Amid Mounting Personal Injury Lawsuits, California’s PG&E Rejects $24 Billion Proposal from Wildfire Victims/Bondholders
Pacific Gas & Electric Company announced Monday that they would be rejecting the $24 billion bankruptcy plan offered last week by bondholders and wildfire victims. In a press release, PG&E stated, “That plan proposal is a blatant attempt to unjustly enrich the noteholders who proposed it.” The $24 billion proposal was a counteroffer to the $11 billion settlement agreement PG&E announced in principle earlier this month, which covers insurance carriers and hedge funds seeking compensation from PG&E related to claims by homeowners and businesses over fires sparked by the company’s equipment.
PG&E’s $11 billion agreement is a plan to exit bankruptcy that mandates payments be capped at $8.4 billion for wildfire victims. Los Angeles-based BakerHostetler lawyer, Cecily Dumas, who represents the official committee of tort claimants in PG&E’s bankruptcy, deemed the plan “totally unacceptable,” noting that government agencies such as the Department of the Interior and the Federal Emergency Management Agency could file billions of dollars in claims, leaving far less for victims than the proposed $8.4 billion.
Additionally, PG&E announced the intention to pay other unsecured creditors, including noteholders, fully in cash when its plan goes into effect next year. Dumas called the scenario “unfair,” as it will put wildfire victims in line behind banks and other PG&E creditors in future bankruptcy hearings.
In response, wildfire victims and Pacific Gas and Electric Co. bondholders joined forces and offered their own proposal last week. Their plan would have set aside $24 billion to pay all victims of fires started by the company’s power lines in recent years, including individuals whose homes were lost, as well as insurance companies.
Bondholders proposed investing $28.4 billion in exchange for a 58.8% stake in the utility’s parent company, PG&E Corp. The bondholders’ investment would then create a $24 billion trust, in cash and stock, to pay victims’ claims from various fires in which the company was responsible. Attorneys for the committees of wildfire victims and bondholders involved in the PG&E case indicated that the trust would be acceptable to wildfire victims, allowing an impartial party to “manage the process.”
But today, PG&E decried that proposed settlement. PG&E spokesman James Noonan called the bondholders’ plan “an attempt to pay themselves more than they are entitled to under the law and costs customers billions of dollars.”
Brian Panish, a personal injury attorney and partner at Panish Shea Boyle, LLP in Newport Beach, represents over 1,000 wildfire victims. In response to a request for comment from PINews.com, Panish stated that while “they [PG&E] caused the problems and are trying to evade complete responsibility,” the proposed PG&E settlement could be considered a “good faith effort to try to resolve the situation.” Panish cautioned that the proposed agreement will require further examination, stating, “It will take time to know how exactly this will affect them [the victims], and we’ll need more analysis on that.”
Whether or not the bondholders and wildfire victims revise their original $24 billion offer remains to be seen, but it could ultimately hinge on one key detail. Attorney Dumas stated last week via a court filing that she and her clients had uncovered a “misconception” in the case, adding that “hundreds if not thousands of victims” who could file a claim against PG&E have not yet done so “based on the belief, however mistaken, that they would be violating their insurance policies and the terms of payment of their benefits. Dumas also indicated that the number of current PG&E victims who have filed for compensation may only represent a fraction of what could be a potential avalanche of impending personal injury claims.
Dumas also noted that, “While insurance covers damaged or destroyed property, it does not prevent someone from seeking payment for personal injuries such as emotional distress and physical harm.” She announced that the victims’ committee plans to “conduct more comprehensive discovery” of insurance companies and the people they covered to try to “find out whether victims are confused and believed that they are prohibited from emotional distress claims because they received insurance payments.”
If Dumas is correct, we may soon see a joint counteroffer from the bondholders/victims to PG&E that is significantly larger than the original $24 billion. Last month, Dumas suggested a more accurate estimate of the sum total of claims to be in excess of $40 billion. Personal injury attorneys are advising victims to be aware that they have until Oct. 21 to file a claim against PG&E as part of its bankruptcy case, which is separate from the Tubbs Fire civil jury trial.
Last week, a San Francisco Superior Court judge set a January 7 trial date for claims against PG&E by a group of 18 plaintiffs. The group is comprised of elderly and ill Sonoma County residents who were harmed in the 2017 Tubbs Fire. Though many similar lawsuits against PG&E have been filed but have yet to receive a trial date, these particular plaintiffs were given preference for the trial under a state rule giving elderly or ill individuals priority in having their cases resolved.
Michael Kelly, of Sacramento’s Walkup, Melodia, Kelly & Schoenberger firm, is an attorney representing Tubbs Fire victims. He described the importance of expediting the trial for the 18 plaintiffs to San Francisco’s ABC10 this week, noting, “For our clients who are elderly or who are sick, that they have some sense of finality, that they get an award to pay for the rebuilding of their house, to pay for the reforestation of their property, so that they can get closure before either their old age or their illness results in their premature death.
When PG&E declared bankruptcy in January 2019, the move froze all pending litigation against the company. The January 7 trial date represents a federal bankruptcy judge’s decision to in effect “unfreeze” the 18 plaintiffs’ lawsuits and move forward with challenging the cause of the Tubbs Fire. The stakes in that case are great, as the verdict will have definite effects on the pending lawsuits from fire victims represented by Cecily Dumas and BakerHostetler, as well as Brian Panish and Panish Shea Boyle, LLP.
Despite a Cal Fire investigation concluding that the Tubbs Fire most likely was sparked by private power equipment at a Calistoga-area property before destroying over 4,600 homes and killing 22 people, attorneys representing the victims are adamant that the findings are incorrect. Steven M. Campora, of Sacramento’s Dreyer Babich Buccola Wood Campora, LLP, is a personal injury attorney representing plaintiffs in the civil trial. Campora disagrees with the findings from Cal Fire’s investigation, stating that, “The Tubbs people are going to get their day in court…There is tons of evidence [implicating PG&E] Cal Fire didn’t consider.”
Attorney Michael Kelly agreed and clarified Campora’s point further by stating, “Cal Fire did not find, actually, a component, a wire, a pole— did not find any physical evidence consistent with its suggestion that the fire started there.”
Claims against PG&E in both civil and bankruptcy courts are expected to increase as more and more victims seek consultations from California’s personal injury attorneys.