SAN FRANCISCO (CN) – A state court jury will decide if Pacific Gas and Electric should be held liable for the 2017 Tubbs Fire that killed 22 people and caused $6.2 billion in damage, a federal judge ruled Friday.
U.S. Bankruptcy Judge Dennis Montali granted a motion for relief from an automatic stay on litigation so Tubbs Fire victims can resolve their claims against PG&E in state court.
In January, CalFire determined that the Tubbs Fire was caused by a “private electrical system” in Calistoga and not by PG&E equipment, but a group of fire victims disputes those findings.
PG&E had asked Montali to deny the motion, arguing a state court trial would cause delay and jeopardize its ability to emerge from bankruptcy by a June 30, 2020, deadline so it can access a state-sponsored $21 billion wildfire liability fund.
Montali rejected those arguments in a 5-page ruling. He found a state court trial could take place on a “parallel track” as the bankruptcy court moves forward with estimating PG&E’s total liability for other wildfires.
PG&E said in a statement that it will cooperate with the state court to support a speedy resolution so it can meet the state’s June 2020 deadline for resolving its bankruptcy case.
“Regardless of the next legal steps, Cal Fire has already determined that the cause of the 2017 Tubbs Fire was not related to PG&E equipment,” PG&E spokeswoman Andrea Menniti said by email.
Arguing before Montali earlier this week, attorneys for wildfire victims said a state court trial could start as early as January 2020.
The bankruptcy judge agreed with wildfire victims’ position that Tubbs Fire claims present unique questions of state law that a state court is better suited to handle. The state court must determine if the principle of “inverse condemnation” applies to an investor-owned utility regulated by the state.
Inverse condemnation is a legal principle that allows a public entity to be held liable for damage caused by its equipment, even if it was not negligent. The state court must also decide if PG&E was negligent in maintaining its equipment or vegetation around power lines and if that negligence was a factor in causing the Tubbs Fire.
The jury’s decision will play a major role in influencing how Montali decides to estimate PG&E’s total wildfire liability. That estimate will inform his decision on how much money should be placed in a recovery fund for wildfire victims.
Also on Friday, Montali denied bondholders’ and insurers’ motions to terminate PG&E’s exclusive right to file its own bankruptcy reorganization plan before a Sept. 26 deadline. The judge said allowing lawyers to fight over competing plans would prolong the litigation and increase court costs.
“Fire victims and their insurers should not need to wait for conclusion of expensive, lengthy and uncertain disputes that only indirectly concern them,” Montali wrote.
PG&E intends to file its own restructuring plan by Sept. 9.
The company said in a statement that it has “made significant progress in further refining a viable, fair, and comprehensive plan of reorganization that will compensate wildfire victims, protect customer rates, and put PG&E on a path to be the energy company our customers need and deserve.”
PG&E declared bankruptcy in January as it faced a potential $30 billion in liability for wildfires allegedly caused by its equipment and failure to maintain vegetation around power lines.
Wildfire victims’ attorneys Robert Julian and Cecily Dumas, of Baker & Hostetler in San Francisco, did not immediately return emails and phone calls seeking comment Friday.