State Farm, with $170M in claims payouts, files complaint against PG&E

A complaint by State Farm, which says it has paid $170 million in insurance claims from last month's Camp Fire, alleges Pacific Gas & Electric Company is at fault in what could be the start of a new wave of lawsuits.

PG&E, which noted Thursday the cause of the fire has not been determined, already faces a raft of litigation from the blaze, including a complaint filed just a week after the Nov. 8 start of the fire.

The suits so far have generally come from private individuals whose homes burned. But more litigation could be coming directly from insurers.

On Dec. 12, Allstate Corporation announced it would cover $1.2 billion in claims from the Camp Fire and the Woolsey Fire, which devastated much of Malibu around the same time. That same day, Insurance Commissioner Dave Jones announced there were already more than $9 billion in insured losses reported from the Camp Fire and two other major blazes last month.

The new complaint, filed Dec. 21, did not specify an amount of damages sought, but they would be significant. State Farm General Insurance Company v. Pacific Gas & Electric Company, 00247024 (Sacramento Super. Ct., filed Dec. 21, 2018).

"We can't speculate on projected number of claims or indemnity," said State Farm spokesman Chris Pilcic.

But Pilcic did offer a running total. He said the company has paid out $159.3 million on about 2,150 homeowner claims from the Camp Fire. It's also paid $11 million on nearly 1,300 auto claims.

The fast-moving fire killed at least 88 people and largely destroyed the Butte County town of Paradise, population 27,000. It also claimed a large number of vehicles. Facing bottlenecks on narrow mountain roads, many survivors abandoned their cars and fled on foot.

The complaint also noted many lawsuits have been filed in San Francisco, Butte and Sacramento. San Francisco Superior Court Judge Curtis E.A. Karnow will hold a hearing on a coordination petition on Jan. 31.

"The cause of the Camp Fire is still under investigation," said PG&E spokesman Denny Boyles in an emailed statement. "We are aware of lawsuits regarding the Camp Fire. Right now, our focus is on assessing infrastructure, safely restoring power where possible, and helping our customers recover and rebuild."

State Farm makes claims under inverse condemnation, negligence, trespass, private nuisance and violations of the Health & Safety and Public Utilities codes. The thrust of the complaint is similar to prior suits: PG&E is allegedly at fault and is liable even if it isn't.

This is due to the state's somewhat uncommon inverse condemnation law. This holds utilities liable for fires caused by their lines even when the company did not behave negligently.

The rule is meant to offset the powers enjoyed by major utilities, such as eminent domain. The complaint notes, "PG&E ... enjoys a state protected monopoly ... and is more akin to a governmental entity than a purely private entity."

The State Farm complaint offers extensive arguments that PG&E will be found at fault, saying the fire was first seen near its power lines after the National Weather Service issued a red flag warning due to high winds.

"This case arises from ... Pacific Gas & Electric Company's longstanding corporate culture of decision-making that places profits over public safety," reads the complaint led by Maura Walsh Ochoa, managing partner of the San Francisco office of Grotefeld, Hoffmann, Schleiter, Gordon, Ochoa & Evinger LLP. "PG&E's well-documented disregard for safety regulations and risk management practices ... lies at the root of the various factors which caused and/or contributed to causing the Camp Fire." Ochoa did not return a call seeking comment.

Under the inverse condemnation law, PG&E can pass these costs on to ratepayers if it can show it did not behave negligently and gets permission from the California Public Utilities Commission. But that regulator is under increasing political pressure after complaints from some quarters that it has been seen for years as too cozy with the utility.

At a Dec. 21 meeting, commissioners floated the idea of breaking up or taking over PG&E.

The filing comes just before a major change in wildfire liability takes place on Jan. 1. Under SB 901, utilities will have more flexibility in securitizing losses from new wildfires as well as the major fires that occurred in 2017.

But 2018 fires were not covered by the bill.

Utilities also failed to get the major overhaul they were seeking of the state's inverse condemnation law. Outgoing Gov. Jerry Brown floated a change in the law back in July, but the Legislature did not take up the idea in late negotiations around SB 901.