Opinion
NOT TO BE PUBLISHED
APPEAL from a judgment of the Superior Court of Los Angeles County. Super. Ct. No. BC318347 Wendell Mortimer, Jr., Judge.
Abbey Spanier Rodd Abrams & Paradis; Horwitz, Horwitz & Paradis, Paul O. Paradis, Gina M. Tufaro; Milberg Weiss & Bershad, Milberg Weiss, Jeff S. Westerman, Sabrina S. Kim and M. Michelle Furukawa for Plaintiffs and Appellants.
O'Melveny & Myers, John W. Alden, Eric Y. Kizirian, A. Patricia Klemic and Wallace Allen for Defendant and Respondent.
ARMSTRONG, J.
Plaintiffs Betty Lou Sandsmark, Richard Ammon, and Trevor Boen sued defendant American Honda Motor Corporation ("Honda") in their individual capacities and as class representatives for breach of implied warranty, unjust enrichment, and violation of the Consumer Legal Remedies Act, Civil Code section 1750 et seq. (the "CLRA") based on an alleged design defect which caused their cars to catch fire and burn. Honda demurred to the third amended complaint, and moved to strike the class allegations. The trial court determined that plaintiffs had properly pled claims for unjust enrichment and breach of the implied warranty of merchantability, sustained the demurrer to the causes of action based on the CLRA, and ordered the class allegations stricken. Plaintiffs appeal the latter ruling only.
Plaintiffs contend that the elimination of the class allegations at the demurrer stage was premature, and that the ruling is inconsistent with the court's order overruling defendant's demurrer to the causes of action for breach of implied warranty and unjust enrichment. We conclude that the trial court erred in striking the class allegations, and so reverse the judgment.
Because a motion to strike, like a demurrer, challenges the legal sufficiency of the complaint's allegations, on review, we accept as true the well-pleaded allegations of the complaint. (Blakemore v. Superior Court (2005) 129 Cal.App.4th 36, 53.)
Honda designed, manufactured and marketed the two vehicle models at issue in this case, CR-Vs of the model years 2002 through 2005, and Elements of the model years 2003, 2004 and 2005 (collectively, the "Vehicles"). These Vehicles are all equipped with Honda's 2.4 Liter DOHC i-VTEC Engine (the "i-VTEC Engine"). This engine differs from its predecessor in that the oil filter and oil filter engine mount are located on the backside of the engine, in close proximity to the exhaust manifold, front exhaust pipe, and catalytic converter. As a result of the engine's design, engine oil leaking from the oil filter can spray directly onto the exhaust manifold, the front exhaust pipe, and/or the catalytic converter (the hottest portions of the exhaust system) and erupt in fire. In addition, the exhaust system components in the new engine reach significantly higher temperatures than the components of the engine type previously used in the manufacture of Honda vehicles. Plaintiffs' principal contention in this lawsuit is that the design configuration of the i-VTEC engine, in conjunction with these significantly higher temperatures, constitute a design defect, resulting in vehicular fires when there is an oil leak.
The three named plaintiffs were driving CR-Vs of the specified model years when their cars burst into flames.
Plaintiffs filed a putative class action against Honda on behalf of all those who purchased or leased a new or used Vehicle equipped with the i-VTEC engine. The operative third amended complaint alleged causes of action for restitution/unjust enrichment pursuant to California law brought by the named plaintiffs individually and on behalf of all those who purchased their Vehicles in any of the 50 states or the District of Columbia. Separate causes of action were brought by each individual plaintiff and on behalf of class members who purchased their Vehicles in that plaintiff's state of residence (Boen in California, Ammon in Maryland, and Sandsmark in New Jersey) for unjust enrichment under the laws of that particular state. Additional counts were brought in similar fashion alleging breach of the implied warranty of merchantability. In addition, the plaintiffs separated the unjust enrichment claims into three categories according to the different elements required to state a cause of action based on common law of the states.
Honda demurred, arguing that plaintiffs had failed to state a claim for violations of the CLRA, breach of implied warranty and unjust enrichment. Honda also moved to strike the class allegations of the complaint, contending that the complaint did not allege an ascertainable class. The trial court found that plaintiffs had stated a cause of action for breach of implied warranty and unjust enrichment, but not for violations of the CLRA. The court also concluded that the members of the purported class whose Vehicles had not caught on fire (so-called "no injury" plaintiffs) could not state a claim for breach of warranty or unjust enrichment. Consequently, the court struck the class allegations in their entirety for lack of an ascertainable class.
Plaintiffs appeal the ruling on the motion to strike. They maintain that the trial court erred "by striking all of the class allegations – including those made by and on behalf of individuals whose Vehicles had caught fire."
DISCUSSION
Like a demurrer, a motion to strike challenges the legal sufficiency of the complaint's allegations, which are assumed to be true for purposes of the motion. (Blakemore v. Superior Court, supra, 129 Cal.App.4th at p. 53.) A motion to strike class allegations "raises only the narrow issue whether this suit as a matter of law lacks sufficient community of interest to sustain a class action." (La Sala v. American Sav. & Loan Assn. (1971) 5 Cal.3d 864, 876.) Consequently, the ruling is reviewed de novo. (Blakemore v. Superior Court, supra, 129 Cal.App.4th at p. 54.)
The trial court entered the following ruling: "Motion to Strike Class Allegations is granted based upon the American Suzukicase. 'No Injury' owners are not entitled to assert a Breach of Implied Warranty action. A vast majority of the products remain fit for their ordinary purpose. [¶] As to the Unjust Enrichment claims, if class member cars are performing as they expected, there has been no 'unjust enrichment' and the vast majority of plaintiffs have received what they bargained for. Further, there are many variations in state laws as to the elements." Thus, the ruling was based on two separate findings: (1) that "no injury" owners could not state a cause of action, and (2) that the elements of unjust enrichment vary from state to state.
Plaintiffs contend on appeal that the trial court was wrong on both counts. They argue that the court "improperly denied individuals whose Vehicles have caught fire the ability to pursue their otherwise properly pled claims on a class-wide basis," and "improperly concluded that the elements of unjust enrichment differ from state to state [such] that Plaintiffs' class allegations for unjust enrichment claims should . . . be stricken." In addition, plaintiffs maintain that striking the class allegations at the demurrer stage was premature since California courts have consistently held that class allegations should be allowed to survive the pleading stage if at all possible, and should be tested at a class certification hearing after the evidentiary record has been developed.
As this court explained in Beckstead v. Superior Court (1971) 21 Cal.App.3d 780, California has a "judicial policy of allowing potential class action plaintiffs to have their action measured on its merits to determine whether trying their suits as a class action would bestow the requisite benefits upon the litigants and the judicial process to justify class action litigation. In order to effect this judicial policy, the California Supreme Court has mandated that a candidate complaint for class action consideration, if at all possible, be allowed to survive the pleading stages of litigation. The wisdom of allowing survival is elementary. Class action litigation is proper whenever it may be determined that it is more beneficial to the litigants and to the judicial process to try a suit in one action rather than in several actions. To make this determination, it is necessary to balance the benefits of trying a particular suit as a class action, against the concomitant burdens." (Id. at p. 783.)
As Honda points out, it is not always improper to sustain a demurrer to a class action complaint without leave to amend. For instance, in Diamond v. General Motors Corp. (1971) 20 Cal.App.3d 374, the plaintiff "on behalf of himself and all other possessors of real property in, and residents of, the County of Los Angeles," a class of 7,119,184 individuals, sued 293 industrial corporations and municipalities for polluting the air. The complaint sought billions of dollars in compensatory and punitive damages, as well as an injunction against further polluting acts. Demurrers to the complaint were sustained without leave to amend, based on misjoinder of parties, and failure to state a cause of action. The trial court ruled, among other things, that the lawsuit was not a proper class action, that a private person may not sue to abate a public nuisance in the absence of an allegation of special injury to himself, and that the complaint failed to state a cause of action in favor of plaintiff as an individual. In Beckstead, we commented approvingly upon the Diamond court's affirmance of an order sustaining the demurrers without leave to amend. We went on to conclude, however, that "absent such strong factual showings, all that is normally required for a complaint to survive demurrers to the propriety of class litigation is that the complaint allege facts that tend to show: (1) an ascertainable class of plaintiffs, and (2) questions of law and fact which are common to the class. If the complaint is allowed to survive the demurrer, then the judge may proceed with the suit, deferring his determination of the propriety of class action until a time when he may better make the decision." (Beckstead v. Superior Court, supra, 21 Cal.App.3d at p. 784.)
While in the extreme case typified by Diamond v. General Motors, supra, a class action lawsuit may be dismissed at the pleading stage, this is not an extreme case. Here, there is an ascertainable class of plaintiffs (indeed, at oral argument, defendant's counsel purported to know the precise number of Vehicles which had caught fire), and questions of law and fact are common to the class. That the complaint did not separate the plaintiffs into injury and no-injury categories is not fatal, as this defect in the pleadings can be easily cured.
Honda relies on Washington Mutual Bank, FA v. Superior Court (2001) 24 Cal.4th 906 to argue that even if there is an ascertainable class of plaintiffs, the trial court's order should be affirmed due to the variations in the state laws which the court would be required to apply in the case.
Honda's concerns are premature. In Washington Mutual the Supreme Court was reviewing a trial court order certifying an action against a bank as a nationwide class. In this case, the size of the class was greatly reduced when it was limited to those owners whose Vehicles had caught fire. It is not yet clear whether plaintiffs will seek to certify a nationwide class. If and when they do, defendant will have the opportunity to oppose class certification based on the reasoning of Washington Mutual.
DISPOSITION
The judgment is reversed. Respondent is to bear the costs on appeal.
We concur: TURNER, P. J., KRIEGLER, J.