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Dennis F. Dunne (admitted pro hac vice) 

Samuel A. Khalil (admitted pro hac vice) 

MILBANK LLP 

55 Hudson Yards 

New York, New York 10001-2163 

Telephone: (212) 530-5000 

Facsimile: (212) 530-5219 

and 

Gregory A. Bray (SBN 115367) 

Thomas R. Kreller (SBN 161922) 

MILBANK LLP 

2029 Century Park East, 33rd Floor 

Los Angeles, CA 90067 

Telephone: (424) 386-4000 

Facsimile: (213) 629-5063 

Counsel for the Official Committee 

of Unsecured Creditors

UNITED STATES BANKRUPTCY COURT 

NORTHERN DISTRICT OF CALIFORNIA 

SAN FRANCISCO DIVISION 

In re: 

PG&E CORPORATION 

 -andPACIFIC GAS AND ELECTRIC 

COMPANY, 

 Debtors.

Case No. 19-30088 (DM) 

Chapter 11 

(Lead Case) 

(Jointly Administered)

☐ 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) 

OBJECTION OF THE OFFICIAL 

COMMITTEE OF UNSECURED 

CREDITORS TO MOTIONS OF (I) AD 

HOC GROUP OF SUBROGATION 

CLAIM HOLDERS AND (II) OFFICIAL 

COMMITTEE OF TORT CLAIMANTS 

FOR RELIEF FROM AUTOMATIC STAY 

Date: July 24, 2019 

Time: 9:30 a.m. (Pacific Time) 

Place: United States Bankruptcy Court 

 Courtroom 17, 16th Floor 

 San Francisco, CA 94102 

Re: Docket Nos. 2863 & 2904 

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The Official Committee of Unsecured Creditors (the “Official Committee”) appointed in 

the above-captioned chapter 11 cases, by its attorneys, Milbank LLP, hereby objects to the 

Motion of the Ad Hoc Group of Subrogation Claim Holders for Relief from the Automatic Stay

(the “Subrogation Group Lift Stay Motion”) [Docket No. 2863], and to the Amended Motion of 

the Official Committee of Tort Claimants for Relief from Automatic Stay to Permit State Court 

Jury Trial of 2017 Tubbs Wildfire Claims (the “TCC Lift Stay Motion”) [Docket No. 2904] 

(together with the Subrogation Group Lift Stay Motion, the “Lift Stay Motions”).1

PRELIMINARY STATEMENT 

1. Through the Lift Stay Motions, the movants2 request relief that will delay these 

cases and stall settlement negotiations. Initiation of state court litigation will reintroduce the 

inefficiencies of mass tort litigation that were an important motivating factor for the filing of 

these cases, and will result in an ad hoc approach to claims resolution rather than the centralized 

approach that is the raison d’être of the bankruptcy process. For these reasons, the requested 

relief should be denied. 

2. But perhaps the primary purpose of the Lift Stay Motions was to place before the 

Court the movants’ arguments concerning their views on claims estimation and its application in 

 

1

 Capitalized terms not defined herein have the meanings ascribed to them in the Memorandum of Points and 

Authorities in Support of Motion of the Official Committee of Tort Claimants for Relief from Automatic Stay to 

Permit State Court Jury Trial of 2017 Tubbs Wildfire Claims [Docket No. 2843]. 

2

 “Movants” shall mean, together, the Official Committee of Tort Claimants (“TCC”), Ad Hoc Group of 

Subrogation Claim Holders (“Subrogation Group”), and the parties that have filed joinders in either Lift Stay 

Motion. See Docket No. 2861 (joinder of Barbara Thompson and Raymond Breitenstein identified in TCC’s 

motion and “indispensable parties” John Thompson, Matthew Thompson, Peter Thompson and Stephen 

Breitenstein); Docket No. 2929 (joinder of John Caslin and Phyllis Lowe); Docket No. 2930 (joinder of William 

Edelen and Burton Fohrman, and additional parties Roxanne Edelen, The William L. Edelen and Roxanne G. 

Edelen Trust Agreement Dated June 22, 2011, Raleigh Fohrman, The Fohrman Family Trust Dated February 3, 

1976, Jeremy Olsan, Ann DuBay, Jacob Olsan, and The Jeremy L. Olsan and Ann M. DuBay Trust Dated 

November 29, 2011, the heirs of decedent Monte Kirven (Kathleen Groppe, Ken Kirven and Brian Kirven), and 

the Estate of Monte Kirven); Docket No. 2942 (joinder of Don Louis Kamprath, Elizabeth Fourkas, Greg and 

Christina Wilson, and “indispensable parties” Ruth Kamprath, the Donald L. Kamprath and Ruth Johnson 

Kamprath Revocable Trust, Pete Fourkas [deceased], Alissa Fourkas, and the Fourkas Family Trust); Docket 

No. 2943 (joinder of Armando A. Berriz and heirs of Carmen Caldentey Berriz (Armando J. Berriz, Carmen T. 

Meissner, and Monica Berriz), and the Estate of Carmen Caldentey Berriz); Docket No. 2959 (joinder of Amica 

Mutual Insurance Company, BG Resolution Partners I-A, L.L.C. (an affiliate of The Baupost Group, L.L.C.), 

Encompass Insurance Company, Fire Insurance Exchange, Hartford Accident & Indemnity Company, Liberty 

Insurance Corporation, Mercury Insurance, Nationwide Mutual Insurance Company, and United Services 

Automobile Association); Docket No. 2983 (joinder of State Farm Mutual Automobile Insurance Company and 

its affiliates and subsidiaries). 

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these cases. Estimation of claims will be central to the progress of these cases and, ultimately, to 

the confirmation of a plan of reorganization. Accordingly, the process for estimating claims 

against the Debtors should be the subject of deliberate, educated discussion. The Official 

Committee believes, and the movants appear to agree, that it is high time for the discussion on 

the estimation process to begin; the Debtors’ recent filing of an estimation procedures motion is 

a first step in this direction. The Official Committee is reviewing the Debtors’ proposed 

procedures carefully, and hopes and expects that the claims estimation procedures for these cases 

will be carefully negotiated between the Debtors, the movants here, the Official Committee, and 

a variety of other stakeholders in the coming days and weeks. But it is these deliberations, and 

not movants’ requested relief, that should determine the appropriate estimation procedures for 

these cases. The Lift Stay Motions should be denied. 

BACKGROUND 

3. As the Debtors noted at the inception of these cases, their “chapter 11 filings were 

necessitated by a confluence of factors resulting from the catastrophic and tragic wildfires that 

occurred in Northern California in 2017 and 2018, and PG&E’s potential liabilities arising 

therefrom.” Decl. of Jason P. Wells in Support of First Day Motions and Related Relief (the 

“First Day Declaration”) [Docket No. 28] at 3. 

4. The Debtors filed these cases in large part “to establish a process for PG&E to 

fully address and resolve its liabilities resulting from the 2017 and 2018 Northern California 

wildfires and to provide compensation to those entitled to compensation from the Debtors fairly 

and expeditiously.” Id. at 4. The Debtors’ goal is to achieve a resolution of these liabilities in 

this Court “more quickly and more equitably than those liabilities could be addressed and 

resolved in the state court system.” Id. 

5. The Lift Stay Motions seek relief from the automatic stay to allow thirteen tort 

plaintiffs, and members of the Ad Hoc Subrogation Group (collectively, the “Preference 

Plaintiffs”), all of whom hold claims related to the 2017 wildfire known as the Tubbs fire, to 

proceed with their actions in the California Superior Court, and to request preferential 

adjudication of their claims under California Code of Civil Procedure Section 36. Joinders to the 

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Lift Stay Motions seek to expand the tort plaintiff group to about thirty-five plaintiffs.3 The 

Debtors maintain that they are not liable for the ignition of, or damages resulting from, the Tubbs 

fire. 

A. The California Superior Court Judicial Council Coordination Proceeding

6. The Preference Plaintiffs’ actions are part of a Judicial Council Coordination 

Proceeding (the “JCCP”) created by the California Superior Court to efficiently address wildfirerelated litigation brought against the Debtors. 

7. On November 2, 2018, California Superior Court Judge Curtis E.A. Karnow, 

overseeing the JCCP, issued an order concerning the order in which claims relating to certain 

fires would be tried, specifically addressing whether claims related to the Tubbs, Atlas, or 

Sulphur fires should be tried first. In making this determination, Judge Karnow stated two 

primary objectives: 

First, the goal is to have a trial which includes a sufficient number of issues such that the 

verdict in that case will be persuasive for not only the other parties involved in that fire, 

but also will be seen as strongly predictive of the way issues are likely to be resolved in 

cases involving other fires. Second, given the fact that these fire cases are complicated 

and will take up substantial resources of the parties, counsel, and the court in any event, 

and may tread new legal ground, there is an interest in selecting something less than the 

most complex case. 

Amended Decl. of Michael A. Kelly in Support of TCC Lift Stay Motion (“Kelly Decl.”) 

[Docket No. 2907], Ex. B, at 1. 

8. Judge Karnow further explained that “[t]he risk of delay and error goes up with 

increased complexity. Very highly complex cases are more likely to include issues unique to the 

parties involved in that trial, and so not useful in the evaluation of issues common to other cases. 

It bears repeating that the selection of this first trial ought to be based in great part on the 

persuasive value its result will have for other cases and other fires.” Id. 

9. After receiving suggestions from the various parties and analyzing the relevant 

factors, Judge Karnow determined that the Atlas fire cases should be tried first. In doing so, 

 

3

 Several joining parties assert that “[f]ailure to allow them to join in the preference motion will both impair 

and impede those interests and may subject Debtors to a substantial risk of inconsistent obligations.” 

Joinder [Docket No. 2861] at 4; Joinder [Docket No. 2930] at 5 & 7; Joinder [Docket No. 2942] at 5; 

Joinder [Docket No. 2943] at 3. 

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Judge Karnow explained at length why “Tubbs is the most complex and wide ranging case to 

try,” and that the nature and characteristics of the Atlas fire case would “make it [more] useful as 

precedent” than Tubbs. Id at 2. 

10. In addition, Judge Karnow issued an order to set “a preference case protocol to 

facilitate the exchange of information related to cases potentially eligible for preferential trial 

setting.” See Declaration of Thomas R. Kreller in Support of Objection of the Official 

Committee of Unsecured Creditors to Motions of (I) Ad Hoc Group of Subrogation Claim 

Holders and (II) Official Committee of Tort Claimants for Relief from Automatic Stay (“Kreller 

Decl.”), Ex. A (Case Management Order 6 re: Preference Case Protocol, California North Bay 

Fire Cases, JCCP No. 4955, Case No. CJC-17-004955 (Cal. Super. Ct. Dec. 31, 2018)). This 

order established a “Preference Committee for Individual Plaintiffs . . . to review potential 

preference cases and advise the submitting Plaintiff’s counsel as to the viability and sequence of 

any potential filings.” Id. ¶ 1. Judge Karnow delineated a process for providing notice of 

alleged preference claims under California Code of Civil Procedure Section 36, which includes a 

“written statement setting forth in detail the grounds for preferential trial setting” and any records 

and declarations in support thereof. Id. ¶ 5. Following the completion of this “Preference 

Protocol,” the order requires the filing of a motion for preference. Id. ¶ 10. 

B. The Lift Stay Motions and Relief Sought Therein

11. The Lift Stay Motions ask this Court for entry of an order terminating the 

automatic stay to allow the movants to request that the Preference Plaintiffs proceed to a jury 

trial in the California Superior Court on claims arising from the Tubbs fire.4

12. While the TCC Lift Stay Motion asserts that eight of the identified Preference 

Plaintiffs qualify for preferential treatment under California Code of Civil Procedure Section 

36(a), the motion makes no mention of a specific Section 36 provision that pertains to the 

remaining Preference Plaintiffs. See TCC Lift Stay Mot., Ex. A.5

 

4

 The Subrogation Group limits its request for stay relief to pursue claims only on the issue of PG&E’s contested 

liability for the Tubbs fire. 

5

 The Subrogation Group Lift Stay Motion does not identify specific plaintiffs they claim should be granted 

relief, but state that if “this Court determines that the [California] Superior Court is the appropriate forum for an 

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ARGUMENT 

I. Cause Does Not Exist to Lift the Stay to Determine the Question of Causation of the 

Tubbs Fire in State Court. 

13. The movants bear the burden of establishing that the Court should grant relief 

from the automatic stay “for cause” to allow the Preference Plaintiffs to proceed with their 

actions in the California Superior Court. See 11 U.S.C. § 362(d)(1). Because “cause” is not 

defined in the Bankruptcy Code, bankruptcy courts determine cause on a case-by-case basis. 

E.g., In re Brotman Med. Ctr., Inc., No. BAP.CC-08-1056-DKMO, 2008 WL 8444797, at *5 

(B.A.P. 9th Cir. Aug. 15, 2008). 

14. Cause does not exist to lift the automatic stay to grant the movants’ requested 

relief. These cases were commenced in large part to address the Debtors’ tort liabilities in a 

centralized forum that would enable efficient resolution and facilitate settlement. Far from 

creating efficiencies, the requested relief will result in distraction and delay by taking central 

issues out of the purview of this Court and creating hurdles to settlement negotiations. 

15. In its earlier denials of requests for relief from the automatic stay by parties 

situated similarly to the Preference Plaintiffs, this Court recognized the importance of a single, 

orderly process through which claims adjudication must proceed. The Court declined to grant 

the stay relief motions of Marina and Mikhail Gelman [Docket No. 1310] and of Valero Refining 

Company – California (“Valero”) [Docket No. 315], each of which sought this Court’s 

permission to pursue their prepetition tort claims against the Debtors in state or federal district 

court. See Mem. Decision on Motions for Relief from Stay [Docket No. 1982]. The Court 

reasoned that “it is still too early in these complex reorganization cases to force the Debtors to 

defend the claims of the two movants in two different courts while at the same time attempting to 

make progress toward the goal of a successful reorganization.” Id. at 2. The Court further 

explained that “[w]hile there is no doubt that [PG&E’s] alleged liability must be determined, if at 

all, and perhaps for both claims liquidated as to amount, it is far more preferable to make 

 adjudication of the claims of the TCC Plaintiffs, it follows that the Ad Hoc Subrogation Group should be 

permitted to participate in those trials, as well.” Subrogation Group Lift Stay Motion, Ex. 1 (Memorandum of 

Points and Authorities) at 4. 

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progress toward that goal before the individual claims be dealt with.” Id. Additionally, the 

Court noted that even if it granted relief from the stay, and the Gelmans or Valero were granted a 

judgment against PG&E, neither plaintiff would “be able to enforce any judgment or take other 

actions to recover from PG&E without further permission” from the Court. Id. at 2-3. 

16. Similarly, this Court recently dismissed an adversary complaint, without leave to 

amend, because the state law tort causes of action asserted therein (relating to the November 

2018 Camp Fire) “should be handled and resolved through the claims process and not through a 

separate adversary proceeding.” Order Granting Mot. to Dismiss First Am. Compl., Adv. Pro. 

No. 19-03005 (Bankr. N.D. Cal. July 10, 2019) at 2. 

17. That same analysis applies with equal force here. As with the Gelman and Valero 

motions, the Lift Stay Motions seek to leapfrog the centralized claims resolution process. While 

the Official Committee agrees that progress must be made toward the Debtors’ reorganization, 

litigating certain issues in other courts will jeopardize, rather than facilitate, the negotiations that 

are critical to these cases’ resolution—specifically, negotiations concerning estimation of tort 

claims. 

18. The movants posit that proceeding in state court is a superior alternative to an 

estimation process. But the question of how to estimate claims, and for what purposes, is likely 

to be a central issue in these cases. These issues deserve focused attention and negotiation 

among these cases’ various constituents, and such discussions must—and will—begin now. 

Rather than addressing these important issues in response to lift stay motions, the parties should 

channel these efforts to negotiating toward a consensual view on process. The Official 

Committee expects that the Debtors’ motion to establish claims estimation procedures will kickstart these deliberations.6

19. For a variety of estimation paths are available in these cases, especially if 

consensus can be achieved on a path forward. The law is clear that this Court and the District 

Court have the power to estimate all claims in a centralized proceeding, and that as a part of that 

 

6

 See Debtors’ Motion Pursuant to 11 U.S.C. §§ 105(a) and 502(c) for the Establishment of Wildfire Claims 

Estimation Procedures (the “Estimation Procedures Motion”) [Docket No. 3091]. 

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proceeding also may determine the allowability of all claims. An estimation proceeding, which 

must be held in these cases in any event for any proposed plan to be confirmable, has the benefit 

of providing binding results for all parties, rather than only those whose cases are allowed to 

proceed on an ad hoc basis, as the movants propose. An aggregate claims estimation, and not 

individual trials, will bring all parties closer to a negotiated settlement. 

20. That a claims estimation process is appropriate is clear; which process to employ 

is yet to be determined. The benefits and drawbacks of the various options for estimation, 

including those proposed in the Estimation Procedures Motion, should, and will, be considered in 

negotiations on the appropriate claims estimation process for these cases, and the Official 

Committee continues to evaluate all options carefully. 

II. The Path Movants Propose Is Procedurally Flawed.

21. Like the movants, the Official Committee is eager to move these cases forward. 

But the movants’ requested relief is not only inefficient, it also suffers from several procedural 

defects. 

22. First, as previously noted, even if the Court were to grant the movants’ requested 

stay relief, the movants would still need to make a request of Judge Karnow at the California 

Superior Court under California Code of Civil Procedure Section 36. Judge Karnow previously 

entered orders regarding procedures for identifying plaintiffs that qualify under Section 36, but 

has not yet determined how such plaintiffs’ cases would proceed in the JCCP. To make their 

request, the movants would be required to follow the established “Preference Protocol” and to 

file motions with the California Superior Court. See supra ¶ 10; Kreller Decl. Ex. A. 

23. In addition, the relief sought in the TCC’s Lift Stay Motion is directly contrary to 

Judge Karnow’s ruling that the Atlas fire cases should be tried first. After considering the 

arguments of the parties, and after careful deliberation, Judge Karnow determined that the Atlas 

fire cases, rather than the Tubbs fire cases, should be tried first in the JCCP on the ground that 

“Tubbs is the most complex and wide ranging case to try,” and Atlas would be the most “useful 

as precedent.” Kelly Decl., Ex. B, at 2. The movants’ requested relief would require the 

California Superior Court to reconsider this measured decision.

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24. Furthermore, a grant of the movants’ requested stay relief reintroduces certain 

inefficiencies involving mass tort litigation that both of the JCCP and these bankruptcy cases 

were designed to resolve. In addition to the inconsistent verdicts that might arise from individual 

trials, the preclusive effect of individual cases may be asymmetric, and is uncertain in any 

event. See, e.g., Parklane Hosiery Co, Inc. v. Shore, 439 U.S. 322, 326-29 (1979) (non-mutual 

collateral estoppel may be applied only where certain delineated factors are met). This is 

especially true here, where subsequent plaintiffs that might have joined in a first case are 

precluded from doing so by the automatic stay. Moreover, appeals from individual state court 

cases are likely to take years, regardless of the verdict. Sending individual cases to state court is 

not the quick fix the movants present it to be. 

25. Bankruptcy process is designed to avoid these issues and to reach a resolution 

efficiently in a centralized forum—all the more efficiently if it can be done consensually. Now 

that the Governor of California and the California legislature have taken extraordinary steps to 

put in place a regime to assist the state’s utilities, including the Debtors, the next logical step is to 

formulate an estimation framework that will lead to a consensus in these cases regarding the 

most efficient path forward. The Official Committee is prepared and eager to engage in these 

discussions with the Debtors and others who may have a viable plan to move forward. 

CONCLUSION 

26. For these reasons, the Official Committee respectfully requests that the Lift Stay 

Motions be denied. 

DATED: July 19, 2019 MILBANK LLP 

 /s/ Gregory A. Bray 

DENNIS F. DUNNE 

SAMUEL A. KHALIL 

GREGORY A. BRAY 

THOMAS R. KRELLER 

Counsel for the Official Committee of Unsecured 

Creditors

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