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Court of Appeal:
S.C. Should Rethink Rule on Stipulated-Judgment Appeals
Panel Balks at Having to Decide if Demurrer Was Properly Sustained to Action Against Southern California Edison in Massive Fire Case, Ordinarily a Nonappealable Order, Through Friendly Agreement of Parties Quickening Appeal
By a MetNews Staff Writer
Div. Seven of the Court of Appeal for this district has criticized the rule erected by the California Supreme Court that a stipulated order or judgment may be appealed where the accord was reached for the purpose of expediting an appeal, urging that the high court take a fresh look at its precedents that go back to 1869.
Applying those precedents, Div. Seven considered an appeal by Southern California Edison Company (“SCE”) from an agreed-upon resolution of an action against it by Simple Avo Paradise Ranch, LLC, which owns an avocado farm, under which it will pay $1.75 million on an inverse condemnation claim based on damage from the massive 2017 Thomas Fire in in the Los Padres National Forest caused by SCE’s power poles. However, under a deal reached by the parties, that duty to pay would disintegrate if the appeals court were to reverse the order by then-Los Angeles Superior Court Judge Daniel J. Buckley overruling SCE’s demurrer—which ordinarily would be nonappealable.
Presiding Justice Gonzalo C. Martinez authored the opinion, filed Thursday, which affirms the judgment and order.
Large Stakes
Had the decision gone the other way, with a holding that SCE’s demurrer should have been sustained, it would have benefitted SCE appreciably and beyond the litigation with the olive farm, potentially sparing it of potentially several millions of dollars in liability. Simple Avo was a participant in one of three groups of plaintiffs in consolidated actions—individual private parties—and SCE’s demurrer to the group’s master complaint had been overruled.
A published decision in favor of SCE would have upset that decision. However, Martinez, addressing the merits of the demurrer, said he saw no reason to depart from the conclusion reached in two recent Court of Appeal opinions that SCE, as a public utility, can be held liable in an inverse condemnation action.
As to the matter of appealability, Martinez wrote:
“[W]hile 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.”
Seminal Case
The presiding justice made note of a line of California Supreme Court decisions which started with the 1896 opinion in Mecham v. McKay. There, it was declared that the bar on appealing from a stipulated judgment or order “is to be limited to cases wherein it does not appear from the record that the consent was given only pro forma to facilitate an appeal, and with the understanding on both sides that the party did not thereby intend to abandon his right to be heard on the appeal in opposition to the judgment or order.”
That decision was cited in the 1986 high court case of Building Industry Assn. v. City of Camarillo. Chief Justice Malcolm Lucas (now deceased) wrote:
“[T]here is an exception to the rule that a party may not appeal a consent judgment. 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.”
In his 1999 opinion in Norgart v. Upjohn Co., Supreme Court Justice Stanley Mosk (also deceased) quoted the second sentence of that passage and adopted the opinion’s reasoning. In that case, the parties stipulated to the granting of a motion for summary judgment—which is appealable—although the tentative ruling was to deny it, an order that would not have been appealable.
Justice Joyce Kennard (now retired) protested:
“To permit the parties to manufacture appellate jurisdiction in this way subverts the Legislature’s determination making summary judgment denials subject to discretionary appellate review by writ petition rather than appealable as a matter of right.
“In my view, the parties may not by stipulation artificially convert a nonappealable interim ruling denying summary judgment into an appealable final judgment.”
Martinez’s Opinion
Decrying the effect of Norgart and its predecessors, Martinez said:
“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.”
He continued:
“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.”
Coordinated Proceedings
Martinez went on to say:
“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…, also gives us pause.”
He bemoaned an inability to “discern a principled basis or precedent to create a rule carving out coordinated proceedings from the exception,” and said that “Norgart’s focus on the parties’ intent would preclude such a rule.”
Noting that under Building Industry, an appeal from a stipulated judgment must be based on a ruling on a “critical issue” Martinez remarked:
“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.”
He added that “[u]nder the current state of the law,” with no “meaningful limitation on the exception” to the nonappealability rule, “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.”
The case is Simple Avo Paradise Ranch, LLC v. Southern California Edison Company, 2024 S.O.S. 1750.
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