STATE FARM GENERAL INSURANCE COMPANY v. GENERAL ELECTRIC COMPANY GE 40 (2025)

ORDER GRANTING, IN PART, AND DENYING, IN PART, DEFENDANT's MOTION TO DISMISS SECOND AMENDED COMPLAINT [ECF NO. 21]

Before the Court is the Motion to Dismiss Second Amended Complaint (ECF No. 21-1 (“Motion”)) filed by Defendant GE Appliances (“Defendant”). The Court has read and considered the Motion and concluded that it is suitable for decision without oral argument. See Fed. R. Civ. P. 78(b); C.D. Cal. L.R. 7-15. Having considered the parties’ submissions, the relevant law, and the record in this case, the Court GRANTS, in part, and DENIES, in part, the Motion.

I. BACKGROUND

The following allegations are taken from Plaintiff State Farm General Insurance Company's (“Plaintiff”) Second Amended Complaint (“SAC”). See (ECF No. 20 (“SAC”)). Plaintiff issued an insurance policy to an individual (the “Insured”), under which Plaintiff was to reimburse the Insured for damages to or destruction of the Insured's Studio City, California property (the “Property”). (Id. ¶¶ 4-5). Defendant is the manufacturer and designer of a General Electric model GVS04BQNSS Wine Cooler (the “Cooler”). (Id. ¶ 6). The Cooler was sold to a prior owner of the Property and came into the Insured's possession when she purchased the Property. (Id. ¶ 7).

On or about March 14, 2024, the Cooler caught fire while located at the Property, causing severe damage to the Property. (Id. ¶ 8). As a result of the fire, the Insured sustained damage to her home and personal property in an amount of at least $10,875,706.79. (Id. ¶ 25). Plaintiff paid this sum to the Insured and, pursuant to the terms of the insurance policy, became subrogated to the rights of the Insured against Defendant. (Id. ¶ 26).

Plaintiff alleges that the fire was the result of either a design or manufacturing defect in the Cooler. Plaintiff explains that the Cooler is cooled by a Compressor, to which a “Start Relay” is attached. (Id. ¶¶ 15-16). The Start Relay supplies the start current to run the Compressor and acts as a high limit switch on the Compressor, turning it off when the current draw gets too high to prevent an overload in the windings inside the Compressor. (Id. ¶¶ 17-19). Plaintiff alleges that, during the fire, the Start Relay failed to turn off the Compressor, either because Defendant defectively designed the Cooler or because the Cooler was improperly manufactured. (Id. ¶¶ 20-22). Plaintiff brings claims under California law for strict products liability ¹ and negligence, and seeks to recover damages based on the payments it made to the Insured. (Id. at 2-7).

Plaintiff initiated this action in Los Angeles County Superior Court on March 10, 2025. (ECF No. 1-1). Defendant removed the case to this Court on April 11, 2025. (ECF No. 1). Following removal, Plaintiff stipulated to the dismissal of General Electric Company, leaving Defendant as the sole remaining named defendant. (ECF No. 13). Plaintiff filed its First Amended Complaint on May 9, 2025, (ECF No. 14), and, following a stipulation for leave to amend, filed the SAC on June 26, 2025, (SAC).

Defendant filed the instant Motion on July 28, 2025. (Mot.). Plaintiff filed an opposition on August 12, 2025, (ECF No. 22 (“Opposition”)), and Defendant replied in support of the Motion on August 20, 2025, (ECF No. 23 (“Reply”)).

II. LEGAL STANDARD

Under Rule 8(a)(2) of the Federal Rules of Civil Procedure, a complaint must include “a short and plain statement of the claim showing that the pleader is entitled to relief.” Fed. R. Civ. P. 8(a)(2). A complaint that fails to meet this standard may be dismissed pursuant to Federal Rule of Civil Procedure 12(b)(6). “Dismissal under Rule 12(b)(6) is proper when the complaint either (1) lacks a cognizable legal theory or (2) fails to allege sufficient facts to support a cognizable legal theory.” Somers v. Apple, Inc., 729 F.3d 953, 959 (9th Cir. 2013). To survive a 12(b)(6) motion, the plaintiff must allege “enough facts to state a claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). “A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009). “The plausibility standard is not akin to a probability requirement, but it asks for more than a sheer possibility that a defendant has acted unlawfully.” Id. (internal quotation marks and citation omitted).

When ruling on a Rule 12(b)(6) motion, courts “accept factual allegations in the complaint as true and construe the pleadings in the light most favorable to the nonmoving party.” Manzarek v. St. Paul Fire & Marine Ins. Co., 519 F.3d 1025, 1031 (9th Cir. 2008). The Court is “not required to accept as true allegations that contradict exhibits attached to the Complaint or matters properly subject to judicial notice,” nor must it accept “allegations that are merely conclusory, unwarranted deductions of fact, or unreasonable inferences.” Seven Arts Filmed Ent., Ltd. v. Content Media Corp. PLC, 733 F.3d 1251, 1254 (9th Cir. 2013) (internal quotation marks and citation omitted). Where dismissal is appropriate, a court should grant leave to amend unless the plaintiff could not possibly cure the defects of the pleading. Knappenberger v. City of Phoenix, 566 F.3d 936, 942 (9th Cir. 2009).

III. DISCUSSION

A. Economic Loss Rule

Defendant argues that Plaintiff's lawsuit is barred in its entirety by California's economic loss rule. (Mot. at 12). Because the Insured bought the Property with the Cooler, Defendant argues that the Insured and Plaintiff “were in the best position to assess and allocate risk potentially arising [in] the property.” (Mot. at 15). Defendant contends that the Cooler was an “integrated part of the property that the Insured bought” and that Plaintiff agreed to insure, such that any claim for damage to the Property must sound in contract rather than tort. (Id. at 14).

Under California law, recovery in tort for a product defect is limited solely to “physical harm to person or property.” Seely v. White Motor Co., 63 Cal. 2d 9, 18, 45 Cal.Rptr. 17, 403 P.2d 145 (1965). Plaintiffs may not recover for “economic loss,” including “damages for inadequate value, costs of repair and replacement of the defective product or consequent loss of profits.” Jimenez v. Superior Ct., 29 Cal. 4th 473, 482, 127 Cal.Rptr.2d 614, 58 P.3d 450 (2002) (internal quotation marks and citation omitted). Thus, a plaintiff may recover in tort based on a product defect only when the defect “causes damage to ‘other property,’ that is, property other than the product itself.” Id. at 483, 127 Cal.Rptr.2d 614, 58 P.3d 450. To assess whether a claim is barred by the economic loss rule, courts must first “determine what the product at issue is,” then assess whether the injury “is to the product itself (for which recover is barred by the economic loss rule) or to property other than the defective product (for which plaintiffs may recover in tort).” Id.

In cases involving damage caused by one component of a product to other components of the product, courts must determine “whether the defective part is a sufficiently discrete element of the larger product that it is not reasonable to expect its failure invariably to damage other portions of the finished product.” KB Home v. Superior Ct., 112 Cal. App. 4th 1076, 1087, 5 Cal.Rptr.3d 587 (2003). Among the factors relevant to this inquiry are the following: (1) whether the defective component “perform[s] an integral function in the operation of the larger product”; (2) whether the component has “any independent use to the consumer, that is[,] some use other than as incorporated into the larger product”; (3) the relation between the property damage and the “inherent nature of the defect in the component”; and (4) whether the component itself or the larger product was placed into the stream of commerce. Id. at 1086, 5 Cal.Rptr.3d 587. Resolution of this issue should ordinarily “be left to the trier of fact.” Id. at 1087, 5 Cal.Rptr.3d 587.

The Court rejects Defendant's argument that Plaintiff's claims are barred by the economic loss rule. Jimenez is instructive. There, the California Supreme Court concluded that “the manufacturer of a defective window installed in a mass-produced home may be held strictly liable in tort for damage that the window's defect causes to other parts of the home in which it is installed.” Jimenez, 29 Cal. 4th at 484, 127 Cal.Rptr.2d 614, 58 P.3d 450. In so concluding, the court emphasized that the economic loss rule does not “bar recovery in tort for damage that a defective product (e.g., a window) causes to other portions of a larger product (e.g., a house) into which the former has been incorporated.” Id. at 483, 127 Cal.Rptr.2d 614, 58 P.3d 450. Here too, the fact that the Cooler was incorporated into the larger home does not bar recovery in tort because the Cooler was a separate product from the home. Taking Plaintiff's allegations as true, although the Insured purchased the Cooler along with the Property, it is a separate product from the Property, such that damage to the Property is not simply damage to the Cooler itself. Under the factors laid out in KB Home, a wine cooler is not integral to the operation of a home; it has an independent use (i.e., cooling wine), unrelated to the home itself; it is not inevitable that a defective wine cooler would cause damage to the surrounding home; and the Cooler was placed into the stream of commerce separately from the home, notwithstanding the fact that the Insured later purchased the two in a single transaction.

Defendant attempts to distinguish Jimenez because it was not a subrogation case. (Mot. at 13). However, the fact that this claim was brought by an insurer rather than by the Insured makes no difference since “subrogation merely alters who can bring a given claim, not the nature of the claim itself.” Kidd v. Am. Reliable Ins. Co., No. SACV 15-01720-CJC(KESx), 2016 WL 4502459, at *3 n.2 (C.D. Cal. Aug. 23, 2016). Defendant also points out that Jimenez expressly withheld decision on “whether defective raw materials should be treated in the same manner as component parts or whether there may be situations in which the economic loss rule would bar recovery for damages that a defective component part causes to other portions of the finished product of which it is a part.” Jimenez, 29 Cal. 4th at 484, 127 Cal.Rptr.2d 614, 58 P.3d 450. The claims here, however, do not involve “raw materials,” and Defendant offers no policy reason why Jimenez’s general rule should not apply to the facts here. Defendant's cited cases are easily distinguishable because each involved defects to component parts of a larger product, rather than to a separate product. See Waste Mgmt., Inc. v. Ishikawajima-Harima Heavy Indus., Co., Ltd., No. CIV S-04-2028 WBS DAD, 2006 WL 2507150, at *4 (E.D. Cal. Aug. 29, 2006) (concluding, on summary judgment, that “blade retainers were intrinsic, not discrete, elements of [a wind] turbine,” such that plaintiff could not recover in tort for damages to the turbine caused by defective blade retainers); In re Sony Vaio Comput. Notebook Trackpad Litig., No. 09cv2109 BEN (RBB), 2010 WL 4262191, at *7 (S.D. Cal. Oct. 28, 2010) (concluding that computer trackpad was not a separate product from computer); Harlan v. Roadtrek Motorhomes, Inc., No. 07-CV-0686 IEG (BLM), 2009 WL 928309, at *19 (S.D. Cal. Apr. 2, 2009) (finding, on summary judgment, that generator and air conditioning system in motorhome were not separate products from the motorhome).

Because Plaintiff has adequately alleged that the Cooler here is a standalone product separate from the home, the Court concludes that the economic loss doctrine does not bar Plaintiff's tort claims.

B. Negligence Claim

Next, Defendant argues that Plaintiff's negligence claim should be dismissed as conclusory. (Mot. at 9). Defendant argues that the SAC simply alleges a product-related accident without alleging how Defendant's negligence caused the resulting injury or addressing other plausible explanations such as improper installation, maintenance, use, or age. (Id. at 10-11). Defendant also argues that Plaintiff has failed to allege anything about the manufacturing process, anything about how the Cooler differed from the intended design, or anything about the condition of the Cooler at the time of the accident. (Id.). Finally, Defendant argues that the negligence claim fails because the SAC fails to distinguish between acts attributable to Defendant and those attributed to unknown Doe defendants. (Id. at 11).

Under California law, the elements of a negligence claim are “duty, breach, causation and damages.” Cnty. of Santa Clara v. Atl. Richfield Co., 137 Cal. App. 4th 292, 318, 40 Cal.Rptr.3d 313 (2006). To recover under a products liability theory of negligence, a plaintiff must show that “a defect caused injury” and that the defect “was due to the negligence of the defendant.” Merrill v. Navegar, Inc., 26 Cal. 4th 465, 479, 110 Cal.Rptr.2d 370, 28 P.3d 116 (2001). California law has “embraced a great variety of injury-producing deficiencies,” including theories of (1) manufacturing defect, where the product “deviate[s] from the manufacturer's intended result”; (2) design defect, in which products, “though ‘perfectly’ manufactured, are unsafe because of the absence of a safety device”; and (3) failure to warn, in which a product is dangerous because it “lack[s] adequate warnings or instructions.” Barker v. Lull Eng'g Co., 20 Cal. 3d 413, 428, 143 Cal.Rptr. 225, 573 P.2d 443 (1978).

The Court agrees that Plaintiff has failed to adequately allege a negligence claim based on a manufacturing defect. “To prove a negligent manufacturing claim under California law, a plaintiff must first show that the product as delivered departed from the governing specifications.” Carson v. Depuy Spine, Inc., 365 F. App'x 812, 814 (9th Cir. 2010). Plaintiff alleges that the failure “was also due to a manufacturing defect and the Defendant was negligent in its manufacture in that the Defendant failed to manufacture the Start Relay and the Overload in such a manner that the Overload portion of the Start Relay would shut down the power to the Compressor when it began to overheat.” (SAC ¶ 22). However, nowhere does Plaintiff allege that this defect deviated in any way from the intended design. See McCabe v. Am. Honda Motor Co., 100 Cal. App. 4th 1111, 1120-21, 123 Cal.Rptr.2d 303 (2002) (explaining that a manufacturing defect requires “showing the product performed differently from other ostensibly identical units of the same product line,” while a design defect “exists when the product is built in accordance with its intended specifications, but the design itself is inherently defective”). While a plaintiff is permitted to plead design and manufacturing defects in the alternative, see Fed. R. Civ. P. 8(a)(3), Plaintiff has failed to allege that the defect here was the result of any deficiency with the manufacturing of this specific Cooler, as opposed to a design defect common to all such Coolers. See Jager v. Davol Inc., No. EDCV 16-1424 JGB (KKx), 2017 WL 696081, at *3 (C.D. Cal. Feb. 9, 2017) (“[I]f Plaintiffs seek to state a claim for negligence based upon a manufacturing defect, they must show that the product caused a plaintiff's injury because it deviated from the manufacturer's intended result or from other ostensibly identical units of the same line.”); Sater v. Chrysler Grp. LLC, No. EDCV 14-00700-VAP (DTBx),, 2015 WL 736273, at *4 (C.D. Cal. Feb. 20, 2015) (“The SAC makes consistent and specific allegations of a uniform design defect; Plaintiffs’ arguments that this lawsuit is actually about the Trucks’ ‘factory preparation’ lacks facial plausibility.”).

However, as to the design defect theory, Plaintiff has adequately pleaded a claim for negligence. Defendant owed a duty to Plaintiff as a foreseeable end user of its products. See Bettencourt v. Hennessy Indus., Inc., 205 Cal. App. 4th 1103, 1118, 141 Cal.Rptr.3d 167 (2012) (“Under established California law, a manufacturer already owes a duty of care to foreseeable users of its product.” (emphasis omitted)). Plaintiff has also alleged both breach and resulting damages by alleging that a design defect made the Cooler “not fit for its intended purpose” in that it “caught fire, causing damage and destruction to the [Insured's] Property.” (SAC ¶ 23). Finally, as to causation, “in a products liability action based on negligence in the design of a product placed on the market, the test of negligent design involves a balancing of the likelihood of harm to be expected from a machine with a given design and the gravity of harm if it happens against the burden of the precaution which would be effective to avoid the harm.” Merril, 26 Cal. 4th at 479, 110 Cal.Rptr.2d 370, 28 P.3d 116 (internal quotation marks and citation omitted). Because most of the evidentiary matters relevant to the determination of the burden of the precaution “involve technical matters peculiarly within the knowledge of the manufacturer,” plaintiffs are required only to make a “prima facie showing that the injury was proximately caused by the product's design,” at which point “the burden should appropriately shift to the defendant to prove, in light of the relevant factors, that the product is not defective.” Barker, 20 Cal. 3d at 431, 143 Cal.Rptr. 225, 573 P.2d 443. Here, Plaintiff alleges that the fire “was due to a design defect in the Overload portion of the Start Relay in that it should have closed the power to the Compressor when it began to overheat and failed to do so.” (Id. ¶ 21). This is sufficient to allege a prima facie case because it identifies the specific defect in the Cooler's design and alleges that this defect caused the fire. Taking Plaintiff's allegations as true, the SAC sufficiently alleges that a defect caused the injury and that the defect was due to Defendant's negligent design. See Merrill, 26 Cal. 4th at 479, 110 Cal.Rptr.2d 370, 28 P.3d 116.

Defendant argues that the SAC is too conclusory in that it fails to allege facts showing how Defendant was negligent. (Mot. at 9-10). But as discussed above, the SAC identifies a specific design defect in the electrical wiring of the Cooler and alleges that this defect was the cause of the fire. (SAC ¶ 21). By identifying a specific defect caused by Defendant's negligent design of the Cooler, the SAC does more than simply parrot the elements of negligence and rely on the mere fact of the accident to show causation. Defendant also argues that the SAC does nothing to show how the design defect caused the fire, “rather than other plausible explanations, like improper installation, maintenance, use or simply age.” (Mot. at 11; Reply at 9). However, “[i]f there are two alternative explanations, one advanced by defendant and the other advanced by plaintiff, both of which are plausible, plaintiff's complaint survives a motion to dismiss under Rule 12(b)(6).” Starr v. Baca, 652 F.3d 1202, 1216 (9th Cir. 2011). Moreover, a plaintiff alleging defective design “is not required to disprove every possible alternative explanation of the injury.” Campbell v. Gen. Motors Corp., 32 Cal. 3d 112, 121, 184 Cal.Rptr. 891, 649 P.2d 224 (1982). Finally, while Defendant argues that the SAC's use of the collective term “Defendants” renders it unclear which acts are attributed to Defendant and which are attributed to unnamed Doe defendants, the Court finds the SAC's allegations to be clear. Defendant, as the designer and manufacturer of the Cooler, is responsible for negligent design defects with the Cooler. While there may be unnamed defendants who sold or marketed the Cooler, the lack of any specific allegations as to their role does not make Defendant's role unclear.

Accordingly, the Court GRANTS the Motion as to the manufacturing defect theory but DENIES the Motion as to the design defect theory. Because it is not yet clear that amendment would be futile, the Court grants Plaintiff leave to amend the complaint solely as to the manufacturing design theory.

C. Strict Products Liability Claim

In the initial Motion, Defendant did not raise specific arguments as to the strict liability claim. Instead, Defendant took the SAC to raise a claim solely for “subrogation,” which it argued should fail because it is purely derivative. (Mot. at 12). As mentioned above, however, subrogation is not a standalone cause of action, but rather a “derivative right” consisting of “the substitution of one party in place of another with reference to a lawful claim, demand or right.” Hamada, 291 F.3d at 649. As Plaintiff attests in its Opposition, the claim labeled “subrogation” in the SAC is actually a claim for strict products liability. (Opp. at 8). The Court finds that, notwithstanding the label in the SAC, it is clear from the allegations that Plaintiff intended to raise such a claim. See Snyder v. Nationstar Mortg. LLC, No. 15-cv-03049-JSC, 2015 WL 7075622, at *4 (N.D. Cal. Nov. 13, 2015) (“It is the substance of a plaintiff's allegations, not the label, that controls.”). The Court therefore rejects Defendant's argument that Plaintiff is attempting to amend the SAC by asserting a strict liability claim. See (Reply at 8-9).

In its Reply, Defendant raises the same arguments as to strict liability that it did as to negligence, including that Plaintiff fails to allege facts showing that the Cooler was defective when it left Defendant's control, and that Plaintiff fails to account for other “plausible explanations” for the Cooler's failure. (Reply at 9). Additionally, Defendant argues that the Complaint is unclear as to whether it relies on California's consumer-expectation or risk-benefit test and how. (Id. at 10).

Under California law, “[t]he elements of a strict products liability cause of action are a defect in the manufacture or design of the product or a failure to warn, causation, and injury.” Nelson v. Superior Ct., 144 Cal. App. 4th 689, 695, 50 Cal.Rptr.3d 684 (2006) (citation omitted). “The theories of negligence and strict liability parallel and supplement each other.” Bettencourt, 205 Cal. App. 4th at 1118, 141 Cal.Rptr.3d 167 (internal quotation marks and citation omitted). However, strict liability “requires proof of fewer elements than negligence,” such that “a positive verdict on the latter [is] difficult to explain if strict liability cannot be found.” Trejo v. Johnson & Johnson, 13 Cal. App. 5th 110, 125, 220 Cal.Rptr.3d 127 (2017) (citation omitted).

As with Plaintiff's negligence claim, the Court agrees with Defendant that Plaintiff has failed to adequately allege a manufacturing defect. The SAC does not allege that the specific Cooler purchased by the Insured differed in any way from the intended design. Accordingly, Plaintiff has not alleged that there was any manufacturing defect, let alone that such defect was the cause of the fire.

As to the defective design claim, the Court concludes that Plaintiff has stated a claim. As discussed above, the SAC adequately alleges that the Cooler was defectively designed in that it “should have closed the power to the Compressor when it began to overheat.” (SAC ¶ 21). The SAC also alleges that this defect caused Plaintiff an injury because it led to the Cooler catching fire, resulting in significant damage to the Insured's home. (Id. ¶ 20). While there may be other plausible explanations for the fire, Plaintiff need not disprove these alternatives at the motion to dismiss stage. Under California law, “a product is defectively designed if it fails to meet an ordinary consumer's expectations, or if injury is attributable to a specific design feature of the product and the risks associated with the design outweigh its benefits.” Papike v. Tambrands Inc., 107 F.3d 737, 743 (9th Cir. 1997). As discussed above, under the risk-benefit test, a plaintiff need only make a “prima facie showing that the injury was proximately caused by the product's design,” at which point the burden shifts to the defendant “to prove, in light of the relevant factors, that the product is not defective.” Barker, 20 Cal. 3d at 431, 143 Cal.Rptr. 225, 573 P.2d 443. Plaintiff has met this initial burden.

Accordingly, the Court GRANTS the Motion as to Plaintiff's manufacturing defect theory and DENIES the Motion as to the design defect theory. As with Plaintiff's negligence claim, the Court grants leave to amend the SAC to cure these deficiencies.

IV. CONCLUSION

For the foregoing reasons, the Court GRANTS, in part, and DENIES, in part, the Motion. Within twenty-one (21) days of the issuance of this Order, Plaintiff may file an Amended Complaint curing the deficiencies identified herein. If Plaintiff fails to file an Amended Complaint, the SAC shall become the operative complaint, and Defendant must answer the SAC within fourteen (14) days thereafter.

IT IS SO ORDERED.

FOOTNOTES

1.   Plaintiff labeled this claim “subrogation,” but the substance of its allegations is about strict products liability. See (SAC at 2-5). As discussed in greater detail below, Section III(C), subrogation is not itself a claim but rather a “derivative right” consisting of “the substitution of one party in place of another with reference to a lawful claim, demand or right.” In re Hamada, 291 F.3d 645, 649 (9th Cir. 2002).

SHERILYN PEACE GARNETT, UNITED STATES DISTRICT JUDGE