EXHIBIT B 

 

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BUTTE FIRE CASES 

MAY - 1 2018 

SUPERIOR COURT OF CALIF ffri t1:----:-:~~ -1-.J:=--q 

Deputy Cler 

COUNTY OF SACRAMENTY-0~--....:::..::..:.~.:...::..___...1__J 

Case No.: JCCP 4853 

RULING ON SUBMITTED MATTER: 

PG&E'S RENEWED MOTION FOR A 

LEGAL DETERMINATION OF INVERSE 

CONDEMNATION LIABILITY 

PURSUANT TO CODE OF CIVIL 

PROCEDURE SECTION 1260.040 

1 O On April 26, 2018, the court heard the Renewed Motion by Pacific Gas and Electric 

11 Company ("PG&E") for a Legal Determination of Inverse Condemnation Liability. PG&E 

12 renews its motion for a legal determination of inverse condemnation liability under Code of Civil 

13 Procedure section 1008, subdivision (b ), "on the ground that new facts have materialized since 

14 the Court's ruling on [its] previous motion." (PG&E's Renewed Mot. ("Mot.") 1 :3-6.)1 PG&E 

15 also requests the court sua sponte reconsider and deny plaintiffs' cross-motion. (Id. at 1 :6-8.) 

16 The parties appeared and presented oral argument. 

17 The court, having fully considered the arguments of all parties, both written and oral, as 

18 well as the evidence submitted, affirms its tentative ruling, as supplemented concerning the 

19 parties' requests for judicial notice and evidentiary objections. The court also denies PG&E's 

20 request to certify its order to the Court of Appeal under section 166.1. 2 

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1 All statutory references are to the Cod of Civil Procedure unless otherwise specified. 

2 Additional minor changes have been made to the tentative ruling, including correcting the two 

errors discussed during the April 26, 201 8 hearing. 

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2 Introduction 

3 Whether PG&E, a privately owned public utility, should be liable under the doctrine of 

4 inverse condemnation for damages caused by the Butte Fire is a question of public policy to be 

5 addressed to the Legislature. Whether PG&E is liable for inverse condemnation damages under 

6 present controlling appellate case law is a question of law this court must decide. (See People v. 

7 McGuire (1872) 45 Cal. 56, 57-58 ["Nisi prius Courts are not at liberty to set aside or disregard 

8 the decisions of [ a court of superior jurisdiction] because it may seem to them that the decisions 

9 are unsound. Until reversed or modified ... , [a] decision[] must be accepted by all inferior 

10 tribunals."].) 

11 Factual Background 

12 A. Procedural History 

13 Plaintiffs and PG&E filed competing motions under section 1260.040 seeking a legal 

14 determination on whether PG&E is liable for inverse condemnation damages caused by the Butte 

15 Fire. Hearing on the competing motions was held June 16, 2017. 

16 On June 22, 2017, the court issued its Ruling on Submitted Matter: Inverse Condemnation 

17 Motions ("Ruling"), granting plaintiffs' motion for a finding PG&E is liable in inverse 

18 condemnation and denying PG&E's competing motion for a legal determination it is not liable.3 

19 Specifically, the court found (1) PG&E may be held liable for inverse condemnation under 

20 California law even though it is a privately owned public utility, and (2) the Butte Fire was 

21 caused by a public improvement as deliberately designed and constructed by PG&E. The June 22, 

22 2017 Ruling, attached hereto as Exhibit A, states in relevant part: 

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3 The court denied plaintiffs' motion as to the Pacific Gas & Electric Corporation. 

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A. A Privately Owned Public Utility May Be Liable For 

Inverse Condemnation 

1) Private Utilities 

California courts have long found public and quasi-public 

entities responsible for damages under inverse condemnation. (See, 

e.g., Eachus v. Los Angeles Consolidated Elec. Ry. Co. (1894) 103 

Cal. 614 [ railroad liable for cutting off access to a public road.].) 

Courts have repeatedly classified utilities as "public 

entities." (Barham v. Southern Cal. Edison Co. (1999) 74 Cal. App. 

4th 744, 752 (1999); Gay Law Students Assn. v. Pac Tel. & Tel. Co. 

(1979) 24 Cal. 3d 458, 470; Pac. Bell Tel. Co. v. Pac. Gas and 

Electric Co. (2012) 208 Cal. App. 4th, 1400 ["Pacific Be/I"]; 

She.ffet v. City of Los Angeles (1970) 3 Cal. App. 3d 720, 732.) 

More specifically, under California law the proposition a 

privately-owned public utility such as PG&E may be held liable for 

inverse condemnation is now solidly established. (Barham v. 

Southern California Edison Co., supra, 74 Cal.App.4th 744, 753; 

Pacific Bell, supra, 208 Cal. App. 4th 1400.) 

The Court in Barham found no "significant differences" 

between a privately held public utility and a publicly held utility for 

the purpose of inverse condemnation liability. (Barham, supra, 74 

Cal.App. 4th at 753.) Rather, the Court cited the California 

Supreme Court's holding in Gay Law Students Assn. v. Pac Tel. & 

Tel. Co., supra, 24 Cal. 3d 458 that a public utility is a "state actor" 

when hiring its employees. (Barham at 753.) In Gay Law Students, 

the Supreme Court found " ... the breadth and depth of governmental 

regulation of a public utility's business practices inextricably ties 

the state to a public utility's conduct..." (Gay Law Students, supra, 

24 Cal.3d at 470.) 

The Fourth District is not alone in this line of reasoning. In 

Pacific Bell, the Second District adopted Barham 's reasoning in 

finding the quasi-monopolistic nature of Southern California 

Edison rendered it a public entity. (Pac. Bell, supra, 208 Cal. App. 

4th at 1405.) The Court explained: "[A] public utility's 

monopolistic or quasi-monopolistic authority ... derives directly 

from its exclusive franchise provided by the state."(Jd at 1406.) 

PG&E argues repeatedly the California Supreme Court itself 

has not found a privately held public utility liable under inverse 

condemnation. This is true, but not dispositive. 

PG&E argues the appellate courts in Barham and Pacific 

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Bell improperly extended the holding of Gay Law Students beyond 

the employment context. PG&E cites Automatic Sprinkler Co. v. 

Southern Cal. Edison Co. (1989) 216 Cal. App. 3d 627, 633 for its 

argument. However, Automatic Sprinkler ultimately turned on a 

specific statutory scheme, not application of Gay Law Students. 

(Automatic Sprinkler at 633.) Furthermore, the very same Court of 

Appeals declined to extend the conclusions in Automatic Sprinkler 

to Barham. (Barham, supra, 74 Cal. App. 4th at 753.) 

PG&E also cites language from the Third District Court of 

Appeal's decision in Bach v. County of Butte, supra, 215 Cal.App. 

3d at 307: " ... it is elementary that an inverse condemnation action 

... requires state action and, therefore, cannot be asserted against 

private parties." The court does not find this general statement 

controlling. 

Plaintiffs in Bach sought to sue their neighbors in inverse 

condemnation for the neighbors' complaint to the county the Bachs 

were operating a law practice out of their home in violation of 

zoning regulations. The Court of Appeal's summary dismissal of 

Bachs' "ill-conceived, frivolous" argument (Bach, supra, 215 

Cal.App.3d at 307) is of little guidance in assessing PG&E's 

liability for damages resulting from operation of its power lines. 

2) Risk Sharing 

Over 70 years ago Justice Roger Traynor explained the 

fundamental public policy underlying the principle of liability for 

inverse condemnation: 

The construction of the public improvement is a 

deliberate operation of the state or its agency in 

furtherance of public purposes. In erecting a 

structure that is inherently dangerous to private 

property, the state or its agency undertakes by virtue 

of its constitutional provision to compensate 

property owners for injury to their properly arising 

from the inherent dangers of public improvement .... 

The decisive consideration is the effect of the public 

improvement on the property and whether the owner 

of the damaged property if uncompensated would 

contribute more than his proper share to the public 

undertaking. It is irrelevant whether or not the injury 

to the property is accomplished by a corresponding 

benefit to the public purpose to which the 

improvement is dedicated, since the measure of 

liability is not the benefit derived from the property, 

but the loss to the owner. 

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(House v. Los Angeles Co. Flood Control Dist. (1944) 25 Cal.2d 

384, 396-397 [cone. opn. of Traynor, J.) 

The Butte Fire occurred when a tree came into contact with 

a power line PG&E operates providing electrical service to over 

3,640 customers on that line. The court finds if the individual 

property owners damaged here were to absorb that loss, they would 

be contributing more than their "proper share" to the cost of this 

undertaking. As the Court explained in Pacific Bell, supra, 208 

Cal. App. 4th at 1408: 

For an owner whose property is damaged by the 

operation of a utility, he or she · suffers a 

disproportionate share of the cost of the public 

improvement regardless of whether the utility is 

governmentally or privately owned. We do not 

believe the happenstance of which type of utility 

operates in an area should foreclose a property 

owner's right to just compensation under inverse 

condemnation for the damage, interest and attorney 

fees and should limit the property owner to 

traditional tort remedies. 

3) Public Improvement 

4) Public Policy 

PG&E is subject to inverse condemnation liability despite 

the fact it is a privately-owned public utility. The policy reasons 

underlying the just compensation right in inverse condemnation do 

not dictate a different conclusion. 

PG&E argues because it is a privately-owned utility, the 

traditional policy justifications for inverse condemnation should not 

apply in this case because: (1) PG&E did not obtain the land upon 

which its line is located through eminent domain or joint action 

with the state; (2) PG&E does not enjoy sovereign immunity; and 

(3) PG&E does not have authority to spread the cost of any award 

to all its customers. 

The court is not persuaded. 

[(a)] Eminent Domain 

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[(b)] Cost Spreading 

The court also rejects PG&E's argument the cost-sharing 

policy underlying inverse condemnation does not apply because it 

lacks the power to spread the cost of condemnation across the 

benefitted public. 

In Pacific Bell, Southern California Edison ("SCE") 

similarly argued the loss-spreading rationale underpinning inverse 

condemnation liability did not apply to it because as a public utility 

it did not have taxing authority and could only raise rates with the 

approval of California's Public Utilities Commission [("PUC")]. 

But the Court noted the government's delegation to SCE the right 

and obligation to provide a vital public interest (electricity) did "not 

remove the policy justifications underlying inverse condemnation 

liability: that individual property owners should not have to 

contribute disproportionately to the risks from public improvements 

made to benefit the community as a whole. (Belair v. Riverside 

County Flood Control Dist. (1988) 47 Cal.3d 550, 558)." (Pacific 

Bell, supra, 208 Cal. App. 4th at p. 1407.) 

The court also noted SCE had not pointed to any evidence 

supporting its implication the PUC would not allow it adjustments 

to pass on damage liability during its periodic reviews. (Pacific 

Bell, supra, 208 Cal. App. 4th at p. 1407.) 

Such evidence is similarly lacking here. 

[(c)) Sovereign Immunity 

For all these reasons, the court finds PG&E may be held 

liable under a claim of inverse condemnation for the damages 

alleged here, notwithstanding the fact it is a privately-owned utility. 

(June 22, 2017 Ruling at pp. 11-17.) 

B. San Diego Gas & Electric Company's PUC Application 

In September 2015, San Diego Gas & Electric Company applied for approval from the 

California Public Utilities Commission ("PUC") to recover as rate increases its costs and legal 

fees incurred in settling damage claims arising from three wildfires, collectively referred to as the 

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"2007 Southern California Wildfires." Inverse condemnation was a cause of action alleged 

against San Diego Gas & Electric Company in the San Diego County coordinated proceedings 

arising out of those fires. 

In a Decision issued November 30, 2017, the PUC denied San Diego Gas & Electric 

Company's application ("Decision"), holding the company "did not reasonably manage and 

operate its facilities prior to the 2007 Southern California Wildfires." (PUC Decision 17-11-033, 

at p. 2, attached as Ex. G to the Deel. of Jeffrey N. Boozell ("Boozell Deel.").) In its Decision the 

PUC stated "Inverse Condemnation principles are not relevant to a Commission reasonableness 

review under the prudent manager standard." (Id. at p. 65.) 

PG&E contends the Decision was the first time the PUC "announced . .. that the cost 

spreading rational for inverse condemnation has no bearing" on the PUC's approval ofrate 

increases. PG&E argues this declaration by the PUC is a new fact coming after this court's 

Ruling, which "unambiguously establishes that the fundamental policy underlying the doctrine of 

inverse condemnation has no application to private utilities such as PG&E." (Mot. 2:9-13.) 

Legal Standard 

Section 1008, subdivision (b ), permits a party "who originally made an application for an 

order which was refused in whole or part ... [to] make a subsequent application for the same 

order upon new or different facts, circumstances, or law." Unlike a motion for reconsideration 

under section 1008, subdivision (a), there is no time limit for PG&E to renew its previous motion. 

(Stephen v. Enterprise Rent-A-Car (1991) 235 Cal.App.3d 806, 816.) 

Discussion 

A. Deciding Inverse Condemnation Liability under Section 1260.040 

As discussed in the court's June 22, 2017 Ruling, in their initial motions the parties agreed 

the court had authority pursuant to section 1260.040 to rule upon the question of liability for 

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1 inverse condemnation presented by their competing motions. (June 22, 2017 Ruling at p. 2.) At 

2 that time, only one Court of Appeal had addressed the application of section 1260.040. In Dina v 

3 People ex rel. Department of Transportation (2007) 151 Cal.App.4th 1029 ("Dina"), the Second 

4 Appellate District held the trial court properly determined the legal issue of liability for inverse 

5 condemnation pursuant to the motion procedure afforded by section 1260.040. (Dina at 1047.) 

6 However, after this court's June 22, 2017 Ruling and PG&E filed its renewed motion, the 

7 Fourth Appellate District expressly disagreed with Dina, stating "we part company with Dina in 

8 interpreting section 1260.040 to authorize pretrial liability determinations" in an inverse 

9 condemnation action. (Weiss v. People ex rel. Dep 't ofTransp. (2018) 20 Cal.App.5th 1156, 1175 

10 ["Weiss"].) The Court stated, "Code of Civil Procedure section 1260.040 does not provide for a 

11 nonsuit or other dispositive motion to resolve liability in limine in inverse condemnation actions, 

12 and we decline to judicially create such a procedure." (Id. at 1166.) 

13 In light of the recent split of authority on whether the issue of inverse condemnation 

14 liability may be decided under section 1260.040, the court allowed the parties to file supplemental 

15 briefing on the issue. 

16 Plaintiffs maintain Weiss correctly interpreted the application of section 1260.040 and 

17 argue the court may not hear PG&E's renewed motion because using section 1260.040 to 

18 determine inverse condemnation liability "is improper and a violation of due process." (Pls.' 

19 Supp. Br. 1:9-14, 5:17-19.) Although plaintiffs contend utilizing section 1260.040 to determine 

20 inverse condemnation liability is improper, they say nothing concerning the continued validity of 

21 the court's June 22, 2017 Ruling in their favor- rendered pursuant to section 1260.040 at their 

22 urgmg. 

23 In contrast, PG&E argues the court should continue to view this case as controlled by 

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Dina in light of the parties' representations and the court's "reliance and substantial investment of 

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1 time and resources on the assumption that Dina controls.',4 (PG&E's Supp. Br. 2:6-13.) 

2 Alternatively, PG&E argues if the court follows Weiss rather than Dina to deny PG&E's renewed 

3 motion, the court must then vacate its June 22, 2017 Ruling. (Id. at 2:14-17.) 

4 Assuming, arguendo, the Dina court correctly decided section 1260.040 can be used to 

5 decide inverse condemnation liability pre-trial, the court nevertheless finds PG&E loses on the 

6 merits of its renewed motion. Therefore, the court need not decide which Court of Appeal 

7 decision to follow regarding section 1260.040.5 

8 B. Requests for Judicial Notice 

9 Plaintiffs and PG&E filed Requests for Judicial Notice in support of their briefing. 

10 PG&E's requests the court take judicial notice of the PUC's Decision and the December 

11 26, 2017 Concurrence of Commissioners Picker and Aceves are GRANTED. (See People ex rel. 

12 Orloff v. Pacific Bell (2003) 31 Cal.4th 1132, 1143, fn.4.) 

13 The parties' remaining requests are denied as irrelevant to the court's decision. 

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C. Evidentiary Objections 

The court rules on plaintiffs' evidentiary objections as follows: 

Plaintiffs' Objection No. 9 to Exhibit G to the Boozell Declaration (the PUC Decision) 

4 In its supplemental brief, PG&E "reserve[ d] the right to argue in another case ... that the 

18 conflicting view oflaw[, i.e., Weiss,] represents the better-reasoned decision." (PG&E Supp. Br. 

2:10-13.) 

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5 Further, the court finds the due process concerns plaintiffs raise in their supplemental brief are 

20 not at issue here given the circumstances and procedural history of this coordinated proceeding. 

PG&E's renewed motion does not concern disputed facts, nor does it require the court to 

21 weigh evidence. Thus, the Court of Appeal's concern in Weiss with the impropriety of using 

section 1260.040 to resolve disputed factual issues does not apply here. Rather, the court is 

22 deciding a legal issue - whether under existing California law a privately owned public utility can 

be held liable for inverse condemnation. 

23 Additionally, plaintiffs cannot argue they are now prejudiced by using the very procedure they 

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initially requested. 

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1 and Objection No. 10 to Exhibit H to the Boozell Declaration (the December 26, 2017 

2 Concurrence) are OVERRULED. 

3 The court does not rule on plaintiffs' remaining evidentiary objections since they concern 

4 evidence not considered or otherwise material to this motion. 

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D. PG&E's Renewed Motion 

1) The PUC's Decision 

7 PG&E argues renewal of its motion for a legal determination of inverse condemnation 

8 liability is permitted given the PUC's announcement for the first time in its November 2017 

9 Decision that the cost-spreading rational for inverse condemnation has "no bearing" on the PUC's 

10 obligation to allow utilities to recover only reasonably and prudently incurred costs. (Mot. 2:6-8.) 

11 PG&E argues: 

12 On June 22, 2017, the Court concluded that the doctrine of inverse 

condemnation applies to PG&E with respect to the Butte Fire. The 

13 Court rejected PG&E's argument that inverse condemnation is not 

properly applied to a private utility such as PG&E because, unlike a 

14 public utility, PG&E lacks the power unilaterally to spread the costs 

of inverse condemnation across the benefitted public. The Court 

15 relied on two intermediate court decisions that found that private 

utilities could be held liable for inverse condemnation because, in 

16 the view of those courts, there is no salient difference between a 

public utility (which can automatically pass on inverse damages to 

17 the public) and a private utility (which cannot). Critically, this 

Court held that PG&E had failed to put forth any evidence to 

18 support its contention that the [PUC]-the regulatory agency 

charged with reviewing and approving any rate increases proposed 

19 by PG&E-would not allow PG&E to pass on its inverse 

condemnation liability through rate increases. 

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Such evidence now exists and forms the basis for this 

Motion .... 

Because the [PUC] must approve private utility rate 

increases, [its] declaration that it will not automatically allow such 

utilities to spread inverse losses through rate increases to the 

customers that benefit from the public improvement unambiguously 

establishes that the fundamental policy underlying the doctrine of 

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inverse condemnation has no application to private utilities such as 

PG&E. Inverse is premised on automatic cost spreading and this 

new fact-which did not exist at the time of this Court's decision 

( or the prior decisions on which this Court relied)-refutes the 

assumption that a private utility can spread inverse costs in the 

same way that a public utility can. As a result, PG&E respectfully 

submits that, in light of this new fact, the prior decisions upon 

which this Court relied were incorrectly decided and that inverse 

condemnation cannot apply to a private utility such as PG&E under 

California law. 

7 (Mot. 1: 15-2: 18.) PG&E also argues that PU C's declaration inverse condemnation is irrelevant to 

8 its rate-making process causes continued application of inverse condemnation to private utilities 

9 to violate the California and United States Constitutions. (Id at 10:6-8.) 

10 Plaintiffs argue PG&E's renewed motion fails for seven reasons:

6 

11 1) The court lacks jurisdiction to hear the motion because Public Utilities 

12 Code section 1759 vests exclusive jurisdiction to review decisions of the PUC with the Court of 

13 Appeal and Supreme Court; 

14 2) The only proper procedure to review the PUC Decision is via a writ of 

15 review as provided in Public Utilities Code section 1759; 

16 3) PG&E's renewed motion is not ripe for adjudication because the PUC's 

17 Decision is advisory; 

18 4) The PUC's Decision is "not final" and therefore not ripe for review 

19 because multiple utilities have applied for rehearing and the PUC has not ruled on those 

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5) PG&E has not presented any "new law" or "new facts," and thus there are 

no grounds supporting a renewed motion under section 1008; 

6 The County of Calaveras filed a Joinder in Opposition to PG&E's renewed motion. The 

joinder was not considered since the County of Calaveras is not currently a party to the 

coordinated proceeding. 

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6) 

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PG&E' s renewed motion is unsupported by competent evidence; and 

There has been no change in the controlling appellate case law, and 

3 therefore, the doctrine of stare decisis compels this court to continue to follow it. 

4 (Pls.' Opp'n 1:2-18.) 

5 The court need not address plaintiff's first six arguments because the court concludes two 

6 decisions of the Court of Appeal holding privately owned public utilities can be liable under the 

7 doctrine of inverse condemnation are still controlling authority this court must follow. 7 (Barham 

8 v. Southern California Edison Company (1999) 74 Cal.App.4th 744 ["Barham"] and Pacific Bell 

9 Telephone Company v. Southern California Edison Company (2012) 208 Cal.App.4th 1400 

IO ["Pacific Belf'].) The PUC's statement in its Decision that inverse condemnation principles "are 

11 not relevant" to the PUC's rate review does not "fairly distinguish" this case from the facts or 

12 rulings in Barham and Pacific Bell. Accordingly, PG&E's renewed motion is DENIED. 

13 2) Stare decisis 

14 Under the doctrine of stare decisis, tribunals exercising "inferior jurisdiction" must follow 

15 decisions of courts exercising superior jurisdiction. Our Supreme Court directs: "Decisions of 

16 every division of the District Courts of Appeal are binding upon ... all the superior courts of this 

17 state, and this is so whether or not the superior court is acting as a trial or appellate court." (Auto 

18 Equity Sales, Inc. v. Super. Ct. (1962) 57 Cal.2d 450, 455.) "Courts exercising inferior 

19 jurisdiction must accept the law declared by courts of superior jurisdiction. It is not their function 

20 to attempt to overrule decisions of a higher court." (Ibid.; accord Lafferty v. Wells Fargo Bank 

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7 The court recognizes the jurisdiction and independence of the PUC and a superior court's 

inability to "review" a PUC decision. (Pub. Util. Code, § 1759, subd. (a).) However, PG&E's 

renewed motion does not call upon the court to review the PUC's November 2017 Decision in 

violation of the Public Utilities Code. (See, e.g., Breidert v. S. Pacific Co. (1964) 61 Cal.2d 659, 

662 [discussing the respective jurisdiction of the PUC and courts]; San Diego Gas & Elec. Co. v. 

Super. Ct. (1996) 13 Cal.4th 893, 916-920.) 

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1 (2013) 213 Cal. App. 4th 545, 569.) 

2 In Barham the Court of Appeal (Fourth Appellate District) held a privately owned public 

3 utility could be liable for inverse condemnation. The Court rejected the utility's argument that 

4 inverse condemnation principles should not apply because Southern California Edison ("SCE") is 

5 a privately owned public utility, not a public entity. (Barham at p. 752.) The Court of Appeal 

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explained: 

(Id at p. 753.) 

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. 

[Citations.] 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. Further, article I, 

section 19 of the California Constitution and the cases which 

interpret and apply it have as their principal focus the concept of 

public use, as opposed to the nature of the entity appropriating the 

property. 

Thirteen years later, the Court of Appeal (Second Appellate District) in Pacific Bell 

agreed with the conclusion reached in Barham that a privately owned public utility could be liable 

under inverse condemnation. (Pacific Bell at p. 1404.) The Court of Appeal reasoned: 

On appeal [SCE] contends that the central case relied upon by the 

trial court in finding [SCE] liable for inverse condemnation, 

Barham, supra, ... wrongly interpreted Supreme Court precedent 

to hold a privately owned public utility like [SCE] may be liable for 

inverse condemnation as a public entity. [Citation.] .... 

We find [SCE's] reading of the Supreme Court cases to be 

overly limited and agree with the conclusion reached in Barham 

and by the trial court that [SCE] may be liable under inverse 

condemnation for the damage to Pacific Bell's property. 

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The Barham court found ... support for its conclusion that 

[SCE] may be liable for inverse condemnation in the Supreme 

Court's decision in Gay Law Students Assn. v. Pacific Tel. & Tel. 

Co. (1979) 24 Cal.3d 458 .... In Gay Law Students Assn., the 

California Supreme Court held that the defendant, "a privately 

owned public utility, which enjoys a state-protected monopoly or 

quasi-monopoly," violates the California constitutional equal 

protection guarantee in article I, section 7 of the state Constitution, 

when it utilizes its authority arbitrarily to exclude a class of 

individuals from employment opportunities. [Citation.] The 

Supreme Court reasoned that the utility was "in many respects more 

akin to a governmental entity than to a purely private employer" 

and ''the breadth and depth of governmental regulation of a public 

utility's business practices inextricably ties the state to a public 

utility's conduct, both in the public's perception and in the utility's 

day-to-day activities. [Citations]." [Citation.] Of particular 

significance in this case is that "a public utility's monopolistic or 

quasi-monopolistic authority ... derives directly from its exclusive 

franchise provided by the state." [Citations.] A public utility's 

monopoly "is guaranteed and safeguarded by the state Public 

Utilities Commission, which possesses the power to refuse to issue 

certificates of public convenience and necessity to permit potential 

competition to enter" the market. (Gay Law Students Assn., supra, 

24 Cal.3d at p. 471.) 

In the instant appeal, we find that [SCE's] monopolistic or 

quasi-monopolistic authority, deriving directly from its exclusive 

franchise provided by the state {see Gay Law Students Assn., supra, 

24 Cal.3d at p. 471 ), distinguishes [SCE's] action from the cases it 

cites rejecting inverse condemnation cases against private parties 

who do not have such monopolistic authority from the state. 

[Citation.] 

We find further support in Eachus v. Los Angeles etc. Ry. 

Co. {1894) 103 Cal. 614 . . .. [L]ike Gay Law Students Assn. the 

dispositive factor in Eachus appears to be the quasi-monopolistic 

authority and delegated power given to the defendant by the grant 

of a franchise. In Eachus, supra, 103 Cal. 614, the Supreme Court 

affirmed the award to the plaintiff landowners of inverse 

condemnation damages under the former takings clause of the 

California Constitution against a defendant, a railway company that 

had "received a franchise from the city of Los Angeles to construct 

a railroad" along the street in front of the plaintiffs' property and, in 

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preparation for construction of the railroad, excavated the middle of 

the street to its official grade and thereby cut off the plaintiffs' 

access to the street. (Eachus, supra, 103 Cal. at pp. 615-616.) .... 

"The term 'franchise' ordinarily refers to those services and 

functions that government itself is obligated to furnish to its 

citizens, and usually concerns matters of vital public interest such 

as water, gas, electricity, or telephone services, and the right to use 

the public streets and ways to bring them to the general public." 

[Citation.] Here, the government has chosen to grant a franchise 

and delegate the furnishing of electricity to [SCE] rather than 

operating the utility itself. Such a delegation does not remove the 

policy justifications underlying inverse condemnation liability: that 

individual property owners should not have to contribute 

disproportionately to the risks from public improvements made to 

benefit the community as a whole. [Citation.] [SCE] argues that this 

loss-spreading rationale does not apply because as a public utility it 

does not have taxing authority and may raise rates only with the 

approval of California's Public Utilities Commission. We note that 

in this case the judgment was for $123,841.95 and that [SCE] has 

not pointed to any evidence to support its implication that the 

commission would not allow [SCE] adjustments to pass on 

damages liability during its periodic reviews. [fn.] 

As the Barham court noted, if we were 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" but we are "not convinced that any significant 

differences exist." (Barham, supra, 74 Cal.App.4th at p. 753.) For 

an owner whose property is damaged by the operation of a utility, 

he or she suffers a disproportionate share of the cost of the public 

improvement regardless of whether the utility is governmentally or 

privately owned. We do not believe the happenstance of which type 

of utility operates in an area should foreclose a property owner's 

right to just compensation under inverse condemnation for the 

damage, interest and attorney fees and should limit the property 

owner to traditional tort remedies. We therefore conclude that 

[SCE] may be liable for inverse condemnation and affirm the 

judgment. 

(Id. at pp. 1404-1408.) 

3) Distinguishing Barham and Pacific Bell 

The language of Barham and Pacific Bell must be construed in light of the facts of each 

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case because "an opinion's authority is no broader than its factual setting." (San Diego Cnty. 

Employees Retirement Ass'n v. Cnty of San Diego (2007) 151 Cal.App.4th 1163, 1183.) Cases do 

not stand for propositions never considered by the court. (People v. Frazier (2005) 128 

Cal.App.4th 807, 825.) 

But this court is bound by the holdings of Barham and Pacific Bell unless the facts here 

are "fairly distinguishable" from the facts before those Courts. (See, e.g., People v. Linkenauger 

(1995) 32 Cal.App.4th 1603, 1613.) PG&E has not shown the PUC's Decision renders this 

coordinated proceeding fairly distinguishable from the facts of Barham and Pacific Bell such that 

those cases are no longer binding on this court. 

Although both decisions discuss the cost-spreading policy behind inverse condemnation, 

the court is not persuaded either decision rested on the assumption that the utility would 

automatically be able to pass on its losses as rate increases to its customers. For example, in 

Barham the Court discusses as a "principal focus" of cases interpreting inverse condemnation 

under article 1, section 19 of the California Constitution, the "concept of public use." (Barham, 

supra, 74 Cal.App.4th at 753.) Here, like in Barham, the plaintiffs' property was taken "for a 

public use, i.e., the transmission of electric power to the public." (Id at p. 754.) 

In Pacific Bell, the Court highlights the privately owned public utility's "monopolistic or 

quasi-monopolistic authority, deriving directly from its exclusive franchise provided by the state" 

as a factor influencing its decision to hold SCE liable for inverse condemnation. (Pacific Bell, 

supra, 208 Cal.App.4th at 1406-1407.) The Pacific Bell Court explained someone whose 

property is damaged by operation of a public utility "suffers a disproportionate share of the cost 

of the public improvement regardless of whether the utility is governmentally or privately 

owned." (Id at p. 1408.) 

These premises for finding a privately owned utility liable for inverse condemnation are 

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1 unaffected by the PUC's intervening Decision. Moreover, the Pacific Bell Court indicated in a 

2 footnote it did "not believe" a municipally owned utility's potential future inability "to spread the 

3 cost of public improvements" would "immunize" the utility from inverse condemnation. (Pacific 

4 Bell, supra, 208 Cal.App.4th at 1407, fn. 6.) Even if considered dicta, this statement suggests a 

5 utility's ability to pass on its losses as rate increases was not essential to the Pac Bell Court's 

6 decision. Merely characterizing the Court of Appeal's observation on this point as dicta does not 

7 mean its reasoning is wrong, unreasonable, or should not be considered. (Sarguy v. Resolution 

8 Trust. Corp. (1992) 8 Cal.App. 4th 1039, 1045-1046.) 

9 4) PG&E's Constitutional Arguments 

1 o PG&E additionally argues if inverse condemnation continues to apply to a privately held 

11 public utility after the PUC's Decision, such liability would constitute an uncompensated taking 

12 in violation of the Fifth Amendment of the United States Constitution and Article I, Section 19 of 

13 the California Constitution or, in the alternative, would be arbitrary and irrational, and therefore 

14 violate PG&E's substantive due process rights under the California Constitution and the 

15 Fourteenth Amendment of the United States Constitution. (Mot. 2:18-23.) 

16 These constitutional arguments should be made to the appellate courts. This court remains 

17 bound to follow Barham and Pacific Bell. To the extent PG&E raises public policy implications 

18 of the PUC's Decision, these arguments should be addressed to the Legislature or PUC. 

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5) PG&E's Request for Certification under Code of Civil Procedure 

section 166.1 

In its reply brief, PG&E requests the court certify this order for appellate review under 

section 166.1 in the event its renewed motion is denied. PG&E's request is DENIED. 

The parties represent that the question of whether privately owned utilities may be liable 

under the doctrine of inverse condemnation is also presently before trial courts in Los Angeles 

and San Francisco Counties, as well as the California Legislature. Given the PUC's recent 

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1 Decision, there are certainly "substantial grounds for difference of opinion" on this question 

2 within the meaning of section 166.1. However, this court cannot represent that an interlocutory 

3 ruling from a third Court of Appeal "may materially advance the conclusion" of this litigation. (§ 

4 166.1.) 

5 Conclusion 

6 For these reasons, PG&E's Renewed Motion for a Legal Determination oflnverse 

7 Condemnation Liability is DENIED. 

8 Plaintiffs' counsel shall prepare an order for the court's signature pursuant to California 

9 Rules of Court, rule 3.1312. 

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DATED: April -W, 2018 

Jud Aile . S er 

Superior Court of Californiai 

County of Sacramento 

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