What’s today’s “motion for relief from stay” all about?

The dispute about PG&E’s total liabilities.

When it filed bankruptcy, PG&E said its liabilities as a result of the 2017 and 2018 wildfires totaled at least $30 billion. Yet, PG&E now proposes to resolve all wildfire claims by funding a trust for wildfire claimants of substantially less — about $14 billion.

What explains the difference? Well, after the bankruptcy, Cal Fire determined that PG&E’s facilities did not cause the Tubbs fire – the most costly of the 2017 fires. Rather, according to Cal Fire, the Tubbs fire started at wires on private property. Thus, PG&E argues it is not responsible for the Tubbs fire after all and so should not have to pay Tubbs claims. Damages for the Tubbs fire amount to as much as $18 billion, by some estimates. Subtract that amount from PG&E’s original $30 billion estimate and, PG&E argues, a $14 billion trust fund should be adequate to pay all the claims for which PG&E is in fact liable.

Tubbs claimants, however, have a different view. Even if the Tubbs fire was ignited by power lines on private property — not by PG&E distribution lines — PG&E should still be held liable because the fire wouldn’t have started that night had PG&E turned off the power as it was supposed to. Therefore, PG&E should not be let off the hook for a mere $14 billion. Rather, its total bill is well over $30 billion, even using PG&E’s estimates.

Why the dispute matters now.

PG&E cannot get out of bankruptcy until PG&E and its victims agree, or the bankruptcy judge decides, how much PG&E owes. The fire survivors argue that they will never come to an agreement with PG&E concerning the size of the trust fund that PG&E should establish unless and until the issue of PG&E’s liability for the Tubbs fire is decided. Further, the law does not allow for the bankruptcy judge to decide the whether PG&E caused the Tubbs fire.  That key issue must be decided by either a federal trial court, or by a state trial court.

If the bankruptcy judge sends the issue to a federal trial court, it will take years to reach trial.  Thus, the survivors are asking the bankruptcy judge to send eight Tubbs cases back to state court in San Francisco, where they were when PG&E filed bankruptcy back in January. (Two of the eight clients are represented by the NorCalFireLawyers.) Because the victims in those eight cases are elderly and infirm, state law allows the state court judge to fast-track the trials and have them heard in about 120 days.

Once the state court decides whether PG&E is liable for the Tubbs fire, then PG&E and the fire survivors will be in a better position to agree on the size of the trust fund that will be necessary for PG&E to exit bankruptcy.  And if they can’t agree, then the bankruptcy judge can weigh in, keeping in mind the trial court’s determination.

The bankruptcy judge will hear arguments on July 24. He will likely decide that day or soon thereafter whether to send the eight cases to state trial court, or to federal trial court, or to do something else with them.