IQ Holdings Inc vs Surfdog Ventures LLC et al

Analysis: (1) Standard on Demurrer "Because the function of a demurrer is to test the sufficiency of a pleading as a matter of law, we ... assume the truth of the allegations in the complaint, but do not assume the truth of contentions, deductions, or conclusions of law. [Citation.] It is error for the trial court to sustain a demurrer if the plaintiff has stated a cause of action under any possible legal theory, and it is an abuse of discretion for the court to sustain a demurrer without leave to amend if the plaintiff has shown there is a reasonable possibility a defect can be cured by amendment." (California Logistics, Inc. v. State of California (2008) 161 Cal.App.4th 242, 247).

"The reviewing court gives the complaint a reasonable interpretation, and treats the demurrer as admitting all material facts properly pleaded." (Payne v. National Collection Systems, Inc. (2001) 91 Cal.App.4th 1037, 1043.) "[I]n ruling on a demurrer the trial court may take into account in addition to the complaint itself any matter that may be properly considered under the doctrine of judicial notice." (Cruz v. County of Los Angeles (1985) 173 Cal.App.3d 1131, 1133-1134.)

(2) Statute of Limitations "[I]t is difficult for demurrers based on the statute of limitations to succeed because (1) trial and appellate courts treat the demurrer as admitting all material facts properly pleaded and (2) resolution of the statute of limitations issue can involve questions of fact. Furthermore, when the relevant facts are not clear such that the cause of action might be, but is not necessarily, time-barred, the demurrer will be overruled. [Citation.] Thus, for a demurrer based on the statute of limitations to be sustained, the untimeliness of the lawsuit must clearly and affirmatively appear on the face of the complaint and matters judicially noticed." (Schmier v. City of Berkeley (2022) 76 Cal.App.5th 549, 554 (Schmier).)

"To determine the statute of limitations which applies to a cause of action it is necessary to identify the nature of the cause of action, i.e., the 'gravamen' of the cause of action. [Citations.] Where negligent conduct has caused injury to real property, the gravamen of the cause of action is the injury to the real property. [Citation.] In such circumstances, the three-year statute of limitations [in Code of Civil Procedure section 338, subdivision (b),] applies. [Citation.] [I]t is the underlying injury and not the legal theories of recovery superimposed on the injury that dictates the applicable statute of limitations. [Citations.]" (Cyr v. McGovran (2012) 206 Cal.App.4th 645, 650, internal quotation marks omitted (Cyr).)

Here, the injuries alleged in each of COAs in the FAC are for property damage. Thus, the three-year statute of limitation applies. (Cyr, supra, 206 Cal.App.4th at p. 650.)

As to accrual, "[w]here a nuisance is of such character that it will presumably continue indefinitely it is considered permanent, and the limitations period runs from the time the nuisance is created. [Citations.] On the other hand, if the nuisance may be discontinued at any time it is considered continuing in character. [Citations.]" (Kahn v. Price (2021) 69 Cal.App.5th 223, 238.) " 'In general, a permanent nuisance is considered to be a permanent injury to property for which damages are assessed once and for all, while a continuing nuisance is considered to be a series of successive injuries for which the plaintiff must bring successive actions.['] [Citations.] 'With respect to a permanent nuisance, the statute of limitations begins to run on the creation of the nuisance and bars all claims after its passage ... .' [Citation.]

By contrast, 'each repetition of a continuing nuisance is considered a separate wrong which commences a new period in which to bring an action for recovery based upon the new injury.['] [Citations.] Thus, if a trespass or nuisance is continuing, 'an action may be brought at any time to recover the damages which have accrued within the statutory period, although the original trespass occurred before that period.' [Citation.] The same principles apply whether the wrongdoing is characterized as a nuisance or trespass." (Madani v.

Rabinowitz (2020) 45 Cal.App.5th 602, 608, internal quotation marks omitted (Madani).)

"[T]he 'crucial test of the permanency of a trespass or nuisance is whether the trespass or nuisance can be discontinued or abated.' [Citations]. Under this test, sometimes referred to as the 'abatability test' [citation], a trespass or nuisance is continuing if it 'can be remedied at a reasonable cost by reasonable means.' " (Madani, supra, 45 Cal.App.5th at pp. 608-609.)

Here, the alleged nuisance is the Surfdog Improvements in 2018 and 2019, which caused flooding onto the IQ Property in 2023. (FAC, P.P. 7-13.) The SAC alleges that Defendants "did not remove or modify the [Surfdog] Improvements" after being notified of the potential flooding issues. (FAC, P. 10.) It is not clear on the face of the FAC that the Surfdog Improvements cannot be discontinued or abated, or cannot be remedied at a reasonable cost by reasonable means. As alleged, the first and second COAs for nuisance and trespass are within the three-year statute based on a continuing nuisance theory and the property damage in 2023. (FAC, P. 11.)

As to the third COA for negligence, "a cause of action for damage to real property accrues when the defendant's act causes ' immediate and permanent injury' to the property or, to put it another way, when there is '[a]ctual and appreciable harm' to the property." (Siegel v. Anderson Homes, Inc. (2004) 118 Cal.App.4th 994, 1005, internal quotation marks omitted.) The FAC alleges that damage to the IQ Property occurred in 2023. (FAC, P. 11.) As alleged, "[t]his was the first significant rain event following the construction of the [Surfdog] Improvements that caused material damage to the IQ Property." (Ibid.) As alleged, it appears the third COA for negligence is within the three-year statute of limitations.

The court is not persuaded by defendant's estoppel/judicial admission arguments pertaining to prior unverified pleadings in another action. The court notes that "[t]he doctrine of judicial admissions also does not apply to allegations in pleadings that have been superseded by amendments, especially where the initial pleading was not verified ...." (Minish v. Hanuman Fellowship (2013) 214 Cal.App.4th 437, 456-457.) Moreover, as alleged, under a recurring accrual theory the 2023 property damage would fall within the statute of limitations. (See FAC, P.P. 9-12; Orange County Water Dist. v.

Sabic Innovative Plastics US, LLC (2017) 14 Cal.App.5th 343, 394 [applying continuous accrual theory to property damage caused by negligence in context of summary judgment motion] (Orange County).) "We see no reason why the theory of continuous accrual should not apply to negligence claims." (Orange County, supra, 14 Cal.App.5th at p. 396.)

Under these circumstances, the untimeliness of this action does not clearly and affirmatively appear on the face of the FAC and matters judicially noticed. Thus, the court will overrule the demurrer as to the applicable statute of limitations. (Schmier, supra, 76 Cal.App.5th at p. 554.)

(3) The Five-Year Rule "An action shall be brought to trial within five years after the action is commenced against the defendant." (Code Civ. Proc., Sec. 583.310.) This action was commenced on July 23, 2025, and five years have not elapsed since that time. (See Compl.) The court will overrule the demurrer as to this ground.

(4) Allegations of Individual Liability Against the Mullers The elements of private nuisance are: "First, the plaintiff must prove an interference with its use and enjoyment of its property. Second, the invasion of the plaintiff's interest in the use and enjoyment of the land must be substantial, i.e., it caused the plaintiff to suffer substantial actual damage. Third, the interference with the protected interest must not only be substantial, it must also be unreasonable, i.e., it must be of such a nature, duration, or amount as to constitute unreasonable interference with the use and enjoyment of the land." (Today's IV, Inc. v. Los Angeles County Metropolitan Transportation Authority (2022) 83 Cal.App.5th 1137, 1176.)

"The invasion may be intentional and unreasonable. It may be unintentional but caused by negligent or reckless conduct; or it may result from an abnormally dangerous activity for which there is strict liability. On any of these bases the defendant may be liable." (Lussier v. San Lorenzo Valley Water Dist. (1988) 206 Cal.App.3d 92, 100.) "The only parties who can be liable for a nuisance are 'the party who maintains the nuisance' as well as 'the party or parties who create or assist in its creation.' " (Kaura v.

Stabilis Fund II, LLC (2018) 24 Cal.App.5th 420, 434 (Kaura), internal quotation marks omitted.) "[L]iability for nuisance does not hinge on whether the defendant owns, possesses or controls the property [creating the nuisance], nor on whether he is in a position to abate the nuisance; the critical question is whether the defendant created or assisted in the creation of the nuisance." (City of Modesto Redevelopment Agency v. Superior Court (2004) 119 Cal.App.4th 28, 38 (City of Modesto).)

The FAC alleges that the Mullers reside and occupy the Surfdog Property. (FAC, P. 3.) The FAC alleges that the Mullers personally directed, controlled, authorized, and participated in the Surfdog Improvements. (FAC, P. 4.) The FAC alleges that "the Mullers and Surfdog operated as a common enterprise with respect to the ownership, management, improvement, and maintenance of the Surfdog Property, sharing a joint pecuniary interest in the enterprise and exercising mutual rights of control over the activities that caused the harm alleged herein." (Ibid.) The FAC alleges that the Mullers engaged in the activities that created or assisted in the creation of the nuisance. (Ibid.) Assuming these allegations are true, this is sufficient to support individual liability. (City of Modesto, supra, 119 Cal.App.4th at p. 38.)

(5) Consent to Nuisance Defendants argue that IQ admitted consent to the nuisance in the FAC. Defendants argue that the FAC alleges that IQ objected to the unpermitted actions in 2019 but did not file this action until 2025, and this constitutes consent to the nuisance. Defendants argue that IQ implicitly consented to the nuisance because it did not act sooner after raising objections. The court disagrees with this analysis. There are no allegations in the FAC that necessarily establish that IQ consented to the nuisance.

The FAC alleges that IQ "has never consented to the construction of the [Surfdog] Improvements, the diversion of water and debris onto the IQ Property, or any of the conditions described herein." (FAC, P. 10.) Assuming the truth of the factual allegations, a reasonable reading of the FAC establishes that IQ did not consent to the alleged nuisance. The court will overrule the demurrer on this ground.

(6) Allegation of Substantial Damage The FAC alleges that, "in January 2023, during a period of intense rainfall, the Improvements diverted large quantities of water, trees, vegetation, mud, debris, and other material from the Surfdog Property and Montecito Creek onto the IQ Property, causing substantial erosion, physical damage, and other harm to the IQ Property." (FAC, P. 11.) This is sufficient to allege substantial damage to property at the pleading stage. The court will overrule the demurrer on this ground.

(7) Motion to Strike "Any party, within the time allowed to respond to a pleading may serve and file a notice of motion to strike the whole or any part thereof ...." (Code Civ. Proc., Sec. 435, subd. (b)(1).) "The court may, upon a motion made pursuant to [s]ection 435, or at any time in its discretion, and upon terms it deems proper: [P.] ... [s]trike out any irrelevant, false, or improper matter inserted in any pleading." (Code Civ. Proc., Sec. 436, subd. (a).) "In passing on the correctness of a ruling on a motion to strike, judges read allegations of a pleading subject to a motion to strike as a whole, all parts in their context, and assume their truth." (Clauson v. Superior Court (1998) 67 Cal.App.4th 1253, 1255.)

Here, Defendants argue that the allegations against the Mullers in their individual capacities should be stricken. The court has addressed these arguments above in the context of Defendants' demurrer. For the same reasons that the court overruled the demurrer on this ground, the court will deny the motion to strike.

(8) Request for Judicial Notice " 'Judicial notice is the recognition and acceptance by the court, for use by the trier of fact or by the court, of the existence of a matter of law or fact that is relevant to an issue in the action without requiring formal proof of the matter.' [Citation.] The court may in its discretion take judicial notice of any court record in the United States. [Citation.] This includes any orders, findings of facts and conclusions of law, and judgments within court records. [Citations.]

However, while courts are free to take judicial notice of the existence of each document in a court file, including the truth of results reached, they may not take judicial notice of the truth of hearsay statements in decisions and court files. [Citation.] Courts may not take judicial notice of allegations in affidavits, declarations and probation reports in court records because such matters are reasonably subject to dispute and therefore require formal proof. [Citation.] (Lockley v. Law Office of Cantrell, Green, Pekich, Cruz & McCort (2001) 91 Cal.App.4th 875, 882.)

Here, Defendants ask the court to take judicial notice of prior unverified pleadings in another action. Defendants argue these prior unverified allegations are inconsistent with allegations in this action. Defendants also seek judicial notice of a document indicating that Surfdog is the legal owner of the Surfdog Property. The court finds the existence of these documents is not material to the disposition of the demurrer and motion filed by Defendants. "It is not sufficient that the evidence [subject to judicial notice] be relevant to an argument made by its proponent. The evidence must be relevant to the disposition of the matter." (OneTaste Inc. v. Netflix, Inc. (2025) 116 Cal.App.5th 174, 194.) The court will deny Defendants' request for judicial notice.

Tentative Ruling: Francisco Bueno vs City of Santa Barbara Tentative Ruling: Francisco Bueno vs City of Santa Barbara