Simple Avo Paradise Ranch, LLC v. Southern Cal. Edison Co.

Filed 5/23/24

CERTIFIED FOR PUBLICATION

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT

DIVISION SEVEN

SIMPLE AVO PARADISE B320948

RANCH, LLC,

(Los Angeles County

Plaintiff and Respondent, Super. Ct. No. 19STCV09910;

JCCP No. 4965)

v.

SOUTHERN CALIFORNIA

EDISON COMPANY,

Defendant and Appellant.

APPEAL from a judgment and order of the Superior Court

of Los Angeles County, Daniel J. Buckley, Judge. Affirmed.

Glynn, Finley, Morti, Hanlon & Friedenerg, Clement L.

Glynn, James M. Hanlon, Jr. and Adam M. Rapp for Plaintiff and

Respondent.

Berger Kahn, Craig S. Simon 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 and Harini P.

Raghupathi for Consumer Attorneys of California as Amicus

Curiae on behalf of Plaintiff and Respondent.

Hueston Hennigan, John C. Hueston, Douglas J. Dixon,

Padraic W. Foran; Southern California Edison Company,

Belynda S. Reck, Patricia A. Cirucci and Brian Cardoza for

Defendant and Appellant.

Vinson & Elkins, Mortimer H. Hartwell, Jeremy C.

Marwell and Nathan Campbell for Edison Electric Institute as

Amicus Curiae on behalf of Defendant and Appellant.

Haight Brown & Bonesteel, Arezoo Jamshidi, Kaitlyn A.

Jensen, Krsto Mijanovic, Patrick F. McIntyre and Steven

Scordalakis for Liberty Utilities (Calpeco Electric) LLC as

Amicus Curiae on behalf of Defendant and Appellant.

Skadden, Arps, Slate, Meagher & Flom, Peter B. Morrison

and Zachary Faigen; Shay Dvoretzky for Nextera Energy

Resources, LLC as Amicus Curiae on behalf of Defendant and

Appellant.

Munger, Tolles & Olson, Henry Weissmann, Jonathan E.

Altman and Anne K. Conley for Pacific Gas & Electric Company,

San Diego Gas & Electric Company and PacifiCorp as Amicus

Curiae on behalf of Defendant and Appellant.

________________________

2

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

1 The three groups in the coordinated proceedings are the

individual plaintiffs, the public entity plaintiffs, and the

subrogation plaintiffs.

3

an exception when “‘consent was merely given to facilitate an

appeal.” (Norgart v. Upjohn Co. (1999) 21 Cal.4th 383, 400

(Norgart), quoting Building Industry Assn. v. City of Camarillo

(1986) 41 Cal.3d 810, 817 (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.

4

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 de-energize 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

2 “‘Public utility’ includes every . . . electrical corporation, . . .

where the service is performed for, or the commodity is delivered

to, the public or any portion thereof.” (Pub. Util. Code, § 216,

subd. (a)(1).)

5

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 modern 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.

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 (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 (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

6

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, and Pacific Bell

Telephone Co. v. Southern California Edison Co. (2012)

208 Cal.App.4th 1400 (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 Pacific Bell were wrongly

decided.

On October 4, 2018 the trial court overruled the demurrer

on the ground that it was bound by Barham and Pacific Bell,

which held that, even as a privately-owned utility, SCE could be

liable for inverse condemnation. The trial court observed that

the CPUC’s 2017 decision regarding SDG&E did not predict any

future decision the CPUC might make regarding the Thomas Fire

and SCE and Edison International. It reasoned that the CPUC’s

“fact specific” analysis utilized in determining whether to

authorize a rate increase meant that whether SCE could obtain

such an increase in the future presented a factual dispute not

appropriate for demurrer. Relying on Pacific Bell, the trial court

concluded that a utility’s ability to raise rates unilaterally did not

7

by itself determine potential liability for inverse condemnation.

The trial court additionally determined plaintiffs had sufficiently

alleged the damage and public use elements of an inverse

condemnation cause of action.

SCE and Edison International filed a petition for writ of

mandate seeking review of the trial court’s demurrer ruling,

which this court denied in December 2018.

B. Simple Avo’s Lawsuit

Simple Avo is an avocado farm owned by a private equity

firm and other investors. On March 25, 2019, five months after

the trial court overruled SCE and Edison International’s

demurrer, Simple Avo filed its complaint. It was a short form

complaint that adopted and incorporated the individual plaintiffs’

master complaint. Simple Avo checked boxes indicating, among

other things, the defendants it was suing, its insurer, damages

suffered, and its causes of action. Simple Avo “agree[d] to be

bound by any rulings with respect to the pleadings,” including

the trial court’s prior demurrer ruling. As such, SCE and Edison

International did not file a demurrer to Simple Avo’s complaint,

nor did Simple Avo ever defend against a demurrer. The record

before us does not indicate any motion practice between the

parties to this appeal. Simple Avo’s case was added to the

Judicial Council coordination proceedings on May 7, 2019.

In January 2022 Simple Avo settled with SCE and Edison

International. The parties stipulated to: (1) dismiss with

prejudice all of Simple Avo’s claims against Edison International;

(2) dismiss with prejudice all of Simple Avo’s causes of action

against SCE, except for inverse condemnation; and (3) enter

judgment in favor of Simple Avo on the inverse condemnation

claim in the amount of $1.75 million. The stipulation further

8

stated: “This stipulated final judgment resolving all of the claims

in this case is without prejudice to the rights of SCE to appeal

this final judgment, including the Court’s October 4, 2018, order

denying SCE’s August 3, 2018, Demurrer,” and “Plaintiff [Simple

Avo] hereby waives, pursuant to Code of Civil Procedure

§ 995.230, any requirement that SCE post an undertaking, bond

or security deposit to stay, and agrees not to enforce the

Judgment pending appeal from this Judgment.” The trial court

entered the stipulated judgment and SCE timely appealed.

DISCUSSION

This case presents an unusual set of circumstances. We

first address the appealability of the parties’ stipulated judgment

and conclude that, while we have serious reservations about its

appealability, we are required to give effect to the parties’ intent

to obtain appellate review of the trial court’s demurrer ruling.

This appeal—involving what one amicus curiae characterizes as a

“cherry-pick[ed]” respondent—is at the outer limits of what

constitutes a justiciable case. As explained further below, the

exception allowing appeals from stipulated judgments warrants

revisiting from the California Supreme Court as the Courts of

Appeal have been unable to craft reasonable limits on it given the

expansive language with which the exception was articulated in

Norgart.

As to the order on the demurrer, SCE questions the

continued viability of Barham and Pacific Bell. It urges us to

depart from their holdings in favor of a categorical rule that

privately-owned utility companies, such as SCE, cannot be liable

for inverse condemnation as a matter of law because they cannot

unilaterally raise their rates. SCE additionally contends that

9

Simple Avo has not alleged other elements of the inverse

condemnation cause of action. At bottom, the question before us

is whether the master complaint sufficiently alleges inverse

condemnation against SCE, and we conclude that it does.

A. Whether the Parties’ Stipulated Judgment Is Appealable

Whenever a doubt exists as to whether the trial court has

entered an appealable judgment, an appellate court must

consider appealability on its own even if the parties have not

raised the issue because we ordinarily must dismiss an appeal

from a judgment that is not appealable. (See Jennings v.

Marralle (1994) 8 Cal.4th 121, 126; Baker v. Castaldi (2015)

235 Cal.App.4th 218, 222 [court requested supplemental briefing

on appealability where “[n]either party raised this issue in their

initial briefs”].)

1. SCE’s and amici curiae’s briefs on appealability

SCE’s opening brief asserted the stipulated judgment was a

final judgment made appealable by Code of Civil Procedure

section 904.1, subdivision (a)(1). It acknowledged the general

rule that stipulated judgments are not appealable, but argued the

stipulated judgment here fell under the “well-established”

exception that a party may appeal from a stipulated judgment

when “‘consent was merely given to facilitate an appeal following

adverse determination of a critical issue.’” (Norgart, supra,

21 Cal.4th at p. 400, quoting Building Industry, supra, 41 Cal.3d

at p. 817.)

Simple Avo’s respondent’s brief did not address

appealability. Instead, the National Association of Subrogation

Professionals (NASP) and Consumer Attorneys of California

(CAC) raised the issue in amicus curiae briefs, arguing the

10

stipulated judgment was not appealable.3 SCE initially

responded only to NASP’s amicus brief. We asked Simple Avo

and SCE to submit supplemental briefing addressing

appealability, justiciability, and NASP’s and CAC’s arguments to

the extent they had not already done so. Simple Avo filed no

supplemental brief. Having already answered NASP’s amicus

brief, SCE responded only to CAC’s arguments in its

supplemental brief. We granted CAC’s and NASP’s requests to

appear at oral argument.

2. The appealability of stipulated judgments

A stipulated judgment is not generally appealable. (See

Norgart, supra, 21 Cal.4th at p. 400; Mecham v. McKay (1869)

37 Cal. 154, 158-159 (Mecham).) The California Supreme Court

has recognized an exception to this rule when “consent was

merely given to facilitate an appeal following adverse

determination of a critical issue.” (Building Industry, supra,

41 Cal.3d at p. 817; Norgart, at p. 400.)

The exception originated in Mecham. Mecham allowed an

appeal to proceed from a stipulated order denying a motion for

new trial. (Mecham, supra, 37 Cal. at p. 158.) The high court

explained that an order or judgment entered pursuant to a

stipulation is generally not appealable based “on the theory that

by consenting to the judgment or order the party expressly

waives all objection to it, and cannot be allowed afterwards, on

appeal, to question its propriety, because by consenting to it he

has abandoned all opposition or exception to it.” (Id. at pp. 158-

159.) It recognized an exception to this rule for cases where

“consent was given only pro forma to facilitate an appeal, and

3 We granted requests by six amici to file briefs in this

matter. We only address the issues raised by NASP and CAC.

11

with the understanding on both sides that the party did not

thereby intend to abandon his right to be heard on the appeal.”

(Id. at p. 159.)

The Court next examined the exception over 100 years later

in Building Industry.4 It applied Mecham to the case before it

but limited the exception to stipulated judgments following an

“adverse determination of a critical issue”: “If consent was

merely given to facilitate an appeal following adverse

determination of a critical issue, the party will not lose his right

to be heard on appeal.” (Building Industry, supra, 41 Cal.3d at

p. 817.) The Court also noted that “it is ‘wasteful of trial court

time’ to require the plaintiff to undergo a probably unsuccessful

court trial merely to obtain an appealable judgment.” (Ibid.)

There, the trial court had granted partial summary judgment for

the defendant city, ruling that despite the potential applicability

of an Evidence Code section shifting the burden of proof, the

plaintiff retained the burden of proof on its claim. (Id. at p. 815.)

The plaintiff stipulated to entry of judgment for the city,

conceding it could not prevail if it had the burden of proof. (Id. at

p. 816.)

The Court applied the exception in Connolly v. County of

Orange (1992) 1 Cal.4th 1105 (Connolly) to a class action. The

trial court had granted extraordinary writ relief only to the

named plaintiff. The parties subsequently stipulated the same

4 In the intervening years, as relevant here, the high court

cited Mecham not for the exception it articulated, but for the

general rule that stipulated judgments or orders are

nonappealable. (See, e.g., Sleeper v. Kelly (1863) 22 Cal. 456,

fn. 1; Erlanger v. Southern Pac. R. R. Co. (1895) 109 Cal. 395,

396; Hibernia Sav. & Loan Soc. v. Waymire (1907) 152 Cal. 286,

287-288.)

12

relief would be granted to the 200 class members, and the trial

court entered a stipulated judgment in favor of the class.

Without substantive analysis, Connolly ruled the exception

applied to make the stipulated judgment as to the class

appealable. (Id. at p. 1111.)

The Court gave its most complete explanation of the

exception in Norgart.5 It reiterated the twin rationales for the

exception from Building Industry. (See Norgart, supra,

21 Cal.4th at p. 400.) But Norgart abandoned any requirement of

an adverse determination of a critical issue in favor of a focus on

the parties’ intent: “any ‘adverse determination’ . . . is not a legal

condition that defines the exception, but only a factual

circumstance that may happen to accompany, and explain, the

plaintiff’s consent to an unfavorable judgment or order. For it is

‘accidental’ why the plaintiff might desire ‘to facilitate an appeal.’

[Citation.] It is ‘essential,’ however, that the plaintiff actually so

desire.”6 (Norgart, at p. 402.) In other words, an “adverse

determination” of “a critical issue” are not affirmative

5 In Norgart, the plaintiffs sued for wrongful death. The

defendant moved for summary judgment on statute of limitations

grounds, relying on a then newly-decided appellate decision

articulating a discovery rule. The parties agreed the plaintiffs’

wrongful death claim would be time-barred under that new rule.

To hasten appellate review, the plaintiffs stipulated to a

judgment against them. (Norgart, supra, 21 Cal.4th at pp. 392-

393.)

6 Justice Kennard objected to the majority’s decision to reach

the merits because in her view “the parties may not by

stipulation artificially convert a nonappealable interim ruling

denying summary judgment into an appealable final judgment.”

(Norgart, supra, 21 Cal.4th at p. 412 [conc. & dis. opn. of

Kennard, J.].)

13

requirements or limitations on the exception, but instead merely

describe the circumstances under which a stipulated judgment

may arise.

The Courts of Appeal expanded the exception from

summary judgments to cases involving motions in limine,

nonsuits, and judgment on the pleadings. (See, e.g., Tudor

Ranches, Inc. v. State Comp. Ins. Fund (1998) 65 Cal.App.4th

1422, 1431 (Tudor Ranches) [motion in limine]; Villano v.

Waterman Convalescent Hospital, Inc. (2010) 181 Cal.App.4th

1189 [in limine rulings tantamount to nonsuit]; Tos v. State of

California (2021) 72 Cal.App.5th 184, 194 [judgment on the

pleadings].) The only limitation the courts have imposed on the

exception is a requirement that the stipulated judgment

adjudicate all claims.7

Amicus CAC proposes a limitation on the exception

requiring that a stipulated judgment must follow an adverse

determination that is “outcome determinative” or “dispositive.”

In its view, the overruling of SCE’s demurrer to the master

complaint is not such a ruling because it does not “devastate”8

7 See, e.g., Harrington-Wisely v. State of California (2007)

156 Cal.App.4th 1488, 1496 (“the exception may not be invoked

when, as here, the stipulated judgment fails to dispose of all

claims between the parties”); Tudor Ranches, supra,

65 Cal.App.4th at pp. 1429-1430 (stipulated judgment that does

not dispose of all claims between parties is not appealable); Four

Point Entertainment, Inc. v. New World Entertainment, Ltd.

(1997) 60 Cal.App.4th 79, 81 (judgment before court was “‘final’

in name only” because, in substance, it did not dispose completely

of all claims between parties).

8 See, e.g., Hensley v. San Diego Gas & Electric Co. (2017)

7 Cal.App.5th 1337, 1341, fn. 3 (trial court excluded evidence of

14

SCE’s case on the merits and is not dispositive9 because SCE

could still proceed to trial and prevail. Although some Court of

all emotional distress damages, which constituted most of the

plaintiff’s claimed damages); Martinez v. Robledo (2012)

210 Cal.App.4th 384, 387 (trial court limited measure of damages

for wrongful injury of a pet to the market value of the pet, which

was minimal); McMahon v. Craig (2009) 176 Cal.App.4th 1502,

1508 (the plaintiff “determined the trial court’s rulings had

severely impaired the value and viability of her case”); Tudor

Ranches, supra, 65 Cal.App.4th at p. 1427 (in limine rulings

prevented plaintiff from presenting its case); City of South San

Francisco v. Mayer (1998) 67 Cal.App.4th 1350, 1353 (trial court

decided motion in limine that limited the value of the defendants’

property in condemnation action); Kenworthy v. Hadden (1978)

87 Cal.App.3d 696, 700 (trial court ruled against appellant on

appellant’s “major contention” and appellant elected not to go to

trial on any other issues).

9 See, e.g., Tos v. State, supra, 72 Cal.App.5th at p. 194, fn. 4

(stipulated judgment appealable because the constitutionality of

a bond statute was dispositive of all of plaintiffs’ claims); State

Farm General Ins. Co. v. Frake (2011) 197 Cal.App.4th 568, 576

(stipulated judgment “was intended to facilitate State Farm’s

appeal of the dispositive coverage issue in this case”); Monticello

Ins. v. Essex Ins. Co. (2008) 162 Cal.App.4th 1376, 1383-1384

(concluding “the parties properly stipulated to judgment in order

to obtain immediate appellate review of the trial court’s critical

and outcome-determinative ruling”); Chavez v. Carpenter (2001)

91 Cal.App.4th 1433, 1437 (trial court found the plaintiffs lacked

standing to assert claim for wrongful death); Aloha Pacific, Inc. v.

California Ins. Guarantee Assn. (2000) 79 Cal.App.4th 297, 306,

fn. 6 (trial court denied the plaintiff’s motion for summary

judgment finding on undisputed facts the defendant should

prevail as a matter of law); Edwards v. Centex Real Estate Corp.

(1997) 53 Cal.App.4th 15, 27-28 (trial court’s order excluded “bulk

15

Appeal decisions involve such circumstances or could be read as

supporting such a rule, these characteristics are not affirmative

limits on the exception but merely reflect the circumstances

under which the cases were decided. Indeed, Norgart forecloses

such limitations. As noted above, Norgart explained that “any

‘adverse determination’ . . . is not a legal condition that defines

the exception, but only a factual circumstance that may happen

to accompany, and explain, the plaintiff’s consent to an

unfavorable judgment or order,” and it is the parties’ intent that

controls. (Norgart, supra, 21 Cal.4th at p. 402.)

3. The mootness doctrine and the stipulated judgment

We also asked the parties to address whether this case

presents a justiciable controversy. As noted above, the stipulated

judgment included a payment of $1.75 million from SCE to

Simple Avo contingent on the outcome of this appeal.

Hensley v. San Diego Gas & Electric Co. (2017)

7 Cal.App.5th 1337 dealt with a similar situation. There, the

parties agreed to a stipulated judgment where the plaintiffs

received an undisclosed sum from the defendant in settlement of

their claims but reserved the right to appeal the trial court’s

in limine ruling that plaintiffs could not introduce evidence of

emotional distress damages. The parties agreed the plaintiffs

would receive an additional sum from the defendant if they were

successful on appeal. (Id. at p. 1342.) Hensley concluded the case

of the evidence upon which” plaintiffs “base[d] their causes of

action” and was “tantamount to a nonsuit”); Holmes v. Roth

(1992) 11 Cal.App.4th 931, 934, fn. 1 (“sole disputed issue” was

decided against appellant); Dong v. Board of Trustees (1987)

191 Cal.App.3d 1572, 1576 (trial court’s exclusion of plaintiff’s

evidence exposed his case to nonsuit).

16

was not moot because the additional sum was a liquidation of the

plaintiffs’ emotional distress damages. (Id. at p. 1345.) But

Hensley also stated, “We discourage parties from reaching

agreements that arbitrarily stake payments or ‘bet’ on the

outcome of an appeal so as to avoid rendering their case moot, or

from creating an agreement divorced from the controversy for the

exclusive purpose of obtaining a decision on a matter. Where an

issue left to be decided is entirely unrelated to the controversy,

parties risk a finding that their settlement has mooted any

appeal.” (Id. at p. 1346.)

We likewise conclude this case is not moot due to the

potential $1.75 million payment to Simple Avo, which we deem a

liquidation of its inverse condemnation damages. But we join

Hensley in discouraging such “side bets” on the outcome of an

appeal for purposes of obtaining an appellate decision.

4. Under Norgart, the stipulated judgment is

appealable, but we have serious reservations the

exception should apply under the circumstances here

Amici argue that “[a]llowing this appeal to go forward

would mark . . . an unprecedented carve-out from the rule barring

appeals from consent judgments” and is an “attempt by SCE to

artificially manufacture appellate jurisdiction against a

Respondent of its own choosing.” Specifically, NASP contends

that “while California may permit parties to stipulate to an

immediate appeal in certain cases, those exceptions have never

been applied in the context of complex coordinated actions before

a JCCP Court” and that, at the time it filed its brief, “several

17

hundred Thomas Fire claims [were] still pending in the JCCP

action.”10

We question whether the exception should apply in a

coordinated proceeding such as this one involving hundreds of

remaining lawsuits and where the respondent on appeal did not

participate in drafting the master complaint, did not participate

in opposing the demurrer challenged on appeal, and did not

otherwise actively litigate any matter before the trial court. Of

the hundreds of individual plaintiffs who settled with SCE, amici

argue that only one settlement (this one) resulted in a stipulated

judgment that allows SCE to appeal the trial court’s ruling on

demurrer. The $1.75 million “side bet,” although technically

permissible for the reasons explained above, also gives us pause.

In addition, SCE seeks to appeal from the overruling of its

demurrer even though (1) “an order overruling a demurrer is not

directly appealable” (San Diego Gas & Electric Co. v. Superior

Court (1996) 13 Cal.4th 893, 912), and (2) it is not a foregone

conclusion that it would be wasteful of trial court or litigants’

time to require SCE to proceed to trial because SCE could very

well prevail, obviating the need for an appeal. (See Building

Industry, supra, 41 Cal.3d at p. 817.) As the trial court noted, the

2017 CPUC decision could create a factual issue precluding

inverse condemnation liability. SCE also has other defenses on

10 NASP further avers that “after much delay, SCE and

Simple Avo represent to this court that its intervention is

suddenly necessary to resolve a critical issue: 1) that Simple Avo

has never litigated previously; 2) that SCE has attempted to

overturn for decades; 3) that Simple Avo has no obvious stake in

for future cases; and 4) under the hidden terms of a settlement

agreement which no court has reviewed.”

18

which it could prevail at trial: (1) it did not substantially cause

the alleged damage; (2) the damage from the Thomas Fire was

not caused by an inherent risk presented by the deliberate

design, construction, or maintenance of the public improvement;

and (3) the destruction or damage to Simple Avo’s property was

not for a public use.11

Despite these considerations and the availability of

potential meritorious defenses for SCE at trial, Norgart compels

us to give effect to the parties’ stated intent to obtain appellate

review. (See Auto Equity Sales, Inc. v. Superior Court (1962)

57 Cal.2d 450, 455.) We do not discern a principled basis or

precedent to create a rule carving out coordinated proceedings

from the exception. Connolly’s application of the exception to a

stipulated judgment involving a plaintiff class suggests it is not

improper to apply the exception in coordinated proceedings (see

Connolly, supra, 1 Cal.4th at p. 1111), and Norgart’s focus on the

parties’ intent would preclude such a rule.

In this light, Norgart’s singular focus on the parties’ intent

to seek immediate appellate review warrants reconsideration or

refinement of the exception authorizing appeals from stipulated

judgments from the California Supreme Court. As noted above,

Norgart dispenses with the adverse determination of a critical

issue portion of the exception and directs that only the parties’

intent is “essential” to the inquiry. (Norgart, supra, 21 Cal.4th at

11 CAC and NASP raised additional factual disputes that

would have to be resolved against SCE in order to find it liable

for inverse condemnation. These relate to whether the creation of

a Wildfire Fund or the entry of a consent order would entitle SCE

to spread costs. We need not assess what impact these could

have on liability or at trial, but note them to highlight the

availability of defenses to SCE at a trial.

19

p. 402.) The requirement that a stipulated judgment must follow

from an adverse determination of a critical issue (see Building

Industry, supra, 41 Cal.3d at p. 817) that is outcome

determinative sets a reasonable boundary around the exception.

But, even then, the meaning of “a critical issue” is relative and

differs in any given individual case. That is why the exception

has expanded from summary judgment motions to motions in

limine, and just about everything in between.

We agree with Tudor Ranches that, “without some

limitation on the . . . exception, a party theoretically could obtain

immediate appellate review of any . . . ruling . . . provided both

parties were willing to stipulate to a judgment finally disposing of

all claims. . . . Without guidance from precedent, we conclude

that, if the . . . exception is to be thus limited, the limitation

should come from the Supreme Court.” (Tudor Ranches, supra,

65 Cal.App.4th at p. 1431.) Under the current state of the law,

all a party needs to overcome the rule against the appealability of

stipulated judgments or orders is a well-crafted stipulation

demonstrating the parties’ intent to do so. Without any

meaningful limitation on the exception, it truly has swallowed

the rule.

B. The Individual Plaintiffs’ Master Complaint Adequately

Alleged a Claim for Inverse Condemnation Against SCE

SCE contends Simple Avo failed to state a cause of action

for inverse condemnation. SCE reiterates many of the arguments

it raised in Barham and Pacific Bell that those courts rejected.

In all events, we examine SCE’s arguments in the context of the

case before us but decline to depart from the well-reasoned and

long-standing holdings of Barham and Pacific Bell. Further, we

20

are not persuaded that Simple Avo did not allege the Thomas

Fire was substantially caused by an inherent risk presented by

the deliberate design, construction, or maintenance of the public

improvement as required by Oroville.

1. Standard of review

“The standard of review for an order overruling a demurrer

is de novo. The reviewing court accepts as true all facts properly

pleaded in the complaint in order to determine whether the

demurrer should be overruled. [Citation.] A general demurrer

will lie where the complaint ‘has included allegations that clearly

disclose some defense or bar to recovery.’” (Casterson v. Superior

Court (2002) 101 Cal.App.4th 177, 182-183; accord, Mt. Hawley

Ins. Co. v. Lopez (2013) 215 Cal.App.4th 1385, 1394.) A demurrer

can be used only to challenge defects that appear on the face of

the complaint or from matters outside the pleading that are

judicially noticeable. (Blank v. Kirwan (1985) 39 Cal.3d 311, 318;

Donabedian v. Mercury Ins. Co. (2004) 116 Cal.App.4th 968, 994.)

“To survive a demurrer, the complaint need only allege facts

sufficient to state a cause of action.” (C.A. v. William S. Hart

Union High School Dist. (2012) 53 Cal.4th 861, 872.) The

demurrer admits the truth of all material facts properly pleaded,

including all ultimate facts alleged, but not contentions,

deductions or conclusions of fact or law. (See 290 Division (EAT),

LLC v. City and County of San Francisco (2022) 86 Cal.App.5th

439, 452.)

2. Principles of inverse condemnation

The California Supreme Court recently examined the

principles underlying an inverse condemnation claim in Oroville.

21

“Under article I, section 19 of the California Constitution . . . a

public entity must pay the owner just compensation when it

takes or damages private property for public use.” (Oroville,

supra, 7 Cal.5th at p. 1102; see Cal. Const., art. I, § 19, subd. (a)

[“Private property may be taken or damaged for a public use and

only when just compensation . . . has first been paid to . . . the

owner”].) This constitutional provision forms “the basis for two

kinds of actions: a conventional eminent domain proceeding,

instituted by a public entity to acquire private property for public

use; and an inverse condemnation action, initiated by a private

property owner seeking compensation for a taking or damage to

his or her property.” (Oroville, at p. 1102.)

The high court identified two competing concerns when

setting the contours of inverse condemnation claims: “One is to

pool the burden to the individual property owner and distribute

throughout the community the losses resulting from the public

improvement. [Citations.] Another is to mitigate concerns that

‘compensation allowed too liberally will seriously impede, if not

stop, beneficial public improvements because of the greatly

increased cost.’” (Oroville, supra, 7 Cal.5th at pp. 1103-1104.)

Neither party contends the second concern—increased cost

impeding public works—is implicated here.

3. The master complaint sufficiently alleged SCE’s

liability for inverse condemnation as a public entity

SCE contends inverse condemnation applies only to public

entities and the master complaint, adopted by Simple Avo,

alleges SCE is “a privately owned public utility,” thereby

defeating the inverse condemnation cause of action. Simple Avo,

relying on Barham and Pacific Bell, asserts SCE may be

considered a public entity for purposes of inverse condemnation.

22

We agree that our courts have not categorically limited inverse

condemnation claims as SCE argues.

a. Barham and Pacific Bell

In Barham, the plaintiff landowners sued SCE for damages

they sustained in a wildfire caused by a failure in SCE’s overhead

power line equipment. (Barham, supra, 74 Cal.App.4th at

p. 747.) A jury awarded the landowners damages on their tort

causes of action, but the trial court entered judgment for SCE on

the inverse condemnation cause of action. (Ibid.) Both sides

appealed. Division Two of the Fourth Appellate District reversed

the trial court’s inverse condemnation ruling. (Id. at p. 751.)

As in this case, SCE argued it was a privately-owned

utility, not a public entity subject to inverse condemnation

claims. (Barham, supra, 74 Cal.App.4th at p. 752.) The court

rejected this argument, reasoning publicly-owned electrical

utilities had been held liable in inverse condemnation in

“virtually identical” circumstances and that, under the facts

presented, there was no rational basis for distinguishing them

from privately-owned utilities. (Id. at p. 753.) Barham expressly

held that “SCE may be liable in inverse condemnation as a public

entity.” (Ibid.)

Barham examined the California Supreme Court’s analysis

in Gay Law Students Assn. v. Pacific Tel. & Tel. Co. (1979)

24 Cal.3d 458 (GLSA). There, the high court held a privately-

owned utility “to whom the state has granted a monopoly over a

significant segment of the telephonic communications industry in

California” could be treated as a state actor subject to the Equal

Protection clause when hiring employees. (Id. at p. 468.) The

court found, “the nature of the California regulatory scheme

23

demonstrates that the state generally expects a public utility to

conduct its affairs more like a governmental entity than like a

private corporation.” (Id. at p. 469.) The court further concluded,

“we believe . . . that a public utility may not properly claim

prerogatives of ‘private autonomy’ that may possibly attach to a

purely private business enterprise.”12 (Id. at p. 470.)

In Pacific Bell, the plaintiff telephone company sued SCE

for inverse condemnation. It alleged its telephone cables were

damaged when a bird flew into a SCE power line, causing

electricity to run down a utility pole to the underground trench

holding its cables and SCE’s power infrastructure. (Pacific Bell,

supra, 208 Cal.App.4th at p. 1403.) After a bench trial, judgment

12 SCE contends GLSA is limited to employment

discrimination cases, citing Pasillas v. Agricultural Labor

Relations Board (1984) 156 Cal.App.3d 312 (Pasillas) and

Automatic Sprinkler Corp. v. Southern California Edison Co.

(1989) 216 Cal.App.3d 627 (Automatic Sprinkler). We are

unpersuaded. Pasillas merely found GLSA did not confer “state

action” on a union with “monopoly” status pursuant to a state-

authorized union security agreement. (Pasillas, at p. 348.) It

questioned whether GLSA might have applicability beyond the

employment discrimination context and particularly in the free

speech context. (Ibid.) A different Court of Appeal responded in

the affirmative in Savage v. Pacific Gas and Electric Co. (1993)

21 Cal.App.4th 434, 455-456, relying on GLSA to impose liability

on privately-owned Pacific Gas and Electric Company for

violations of the First Amendment and the Equal Protection

clause of the United States Constitution. Nor did Automatic

Sprinkler limit the scope of GLSA. There, the court merely

concluded that, “It is readily seen that the issue, body of law, and

subject matter of [GLSA] have no bearing or relationship to this

case,” which involved a payment bond for public works.

(Automatic Sprinkler, at p. 633.)

24

was entered against SCE. (Id. at p. 1402.) On appeal,

Division One of this District rejected SCE’s private entity

argument, agreeing with Barham. (Id. at p. 1404.)

Pacific Bell cited California Supreme Court precedent

reflecting that inverse condemnation liability could be imposed

on private entities. (Pacific Bell, supra, 208 Cal.App.4th at

p. 1405.) For example, in Breidert v. Southern Pacific Co. (1964)

61 Cal.2d 659, the defendant railroad and a local city closed a

railroad crossing, depriving the plaintiffs of access to a right-of-

way. (Id. at p. 661.) The closure was authorized by an order of

the CPUC. (Id. at p. 662.) The high court rejected the railroad’s

contention it was “not a proper party defendant” to the inverse

condemnation case. (Ibid.) It reasoned that “[s]ince defendant

railroad was an active joint participant in closing the crossing, it

is a proper party to the present litigation.” (Ibid.) Pacific Bell

rejected SCE’s narrow reading of Breidert and did not require

joint participation with a government entity for liability to attach

to SCE for an inverse condemnation claim: “While joint

participation may certainly give rise to inverse condemnation

liability, we do not believe it is required.” (Pacific Bell, at

p. 1405.)

Pacific Bell further observed the California Supreme Court

had previously indicated a privately-owned utility could be liable

for inverse condemnation in Pettis v. General Telephone Co.

(1967) 66 Cal.2d 503 (Pettis). Pettis involved claims against two

utilities to compel removal of utility lines. The defendant

utilities argued the plaintiff was not entitled to injunctive relief

or to quiet title against them because his property had been put

to a public use and the public interest had intervened. (Id. at

pp. 505, 507.) The high court agreed that if the defendants

25

established at trial the necessity of maintaining their utility lines

through the plaintiff’s property, then the plaintiff would be

“relegated to the remedy of damages as in inverse condemnation.”

(Id. at p. 507.)

Pacific Bell also found GLSA, discussed above, and

Eachus v. Los Angeles etc. Ry. Co. (1894) 103 Cal. 614 (Eachus),

persuasive. In Eachus, the California Supreme Court affirmed

an award of inverse condemnation damages against a privately

owned railroad company. (Eachus, at pp. 622-623.) The city had

granted the railroad company a franchise to construct a railroad

in front of the plaintiffs’ property. (Id. at p. 615.) Pacific Bell

reasoned, “like [GLSA] the dispositive factor in Eachus appears

to be the quasi-monopolistic authority and delegated power given

to the defendant by the grant of a franchise” in determining

whether a privately-held company could be held liable for inverse

condemnation. (Pacific Bell, supra, 208 Cal.App.4th at p. 1407.)

Pacific Bell distinguished the facts before it from cases

involving private parties who did not operate under a similar

franchise from the state. (Pacific Bell, supra, 208 Cal.App.4th at

p. 1407.) “Here, the government has chosen to grant a franchise

and delegate the furnishing of electricity to Edison rather than

operating the utility itself. Such a delegation does not remove

the policy justifications underlying inverse condemnation

liability: that [injured] individual property owners should not

have to contribute disproportionately to the risks from public

improvements made to benefit the community as a whole.”13

(Ibid.)

13 SCE argues Pacific Bell’s reliance on the grant of monopoly

powers to a private entity to justify inverse condemnation

26

SCE argued in Pacific Bell, as it does in this case, that the

policy behind inverse condemnation was not met because it could

not raise rates without the CPUC’s approval. The court was not

persuaded because there was no evidence the CPUC would not

allow SCE to raise its rates to pass on damages liability. (See

Pacific Bell, supra, 208 Cal.App.4th at p. 1407.) Additionally, the

court observed “the Supreme Court has stated that, although the

Legislature has chosen not to do so, nothing in the Constitution

prevents the Legislature from placing municipally owned utilities

under the regulations of the Public Utilities Commission,

including regulation of rates. [Citation.] We do not believe such

regulation would immunize municipal utilities from inverse

condemnation liability under the theory that they were no longer

able to spread the cost of public improvements.” (Id. at p. 1407,

fn. 6.)

b. SCE does not persuasively demonstrate why we

should depart from Barnham and Pacific Bell

The trial court followed the well-reasoned analysis in

Barham and Pacific Bell. On appeal, SCE provides no persuasive

reason to depart from their holdings.

liability would be misplaced in this case because SCE does not

have the power to raise prices as a monopoly does. But, as

outlined above, Pacific Bell’s analysis did not rest on a

monopoly’s power to raise prices; it knew SCE could not raise

rates without CPUC authorization. Pacific Bell merely reasoned,

as did the high court in GLSA, that a private company granted a

franchise to operate like a governmental entity could be held

liable under inverse condemnation as would a government entity.

(Pacific Bell, supra, 208 Cal.App.4th at pp. 1406-1407.)

27

The master complaint in this case alleges SCE is “a

privately owned public utility, which enjoys a state-protected

monopoly or quasi-monopoly, derived from its exclusive franchise

provided by the State of California and is more akin to a

governmental entity than a purely private entity, and runs its

utility affairs like a governmental entity. [SCE’s] monopoly is

guaranteed and safeguarded by the [CPUC], which possesses the

power to refuse to issue certificates of public convenience and

necessity to permit potential competition to enter the market. . . .

Under the rules and regulations set forth by the [CPUC],

amounts that SCE must pay in inverse condemnation can be

included in [its] rates and spread among the entire group of rate

payers so long as [it is] otherwise acting as a reasonable and

prudent manager of [its] electric distribution systems.” This is

sufficient to allege SCE can be held liable for inverse

condemnation.

We are not persuaded by SCE’s attempts to distinguish or

limit Barham and Pacific Bell. SCE’s primary argument is that

both cases are based on the incorrect assumption that SCE could

pass on its losses to customers through rate increases. But,

according to SCE, the 2017 CPUC decision involving SDG&E

demonstrates that assumption is incorrect. SCE misreads

Barham and Pacific Bell. Neither case assumed SCE had

unfettered authority to raise rates and Pacific Bell expressly

observed that SCE “may raise rates only with the approval of

California’s Public Utility Commission.” (Pacific Bell, supra,

208 Cal.App.4th at p. 1407; see Barham, supra, 74 Cal.App.4th at

pp. 751-753.)

28

Further, Pacific Bell rejected this same argument from

SCE. Pacific Bell reasoned that even if the Legislature subjected

municipal utilities to the same regulations as private utilities,

“such regulation would [not] immunize municipal utilities from

inverse condemnation liability under the theory that they were

no longer able to spread the cost of public improvements.”

(Pacific Bell, supra, 208 Cal.App.4th at p. 1407, fn. 6.) SCE

argues this was dicta based on an assumption that a municipality

can spread losses through its taxation power. But Pacific Bell

made no mention of a municipality’s taxing powers and instead

based its analysis on the well-established “policy justifications

underlying inverse condemnation liability: that individual

property owners should not have to contribute disproportionately

to the risks from public improvements made to benefit the

community as a whole.” (Id. at p. 1407.)

In all events, the CPUC’s 2017 decision regarding SDG&E

did not demonstrate as a matter of law that the CPUC would also

deny a rate increase to SCE in connection with the Thomas Fire

such that the master complaint failed to state a claim for inverse

condemnation. The trial court recognized that SCE was

improperly inviting it to weigh a factual dispute on demurrer

regarding the effect of the 2017 CPUC decision on any future

request by SCE to the CPUC relating to the Thomas Fire. As the

trial court correctly observed, “That alone dictates a decision to

overrule the demurrer.”

SCE cites no authority that disapproves, overrides, or even

disagrees with Barham or Pacific Bell. SCE instead quotes from

Oroville, supra, 7 Cal.5th at p. 1102 and Paterno v. State of

California (1999) 74 Cal.App.4th 68 (Paterno), for the proposition

that only a “public entity” may be liable for inverse

29

condemnation. Neither case considered whether a private entity

may be treated as a public entity for purposes of inverse

condemnation. The “public entity” language that SCE quotes

from each case merely reflects that the defendant in those cases

was a public entity. In Oroville, the defendant was the City of

Oroville, and in Paterno the defendant was the State of

California. (See Oroville, at p. 1097; Paterno, at p. 75.) A

decision “does not stand for a proposition not considered by the

court.” (Nolan v. City of Anaheim (2004) 33 Cal.4th 335, 343; see

Gogri v. Jack in the Box Inc. (2008) 166 Cal.App.4th 255, 272.)

We are also not persuaded that Simple Avo’s position

departs from the cost-spreading rationale underlying inverse

condemnation to a “cost-shifting” one that burdens SCE alone

with liability. Simple Avo’s position rests almost entirely on

Barham and Pacific Bell, which are established law that we

follow. Further, to the extent SCE desires to spread its costs to

utility users, it has the ability to seek a rate increase from the

CPUC, and on demurrer we cannot conclude as a matter of law

that the CPUC would deny such a request.

C. The Master Complaint Sufficiently Pleaded an Inverse

Condemnation Claim After Oroville

After the trial court overruled SCE’s demurrer in 2018, the

California Supreme Court issued its decision in Oroville in 2019,

clarifying the substantial causation element of an inverse

condemnation cause of action. Oroville explained that liability

under inverse condemnation requires addressing “a fundamental

question: whether the inherent risks associated with the [public

improvement]—as deliberately designed, constructed, or

maintained—were the substantial cause of the damage to the

30

private property.” (Oroville, supra, 7 Cal.5th at p. 1098.) SCE

argues Simple Avo cannot allege the inherent risk and

substantial cause components. We conclude the master

complaint sufficiently alleges both.

1. Oroville

In Oroville, the plaintiff dentists sued the city for inverse

condemnation arising out of a sewer backup that caused sewage

to spew from the toilets, sinks, and drains in plaintiffs’ offices.

The plaintiffs alleged the city’s sewer system failed to function as

intended. The city countered the damage occurred because the

plaintiffs failed to install a legally-required backwater valve that

would have prevented sewage from entering their building.

(Oroville, supra, 7 Cal.5th at pp. 1097-1098.)

After denying the city’s motion for summary judgment, the

trial court made a judicial determination under Code of Civil

Procedure section 1260.040 that the primary cause of the

blockage in the sewer line and the backup was root intrusion,

whereas the plaintiffs’ failure to install the backwater valve was

a secondary, but significant cause of damage.14 Under these

circumstances, the trial court found the city liable for inverse

condemnation and the Court of Appeal affirmed. (Oroville, supra,

7 Cal.5th at p. 1099.)

14 Code of Civil Procedure section 1260.040, subdivision (a),

provides: “If there is a dispute between plaintiff and defendant

over an evidentiary or other legal issue affecting the

determination of compensation, either party may move the court

for a ruling on the issue.”

31

The California Supreme Court reversed. It held that

liability under inverse condemnation principles requires the

damage to private property must be substantially caused by an

inherent risk presented by the deliberate design, construction, or

maintenance of the public improvement. It disapproved

California State Automobile Assn. v. City of Palo Alto (2006)

138 Cal.App.4th 474 (Palo Alto), relied upon by the trial court

and Court of Appeal, on the ground that Palo Alto improperly

required the city to prove that other forces (i.e., the failure to

install the backwater valve) alone produced the injury. (See

Oroville, supra, 7 Cal.5th at p. 1101.)

The court explained, “The concepts of ‘inherent risk’ and

‘substantial causation’ address somewhat overlapping

considerations but play distinct roles in the analysis of inverse

condemnation. And both must be present for a public entity to be

liable.” (Oroville, supra, 7 Cal.5th at p. 1106.)

The court stated the “focus” of substantial causation was

“on whether there is proof that the damages ‘followed in the

normal course of subsequent events’ and were ‘predominantly’

produced by the improvement.” (Oroville, supra, 7 Cal.5th at

p. 1108.) “At the core of the test is the requirement that––even in

the case of multiple concurrent causes—the injury to private

property is an ‘inescapable or unavoidable consequence’ of the

public improvement as planned and constructed.” (Ibid.)

Accordingly, the court rejected a strict liability standard for

inverse condemnation claims. (Ibid.)

Oroville further explained, “The inherent risk

assessment—in line with the policy considerations underlying

article I, section 19—avoids open-ended liability by protecting

public entities from liability for private property damage that is

32

arguably connected to a public improvement but is not the result

of the improvement’s inherent risks.” (Oroville, supra, 7 Cal.5th

at p. 1106.) The court emphasized, “the ‘inherent risk’ aspect of

the inverse condemnation inquiry is not limited to deliberate

design or construction of the public improvement. It also

encompasses risks from the maintenance or continued upkeep of

the public work. [Citation.] A public entity might construct a

public improvement and then entirely neglect any kind of

preventive monitoring or maintenance for the improvement.

[Citation.] If the public entity makes a policy choice to benefit

from the cost savings from declining to pursue a reasonable

maintenance program, for instance, inverse condemnation

principles command ‘the corollary obligation to pay for the

damages caused when the risks attending these cost-saving

measures materialize.’ [Citation.] It may be sensible in some

sense for a public entity to forgo regular monitoring and repair

and instead adopt a ‘wait until it breaks’ plan of maintenance to

save on the costs of imposing a monitoring system. But the

damages that result from the inherent risks posed by the public

entity’s maintenance plan should be spread to the community

that benefits from lower costs, instead of leaving property owners

adversely affected by the public entity’s choice to shoulder the

burden alone.” (Id. at p. 1107.)

Oroville concluded it was not enough for the trial court to

find the primary cause of the sewage backup was root intrusion.

Sewage backup was not an inherent risk of the city’s sewer

system as deliberately designed and constructed. Instead, the

sewer system was deliberately designed to include the back-water

valve, which the evidence showed would have significantly

reduced the risk of invasion. (See Oroville, supra, 7 Cal.5th at

33

p. 1111.) Thus, “[t]he backup of sewage into [the plaintiffs’]

offices was not the necessary result or unavoidable consequence

of any risk posed by the sewer system.” (Ibid.)

2. The master complaint satisfies Oroville

a. Substantial causation

Here, the master complaint alleged that SCE knew its

infrastructure was old and improperly maintained for safety, yet

it failed to properly assess and remediate these known risks,

resulting in the Thomas Fire and other wildfires. On

December 4, 2017 SCE’s electrical distribution system, including

its power lines, conductors, electrical infrastructure and

equipment and transformers “arced,” igniting the Thomas Fire at

two separate locations. Although it had the authority to do so,

SCE did not power down its electrical infrastructure before the

Thomas Fire ignited, despite a “Red Flag Warning” of high winds

and hazardous conditions. The Thomas Fire burned more than

281,000 acres in Santa Barbara and Ventura Counties. Simple

Avo further alleged its property in Ventura was destroyed

causing damage to its crops, structures, and loss of profits. The

master complaint concluded, “The above described damage to

Plaintiffs’ property was legally and substantially caused by the

actions of SCE in their installation, ownership, operation, use,

control, management, and/or maintenance of the electrical

distribution system for a public use.”

These allegations are sufficient to allege Simple Avo’s

damages were “substantially caused” by SCE’s old and

improperly maintained electrical distribution system.

34

We are not persuaded by SCE’s argument that its own

negligence is a concurrent cause of the Thomas Fire that absolves

it of inverse condemnation liability. Seizing on one sentence in

Oroville that states, “even in the case of multiple concurrent

causes—the injury to private property [must be] an ‘inescapable

or unavoidable consequence’ of the public improvement” (Oroville,

supra, 7 Cal.5th at p. 1108), SCE contends the master complaint

does not and cannot meet this “elevated” standard. According to

SCE, the master complaint alleged SCE failed to act with

reasonable care to maintain its safety equipment, supervise its

employees, or manage the vegetation surrounding its equipment.

The consequences of SCE’s operation and maintenance of its

electric utility (i.e., the Thomas Fire) were therefore escapable

and avoidable if not for SCE’s own negligence.

But Oroville expressly rejected this argument: “If damage

to private property is substantially caused by the inherent risks

of the design or construction of a public improvement, a public

entity must provide just compensation for the damage, whether it

was intentional or the result of negligence by the public entity.”

(Oroville, supra, 7 Cal.5th at p. 1106.) Accordingly, the master

complaint sufficiently alleged SCE “substantially caused” the

damage to Simple Avo’s property.

b. Inherent risk

Next, SCE contends the master complaint fails to plead an

inherent risk in the deliberate design, construction or

maintenance of its electric distribution system substantially

caused Simple Avo’s damages. The allegations in the master

complaint show otherwise.

35

The master complaint alleges that SCE chose to forgo

regular monitoring and repair of its aging electric infrastructure.

In particular, that SCE failed to meet its own target metrics to

inspect, assess, and remediate electrical poles that did not meet

modern safety standards. SCE instead modified its software to

recalculate pole safety factors and reduced the percentage of

poles that need remediation to 9 percent from its original

estimate of 22 percent. The master complaint identified other

fires caused by SCE’s electrical infrastructure as well as the fines

assessed by the CPUC against SCE for prior safety violations.

The master complaint further alleged, “SCE knew about the

significant risk of wildfires from its ineffective vegetation

management programs, unsafe equipment, and/or aging

infrastructure for decades before the Thomas Fire.” These

allegations describe the “wait until it breaks” maintenance plan

set out in Oroville.

As in Oroville’s hypothetical, SCE’s failure to meet its

targets to inspect, assess, and remediate poles benefits SCE in

the form of cost savings. The complaint alleged SCE deliberately

modified its software, which resulted in a significant reduction of

the number of poles to be remediated. Because the master

complaint alleged SCE made a choice to “declin[e] to pursue a

reasonable maintenance program . . . inverse condemnation

principles command ‘the corollary obligation to pay for the

damages caused when the risks attending these cost-saving

measures materialize.’” (Oroville, supra, 7 Cal.5th at p. 1107.)

SCE contends there are no allegations it made a deliberate

choice when it failed to meet its program goals, and that the

allegations that it negligently failed to meet its own goals prevent

inverse condemnation liability from attaching. We already

36

addressed and rejected SCE’s negligence argument above.

Further, at the pleading stage, the complaint sufficiently alleged

facts that SCE chose to forgo regular monitoring and repair of its

aging electric infrastructure.

Accordingly, the master complaint has adequately alleged

the inherent risk in the deliberate design, construction or

maintenance of its electric distribution system substantially

caused Simple Avo’s damages.

3. The master complaint sufficiently alleges public use

SCE argues that neither the Thomas Fire itself, nor any of

the damage from the Thomas Fire, served “the public use”—a

required element for inverse condemnation. SCE argues that

such damage may give rise to an inverse condemnation only if the

damage itself, rather than the public improvement, furthers the

public use.

“‘A public use is “a use which concerns the whole

community as distinguished from a particular individual or a

particular number of individuals.”’” (Customer Co. v. City of

Sacramento (1995) 10 Cal.4th 368, 381 (Customer Co.); see City of

Los Angeles v. Superior Court (2011) 194 Cal.App.4th 210, 221.)

“[G]enerally, condemning private property for the transmission of

electrical power is a public use and inverse condemnation will

apply.” (Barham, supra, 74 Cal.App.4th at p. 752; see also

Hale v. Morgan (1978) 22 Cal.3d 388, 400 [electrical service is a

“vital” necessity to the public]; Slemons v. Southern California

Edison Co. (1967) 252 Cal.App.2d 1022, 1026 [“Electric power

lines for the transmission and distribution of electric energy are

clearly a public use of property for eminent domain purposes.”].)

37

Cantu v. Pacific Gas & Electric Co. (1987) 189 Cal.App.3d

160 (Cantu) is instructive. There, the developer of a subdivision

contracted with a utility company to provide electrical and gas

service to the 16 lots within the subdivision. (Id. at p. 162.) The

utility installed a trench within the subdivision to accommodate

its electrical and gas lines. (Id. at p. 163.) Years later, during

heavy winter rains, a landslide occurred in the subdivision,

damaging the plaintiffs’ home. (Ibid.) The plaintiffs sued the

utility for inverse condemnation, alleging the utility’s trench was

a contributing cause of the landslide. (Ibid.) Following a bench

trial, the court found the utility liable in inverse condemnation.

(Ibid.) The Court of Appeal reversed, ruling the utility facilities

at issue were “for a private use and therefore inverse liability

principles are inapplicable.” (Id. at p. 164.)

Cantu based its public use finding on two key

circumstances. First, that it “would be unfair” to impose inverse

condemnation liability when “service was provided pursuant to a

contract between the private developer and [the utility]” rather

than by the utility’s exercise of its eminent domain authority,

which would reflect “an economic business decision to assume

liability in the event damage to neighboring property is

proximately caused by its improvement.” (Cantu, supra,

189 Cal.App.3d at pp. 164-165.) Second, the court determined it

was significant that the utility trench “was designed to fulfill an

individual need” for a single subdivision and was not part of a

larger system “designed to transmit electricity over a much

greater area and which would exist even if these particular

plaintiffs were not customers.” (Ibid.) Because the utility

facilities “did not benefit the public at large but [were] for the

private use of the plaintiffs and their neighbors,” the court

38

reasoned that imposing inverse condemnation liability would be

inconsistent with the doctrine’s underlying rationale that “the

risks of injury [from public activity] should be spread over

society.” (Id. at p. 165.)

In Barham, by contrast, the power lines that caused the

fires were part of a “circuit” that “provide[d] electric service to

more than 1,000 households.” (Barham, supra, 74 Cal.App.4th at

p. 754.) Distinguishing Cantu, Barham concluded “the

transmission of electric power through the facilities that caused

damage to the [plaintiffs’] property was for the benefit of the

public.” (Ibid.) The same analysis applies here. The master

complaint alleged the power lines that ignited the Thomas Fire

were part of an electrical distribution system serving thousands

of acres in Central, Coastal, and Southern California. Under

Barham, the electric distribution system that caused damage to

Simple Avo’s property was for the public use.

We are not persuaded by Customer Co., supra, 10 Cal.4th

at page 383, which SCE cites for the proposition that inverse

condemnation liability arises only if the damage itself serves a

public use. There, law enforcement, in the course of

apprehending a felony suspect, fired teargas into the plaintiff’s

store, causing extensive property damage. (Id. at p. 371.)

Customer Co. held that “an action for inverse condemnation does

not lie in the present case to recover damages caused by the

efforts of law enforcement officers to enforce the criminal laws.”

(Ibid.) The court reasoned, “the property damage for which

Customer seeks to recover bears no relation to a ‘public

improvement’ or ‘public work’ of any kind. Instead, the damage

was caused by actions of public employees having ‘no relation to

the function’ of a public improvement whatsoever.” (Id. at

39

p. 383.) Customer Co. merely reinforces the rule that the public

use element is tied to the public improvement, not the damage it

causes.

SCE’s other cases that it cites for the proposition that the

public use requirement applies to the damage (e.g., the wildfire)

rather than the public improvement (e.g., the electric distribution

system) that caused the damage do not overcome the inverse

condemnation analysis presented in Barham, Cantu, and

Customer Co.15

Our ruling that the master complaint sufficiently alleges a

cause of action for inverse condemnation, of course, is not a ruling

that SCE is liable on that cause of action. As the trial court

noted, SCE’s argument regarding the purported effect of the 2017

CPUC decision on its ability to spread its losses through a rate

increase identifies a potential factual issue that cannot be

resolved on demurrer. The CPUC may come to a different

conclusion as to SCE and the Thomas Fire, a matter on which we

will not speculate and offer no view.

15 See, e.g., Reardon v. San Francisco (1885) 66 Cal. 492;

Western Assurance Co. v. Sacramento & San Joaquin Drainage

District (1925) 72 Cal.App. 68; Miller v. City of Palo Alto (1929)

208 Cal. 74; Hayashi v. Alameda County Flood Control & Water

Conservation District (1959) 167 Cal.App.2d 584.

40

DISPOSITION

The judgment and order denying the demurrer are

affirmed. Simple Avo is to recover its costs on appeal.

MARTINEZ, P. J.

We concur:

SEGAL, J.

FEUER, J.

41