Simple Avo Paradise Ranch v. S. Cal. Edison Co.

321 Cal.Rptr.3d 305

SIMPLE AVO PARADISE RANCH, LLC, Plaintiff and Respondent,

v.SOUTHERN CALIFORNIA EDISON COMPANY, Defendant and Appellant

B320948

Court of Appeal, Second District, Division 7.

Filed May 23, 2024

APPEAL from a judgment and order of the Superior Court of Los Angeles County, Daniel J. Buckley, Judge. Affirmed. (Los Angeles County Super. Ct. No. 19STCV09910; JCCP No. 4965)

Glynn, Finley, Morti, Hanlon & Friedenerg, Clement L. Glynn, Walnut Creek, James M. Hanlon, Jr., Walnut Creek, and Adam M. Rapp for Plaintiff and Respondent.

Berger Kahn, Craig S. Simon, Irvine, and Adam M. Romney; Grotefeld Hoffman, Mark Grotefeld, Jordan B. Everakes and David J. Kestenbaum for National Association of Subrogation Professionals as Amicus Curiae on behalf of Plaintiff and Respondent.

Singleton Schreiber, Benjamin I. Siminou, San Diego, and Harini P. Raghupathi for Consumer Attorneys of California as Amicus Curiae on behalf of Plaintiff and Respondent.

Hueston Hennigan, John C. Hueston, Newport Beach, Douglas J. Dixon, Newport Beach, Padraic W. Foran, Los Angeles; Southern California Edison Company, Belynda S. Reck, Patricia A. Cirucci and Brian Cardoza for Defendant and Appellant.

Vinson & Elkins, Mortimer H. Hartwell, San Francisco, Jeremy C. Marwell and Nathan Campbell for Edison Electric Institute as Amicus Curiae on behalf of Defendant and Appellant.

Haight Brown & Bonesteel, Arezoo Jamshidi, San Diego, Kaitlyn A. Jensen, San Diego, Krsto Mijanovic, Los Angeles, Patrick F. McIntyre, Los Angeles, and Steven Scordalakis, Sacramento, for Liberty Utilities (Calpeco Electric) LLC as Amicus Curiae on behalf of Defendant and Appellant.

Skadden, Arps, Slate, Meagher & Flom, Peter B. Morrison, Los Angeles, and Zachary Faigen, Los Angeles; Shay Dvoretzky for Nextera Energy Resources, LLC as Amicus Curiae on behalf of Defendant and Appellant.

Munger, Tolles & Olson, Henry Weissmann, Los Angeles, Jonathan E. Altman, Los Angeles, and Anne K. Conley, Los Angeles, for Pacific Gas & Electric Company, San Diego Gas & Electric Company and PacifiCorp as Amicus Curiae on behalf of Defendant and Appellant.

MARTINEZ, P. J.

INTRODUCTION

This case arises from the 2017 Thomas Fire in Southern California and is one of the hundreds of lawsuits coordinated in proceedings involving three plaintiff groups.¹ Defendant and appellant Southern California Edison Company (SCE) appeals from a stipulated judgment entered in favor of plaintiff and respondent Simple Avo Paradise Ranch, LLC (Simple Avo), a member of the individual plaintiff group.

Before Simple Avo filed the present lawsuit, as further explained below, the trial court had previously overruled SCE’s demurrer to the cause of action for inverse condemnation in the master complaints filed by each of the plaintiff groups. Simple Avo did not itself file any of the master complaints in this action, nor did it participate in the briefing or argument on SCE’s demurrer before the trial court. Rather, Simple Avo checked a box on a form complaint indicating the causes of action it asserted and acceded to the trial court’s demurrer ruling. Simple Avo and SCE subsequently settled for an undisclosed amount and entered into a stipulated judgment whereby SCE would pay $1.75 million to Simple Avo on the inverse condemnation claim, subject to SCE’s appeal of the demurrer ruling. Simple Avo dismissed all its other causes of action with prejudice.

This case presents two issues. The first is whether the stipulated judgment is appealable and whether this case presents a justiciable controversy. Stipulated judgments are not generally appealable, but the California Supreme Court has acknowledged an exception when " ‘consent was merely given to facilitate an appeal." (Norgart v. Upjohn Co. (1999) 21 Cal.4th 383, 400, 87 Cal.Rptr.2d 453, 981 P.2d 79 (Norgart), quoting Building Industry Assn. v. City of Camarillo (1986) 41 Cal.3d 810, 817, 226 Cal.Rptr. 81, 718 P.2d 68 (Building Industry).) Over the past several decades, the courts have expanded the exception and allowed parties to obtain immediate appellate review of summary judgments, motions in limine, and just about everything in between. Under Norgart, the only requirement to invoke this exception is that the parties intend to seek appellate review. But this by itself is an insufficient constraint. Indeed, following the reasoning of Norgart, we are compelled to give effect to the parties’ intent in this case to obtain immediate appellate review of an overruled demurrer (which is not generally appealable) in a coordinated proceeding (which impacts hundreds of other parties). The exception allowing appeals from stipulated judgments warrants reconsideration or refinement from our high court. Otherwise, the exception will continue to expand and swallow the rule.

The second issue is whether the trial court erred in overruling SCE’s demurrer to the inverse condemnation cause of action. We conclude the stipulated judgment is appealable and justiciable, and that the trial court correctly overruled the demurrer. Accordingly, we affirm.

FACTUAL AND PROCEDURAL BACKGROUND

A. Background: The Consolidated Actions Arising from the Thomas Fire

The 2017 Thomas Fire in Ventura and Santa Barbara counties, as described by state authorities, was the largest fire in California’s modern history and the seventh most destructive. Hundreds of lawsuits were filed against SCE and Edison International, alleging tort and inverse condemnation causes of action based on plaintiffs’ claims the fire was caused by downed power lines. The cases were coordinated in a Judicial Council coordination proceeding and three groups of plaintiffs were formed: individual plaintiffs, public entity plaintiffs, and subrogation plaintiffs. On July 12, 2018 lead counsel for each of the plaintiff groups filed three master complaints. For purposes of this opinion, we are only concerned with and rely only on the allegations in the individual plaintiffs’ master complaint.

As relevant here, the master complaint alleged SCE is a "public utility" that is granted an exclusive franchise by the State of California to operate a monopoly or quasi-monopoly for the distribution of electricity to the residents and businesses of Central, Coastal, and Southern California.² The master complaint alleged Edison International was SCE’s parent company and a public utility. The Thomas Fire was purportedly sparked on December 4, 2017 by unsafe electrical infrastructure owned, operated, and maintained by SCE. Although SCE was able to temporarily deenergize its line in high fire-threat areas, it chose not to do so that day.

The master complaint further alleged SCE’s infrastructure had caused previous fires and that the California Public Utilities Commission (CPUC) had levied millions of dollars in fines against SCE for its failure to mitigate the risks associated with its "ineffective vegetation management programs, unsafe equipment, and/or aging infrastructure." Specifically, 63.3 percent of SCE’s electrical distribution system was comprised of overhead lines, with most of its poles installed just after World War II. SCE has not brought the older poles into compliance with modem safety standards. In 2014 SCE allegedly proposed a program to inspect, assess, and remediate poles that did not meet current standards. In 2018 SCE acknowledged it had failed to meet its own program targets for assessment or remediation of its poles. It extended its program from seven years to 10 years. It also modified its software program, reducing the number of poles in need of remediation.

[1, 2] On August 3, 2018 SCE and Edison International demurred to the cause of action for inverse condemnation in each of the master complaints. An action for inverse condemnation is "an action to recover damages for injuries to private property caused by a public improvement." (City of Oroville v. Superior Court (2019) 7 Cal.5th 1091, 1097, 250 Cal.Rptr.3d 803, 446 P.3d 304 (Oroville).) To state a claim for inverse condemnation, a plaintiff must allege "[1.] a public entity [2.] has taken or damaged their property [3.] for a public use." (Barham v. Southern Cal. Edison Co. (1999) 74 Cal.App.4th 744, 751, 88 Cal.Rptr.2d 424 (Barham).)

SCE and Edison International’s principal argument on demurrer was that neither defendant was a public entity able to spread its losses as a matter of right, as, for example, a municipality could by raising taxes. Instead, they were privately-owned corporations that needed approval from the CPUC to raise their rates. They cited a 2017 CPUC decision rejecting the request of a different utility—San Diego Gas & Electric (SDG&E)—to raise its rates to cover the cost of a different fire. According to SCE and Edison International, the CPUC’s decision in that case demonstrated privately-owned utility companies such as SCE lacked authority to spread the losses from the Thomas Fire. Under these circumstances, SCE and Edison International argued they were not public entities subject to liability for inverse condemnation. SCE also demurred on the ground the master complaint failed to allege the remaining elements of an inverse condemnation cause of action.

The plaintiff groups each filed an opposition to the demurrer. All three plaintiff groups relied on two cases—Barham, supra, 74 Cal.App.4th at page 751, 88 Cal. Rptr.2d 424, and Pacific Bell Telephone Co. v. Southern California Edison Co. (2012) 208 Cal.App.4th 1400, 146 Cal. Rptr.3d 568 (Pacific Bell)—which addressed and rejected the precise issues raised by SCE in its demurrer. Indeed, SCE was the defendant in both Barham and Pacific Bell. The individual plaintiffs additionally requested judicial notice of rulings by trial courts and orders by the Courts of Appeal following writ petitions that adopted the holdings in Barham and Pacific Bell. The trial court granted the request for judicial notice. The defendants filed one reply brief in response to the three oppositions, arguing Barham and ...