Facts

On Sept. 6, 2001, a 120-foot tall diseased, and dead or dying Ponderosa Pine tree fell onto a 12,000-volt PG&E power line causing the line to break and ignite the Poe Fire that burned 8,333 acres in Butte County and destroyed the personal property of 130 residents. The California Department of Forestry and Fire Protection suppressed the fire at a cost of $10 million. PG&E has a non-delegable statutory duty to inspect and maintain its power lines free from vegetation that may contact the lines and ignite a fire. PG&E contracted with Western Environmental Consultant's Inc. to inspect PG&E's lines for such hazards and with Davey Tree Surgery Company to inspect the lines and trim vegetation or remove hazard trees posing a threat to the power lines. On the last regularly scheduled inspection, the inspector failed to walk along the power line and inspect it as was usually done in the normal course of inspections. The residents and subrogation claimants sued PG&E, Western Environmental Consultants and Davey Tree Surgery for negligence. The cases were consolidated with a California Dept. of Forestry action for fire suppression costs.

PLAINTIFF'S CONTENTIONS:
The plaintiffs contended that PG&E was liable for failure to inspect its power lines, locate the diseased and dead or dying Ponderosa Pine and remove it before it fell on the power line. As PG&E contractors, Davey and Western Environmental were liable for failure to inspect, locate and remove the hazardous tree.

DEFENDANT'S CONTENTIONS:
Defendant PG&E contended that it had an indemnity agreement with defendants Western and Davey Tree, pursuant to which it could ultimately not be held responsible for damages caused by either defendant. Defendant Davey Tree contended that Western supervised its actions, thus Western was responsible for the damage resulting from the fire. In addition, Davey Tree argued that a defective power line was the cause of the fire, not the tree. Defendant Western claimed it passed the inspection duties on to Davey Tree, thus it was not negligent for failing to have the tree cut.

Damages

Fifty-four homes belonging to various plaintiffs were destroyed during the fire. The values of the homes varied in range, the highest being $250,000. The plaintiffs sought damages for their lands. The plaintiffs were not eligible for federal loans for fire victims because the fire was not declared a disaster. Only 30 percent of the plaintiffs had fire insurance. Ten of the plaintiffs also sought damages for emotional distress. For the costs of deploying 2,100 firefighters and spending several days putting out the fire and cleaning up the affected areas, the California Department of Forestry sought its fire suppression costs in the amount of $10 million, investigation costs, attorney fees and prejudgment interest.

Result

The parties settled during mediation for $17,073,223 million. The California Dept. of Forestry received $10.4 million of that amount in suppression costs; the individual plaintiffs received $5.9 million and the remainder was paid to the subrogation claimants.