Abrams v. PG&E Corporation

• Court: United States Bankruptcy Court, N.D. California
• Decided: September 19, 2025
• Docket: 25-03027
• Status: Unknown

Opinion

U.S. BANKRUPTCY COURT SS NG NORTHERN DISTRICT OF CALIFORNIA □□□□ Me 1 . . Signed and Filed: September 19, 2025 □□□□ OL 2 Vani J 4 , 5 DENNIS MONTALI U.S. Bankruptcy Judge 6 7 UNITED STATES BANKRUPTCY COURT 8 NORTHERN DISTRICT OF CALIFORNIA 9 In re: ) Bankruptcy Case 10 ) No. 19-30088-DM PG&E CORPORATION, ) 11 ) Chapter 11 1 2 7 and 7 ) ) Jointly Administered 13 |}PACIFIC GAS AND ELECTRIC COMPANY, } ) 14 Reorganized Debtors. ) 15 ) L] Affects PG&E Corporation ) 16 affects Pacific Gas and ) 17 Electric Company ) Affects both Debtors 18 * All papers shall be filed in 19 |lthe Lead Case, No. 19-30088 (DM) . \ 20 ) 21 ) WILLIAM B. ABRAMS, ) Adversary Proceeding 22 ) No. 25-03027-DM Plaintiff, ) 23 ) Vv. ) 24 ) 25 PG&E CORPORATION; PACIFIC GAS AND) ELECTRIC COMPANY, ) 26 ) Defendants. ) 27 ) gg ff =- 1 =-

1 MEMORANDUM DECISION REGARDING MOTION TO DISMISS 2 I. INTRODUCTION 3 On January 29, 2019, PG&E Corporation and Pacific Gas and 4 Electric Company (“Debtors”) filed chapter 11 to deal with 5 claims for damages arising out of devasting and destructive 6 wildfires that took place in 2015, 2017, and 2018 (the 7 “Wildfires”). Those Wildfire caused tens and thousands of 8 dollars in injuries and tens of billions of dollars in damages. 9 On July 12, 2019, Governor Newsom signed AB 1054 into law, which 10 essentially gave Debtors a deadline to satisfy prepetition 11 claims from the Wildfires by June 30, 2020. If Debtors did not 12 meet that deadline, they were not eligible to participate in the 13 California Wildfire Fund (the “Fund”), a mechanism established 14 by AB 1054 and AB 111 (signed into law at the same time) to deal 15 with future wildfires. That legislation provided no relief for 16 the damages caused by the Wildfires. 17 The expectation of the court, the principal participants in 18 the Chapter 11 effort, the representatives of the fire 19 claimants, and the vast majority of the claimants themselves, 20 was that the Debtors’ transfer of $13.5 billion in cash and 21 securities to the new created Fire Victims Trust (“the FVT”) 22 would result in an anticipated recovery of one hundred percent 23 (100%) of the direct (not subrogation) claims of the victims of 24 the Wildfires. This expectation has not been realized. Whether 25 it was a greater number of Wildfires claims, more expensive 26 costs of administering the FVT, excessive attorney’s fees, or 27 the performance of the stock contribution to the FVT, or other 28 factors, the final estimates pegged the net recovery at no 1 better than seventy percent (70%), leaving a shortfall of at 2 least thirty percent (30%). 3 William B. Abrams (“Abrams”), a 2017 Tubbs Fire victim, 4 acting pro se and without an attorney, has emerged as a 5 passionate advocate for Wildfires victims. Abrams filed the 6 adversary proceeding to unravel the Debtors’ Chapter 11 Plan 7 that created the FVT, claiming that the Plan was confirmed via a 8 fraud on Plan voters. For the reasons set forth below, he does 9 not present any cognizable claim for relief and his Amended 10 Complaint (Dkt. 7) must be dismissed without leave to amend.1 11 II. BACKGROUND 12 On June 20, 2020, the court confirmed Debtors’ and Shareholder Proponents’ Joint Chapter 11 Plan of Reorganization 13 14 Dated June 19, 2020 (Dkt. 8048) (the “Plan”). The court’s 15 Confirmation Order was entered on June 20, 2020 (Dkt. 8053). 16 Pursuant to the Plan, the FVT was created to administer, 17 process, settle, resolve, liquidate, satisfy and pay the claims 18 arising out of the Wildfires (“Wildfire Claims”) (other than 19 claims of public entities and those based upon subrogation 20 principles). Abrams and tens of thousands of others asserting 21 Wildfire Claims were affected by creation of the FVT, as all 22 their claims were channeled to the FVT for adjudication and 23 resolution, independent of Debtors, who received broad 24 25 26 27 1 Docket numbers that have more than two digits are in the main Chapter 11 cases; those with one or two digits are in the 28 adversary proceeding. 1 discharges of all liabilities dealt with under the Plan pursuant 2 to Section 1141(a).2 3 Debtors funded the FVT by channeling to it cash and 4 securities of a value totaling approximately $13.5 billion. The 5 Wildfire Claims were the subject of a channeling injunction that 6 established the FVT as the sole source of recovery for the 7 holders of those Wildfire Claims; Wildfire Claimants would have 8 no recourse against the discharged Debtors. Those holders were 9 “permanently and forever stayed, restrained, and enjoined from 10 taking any action for the purpose of directly or indirectly 11 collecting, recovering, or receiving payments, satisfaction or 12 recovery from any Debtor or Reorganized Debtor.” Plan, § 13 10.7(a); Confirmation Order, Para 53(a). 14 In his initial Adversary Proceeding Complaint, filed on 15 June 17, and his Amended Complaint (Dkt. 7) filed on July 8, 16 2025 (“Complaint”), Abrams named as defendants Debtors, the FVT, 17 and others associated with them. On July 21, 2025, Abrams filed 18 a Notice of Certain Dismissal of Certain Defendants (Dkt. 47) in 19 which he dismissed all defendants other than Debtors. 20 At a hearing on September 9, 2025, the court heard oral 21 argument on the Motion to Dismiss Adversary Proceeding 22 (“Motion”) filed by Debtors (Dkt. 76), the Abrams’ Opposition 23 (Dkt. 92) and the Debtors’ Reply (Dkt. 96).3

24 25 2 Unless otherwise indicated, all chapter and section references are to the Bankruptcy Code, 11 U.S.C. §§ 101-1532 . 26 3 Also at the hearing, Abrams indicated that the court still had 27 not ruled on his prior Motion to Stay Adversary Proceeding (Dkt. 35). The text of the order entitled “ORDER DENYING MOTION TO 28 STAY ADVERSARY PROCEEDING” (Dkt. 85), sets forth and addresses 1 For the reasons that follow, the court rejects Abrams’ 2 attempts in this court and wishes him and others well in other 3 efforts before other legislative or administrative bodies. His 4 Complaint must be denied, without leave to amend. 5 III. DISCUSSION 6 In an introductory paragraph of his Complaint, Abrams 7 states that he “seeks redress for a pattern of statutory, 8 constitutional, and fiduciary breaches surrounding the 9 procurement and following the confirmation of the “Debtors’ and 10 Shareholder Proponents’ Joint Chapter 11 Plan of Reorganization 11 Dated June 19, 2020” (the “Plan”) [Dkt. 8048]. The Plan 12 purported to resolve fire victim claims through the creation of 13 the Fire Victim Trust, promising timely and fair compensation.” 14 (Amended Complaint, 3:22-26). 15 He complains that the FVT was marred by structural and 16 financial conflicts of interest, withheld and redacted financial 17 disclosures, improper and mismanaged liquidation of Debtors’ 18 equity, denial of individualized due process rights, and willful 19 and fraudulent conduct “by key actors before, and after during 20 Plan Confirmation.” (Amended Complaint, 4:4-5). 21 Under a main heading titled “Background: Pattern of Fraud, 22 Willful Misconduct and Post-Confirmation Inequity”, Abrams 23 alleges the Debtors’ corporate misconduct and criminal history; 24

25 the full title of Abrams’ Motion, namely, “Motion to Stay 26 Adversary Proceeding Pending Assignment of Counsel for Plaintiff and the Proposed Class Given Defendants Posture and Recent 27 Actions filed by Plaintiff William B. Abrams”. No further order 28 is necessary so none will be issued. 1 a Fire Victim Trust bait and switch; fiduciary breaches and 2 deviations from Plan terms; fraud in Plan solicitation and 3 confirmation; post-confirmation conduct and failure to remedy 4 harm; concealment of conflicts; suppression of oversight; and 5 victims being undercompensated and continually harmed as a 6 result thereof. 7 Finally, Abrams introduces what he calls “Factual 8 Allegations and Causes of Action” and asks that the court note 9 seven enumerated instances that involved pre-confirmation or 10 pre-disclosure statement conduct, alleged conflict by a secured 11 creditor and lender, grievances about the actions of the Tort 12 Claimant Committee, statements made by the United States 13 Trustee, influence of a plan component alleged by various 14 insiders, and post-confirmation’s document manipulation, without 15 specific attribution. 16 These allegations then segue into eight enumerated counts 17 seeking relief. 18 Rather than confine Abrams to the eight enumerated claims 19 in his Complaint, the court will discuss additional theories he 20 advances to justify prosecution of this adversary proceeding. 21 Those theories were argued in detail at the September 9, 2025 22 hearing and are discussed in order after dealing with the eight 23 specific courts. They are, third party releases, plausibility 24 of the allegations contained in the Amended Complain, the impact 25 or inapplicability of res judicata, and law of the case, the 26 exculpation provisions of Section 10.8 of the Plan, and the 27 impact of the California tort statute of limitations. 28 1 A. The Counts Alleged in Abrams’ Complaint 2 The first Count is Fraudulent Inducement (Common Law 3 Fraud). In a series of subparagraphs, Abrams alleged false 4 representations of facts and omissions attributable to Debtors’ 5 officers, attorneys and agents made during the bankruptcy case, 6 within CPUC proceedings, and elsewhere, including 7 representations regarding the $13.5 billion funding of the FVT 8 as insufficient, that the value of the PG&E stock contributed to 9 the FVT would be quickly rise when in fact Debtors knew that 10 stock was volatile and there was no likelihood of quickly rising 11 in value. He contends further that Debtors knew that the 12 representations were false and misleading and that they chose to 13 rely on an overly optimistic and incomplete picture to ensure 14 support for the Plan. He goes on to contend that he and others 15 similarly situated “justifiably relied” on Debtors’ 16 representations and omissions and this resulted in damages. 17 Elsewhere in the same count, he contends that these assertions 18 were not related to any fire and thus fell outside of the FVT 19 purview. He contends that Debtors’ conduct was “willful, 20 malicious and in conscious disregard of the fire victims’ rights 21 and that that conduct should give rise to punitive and exemplary 22 damages.” (Amended Complaint, 22:4-5). Finally, he reiterates 23 objections he filed on May 15, 2020 as part of an objection to 24 confirmation of the Plan. (Dkt. 7230). 25 The Confirmation Order and its finality, and the operation 26 of Section 1141 are dispositive. Abrams is bound by the Plan. 27 There is no exception to the broad discharge of Debtors under 28 the Order Confirming Plan and Section 1141. See, e.g., United 1 Student Aid Funds, Inc. v. Espinosa, 559 U.S. 260 (2010) 2 (confirmation order containing components that did not comply 3 with other parts of Code was still binding); Trulis v. Barton, 4 107 F.3d 685, 691 (9th Cir. 1995) (“Once a bankruptcy plan is 5 confirmed, it is binding on all parties and all questions that 6 could have been raised pertaining to the plan are entitled to 7 res judicata effect”). 8 On top of that, and even without regard to the Confirmation 9 Order, these various representations even if fraudulent, and 10 even if actionable, are barred by the California statute of 11 limitations of three years for fraud. Even more to the point, 12 there is no particularity for such a contention as required by 13 Fed. R. Bankr. P. 9(b), incorporated by Fed. R. Civ. P. 9(b). 14 The first Count must be dismissed. 15 The second Count is for Willful Misconduct through Breach 16 of Contract and Breach of the Implied Covenant of Good Faith and 17 Fair Dealing. Abrams contends that the Plan and Confirmation 18 Order constituted a binding contract, that Debtors materially 19 breached their contractual obligations, and then doing so they 20 violated the implied covenant of good faith and fair dealing. 21 While there is settled bankruptcy policy that treats a plan 22 as a contractual relationship between the debtor and the 23 creditors, this Count alleges that key obligation such as 24 funding the FVT and assignment various claims against third 25 parties resulted in contractual obligations that Debtors 26 materially breached by undermining stock value, implementing the 27 Plan in bad faith, imposition of undisclosed liquidity 28 1 restrictions and breach of the implied covenant of good faith 2 and fair dealing. 3 Over five years have elapsed since the Plan was confirmed 4 and before Abrams filed his adversary proceeding, and apart from 5 the broad discharge of Section 1141 and the permanent discharge 6 injunction under Section 524, this Count, under Abrams’ own 7 breach of contract theory, would be barred by California’s 4- 8 year statute of limitations on written contracts. Cal. Code 9 Civ. Proc. § 337. Further, the Count does not plead any 10 specific expressed or implied terms of the Plan that could 11 constitute a breach of a covenant of good faith and fair dealing 12 as it acknowledges that Debtors did pay the aggregate FVT 13 consideration of $13.5 billion as required under Section 4.26(a) 14 of the Plan. 15 The second Count must be dismissed. 16 The third Count is entitled Declaratory Judgement and 17 Equitable Relief, contending that the discharge and release 18 provisions of the Plan and Confirmation Order do not provide 19 relief due to fraud, willful misconduct and material breach. To 20 repeat, Section 1141 is all-encompassing, and includes torts not 21 discharged in individuals’ bankruptcies and specifically subject 22 to the permanent injunction of Section 524. The channeling 23 injunction provides the same protection for the Debtors, and 24 since Debtors fully complied with their obligations to the FVT, 25 Abrams or any other Wildfires victims individually cannot assert 26 breach of the Plan or invoke traditional fraud and willful 27 misconduct theories under the rubric of declaratory judgement. 28 The third Count must also be dismissed. 1 The fourth Count, Breach of Fiduciary Duty and Constructive 2 Fraud, appears directed at the FVT, the Trust Oversight 3 Committee, and affiliated professionals. Abrams dismissed his 4 Complaint against all those parties. He does not allege any new 5 theories of liability under this Count against Debtors, and his 6 dismissal of all other defendants is all that needs to be noted 7 to support dismissal of this Count as to Debtors. 8 The fifth Count erroneously invokes a misunderstanding of 9 third-party releases and confusion between them and exculpation 10 clauses. The court dealt directly with Abrams when it denied 11 his similar and previous request on May 2, 2024 (Dkt. 14438) and 12 his confusion between the Purdue Pharma bankruptcy and the Ninth 13 Circuit treatment of exculpation clauses in Blixseth v. Credit 14 Suisse, 961 F.3d 1072 (9th Cir. 2020). 15 The fifth Count must be dismissed. 16 The sixth Count, Securities Violations Including 17 Unauthorized Securitization and Misrepresentations of Claim 18 Value, does not state any theory of liability as to Debtors or 19 any claim by Abrams that he is the victim of any securities 20 violations. He earlier attempted to refer to the litigation 21 between Debtors and Baupost Group Securities LLC (Dkt. 13440) 22 but offers no theory of liability under this Count and appears 23 to repeat the eye-catching words of that separate ongoing 24 litigation without tying the substance of that litigation to 25 himself as a plaintiff or how it applies to Plan solicitation, 26 Confirmation, and execution. 27 The sixth Count must be dismissed. 28 1 The seventh Count alleges a post confirmation material 2 alteration of FVT structure. Abrams contends that the FVT was 3 materially altered post-confirmation, claiming a violation of 4 due process and disclosure obligations under Section 1125(b) 5 among other theories4. He concedes that Debtors and the FVT 6 brought a joint motion on April 25, 2021 (Dkt. 10497) which 7 sought authorization for an exchange transaction, that that 8 transaction was challenged by one fire victim, but not Abrams, 9 and that the court approved that transaction by an order dated 10 April 29, 2021 (Dkt. 10598). Given the final disposition of 11 that matter over four years ago, the lack of any appeal 12 thereafter, the running of the 180-days to seek revocation of a 13 Plan under Section 1144, there is no actionable claim for relief 14 available. 15 The seventh Count must be dismissed. 16 The eighth Count alleges violations of Sections 1125(b) and 17 1126(e), both covering improper solicitation and conflicts in 18 connection with a restructuring support agreement approved years 19 and years ago and prior to Confirmation. For the same reasons 20 recited as to the seventh Count, it is too late to revisit the 21 matters and this Count fails. 22 For the foregoing reasons, the eighth Count must be 23 dismissed. 24 In this circuit, courts are directed to permit liberally 25 amended pleadings in the interest of giving litigants the 26 opportunity to present the merits of their contentions rather

27 4 Section 1125(b) deals with post-petition and pre-confirmation 28 matters only, and has no relevance to post-confirmation matters. 1 than dismiss them at the pleading stages. None of the eight 2 Counts discussed above can be salvaged, so amendment would be 3 futile. Given the extensive efforts of Abrams as presented by 4 the Complaint, the court will discuss his other arguments in his 5 efforts to save the Complaint 6 B. Abrams’ Additional Theories 7 Third-Party Releases 8 Abrams has devoted some energy and effort to challenge what 9 he believes are third-party releases, as those instruments have 10 been recently disapproved by the United States Supreme Court in 11 the highly publicized Purdue Pharma bankruptcy. He apparently 12 believes that somehow confirmation of the Plan here violated 13 what is now the law of the land under the Purdue Pharma 14 decision. He is incorrect. 15 In the Ninth Circuit, third-party releases have been 16 prohibited for decades. In this very case, the court had 17 extensive discussions with counsel and parties about this issue 18 before Confirmation, independently reviewed the Plan and other 19 critical documents, and determined that there were no 20 impermissible third-party releases anywhere. Third-party 21 releases generally benefit non-debtors who get the benefit of 22 the discharge of their common debtor, which Abrams correctly 23 notes the Supreme Court recently limited in Harrington v. Purdue 24 Pharma, L.P., 144 S.Ct. 44 (2023). No third-party release was 25 part of the Plan or the Confirmation Order here. The only 26 possible confusion would come about by Abrams’s possible 27 misunderstanding of exculpation clauses. They are provisions 28 that release parties such as the FVT, the Trust Oversight 1 Committee and others who have played a role in the bankruptcy 2 process, and against some of whom Abrams leveled his charges 3 prior to dismissing them as parties. These exculpation clauses 4 are specifically permitted in the Ninth Circuit under Blixseth 5 v. Credit Suisse, 961 F.3d 1074 (9th Cir. 2020). Such clauses 6 are operative to this day, will operate in the future and 7 protect those many parties who played a role in the Debtor’s 8 reorganization, Plan, and the Confirmation Order, Debtors’ 9 discharge and the Channeling Injunction. 10 Plausibility 11 At the hearing, Abrams took issue with Debtors’ contention 12 that even taking all facts alleged by Abrams as true, as the 13 court does at the pleading stage the claims for relief stated by 14 Abrams are still not plausible. The court takes no issue with 15 Debtor’s argument and agrees. “Under Rule 12(b)(6), ‘[o]nly when 16 the plaintiff pleads itself out of court,’ by admitting all the 17 elements of an affirmative defense, may a complaint that 18 otherwise states a claim be dismissed.” Scheibe v. ProSupps USA, 19 LLC, 141 F.4th 1094, 1098 (quoting Durnford v. MusclePharm 20 Corp., 907 F.3d 595, 603 n.8 (9th Cir. 2018)). 21 In other words, even accepting all facts as true, a legal 22 impediment is fatal and plausibility must be denied as a matter 23 of law if an affirmative defense that is plain on the face of 24 the complaint applies. Such a claim is simply not a cognizable 25 claim that can survive the pleading stage. As noted above, and 26 below, there are many applicable affirmative defenses asserted 27 by the Debtors that are plain on the face of the Amended 28 Complaint. 1 Res Judicata and Law of the Case 2 The court has already addressed the preclusive effect of 3 plan confirmation supra. The Confirmation Order, and all its 4 components, constitutes a binding final order, “and precludes 5 the raising of issues which could or should have been raised 6 during the pendency of the case.” See Trulis v. Barton, 107 F.3d 7 685, 691 (9th Cir. 1995); Heritage Hotel Ltd. Partnership I v. 8 Valley Bank (In re Heritage Hotel Ltd. Partnership I), 160 B.R. 9 374, 377, Aff’d without op., 59 F.3d 175 (9th Cir.1995). 10 The issues raised by Abrams in the Amended Complaint could 11 have been, or actually were raised prior to confirmation (See 12 Dkt. 7230). 13 Like the binding effect of the Confirmed Plan, Abrams is 14 also bound by the law of the case doctrine. “Under the law of 15 the case doctrine, a court is barred from reconsidering an issue 16 that already has been decided in the same court or in a higher 17 court in the same case.” FDIC v. Kipperman (In re Commer. Money 18 Ctr., Inc.), 392 B.R. 814, 832 (citing Milgard Tempering, Inc. 19 v. Selas Corp. of America, 902 F.2d 703, 715 (9th Cir. 1990). 20 Exculpation 21 In his Opposition to the Motion to Dismiss, and during the 22 September 9 hearing, Abrams argued that the exculpation clause 23 found in Section 10.8 of the Plan encompasses the Debtors and 24 does not exculpate specific torts, including fraud and willful 25 misconduct5. That Debtors are included in this exculpation

26 5 Section 10.8 narrowly carves out “except for Claims related to 27 any act or omission that is determined in a Final Order by a court of competent jurisdiction to have constituted actual fraud 28 or willful misconduct…” 1 clause as well as the broadest definition of discharge pursuant 2 to Section 1141 and the Confirmation Order is not necessarily an 3 inconsistency, but perhaps inartful drafting. And while it is a 4 well-settled maxim that an ambiguous writing must be construed 5 against the drafters, the court cannot conclude that the 6 exculpation clause overrides or undermines the broader 7 protections of the Sections 1141 and 524 and the channeling 8 injunction, and provide another layer of discharge to the 9 Debtors that may not have been available to the other parties 10 named in the exculpation clause of Section 10.8. 11 Finally, even if narrow exception to Section 10.8 did apply 12 to conduct of the Debtors, there are absolutely no specifics as 13 required by Rule 9(b) and none have been pled within the three- 14 year timeframe mandated by California law. 15 Statute of Limitations 16 As the court noted supra, Abrams various allegations are 17 otherwise barred by the California statute of limitations of 18 three years for fraud. 19 IV. CONCLUSION 20 For the foregoing reasons, the Motion to Dismiss will be 21 GRANTED. 22 The court is concurrently issuing an order dismissing this 23 adversary proceeding without leave to amend for the reasons 24 stated in this Memorandum Decision. 25 26 **END OF MEMORANDUM DECISION**

28 1 COURT SERVICE LIST

2 William B. Abrams 625 McDonald Ave. 3 Santa Rosa, CA 95404 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28