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Podcasts: Mike Danko Talks About PG&E Wildfire Claims with Eric Bersano

August 27, 2021 Posted In

Eric Bersano talks with Mike Danko about Wildfire Claims litigation against PG&E.

 

Read the Transcript:

 

In this episode of Esquire University I interview attorney Mike Danko about California wildfire litigation. Mike has been handling these cases for years, and give some really good insights as to how someone who is affected by a wildfire can recoup as much of their losses as possible. There are a lot of interesting things that come out of this, including not only are the losses and ancillary losses compensated for, but any attorney’s fees at all that are incurred are covered by a wildfire lawsuit. So with that here’s attorney Mike Danko.

Eric:

Hi, today I’d like to welcome trial attorney, Mike Danko to the podcast. Welcome. Give us a little bit of your vast experience in this category and let people know that this is something that you’ve had quite an extensive background in.

Mike Danko:

Sure, Eric. I’ve been handling cases against utilities, such as PG&E, cases involving wildfires and explosions, really for probably 20 years or more. Recently I handled the Butte Fire in Northern California of 2015, that involved 77,000 acres and over 500 homes. The North Bay Fires of 2017, which wiped out a number of communities and cause over $10 billion worth of damages. The 2018 Camp Fire, which wiped out the community of Paradise in Northern California. Working on Southern California fires, such as the Thomas Fire.

Mike Danko:

And then in addition, there’s a lot of other cases that don’t make the news because they involve damages that are basically less than $500 million, still it’s a lot of damages, but to utility, it’s really not. And been doing that, like I say, for a number of years. And it’s an area which unfortunately is growing because of climate change, basically. I can say this without hesitation that the utilities basically as part of their business plan over the years, it has been to allow fires to happen and then deal with the financial consequences after, because fires could and would be eventually put out, and that’s no longer the case. And so that’s why we have now the cataclysmic wildfires that we didn’t have a few years ago and we will have in the future without question.

Eric:

Yeah. Now being a Southern California resident, for the past 20 years living in LA and San Diego, there seems to be just a circular pattern where you get dry season, well, you get the rainy season that causes a lot of growth, and you get a dry season that dries out everything, and then you get the fires combined with some winds. And it just seems to be a pattern that you’ve probably seen over and over.

Mike Danko:

Right. It’s especially, the thing that really makes the fire as you know, from Southern California, the fires that make them uncontrollable, is the Diablo winds. And our system is pretty well equipped to suppress wildfires wherever they occur, wherever they need to be suppressed, but not when you have winds driving them of 60, 70, 80 miles an hour. At that point, there’s just nothing that can be done. They call it a defensible space, create a defensible space. And in the old days there’d be a fire in the neighborhood, the firetruck would come down the street and they look at your house, and if there’s a clear area, they’d say, that’s why they call it defensible space. We can defend this house. And they would make a stand in your yard and basically protect your house. And so that was important back then.

Mike Danko:

Now the defensible spaces really do nothing, because if you have a wind driven fire, as we now have so frequently, and they’re so hot and so intense, it does nothing to protect your home. The other thing which is sad, and this just comes from representing hundreds of folks, as bad as it is to lose your house, it might be worse to be the only house in the neighborhood that survives, because you end up basically having a house on the moon, it’s a moonscape. And these people, they get no compensation, they can’t go down and buy milk at the corner store because it’s gone. The schools are closed, and they’re forced to basically continue to live there. So it’s almost as though, as bad as it is to lose your house, and it is, of course, a terrible thing, it may be worse to be the only house in the neighborhood that’s standing.

Eric:

Yeah, it’s amazing how mother nature does that. You see that with tornadoes where a tornado goes through a community and there’s one house on the corner that’s still standing and the rest of the block is decimated, and you obviously see that with fires as well. And to back up your point, I was in San Diego, I want to say it was around 2005, 2006, where there was a massive fire, and they closed down Interstate 8. So those who aren’t familiar with Interstate 8, we’re talking about a eastbound and westbound lanes, four lanes each, eight lanes total, the fire jumped that. So if you think you have a defensible space by clearing out some brush in front of your house, no, it has to be an 80 yard jump that this fire made.

Mike Danko:

Yeah. Yeah. And that’s also now is sort of, that as a matter of policy, firebreaks were always very important. Not just around house as defensible spaces, but firebreaks in the natural terrain. And now they’re talking about, well, if you really have a firebreak, you need maybe to have a one mile swath of clear-cut, because it’s because of the issues that we have now. So firebreaks, defensible space, it used to be, for example, just like you say, it used to be that the highways, basically, the interstates were basically boundaries, and that’s where they tried to contain fires. And now they not really seem to be very effective at all.

Eric:

Yeah. So, the reason that I wanted to speak to you specifically, we’ve already established there’s not much that you can do as a homeowner. So you really come into play after someone’s house has been damaged, and you’ve had a ton of experience with a lot of different fires. So can you explain what it is that you do?

Mike Danko:

Yeah. So, what I do is I talk to people and generally represent them after they’ve either lost their home, or their home has been damaged as a result of a fire. And the first thing that most people want to know, or many people want to know, is first of all, first off, they’ll tell me, Mike, I’m not sure that the utility did anything wrong here. So, I don’t think this is for me. And it’s hard for people to understand that the way the law is, is that it doesn’t matter whether the utility did anything wrong or not. They may have run the utility exactly right. If, however, the facilities, that’s the electrical facilities, ignited the fire, the utility has to pay for the damage. People say, oh, that just sounds unfair. That’s just unfair. That’s really a bad system.

Mike Danko:

And it’s really not, because when you think about it, the idea is that, we all benefit from the facility. We all benefit from electrical distribution and from basically having electricity available to us. And if there’s a fire, even if the utility did everything right, and so it was unavoidable, a tree got blown down from three blocks away and hit the wires and started a fire. It’s like, we’re not going to let that poor guy who lost their home just sit there with a loss. It really needs to be borne, not to punish the utility, but it needs to be borne that loss by everyone who benefits from the system. So, that’s the first mental hurdle that people have to get over, it’s initially we’re not out to punish the utility. We’re not out to be unfair. It’s just that everyone benefits from the electrical system. And if the electrical system causes a fire, even though it was well run system, it’s the system that’s going to pay.

Mike Danko:

And that’s called, what that’s called is a legal doctrine, which is a mouth full, but anybody who’s been through this really knows it inside out by the time you come out the other end, it’s called inverse condemnation. And everybody’s familiar with condemnation, an electrical company can say, hey, we want your property to put wires through it. They take you to court, they take your property, and it’s decided how much they have to pay. That’s it, it’s for the good of the system. And here it’s saying, look, the system took my house, but they’re not suing me and giving me money for it.

Mike Danko:

So the homeowner sues the system and says, okay, you took my house, you took it by fire. And now you have to pay me what the value of the house was. So in an inverse condemnation, if a fire started, takes your home through no fault of the utility, but the facilities ignite the fire in some way, then the utility has to pay you the difference in value of your home the day before the fire and the day after. So if your home was worth $300,000 the day before the fire, the day after it’s worth $10,000, the utility owes you $290,000. Okay. And then in addition they owe you for the personal property that you lost.

Mike Danko:

So, that’s pretty straightforward. That’s basically been the law in California for years and years. And that is the law of inverse condemnation. In addition, the thing is that you’re also entitled to your attorney’s fees, and that’s a big deal because people don’t want to be paying attorneys. They’re already in the hole. I’ve lost my house. It’s like, yeah, well, don’t worry about it, because if we sue inverse condemnation and the utility pays you for the diminution in value in your house, then they also have to add on attorney’s fees. And so that’s usually going to be whatever the attorney’s contingency fee is, a third, or 40%, whatever’s being charged is going to basically get added onto the final bill. So that’s a law of inverse condemnation, and it’s really designed to make sure that the homeowner is made whole if the utility causes a loss of the home. That’s the first thing.

Eric:

Yeah. I think that’s a really important piece, even, let’s just say a normal personal injury case, an attorney, you’ll say, no fee, unless we win, no fee, unless we win, which is true the attorney has to win, but then you do owe that fee where this is truly, the person only has upside here. There’s no fee, even if you win that fee goes to the attorney. And I would say just from talking with some people who, not everybody understands the law like an attorney, or some like myself who works with attorneys, a lot of people would say, oh, this is just one of those big class actions. And the attorneys are going to make money. And I’m going to get a coupon for something at bed, bath and beyond. But that’s not the case in these types of litigations.

Mike Danko:

No, in fact, that’s frequently people, because there’s so many other people who are involved. Now, let me tell you, I handle cases where the utility burns down one house. Okay. So everybody knows that’s my case, your no case. They know it’s not a class action. But when the utility sparks a fire that burns down a thousand homes, people say, oh, this is a class action. And by the way, Mike, thanks for talking to me, but I don’t want to have anything to do with a class action. And this is not a class action. These are not class actions. The big difference is, is a couple of differences. One is that in a class action, basically everybody gets the same. They get in the mail the same $17 coupon or whatnot. And in this case, everybody’s case is handled on its own merits. So you are compensated according to what your loss is.

Mike Danko:

The other thing is in a class action, if a class action goes forward, you are included whether you want to be, or not. In these cases, they’re called mass torts, in these cases, if you want to be included, you have to get a lawyer, you have to hire a lawyer, and you have to join it. So it’s a big difference. It’s handled somewhat like a class action in that all the cases, wherever they are initially filed, whatever county they’re filed in, they all get transferred to one judge typically who handles them basically all together in some respects. So it’s not mass chaos. So there’s some organization that’s involved, but there definitely, you have your individual suit, with your individual claims, and your individual attorney making those claims, and you get paid, or compensated, according to your individual loss.

Eric:

So one other thing, I know it sounds like there’s really not a lot you can prepare for, but you did mention that if someone’s involved in one of these, they also can be compensated for their property. Should someone who lives in a zone that is, has the likelihood of maybe experiencing a fire, should they keep some type of a list, or is this, you don’t have to worry about it until it happens to you kind of thing?

Mike Danko:

I’ll tell you that one of the most stressful and difficult things that my clients are asked to do after a fire is to list all of their personal property. They don’t like doing that. It takes a long time. It’s very difficult. It’s emotional. So if you really wanted to prepare, what you would do is not necessarily make a list, but you would go around through your house closet by closet, drawer by drawer, and video everything. And that’s enough to do that. Because in fact, when I ask people to make a list, I ask them to sit down in a room, it’s usually them and their spouse, and I say, one of you is going to close your eyes and you’re going to pretend you’re in now the kitchen, you’re going to open that first drawer on the left-hand side and just say what’s in the drawer. And the other one is going to write it all down.

Mike Danko:

So, if you did that ahead of time and videotape everything that’s in your house, however silly it sounds, you’d be way ahead of the game. I don’t know of anybody who actually, there’s some people who actually do that, but very few people, very few people actually do that.

Eric:

Yeah, I can imagine. It’s like, I always tell people, you get under-insured or uninsured policy as a driver, because you don’t think about getting hit by somebody who doesn’t have insurance, or doesn’t have enough insurance, because you just don’t imagine yourself in that catastrophic car accident, but you’ll be really happy that you did if it ever happens.

Mike Danko:

Yeah. And a lot of folks think, well, again, I have insurance. Okay. And I’ll tell you that by and large, I’m not a fan of insurance companies, but by and large, after a wildfire, the insurance companies treat the insureds fairly well, as far as the policy goes. But what people find out, this is, again, something that I experienced over and over again. They first talk to me and they say, Mike, thanks for talking with me, but I have really good insurance. So I don’t think I’m really interested. But then they find out that although the insurance carriers are actually pretty quick to write checks to them, which is very nice, they realize they thought they were insured, but they really were not. So for example, when I said, let’s say you have a house that’s worth $300,000, you say, okay, I’ve lost it, but I’m going to get a check for $300,000.

Mike Danko:

And the answer is no, you’re going to get a check for $250,000, because the insurance carrier’s only insuring the structures, and the insurance carrier says that your land is worth $50,000. And you say, but my land, I have an appraiser who says the lot is worth 10,000 at most, especially, maybe even less because now it’s toxic, and you’re out. You just don’t get that, and then you don’t get the people who say, well, I had my grandmother’s rocking chair that had no real economic value, but had great sentimental value, had all my high-school trophies. I had these pocket watches that my father gave me. I had a shotgun that my cousin gave me. None of them have economic value, the insurance carrier doesn’t give you anything for that. So in a sense, even if you’re well insured, insurance really doesn’t cover it. Those are all the things that the utility is required to make up the difference.

Eric:

So the utility, so if you have a pocket watch or something that just has more sentimental value, they’ll actually place a value on that for each individual person.

Mike Danko:

Well, let’s talk about that. Remember I said that the utility is basically automatically liable if a facility ignites the fire. Well, let’s say that the utility did do something wrong, for example, it failed to keep its wires clear of trees, or it knew there was going to be a big wind storm and it failed to turn off the power, or it failed to maintain its electrical lines. So they came down too easily in a windstorm. If they do something wrong, then the utility is required to pay for a lot more than it otherwise would. And one of those things it’s required to do is to pay people for, we switch then, we have another theory instead of inverse condemnation, we have trespass by fire. And if utility has trespassed upon your property by fire, it must pay you for the emotional distress that’s resulting from that trespass, and for the nuisance and annoyance of having to deal with the fire. And that includes things like the fact that you lost your grandfather’s pocket watch.

Mike Danko:

So they have to pay you for your emotional attachment to that. And in fact, they do pay for that. Then there’s something else that they pay for. And this is probably the largest component of any case. And that is, I’ve been talking about a $300,000 house, and they have to pay you maybe $290,000 after it’s burnt down. But what if I say, thanks, but I wasn’t selling my house to you of all people. I want to rebuild it. I want to restore my house to what it was previously. Well, if they did something wrong, if they were careless or negligent, they have to pay you for that. And what happens is, it costs at least $450,000, $500,000 to rebuild a $300,000 house. And people are shocked to hear this, but if you have trees on your property that burned down, or were destroyed, the utility has to pay to replace those trees with trees of like size species and kind. That can be hundreds of thousands of dollars.

Mike Danko:

So it doesn’t take long if the utility caused the fire, because it was careless, to rack up a rebuilding cost well over a million dollars for that $300,000 house. So that’s something that you, and, of course, you may say, well, I have rebuilding insurance, yet rebuilding insurance will never cover the full cost of rebuilding because it’s typically based, not in California costs of rebuilding, but rather the national averages. And insurance carriers do not pay for trees. They generally either don’t pay at all, or they cap it at 1500 bucks a tree, where one tree to replace can be 70, 80, 90, a hundred thousand dollars. So, that’s one of the things that we do. If you lost your house, you say, hey, I think I might like to rebuild.

Mike Danko:

We get contractors to figure out what it costs to rebuild. We get arborist in to figure out what it would cost to re-tree your property. And then we quantify the emotional distress and the annoyance factor. I’ll tell you, every client who’s been through this, they’re immediately given a new job, a job they don’t want, and that’s dealing with a fire, it typically takes about two years, and it’s almost a full-time job. So when we quantify all of that, and then we basically present a bill to PG&E, and above and beyond what your insurance would pay, and it’s usually pretty darn significant.

Eric:

So, what would you say, and just a general number, unless you knew it, of the number of people who opt out? Either they say, oh, my insurance will take care of it, and they really miss out on all these other economic restitutions that they would get, or they just say, oh, maybe in the back of their mind they’re like, oh, this is the government. I can’t sue the government, or this is just a class action, I’m not going to get anything. What percentage on any particular fire do you think that is?

Mike Danko:

First off you have people who say, I don’t want to get involved until I know that PG&E has done something wrong. So let’s wait until CAL FIRE, the state investigative agency, determines whether PG&E did something wrong. So you have those folks. And I explain to them, CAL FIRE, basically, it’s going to take them up to a year, their report, their conclusion is not admissible in court. It has no usefulness at all, if they find against PG&E we can’t use it. And PG&E will say, we just respectfully disagree. And if they find that PG&E caused the fire, we can’t use it, or the fact that PG&E didn’t cause the fire. So it has no meaning whatsoever. So it just puts people behind. That’s one, I’d say with probably 20% of the folks who should be suing, or should be joining the litigation don’t, because they want to wait for CAL FIRE to come out with it’s report.

Mike Danko:

Then you can get other people who do join, the biggest, where they leave the most money on the table is, mostly for emotional reasons they say, I just, I cannot, I’m not interested in rebuilding. I am moving to Texas, or Nevada, someplace where there are no trees. And if you do that and you sell your lot, now worth $10,000, you are no longer entitled to the costs of restoring that property to its previous condition. So that’s where the, and of course, when PG&E finds out you sold your lot, they just jump up and down with joy, because now at the most they’re going to have to pay you is that $290,000 figure minus whatever you get from insurance, rather than perhaps the seven figures that we’re talking about, because they no longer have to be concerned about restoring your property to its previous condition. And I’d say that happens roughly half of the folks who sign on before we get to the end sell their properties. Even though they know they’re leaving a lot of money on the table, they just [crosstalk 00:24:51].

Eric:

Who are they selling it? Are they selling it to the PG&E?

Mike Danko:

No, PG&E has tried that in the past, what they would do, what PG&E would do, they’d buy up some of the properties at artificially high prices, they’d give a few people a lot of money for their burnt out lots so that they can say, when somebody else appraises the other burnt out lots, they say, oh, we have comparables here. What do you know, who’d think a burnt out lot is actually worth quite a bit of money, now just because PG&E bought a few. They don’t do that anymore because they were found out. But what happens is you have speculators come in and the speculators will say, I’m going to buy this entire street. And the reason why they want to do that is because if I buy the entire street, I can redevelop and rebuild the entire street, basically all at once, and it’s cheaper.

Mike Danko:

So those are typically the people who come in and speculators. And even though people, this is what happens all the time. People say, I know my property is only worth $10,000. I would never sell it. I don’t need $10,000. Don’t you worry. I’m not going to sell this property. But then a developer comes in and offers them $14,000. And they say, I’m tired of holding onto this property. I’m paying taxes on the property, even though I don’t have any services, I just want to cut the cord. This guy’s offering me more than the property is worth. It’s $14,000. I’m going to take it. And I say, well, you’re kissing goodbye to the cost of rebuilding. And they just say, I just, I can’t do it. And that’s pretty common. It’s about, like I say, maybe 50% of the owners.

Eric:

One of the costs I don’t think we covered yet was, okay, the house has burned down. Where does the family live? And I’m assuming people will stay in hotels, or maybe they’ll get rental property. Who’s paying that fee and when?

Mike Danko:

So there’s two things going on. One is, if you have insurance, insurance will pay you what’s called alternative living expenses. Usually for up to 24 months. It’s a fixed amount, but they’ll say, yeah, well, we’ll get you a place to live. And it may be Best Western, it may be a rental. And many of my clients will say, heck, this adjuster is really a nice guy. He got me a really nice place. And I say, yeah, and you have exactly $60,000 of benefits for ALE, that is going to run out. He doesn’t care. He would’ve gotten you the Taj Mahal. He has written off basically those benefits.

Mike Danko:

So he found a place and put you in it. And what are you going to do in 10 months when it’s gone? So that’s if you have insurance, if you don’t have insurance then you are basically on your brother-in-law’s couch eventually. And that’s gets to be pretty unpleasant for folks. Of course, in the course of litigation, what we do is we are seeking from PG&E money for the annoyance, the inconvenience of being displaced. And also for the, if you end up coming out of pocket, to recover that as well.

Eric:

So if I understand this in totality, if someone has been affected by a wildfire, it’s just in their best interest to join this mass tort litigation. And they, what you’d mention, they have to hire an attorney, whether it’s you or somebody else, but the best thing for them, for the financial value replacement, sentimental, they have to get involved with the litigation in order to get all these benefits.

Mike Danko:

Yeah. And I tell folks, let’s go back to my example of somebody who had that $300,000 house, it’s burned down, but they did get a $250,000 check from their insurance carrier. And they say, is this worth my time, Mike? And I say, look, at the worst that I see is $40,000. And it’s not going to take basically anything of your time very much at all. And you’re not going to have to pay attorney’s fees. So I don’t exactly know, Mr. Smith, what you have coming to you, but unlike most other cases, whatever you have coming to you under the law, you’re going to get, it’s not the case like, yeah, by the time the experts and the time that attorneys, I’m going to get a pittance, no, whatever you’re entitled to, you’re going to get. And there’s no downside.

Mike Danko:

So it takes a while for people to realize, oh, and the things that they’ll ask me is how much time is going to be required of me. And it’s like, it’s really not that much. It’s maybe a total, you have to talk to me or my paralegals. You have to give us some documents, maybe fill out some forms, but it’s really not more when you add it all up, it maybe two or three or four days total in most cases. So, unless your time is worth $10,000 an hour or whatever, it’s generally well worth your time to get involved.

Eric:

Yeah. And then one thing I try to, or we can end on, unless you’ve got something else that you’d like to talk about is, just because I’ve been in this legal world for a long time, you realize that there are people who are experts in a specific type of area. And you’ll talk to someone who says, oh, well, my neighbor’s an attorney, and they might be a family law attorney, or a micro criminal defense attorney. And you give some insight, it’s like, this is something you’ve studied, you’ve been so part of, what’s the advantage of someone coming to you if they’ve been affected by a wildfire?

Mike Danko:

Because we’ve talked already about some different theories from inverse condemnation to trespass by fire, to getting value for your sentimental items and so forth. It’s a very, very specialized area of law, and you really do need a specialist. And one of the things that you’ll find is that certainly PG&E, or whatever utility is on the other side, they have nothing but specialists doing this, and they have their tricks. They have their strategies to minimize what you have coming to you. And so it really makes sense to have someone who has done this before, who has all the legal theories down, has all the strategies down. For example, I tell my clients to think twice before they sell their property. And I know many other lawyers, or local lawyers, they can do this for you, never even mentions that to the client, and the client ends up thinking it doesn’t make any difference and ends up selling their property because they don’t want to be bothered with it anymore. That costs them, again, hundreds of thousands of dollars, that decision.

Mike Danko:

So it isn’t a specialized area that you want to deal with. The other thing is that when it comes time to resolve the cases, you are going to get the best result if your attorney has actually taken one of these cases to trial against the utility. The utilities immediately sniff out, this attorney is not going to go the distance, and they will stonewall the attorney. And basically they’re able to settle the case cheap. If a utility knows that this attorney has taken it to trial before and won, then it’s going to be a different deal. And there are few attorneys out there now who do have good experience in wildfire cases, but there are very, very few that have actually taken a utility to trial and won. So that’s one of the things that you ought to be looking for when you’re looking for an attorney, especially because it doesn’t matter, the utility’s going to end up paying the attorney’s fee. So you might as well get the best.

Eric:

Yeah. And I think that that point can’t be emphasized enough, the fact that a lot of attorneys will show, we are trial attorneys. And what that means to the layperson who might be listening to this is, if an insurance company knows that you don’t have the skillset, or the finances to take it to trial, they can just push you down the road. They could just keep kicking the can, but the threat of trial means that they could pay a lot more than they would have to do if they just settled. So if someone goes to you, that PG&E or whoever it is, they know that, okay, we can’t play games here because if Mike takes us to trial we’re going to write even bigger checks than if we would’ve just settled for what they wanted.

Mike Danko:

Right. And they have another issue as well, which is, nobody really knows what these cases are worth. So if I take it to trial and get a jury verdict, that is a good one. It becomes, I just not only done something for my client, I’ve done it for all the other cases as well. So that’s really what utility doesn’t want to do, is they don’t want basically a rising tide to float all the boats. So they end up basically paying the trial attorneys, people with real experience, they end up paying their clients more to basically keep it out of court.

Eric:

Well, Mike, I really appreciate your time today. And it was fascinating for me. I’ve known about this type of litigation for a while, but I learned a bunch of new things just talking to you today. So thank you for your time.

Mike Danko:

Pleasure, Eric, anytime.