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Tig WEIL, GOTSHAL & MANGES LLP 

Stephen Karotkin (pro hac vice) 

(stephen.karotkin@weil.com) 

Ray C. Schrock, P.C. (pro hac vice) 

(ray.schrock@weil.com) 

Jessica Liou (pro hac vice) 

(jessica.liou@weil.com) 

Matthew Goren (pro hac vice) 

(matthew.goren@weil.com)| 

767 Fifth Avenue 

New York, NY 10153-0119 

Tel: 212 310 8000 

Fax: 212 310 8007 

Attorneys for Debtors 

and Debtors in Possession 

KELLER & BENVENUTTI LLP 

Tobias S. Keller (#151445) 

(tkeller@kellerbenvenutti.com) 

Peter J. Benvenutti (#60566) 

(pbenvenutti@kellerbenvenutti.com) 

Jane Kim (#298192) 

(jkim@kellerbenvenutti.com) 

650 California Street, Suite 1900 

San Francisco, CA 94108 

Tel: 415 496 6723 

Fax: 650 636 9251 

UNITED STATES BANKRUPTCY COURT 

NORTHERN DISTRICT OF CALIFORNIA 

SAN FRANCISCO DIVISION 

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).

 Case No. 19-30088 (DM) 

Chapter 11 

(Lead Case) (Jointly Administered) 

DEBTORS’ PRELIMINARY 

LIMITED OPPOSITION TO 

VLAZAKIS DEFENDANTS’ 

MOTION AS TO THE 

INAPPLICABILITY OF STAY, AND 

IN THE ALTERNATIVE FOR 

RELIEF FROM STAY 

Relates to Dkt. Nos. 4846, 4847 

Date: December 17, 2019 

Time: 10:00 a.m. 

Place: United States Bankruptcy Court 

 Courtroom 17, 16th Floor 

 San Francisco, CA 94102

 

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Pacific Gas and Electric Company (the “Utility”), as a debtor and debtor in possession along 

with PG&E Corporation (“PG&E Corp.”, together with the Utility, the “Debtors”) in the abovecaptioned Chapter 11 Cases (the “Chapter 11 Cases”), respectfully submits this opposition (the 

“Opposition”) to the Motion as to Inapplicability of Stay, and in the Alternative, for Relief from 

Stay (Docket No. 4846) filed by Athanasia Vlazakis, George Vlazakis, John Barbis, and Maria 

Barbis (collectively, the “Vlazakis Defendants”). The Vlazakis Defendants seek relief from the 

automatic stay pursuant to section 362(d) of title 11 of the United States Code (the “Bankruptcy 

Code”) to file an affirmative cross-complaint (the “Cross-Complaint”) against the Utility in the 

case pending in the Superior Court for the State of California, County of Alameda (the “State 

Court”), Pacific Gas and Electric Company v. Vlazakis, et al., Case No. RG19021463 (the “State 

Court Action”). In support of the Opposition, the Utility submits the Declaration of Kenyon Mark 

Lee (the “Lee Declaration”) and the Request for Judicial Notice (the “RJN”), filed 

contemporaneously herewith. 

I. PRELIMINARY STATEMENT 

The Utility opposes the Motion insofar as claims asserted in the Cross-Complaint are 

predicated on an unconsummated November 22, 2017 settlement agreement between the Utility and 

the Vlazakis Defendants, a copy of which is attached as Exhibit 1 to the Declaration of Ronald F. 

Beretska, Jr. in support of the Motion (the “Contract”).1 The Utility does not oppose relief from 

stay as to other elements of the Cross-Complaint, reflected in the Fourth through Seventh Causes of 

Action. 

The Utility’s position here, as in the State Court Action, is motivated by important public 

safety considerations that will be served by obtaining a determination, as expeditiously as possible, 

of Utility’s request for declaratory and injunctive relief in the State Court. The Utility seeks to 

construct a new natural gas regulation station on Utility’s property at 225 Brush Street in Oakland, 

to meet current applicable safety standards and code requirements and enhance the inspection of gas 

transmission lines and the safe management of the lines in an emergency. RJN Ex. A at para. 3. To 

1

 These are the First through Third Causes of Action in the proposed Cross-complaint. 

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do this, Utility must demolish the existing building on the Utility-owned property. RJN Ex. A at 

para. 4. The Utility’s ability to do this so it can move forward with the new station has been 

frustrated for several years by an encroachment from the Vlazakis Defendants’ property. 

Specifically, the old building on the Vlazakis property, immediately adjacent to the Utility’s 

property and building, is supported by the exterior wall of the Utility’s adjoining building, which 

functions as the exterior wall of the Vlazakis building as well. RJN Ex. A at para. 4. Demolition 

of the Utility’s building will leave the Vlazakis building without an exterior wall or support for its 

roof and perpendicular walls. Id. 

After several years of unsuccessful efforts—including the Contract—to resolve the situation 

with the Vlazakis Defendants consensually, the Utility filed the State Court Action on June 4, 2019, 

seeking a determination permitting it to demolish its building, including the wall that adjoins the 

Vlazakis property and supports the Vlazakis building. Lee Decl. at para. 3. The Utility promptly 

sought a preliminary injunction. Lee Decl. at para. 4. The State Court denied the Utility’s request 

for an injunction but set an expedited case management schedule and an early date for a bench trial 

on May 12, 2020. Lee Decl. at para. 5. 

Five months after State Court Action was filed, and after the expedited trial date had been 

set, the Vlazakis Defendants belatedly requested leave from the State Court to file the proposed 

Cross-Complaint. Lee Decl. at para. 7. The State Court properly declined to consider that request 

until the Vlazakis Defendants obtained a ruling from this Court that the stay does not prevent the 

Vlazakis Defendants from making it. Id., Ex. A The State Court, on November 4, directed the 

Vlazakis Defendants to bring a motion “forthwith” in this Court. Id. The Motion was filed on 

November 22, 2019. 

The Proposed Cross-Complaint contains two categories of claims. The first three causes of 

action (the “Contract Claims”) are based on the Contract. The First Cause of Action is for Specific 

Performance of the Contract, the Second is for damages for alleged breach of it, and the Third is for 

damages for alleged negligence in its performance. Causes of Action Four through Seven are based 

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on traditional real estate principles and doctrines (the “Title Claims”): adverse possession (Fourth), 

prescriptive easement (Fifth), implied easement (Sixth) and easement by necessity (Seventh).2 

For the reasons explained below, the Court should not grant relief from stay as to the 

Contract Claims—claims as to which the automatic stay unquestionably applies under Bankruptcy 

Code §362(a)(1) and (6), and as to which the Vlazakis Defendants have timely filed a proof of claim 

for $500,000 in the Utility’s bankruptcy case (Claim No. 71712) (the “Proof of Claim”). The 

Utility does not oppose relief as to the Title Claims, so it is unnecessary to determine whether the 

form of that relief is a modification of the stay or a determination that it does not apply.3

II. FACTUAL BACKGROUND 

The crux of the issue for Utility is the virtual certainty that litigation of the Contract Claims 

in the State Court Action will postpone—probably materially—the determination by the State Court 

of the Utility’s right to demolish its building and proceed with construction of the gas regulation 

station. The safety consequences of such a delay include (1) gas-line inspections not being carried 

out pursuant to CPUC regulatory requirements and Utility commitments; (2) unacceptable levels of 

risk arising from delayed inspections of the 24” high-pressure gas lines; and (3) compromise of the 

Utility’s ability to utilize the critical shut-off valves to speed the response to reported gas leaks or 

related risks. RJN Ex. A at para. 11. 

The Vlazakis Defendants assert, and the Utility does not dispute, that the proposed claims 

for damages for breach of contract, and for negligence in performance of the contract (assuming 

2

 The Eighth Cause of Action is not substantive; it seeks a declaration of rights predicated on the 

preceding seven causes of action. Analytically it is a Contract Claim to the extent the declaration it 

seeks is based on any of the first three causes of action, and a Title Claim to the extent based on any 

of the others. 

3

 Bankruptcy Code §362(a)(3) applies to the Title Claims because they seek to exercise possession 

or control over property of the estate – namely, the Utility’s real property located at 225 Brush 

Street, and the Utility’s building located on that property. The Title Claims are also likely subject 

to §362(a)(1), because the claims to establish rights in the Utility’s property, to the extent they are 

valid, arose prepetition and could have been the subject of a prepetition action independent of the 

action filed by the Utility. Nevertheless, because the Utility does not oppose the assertion or 

litigation of the Title Claims, whether by answer or Cross-Complaint, this memorandum does not 

address them further. 

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this is a claim at all), carry a right to jury trial, which the Vlazakis Defendants have stated to this 

Court they will demand. Motion at 5. The State Court has informed the parties that, if there is a 

jury trial, the trial will not proceed on the currently scheduled date; and the need for broader 

discovery and trial preparation will likely contribute further to the delay, especially given that the 

Vlazakis Defendants have identified fourteen witnesses (or categories of witnesses) that they 

contend needed to be deposed in connection with the Contract Claims. Lee Decl. at paras. 22-23. 

The Contract Claims are based on the Contract that the Utility and the Vlazakis Defendants 

entered into in November 2017, in an effort to resolve the issues between them. RJN Ex. A at 

para. 5. The Contract calls for the transfer to the Vlazakis Defendants of the Utility’s wall and the 

four-foot strip of land on which it is located, and for Utility to reinforce the wall. The agreement 

has not been consummated. The parties dispute whether the Utility breached the Contract and 

whether the Utility remains obligated to perform it.4 The Vlazakis Defendants seek, as part of their 

proposed Cross-Complaint, specific performance of this agreement. 

The Utility disputes that specific performance is available to the Vlazakis Defendants for a 

variety of reasons, including that Utility is not obligated under the terms of the Contract to perform 

it. However, having to litigate over the contract would significantly complicate the trial and 

contribute materially to reasons to delay it. Under bankruptcy law, the Utility can eliminate its 

exposure to specific performance and the risks and burdens associated with it by rejecting the 

contract. Kaonohi Ohana, Ltd. v. Sutherland, 873 F.2d 1302, 1306 n. 5 (9th Cir. 1989). 

Accordingly, the Utility has authorized, and intends to file shortly, a motion for authority to reject 

the Contract and thereby remove specific performance as a possible subject for the State Court trial. 

III. ARGUMENT 

 The Vlazakis Defendants argue in the alternative that: (1) the automatic stay does not apply 

to the Cross-Complaint and (2) cause exists to lift the stay. Motion at 6-10. Both arguments are 

unavailing. 

4 See RJN Ex. B at paras. 3-6 for additional information about the Contract dispute and the 

Utility’s position about it. 

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A. The Automatic Stay Applies to the Contract Claims

The Vlazakis Defendants argue that the stay does not apply to “proposed cross-claims in a 

lawsuit filed after PG&E’s bankruptcy petition.” Motion at 6. With respect to the Contract Claims, 

the fact that the State Court Action itself was filed after the Petition Date is immaterial. The 

Vlazakis Defendants’ pursuit of specific performance or damages for an alleged prepetition breach 

of a prepetition agreement constitutes “commencement or continuation . . . of . . . an action or 

proceeding against the debtor that could have been commenced before the [petition date].” 

11 U.S.C. § 362(a)(1). With respect to the Title Claims, the stay applies because this is an action 

“to exercise control over property of the estate.” 11 U.S.C. § 362(a)(3). However, the Debtors do 

not contest the State Court Action moving forward with respect to the Title Claims, recognizing that 

fairness and efficiency call for litigation of those matters as part of the same proceeding with the 

Utility’s Complaint. 

B. The Vlazakis Defendants Are Not Entitled to Stay Relief on the Contract Claims

Section 362(d)(1) of the Bankruptcy Code authorizes a court to modify or terminate the 

automatic stay for “cause,” which “has no clear definition and is determined on a case-by-case 

basis.” Christensen v. Tucson Estates, Inc. (In re Tucson Estates, Inc.), 912 F.2d 1162, 1166 (9th 

Cir. 1990) (citation omitted). The party requesting stay relief bears the burden of making a prima 

facie showing of cause under section 362(d)(1). See In re Plumberex Specialties Prods., Inc., 311 

B.R. 551, 553 (Bankr. C.D. Cal. 2004); 3 Collier on Bankruptcy ¶ 362.10 (2019) (“Failure to prove 

a prima facie case requires denial of the requested relief.”). In determining whether cause exists to 

permit an action to proceed in a non-bankruptcy forum, courts analyze the twelve factors set forth 

in In re Curtis, 40 B.R. 795 (Bankr. D. Utah 1984);5 see also Kronemyer v. Am. Contrs. Indem. Co. 

5

 The Curtis factors are: (1) whether the relief will result in partial or complete resolution of issues; 

(2) the lack of any connection with or interference with the bankruptcy case; (3) whether the foreign 

proceeding involves the debtor as a fiduciary; (4) whether a specialized tribunal has been established 

to hear the particular cause of action and whether the tribunal has expertise to hear such cases; 

(5) whether the debtor’s insurance carrier has assumed full financial responsibility for defending the 

litigation; (6) whether the action essentially involves third parties, and the debtor functions only as 

a bailee or conduit for the goods or proceeds in question; (7) whether the litigation in another forum 

would prejudice the interests of other creditors, the creditors’ committee and other interested parties; 

(8) whether the judgment claim arising from the foreign action is subject to equitable subordination; 

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(In re Kronemyer), 405 B.R. 915, 921 (B.A.P. 9th Cir. 2009) (“We agree that the Curtis factors are 

appropriate, nonexclusive, factors to consider in deciding whether to grant relief from the automatic 

stay to allow pending litigation to continue in another forum.”). 

 The applicable Curtis factors here weigh against lifting the stay. Factor 10, the interests of 

judicial economy and the expeditious and economical determination of litigation for the parties and 

factor 12, the impact of the stay and the “balance of hurt” both demonstrate that the Utility would 

be harmed if the May 2020 trial date slipped because of a jury trial associated with the Contract 

Claims. There would be no judicial economy associated with trying the Contract Claims together 

with the Title Claims, because they do not overlap and thus are easily severable. 

1. Judicial Economy Is Not Served by Litigating the Contract Claims and 

Title Claims Together (Curtis Factor 10)

Regardless of whether or not the automatic stay applies to the Title Claims, the Debtors do 

not oppose permitting them to move forward as part of the State Court Action toward trial in May 

2020. However, the Contract Claims can and should be bifurcated from the Title Claims, and the 

Debtors respectfully submit that relief from stay is not appropriate with respect to them because 

moving forward with the State Court Action would be judicially inefficient. 

a. The Contract Claims Are Severable from the Title Claims 

 The Contract Claims are factually distinct and severable from the Title Claims. To the extent 

the Contract has any relevance to the Vlazakis Defendants’ defense to the Utility’s encroachment 

claims and request for an injunction, it would be due only to the Vlazakis Defendants’ estoppel-type 

arguments. The Vlazakis Defendants’ claims for breach of contract, negligence and resulting 

damages, all of which are based on conduct and events that post-date the Utility’s discovery of the 

(9) whether movant’s success in the foreign proceeding would result in a judicial lien avoidable by 

the debtor under section 522(f); (10) the interests of judicial economy and the expeditious and 

economical determination of litigation for the parties; (11) whether the foreign proceedings have 

progressed to a point where the parties are prepared for trial; and (12) the impact of the stay and the 

“balance of hurt.” 40 B.R. at 799-800. 

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encroachment and the formation of the Contract, are entirely separate and distinct from any issues 

that are potentially relevant to an adjudication of the Utility’s claims. Lee Decl. at para. 16. 

 While there might be an argument to the contrary with regard to the proposed claim for 

specific performance, the Debtors will move to reject the Contract. Upon rejection, specific 

performance of the Contract no longer will be available to the Vlazakis Defendants. Kaonohi 

Ohana, Ltd. v. Sutherland, 873 F.2d 1302, 1306 n. 5 (9th Cir. 1989) (“Specific performance of a 

rejected executory contract cannot be required.”); In re A.J. Lane & Co., 107 B.R. 435, 439 (Bankr. 

D. Mass. 1989) (right of specific performance subordinate to debtor’s rejection rights). 

 Post-rejection, the Vlazakis Defendants only will have a claim for (money) damages against 

the Utility. See, e.g., Midway Motor Lodge of Elk Grove v. Innkeepers’ Telemanagement & Equip. 

Corp., 54 F.3d 406, 407 (7th Cir. 1995) (holding that “rejection avoids specific performance” and 

results only in a claim for damages); In re CB Holding Corp., 448 B.R. 684, 690 (Bankr. D. Del. 

2011) (where no right to specific performance, only a pre-petition claim for rejection damages). 

The Proof of Claim seeks $500,000 in damages for breach of the Contract, which can be adequately 

addressed through the bankruptcy claims process. 

 Several other claims the Vlazakis Defendants seek to bring, for prescriptive easement and 

adverse possession, may also carry the right to a jury trial. The Utility plans to bring a summary 

adjudication motion in the State Court Action to remove these. Lee Decl. at para. 20. The Utility 

believes such a motion is meritorious and would have a reasonable prospect of success. Id. 

b. It Would Be Inefficient to Litigate the Contract Claims and Title 

Claims Together 

 If the Contract Claims are eliminated from the Superior Court Action and Utility’s summary 

adjudication motion as to the prescriptive easement and related claims is successful, there would be 

no need for a jury trial in the State Court Action. The remaining Title Claims then can be adjudicated 

by the State Court in the bench trial scheduled for May 2020. This approach will conserve judicial 

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resources: the Vlazakis Defendants’ damage claims can be resolved through the claims process in 

this Court, and the State Court can proceed with a bench trial on the Title Claims. 

2. The “Balance of Hurt” Weighs in Favor of Maintaining the May 2020 

Trial Date (Curtis Factor 12)

 This factor ordinarily looks at the impact of the requested stay relief on the administration of 

the estate, and precludes such relief where there would be even slight interference with the 

administration of the estate absent commensurate benefit. Curtis, 40 B.R. at 806. Here, the 

interference at issue would be less with the administration of the Debtors’ estates and more with the 

negative effects of further delays to the project should a jury trial be necessary, such as: (1) the 

health and safety impact when the scheduled gas-line inspections are not carried out pursuant to 

CPUC regulatory requirements and Utility commitments; (2) unacceptable levels of risk arising 

from delayed inspections of the 24” high-pressure gas lines; and (3) compromise of the Utility’s 

ability to utilize the critical shut-off valves to speed the response to reported gas leaks or related 

risks. RJN Ex. A at para. 11. The Utility already has had to delay the project for more than two 

years. Id. Any further delay would magnify these negative effects. 

On the other hand, there is no commensurate benefit to the Vlazakis Defendants to delaying 

the State Court Action for a jury trial. The Vlazakis Defendants allege that if they are not permitted 

to file the Cross-Complaint now, the claims therein will be forever barred. Motion at 9. This is 

demonstrably not correct. The Proof of Claim was timely filed and is based upon “[b]reach of 

written agreement to undertake structural upgrades to common wall at 751 Third Street, Oakland, 

CA 94607.” The Contract Claims are not barred at all; they can be through the normal bankruptcy 

claims process. Furthermore, as outlined above, the Vlazakis Defendants have delayed at every 

stage of this dispute, delaying the project in the face of a strong public safety motive to proceed 

expeditiously. They should not be allowed to cause further delay when a complete remedy exists 

before this Court. See, e.g., In re Smith, 389 B.R. 902, 920 (Bankr. D. Nev. 2008) (movant’s threemonth wait from petition date to filing stay relief motion “belies [his] stated desire for a swift 

resolution.”). 

In conclusion, the Debtors respectfully request that the Court deny the Motion and decline 

to modify the automatic stay with respect to the Contract Claims. 

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Dated: December 12, 2019 WEIL, GOTSHAL & MANGES LLP

KELLER & BENVNUTTI LLP 

By: /s/ Peter J. Benvenutti 

 Peter J. Benvenutti 

Attorneys for Debtors and Debtors in Possession

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