Wins

GMSR secures reinstatement of client’s fraudulent inducement claims

Owners of a Nissan Sentra sued Nissan, alleging that Nissan fraudulently induced them to buy their car by concealing the fact that the transmissions in the Sentras were defective.  The trial court sustained Nissan’s demurrer based on the “economic loss rule,” which bars certain tort claims between contracting parties on the theory that the parties are limited to contract remedies.

Representing the Sentra owners on appeal, GMSR argued that the economic loss rule does not bar claims for inducing a contract by fraudulent concealment, and that the fraud claim was sufficiently pled.

The Court of Appeal agreed on both points.  In a published decision, it explained that although federal district courts and other states have split on whether the economic loss rule bars claims for fraudulent concealment, as opposed to fraudulent misrepresentations, the rationale of a prior California Supreme Court decision compels concluding that the rule does not categorically bar inducement claims based on either type of fraud.  The Court of Appeal further found that the complaint adequately spelled out Nissan’s alleged fraud.  On those bases, it reinstated the Sentra owners’ claim.

The opinion notes that the scope of the economic loss rule is currently pending before the California Supreme Court in another case, Rattagan v. Uber Technologies, Inc.  GMSR is representing the plaintiff in Rattagan as well.  For more information on Rattagan and other civil cases pending in the California Supreme Court, visit and bookmark GMSR’s regularly-updated California Supreme Court Watch:  https://www.gmsr.com/california-supreme-court-watch/

To read the Court of Appeal Opinion, click here: Dhital v. Nissan North America, Inc. (2022) __ Cal.App.4th __ [WL 14772909] [First District, Division Four]