Date: 01-31-2018

Case Style:

Case Number: F073215

Judge: Franson

Court: California Court of Appeals Fifth Appellate District on appeal from the Superior Court, Kern County

Plaintiff's Attorney: Robert Starr and Adam Rose

Defendant's Attorney: Kurt A. Schlichter, Steven C. Shonack, Jamie L. Keeton and William A. Percy

Description: Tammy Gutierrez sued defendant CarMax Auto Superstores California,
LLC (CarMax) alleging breaches of express and implied warranties, intentional and
negligent misrepresentation, breach of contract, unfair competition under Business and
Professions Code section 17200 (UCL), and a violation of the Consumer Legal Remedies
Act (CLRA; Civ. Code, § 1750 et seq.). CarMax demurred to Gutierrez’s third amended
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complaint and the trial court sustained the demurrer without leave to amend. Gutierrez
appealed, contending her allegations about an undisclosed safety recall adequately stated
causes of action for breach of an implied warranty of merchantability and violations of
the UCL and CLRA.
As to the alleged breach of the implied warranty of merchantability, we conclude
CarMax’s express limitations on the remedies available apply to such a breach. Gutierrez
obtained the remedy authorized under the contract and its limitations for a breach of
warranty. Specifically, the potentially defective stop lamp switch subject to a safety
recall was replaced at no charge for the parts and labor. Having obtained her contractual
remedy, Gutierrez is unable to state of a cause of action for breach of an implied
warranty.
In contrast, Gutierrez has alleged sufficient facts to establish CarMax engaged in
unfair or deceptive practices in violation of the CLRA. Gutierrez alleged CarMax
engaged in deceptive practices by (1) representing the vehicle passed a 125-point quality
inspection and (2) failing to disclose the safety recall for the vehicle’s stop lamp switch.
She alleged the switch was a critical safety-related component of the vehicle’s braking
system and CarMax did not disclose the recall because it deemed making money more
important than protecting its customers from dangers relating to serious safety recalls. As
to the elements of reliance and the causation of harm, Gutierrez alleged she would not
have purchased the vehicle if she had known its true condition, including recall history.
Case law establishes this allegation adequately states Gutierrez suffered “any damage” as
that term is used in the CLRA and, therefore, might be entitled to restitution under the
statute. Also, the contractual limitations on remedies for a breach of warranty do not
control or restrict the availability of restitution or other relief specified in the CLRA.
On the question whether Gutierrez pleaded sufficient facts to establish CarMax
had a duty to disclose the safety recall, we conclude her allegations are sufficient.
Gutierrez contends the duty to disclose existed because CarMax (1) had actual knowledge
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of the recall before the sale of the vehicle and (2) made partial representations about the
vehicle that were misleading because the existence of the recall, a material fact, had not
been disclosed. We conclude her allegations are sufficient to establish for pleading
purposes the existence of the safety recall was a material fact and, by reasonable
inference, the existence of CarMax’s knowledge of the recall before the sale. As the stop
lamp switch is related to the vehicle’s braking and lighting systems, Gutierrez’s
allegations about the rigorous inspection of the vehicle’s braking and lighting systems,
and its misleading character in the absence of a disclosure about the safety recall, are
sufficient to plead the remaining factual element of a duty to disclose. Therefore, we
conclude she has alleged sufficient facts to state a claim for a deceptive practice
actionable under the CLRA.
Gutierrez also has stated a cause of action under the UCL. We conclude the
violation of the CLRA serves as the predicate violation of law necessary to establish the
unlawful practice variety of unfair competition that is actionable under the UCL.
We therefore reverse the judgment of dismissal.
FACTS
On May 6, 2013, Gutierrez purchased a 2008 Hyundai Elantra from defendant
CarMax at its dealership in Bakersfield. The vehicle came with a 30-day limited
warranty. The vehicle’s purchase agreement stated:
“The CarMax Warranty Brochure contains the details of the Limited
Warranty.
“LIMITATION OF WARRANTIES: CARMAX MAKES NO EXPRESS
WARRANTIES UNLESS SEPARATELY SET FORTH IN WRITING.
ANY AND ALL IMPLIED WARRANTIES APPLICABLE TO THE
PRODUCTS SOLD HEREUNDER, INCLUDING THE IMPLIED
WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A
PARTICULAR PURPOSE, ARE LIMITED TO THE DURATION OF
THE WRITTEN LIMITED WARRANTY GIVEN BY CARMAX, IF
ANY.”
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The document containing the limited warranty stated the duration of the warranty
was 30 days and listed the systems covered. The document also stated: “The dealer will
pay 100% of the labor and 100% of the parts for the covered systems that fail during the
warranty period.”
Before Gutierrez purchased the vehicle, she was advised by CarMax sales staff
that the Hyundai was in excellent condition because it had passed a rigorous 125-point
quality inspection. Gutierrez also received a document with the heading “CQI CarMax”1
that stated: “This vehicle has passed the rigorous CarMax 125-Point Quality Inspection”
and listed the 125 points. The following sentence appeared at the top of the document:
“Your signed CQI certificate can be found in your vehicle’s glove compartment.”
At the time of the sale, the Hyundai was subject to a national recall relating to the
stop lamp switch, which Gutierrez alleges was a critical safety-related component of the
vehicle’s braking system that materially affects a person’s ability to operate the vehicle
safely. She further alleges it is unsafe to operate a vehicle with a defective stop lamp
switch, but has not alleged the switch on her vehicle malfunctioned or was actually
defective.
CarMax did not disclose to Gutierrez that there was an outstanding safety recall
relating to the stop lamp switch. The operative complaint does not explicitly address
what CarMax knew about the recall at the time of sale. However, the complaint alleges
CarMax “should have either disclosed to Gutierrez that the Hyundai was the subject of
the recall, or had the safety recall work performed” and the only reason CarMax did not
disclose the recall because it placed more importance on money than protecting its
customers.2
We conclude these allegations can be reasonably interpreted as implying

1 CQI stands for certified quality inspection.
2 Gutierrez’s interpretation of her complaint has changed slightly during the course
of this appeal. Initially, her opening brief addressed CarMax’s knowledge by stating that
CarMax made the representation about the vehicle passing the quality inspection “either
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CarMax actually knew the recall had been issued when it sold the Hyundai to Gutierrez.
(See Code Civ. Proc., § 452 [construction of pleadings]; Mendoza v. Continental Sales
Co. (2006) 140 Cal.App.4th 1395, 1401-1402 [when construing a complaint, court
assumes the truth of facts that (i) can be inferred reasonably from the allegations and
exhibits and (ii) are favorable to the plaintiff].)
Shortly after Gutierrez purchased the vehicle, it began having transmission
problems, which included making a grinding noise and failing to accelerate in traffic.
Gutierrez presented the vehicle to CarMax for repairs on June 7, 2013. The transmission
problem was a known defect for which Hyundai had issued a technical service bulletin.
The June 7, 2013, repair order stated (1) the stop lamp switch was replaced because of
recall campaign 110 and (2) the transmission failed a bulletin’s stall test in second gear
and the bulletin advised to replace the transmission. As advised in the bulletin, the
transmission was replaced.3

PROCEEDINGS
In November 2014, Gutierrez prepared and filed a complaint against CarMax
using a form complaint approved by the Judicial Council of California. Demurrers to her
first and second amended complaints were filed and sustained with leave to amend.

knowing that there was an open safety recall, or knowing that Carmax did not investigate
whether or not there was an open safety recall.” Subsequently, Gutierrez’s reply brief
asserted “CarMax knew about the stop lamp switch recall for Gutierrez’s vehicle but did
not disclose it.”
3 Multiple paragraphs of the complaint allege “the vehicle was never properly
repaired, and the herein mentioned problems were never resolved” despite Gutierrez’s
attempts to have it repaired. Gutierrez’s opening brief does not mention the failure to
repair as the factual basis for an adequately alleged cause of action and, consequently, we
do not consider whether Gutierrez’s allegations about the failure to repair the
transmission or the stop lamp switch are sufficient to state a cause of action.
6.
In October 2015, Gutierrez’s attorney prepared and filed the third amended
complaint (complaint), which is the operative pleading in this appeal. In November
2015, CarMax filed another demurrer.
At a January 14, 2016, hearing, the trial court sustained the demurrer without leave
to amend and directed CarMax to give notice of the order. The order stated the complaint
failed to allege sufficient facts to constitute (1) a breach of warranty, (2) a
misrepresentation that was not remedied or limited by the terms of the express warranty,
or (3) a breach of contract. The order explained these conclusions by stating:
“The warranty was expressly limited to 30 days, and all the alleged
misrepresentations [Gutierrez] complains of, were disclaimed by the
warranty, or could not be reasonably relied upon due to the time limitations
of the warranty. Since [Gutierrez] failed to present the subject vehicle for
repair until after the warranty expired, no breach of a duty or contractual
obligation, and no misrepresentation or reliance has yet to be sufficiently
pleaded, and likely cannot be pleaded from the facts as alleged in the four
attempts in this case.”
The order also stated Gutierrez had not presented any facts or allegations that
would cure the defects apparent on the face of the pleadings and, consequently, leave to
amend was denied. In February 2016, Gutierrez filed a notice of appeal.
DISCUSSION
I. STANDARD OF REVIEW FOR DEMURRERS
When a demurrer is sustained, appellate courts conduct a de novo review to
determine whether the pleading alleges facts sufficient to state a cause of action under
any possible legal theory. (City of Dinuba v. County of Tulare (2007) 41 Cal.4th 859,
870 (Dinuba); Villery v. Department of Corrections & Rehabilitation (2016) 246
Cal.App.4th 407, 413 (Villery).) Appellate courts treat the demurrer as admitting all
material facts properly pleaded, but do not assume the truth of contentions, deductions or
conclusions of law. (Ibid.) The pleader’s contentions or conclusions of law are not
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controlling because appellate courts must independently decide questions of law without
deference to the legal conclusions of the pleader or the trial court. (Ibid.)
Legal questions include the interpretation of a statute and the application of a
statutory provision to facts assumed to be true for purposes of the demurrer. (Villery,
supra, 246 Cal.App.4th at p. 413.) In this appeal, all three legal theories raised by
Gutierrez involve statutes.
II. BREACH OF IMPLIED WARRANTY
A. Contentions of the Parties
1. Gutierrez’s Legal Theory
Gutierrez contends the breach of implied warranty cause of action is based on the
implied warranty of merchantability that is implied in every contract for the sale of
consumer goods by Civil Code section 1792.4
Gutierrez contends goods are
“merchantable” if they are fit for the ordinary purposes for which such goods are used.
Gutierrez further contends the ordinary purpose of a vehicle is safe driving and, therefore,
a vehicle is not merchantable when it is not fit for safe driving.5

Applying this legal theory to her vehicle, Gutierrez argues the Hyundai was not
merchantable when sold to her because “it had the unresolved and undisclosed stop lamp
switch issue” identified in the safety recall. In Gutierrez’s view, this breach of the
implied warranty of merchantability occurred at the time of sale and, as a result, the cause

4 Civil Code section 1792 states: “Unless disclaimed in the manner prescribed by
this chapter, every sale of consumer goods that are sold at retail in this state shall be
accompanied by the manufacturer’s and the retail seller’s implied warranty that the goods
are merchantable.”
5 Gutierrez supports this point by citing a federal safety standard for motor vehicles
that provides vehicles must have adequate, functioning lights (49 C.F.R. § 571.108) and
the discussion of the implied warranty of merchantability in American Suzuki Motor
Corp. v. Superior Court (1995) 37 Cal.App.4th 1291 at page 1296.
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of action does not depend on the timing of her discovery of (1) the safety recall or (2)
CarMax’s failure to fix the vehicle as specified in the recall.
2. CarMax’s Contentions
CarMax challenges Gutierrez’s cause of action for breach of an implied warranty
on multiple grounds. First, CarMax contends the theory that the vehicle was not
merchantable because of the unresolved and undisclosed stop lamp switch issue is a new
theory of liability set forth for the first time on appeal. Thus, CarMax argues Gutierrez
has waived her “claim that the recall rendered the vehicle unmerchantable.”
Second, CarMax contends Gutierrez “wholly fails to cite to the record and
presents no cognizable legal argument to show that the recall was a violation of the
implied warranty under any theory.” CarMax argues this failure to present specific
argument on the issue also operates as a waiver.
Third, CarMax contends the breach of implied warranty claim is deficient because
there is no allegation that the recall affected the vehicle’s usability. CarMax notes
Gutierrez did not allege the stop lamp switch on her vehicle was actually defective or did
not function properly, but only alleged there was an outstanding recall. CarMax
contends, “An outstanding recall, by itself, does not render a product unfit for use.”
Thus, in CarMax’s view, the cause of action must include allegations showing there were
problems with the specific vehicle that rendered it unfit for ordinary purposes, rather than
showing a precautionary replacement of a properly functioning part. In addition, CarMax
contends the stop lamp switch was replaced at no cost to plaintiff in accordance with the
limitations on remedies for breach of warranties specified in the contract.
Fourth, CarMax contends the implied warranties expired on June 5, 2013, which
was 30 days after the May 6, 2013, purchase date. CarMax contends Gutierrez did not
present the vehicle for repair until June 7, 2013, by which time the implied warranties
had expired.
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B. Demurrers and New Legal Theories on Appeal
1. General Rule
CarMax relies on the general rule “‘that issues not raised in the trial court cannot
be raised for the first time on appeal.’” (Johnson v. Greenelsh (2009) 47 Cal.4th 598,
603; 9 Witkin, Cal. Procedure (5th ed. 2008) Appeal, § 400 [point not properly raised
below].) The cases cited by CarMax—Tiernan v. Trustees of Cal. State University &
Colleges (1982) 33 Cal.3d 211 and Reyes v. Kosha (1998) 65 Cal.App.4th 451—arose in
the procedural context of a denial of a petition for writ of mandate and motion for
summary judgment, respectively. These cases are of little precedential value in the
present appeal because the rule about raising new issues on appeal was not applied to the
review of a general demurrer.6

2. Rule Applicable to Demurrers
CarMax’s reliance on the general rule is contrary to the precedent established by
the California Supreme Court, which is binding on this court and all state trial courts.
The Supreme Court has repeatedly stated that appellate courts reviewing a general
demurrer make a de novo determination of whether the complaint alleges “facts sufficient
to state a cause of action under any possible legal theory.” (Dinuba, supra, 41 Cal.4th at
p. 870, italics added; Aubry v. Tri-City Hospital Dist. (1992) 2 Cal.4th 962, 967 [any
possible legal theory].) The term “any” is a broad term that ordinarily means “‘of
whatever king’” or “‘without restriction.’” (Zabrucky v. McAdams (2005) 129
Cal.App.4th 618, 628.) Here, we presume the Supreme Court understood this meaning
and note the court did not add any restrictions following its phrase “any possible legal
theory.” For instance, the court did not refer to any possible legal theory raised in the

6 Generally, attorneys should “think carefully about the persuasive force of the
precedent” cited in a brief. (Herrmann, The Curmudgeon’s Guide to Practicing Law
(ABA 2006) 4.) Here, the cases with the most persuasive force are those that address
raising new legal theories on appeal in the procedural context presented in this case—
that is, where a demurrer has been sustained without leave to amend.
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trial court. Indeed, the Supreme Court rejected restrictions of this type when,
immediately after mentioning “any possible legal theory,” it stated: “We are not limited
to plaintiffs’ theory of recovery or ‘“form of action”’ pled in testing the sufficiency of the
complaint.” (Dinuba, supra, at p. 870.)7
Accordingly, the “any possible legal theory” standard encompasses a legal theory
presented for the first time in an opening appellant’s brief. The standard also includes
legal theories first raised by the reviewing court. (E.g., Genesis Environmental Services
v. San Joaquin Valley Unified Air Pollution Control Dist. (2003) 113 Cal.App.4th 597,
[Fifth District vacates order sustaining demurrer after determining the facts alleged stated
a violation of the right to equal protection—a legal theory first raised by the court in a
request for supplemental briefing under Gov. Code, § 68081].) In short, an appellate
court “may consider new theories on appeal from the sustaining of a demurrer.”
(Simpson v. The Kroger Corp. (2013) 219 Cal.App.4th 1352, 1367.) CarMax’s argument
to the contrary misstates California law.
Consequently, we conclude Gutierrez did not waive, forfeit or abandon the legal
theory that the existence of an undisclosed and unresolved safety recall constitutes a
breach of the implied warranty of merchantability.
C. Alleged Deficiencies in Gutierrez’s Brief
1. Insufficient Argument and Legal Authority
CarMax argues that consideration of Gutierrez’s legal theory is barred because her
“brief also violates subsection (a)(1)(A) of [California Rules of Court] rule 8.883 by

7 A contrary rule of law would be difficult to harmonize with the Legislature’s
approach to showings of the ability to cure a defective pleading by alleging additional
facts. (See Code Civ. Proc., § 472c, subd. (a).) Our Supreme Court has interpreted the
statute to mean: “The issue of leave to amend is always open on appeal, even if not
raised by the plaintiff.” (City of Stockton v. Superior Court (2007) 42 Cal.4th 730, 746-
747, italics added.) Under this statutory interpretation, a proposed amendment can be
presented for the first time on appeal.
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failing to provide substantive legal argument on the issues pertinent to this appeal
supported by citation to relevant legal authority.” We reject this argument.
First, the cited rule applies to the appellate division of the superior court, not to the
Court of Appeal. (See Cal. Rules of Court, rule 8.800(a).) Second, Gutierrez has
provided substantive legal argument regarding the legal theory that the existence of the
undisclosed and unresolved safety recall constituted a breach of the implied warranty of
merchantability. She has cited the statutory provision that imposes the implied warranty,
referred to the standard that the goods sold must be fit for ordinary purposes, and argued
that a vehicle subject to a safety recall is not fit for the ordinary purpose of safe driving.
Third, the lack of a citation to legal authority supporting her specific argument for when a
vehicle is not fit for ordinary purposes does not violate the rules governing appellate
briefs. Such a citation to authority is required “if possible.” (Cal. Rules of Court, rule
8.204(a)(1)(B).) This rule does not bar appellants from presenting (or this court from
considering) novel legal theories not explicitly considered or adopted in a published
opinion.
2. Citations to the Record
CarMax also argues Gutierrez’s opening brief wholly fails to cite to the record in
the argument section and, as a result, this court should deem her to have waived those
arguments. This court has recognized that California Rules of Court, rule 8.204(a)(1)(C)
requires any reference to a matter in the record be supported by a citation to the volume
and page number of the record where the matters appears. (Sky River LLC v. Kern
County (2013) 214 Cal.App.4th 720, 741.) In addition, this court has concluded the
requirement “applies to matter[s] referenced at any point in the brief, not just in the
statement of facts.” (Ibid.)
In this case, however, we will not treat Gutierrez’s failure to include citations to
her complaint and its exhibits as constituting a waiver or forfeiture. The court became
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familiar with the complaint and its exhibits in the course of its review and, as this appeal
is narrowly focused on whether the operative pleading stated a cause of action, we
experienced no inefficiencies by the omissions of repeated citations to the complaint.
Consequently, we will exercise our discretionary authority such that the omissions of
citations to the record are not deemed a waiver or forfeiture of the related arguments.
D. Implied Warranty Cause of Action
1. Elements of a Claim—Implied Warranty of Merchantability
CACI No. 1231 sets forth the essential factual elements of a cause of action for
breach of the implied warranty of merchantability. If these elements are applied to the
facts of this case, Gutierrez must prove that (1) she bought the Hyundai from CarMax; (2)
at the time of purchase, CarMax was in the business of selling vehicles; (3) the Hyundai
was not fit for the ordinary purposes of which such goods are used; (4) Gutierrez took
reasonable steps to notify CarMax within a reasonable time that the Hyundai did not have
the expected quality; (5) Gutierrez was harmed; and (6) the failure of the Hyundai to have
the expected quality was a substantial factor in causing Gutierrez’s harm.
The elements that are subject to dispute on appeal are whether Gutierrez has
alleged sufficient facts to show (1) the Hyundai was not fit for ordinary purposes, (2)
Gutierrez was harmed, and (3) the harm was proximately causes by the breach of the
implied warranty. In addition, CarMax argues the express and implied warranties lasted
only 30 days and, therefore, any implied warranties had expired by the time Gutierrez
brought the Hyundai in for repair on June 7, 2013.
2. Duration of Implied Warranty
The duration of CarMax’s limited warranty was 30 days and the warranty
documents clearly stated the implied warranty of merchantability was limited to the
duration of CarMax’s written limited warranty. This limitation on the duration of an
implied warranty is authorized by Civil Code section 1795.5, subdivision (c).
13.
The question presented by CarMax’s argument is whether the purchaser must
notify the seller of the breach of the implied warranty during the warranty period or,
alternatively, whether the purchaser is allowed to provide notice after the warranty period
has expired so long as the breach occurred during the warranty period. We reject
CarMax’s argument that Gutierrez was required to present the vehicle to CarMax during
the warranty period. This argument is contrary to the express language of the warranty
itself. The warranty states: “The dealer will pay 100% of the labor and 100% of the
parts for the covered systems that fail during the warranty period.” (Italics added.) This
language does not require presentation of the claim during the warranty period. Instead,
it covers a breach of the warranty that occurs during the warranty period.
Applying this interpretation of the warranty to the facts of this case, we conclude
the alleged breach of the implied warranty (i.e., the existence of an unresolved safety
recall) existed during the warranty period. It is not a problem that first cropped up after
the warranty had expired. Therefore, CarMax’s argument about the duration of the
warranty does not preclude Gutierrez from stating a cause of action for breach of the
implied warranty of merchantability.
3. Warranty’s Limitations as to Remedy
Immediately below the language in the purchase agreement that limited the
duration of the implied warranties to the same duration as the written limited warranty
given by CarMax, the purchase agreement stated: “To the extent allowed by applicable
law, CarMax shall not be liable for any damages relating to loss of use of the products,
loss of time, inconvenience or commercial loss, or any other incidental or consequential
damages.” This language reinforces the language of the limited warranty that stated
CarMax “will pay 100% of the labor and 100% of the parts for the covered systems that
fail during the warranty period.” The combined effect of the language in the purchase
agreement and the terms of the limited warranty is to limit the remedies available to
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Gutierrez for a breach of the implied warranty of merchantability to the repair of the
vehicle so that it complies with the warranty.
Here, the allegations in the earlier pleadings and the repair order attached to the
complaint establish that the stop lamp switch was replaced after Gutierrez presented the
vehicle on June 7, 2013. The repair order does not list a price charged, but has the word
“warranty” in the column for the amount charged for the services listed. Consequently,
Gutierrez has obtained the contractually specified remedy for the alleged breach of
implied warranty. As a result, we conclude Gutierrez cannot state a cause of action for
breach of the implied warranty of merchantability. The alleged breach of the implied
warranty was fixed when the stop lamp switch was replaced and the express limitations
on the remedies available for a breach of a warranty preclude Gutierrez from obtaining
additional relief under this legal theory.
III. CONSUMER LEGAL REMEDIES ACT
A. Unfair and Deceptive Acts and Practices
1. Statutory Text
The CLRA prohibits “unfair methods of competition and unfair or deceptive acts
or practices” in transactions involving the sale of goods or services to any consumer.
(Civ. Code, § 1770.) Gutierrez relies on paragraphs (5), (7) and (9) of subdivision (a) of
Civil Code section 1770, which prohibit “[r]epresenting that goods … have …
characteristics [or] benefits ... that they do not have”; “[r]epresenting that goods … are of
a particular standard, quality, or grade … if they are of another”; and “[a]dvertising goods
… with intent not to sell them as advertised.” A question of statutory construction
presented by this text is whether concealment, omissions or failures to disclose are
prohibited.
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2. Statutory Construction—Ambiguous or Plain Meaning
California’s rules of statutory interpretation are well established. (See Merced
Irrigation Dist. v. Superior Court (2017) 7 Cal.App.5th 916, 924-926.) The first question
is whether the statutory language is ambiguous—that is, susceptible to more than one
reasonable interpretation—or, alternatively, has a plain meaning. (Id. at pp. 924-925.)
Here, a dispute has arisen over whether the action verb “representing” is ambiguous or
has a plain meaning.
One view is that “representing” has a plain meaning, which includes making oral
and written statements and excludes omitting or failing to disclose information. A
different view is that “representing” is ambiguous because, in certain contexts,
representations can be expressed in words (i.e., oral or written) and also can be implied.8
Dictionaries are one place to look for a word’s usual, ordinary meaning. (Wasatch
Property Management v. Degrate (2005) 35 Cal.4th 1111, 1121-1122.) Webster’s
defines the verb “represent” as “‘[t]o bring clearly before the mind: [to] cause to be
known …: [to] present esp. by description.’” (U.S. v. Alvarez (9th Cir. 2010) 617 F.3d
1198, 1238.) A subsequent definition states “to describe as having a specified character
or quality.” (Webster’s 3d New Internat. Dict. (1993) p. 1926.) These definitions do not
address the distinction between expressed and implied statements. The related term
“representation” means “[a] presentation of fact—either by words or by conduct—made
to induce someone to act, esp. to enter into a contract.” (Black’s Law Dict. (9th ed. 2009)
p. 1415.)
We conclude the statutory term “representing” is ambiguous and does not have
single plain meaning. It is possible to interpret “representing” narrowly to mean

8 By way of comparison, contracts can be express or implied. (BAJI No. 10.56
[express or implied contracts].) “Express” contracts are stated in words, either oral or
written. (Civ. Code, §§ 1620, 1622; BAJI No. 1057 [oral and written contracts].)
“Implied” contracts are manifested by conduct or implied in law. (Weitzenkorn v. Lesser
(1953) 40 Cal.2d 778, 794; BAJI No. 10.56; Civ. Code, § 1621 [implied by conduct].)
16.
presenting written or oral statements of fact to another, which interpretation excludes
omissions of fact or nondisclosures. For example, the tort of negligent misrepresentation
usually “exclude[es] liability for mere nondisclosure or other failure to act.” (Randi W. v.
Muroc Joint Unified School Dist. (1997) 14 Cal.4th 1066, 1084.) In contrast,
“representing” also can be reasonably interpreted as encompassing statements of fact that
are express, implied-in-fact or implied-in-law.9
Under this broader interpretation, placing
the modifiers “actually” or “affirmatively” before the verb “represents” is not superfluous
because the modifiers address the word’s ambiguity and reduce the probability that the
modified verb would be interpreted to include implied representations. (See Randi W.,
supra, 14 Cal.4th at p. 1084 [affirmative representations in recommendation letter
strongly implied school administrator was fit to interact appropriately with female
students, which was a misleading half-truth; demurrer to negligent misrepresentation
claim should have been overruled]; People v. Fedalizo (2016) 246 Cal.App.4th 98, 107
[courts routinely rely on the express and implied representations of attorneys on a wide
range of matters].)
When statutory language is ambiguous, the court must adopt the interpretation that
best effectuates the legislative intent or purpose. (Beal Bank, SSB v. Arter & Hadden,
LLP (2007) 42 Cal.4th 503, 508.) In identifying the best interpretation, courts may
consider a variety of extrinsic sources. (Ibid.)
3. Other Statutory Provisions
Ambiguous statutory language is construed in context—that is, it must be read in
conjunction with the other words of the section and in light of the statutory scheme as a

9 An example of a representation implied-in-law involves the duty to disclose a
material fact. If a defendant subject to such a duty does not disclose the material fact, the
defendant has impliedly represented that the material fact—usually negative information
about the good being purchased—does not exist. This implication arises by virtue of the
law that created the duty to disclose the material fact.
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whole. (Merced Irrigation Dist. v. Superior Court, supra, 7 Cal.App.5th at p. 925.)
Accordingly, we consider the other language in Civil Code section 1770 and other
provisions of the CLRA, as those provisions might aid our resolution of the ambiguity.
Civil Code section 1770 expressly prohibits the failure to provide particular types
of information. The advertising of furniture “without clearly indicating” it is
unassembled or the assembled price (if available assembled) is prohibited. (Civ. Code, §
1770, subd. (a)(11), (12).) “Advertising goods or services with intent not to supply
reasonably expectable demand, unless the advertisement discloses a limitation of
quantity” is prohibited, which is only place the word “disclose” or its variants is used in
Civil Code section 1770. (Id., subd. (a)(10), italics added.) Other provisions prohibit (1)
advertising a specific price plus percentage markup unless other pricing information is
included and (2) disseminating unsolicited prerecorded telephone messages that do not
first provide information specified in the statute. (Id., subd. (a)(20), (22).)10
Other statutory text relevant to our construction of the provisions Gutierrez has
alleged were violated is the Legislature’s express statement of the CLRA’s purposes:
“This title shall be liberally construed and applied to promote its underlying
purposes, which are to protect consumers against unfair and deceptive
business practices and to provide efficient and economical procedures to
secure such protection.” (Civ. Code, § 1760, italics added.)
The reference to “efficient and economical procedures” is somewhat ambiguous in
scope. It could be intended to refer to procedures that are efficient and economical to the
consumer seeking the CLRA’s protection. Alternatively, the CLRA could be concerned
with efficiency and economy on a broader, societal scale—that is, for all persons and
entities involved in consumer transactions. Under this broader perspective, courts would

10 These provisions demonstrate the Legislature was capable of explicitly addressing
failures to provide information and, thus, support the inference that the Legislature did
not intend the provisions at issue in this appeal to reach omissions and failures to disclose
information. (Blankenship v. Allstate Ins. Co. (2010) 186 Cal.App.4th 87, 94-95.)
18.
weigh any inefficiencies a particular statutory construction might create for scrupulous
businesses and balance those inefficiencies (i.e., burdens) against the protection (i.e.,
benefits) provided to consumers. Therefore, the Legislature’s expression of the CLRA’s
purposes is ambiguous, which creates uncertainty in how to interpret the statute. (See
Apple Inc. v. Superior Court (2013) 56 Cal.4th 128, 135 [fundamental goal of statutory
interpretation is to effectuate the purpose of the statute].)
4. Legislative History
The ambiguity about efficient and economical procedures is not addressed in the
Legislative Counsel’s Digest for the bill enacting the CLRA, which states in full:
“Enacts [CLRA] which provides specific legal remedies for consumers who suffer
damage as a result of method, act, or practice declared to be unlawful by the act.” (Legis.
Counsel’s Dig., Assem. Bill No. 292, 2 Stats. 1970 (Reg. Sess.) Summary Dig., p. 223;
see Broughton v. Cigna Healthplans (1999) 21 Cal.4th 1066, 1099 [this summary is
relevant to interpretation of CLRA].)
Other materials in the legislative history from the year of the CLRA’s enactment,
provide a stronger foundation for drawing inferences about the legislative purpose. One
report states the act was designed “‘to provide affirmative remedies for consumers which
will protect them from unscrupulous business practices while insulating responsible
businessmen from spurious or vexatious lawsuits.’ (Assem. Com. on Judiciary, Rep. on
Assem. Bill No. 292 (1970 Reg. Sess.) Sept. 23, 1970.)” (Benson v. Southern California
Auto Sales, Inc. (2015) 239 Cal.App.4th 1198, 1205.) This statement supports the view
that an appropriate interpretation of the CLRA takes into account efficiency and economy
from a societal perspective and is not limited to consideration of what is efficient and
economical for the consumer. We resolve the ambiguity in the Civil Code section 1760
as to purpose by adopting the broader, societal perspective because the CLRA was “a
product of intense extended negotiation with representatives of virtually all segments of
19.
the business community and, not unnaturally under such circumstances, is a
compromise.” (Reed, Legislating for the Consumer: An Insider's Analysis of the
Consumers Legal Remedies Act (1971) 2 Pacific L.J. 1, 8, fn. omitted.)
Next, we consider whether the CLRA’s legislative history is useful in determining
whether the provisions invoked by Gutierrez should be construed to prohibit omissions or
nondisclosures of fact. The materials we have reviewed are not definitive and can be
used to support conflicting inferences on the nondisclosure question. One report gave an
example of how each of the 16 subdivisions of Civil Code section 1770 enacted in 1970
could be violated. (Assem. Com. on Judiciary, Rep. on Assem. Bill No. 292 (1970 Reg.
Sess.) Sept. 23, 1970.)11
The example for the provision that is now subdivision (a)(6) of
Civil Code section 177012 is the only example that refers to the failure to disclose
information, and it states: “It would be a deceptive practice for a salesman to fail to
disclose that products are reprocessed even though the reprocessed products are as good
as new. FTC v. Colgate Palmolive, 85 S. Ct. 1035.”13
(Assem. Com. on Judiciary, Rep.

11 This report is reproduced as Appendix B to Reed, Legislating for the Consumer:
An Insider’s Analysis of the Consumers Legal Remedies Act, supra, 2 Pacific L.J. at
pages 25 through 26.
12 The text of this provision, which has not been altered since its adoption in 1970,
prohibits: “Representing that goods are original or new if they have deteriorated
unreasonably or are altered, reconditioned, reclaimed, used, or secondhand.”
13 In FTC. v. Colgate-Palmolive Co. (1965) 380 U.S. 374, the court considered a
television advertisement for Rapid Shave shaving cream in which the announcer stated,
“‘To prove RAPID SHAVE’S super-moisturizing power, we put it right from the can
onto this tough, dry sandpaper. It was apply … soak … and off in a stroke.’” (Id. at p.
376.) The advertisement did not show actual sandpaper; instead, it used a mock-up or
simulated prop made of plexiglass to which sand had been applied. (Ibid.) If sandpaper
had been used, it would have required a substantial soaking period of about 80 minutes.
(Ibid.) The Federal Trade Commission found the undisclosed use of a plexiglass
substitute for sandpaper was a material misrepresentation and, thus, a deceptive act that
violated section 5 of the Federal Trade Commission Act. (FTC. v. Colgate-Palmolive
Co., supra, at pp. 375-376, 377.) The Supreme Court upheld the finding, stating “the
undisclosed use of plexiglass in the present commercials was a material deceptive
20.
on Assem. Bill No. 292 (1970 Reg. Sess.) Sept. 23, 1970, italics added.) This example
supports the inference that the Legislature was aware that the terms “deceptive act” and
“representing” used in the CLRA could be interpreted to include the failure to disclose
information about the goods being sold.
5. Statutes and Case Law Existing in 1970
A principle of statutory construction states the Legislature is deemed to be aware
of existing statutes and judicial decisions when it adopts a statute. (People v. Harrison
(1989) 48 Cal.3d 321, 329.) Under this principle, we consider some of the statutes and
case law in place in 1970 when the CRLA was enacted.
The existing statutes included the Civil Code provisions adopted in 1872 to define
fraud and deceit. (Civ. Code, § 1572 [fraud], 1710 [deceit].) Both these definitions
encompass omissions and nondisclosures. Deceit includes the “suppression of a fact, by
one who is bound to disclose it, or who gives information of other facts which are likely
to mislead for want of communication of that fact.” (Civ. Code, § 1710, subd. 3.) Fraud
includes “suppression of that which is true, by one having knowledge or belief of the
fact.” (Civ. Code, § 1572, subd. 3.)
Existing judicial decisions included General Acc. etc. Corp. v. Indus. Acc. Com.
(1925) 196 Cal. 179, a case in which the California Supreme Court reviewed a workers’
compensation award to the dependents of a deceased employee. (Id. at p. 181.) The
litigation addressed whether an insurance policy was in effect or whether the employer
would be responsible for paying the award. The specific issue was “whether or not the
policy was obtained by fraudulent concealment of a material fact on the part of [the
employer]” because, under the circumstances, the employer had a duty to disclose facts
not known or suspected by the insurance company. (Id. at p. 186.) The court stated:

practice, independent and separate from the other misrepresentation found.” (Id. at p.
390.)
21.
“Respondent Commission attempts to point out a distinction between a concealment of a
material fact and a misrepresentation as to such fact. The legal effect in each instance
amounts to the same thing, fraud.’”
14
(Id. at p. 190.) This decision provides a basis for
inferring the Legislature was aware that the CLRA’s reference to “unfair or deceptive
acts” involving “representing” would be interpreted to include both affirmative
misrepresentations of fact and the nondisclosure of material facts. Similarly, the United
State Supreme Court’s decision in FTC v. Colgate-Palmolive Co., supra, 380 U.S. 374,
had been in place for five years and would have informed the Legislature that the term
“deceptive act” used in a federal statute had been interpreted to encompass the
nondisclosure of material information. (Id. at p. 390.)
6. Subsequent Judicial Decisions and Amendments of the CLRA
Another principle of statutory construction provides that courts generally presume
“the Legislature is aware of court opinions existing at the time it amends legislation.”
(Estate of Burden (2007) 146 Cal.App.4th 1021, 1030.) Under this principle, when the
Legislature reenacts the statute without changing the interpretation given to the statute by
the courts, the Legislature is presumed to have been aware of, and acquiesced in, the
courts’ construction of that statute. (People v. Bouzas (1991) 53 Cal.3d 467, 475.) This
principle is applicable because of case law stating nondisclosures or omissions are
actionable under the CLRA and the many times the statute has been amended without
contradicting this interpretation.
The first published case to discuss whether the suppression or omission of facts
was actionable under the CLRA was the Third District’s 1975 decision in Outboard

14 The view that the words “representing” and “misrepresenting” have a plain
meaning that is limited to written and oral statements of fact and excludes omissions and
nondisclosures is an attempt to adopt a distinction as the only reasonable interpretation
when the distinction itself was rejected long ago. Moreover, we have found no published
California decision stating “representing” has a plain meaning (i.e., is not ambiguous).
22.
Marine Corp. v. Superior Court (1975) 52 Cal.App.3d 30 (Outboard Marine). The court
referred to (1) California precedent stating fraud or deceit included the suppression of a
fact by one bound to disclose it or by one who states other facts that are likely to mislead
without a disclosure of the suppressed fact; (2) the statement from General Acc. etc.
Corp. v. Indus. Acc. Com., supra, 196 Cal. at page 190, that concealment of a material
fact and misrepresentation of a material fact, in legal effect, was the same thing, fraud;
and (3) a legal encyclopedia stating “‘the distinction between concealment and
affirmative misrepresentation is tenous’” because the force and effect is the same.
(Outboard Marine, supra, at p. 37.) Ultimately, the court concluded there were no
demonstrable differences between the allegation in the plaintiff’s causes of action for
misrepresentation and for concealment as the particular affirmative misrepresentations
worked to conceal true facts about the off-road vehicle’s braking and handling. (Ibid.)
Consequently, the court’s discussion of material omissions of fact was not necessary to
its conclusion that “[t]he conduct described in the first amended complaint reasonably
and unquestionably falls within the activities proscribed by Civil Code section 1770.”
(Id. at p. 36.)
In Bardin v. DaimlerChrysler Corp. (2006) 136 Cal.App.4th 1255 (Bardin), the
Fourth District interpreted Outboard Marine as holding “that [Civil Code] section 1770
prohibited concealment or suppression of material facts: ‘It is fundamental that every
affirmative misrepresentation of fact works a concealment of the true fact…. [¶] Fraud or
deceit may consist of the suppression of a fact by one who is bound to disclose it or who
gives information of other facts which are likely to mislead for want of communication of
that fact.’” (Bardin, supra, at p. 1276.) The court then concluded the claim for violation
of the CLRA failed because the pleading “neither alleged facts showing [defendant] was
‘bound to disclose’ its use of tubular steel exhaust manifolds, nor alleged facts showing
[defendant] ever gave any information of other facts which could have the likely effect of
misleading the public ‘for want of communication’ of the fact it used tubular steel
23.
exhaust manifolds.” (Ibid.) Accordingly, the Fourth District affirmed the judgment
entered after the trial court sustained a demurrer without leave to amend. (Id. at pp.
1277-1278.) We interpret Bardin’s statements about concealment and suppression of
facts as dicta because those statements are not necessary to the decision that a cause of
action under the CLRA had not been alleged.15
Later in 2006, the Second District filed Daugherty v. American Honda Motor Co.,
Inc. (2006) 144 Cal.App.4th 824 (Daugherty), which interpreted Outboard Marine as
holding the practice proscribed by Civil Code section 1770, subdivision (a)(7) “included
‘a proscription against a concealment of the characteristics, use, benefit, or quality of the
goods contrary to that represented.’” (Daugherty, supra, at p. 834.) The court identified
two categories of actionable nondisclosures by stating, “although a claim may be stated
under the CLRA in terms constituting fraudulent omissions, to be actionable the omission
must be [1] contrary to a representation actually made by the defendant, or [2] an
omission of a fact the defendant was obliged to disclose.” (Id. at p. 835.)16
The court
analyzed the particular allegations and concluded “Daugherty did not state a viable
nondisclosure claim under the CLRA.” (Id. at p. 837.) We interpret the statements in
Daugherty about omissions and nondisclosure, like those in Bardin, to be dicta because
they were not necessary to concluding a CLRA claim had not been alleged.
In McAdams v. Monier, Inc. (2010) 182 Cal.App.4th 174 (McAdams), the Third
District referred to its 35-year-old decision in Outboard Marine, stating it “held that the
CLRA, pursuant to its list of proscribed practices in [Civil Code] section 1770, includes

15 In some contexts, the word “holding” means “both of the result of the case and
‘those portions of the opinion necessary to that result by which we are bound.’ (Seminole
Tribe of Florida v. Florida, 517 U.S. 44, 66-67, 116 S.Ct. 1114, 134 L.Ed.2d 252
(1996).” (U.S. v. Kaley (11th Cir. 2009) 579 F.3d 1246, 1253, fn. 10.) We use the word
“necessary” in this sense.
16 The issues raised in this appeal are related to the second category. Therefore, the
first category is not discussed in detail.
24.
the concealment or suppression of material facts.” (Id. at p. 185.) The Third District also
stated the decision in Bardin “illustrates how Outboard Marine applies to an alleged
misrepresentation under the CLRA that comprises a failure to disclose.” (McAdams,
supra, at p. 185.) In McAdams, the Third District concluded the plaintiff’s CLRA cause
of action, which was based on an alleged failure to disclose known information about the
erosion of color composition of roof tiles represented to have a 50-year life span, was
suitable for class treatment. (Id. at p. 186.) As a result, the court reversed the order
denying certification of the proposed CLRA and UCL classes. (McAdams, supra, at p.
192.) We interpret the statement in McAdams about failures to disclose being actionable
under the CLRA as being necessary for the disposition, which allowed certification of the
CLRA claims based on failures to disclose.
In Klein v. Chevron U.S.A., Inc. (2012) 202 Cal.App.4th 1342 (Klein), the
plaintiffs sued a company for selling motor fuel to consumers without (1) adjusting for
temperature expansion of the fuel or (2) disclosing the effect of temperature increases on
motor fuel. (Id. at p. 1353.) The plaintiffs alleged specific acts and omissions that
constituted violations of the UCL and qualified as misrepresentations as to the
characteristics and quantities of motor fuel in violation of Civil Code section 1770,
subdivision (a)(5). The Second District stated:
“Plaintiffs’ allegations are sufficient to state a CLRA claim predicated on a
material omission, which ‘“consist[s] of the suppression of a fact by one
who ... gives information of other facts which are likely to mislead for want
of communication of that fact.”’ (McAdams, supra, 182 Cal.App.4th at p.
185, italics omitted.)” (Klein, supra, at p. 1383.)
We interpret Klein’s statements about omissions of material fact to be necessary to
the outcome of reversing the judgment on the pleadings.17
(Cf. Rubenstein v. The Gap,

17 In Daniel v. Ford Motor Co. (9th Cir. 2015) 806 F.3d 1217, the Ninth Circuit cited
Klein for the legal conclusion that fraudulent omissions are actionable under both the
CLRA and the UCL. (Daniel, supra, at p. 1225.) The Ninth Circuit reversed the grant of
summary judgment on CLRA and UCL claims, concluding the genuine issue of material
25.
Inc. (2017) 14 Cal.App.5th 870, 881 (Rubenstein) [statement that material nondisclosures
are actionable under the CLRA was dicta because it was not necessary to conclusion that
plaintiff had failed to allege a claim under CLRA].)
The line of cases beginning with Outboard Marine, including McAdams, and
ending with Klein is relevant to our interpretation of the CLRA provisions because the
Legislature amended Civil Code section 1770 many times after Outboard Marine and
before McAdams and did not address the interpretation of that section to reach omissions
or nondisclosures of material facts. (See 2 Stats. 1979, ch. 819, § 4, pp. 2827-2828; 2
Stats. 1984, ch. 1171, §1, pp. 4013-4014; 3 Stats. 1986, ch. 1497, § 1, pp. 5368-5369; 5
Stats. 1990, ch. 1641, § 1, pp. 7852-7853; 1 Stats. 1995, ch. 255, § 2, pp. 878-879; 3
Stats. 1996, ch. 684, § 1, pp. 3777-3780.) Similarly, since McAdams was decided, there
have been many amendments to Civil Code section 1770 without the Legislature
expressing its disapproval of the interpretation extending its provisions to omissions or
nondisclosures. (See Stats. 2008, ch. 479, § 1; Stats. 2009, ch. 140, § 26; Stats. 2011, ch.
79, § 1; Stats. 2012, ch. 653, § 1; Stats. 2013, ch. 541, § 1; Stats. 2015, ch. 246, § 1; Stats.
2016, ch. 86, § 19.)
7. National Consumer Act
Another type of analysis used when interpreting the CLRA is comparing the
provisions adopted by the Legislature to the model legislation upon which the CLRA was
based—namely, “the National Consumer Act proposed by the National Consumer Law
Center at Boston College. (Assem. Com. on Judiciary, analysis of Assem. Bill No. 292
(1970 Reg. Sess.) Apr. 20, 1970, p. 1; see Reed, Legislating for the Consumer: An
Insider’s Analysis of the Consumers Legal Remedies Act (1971) 2 Pacific L.J. 1, 11.)”
(Fairbanks v. Superior Court (2009) 46 Cal.4th 56, 61.) In Fairbanks, the Supreme

fact existed as to whether the plaintiffs in fact relied on Ford’s omissions when they
purchased a Ford Focus.
26.
Court used this comparative analysis to support the interpretation that life insurance was
not a “good” or a “service” covered by the CLRA. (Fairbanks, supra, at p. 61.) After
determining those terms were ambiguous, the court resolved the ambiguity by noting the
Legislature had omitted the reference to insurance in the definition of “services”
proposed in the model act. (Ibid.) The court concluded the Legislature’s omission
indicated its intent not to treat insurance as a service under the CLRA. (Fairbanks,
supra, at p. 61.)
Here, a comparison of the model act to the CLRA shows that paragraphs (5), (7)
and (9) of subdivision (a) of Civil Code section 1770 track verbatim the paragraphs (e),
(g) & (i) of Section 3.201(1) of the National Consumer Act, first final draft (Jan. 1970).
However, the 16 types of unfair or deceptive acts or practices made unlawful by Civil
Code section 1770, did not include the last two listed in the model act, which stated: “(q)
Engaging in any other conduct which similarly creates a likelihood of confusion or of
misunderstanding; or [¶] (r) Engaging in any act or practice which is unfair or deceptive
to the consumer.” These provisions were general in scope and could have been
interpreted as encompassing omissions of material facts not covered by the provisions
referring to “representing” and “advertising.”
A number of other aspects of the National Consumer Act might merit discussion
here if we were the first court to interpret the CLRA. However, those aspects are of less
significance in view of the judicial decisions and amendments to the CLRA that have
occurred over the last 45 years.
8. Omissions of Material Fact are Actionable Under the CLRA
Based on the statutory text, legislative history (which includes the National
Consumer Act), the judicial decisions and statutes that existed when the CLRA was
enacted, the subsequent case law, and the many amendments to the CLRA from 1975
through 2016, we join Klein, McAdams and the other cases concluding that failures to
27.
disclose material facts are actionable under the CLRA. In particular, we conclude
paragraphs (5), (7) and (9) of subdivision (a) of Civil Code section 1770 proscribe
material omissions in certain situations.
Not every omission or nondisclosure of fact is actionable. Consequently, we must
adopt a test identifying which omissions or nondisclosures fall within the scope of the
CLRA. Stating that test in general terms, we conclude an omission is actionable under
the CLRA if the omitted fact is (1) “contrary to a [material] representation actually made
by the defendant” or (2) is “a fact the defendant was obliged to disclose.” (Daugherty,
supra, 144 Cal.App.4th at p. 835; see Rubenstein, supra, 14 Cal.App.5th at p. 881;
Collins v. eMachines, Inc. (2011) 202 Cal.App.4th 249, 255 (Collins).) Under the facts
alleged in this case, we are concerned only with the second type of omitted fact and the
question of whether CarMax had a duty to disclose a fact not made known to the plaintiff.
In Collins, the court identified four situations in which a failure to disclose a fact
constitutes a deceptive practice actionable under the CLRA. (Collins, supra, 202
Cal.App.4th at p. 255.) Those situations arise when the defendant is plaintiff’s fiduciary,
when the defendant has exclusive knowledge of material facts not known or reasonably
accessible to the plaintiff, and when the defendant actively conceals a material fact. In
addition, the duty to disclose exists “when the defendant makes partial representations
that are misleading because some other material fact has not been disclosed.” (Ibid.) In
the context of the CLRA, a fact is “material” if a reasonable consumer would deem it
important in determining how to act in the transaction at issue. (Collins, supra, at p.
256.) In other words, a defendant has a duty to disclose when the fact is known to the
defendant and the failure to disclose it is “‘misleading in light of other facts … that [the
defendant] did disclose.’” (Klein, supra, 202 Cal.App.4th at p. 1382; see Civ. Code, §
1710, subd. 3.)
28.
9. Duty to Disclose Safety Concerns
A legal question presented in this appeal is whether an independent duty of
disclosure is imposed on retail sellers of automobiles when the fact omitted implicates
safety concerns. As an alternative to characterizing the disclosure of safety concerns as
an independent duty, it can be viewed as a specific application of the duty to disclose (1)
when defendants have exclusive knowledge of material facts not known or reasonably
accessible to the plaintiff or (2) when defendants make partial representations that are
misleading because some other material fact has not been disclosed. (Collins, supra, 202
Cal.App.4th at p. 255; Smith v. Ford Motor Co. (N.D.Cal. 2010) 749 F.Supp.2d 980, 987;
see Oestreicher v. Alienware Corp. (9th Cir. 2009) 322 Fed.Appx. 489, 493 [CLRA,
UCL and fraudulent concealment claims dismissed; plaintiff had not alleged the defect
posed a threat to his safety or the safety of others].)
The possibility of a duty to disclose safety defects was raised in Bardin, supra,
136 Cal.App.4th 1255, where the plaintiffs attempted to state UCL and CLRA claims by
alleging the defendant manufacturer failed to disclose exhaust manifolds were made of
tubular steel instead of more durable and more expensive cast iron. (Bardin, supra, at p.
1260.) The trial court sustained the manufacturer’s demurrer and the Fourth District
affirmed. In rejecting various legal theories not supported by the allegations, the Fourth
District stated the plaintiffs had not alleged “any personal injury or safety concerns
related to [the manufacturer’s] use of tubular steel exhaust manifolds.” (Id. at p. 1270.)
This was the opinion’s only reference to “safety.”
In Daugherty, supra, 144 Cal.App.4th 824, the Second District addressed whether
Honda had a duty to disclose an alleged engine defect. The court concluded no duty
existed despite the allegation that Honda knew at the time of sale there was an
unreasonable risk of potential serious damages—specifically, the cost of repairs in the
event the alleged engine defect ever caused an oil leak. (Id. at pp. 836-837.) The court
discussed safety concerns in greater detail than in Bardin, but also concluded a claim
29.
under the CLRA had not been stated because the complaint was “devoid of factual
allegations showing … any safety concerns posed by the defect.” (Daugherty, supra, at
p. 836.) In sum, neither Bardin nor Daugherty actually held sellers of automobiles are
subject to an independent duty to disclose safety concerns. Rather, the references to
safety concerns in those opinions appear in dicta.
In Mui Ho v. Toyota Motor Corp. (N.D.Cal 2013) 931 F.Supp.2d 987 (Mui Ho),
the federal district court stated Daugherty and a 2007 federal case following Daugherty
“held that a fact can give rise to a duty to disclose and an actionable omission if it
implicates safety concerns that a reasonable consumer would find material. [Citations.]”
(Mui Ho, supra, at p. 997.) The district court described this conclusion as “a basic rule of
California law.” (Ibid.) The court also stated that simply invoking the word “safety” was
insufficient to establish a duty to disclose and “plaintiffs must still plead facts showing a
material safety defect.” (Ibid.) Next, the court considered the plaintiffs’ allegations
regarding the headlamp flickering or going out at night or during inclement weather and
determined the allegations were sufficient to establish a duty to disclose because the
alleged defect put the car’s driver in danger. (Id. at pp. 997-998.) In comparison, the
court referred to a case where the plaintiffs had failed to adequately plead a safety defect
because they had not shown how problems with the car ignition lock affecting the
driver’s ability to start or shut off the car’s engine posed an unreasonable safety hazard.
(Id. at p. 997, citing Smith v. Ford Motor Company, supra, 749 F.Supp.2d 980, affd.
mem. (9th Cir. 2011) 462 Fed.Appx. 660, 663 [no duty to disclose failure rate of ignition
locks].)
Based on our examination of the federal and Court of Appeal decisions discussing
safety concerns, we conclude there is no independent duty to disclose such concerns.
Rather, a duty to disclose material safety concerns “can be actionable in four situations:
(1) when the defendant is in a fiduciary relationship with the plaintiff; (2) when the
defendant had exclusive knowledge of material facts not known to the plaintiff; (3) when
30.
the defendant actively conceals a material fact from the plaintiff; or (4) when the
defendant makes partial representations but also suppresses some material fact.” (Mui
Ho, supra, 931 F.Supp.2d at p. 996.) In Mui Ho, the plaintiffs alleged the failure to
disclose facts about the headlamps was “actionable because (1) Defendants had exclusive
knowledge of the material fact that the headlamps were defective, or, alternatively, (2)
Defendants actively concealed that material fact.” (Id. at pp. 996-997.) Thus, Mui Ho
does not establish the existence of an independent duty to disclose safety concerns that
exists outside the four situations where a duty to disclose is recognized by California
courts.
B. Duty to Disclose Element
The foregoing discussion addressed the substantive principles pertaining to
nondisclosures of fact actionable under the CLRA and the circumstances that must exist
for the defendant to have a duty to disclose a material fact. Here, we consider the
procedural rules that govern the proper pleading of a claim under the CLRA based on a
breach of a duty to disclose a material fact.
1. Specificity of the Pleading
A general rule of pleading in civil cases is that “the complaint should set forth the
ultimate facts constituting the cause of action, not the evidence by which plaintiff
proposes to prove those facts.” (Committee on Children’s Television, Inc. v. General
Foods Corp. (1983) 35 Cal.3d 197, 212 (Committee).) An exception to this general rule
requires fraud to be pled specifically, which necessitates pleading facts which show how,
when, where, to whom and by what means the representations were tendered. (Robinson
Helicopter Co., Inc. v. Dana Corp. (2004) 34 Cal.4th 979, 993.)
The application of the general rule and its exception to claims under the CLRA
and UCL asserting deceptive acts or practices based on fraud-like allegations of
concealment or a failure to disclose material facts is not entirely clear. For example, in
31.
Committee, the Supreme Court stated: “The requirement that fraud be pleaded with
specificity, discussed in part III of this opinion, does not apply to causes of action under
the consumer protection statutes.” (Committee, supra, 35 Cal.3d at p. 212, fn. 11.)
Fifteen years later, the Supreme Court rejected an insurance company’s argument “that,
because the potential scope of UCL liability is very broad, particularized fact-pleading
should be required in UCL claims.” (Quelimane Co. v. Stewart Title Guaranty Co.
(1998) 19 Cal.4th 26, 46.) The court reiterated “that fraud is the only remaining cause of
action in which specific pleading is required.” (Id. at p. 47; see Morgan v. AT&T
Wireless Services, Inc. (2009) 177 Cal.App.4th 1235, 1256 [under the fraudulent business
practices prong of the UCL, actual falsity and reasonable reliance are not required to be
pleaded with specificity].) In comparison, the Second District stated “[a] plaintiff
alleging unfair business practices under [the Unfair Practices Act] must state with
reasonable particularity the facts supporting the statutory elements of the violation.”
(Khoury v. Maly’s of California, Inc. (1993) 14 Cal.App.4th 612, 619.) Based on the
foregoing, we conclude causes of action under the CLRA and UCL must be stated with
reasonable particularity, which is a more lenient pleading standard than is applied to
common law fraud claims.
2. Sufficiency of Gutierrez’s Allegations
We conclude Gutierrez’s allegations are sufficient to establish CarMax had a duty
to disclose the existence of the recall and the fact that the Hyundai’s stop lamp switch had
not been replaced in accordance with the recall.
First, the complaint alleged (1) the recall related to the stop lamp switch, which
was a critical safety-related component of the vehicle’s braking system, and (2) it was
unsafe to operate a vehicle with a defective stop lamp switch. Also, the name of the part,
“stop lamp switch,” reasonably supports the inference that the malfunctioning of the part
will affect the operation of the vehicles brake lights, which are an important safety-
32.
related feature that alerts other drivers the vehicle is braking and thereby reduces the risk
of a rear end collision. (See 49 C.F.R. § 571.108 [federal motor vehicle safety standards
use the term “stop lamp”].) Therefore, the complaint adequately alleges facts about the
stop lamp switch that implicate safety concerns and would be important to the reasonable
consumer considering whether to buy the Hyundai.
18
Accordingly, we conclude the
factual allegation are sufficient to establish the “materiality” of the facts about the recall
and the vehicle that CarMax did not disclose.
Of course, materiality usually is a question of fact. (Engalla v. Permanente
Medical Group, Inc. (1997) 15 Cal.4th 951, 977.) In certain cases, a court can determine
the factual misrepresentation or omission is so obviously unimportant that the jury could
not reasonably find that a reasonable person would have been influence by it. (Ibid.) At
the pleading stage of this case, we cannot determine as a matter of law that the
nondisclosure of the recall information was obviously unimportant. Therefore, we cannot
uphold the order sustaining the demurrer to the CLRA claim on the ground that the
materiality of the omitted fact was inadequately pleaded.
Second, the complaint alleged facts relevant to establishing a duty to disclose the
material information by alleging the stop lamp switch was “a critical safety related
component of the Hyundai braking system” and sales staff advised Gutierrez “that the
Hyundai was in excellent condition since it passed a rigorous 125-point quality
inspection.” A copy of the inspection certificate was attached to the complaint and it
listed specific points relating to both the vehicle’s brake system and its lighting system,
with “Brake lights” one of the specific 125 points inspected. The complaint also alleged

18 These facts are “intrinsic” to the particular vehicle sold to Gutierrez and do not
relate to “extrinsic” matters. (See Wonnell, The Structure of a General Theory of
Nondisclosure (1991) 41 Case W. Res. L.Rev. 329, 332 [the law tends to take a stricter
position regarding the nondisclosure of intrinsic facts, which pertain to the item being
sold and not the general environment affecting the economic value of the item].)
33.
CarMax engaged in misleading business practices by representing the vehicle passed a
rigorous 125-point quality inspection, but not disclosing the vehicle was subject to a
safety recall. A duty to disclose cannot exist if the defendant was not aware of the facts
that were not disclosed. Here, the complaint did not specifically allege CarMax knew of
the safety recall and that the stop lamp switch on the Hyundai had not been replaced in
accordance with the recall notice. However, we conclude the facts alleged are sufficient
to reasonably infer CarMax’s knowledge. For instance, the complaint alleges the only
reason CarMax did not disclose the recall or have the recall work performed was CarMax
deemed making money more important than protecting its customers from dangers
relating to serious safety recalls. As the lack of knowledge would be a separate reason
for not disclosing the recall, it is reasonable to infer from this allegation that CarMax
actually knew of the recall. (See Code Civ. Proc., § 452 [construction of pleadings].)
We conclude these allegations are sufficient to plead the existence of a duty to
disclose information about the safety recall on the ground CarMax made partial
representations about the vehicle’s braking and lighting systems and those representations
were likely to mislead for want of communication of the facts about the recall. (See
Klein, supra, 202 Cal.App.4th at p. 1382; Civ. Code, § 1710, subd. 3.)
C. “Any Damage” Element of a CLRA Claim
1. Legal Principles
The CLRA authorizes any consumer “who suffers any damage” because of a
unlawful method, act or practice to bring an action for various forms of relief, including
(1) actual damages, (2) an order enjoining the methods, acts, or practices, (3) restitution
of property, (4) punitive damages, and (5) any other relief the court deems proper. (Civ.
Code, § 1780, subd. (a).) “This statutory language makes clear that, to obtain relief under
the CLRA, [Gutierrez] must have suffered some damage caused by a practice deemed
34.
unlawful under Civil Code section 1770.” (Steroid Hormone Product Cases (2010) 181
Cal.App.4th 145, 156.)
Accordingly, a plaintiff pursuing a CLRA action must plead facts showing he or
she suffered “any damage” as that phrase is used in Civil Code section 1780, subdivision
(a), which is not synonymous with “actual damages” and may encompass harms other
than pecuniary damages. (Meyer v. Sprint Spectrum L.P. (2009) 45 Cal.4th 634, 640
(Meyer).)19
In Steroid Hormone Product Cases, a plaintiff “alleged in this case that, in
reliance on [defendant’s] deceptive conduct, he bought an illegal product he would not
have bought had he known it was illegal. He does not seek actual damages, but instead
seeks restitution.” (Steroid Hormone Product Cases, supra, 181 Cal.App.4th at p. 156.)
The court concluded (1) the plaintiff had stated a claim under the CLRA, (2) he could
represent the class, and (3) the trial court erred in denying class certification of the CLRA
claim. (Id. at p. 157.)
2. Gutierrez’s Allegations
Paragraph 13 of the complaint alleges that if Gutierrez “had known the true
condition, including recall history, of the Hyundai before the purchase, she would not
have purchased it.” Gutierrez incorporated this paragraph into her eighth cause of action,
which alleged violations of the CLRA. Paragraph 77 of the complaint, which is part of
the CLRA cause of action, alleges Gutierrez is entitled to various forms of relief,
including an injunction and “restitution of property.”

19 CarMax interprets Meyer to mean Gutierrez must “allege facts showing that she
suffered the requisite actual damage.” We disagree with this interpretation and read Civil
Code section 1780 and Meyer as requiring an allegation of “any damage,” which is a
broad category that includes “actual damage.” (Meyer, supra, 45 Cal.4th at p. 640; see
Civ. Code, § 1780, subd. (a)(1) [actual damages].)
35.
3. Application of Legal Principles to Facts Alleged
Gutierrez’s allegations that she would not have purchased the Hyundai if she had
known its recall history and her request for restitution adequately alleged that she
suffered “any damage” as that phrase is used in Civil Code section 1780, subdivision (a).
The same type of damage was alleged by the plaintiff in Steroid Hormone Product Cases,
and that plaintiff was granted class certification of a CLRA claim. (Steroid Hormone
Product Cases, supra, 181 Cal.App.4th at pp. 156-157.) In other words, we interpret
Steroid Hormone Product Cases to mean an allegation that the plaintiff would not have
purchased the goods if he or she had known the undisclosed information, is sufficient to
allege the purchaser suffered “any damage.” Therefore, we conclude Gutierrez
adequately alleged the any-damage element of a CLRA claim.
CarMax contends we are required to find as a matter of law that the Gutierrez did
not experience “any damage” for purposes of Civil Code section 1780, subdivision (a)
because the potentially defective part (i.e., the stop lamp switch on the Hyundai) was
replaced without charge. CarMax, however, has cited no authority for the principle that
replacement negates “any damage” that a consumer might have experienced and thereby
precludes the consumer from pursuing an injunction or restitution under Civil Code
section 1780, subdivision (a)(2) & (3).
20
Furthermore, based on the timing of the
replacement of the Hyundai’s recalled stop lamp switch, it does not logically preclude
Gutierrez from alleging and proving that the purchase would not have been made if the
undisclosed information had been made known before the sale.

20 For instance, CarMax did not argue Civil Code section 1782, subdivision (b)
should be interpreted in this manner. That subdivision states: “Except as provided in
subdivision (c), no action for damages may be maintained under Section 1780 if an
appropriate correction, repair, replacement, or other remedy is given, or agreed to be
given within a reasonable time, to the consumer within 30 days after receipt of the
notice” of the alleged violations of Civil Code section 1770. (Italics added.)
36.
In addition, the limiting language in CarMax’s purchase agreement and warranty
document does not preclude Gutierrez’s CLRA cause of action. The CLRA expressly
declares that “[a]ny waiver by a consumer” of the CLRA’s provisions “is contrary to
public policy and shall be unenforceable and void.” (Civ. Code, § 1751.) Accordingly,
we conclude the limitations in CarMax’s warranty do not operate as a waiver of
Gutierrez’s right to obtain restitution if she proves CarMax engaged in an unlawful
practice.
IV. UNFAIR COMPETITION LAW
A. Overview
The UCL prohibits, and provides civil remedies for, unfair competition. (Kwikset
Corp. v. Superior Court (2011) 51 Cal.4th 310, 320 (Kwikset).) “[U]nfair competition”
includes “any unlawful, unfair or fraudulent business act or practice.” (Bus. & Prof.
Code, § 17200.) The purpose of the UCL is to protect both consumers and competitors
by promoting fair competition in commercial markets for goods and services. (McGill v.
Citibank, N.A. (2017) 2 Cal.5th 945, 954 (McGill).)
“Actions for relief pursuant to” the UCL shall be prosecuted exclusively by
designated government officials “or by a person who has suffered injury in fact and has
lost money or property as a result of the unfair competition.” (Bus. & Prof. Code, §
17204.) The “injury in fact” and causation requirements were added by the voters in
2004 when they passed Proposition 64. (McGill, supra, 2 Cal.5th at p. 958.)
As to the relief that can be obtained in an “[a]ction for relief” pursuant to the UCL,
injunctions are the primary form of relief available under the UCL to protect consumers
from unfair business practices and restitution is a type of ancillary relief. (Kwikset,
supra, 51 Cal.4th at p. 337.) Thus, the remedies available in a UCL action generally are
limited to injunctive relief and restitution. (Veera v. Banana Republic, LLC (2016) 6
Cal.App.5th 907, 915.)
37.
The UCL’s definition of unfair competition uses the terms “unlawful, unfair or
fraudulent” in the disjunctive. (Bus. & Prof. Code, § 17200.) Consequently, the
definition establishes three varieties of unfair competition. (Cel-Tech Communications,
Inc. v. Los Angeles Cellular Telephone Co. (1999) 20 Cal.4th 163, 180.) By prescribing
“any unlawful” business practice, the UCL borrows violations of other laws and treats
them as unlawful practices that the UCL makes independently actionable. (Ibid.)
Virtually any statute or regulation (federal or state) can serve as a predicate for a UCL
unlawful practice cause of action. (Klein, supra, 202 Cal.App.4th at p. 1383.)
Consequently, the alleged violations of Civil Code section 1770, subdivision (a)(5), (7)
and (9), which are provisions of the CLRA, are sufficient to satisfy the unlawful practice
variety of unfair competition under the UCL. (See Hale v. Sharp Healthcare (2010) 183
Cal.App.4th 1373, 1383.) In other words, a violation of the CLRA can serve as the
predicate for a UCL cause of action.
B. Gutierrez Has Stated a UCL Claim
CarMax does not dispute the legal conclusion that a CLRA violation can serve as
the predicate for a UCL cause of action. Instead, CarMax appears to accept this
conclusion, arguing Gutierrez’s UCL claim “is substantively dependent upon the CLRA
claim” and, therefore, “fails because the CLRA claim[] fails on the merits.” We reject
this argument because Gutierrez’s CLRA claim did not fail on its merits. Therefore, we
conclude Gutierrez has stated a cause of action for an unlawful practice that is actionable
under the UCL because (1) she has alleged facts sufficient to state a cause of action for a
violation of the CLRA and (2) restitution is a type of relief available under both statutes.

Outcome: The judgment is reversed. The trial court is directed to vacate its order sustaining the demurrer without leave to amend and to enter a new order overruling the demurrer as to the seventh (UCL) and eighth (CLRA) causes of action. Gutierrez shall recover her costs on appeal.

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