authorizing plaintiff, ignorant of identity of party responsible for damages, to name “Doe” defendant to extend statute of limitations as to unknown defendant].) In order to show that Section 474 does not apply here, Vapewild must show that at the time Plaintiffs filed the Complaint, they were not “ignorant” of Vapewild’s true identity. The fact that Plaintiffs later had the means to discover Vapewild’s true identity but did not do so before the statute of limitations expired is irrelevant for purposes of Section 474. Further, the SAC and information of which Vapewild has asked the Court to take judicial notice do not show that Plaintiffs knew Vapewild’s true identity in connection with the allegedly wrongful conduct at the time Plaintiffs filed the Complaint. For all the foregoing reasons, and given the liberal policy of allowing resolution of actions on the merits, Vapewild’s Demurrer to the SAC based on the statute of limitations of Section 474 is OVERRULED.

ii. Fraudulent Concealment (Fourth Cause of Action)

“‘The principle is fundamental that ‘[deceit] may be negative as well as affirmative; it may consist of suppression of that which it is one’s duty to declare as well as of the declaration of that which is false.’ [Citations.]” (Jones v. ConocoPhillips Co. (2011) 198 Cal.App.4th 1187, 1198.) “Concealment is a species of fraud or deceit. [Citations.]” (Moncada v. West Coast Quartz Corp. (2013) 221 Cal.App.4th 768, 775.) “The elements of fraudulent concealment are: (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. [Citation.]” (Burch v. CertainTeed Corporation (2019) 34 Cal.App.5th 341, 348.)

Fontem, Costco, and Cuttwood demur to the fourth cause of action for fraudulent concealment based on uncertainty. Peick, Unique Vapors, Cosmic Fog, and Vapewild, as well as Fontem, Costco, and Cuttwood, demur to the fourth cause of action for failure to sufficiently allege the claim with specificity. The Court turns to their arguments accordingly.

a. Uncertainty

CCP § 430.10 establishes that a pleading that is “uncertain” is subject to demurrer, defining “uncertain” to include “ambiguous and unintelligible.” (CCP §§ 430.10 (f).) “Demurrers for uncertainty under Code of Civil Procedure section 430.10, subdivision [(f)] are disfavored. [Citation.] ‘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.’ [Citation.] A demurrer for uncertainty should be overruled when the facts as to which the complaint is uncertain are presumptively within the defendant’s knowledge. [Citation.]” (Chen v. Berenjian (2019) 33 Cal.App.5th 811, 822.)

Fontem, Costco, and Cuttwood demur in a conclusory manner that the fourth cause of action for fraudulent concealment is uncertain but does not state their reasoning. (Fontem & Costco’s Demurrer p. 4; Cuttwood’s Demurrer p. 7.) “‘‘Contentions supported neither by argument nor by citation of authority are deemed to be without foundation, and to have been abandoned.’’ [Citation.]” (Love v. State Dept. of Education (2018) 29 Cal.App.5th 980, 991.) The Court also notes that the Moving Defendants appear to confuse the doctrine of uncertainty and the doctrine of insufficient fact. The Court has reviewed the allegations in support of the fraudulent concealment claim, and it cannot say that they are “so incomprehensible that a defendant cannot reasonably respond.” (Mahan v. Charles W. Chan Ins. Agency, Inc. (2017) 14 Cal.App.5th 841, 848, fn. 3.) Accordingly, Fontem and Costco’s and Cuttwood’s Demurrers to the fraudulent concealment claim for uncertainty are OVERRULED.

b. Specificity

“Fraud allegations ‘involve a serious attack on character’ and therefore are pleaded with specificity. [Citation.] General and conclusory allegations are insufficient. [Citation.] The particularity requirement demands that a plaintiff plead facts which ‘‘‘show how, when, where, to whom, and by what means the representations were tendered.’’’ [Citation.]” (Cansino v. Bank of America (2014) 224 Cal.App.4th 1462, 1469.) “[E]ach element must be pleaded with specificity. [Citations.]” (Daniels v. Select Portfolio Servicing, Inc. (2016) 246 Cal.App.4th 1150, 1166.)

1. Specificity of the Alleged Toxic Chemicals

Fontem, Costco, and Cuttwood argue that Plaintiffs fail to specifically plead the precise toxic chemicals that Plaintiff Edith’s was exposed to and caused her injuries. (Fontem & Costco’s Demurrer p. 8; Peick’s Demurrer p. 5; Cuttwood’s Demurrer p. 5.) This is the same objection that Nu Mark raised in its previous demurrer to the FAC, which was overruled by the Court in its January 9, 2019 Ruling. As the Court held then, and affirms now, “‘the requirement of specificity is relaxed when the allegations indicate that ‘the defendant must necessarily possess full information concerning the facts of the controversy’ [citations] or ‘when the facts lie more in the knowledge of the’’ defendant.” (Orcilla v. Big Sur, Inc. (2016) 244 Cal.App.4th 982, 1008) This relaxed standard for specificity applies here as Plaintiffs are alleging that Defendants concealed the toxic chemicals from them.

In addition, this precise issue came before the Court of Appeal in Jones v. ConocoPhillips Co. (2011) 198 Cal.App.4th 1187, 1191, in which it held: “Contrary to the contention of defendants and the ruling of the trial court [sustaining the demurrer without leave to amend], at the pleading stage the Joneses need not identify the specific toxin contained in each hazardous product to which Carlos was exposed that was a substantial factor in causing his illness to state a viable products liability claim.” Pursuant to Jones, Fontem and Costco’s and Cuttwood’s Demurrers to the fourth cause of action for failure to specify the toxic chemicals are OVERRULED.

2. Affirmative Duty to Disclose Toxic Chemicals

Moreover,“[t]o maintain a cause of action for fraud through nondisclosure or concealment of facts, there must be allegations demonstrating that the defendant was under a legal duty to disclose those facts. [Citation.]” (Los Angeles Memorial Coliseum Com. v. Insomniac, Inc. (2015) 233 Cal.App.4th 803, 831.) Fontem, Costco, and Cuttwood argue that Plaintiffs fail to sufficiently allege what duty they had to Plaintiff Edith to disclose the toxic chemicals. (Fontem & Costco’s Demurrer pp. 9-10; Cuttwood’s Demurrer p. 5.) The SAC alleges that Fontem, Costco, and Cuttwood were manufacturers and suppliers of the chemical products at issue in this action. (SAC ¶¶ 95-97.)

In opposition, Plaintiffs cite to Bigler-Engler v. Breg, Inc. (2017) 7 Cal.App.5th 276 for the proposition that a manufacturer has a general duty to warn its consumers. (Oppo. to Demurrer pp. 3-4.) However, as Fontem and Costco correctly point out, Bigler-Engler, supra, stands for a different proposition. (Fontem & Costco’s Demurrer pp. 11-12.) Distinguishing the duty to warn consumers of a product’s hazards in a product liability claim and the duty to disclose under a fraud claim, Bigler-Engler Court held:

“By contrast, as Bigler-Engler points out, other doctrines impose liability even without evidence of a transaction between the plaintiff and the defendant. Bigler-Engler relies on the general principle that a manufacturer has a duty to warn consumers of a product’s hazards and faults. [Citations.] Bigler-Engler argues that this duty applies here as well and the violation of that duty gives rise to a cause of action for fraud under a theory of concealment. The authorities Bigler-Engler cites, however, involve strict products liability, not fraud. Bigler-Engler has not provided any reason to apply this duty to the fraud cause of action here, and we are aware of none. Products liability law involves a set of circumstances, elements, and doctrines that are independent from, and not directly applicable to, fraud. The duties underlying each cannot simply be applied to the other. [Citation.]”

(Bigler-Engler, supra, 7 Cal.App.5th at 312 [italics added].)

Notwithstanding the foregoing, the Bigler-Engler Court proceeded to stress that the test for determining whether there was “a duty to disclose” in the given context rested on whether “there [was] already a sufficient relationship or transaction between the parties. [Citations.]” (Id.) To put it succinctly, the existence of a manufacturer-consumer relationship does not automatically create a duty to disclose for purposes of a fraud claim; rather, it is the sufficiency of that relationship that trial courts must evaluate. On this theory, Jones, supra, 198 Cal.App.4th 1187 is instructive.

In Jones, “the Joneses sued 19 manufacturers of 34 chemical products, alleging each product identified in the complaint contained toxins that were a substantial factor in causing Carlos’s illness and death.” (Jones, supra, 198 Cal.App.4th at 1191.) The trial court sustained a demurrer without leave to amend, in part, because the Joneses failed to sufficiently allege the manufacturers’ duty to disclose the toxins. (Id. at 1198.) The Court of Appeal reversed that ruling and emphasized that “a duty to disclose may also arise when a defendant possesses or exerts control over material facts not readily available to the plaintiff. [Citation.]” (Id. at 1199.) The Court of Appeal noted that the amended complaint alleged that the manufacturers “‘owed a duty to disclose the toxic properties of their products to [Carlos] because [they] alone had knowledge of material facts, to wit the toxic properties of their products, which were not available to [Carlos].’ It also allege[d] defendants owed a duty to disclose because they ‘made representations regarding their products, but failed to disclose additional facts which materially qualify the facts disclosed, and/or which rendered the disclosures made likely to mislead [Carlos].’” (Id. at 1199-1200.) Based on these allegations, the Court of Appeal found that the Joneses had sufficiently alleged the manufacturers’ duty to Carlos for purposes of a fraudulent concealment claim.

Here, the allegations in the SAC are similar. Plaintiffs allege that Fontem, Costco, and Cuttwood were manufacturers and suppliers of the chemical products containing the toxins to which Plaintiff Edith was exposed. (SAC ¶¶ 95-97.) Fontem, Costco, and Cuttwood had exclusive knowledge of the toxic chemicals, which were not reasonably accessible to Plaintiff Edith. (Id. ¶ 87.) They had a duty to disclose but, instead, provided inadequate warnings of the toxic hazards and concealed risks of the toxins. (Id. ¶¶ 88-90.) Consistent with Jones, supra, the Court finds that Plaintiffs have sufficiently alleged Fontem, Costco, and Cuttwood’s duty to disclose for purposes of the fraudulent concealment claim. Accordingly, Fontem and Costco’s and Cuttwood’s Demurrers to the fourth cause of action for failure to allege specific toxic chemicals are OVERRULED.

3. Knowledge and Intent

“With respect to concealment, ‘‘[t]here are ‘four circumstances in which nondisclosure or concealment may constitute actionable fraud: (1) when the defendant is in a fiduciary relationship with the plaintiff; (2) when the defendant had exclusive knowledge of material facts not known to the plaintiff; (3) when the defendant actively conceals a material fact from the plaintiff; and (4) when the defendant makes partial representations but also suppresses some material facts.’’’ [Citation.]” (Burch v. CertainTeed Corporation (2019) 34 Cal.App.5th 341, 349-350.)

Fontem, Costco, Cuttwood, and Vapewild argue that Plaintiffs fail to allege facts showing that they had knowledge of and intended to conceal the toxic chemicals. (Fontem & Costco’s Demurrer p. 12; Vapewild’s Demurrer p. 14; Cuttwood’s Demurrer pp. 5-8.) Peick similarly contends that Plaintiffs have failed to allege how he was aware of the toxic chemicals. (Peick’s Demurrer pp. 5-6.) Cuttwood specifically points to the October 11, 2018 ruling where the Court found that Plaintiffs had failed to allege sufficient facts to establish knowledge and intent to conceal. (Cuttwood’s Demurrer p. 6.)

In opposition, Plaintiffs correctly assert that “‘the requirement of specificity is relaxed when the allegations indicate that ‘the defendant must necessarily possess full information concerning the facts of the controversy’ [citations] or ‘when the facts lie more in the knowledge of the’’ defendant.” (Orcilla v. Big Sur, Inc. (2016) 244 Cal.App.4th 982, 1008; Oppo. p. 6.) Viewing the SAC under this lense, the Court finds the Fontem, Costco, Cuttwood, and Vapewild’s arguments regarding the lack of intent and knowledge to be unavailing.

The SAC avers that Defendants’ chemical products contain toxins that caused “serious injuries to [Plaintiff Edith’s] internal organs, including Brochiolitis Obliterans Organizing Pneumonia.” (SAC ¶ 26.) Defendants, including Fontem, Costco, Cuttwood, and Vapewild, had exclusive knowledge of the toxic hazards of the chemicals, but elected to provide incomplete warnings and concealed material facts from Plaintiff Edith. (Id. ¶¶ 85, 87-90.) Given these allegations that Defendants necessarily possessed knowledge of the toxins in their chemical products and intended to conceal them, the Court finds that Plaintiffs have sufficiently alleged Defendants’ intent and knowledge. Accordingly, Fontem and Costco’s, Cuttwood’s, and Vapewild’s Demurrers to the fourth cause of action for failure to sufficiently allege intent and knowledge are OVERRULED.

4. Ratification by a Corporate Officer

“[W]hen a plaintiff asserts fraud against a corporation, the plaintiff must ‘allege the names of the persons who made the allegedly fraudulent representations, their authority to speak, to whom they spoke, what they said or wrote, and when it was said or written.’ [Citation.] Less specificity in pleading fraud is required ‘when ‘it appears from the nature of the allegations that the defendant must necessarily possess full information concerning the facts of the controversy . . . .’’ [Citation.]” (Cansino, supra, 224 Cal.App.4th at 1469.)

Vapewild argues that Plaintiffs fail to sufficiently allege facts to show that its corporate officer ratified the fraudulent concealment. (Vapewild’s Demurrer p. 14.) The Court disagrees. Plaintiffs specifically allege that Defendants, including Vapewild, knew about the toxic chemicals in their products, but consciously, and with ratification by their corporate officers, decided to market the products without providing adequate information of the chemical hazards. (SAC ¶¶ 85, 123.) Given that Vapewild necessarily possesses the full information concerning the alleged concealment, the Court finds that Plaintiffs have sufficiently alleged ratification by a corporate officer under a relaxed pleading standard. For this reason, Vapewild’s Demurrer to the fourth cause of action for failure to sufficiently allege corporate ratification is OVERRULED.

5. Reliance

“‘Reliance can be proved in a fraudulent omission case by establishing that ‘had the omitted information been disclosed, [the plaintiff] would have been aware of it and behaved differently.’ [Citation.]’ [Citation.]” (Hoffman v. 162 North Wolfe LLC (2014) 228 Cal.App.4th 1178, 1193-1194 [italics added].) “After establishing actual reliance, the plaintiff must show that the reliance was reasonable by showing that (1) the matter was material in the sense that a reasonable person would find it important in determining how he or she would act [citation]; and (2) it was reasonable for the plaintiff to have relied on the misrepresentation. [Citation.]” (Id. at 1194 [italic added].)

Fontem, Costco, Cosmic Fog, and Vapewild argue that Plaintiffs fail to allege facts demonstrating that Plaintiffs relied on the fraudulent concealment. (Fontem & Costco’s Demurrer pp. 12-14; Vapewild’s Demurrer p. 14.) The Court is unpersuaded.

Plaintiff Edith alleges that she started using e-cigarettes and e-vaporizers in an effort to stop smoking cigarettes and was not aware of the toxic chemicals in those products. (SAC ¶ 25.) Plaintiffs also allege that Defendants had a duty to disclose the toxic chemicals, and had Plaintiff Edith knew about the toxic hazards, she “would not have acted as she did.” (Id. ¶¶ 33, 109.) Taking these allegations as true, the Court finds that Plaintiff Edith, as an ordinary consumer of e-cigarettes and e-vaporizers, reasonably relied on Defendants’ representation, or the concealment thereof, in using the products. For this reason, Fontem and Costco’s, Cosmic Fog’s, and Vapewild’s Demurrers to the fraudulent concealment claim for failure to allege reasonable reliance are OVERRULED.

iii. Intentional Misrepresentation (Fifth Cause of Action)

The Court now turns to the fifth cause of action for intentional misrepresentation. “An intentional misrepresentation is ‘[t]he suggestion, as a fact, of that which is not true, by one who does not believe it to be true.’” (Hoffman, supra, 228 Cal.App.4th at 1198.) “The essential elements of a count for intentional misrepresentation are (1) a misrepresentation, (2) knowledge of falsity, (3) intent to induce reliance, (4) actual and justifiable reliance, and (5) resulting damage. [Citation.]” (Chapman v. Skype Inc. (2013) 220 Cal.App.4th 217, 230-231.) “[E]ach element must be pleaded with specificity. [Citations.]” (Daniels, supra, 246 Cal.App.4th at 1166.)

7-Eleven, Nu Mark, Fontem, Costco, Peick, Cuttwood, Cosmic Fog, and Vapewild contend that Plaintiffs fail to allege an affirmative misrepresentation with sufficient specificity. (7-Eleven’s Demurrer pp. 4.-5, Nu Mark’s Demurrer pp. 4-5; Fontem & Costco’s Demurrer pp. 14-17; Peick’s Demurrer pp. 6-7; Cuttwood’s Demurrer pp. 8-10; Cosmic Fog’s Demurrer pp. 5-8; Vapewild’s Demurrer pp. 17-18.) For the reasons stated below, the Court agrees in part and disagrees in part

In opposition, Plaintiffs cite to specific allegations of advertising made by Fontem and Peick to show that they made misrepresentation about their e-cigarettes and vaporizers. (Oppo. to Demurrer pp. 8-10.) For instance, Plaintiffs allege that Fontem promoted its e-cigarettes with the slogans, “Take back your freedom with Blue eCigs the smart alternative to cigarettes,” “Freedom to have a cigarette without the guilt,” and “Rise from the ashes.” (SAC ¶ 132, emphasis added.) The Court finds that these slogans are sufficiently specific to show that Fontem was advertising its e-cigarettes as safe or safer to use than smoking cigarettes. Accordingly, Fontem’s Demurrer to the fifth cause of action for failure to sufficiently allege a specific affirmative misrepresentation is OVERRULED.

In contrast, Plaintiff Edith alleges that she visited a store at which Peick’s representative told her that using Peick’s vaporizer “would help her stop smoking.” (SAC ¶ 133.) Notably, the representation has nothing to do with the safeness of Peick’s vaporizer or that it would definitively stop Plaintiff Edith’s cigarette smoking. Rather, the representation was that it would only help. The Court construes the statement as mere puffing. “[U]nder long-standing law, statements akin to ‘mere puffing’ ‘cannot support liability in tort.’” (Hartford Casualty Ins. Co. v. Swift Distribution, Inc. (2014) 59 Cal.4th 277, 299.) “[T]he puffing doctrine applies to ‘claims [which] are either vague or highly subjective.’” (Paduano v. American Honda Motor Co., Inc. (2009) 169 Cal.App.4th 1453, 1500.) “‘However, misdescriptions of specific or absolute characteristics of a product are actionable.’” (Id.) The alleged statement made by Peick’s representative is not specific or absolute in the characteristic of the vaporizer to constitute an affirmative misrepresentation. Such a statement is highly subjective and vague. Accordingly, Peick’s Demurrer to the fifth cause of action for failure to allege a specific misrepresentation is SUSTAINED without leave to amend.

As for 7-Eleven, Nu Mark, Costco, Cuttwood, Cosmic Fog, and Vapewild, Plaintiffs rely on Lopez v. Nissan North America, Inc. (2011) 201 Cal.App.4th 572, for the proposition that they can plead their intentional misrepresentation by omission. (Oppo. to Demurrer pp. 10-14.) As an initial matter, the Court notes that there is no case law relying on Lopez for the proposition asserted. More importantly, the Court finds Plaintiff’s argument to be inconsistent with prevailing case law and statutes. (Cf. OCM Principal Opportunities Fund, L.P. v. CIBC World Markets Corp. (2007) 157 Cal.App.4th 835, 854[“To allege fraud based on an affirmative misrepresentation, a plaintiff must allege a misrepresentation—normally an affirmation of fact.”] [italic added].) While Lopez, supra, suggested that intentional misrepresentation may be based on an omission, the authority on which the Lopez Court relied suggests otherwise. The Lopez Court cites to Apollo Capital Fund, LLC v. Roth Capital Partners, LLC (2007) 158 Cal.App.4th 226 as authority, but in the Apollo Capital case, the Court stated: “[t]he investors must therefore plead facts showing Roth’s misrepresentation (or omission it had a duty to disclose); Roth’s knowledge of falsity (scienter); its intent to defraud (i.e., to induce the investors’ reliance on the misrepresentations); justifiable reliance; and resulting damage,” citing to 5 Witkin, Summary of Cal. Law (10th ed.) Torts, § 772, p. 1121 (former citation) (current citation is 5 Witkin, Summary of Cal. Law (11th ed.) Torts, § 891). (Apollo Capital, supra, 158 Cal.App.4th at 240, italics added.) The Apollo Capital Court did not make a holding or application of a theory of intentional misrepresentation by omission. Instead, the Apollo Capital Court made the reference in passing, and its comment may be construed as a reference to two distinct and alternative bases for a fraud claim – intentional misrepresentation and omission. (Id.) Likewise, 5 Witkin, Summary of Cal. Law (11th ed.) Torts, § 891 does not state that an omission may be a basis for intentional misrepresentation or supply an authority to such proposition. Notably, Witkin cites various cases, all of which are examples of an affirmative misrepresentation—not an omissive misrepresentation. The First District Court of Appeal recently affirmed: “a cause of action for [negligent or intentional] misrepresentation requires an affirmative statement, not an implied assertion,” and other Districts have similarly affirmed that intentional misrepresentation requires an affirmative act. (RSB Vineyards, LLC v. Orsi (2017) 15 Cal.App.5th 1089, 1102; see also Perlas v. GMAC Mortgage, LLC (2010) 187 Cal.App.4th 429, 434 [“To establish a claim for fraudulent misrepresentation, the plaintiff must prove . . . the defendant represented to the plaintiff that an important fact was true”] [italic added]; Manderville v. PCG&S Grp., Inc. (2007) 146 Cal.App.4th 1486, 1498 [affirming that intentional misrepresentation must be based on an affirmative act] [italic added].)

Most importantly, Civ. Code § 1710 provides four legal bases on which a fraud claim can be based: “A deceit, within the meaning of the last section, is either:

1. The suggestion, as a fact, of that which is not true, by one who does not believe it to be true;

2. The assertion, as a fact, of that which is not true, by one who has no reasonable ground for believing it to be true;

3. The suppression of a fact, by one who is bound to disclose it, or who gives information of other facts which are likely to mislead for want of communication of that fact; or,

4. A promise, made without any intention of performing it.”

“California law generally recognizes four forms of deceit: intentional misrepresentation, negligent misrepresentation, concealment, and failure to perform a promise. [Citations.]” (Finch Aerospace Corp. v. City of San Diego (2017) 8 Cal.App.5th 1248, 1252-1253, italics added.) Plaintiffs’ construction of intentional misrepresentation to allow such claim to be based on omission collapses the clear distinction between intentional misrepresentation (an affirmative act) and fraudulent concealment (an omissive act) as provided by the statute and the California Legislature. Moreover, such construction of intentional misrepresentation would render Civ. Code § 1710(1) and § 1710(3) superfluous. (People v. Valencia (2017) 3 Cal.5th 347, 357 [“[W]e generally must ‘accord[ ] significance, if possible, to every word, phrase and sentence in pursuance of the legislative purpose,” and have warned that ‘[a] construction making some words surplusage is to be avoided.’”]; In re C.H. (2011) 53 Cal.4th 94, 103 [“It is a settled principle of statutory construction, that courts should ‘strive to give meaning to every word in a statute and to avoid constructions that render words, phrases, or clauses superfluous.”].)

Other authorities also support the Court’s reading of intentional misrepresentation. The Judicial Council of California Civil Jury Instructions and California Civil Jury Instructions require an affirmative act of misrepresentation as an element of an intentional misrepresentation claim. (CACI No. 1900, citing to Civ. Code § 1710(1) as the source of authority for intentional misrepresentation; BAJI 12.31.)

Given the heavy weight of authorities, the Court finds that intentional misrepresentation and fraudulent concealment are different theories of liability of fraud, and intentional misrepresentation cannot be based on a fraudulent omission. Accordingly, 7-Eleven’s, Nu Mark’s, Costco’s, Cuttwood’s, Cosmic Fog’s, and Vapewild’s Demurrers to the fifth cause of action for failure to sufficiently allege an intentional misrepresentation claim are SUSTAINED without leave to amend.

iv. Negligent Misrepresentation (Sixth Cause of Action)

“To allege fraud based on an affirmative misrepresentation, a plaintiff must allege a misrepresentation—normally an affirmation of fact. [Citation.]” (Los Angeles Memorial Coliseum Com. v. Insomniac, Inc. (2015) 233 Cal.App.4th 803, 831 [italic added].)

Only Fontem, Costco, Peick, and Vapewild demur to the sixth cause of action for negligent misrepresentation for failure to sufficiently plead with specificity an affirmative misrepresentation. (Fontem & Costco’s Demurrer pp. 17-19; Peick’s Demurrer pp. 6-7; Vapewild’s Demurrer p. 20.) In opposition, Plaintiffs contend that negligent misrepresentation may be based on a fraudulent omission. (Oppo. to Demurrer pp. 10-14.)

On this point, however, the law is clear. “Generally, ‘[p]arties cannot read something into a neutral statement in order to justify a claim for negligent misrepresentation. The tort requires a ‘positive assertion[.]’” (OCM Principal Opportunities Fund, L.P. v. CIBC World Markets Corp. (2007) 157 Cal.App.4th 835, 854; see also Lopez, supra, 201 Cal.App.4th at 596 [“A negligent misrepresentation claim ‘requires a positive assertion,’ not merely an omission.]”.) Because Plaintiffs’ negligent misrepresentation is premised on a fraudulent omission, Fontem and Costco’s, Peick’s, and Vapewild’s Demurrers to the sixth cause of action for failure to sufficiently allege an affirmative misrepresentation are SUSTAINED without leave to amend.

C. Leave to Amend as to the Demurrers

“When a demurrer is sustained, ‘the plaintiff must be given leave to amend his or her complaint when there is a reasonable possibility that the defect can be cured by amendment. [Citations.] ‘The burden of proving such reasonable possibility is squarely on the plaintiff.’ [Citation.] [¶] ‘To satisfy that burden on appeal, a plaintiff ‘must show in what manner he can amend his complaint and how that amendment will change the legal effect of his pleading.’ [Citation.] The assertion of an abstract right to amend does not satisfy this burden.’ [Citation.] The plaintiff must clearly and specifically state ‘the legal basis for amendment, i.e., the elements of the cause of action,’ as well as the ‘factual allegations that sufficiently state all required elements of that cause of action.’ [Citation.]’ [Citation.]” (Aghaji v. Bank of America, N.A. (2016) 247 Cal.App.4th 1110, 1118–1119.)

Given the history of this case in which the Court has sustained several demurrers to the fifth and sixth causes of action, the Court is not inclined to grant Plaintiffs another leave to amend. Nonetheless, the Court will allow Plaintiffs an opportunity at the hearing on these demurrers to make an offer of proof as to how the SAC can reasonably be amended. If Plaintiffs fail to do so, leave to amend will be denied.

D. Motions to Strike Punitive Damages Allegations from SAC

“In order to state a prima facie claim for punitive damages, a complaint must set forth the elements as stated in the general punitive damage statute, Civil Code section 3294. [Citation.] These statutory elements include allegations that the defendant has been guilty of oppression, fraud or malice. [Citation.]” (Turman v. Turning Point of Central Calif., Inc. (2010) 191 Cal.App.4th 53, 63.) “‘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.” (Civ. Code § 3294(c)(3).)

7-Eleven, Nu Mark, Fontem, Costco, Peick, Cuttwood, Cosmic Fog, Vaping Birdy, and Vapewild contend that Plaintiffs fail to sufficiently allege oppression, fraud, or malice to justify the request for punitive damages. (7-Eleven’s Motion to Strike pp. 3-5; Nu Mark’s Motion to Strike pp. 2-5; Fontem & Costco’s Motion to Strike pp. 4-5; Peick’s Motion to Strike pp. 3-5; Cuttwood’s Motion to Strike pp. 5-6; Cosmic Fog’s Motion to Strike pp. 6-9; Vaping Birdy’s Motion to Strike pp. 3-6; Vapewild’s Motion to Strike pp. 3-6.) Defendants’ argument, however, is unavailing. Because the Court has overruled Defendants’ Demurrers to the fourth cause of action for fraudulent concealment, the Court finds that Plaintiffs have sufficiently alleged fraud within the meaning of Section 3294(c)(3). Therefore, 7-Eleven’s, Nu Mark’s, Fontem and Costco’s, Peick’s, Cuttwood’s, Cosmic Fog’s, Vaping Birdy’s, and Vapewild’s Motions to Strike the punitive damages allegations of the SAC based on the failure to allege fraud are DENIED.

“With respect to a corporate employer, the advance knowledge and conscious disregard, authorization, ratification or act of oppression, fraud, or malice must be on the part of an officer, director, or managing agent of the corporation.” (Civ. Code § 3294(b).) Nu Mark, Cosmic Fog, and Vapewild also contend that Plaintiffs fail to sufficiently plead how their corporate officers or managing agents ratified the fraudulent concealment. (Nu Mark’s Motion to Strike p. 3; Cosmic Fog’s Motion to Strike pp. 7-8; Vapewild’s Motion to Strike pp. 7-8.) The Court disagrees.

Plaintiffs specifically allege that Defendants, including Nu Mark, Cosmic Fog, and Vapewild, knew about the toxic chemicals in their products, but consciously decided to market the products without providing adequate information about the chemical hazards—and that this fraudulent concealment was ratified by their corporate officers and managers. (SAC ¶¶ 85, 123.) “In the construction of a pleading, for the purpose of determining its effect, its allegations must be liberally construed, with a view to substantial justice between the parties.” (CCP § 452.) Moreover, “‘[l]ess particularity [in pleading] is required when it appears that defendant has superior knowledge of the facts, so long as the pleading gives notice of the issues sufficient to enable preparation of a defense.’ [Citation.]” (Doe v. City of Los Angeles (2007) 42 Cal.4th 531, 549-550.) Applying these rules of liberal construction and less particularity, the Court finds that Plaintiffs have sufficiently alleged the requirement of ratification by a corporate officer under Section 3294(b). It follows that Nu Mark’s, Cosmic Fog’s, and Vapewild’s Motions to Strike the punitive damages allegations based on the failure to allege corporate ratification are DENIED.

CONCLUSION AND ORDER

Fontem and Costco’s, Peick’s, Cuttwood’s, Cosmic Fog’s, Unique Vapors’, and Vapewild’s Demurrers to the fourth cause of action for fraudulent concealment are OVERRULED. Fontem’s Demurrer to the fifth cause of action for intentional misrepresentation is OVERRULED. 7-Eleven’s, Nu Mark’s, Costco’s, Peick’s, Cuttwood’s, Cosmic Fog’s, and Vapewild’s Demurrers to the fifth cause of action for intentional misrepresentation are SUSTAINED without leave to amend. Fontem and Costco’s, Peick’s, and Vapewild’s Demurrers to the sixth cause of action for negligent misrepresentation are SUSTAINED without leave to amend.

7-Eleven’s, Nu Mark’s, Fontem and Costco’s, Peick’s, Cuttwood’s, Cosmic Fog’s, Vaping Birdy’s, and Vapewild’s Motions to Strike are DENIED.

Defendants are each to file an answer within 10 days.

Moving Parties are ordered to provide notice of this order and file proof of service of such.

DATED: August 7, 2019 ___________________________

Elaine Lu

Judge of the Superior Court