Bankruptcy judge clears way for trial against PG&E on Tubbs fire

Widely held questions over whether PG&E is responsible for damages caused by the 2017 Tubbs fire that devastated Santa Rosa can be tried in civil court and decided by a California jury, a bankruptcy judge ruled Friday.

The decision marks a key juncture in PG&E's bankruptcy case, which had stalled all lawsuits against the investor-owned utility facing an estimated $30 billion liability for wildfires started by its power equipment in 2017 and 2018.

Now, a group of plaintiffs suing PG&E can ask a jury to hear their case alleging Cal Fire got it wrong when the agency concluded the Tubbs fire - the second-most destructive wildland blaze in state history - was sparked by private power equipment and not PG&E.

Allowing a civil trial on the Tubbs fire would “advance these cases towards the necessary and stated goals of all the parties: a just resolution of the claims of victims of the wildfires that have ravaged Northern California in recent years,” U.S. Bankruptcy Judge Dennis Montali said in his five-page written order issued Friday afternoon.

If PG&E does not appeal the decision, a fast-tracked civil trial on the Tubbs fire will begin in San Francisco Superior Court. The trial will be brought on behalf of a select group of elderly plaintiffs in poor health who are entitled to a fast-tracked trial in state court because of their conditions.

Because preparations for a civil trial such as evidence gathering and witness depositions were well underway last year before the utility filed for bankruptcy in late January, lawyers handling the case said they can pick up where they left off. The plaintiffs' attorneys told Montali they could be prepared for a trial to begin sometime in late 2019 or early 2020 - a timeline PG&E contested.

On Wednesday during a key day of arguments over the issue, a lawyer for the company warned Montali that a civil trial could imperil the company's ability to meet a state deadline to participate in a $10.5 billion wildfire insurance fund created to help utilities pay for victims' claims from future fires not caused by their power equipment.

PG&E has consistently defended Cal Fire's conclusion that private power equipment started the Tubbs fire. Cal Fire has also disputed claims that its investigation was incomplete and defended the work of its investigators.

“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,” a spokeswoman said in an email. “We intend to cooperate with the state court in order to help achieve the June 30, 2020 deadline to participate in the new state Wildfire Fund established by Assembly Bill 1054.”

Attorney Robert Julian, who led arguments Wednesday in federal bankruptcy court in San Francisco in support of a civil trial, said it was “courageous” of Montali to allow a California jury to help make crucial decisions affecting thousands of people, businesses and local governments with losses from the Tubbs fire.

“This case sends a message to the parties in the bankruptcy court and to the bondholders and the security traders on Wall Street who are trading and trying to make profits off of this case,” Julian said. “They are going to have to deal with the thousands of victims in Northern California who are trying to obtain just compensation.”

The number of Tubbs fire victims are in the tens of thousands and includes households, businesses, local governments, insurance companies, people with family members killed in the fire and others.

There is no complete tally of damages caused by the Tubbs fire, which ignited near Calistoga and burned west across 12 miles into Santa Rosa, killing 22 people and destroying 5,636 structures, most of them homes. Insured losses hit an estimated $9.5 billion, according to the industry trade group Insurance Information Institute.

In bankruptcy proceedings, creditors' claims against the debtor are settled through negotiations and estimation hearings overseen by a judge, which take into account what a jury might award creditors.

Lawyers representing wildfire victims in the bankruptcy case argued that questions about PG&E's liability for Tubbs fire damages were too complex for the bankruptcy estimation process.

Their case involves advancing an alternative theory about how the Tubbs fire started and showing that PG&E was negligent in its duty to prevent electricity-sparked wildfires. These questions are better suited for a 12-person jury, they said in a July motion filed in the bankruptcy case.

An attorney representing PG&E warned that a civil trial could be far too time consuming to be an effective means of making that decision and could imperil the utility's ability to take part in a critical state insurance fund created to cover damages from future wildfire.

But Montali agreed with arguments that the bankruptcy proceedings can continue “on a parallel track” while the Tubbs case is tried in civil court because of the large volume of matters to be decided.

In his order, Montali urged PG&E to “work collaboratively with plaintiffs' counsel to expedite rather than delay the pre-trial process to get to a jury trial promptly,” he wrote in a footnote. The judge suggested that it would be in the company's interest to help the process move forward expeditiously in the civil trial if the company wants the same cooperation during bankruptcy sessions for estimating all of the claims by the company's creditors.

“The shoe might be on the other foot when it is time to schedule the final estimation hearings,” Montali wrote.

Roy Miller, a Santa Rosa lawyer whose home was destroyed in the fire, said the bankruptcy estimation process overseen by one judge was not suitable to handle the complex question better suited to a jury of 12 people. Miller in July moved into the home he and his wife rebuilt in Larkfield, which remains a construction zone.

“All we want is to have a determination about the Tubbs fire. Period. End of story,” Miller said. “And the way that it's done is by a jury of your peers.”

You can reach Staff Writer Julie Johnson at 707-521-5220 or julie.johnson@pressdemocrat.com. On Twitter @jjpressdem.