Butte Fire Victims Entitled to Compensation from PG&E for Homes' Diminution in Value

Insurance companies will pay to rebuild most of the homes that were burned down. But even if the newly rebuilt homes are identical to the old ones in all respects, the Butte Fire homeowners will still have a loss. The fact is that a home in the area simply won’t be worth what it was before the fire. The area has changed for the worse and won’t return to what is was for many years.

The law refers to the loss as a residual “diminution in value.” When, as here, the loss is the result of a fire caused by a utility company’s wrongdoing, the law requires the utility to compensate the homeowner for that diminution in value. That was the argument we made for the homeowners in the San Bruno Fire cases. The compensation each San Bruno victim was entitled to from PG&E included, among other things, the difference in their home's value before the fire and after it has been rebuilt.

The Butte Fire victims are entitled to nothing less.

Why Is PG&E Moving Pipe from Crestmoor?

PG&E has finally agreed to move the pipeline from the Crestmoor neighborhood. PG&E would have us believe the decision was made out of concern for residents.  According to PG&E president Christopher Johns:

PG&E understands that no one wants the damaged section of Line 132 rebuilt at its current location.  We know residents in the neighborhood have suffered a terrible trauma and the pipe is a horrible reminder.

Is that the reason?  Or did PG&E simply figure out that moving it was in its financial best interests.  After all, the law makes PG&E liable for any diminution in the value of the neighborhood homes. As long as the pipe runs under the neighborhood, the homes are worth very little. Remove the pipe and values will rebound. In the end, it's cheaper for PG&E to move the pipe than it is for it to leave it there. 

Isn't it as simple as that?

PG&E to Move Pipe

Glenview Homeowners Should Be Compensated for Diminution in Their Homes' Value

The fact of the matter is that Glenview homes aren't worth today what they were on September 8.  That’s because some house hunters who might have considered buying in the Glenview neighborhood before the fire will now fear that the neigborhood is unsafe. Others, in light of all the pain the neighborhood has experienced, will simply prefer to buy elsewhere. 

In real estate terms, the explosion and fire has "stigmatized" the neighborhood. Stigma always depresses home values. Values will drop even more when some Glenview residents, unable to become once again comfortable in their homes, are forced to move out and to sell almost regardless of the price they get.  

The homes' diminution in value represents a significant economic loss to Glenview residents.  The loss may be difficult to quantify, but it doesn't make it any less real.  Even those homeowners who decide not to sell will be affected when, for example, they try to refinance or borrow against their properties.  

A home need not have burned to be “damaged” by the fire.  Whether Glenview residents decide to keep their homes or to sell, they have all suffered a loss. They are all deserving of compensation.