Episode 41 - Eaton Fire Litigation Against Southern California Edison

Robert Sallander discusses the complex litigation against Southern California Edison for the Eaton Wildfire brought by over 100 insurance companies in Los Angeles Superior Court. 

Have a topic you'd like Bob to cover? Submit it to questions@gpsllp.com, or connect with Bob directly on LinkedIn.

And if you'd like to know more about GPSL, check out our website.

You can also find us on LinkedIn, X, and Facebook.

Transcript

Welcome! You are listening to Coverage Counselors In, a weekly podcast for insurance claims professionals. This podcast is for educational and informational purposes only.

It should not be considered legal advice. No attorney -client relationship is created
or implied. For legal assistance, contact a lawyer licensed in your state. And now,
your host, Robert Sallender.

Well, congratulations to the Honorable Laura A. Siegel, judge of the L .A.
Superior Court, in the complex department. She is the judge who's assigned to LA
wildfire cases, or at least some of them. In particular,
she is the judge assigned to preside over Ace Fire Underwriters Insurance Company at
Al versus Southern California Edison, a subrogation action brought against SCE.
by 123 plaintiffs consisting of insurance companies and joint powers authorities to
recoup payments to their insurers for property damage arising from the Eaton fire.
Judge Eaton has related the case to other cases pending in her department related to
the Eaton fire. I suspect that the thing that she finds in common is the
allegations that SCE caused the fire and hence the the harm that emanated from it.
In the subrogation action, the plaintiffs allege the fire originated near the base of
SCE transmission tower M16 -T1.
That tower is in close proximity to two other towers in Eaton Canyon that carry
transmission lines. But reportedly M16 -T1 was taken out of service in 1971 and the
transmission lines that supported were de -energized. So the question is what is it
about 16 T1, the plaintiffs are alleging caused the fire.
The plaintiff's theory, as I understand it, is that at the time the fire began,
FCE had allegedly detected a fault in a transmission line on an adjacent tower
designated M24 T3. Because of the fault in that transmission line,
other transmission lines supported by M24T3 were momentarily subjected to an electrical
surge. But from what I've read, SCE expected that momentary surge,
suggesting that the lines were capable of managing it.
There appears to be evidence, however, of an arcing event. At approximately the time
the fire is believed to have started, there is a photograph,
or at least a screen capture from a gas station surveillance camera showing what is
thought to be an arcing event in the vicinity of towers M16 -T1 and M24 -T3.
Plaintiff's theory is that electricity arched from tower M24 -T3 where the surge
occurred to tower M16 -T1 causing, and now I quote,
"sparks and molten metal," end quote, to shower down onto combustible vegetation,
starting the fire. There's also a photo of a fire burning just below Tower M16 -T1,
and later photos after the fire is out of heat damage to the tower.
There are no allegations in the subrogation complained about who was paid, how much
was paid, or how the amounts were identified and determined for the insurers to pay
to their insurers. But it is also alleged that there will be future payments.
Considering that there are 123 plaintiffs, the amount paid out is expected to be
large. Certainly it's more than the jurisdictional minimum of the Superior Court. It's
also interesting that the two largest homeowners insurers in the state state farm and
farmers are not among the plaintiffs in this case, which suggests that there is
probably going to be further subrogation litigation asserted notwithstanding the size
of this particular piece of litigation. I also find it interesting that this Ace
Fire lawsuit was signed by five law firms, each representing one or more plaintiffs,
but apparently none representing all plaintiffs. We can certainly expect that some of
the lawyers may disagree about positions that other plaintiffs' lawyers want to take.
So, this idea of five law firms signing on to the same complaint while representing
different constituencies may create somewhat of a logistical,
if not procedural, nightmare for Judge Siegel. But it appears Judge Siegel is up to
the task. She was appointed to the bench in 2015 by then Governor Jerry Brown.
Immediately prior to her appointment Judge Segal was a intellectual property and
entertainment litigation partner at IRLA and Manila. She has a degree in social
studies from Harvard and a law degree from Yale. In her nearly 10 years on the
bench she's been involved with Family law department and civil department.
According to Lexis in her nearly 10 years on the bench, Judge Siegel has presided
over nearly 11 ,000 cases, about 8 ,500 of which are tort cases.
I wasn't able to find any data on Judge Siegel's history with insurance subrogation
cases, But as a judge in the complex department, I'm confident that she has faced
insurance issues multiple times in the garden variety subrogation case involving house
fires The insurance company has paid out All it is obligated to pay for the fire
and the damages for which subrogation is sought are typically known and not in
dispute. In this case, the payments not only include property damage but include
business interruption losses and other types of payments for which proof from the
insured is required and an evaluation of that proof must take place.
One of the complicating factors, therefore in the ACE FIRE subrogation case,
is whether SCE is going to insist on vetting or having some understanding of the
amount paid for each type of loss and basically second guessing whether that amount
was reasonable and appropriate and that could grind the case to a halt depending on
the number and the amount and what the insurers did to that and adjust those
losses. Also, the fact that insurers are seeking subrogation for future payments
creates a problematic scenario for Judge Siegel who's going to have to decide what
issues can be decided now that will help determine whether subrogation is owed and
what SCE's rights are going to be in quantifying the subrogation amounts on future
payments. On March 11th, Judge Siegel issued a minute order setting a case management
conference for March 17th, the day I'm recording this podcast and two days before
the podcast is released. At that case management conference she was going to begin
taking control of litigation by determining how
A group of 123 plaintiffs would be structured and who would lead that group.
That evaluation may well ease the court's burden in who to talk to and how
disparate positions might be accommodated as the insurers advocate for their particular
particular interests. There's obviously a common interest though in establishing that
the fire was caused by FCE, so it makes sense that that might be the first order
of business in the litigation. Also to help her get her arms around the issues,
Judge Segal was going to consider at the case management conference,
the preparation of a plaintiff's matrix that identified the type of information that
would need to be included on the matrix and how it should be maintained and stored.
This would be helpful in categorizing the plaintiffs into manageable groups.
The Other items of business involve preservation of evidence,
the selection of an electronic evidence platform, and a service provider.
In cases like this, there's usually one provider.
All litigants have access to the same database. Provision is made for documents that
are deemed privileged or otherwise confidential,
but it makes sense that there's just one database that everybody's working from and
that everybody contributes their documents to. Pending resolution of these issues,
the case is stayed.
notice of appearance but otherwise it appears the court is just going to manage the
litigation not according to the civil code but according to what makes sense for a
massive piece of coverage litigation like this. We're interested to follow how Judge
Siegel manages the case and what the issues are, but as mentioned,
I suspect that the first issues will deal with whether SCE faces liability for
causing the fire in the first place. So we'll report on that in future episodes of
Coverage Counsel is in, and in the meantime, this is Bob Salander signing off.