California Fires And Inverse Condemnation: The "You Broke It, You Bought It" Theory

Update: 10/28/2019: "Lights Out in the Land of No: The Practical Effects of California's Wildfire Inverse Condemnation Doctrine," a post about the (ongoing) wildfires and latest developments in inverse condemnation doctrine.

Update 3/12/2018: "California Wildfires, Inverse Condemnation, and Climate Change," a post about the various responses to the wildfire inverse condemnation lawsuits.

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Here's a story from the San Francisco Chronicle about the legal angles in the recent northern California wildfires, "PG&E could pay dearly for North Bay fires, even if it followed rules. ("The lethal wildfires in the North Bay could exact a heavy cost on Pacific Gas and Electric Co., even if the utility did nothing wrong.").

The focus of the piece is on inverse condemnation and the potential liability of the power company (PG&E):

If investigators do find that PG&E’s electrical lines started the fires, the company will probably be liable for economic damages, regardless of negligence. And even if PG&E faithfully followed every state rule for maintaining its equipment, it still could face costs already estimated to top $1 billion.

In the article, we characterized inverse liability in these situations as similar to the flood cases:

Similar liability issues have been raised in Texas following Hurricane Harvey, said Robert H. Thomas, a land use, eminent domain and appellate lawyer based in Honolulu, who operates the blog www.inversecondemnation.com.

After that disaster, the Army Corps of Engineers was sued for damage caused to homes when water was purposefully released from swollen reservoirs so that it didn’t go another direction and swell an already overflowing river.

“I call it the ‘you broke it, you bought it,’ theory,” Thomas said.

California law has a long history of analyzing wildfires under an inverse condemnation theory, with the two big issues being causation, and whether a nongovernmental entity can be liable for a taking. We've always found the California Court of Appeal's opinion in Barham v. S. Cal. Edison Co., 88 Cal. Rptr. 2d 424 (1999) to be a good example of how the courts approach the latter issue:

Were we to adopt SCE's position, we would be required to differentiate between damage resulting from the operation of a utility based solely upon whether the utility is operated by a governmental entity or by a privately owned public utility. Publicly owned electric utilities have been held liable in inverse condemnation in situations virtually identical to this case. (See Marshall v. Department of Water & Power (1990) 219 Cal.App.3d 1124, 268 Cal.Rptr. 559 and Aetna Life & Casualty Co. v. City of Los Angeles (1985) 170 Cal.App.3d 865, 216 Cal.Rptr. 831.)   We are not convinced that any significant differences exist regarding the operation of publicly versus privately owned electric utilities as applied to the facts in this case and find there is no rational basis upon which to found such a distinction. We conclude, under the factual scenario here present, SCE may be liable in inverse condemnation as a public entity.

Check it out.