Fire Victim Trust enters ‘wind down’ stage. Will North Bay victims be made whole?

The trust has made settlement offers for all of the more than 70,000 claimants, and more than 99% have been accepted. But several hurdles remain. |

It has been four years this month since a fund was established to pay victims of California wildfires sparked by the utility giant Pacific Gas & Electric.

Now, the Fire Victim Trust says its work is in its final stage, but a few outstanding issues remain before its work can be completed and fire survivors see further compensation.

The trust has made settlement offers for all of the more than 70,000 claimants, and more than 99% have been accepted.

“We’re seriously in the wind-down phase,” Trustee Cathy Yanni told The Press Democrat. She said she hopes to close out the trust’s work by the end of the year or early next.

It’s been a long road for fire victims who have been awaiting payouts for the homes, businesses and lives lost during a rash of devastating Northern California wildfires between 2015 and 2018. Many victims have yet to rebuild, especially in Butte County, site of the 2018 Camp Fire, California’s deadliest, where the Park Fire is currently raging.

After PG&E declared bankruptcy in 2019, the company struck a deal to establish a $13.5 billion fund to pay fire survivors, half cash and half funded with the beleaguered utility’s stock. Victims voted in favor of the deal, though under considerable duress.

Trust administrators have parceled out compensation in small increments as they’ve waited for PG&E’s stock to rebound before selling off shares to fund the trust.

While recent sales have brought the trust’s balance to more than $14 billion, surpassing bleaker expectations, the amount victims have been awarded so far — $19.43 billion — far exceeds what’s available, meaning victims will never be made whole.

Yanni said the trust will distribute one more round of payments but could not provide specifics on the amount or timeline. Victims will likely receive another small payment, which is typical in bankruptcy cases. The trust last issued a disbursal in the spring bringing victims from 60% to 66% paid on their claims.

Exactly how much and when victims will receive final compensation will depend on several factors.

To receive further payments, claimants are required to sign two releases, which the trust described as standard. One protects insurers from future liability related to settlement claims, and one prevents victims from making claims against the trust or those charged with its administration and oversight.

The trust started soliciting signatures last fall, but some people have resisted, considering it yet another forfeiture of rights in a process they feel has disadvantaged them all along. Still, more than 95% have now signed. Yanni set an Aug. 15 deadline for releases in a letter sent to victims earlier this month.

Meanwhile, the trust is working through a final set of about 100 claims, many of which are the most complex, Yanni said. They involve large landholdings or multiple properties or businesses. Some involve victims who rejected settlement offers they felt were unfair and are in various forms of appeal. Save for a small handful of corporations and well-positioned individuals who maneuvered to preserve their right to challenge offers in court, recourse for most victims who disagree with their assigned amount is limited to a third-party arbitration process where the trustee still gets the final say.

Additionally, the trust has yet to fully resolve the set of claims for minors or incapacitated or deceased adults. Some victims have struggled to navigate the complexities involved in these cases, at times without adequate support from their attorneys, they say. Yanni said that administrators have adjusted some of the requirements to ease the process, and the trust is working directly with claimants’ attorneys to speed up approvals.

The last piece of the puzzle is outstanding third-party litigation, which could give the trust’s coffers a considerable boost. The trust has been able to bring in hundreds of millions of dollars through lawsuits against other players involved in PG&E-related wildfires. They include vegetation management contractors, consultants and a group of the utility’s directors and officers, though a significant portion of proceeds went to claims on the trust by the federal government. Most recently, in July, the trust settled a case with Osmose Utilities Services for $4.5 million. Two other cases remain, both with additional vegetation management contractors. Both are in mediation.

While this litigation has been a tool to increase victim funding, it has also been the center of some controversy. In 2022, 2017 Tubbs Fire victim and advocate Will Abrams raised concerns in court about the trust’s lack of transparency, noting that law firms hired to represent the trust also had representatives on the trust’s oversight board in some instances. At the time, Judge Dennis Montali ordered the trust provide information on the hiring of these law firms and the costs and benefits of the lawsuits to the trust.

Now Abrams is calling on Montali to order further transparency regarding the remaining cases, particularly the trust’s pending litigation with Davey Tree Service. Abrams filed that request after discovering that Singleton Schreiber partner Gerald Singleton, who has thousands of clients in the Fire Victim Trust and also sits on the fund’s oversight board, is also representing a separate set of fire victim clients in the negotiations with Davey Tree Service.

In court filings, Abrams argued Singleton’s position conflicts with an obligation, given his role in the trust, to seek maximum benefits for all trust claimants.

“The focus of my motion is to bring sunlight on these activities that pulled money away from the corpus of the Trust and seem to be driven by conflicts of interests, perverse incentives and greed,” Abrams told The Press Democrat.

Singleton denied a conflict of interest. He noted he’d been hired to sue Davey Tree on behalf of a group of fire victims long before the trust filed its own lawsuits in 2021, cases that were later all grouped together for negotiations by a judge.

He said his position as a member of the trust’s oversight board is limited primarily to providing advice. “The lawsuit has nothing to do with the duties that any of us have as part of the Trust Oversight Committee,” Singleton said. “Had I been representing my own clients and been the lawyer for the trust in this case, then that’s a different issue.”

Yanni said she would not comment given the pending mediation and ruling by Montali, but in a court filing the trust also denied any conflict or wrongdoing and said that Abrams’ motion, like past ones, was based on “misunderstanding” and “misinterpretation.”

But, to Abrams and some others, it is the latest indication of a system, that since PG&E declared bankruptcy, has benefited power players and attorneys, often at victims’ expense.

Montali has set a hearing for July 30 at 10 a.m., accessible to the public online or by phone.

Even as the trust finally winds down, fire survivors still have no answer on languishing legislation that would relieve them of paying federal income tax on their compensation. One of several iterations since 2022 handily passed the U.S. House of Representatives as part of a bipartisan tax deal in January, but it has stalled in the Senate. In May, Rep. Mike Thompson, D-St. Helena, led an effort to pass the tax relief bill again on its own, through a maneuver known as a discharge petition. Supporters considered a rare success of the move further proof of broad bipartisan support, but, again, there has been no movement since from the Senate.

Jennifer Gray Thompson, CEO of After The Fire USA, a nonprofit that helps communities navigate wildfires and their aftermath, and a key advocate for the measure in Washington, D.C., said she and other advocates are still pushing to pass the legislation via one of its two paths before the extended tax filing deadline in October. She said that the larger tax deal is up for a cloture vote Aug. 1, essentially a straw vote to test its viability. She encouraged fire victims to call and email Republican senators to encourage their support.

“In Your Corner” is a column that puts watchdog reporting to work for the community. If you have a concern, a tip, or a hunch, you can reach “In Your Corner” Columnist Marisa Endicott at 707-521-5470 or marisa.endicott@pressdemocrat.com. On X (formerly Twitter) @InYourCornerTPD and Facebook @InYourCornerTPD.