Victims of the deadly Tubbs Fire in 2017 won the right to pursue lawsuits against PG&E Corp. on Friday in spite of state investigators’ declaration that the utility wasn’t to blame for the fire.
Bankruptcy Judge Dennis Montali gave Tubbs victims’ lawyers the green light to take PG&E to court, arguing that the amount PG&E owes those victims must be resolved before the PG&E bankruptcy can be settled. PG&E has said it owes all wildfire victims about $30 billion.
Montali’s ruling is a victory for Tubbs’ victims lawyers and a setback for PG&E, which had argued that a trial in state Superior Court on the Tubbs disaster would drag on endlessly and hinder PG&E’s ability to exit bankruptcy by next June. That’s the deadline set by the Legislature to allow PG&E to participate in a state-run “wildfire insurance fund” that would pay claims for future fires. Normally the company’s bankruptcy filing would prevent the victims from pursing their lawsuit.
The Tubbs Fire was the worst of the October 2017 fires that tore through the Northern California wine country. Cal Fire has blamed PG&E equipment for more than a dozen of those fires but said in January that Tubbs was caused by an electrical problem on private property. Victims’ lawyers believe they can convince a jury that PG&E was at least partly to blame because it failed to shut off power to the region in spite of gusting winds.
Separately, Montali handed PG&E a victory when he denied a request by the utility’s bondholders to begin lobbying their fellow creditors on their plan to execute a hostile takeover of the company. Instead, the bondholders must wait until after PG&E submits its own plan for reorganizing the company’s finances. PG&E says it will submit that plan Sept. 9. The judge said a free-for-all over PG&E’s future ownership could make things worse for fire victims waiting to be paid.
“Competing plans are tempting, and no doubt produce a feast for lawyers, accountants,investment bankers and others, not to mention the intellectual challenges to the court. But the inescapable fact is that the fire victims and their insurers should not need to wait for conclusion of expensive, lengthy and uncertain disputes that only indirectly concern them,” the judge wrote.