IQ Holdings, Inc. v. Surfdog Ventures LLC, et al.

Case Number

25CV04560

Case Type

Hearing Date / Time

Fri, 03/06/2026 - 10:00

Nature of Proceedings

Demurrer; Motion to Strike; Motion for Order

Tentative Ruling

IQ Holdings, Inc. v. Surfdog Ventures LLC, et al.           

Case No. 25CV04560

           

Hearing Date: March 6, 2026                                

HEARING:              1. Defendants’ Demurrer to Plaintiff’s Complaint

                                    2. Defendants’ Motion to Strike Certain Portions of Plaintiff’s Complaint

                                    3. Defendants’ Motion for Order Requiring Plaintiff to Post Undertaking

ATTORNEYS:        For Plaintiff IQ Holdings, Inc.: Steven A. Blum, Gary Ho, Blum & Ho LLP

                                    For Defendants Surfdog Ventures LLC, Peter Muller, Jillian         Muller: Lawrence J. Conlan, Richard Lloyd, Cappello & Noel LLP                 

TENTATIVE RULING:

For the reasons set forth herein:

1. Defendants’ Demurrer and Motion to Strike Certain Portions of Plaintiff’s Complaint are taken off-calendar as moot.

2. Defendants’ Motion for Order Requiring Plaintiff to Post Undertaking is granted in the reduced amount of $50,000.00. Defendants shall prepare a formal order for the court’s signature, serve plaintiff with the order, and file proof of service with the court. Plaintiff shall post the undertaking within 30 days after the date of service of the formal court order. The action is not stayed pending the posting.

Background:

This action was commenced on July 23, 2025, by the filing of the original complaint by plaintiff IQ Holdings, Inc. (plaintiff) against defendants Surfdog Ventures (Surfdog), Peter Muller (Peter), and Jillian Muller (Jillian) (collectively “defendants”) for negligence, nuisance, and trespass. [Note: Due to common surnames, Peter Muller and Jillian Muller will be referred to by their given names for clarity. No disrespect is intended.]

On October 30, 2025, defendants filed a demurrer to the original complaint as well as a motion to strike certain portions of the original complaint.

Rather than file oppositions to the demurrer and motion to strike, on February 23, 2026, plaintiff filed a first amended complaint (FAC) against the same defendants based on the same three causes of action. The filing of the FAC moots the demurrer and the motion to strike, which will be taken off-calendar.

As alleged in the FAC:

Plaintiff is a Texas Corporation that owns real property located at 631 Parra Grande Lane, Santa Barbara County. (FAC, ¶ 1.)

Surfdog in the record owner of a large residential property, of at least 18 acres, located at 2549 Sycamore Canyon Road, and four adjacent acres located at 2561 Sycamore Canyon Road, Santa Barbara. (FAC, ¶ 2.) The Surfdog property is immediately upslope, upstream, and adjacent to plaintiff’s property and both are located in the Montecito Creek watershed on a mapped floodplain. (Ibid.)

Peter and Jillian reside at and personally occupy the Surfdog property. (FAC, ¶ 3.)

In 2018 and 2019, defendants undertook significant construction and grading activities on the Surfdog property including: (1) Replacing an old bridge with a new bridge, without first obtaining any permits from the City or County of Santa Barbara; (2) Adding soil and boulders to raise the height of the berm on the Surfdog property’s side of Montecito Creek, without first obtaining permits; and (3) Constructing a new building on the flood plain of the Surfdog property, which further altered the natural drainage and flow patterns in the area. (FAC, ¶ 7.)

The modifications to the Surfdog property altered the natural topography and drainage patterns of the Surfdog property and the adjacent portion of Montecito Creek, causing the natural water flows to divert from the Surfdog property and Montecito Creek toward and onto plaintiff’s property. (FAC, ¶ 8.)

The diversion is a continuing condition wherein the improvements channel and redirect water, sediment, vegetation, mud, debris, and other material from the Surfdog property and Montecito Creek toward and onto plaintiff’s property each time it rains. (FAC, ¶ 9.)

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 plaintiff’s property, causing substantial damage to plaintiff’s property. (FAC, ¶ 11.)

Arguing that plaintiff is a Texas Corporation, not certified to do business in California, and that there is a reasonable possibility of defendants prevailing in this action, defendants seek to require plaintiff to post an undertaking, in the amount of $300,000.00, pursuant to Code of Civil Procedure section 1030. Defendants also request that the court stay the action pending plaintiff’s filing of the undertaking.

Plaintiff opposes the motion.

Analysis:

“(a) When the plaintiff in an action or special proceeding resides out of the state, or is a foreign corporation, the defendant may at any time apply to the court by noticed motion for an order requiring the plaintiff to file an undertaking to secure an award of costs and attorney’s fees which may be awarded in the action or special proceeding. For the purposes of this section, “attorney’s fees” means reasonable attorney’s fees a party may be authorized to recover by a statute apart from this section or by contract.

“(b) The motion shall be made on the grounds that the plaintiff resides out of the state or is a foreign corporation and that there is a reasonable possibility that the moving defendant will obtain judgment in the action or special proceeding. The motion shall be accompanied by an affidavit in support of the grounds for the motion and by a memorandum of points and authorities. The affidavit shall set forth the nature and amount of the costs and attorney’s fees the defendant has incurred and expects to incur by the conclusion of the action or special proceeding.

“(c) If the court, after hearing, determines that the grounds for the motion have been established, the court shall order that the plaintiff file the undertaking in an amount specified in the court’s order as security for costs and attorney’s fees.

“(d) The plaintiff shall file the undertaking not later than 30 days after service of the court’s order requiring it or within a greater time allowed by the court. If the plaintiff fails to file the undertaking within the time allowed, the plaintiff’s action or special proceeding shall be dismissed as to the defendant in whose favor the order requiring the undertaking was made.

“(e) If the defendant’s motion for an order requiring an undertaking is filed not later than 30 days after service of summons on the defendant, further proceedings may be stayed in the discretion of the court upon application to the court by the defendant by noticed motion for the stay until 10 days after the motion for the undertaking is denied or, if granted, until 10 days after the required undertaking has been filed and the defendant has been served with a copy of the undertaking. The hearing on the application for the stay shall be held not later than 60 days after service of the summons. If the defendant files a motion for an order requiring an undertaking, which is granted but the defendant objects to the undertaking, the court may in its discretion stay the proceedings not longer than 10 days after a sufficient undertaking has been filed and the defendant has been served with a copy of the undertaking.

“(f) The determinations of the court under this section have no effect on the determination of any issues on the merits of the action or special proceeding and may not be given in evidence nor referred to in the trial of the action or proceeding.

“(g) An order granting or denying a motion for an undertaking under this section is not appealable.” (Code Civ. Proc., § 1030.)

“The purpose of the statute is to enable a California resident sued by an out-of-state resident “ ‘ “to secure costs in light of the difficulty of enforcing a judgment for costs against a person who is not within the court’s jurisdiction.” ’ ” [Citations.] The statute therefore acts to prevent out-of-state residents from filing frivolous lawsuits against California residents.” (Yao v. Superior Court (2002) 104 Cal.App.4th 327, 332.)

There is no dispute that plaintiff is a foreign corporation as contemplated by Code of Civil Procedure section 1030, subdivision (b). The question now becomes whether defendants have shown a reasonable possibility that defendants will obtain judgment in their favor.

By way of affidavit, defense counsel declares:

“As set forth in the demurrer Defendants are filing concurrently, the causes of action that Plaintiff asserts in its complaint are likely barred by applicable statutes of limitations and by the five-year statute, and therefore Defendants have a reasonable possibility of prevailing.” (Conlan Decl., ¶ 3.)

“In the event the complaint is not time-barred in its entirety, however, Defendants have a reasonably possibility of prevailing for several other reasons. First, whatever damages Plaintiff has incurred, if any, it has likely already been paid in its presumptive settlement of its claims against Southern California Edison.” (Conlan Decl., ¶ 4.)

“If this action proceeds, Defendants will seek discovery of the settlement agreement which practically speaking would cover any damage Plaintiff incurred as a result of the debris flow.” (Conlan Decl., ¶ 5.)

“Likewise, Defendants may move to join Southern California Edison as an indispensable party obligated to indemnity for Plaintiff’s losses, if not already covered.” (Conlan Decl., ¶ 6.)

“Defendants will also seek to establish that they have no legal liability to Plaintiff, because all Defendants did was re-build, on their own property, the structures and grading that had been present before the debris flow occurred. There is a reasonable possibility that the Court and/or the jury will not believe Plaintiff’s claims, and Defendants will not be held responsible for harm that may have occurred to Plaintiff’s property.” (Conlan Decl., ¶ 7.)

Defense counsel then goes on to attack the credibility of plaintiff, which this court does not find relevant to the present action.

Likewise, defense counsel’s assertion that plaintiff’s damages, if any, has likely already been paid by way of settlement with Southern California Edison, is entirely too speculative to support defendants’ position of obtaining a judgment in their favor. No actual evidence is provided to support the fact stated.

Defense counsel’s declaration that “all Defendants did was re-build, on their own property, the structures and grading that had been present before the debris flow occurred,” is also unhelpful. Defense counsel has not, and the court suspects could not, establish personal knowledge of this assertion. Without personal knowledge, the statement is inadmissible. (see Evid. Code, § 702.)

Thus, the only remaining argument is whether defendants have a possibility of showing that plaintiff’s action is barred by the statute of limitations. This showing has been made a bit more complicated by plaintiff filing the FAC after the filing of the motion. However, the reply to plaintiff’s opposition assists in explaining the defendants’ application of the statute of limitations as to both the original complaint and the FAC. Also helpful is the demurrer that rendered made moot by the filing of the FAC.

Without ruling as to whether plaintiff’s action is barred by the applicable statute of limitations at this time, defendants have shown that they have a reasonable possibility of obtaining judgment based on this argument.

As noted above, defendants seek an undertaking in the amount of $300,000.00. While the court does appreciate that this type of litigation can result in significant costs, the court determines that defendants have failed to sufficiently justify the amount requested. The court will order plaintiff to post an undertaking of $50,000.00 at this time.