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Paradise Fire Prompts PG&E Insolvency Concerns and Lawsuits

While lost lives, severe injuries, and displacement of thousands of families constitute the most horrific consequences of the Camp Fire that wiped out the town of Paradise, the economic toll also cannot be overstated. Emerging facts and lawsuits filed against PG&E suggest that the utility company that supplies electricity to Northern California might have caused […]

Paradise Fire LawsuitsWhile lost lives, severe injuries, and displacement of thousands of families constitute the most horrific consequences of the Camp Fire that wiped out the town of Paradise, the economic toll also cannot be overstated. Emerging facts and lawsuits filed against PG&E suggest that the utility company that supplies electricity to Northern California might have caused the fire or contributed to its severity.  An SEC filing reveals the company renewed its liability coverage for wildfires with a policy limit of $1.4 billion for the period from August 1, 2018 through July 31, 2019.  However, the company indicated that liability based on faulty or improperly maintained equipment or a failure to implement an emergency shutdown could exceed coverage.  While this revelation makes time of the essence for individuals and families who lost a loved one or their family residence, legislation enacted last year might provide financial protection against a possible PG&G bankruptcy.

 

PG&E Might Face Thousands of Lawsuits Filed by Victims of the Camp Fire

While only a small number of lawsuits have been filed against PG&E for its alleged role in the Paradise fire disaster, the company could soon face thousands of lawsuits filed by individuals who lost loved ones, their family home, and/or all their worldly possessions.  Moody’s estimates the damages could rise as high as $6.8 billion.  This estimate does not include any potential fines or legal fees.  PG&E has indicated in its SEC filing after the discovery of the fire that the company only had $3.46 billion in cash after borrowing from an existing revolving credit line.  Amid this grim financial news, the utility provider saw its stock tumble to half its value since the fire ignited as of November 14, 2018.

Why the Financial Impact for Liability Related to the Blaze Matters to Displaced Families

Although facts have emerged supporting the potential liability of PG&E, the massive scope of potential claims could threaten the ability of individuals adversely affected by the fire to obtain fair and full compensation.  Lawsuits filed against PG&E allege multiple witnesses, which includes fire crews, reported downed power transmission lines and/or a damaged transmission tower near the location where the fire allegedly began.  PG&E also confirmed this information through an aerial flyover.  The company subsequently submitted a mandatory filing to the California Public Utilities Commission that disclosed the problems with the equipment near the source of the fire.  Lawsuits filed against the utility company also suggest that the company should have implemented a Public Safety Power Shutdown, which the company warned customers might be necessary based on harsh winds, arid conditions, and extremely low humidity.

Despite the evidence that the PG&E might have failed to exercise reasonable care to prevent the fire or keep it from turning into the largest wildfire in California history, concerns about the utilities fiscal health could impact plaintiffs in fire-related lawsuits.  Individuals and families filing negligence lawsuits against PG&E for loss of loved ones, serious injuries, or loss of their homes should seek prompt legal advice to facilitate a prompt investigation of their claim and filing of a lawsuit.

New Legislation Offers Potential Financial Security to Plaintiffs Filing Camp Fire Lawsuits

California Senate Bill 90l, which was signed by Gov. Brown on September 21, 2018 empowers PG&E to sell bonds to cover wildfire damages.  The legislation was adopted in the wake of the Wine Country fires last year that were linked to multiple PG&E power line and equipment issues.  Cal Fire has determined that PG&E power infrastructure issues ignited 17 Northern California wildfires in 2017.  The utility provider already faces liability in many pending lawsuits related to those fires.  The bottom line is that Senate Bill 901 provides a potential protection against a PG&E bankruptcy, but the best approach for affected parties is to promptly consult with an experienced lawyer.  We invite you to speak with one of our Parker Waichman LLP attorneys at 1-800 YOUR LAWYER (1-800-968-7529) or to email us to schedule your free case evaluation.

Sources:

Rain will bring much-needed relief to California fires, but also new dangers
PG&E power lines may have sparked deadly Camp Fire, according to radio transmissions
PG&E could be in big financial trouble if it’s found liable for California’s Camp Fire
PG&E reports second power line problem before Camp Fire.

 

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