Bales v. FCA US LLC

Background

James C. Bales alleged that he bought a 2013 RAM 1500 pickup truck in November 2013 and later repeatedly brought it to an FCA-authorized repair facility after warning lights appeared. He alleged that, after a later visit in February 2018, he learned for the first time about a defect in the vehicle’s electrical architecture.

Bales alleged that FCA knew about defects involving electrical systems and modules used in its vehicles, including the PowerNet architecture and the Body Control Module. He claimed FCA did not disclose the alleged PowerNet defects before he bought the truck or during his ownership. His complaint asserted claims for breach of express warranty, breach of implied warranty, violations of the Song-Beverly Act, and fraudulent inducement by concealment.

FCA moved under Rule 12(b)(6), which permits dismissal for failure to state a legally sufficient claim. FCA also moved under Rule 12(f) to strike allegations that it characterized as immaterial, impertinent, or otherwise improper.

Motion to Dismiss

The court held that Bales sufficiently pleaded a fraudulent-inducement-by-concealment claim. The court identified the required allegations as concealment of a material fact, a duty to disclose, intentional concealment with intent to defraud, Bales’s lack of knowledge and reliance, and resulting damage.

The court found that Bales alleged facts supporting the inference that FCA knew about the alleged PowerNet defect, had a duty to disclose it, intentionally concealed it, and caused harm to Bales. The court also rejected FCA’s argument that the economic-loss rule barred the fraud claim because it accompanied warranty claims. The court stated that, under the authorities it cited, fraud claims may proceed alongside contract claims in these circumstances.

The motion to dismiss was DENIED.

Motion to Strike

The court denied FCA’s request to strike paragraphs 14–152 and 160–173, which discussed alleged defects in electrical architectures and modules in vehicles other than Bales’s pickup truck. The court found those allegations relevant because they concerned the BCM and PowerNet systems allegedly present in Bales’s truck, and because the complaint connected the discussion of other vehicles to the alleged defects.

The court also denied FCA’s request to strike paragraphs 188–209, which contained facts and statements supporting Bales’s fraudulent-inducement-by-concealment claim.

The court granted FCA’s request to strike paragraphs 4–7, which discussed bankruptcy and bailout involving FCA’s predecessors. The court found those allegations immaterial and impertinent to the facts alleged.

The motion to strike was DENIED IN PART and GRANTED IN PART.

Reassignment and Order

Judge Alsup’s order stated that both parties consented to magistrate-judge jurisdiction for all purposes. The case was reassigned to Magistrate Judge Kandis A. Westmore with the full consent of the parties.

Result

The fraud claim was not dismissed. The complaint retained the challenged allegations about electrical defects and the fraud claim, while the allegations about predecessor bankruptcy and bailout were stricken. The opinion does not decide the ultimate truth of Bales’s allegations or the parties’ ultimate liability.