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UNITED STATES BANKRUPTCY COURT 

NORTHERN DISTRICT OF CALIFORNIA 

In re: 

PG&E CORPORATION,

- and -

PACIFIC GAS AND ELECTRIC COMPANY,

Debtors.

☐ Affects PG&E Corporation

☐ Affects Pacific Gas and

Electric Company 

☒ Affects both Debtors

* All papers shall be filed in

the Lead Case, No. 19-30088 (DM).

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Bankruptcy Case

No. 19-30088-DM 

Chapter 11

Jointly Administered 

RECOMMENDATION FOR WITHDRAWAL OF REFERENCE OF PROCEEDING IN PART 

To: Honorable Phyllis J. Hamilton, 

 Chief United States District Judge 

A. INTRODUCTION

I am the assigned bankruptcy judge in the chapter 11

reorganization cases of PG&E Corporation and Pacific Gas and 

Electric Company (together “Debtors” or “PG&E”) (Case Nos. 19-

30088-DM and 19-30089-DM). I am making this recommendation to 

Signed and Filed: August 21, 2019

________________________________________

DENNIS MONTALI

U.S. Bankruptcy Judge

Entered on Docket 

August 21, 2019

EDWARD J. EMMONS, CLERK 

U.S. BANKRUPTCY COURT 

NORTHERN DISTRICT OF CALIFORNIA

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you pursuant to B.L.R. 5011-2(b), the local rule that permits me 

as a bankruptcy judge to make such a recommendation.

B. BACKGROUND

These bankruptcy cases were filed on January 29, 2019. The 

filings were precipitated by the Northern California wildfires 

that caused billions of dollars of damage claims asserted or 

expected to be asserted against PG&E by victims who have 

suffered extensive property, personal injury and wrongful death 

claims (tort claims) and by insurers who have already paid or 

are obligated to pay billions of dollars of property damage

claims to victims (subrogation claims).

Last month the Governor of California signed legislation 

(AB-1054) that establishes a multi-billion dollar fund for 

dealing with future wildfires. While the legislation is 

complex, the critical component for present purposes is that it 

gives PG&E until June 30, 2020, to emerge from chapter 11 and to 

deal with these massive wildfire claims. To that end, PG&E has 

stated recently that it intends to file proposed plans of 

reorganization on or about September 9, 2019, and has laid out a 

timeline intended to reach the goal of confirming chapter 11 

plans by that deadline. While that may seem a long way in the 

future, and no doubt is far too long for thousands of victims, 

the complexity of these chapter 11 cases, the requirements of 

chapter 11 and the need for parallel hearings and rulings by the 

California Public Utilities Commission (most of which pertain to 

regulatory matters and contractual obligations that exist apart 

from the wildfire claims) impose very difficult time limits on 

all parties, including the court.

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Because it would be impossible to liquidate thousands of 

tort claims in a matter or months, or possibly years, PG&E needs 

to implement the bankruptcy procedure for estimation of its 

unliquidated claims for its reorganization purposes.

C. APPLICABLE LAW

Section 502(c) of the Bankruptcy Code (11 U.S.C. § 502(c)) 

states that there shall be 

“...estimated for purpose of allowance . . . any 

contingent or unliquidated claim, the fixing or 

liquidation of which . . . would unduly delay the 

administration of the case.” 

28 U.S.C. § 157(b)(1) permits bankruptcy judges to 

determine core proceedings; under subsection (b)(2)(B), core 

proceedings include 

“estimation of claims . . . for the purposes of 

confirming a plan under chapter 11 . . . but not the 

liquidation or estimation of contingent or 

unliquidated personal injury tort or wrongful death 

claims against the estate for purposes of distribution 

in a case under Title 11.” 

28 U.S.C. § 157(b)(2)(O) delegates to bankruptcy judges 

other core proceedings affecting liquidation of assets . . . 

“except personal injury tort or wrongful death claims.” 

28 U.S.C. § 157(b)(3) directs that the bankruptcy judge 

shall determine whether a proceeding is a core proceeding or as 

a proceeding that is otherwise related to a case under Title 11

(a non-core proceeding).

//

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// 

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D. DISCUSSION

1. Estimation Generally1.

Bankruptcy Code Section 502(c) does not provide specific 

guidance to the court as to the process for estimating 

unliquidated claims. All parties seem to agree, however, that 

liquidating thousands of claims in these chapter 11 cases would 

unduly delay them.

A bankruptcy court has core jurisdiction to estimate 

unliquidated claims that are not personal injury tort or 

wrongful death claims. 

2. Estimation for “Purposes of Confirming a Plan” and for 

“Purposes of Distribution”.

The Debtors are expected to propose reorganization plans

that will involve a limited or “capped” fund for distribution to 

the wildfire victims and their insurers after plan confirmation 

and thus provide for the discharge of preconfirmation wildfire 

liabilities. Consequently, the estimation of the amount of 

money to be capped is critical for a variety of reasons; in 

particular it is necessary to assure that the amount is 

reasonably likely to provide for full satisfaction of the 

victims’ claims for which it is established.

The cases are inconclusive (and none binding in this 

circuit) on whether the “purposes of confirming a plan” language 

in the statute is adequate to protect countless wildfire victims

who have personal injury and wrongful death claims. Some 

 1 See S. Elizabeth Gibson, Judicial Management of Mass Tort 

Bankruptcy Cases (Fed. Jud. Ctr. 2005), pp. 88-100, for helpful 

background information and a more detailed explanation of the 

estimation process.

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conclude that the estimation process is enough to fix the amount 

of the required fund, leaving for another day the determination 

of individual claimants’ entitlement to a share of that fund as 

part of the “purposes of distribution” language of the statute. 

Others recognize that the two concepts cannot be unbundled and 

that the rights of the tort victims must be protected by the 

Article III judge’s overseeing of that aspect of the non-core 

estimation process.

I anticipate that as part of that process the supervising 

judge will consider briefing and argument from the 

representative committees of tort fire victims and subrogation 

claimants on the one hand, and the Debtors on the other hand, to 

fully explain their views on these issues to assist the judge in 

reaching the right conclusions.

3. Personal Injury and Wrongful Death Claims.

The statute is silent as to whether the “unliquidated 

personal injury tort or and wrongful death claims” language 

includes or excludes claims arising from emotional distress or 

similar theories of recovery. Some cases construe the statute 

narrowly and suggest that emotional distress claims can be 

excluded from the “estimation for confirmation” analysis; others 

conclude that the statute should be construed broadly and thus 

emotional distress claims must be included as part that 

analysis, rather than considered only in the “purposes of 

distribution” analysis.

These questions, too, should be the subject of further 

briefing by the parties and resolved by the Article III judge.

//

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4. Property Damage Claims.

Billions of dollars are now claimed or expected to be 

claimed by insurers who have reimbursed victims for their 

property losses and thus are subrogated to their claims. There 

are also millions if not billions of dollars of claims for 

personal property damages and other losses suffered by all types 

of governmental agencies. Further, there are no doubt thousands 

of claimants who have suffered losses of property of all types 

and do not have personal injury or wrongful death claims. 

5. Additional Problems.

PG&E must deal with liabilities arising from more than 

twenty separate fires, perhaps from as many different causes. 

Whether just the larger ones are all that are necessary for 

estimation, or groups of them, or some other approach, must be 

considered. Because property damage claims, whether held by the 

original victims or by subrogated parties, may not include 

personal injury claims of the claimants. That raises the yet 

unanswered question of whether there should be separate 

estimation proceedings involving those claims.

My list is by no means complete, but only illustrative of 

the myriad problems that must be dealt with.

The estimation process will involve determining a correct 

amount to deal with all of the foregoing to arrive at an 

estimated amount to be dedicated for the benefit of the victims.

Even how to structure the process itself will require 

consideration of various ways that have been utilized by other 

courts.2 And the mere size and breadth of the wildfires and the 

 2 See Prof. Gibson’s examples, id at 90.

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claims that will be considered might lead to innovative 

procedures that have never been attempted before.3

E. RECOMMENDATION

I recommend that the District Court order the partial 

withdrawal of the reference of the Section 502(c) estimation of 

unliquidated claims arising from the Northern California 

wildfires. The stakes are very high and these several complex 

issues are inexorably intertwined. For those reasons I believe

that an Article III judge should decide:

1. Under 28 U.S.C. § 157(b)(3), what aspects of the 

unliquidated claims estimation are core proceedings 

and what aspects are non-core? In and of itself, that 

would appear to be a straight forward question the 

statute leaves to the bankruptcy judge. But because 

of the intersection of the issues I have outlined and 

the ramifications of the answers to the questions 

presented, the Article III judge should make the 

decision.

2. Whether personal injury and wrongful death claims 

include or exclude damages due to emotional distress 

(or any similar theory of recovery)?

 3 My recent decision to permit a trial to proceed in San 

Francisco Superior Court regarding the Tubbs fire was intended, 

in part, to provide information to inform the tier of fact as to 

a critical date point as part of the anticipated estimation 

process.

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3. The schedule for and method of the conduct of the 

estimation proceedings.4 

4. The 11 U.S.C. 502(c) estimation of unliquidated 

personal injury and wrongful death claims against 

Debtors for all purposes under 28 U.S.C. § 157(b)(2).

F. TIMING

B.L.R. 9015-2(b) deals with the duties of a bankruptcy 

judge when a party has a right to a jury trial and has made a 

timely demand. That rule is instructive for a procedure that 

seems appropriate here. It requires the bankruptcy judge to 

resolve all pretrial matters including dispositive motions and 

to report to the District Court when the matter is “suitable for 

a withdrawal”. Because there are numerous pretrial matters 

pertaining to the estimation process, I recommend that the court 

order withdrawal of the reference as set forth above, designate 

the assigned judge, but defer the effective date of that 

withdrawal until: I have completed those preparatory matters; 

briefed the assigned judge on the status of these preparations; 

have been instructed by that judge as to any desired preliminary 

status conferences to be held, any briefing schedules to be 

promulgated, possible input from the parties to be solicited, or 

other procedures to be implemented; and that judge has directed 

that the partial withdrawal become effective for all purposes.

***END OF RECOMMENDATION***

 4 Not included, but as part of the estimation process, is 

PG&E’s contention that California’s inverse condemnation 

doctrine does not apply to it as a privately-owned utility. 

That will be briefed and argued before me as a matter of law.

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