Under California law, when a utility company is responsible for causing a wildfire, it is required to pay compensation to make up for fire damage even if the company was not negligent. If the required damages are too great for a utility service to pay, it can result in a bankruptcy filing that potentially alters victims’ financial recovery.
Utility Companies Must Pay Wildfire Damage in California
California has a unique inverse condemnation rule where a property owner can recover compensation from a public utility company or government agency when the victim’s property is damaged by that entity’s actions, regardless of negligence. This is known as a strict liability law since it does not require plaintiffs to prove negligence or fault to recover damages.
In the case of a California wildfire, if a utility company is found to be responsible due to a failure of its equipment, the utility must pay for the property damage or losses suffered by the owner. Property owners have the right to file claims in court to recover damages from the utility company or public entity that caused the fire, whether or not the utility was negligent.
Does Declaring Bankruptcy Prevent a Utility From Paying for Wildfire Damage?
If a utility company such as Pacific Gas & Electric (PG&E) or Southern California Edison (SCE) goes bankrupt due to the high costs of a wildfire it is expected to pay under California’s inverse condemnation rule, this can impact victims’ ability to recover compensation for their fire damage. However, it does not release the company from liability entirely.
When a utility company declares bankruptcy, it reorganizes to reduce expenses. It works with the bankruptcy courts to create a feasible reorganization plan that allows it to free up more capital. Any creditors the utility owes must come to a consensus on the bankruptcy plan. During the bankruptcy filing, a stay or pause is automatically placed on any lawsuits against the utility.
Through bankruptcy, the utility may receive legal protections that limit its liability for wildfire damage. Only a certain amount of funds will be set aside to pay out wildfire settlements. This cap can make it more challenging for victims to recover fair compensation for their fire-related losses.
The Importance of Seeking Help From a Wildfire Attorney
Wildfire victims can face significant challenges if the utility company responsible for causing the fire files for bankruptcy. There may be insufficient compensation based on the extent of the victims’ losses and harmful delays in achieving settlements. This can make it more difficult for victims to recover and rebuild after experiencing devastating wildfire losses.
Claims against utilities that have filed for bankruptcy also involve complex legal issues. There must be a distinction made between claims filed against the utility company before vs. after it filed for bankruptcy, for example, and the bankruptcy courts will be involved in wildfire liability limitations.
The answer for victims in this situation is to seek help from a California wildfire recovery attorney in California. Having a private attorney navigate the legal side of your case for you can ensure that your rights are protected as much as possible. Your lawyer will help you make informed decisions about your case to protect your financial future. An attorney will be committed to holding a utility company accountable despite a bankruptcy filing.