Driz v. FCA US, LLC

Background

Robert A. Driz sued FCA US, LLC, arising from alleged defects in his 2019 Chrysler Pacifica. The complaint asserted five warranty-statute violations and a sixth claim for fraudulent inducement by concealment. Driz alleged that FCA knew about a “Stalling Defect” involving vehicles with a 9HP transmission and powertrain control module, and concealed information about that defect. He alleged that the defect could cause stalling, shutdown, or loss of power, and that he would not have purchased the vehicle had FCA disclosed it.

FCA moved to dismiss only the sixth claim and moved to strike Driz’s request for punitive damages. A motion to dismiss under Federal Rule of Civil Procedure 12(b)(6) tests whether a complaint states a legally sufficient claim. Because the claim involved fraud, Federal Rule of Civil Procedure 9(b) required Driz to plead the circumstances of the alleged fraud with particularity, including who, what, when, where, and how.

Economic-Loss Rule

The court rejected FCA’s argument that the economic-loss rule barred the fraudulent-inducement claim. That rule generally limits a purchaser whose product does not work properly to contract remedies for economic losses, rather than tort damages. The court explained that California recognizes fraudulent inducement as an exception to the rule.

The court also rejected FCA’s argument that Driz had not alleged an independent duty separate from the warranty obligations. The complaint alleged that the vehicle defect created a safety concern and that FCA had a separate duty to disclose defects presenting an unreasonable safety hazard. The court therefore found that the economic-loss rule did not bar the sixth claim.

Failure to Plead Fraud with Particularity

The court agreed with FCA that the complaint did not plead the alleged fraud with enough detail. Although the complaint described the Stalling Defect in other vehicles, it did not allege that Driz’s vehicle specifically exhibited stalling problems, that he took it to a repair shop for transmission issues, or that it otherwise had the particular defect FCA allegedly concealed.

The court also found the reliance allegations insufficiently specific. Driz alleged generally that he interacted with sales representatives and reviewed FCA advertisements or other marketing materials, but he did not identify the specific policies, representations, or sales interactions he reviewed. The complaint also did not identify the dealership from which he purchased the vehicle. The court concluded that these allegations did not adequately show that Driz would have known about the omitted information if FCA had disclosed it.

Disposition

The court granted FCA’s motion to dismiss the fraudulent-inducement-by-concealment claim. Because the pleading deficiencies could be corrected with additional facts, the court gave Driz leave to amend and required any amended pleading to be filed within 21 days.

The court denied FCA’s motion to strike the punitive-damages request without prejudice. Because Driz was allowed to amend and could potentially support a proper fraud claim, the court could not determine at that stage that the punitive-damages request was improper.

The order stated that FCA’s motion to dismiss and to strike was granted in part and denied in part. The sixth claim was dismissed with leave to amend, and the motion to strike was denied without prejudice.