Cases

Plaintiffs sued defendant Nissan North America, Inc., alleging the transmission in a 2013 Nissan Sentra they purchased was defective.  In their complaint, plaintiffs asserted statutory claims under the Song-Beverly Consumer Warranty Act (Song-Beverly Act) (Civ. Code, § 1790 et seq.) and a common law fraud claim alleging that Nissan fraudulently concealed the defects, thereby inducing them to purchase the car.

The trial court sustained Nissan’s demurrer to the fraudulent inducement claim without leave to amend, holding the claim was barred by the “economic loss rule,” and granted an accompanying motion to strike plaintiffs’ request for punitive damages.

On appeal, plaintiffs contended that the court erred by applying the economic loss rule to bar their fraudulent inducement claim.  Nissan argued that the court correctly applied the economic loss rule.  It alternatively urged the Court of Appeal to affirm on the ground that plaintiffs did not plead their fraudulent inducement claim with sufficient particularity, a ground for demurrer not reached by the trial court.

The Court of Appeal reversed the judgment entered in favor of Nissan, holding that the economic loss rule did not bar plaintiffs’ fraudulent inducement claim.  It also rejected Nissan’s argument that plaintiffs did not adequately plead a claim for fraudulent inducement.

To read the Court of Appeal opinion, click HERE.