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LIMITED OBJECTION BY HOMEOWNERS OF CONTAMINATED PROPERTIES TO CUSTOMER PROGRAMS 

MOTION [DOCKET NO. 16]; Case Nos. 19-30088, 19-30089

STUART G. GROSS (#251019) 

sgross@grosskleinlaw.com 

GROSS & KLEIN LLP 

The Embarcadero 

Pier 9, Suite 100 

San Francisco, CA 94111 

t (415) 671-4628 

f (415) 480-6688 

Attorneys for Sam and Cathy Dorrance, 

Minh and Gurdon Merchant, 

Laura Hart, and Dennis Caselli

UNITED STATES BANKRUPTCY COURT 

NORTHERN DISTRICT OF CALIFORNIA 

SAN FRANCISCO DIVISION 

In re

PG&E CORPORATION 

- and - 

PACIFIC GAS AND ELECTRIC 

COMPANY, 

 Debtors. 

Bankruptcy Case

Case No. 19-30088 (DM) 

Chapter 11 

(Lead Case) 

(Jointly Administered) 

LIMITED OBJECTION BY 

HOMEOWNERS OF 

CONTAMINATED PROPERTIES 

TO CUSTOMER PROGRAMS 

MOTION [DKT NO. 16]

 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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LIMITED OBJECTION BY HOMEOWNERS OF CONTAMINATED PROPERTIES TO CUSTOMER PROGRAMS 

MOTION [DOCKET NO. 16]; Case Nos. 19-30088, 19-30089

Sam and Cathy Dorrance, Minh and Gurdon Merchant, Laura Hart, and Dennis Caselli 

(collectively, the “Contaminated Property Homeowners”)—all of whom are homeowners who 

have pre-petition agreements with Debtors PG&E Corporation and/or Pacific Gas and Electric 

Company (collectively, “PG&E”) that obligate PG&E to investigate and/or remediate 

contamination on their properties for which PG&E is legally responsible (collectively with 

associated formal and informal implementing agreements, the “Environmental Agreements”)—

hereby file this limited objection to the Motion of Debtors Pursuant to 11 U.S.C. §§ 105(a), 

363(b), and 507(a)(7) and Fed. R. Bankr. P. 6003 and 6004 for Final Orders (I) Authorizing 

Debtors to (A) Maintain and Administer Customer Programs, Including Public Purpose 

Programs, and (B) Honor any Prepetition Obligations Relating Thereto; and (II) Authorizing 

Financial Institutions to Honor and Process Related Checks and Transfers, Doc. No. 16, (the 

“Motion”) based on the following:1

INTRODUCTION AND BACKGROUND 

1. The Contaminated Property Homeowners object to the Motion on the ground that 

PG&E received the Interim Order (Doc. No. 216), granting PG&E the interim authority to 

comply with its pre-petition environmental remediation obligations under what it termed the 

“Environmental Cleanup Programs,” based on the representation of its counsel that “Debtors 

intend to continue to perform in accordance with applicable law their obligations under the 

customer programs,” of which its pre-petition environmental remediation obligations are a part. 

Ex. A (5/31/19 Hearing Tr.) at 104:14-16. PG&E’s obligations in this regard include those 

memorialized in the Environmental Agreements with the Contaminated Property Homeowners. 

However, despite the repeated requests of the undersigned, PG&E has refused to assume or reject 

those agreements, placing the Contaminated Property Homeowners in an untenable position of 

jeopardy that threatens their health and welfare. Thus, the Contaminated Property Homeowners 

 

1

 The Contaminated Property Homeowners request leave nunc pro tunc to file this Objection after 

the 4:00 p.m. deadline. The delay in filing was caused by a delay in receipt of the required 

retention paperwork by the undersigned. The Contaminated Property Homeowners apologize for 

any inconvenience caused by the tardiness of the filing. 

Case: 19-30088 Doc# 527 Filed: 02/20/19 Entered: 02/20/19 21:29:31 Page 2 of 8
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LIMITED OBJECTION BY HOMEOWNERS OF CONTAMINATED PROPERTIES TO CUSTOMER PROGRAMS 

MOTION [DOCKET NO. 16]; Case Nos. 19-30088, 19-30089

object to Motion on the limited basis, and to the extent, that PG&E has failed to fulfill its promise 

to perform its obligations under the Environmental Clean Programs, including those 

memorialized in the Environmental Agreements. And the Contaminated Property Homeowners 

respectfully request that the relief requested by PG&E in the Motion only be granted on the 

condition that they assume the Environmental Agreements and perform their obligations 

thereunder as promised. 

2. The contamination at issue was caused by toxic waste left behind when PG&E 

abandoned two manufactured gas plants (“MGPs”) that formerly operated in the Marina 

neighborhood (the “Marina MGPs”). Together with the Contaminated Property Homeowners, 

over the course of the last eight years, the undersigned represents or has represented, twenty 

homeowners and the San Francisco Herring Association ("SFHA”) in connection with claims 

against PG&E arising out of this contamination. 

3. In 1994, the California Public Utilities Commission (“CPUC”) issued Decision 

No. 94-05-020, which provided PG&E the authority to shift the cost of remediating 

contamination caused by the MGPs for which it is responsible—including, in particular, 

contamination caused the two MGPs that are the cause of the contamination at issue here—to 

ratepayers. As described by PG&E in the Motion, pursuant to this authority, “the projected costs 

associated with the Environmental Cleanup Programs (the “ECP Costs”) are funded through 

various surcharges fees collected by Debtors through rates from customers.” Motion at 24 

(emphasis added). These funds are then placed in dedicated accounts to be used only for the 

purpose of covering ECP Costs. Id. at 24-25. According to the Motion, “the CPUC has approved 

$130.8 million in ECP Costs for 2019.” 

4. As described by PG&E in the Motion, there are two basic components to its 

Environmental Clean Programs: “(a) evaluat[ion] [of] existing and historical operating sites for 

potential releases of hazardous materials by performing site investigations and conducting human 

health and ecological assessments, and (b) design, implement[ation], and perform[ance] [of] 

remedial measures at designated sites to address ongoing or potential exposure risks.” Id. at 23. 

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LIMITED OBJECTION BY HOMEOWNERS OF CONTAMINATED PROPERTIES TO CUSTOMER PROGRAMS 

MOTION [DOCKET NO. 16]; Case Nos. 19-30088, 19-30089

5. As applied to the contamination on the properties of homeowners caused by the 

Marina MGPs, the first step of this process is accomplished through the negotiation, execution, 

and performance of an investigation agreement by the homeowner and PG&E. The investigation 

agreement provides the homeowner’s permission to PG&E to access the property to investigate 

the contamination subject to several essential conditions, including inter alia provisions holding 

the homeowners harmless if PG&E contractors injure someone on their property, and outline in 

detail the locations and methods of sampling and testing that will be conducted, the processes for 

its oversight, and the payment of expenses. Without an investigation agreement, these properties 

cannot be “evaluate[d] . . . for potential releases of hazardous materials by performing site 

investigations and conducting human health and ecological assessments,” because a property 

owner would otherwise expose herself to too much risk. 

6. The second step of this process, if the matter does not get resolved through 

litigation and/or PG&E’s purchase of the property, is accomplished through the negotiation, 

execution, and performance of a set of agreements by which the homeowner and PG&E agree on 

the details of the remediation and restoration of the property and the allocation of various 

responsibilities therefor and risks attendant therewith. The agreements further address details such 

as PG&E’s lease of the property during the remediation and restoration, long-term consequences 

of the contamination on the property’s value, and the release of the homeowner’s claims against 

PG&E, and PG&E responsibilities for injuries suffered by third parties as a result of the remedial 

activities. Again, the “design, implement[ation], and perform[ance] [of] remedial measures at 

[these] sites to address ongoing or potential exposure risks” cannot be accomplished in the 

absence of these agreements, because a property owner would otherwise expose herself to too 

much risk. 

7. Furthermore, during both stages of the process, numerous other smaller but 

essential ad hoc implementing agreements are reached between the homeowner and PG&E that 

facilitate the process. 

8. In the case of the Dorrances, there is currently an active remediation of their home 

by PG&E contractors underway. Their property on Marina Blvd., at the moment, has no 

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LIMITED OBJECTION BY HOMEOWNERS OF CONTAMINATED PROPERTIES TO CUSTOMER PROGRAMS 

MOTION [DOCKET NO. 16]; Case Nos. 19-30088, 19-30089

foundation, and PG&E contractors are working on the Dorrances’ property with heavy equipment 

that could cause an injury to a third person or their property. However, PG&E refuses to state 

whether it will honor the agreements under which this remediation is supposed to be conducted. 

This places the Dorrances in an impossible dilemma between ordering the work stopped with 

their home partially destroyed or allowing it to continue with no guarantees that it will be done in 

accordance with their agreements with PG&E or that they will receive the protections from risks 

that those agreements provide. 

9. In the case of the other Contaminated Property Homeowners, such as the 

Merchants and Ms. Hart, after over a year’s worth of negotiation, an investigation agreement 

between them and PG&E was reached, but PG&E refuses to state whether it will assume the 

investigation agreements and is taking no action to perform them. As a result, all progress in 

addressing the contamination of their properties has stopped, leaving them with unaddressed toxic 

contamination on their properties and no apparent path to its remediation. 

10. The Merchants have two very small children, who, every day that the 

contamination of their property goes unremediated, are potentially exposed to toxins that could 

result in significant increases in their long-term cancer risks and harm to their neurological 

development. PG&E, by refusing to either (a) assume its investigation agreement with the 

Merchants and begin the process of addressing the contamination of their home; or (b) reject the 

agreement and free the Merchants to pursue a judicially compelled remediation has indefinitely 

lengthened that period of exposure. 

ARGUMENT 

11. Section 105(a) of the Bankruptcy Code provides the court with the authority to 

take any action “necessary or appropriate to . . . prevent an abuse of the process.” 11 U.S.C. § 

105(a). More generally, “‘[C]ourts of bankruptcy are essentially courts of equity, and their 

proceedings inherently proceedings in equity.’” Pewer v. Litton, 308 U.S. 295, 304 (1939) 

(quoting Local Loan Co. v. Hunt, 292 U.S. 234, 240 (1934); see also Young v. Higbee Co., 324 

U.S. 204, 214 (1945). “[T]he bankruptcy court has the power to sift the circumstances 

Case: 19-30088 Doc# 527 Filed: 02/20/19 Entered: 02/20/19 21:29:31 Page 5 of 8
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LIMITED OBJECTION BY HOMEOWNERS OF CONTAMINATED PROPERTIES TO CUSTOMER PROGRAMS 

MOTION [DOCKET NO. 16]; Case Nos. 19-30088, 19-30089

surrounding any claim to see that injustice or unfairness is not done in administration of the 

bankrupt estate.” Pepper, 308 U.S. at 308. 

12. PG&E received an interim order granting it the authority to make payments to 

cover the costs of Environmental Cleanup Programs based on the representation of its counsel 

that “Debtors intend to continue to perform in accordance with applicable law their obligations 

under the customer programs.” Ex. A (5/31/19 Hearing Tr.) at 104:14-16. 

13. It further argued for the relief on the basis that “any suspension or delay in 

administering the Environmental Cleanup Programs is contrary to public health and welfare and 

may exacerbate not only existing circumstances but the ultimate costs of cleanup as well.” Doc. 

No. 16 at 32:9-12. 

14. Nonetheless, PG&E has refused to indicate to the Contaminated Property 

Homeowners whether it intends to assume and perform the Environmental Agreements, which 

define PG&E's legal obligations as to the contamination on these people’s properties, and, in the 

case of the Merchants, Ms. Hart, and Mr. Caselli has halted all progress in addressing the 

contamination. 

15. This not only directly conflicts the representation by PG&E’s counsel to the Court 

quoted above, it places the Contaminated Property Homeowners’ health and welfare at risk. 

16. It is untenable that PG&E be allowed, on the one hand, to ask for relief from the 

Court based on its stated intention to comply with its legal obligations to clean up the 

contamination for which it is responsible and on the ground that doing otherwise would be 

contrary to public health and welfare, and then turn around and ignore those obligations and put at 

risk the health and welfare of people most threatened by that contamination. 

17. Such duplicity, moreover, cannot be justified on the ground that by doing so, 

PG&E is protecting the interests of other creditors. As PG&E indicated in its motion, “any 

suspension or delay in administering the Environmental Cleanup Programs . . . may exacerbate 

not only existing circumstances but the ultimate costs of cleanup as well.” Doc. No. 16 at 32:9-

12. As discussed in the Background Section, the Environmental Cleanup Programs cannot be 

administered, as to the properties of the Contaminated Property Homeowners, in the absence of 

Case: 19-30088 Doc# 527 Filed: 02/20/19 Entered: 02/20/19 21:29:31 Page 6 of 8
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LIMITED OBJECTION BY HOMEOWNERS OF CONTAMINATED PROPERTIES TO CUSTOMER PROGRAMS 

MOTION [DOCKET NO. 16]; Case Nos. 19-30088, 19-30089

PG&E’s assumption of the Environmental Agreements. Furthermore, as PG&E acknowledged in 

its Motion, the funds to be used for this purpose do not come from funds of the estate, but rather 

dedicated trust funds that PG&E collects from ratepayers pursuant to California Public Utilities 

Commission Decision No. 94-05-020. 

18. A single day before PG&E’s counsel represented to this Court that “Debtors intend 

to continue to perform in accordance with applicable law their obligations under the customer 

programs,” PG&E appeared before the Honorable Judge William Alsup who is presiding over its 

criminal probation arising out of the San Bruno gas pipeline explosion (criminal probation that 

arose, in part, out of charges that PG&E lied to federal investigators of that tragedy). In that 

hearing, Judge Alsup observed: “Why is it PG&E says, ‘Safety is our No. 1 thing’ – I heard it all 

the time, ‘safety, safety, safety,’ but it’s not really true.” Ex. B. The acts and omissions that gave

rise to Judge Alsup’s observation of PG&E’s dishonesty resulted in the death of many dozens in 

Sonoma, Napa, and Butte Counties and are the cause of the situation from which PG&E seeks 

protection from this Court. 

19. At some point, PG&E needs to be held to its word. In this case, that requires 

PG&E be ordered to assume the Environmental Agreements with the Contaminated Property 

Homeowners and perform its legal obligations thereunder as promised to the Court, as a condition 

of its receipt of the relief sought in the Motion. 

CONCLUSION AND RESERVATION OF RIGHTS 

20. For the foregoing reasons, the Contaminated Property Homeowners object to the 

relief requested in the Motion on the limited ground that PG&E is not complying with its legal 

obligations associated with the Environmental Programs in contradiction of the representations it 

made to this Court in seeking the relief and request that the Court modify PG&E’s Proposed Final 

Customer Programs Order, attached as Exhibit 7 to Doc. No. 491-6, to require, as a condition of 

the relief it seeks, that it assume the Environmental Agreements it has made with the 

Contaminated Property Homeowners and perform its obligations thereunder. 

21. This limited objection is without prejudice to, and does not waive and expressly 

reserves: (1) each Contaminated Property Homeowner’s rights, remedies, claims, actions, 

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LIMITED OBJECTION BY HOMEOWNERS OF CONTAMINATED PROPERTIES TO CUSTOMER PROGRAMS 

MOTION [DOCKET NO. 16]; Case Nos. 19-30088, 19-30089

defenses, setoffs, or recoupments, in law or in equity, against the above-captioned debtor and any 

other person either in this case or in any other action; (2) any objection which may be made to the 

jurisdiction of the Court; (3) each Contaminated Property Homeowner’s right to have final orders 

in non-core matters entered only after de novo review by a district judge; (4) each Contaminated 

Property Homeowner’s right to trial by jury in any proceedings or trial, in any state or federal 

court, so triable herein or in any case, controversy or proceeding relating hereto; and (5) each 

Contaminated Property Homeowner’s right to have and reference withdrawn in any matter 

subject to mandatory or discretionary withdrawal. 

22. This limited objection is not, shall not be deemed or construed as, a submission of 

any each Contaminated Property Homeowner to the jurisdiction of the Court concerning any 

claim or the waiver of any rights of any Contaminated Property Homeowner to pursue any claims 

against any person in any other forum, state or federal, including without limitation, the 

jurisdiction of the Court to adjudicate non-core matters, all of which rights are reserved without 

prejudice. 

Dated: February 20, 2019 GROSS & KLEIN LLP 

By: /s/ Stuart G. Gross 

STUART G. GROSS 

Attorneys for Sam and Cathy Dorrance, 

Minh and Gurdon Merchant, Laura Hart, 

and Dennis Caselli 

Case: 19-30088 Doc# 527 Filed: 02/20/19 Entered: 02/20/19 21:29:31 Page 8 of 8