PG&E Corporation

• Court: United States Bankruptcy Court, N.D. California
• Decided: June 12, 2023
• Docket: 19-30088
• Status: Unknown

Opinion

EDWARD J. EMMONS, CLERK (9 □ □□ □□□ ONG U.S. BANKRUPTCY COURT □□ NORTHERN DISTRICT OF CALIFORNIA al ay wy □ dis 1 Signed and Filed: June 12, 2023 □□□ 2 Mini hi 4 Vine 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. ) HEARING SCHEDULED 15 )} Date: July 11, 2023 L] Affects PG&E Corporation ) Time: 10:00 AM 16 affects Pacific Gas and )} Via Video/Teleconference Electric Company ) www.canb.uscourts.gov/calendars xX Affects both Debtors 18 * All papers shall be filed in 19 Lead Case, No. 19-30088 (DM) . \ 20 ) 21 22 MEMORANDUM DECISION ON MOTION FOR PARTIAL SUMMARY JUDGMENT AND COUNTER-MOTION FOR SUMMARY JUDGMENT 23 DA I. Introduction 25 On May 9, 2023, the court held a hearing on the Amir 26 ||Shahmirza, Responsible Person for Creditor Komir, Inc. 27 (hereinafter “Komir”) Motion for Partial Summary Judgment of 28 ||Issues in Reorganized Debtors Objection to Claim #2090 and =- 1 =-

1 Claimant’s Response Thereto (Dkt. 13478) (the “Partial Motion”) 2 and Reorganized Debtors’ (hereinafter “PG&E”) PG&E’s Opposition 3 to Motion for Partial Summary Judgment and Counter-Motion for 4 Summary Judgment (Dkt. 13567) (the “Counter-MSJ”). At the 5 conclusion of the argument the court took both matters under 6 submission. For the reasons stated below, the court will GRANT 7 Komir’s Partial Motion and DENY PG&E’s Counter-MSJ. 8 II. Undisputed Factual Background 9 The facts of this matter center on a two-acre parcel of 10 real property located at 800 Walnut Avenue, San Bruno, 11 California (the “Komir Property”), that is a portion of land 12 formerly known as Parcel 2. Parcel 2 was one of multiple 13 “Parcels” at and around the intersection of what is now Highway 14 101 and Interstate 380, near the San Francisco International 15 Airport. 16 In 1910 and 1923, PG&E acquired from Mills Estate 17 Incorporated a total of four easements over Parcel 2, to place 18 and maintain electricity transmission towers and lines. By 1943, 19 PG&E had erected transmission lines that cross over the Komir 20 Property. By 1973, the City and County of San Francisco 21 (“CCSF”) owned the Parcels. 22 On May 7, 1973, the State of California filed a Complaint 23 in Eminent Domain (“Complaint”) (Partial Motion, Exh. 3) that 24 named CCSF, PG&E, and a variety of other entities as defendants. 25 The Complaint explicitly stated that “public interest and 26 necessity require the acquisition of certain real property in 27 fee simple absolute unless a lesser estate is described herein 28 for State highway purposes . . .” (emphasis added). The -2- 1 Complaint goes on to separately list each affected Parcel as an 2 exhibit which describes that Parcel’s boundaries, and any 3 easements within that parcel. The exhibit for Parcel 2 contains 4 only a description of its boundaries, and no easements are 5 described. 6 A Judgment of Condemnation (the “Judgment”) and Final Order 7 of Condemnation (the “Final Order”) (Partial Motion, Exhs. 6 & 8 7) were entered simultaneously on February 11, 1983.1 The Final 9 Order states that all of the Parcels shall be taken in eminent 10 domain “in fee simple absolute, unless a lesser estate is 11 described.” As before, the description of Parcel 2 contains no 12 mention of any easements. 13 In 1987, the State of California sold the Komir Property to 14 a third party, who then sold it to Komir in 2000. 15 Between 2000 and 2018 there were no disputes between PG&E 16 and Komir that are relevant to the present controversies. In 17

18 1 While the caption of the Complaint lists every Defendant 19 individually by name, the captions of the Judgment and Final Order do not. Instead, they list the Defendants as “City and 20 County of San Francisco, a municipal corporation, et al.” This quirk is unexplained by either party. However, PG&E does not 21 argue that it was dropped from the Complaint or that it is not 22 bound by the outcome of the matter.

23 Another unexplained quirk is that a second eminent domain lawsuit was filed and consolidated prior to the original 24 lawsuit’s completion. The Judgment and Final Order are double- 25 captioned (each naming the Plaintiff and Defendants identically as described above), with the first caption containing the same 26 case number as the Complaint and concerning the same parcels as the Complaint, and the second lawsuit listing a second case 27 number and describing new affected Parcels. The boundaries described for Parcel 2 in the Complaint are unchanged in the 28 Judgment and Final Order. -3- 1 fact, Komir consented to PG&E activities, leading to the court’s 2 conclusion that PG&E’s easement rights were at most via a 3 consensual easement. 4 In 2018, PG&E began construction of new transmission towers 5 over the Komir Property at considerably lower height than 6 existing lines. In fact, in March 2018 the parties entered into 7 a Temporary Construction Easement, in which PG&E agreed to pay 8 Komir $9,000 per month in exchange for rights of ingress and 9 egress on a portion of the Komir Property to complete 10 construction adjacent to the Komir Property. Shortly 11 thereafter, PG&E removed existing transmission towers and began 12 construction of new towers and lines of a larger size and lower 13 height on the Komir Property. Within months of the 14 construction, Komir filed suit in San Mateo Superior Court 15 against PG&E for trespass and other causes of action related to 16 the new transmission lines. The lawsuit was stayed by PG&E’s 17 bankruptcy filing in 2019. Komir duly filed a Proof of Claim 18 related to the causes of action. After mediation related to the 19 claim was unsuccessful, PG&E filed an Objection to the Proof of 20 Claim (Dkt. 12130), leading to the procedural underpinnings of 21 the MSJ and Counter-MSJ. 22 III. Summary Judgment Standard 23 On a motion for summary judgment, the court must determine 24 whether, viewing the evidence in the light most favorable to the 25 nonmoving party, there are any genuine issues of material fact 26 as to any claim, part of claim, defense, or part of defense. 27 Simo v. Union of Needletrades, Indus. & Textile Employees, 322 28 F.3d 602, 609-10 (9th Cir. 2003); Fed. R. Civ. P. 56. Summary -4- 1 judgment against a party is appropriate when the pleadings, 2 depositions, answers to interrogatories, and admissions on file, 3 together with the affidavits, if any, show that there is no 4 genuine issue as to any material fact and that the moving party 5 is entitled to judgment as a matter of law. Fed. R. Civ. P. 56. 6 It is within a court’s discretion to grant summary judgment in 7 favor of the nonmovant. Fed. R. Civ. P. 56(f)(1); Gospel 8 Missions of America v. City of Los Angeles, 328 F.3d 548, 553 9 (9th Cir. 2003) (court may enter summary judgment for nonmovant 10 if the movant had “full and fair opportunity to ventilate the 11 issues involved in the matter” and the issues adjudicated were 12 present in the original motion.) (citations omitted). 13 IV. Komir’s Partial Motion 14 The Partial Motion seeks summary judgment only as to one 15 issue: whether PG&E’s easements to place and maintain 16 transmission lines on Parcel 2 were extinguished by the Final 17 Order. The court concludes that the easements were indeed 18 extinguished by the Final Order. 19 The basis for Komir’s argument, and for the court’s 20 conclusion, is short and simple: the Final Order condemning the 21 real property that includes all of Parcel 2 (and therefore the 22 entirety of the Komir Property) to the State of California was 23 in fee simple and subject only to easements defined in the Final 24 Order. PG&E’s easements were not defined in the Final Order and 25 were thus extinguished. 26 PG&E points to the following language set forth in the 27 Final Order regarding relocation payments owed PG&E to support 28 its argument that its easements were not extinguished: -5- 1 [a]ll costs for relocation of Pacific Gas and Electric Company transmission lines and their 2 appurtenances and natural gas lines and their 3 appurtenances, as required for freeway construction on Airport property, shall be 4 pursuant to applicable state law and/or Master Contracts in effect between the State and 5 Pacific Gas and Electric Company and will be 6 without cost to the CITY AND COUNTY OF SAN FRANCISCO. 7 8 PG&E then presents a copy of a Master Contract between the 9 State of California and PG&E, to which Komir objects on an 10 evidentiary basis. That Master Contract, taken by the court to 11 be the Master Contract referenced in the Final Order, “governs 12 relocation of PG&E facilities in physical conflict with freeway 13 projects. Under the Master Contract, Caltrans may order the 14 relocation of PG&E facilities to accommodate freeway projects, 15 and the cost is allocated between the parties in accordance to 16 the nature of PG&E’s land rights.” (Counter-MSJ at 4). The 17 Master Contract makes specific references to the payment for new 18 and necessary right-of-way easements when utility lines are to 19 be moved, but, reasonably, does not reference how the Master 20 Contract would interplay with an eminent domain lawsuit. 21 Despite the Master Contract’s silence, PG&E argues that because 22 it was not asked nor paid to move its transmission lines that 23 cross over Parcel 2 pursuant to the applicable Master Contract 24 in effect between Caltrans and PG&E, those easements were not 25 extinguished by the Final Order. This argument does not appear 26 to have any legal or factual basis. 27 First, the Final Order explicitly sets aside a utility 28 easement for a PG&E natural gas line in Parcel 6B, which -6- 1 illustrates that if any easements were meant to have been 2 maintained, they would have been within the language of the 3 Final Order. 4 Next, PG&E does not set forth any facts to establish, or at 5 least put into dispute, whether Parcel 2 is on what is called in 6 the Final Order “Airport Property.” There is no definition of 7 “Airport Property” anywhere else in either party’s papers. 8 Without any facts regarding the boundaries of “Airport 9 Property,” the court assumes, without objection by either party, 10 that Parcel 2 was not on “Airport Property” and thus the 11 transmission lines running over Parcel 2 did not need to be 12 moved. 13 Finally, PG&E does not explain how or why not moving (and 14 not being compensated to move) transmission lines pursuant to 15 the Master Contract would have any effect on the underlying 16 easement, especially when the Master Contract is silent 17 regarding its effect on any existing easement. 18 One final ambiguity is resolved in Komir’s favor. While 19 the Complaint explicitly states that the State plans to take the 20 property described “unless a lesser estate is described herein,” 21 the Final Order only states that the State takes the real 22 property “in fee simple absolute, unless a lesser estate is 23 described” without the word “herein.” PG&E argues that this 24 means that lesser estates described in other recordings, such as 25 its initial easement recordings from the 1910 and 1923, remained 26 in place after the Final Order was entered and recorded. 27 Any ambiguity created by the absence of the word “herein” 28 does not rise to the level of a genuine dispute. The Final -7- 1 Order is itself a final recorded document as to real property 2 that explicitly states, in all incarnations, that the Plaintiff 3 shall take the real property described in fee simple absolute, 4 and then parcel by parcel described what easements, if any, 5 remain. An argument that the State deviated so entirely from 6 this purpose by the deletion of the word “herein” in the Final 7 Order, without more evidence than merely pointing out the loss 8 of the word, is not persuasive and does not establish the 9 existence of a material fact in dispute on the record presented. 10 The court has addressed PG&E’s claims that its easements 11 were not extinguished by the Final Order. The court must also 12 address how PG&E did not even come close to engaging with 13 Komir’s persuasive arguments backed by binding case law and 14 impressive secondary authority that the Final Order did in fact 15 extinguish the easements. 16 Komir begins with Cal. Civ. Code § 811, which states in 17 part that a servitude is extinguished by the destruction of the 18 servient tenement. 19 Komir also cites Burkhart v. Unites States, 227 F.2d 659 20 (9th Cir. 1955) to demonstrate the basic premise of eminent 21 domain law. In Burkhart, the Ninth Circuit held that the 22 enabling eminent domain statute made clear that the government 23 had to designate expressly any exceptions to a fee simple 24 taking, and went on to state “[t]he taking was not of the rights 25 of designated persons in the property but in the property itself 26 . . . Consequently when the Government took the fee simple title 27 subject only to highway easements, it took all the lesser 28 estates.” Burkhart, 227 F.2d at 661-662 at fn.2. -8- 1 Komir then cites United States v. 32.42 Acres of Land, F.3d 2 1030, (9th Cir. 2012) which follows the holding and reasoning of 3 Burkhart to reiterate that lesser estates are “obliterated” 4 unless “specifically excepted” and a new title is created in an 5 eminent domain proceeding. Though the cases involve federal 6 eminent domain proceedings, Komir argues that the facts and law 7 are paralleled to the state court eminent domain proceeding 8 here. Given the Declaration of Necessity upon which the eminent 9 domain proceeding was based, and the explicit text of both the 10 Complaint and Final Order, the court agrees and accepts the 11 cases as persuasive. More persuasive is the lack of any 12 relevant argument by PG&E regarding California eminent domain 13 law. 14 V. PG&E’s Counter-MSJ 15 In addition to PG&E’s arguments addressed above, PG&E seeks 16 summary judgment on three alternative claims: (1) that even if 17 the easements were extinguished in 1983, PG&E’s continued use of 18 the transmission lines entitles it to an easement by 19 prescription; (2) that Komir’s 2018 lawsuit is barred by the 20 statute of limitations; and (3) Komir’s claims arising from the 21 2018 lawsuit were discharged in PG&E’s 2001 bankruptcy. All 22 three arguments turn on the same material facts that the court 23 finds not to be in dispute and operate in Komir’s favor. 24 First, as to PG&E’s claim of prescriptive easement, PG&E 25 merely names the elements that would entitle a party to a 26 determination that it does have a prescriptive easement over 27 another’s property (“open, notorious and peaceable use, adverse 28 and under a claim of right, for the statutory period of five -9- 1 years.” Guerra v. Packard, 236 Cal. App. 2d 272, 288 (1965)) 2 and simply stating, without anything further, that PG&E meets 3 all five criteria because transmission lines have been in 4 operation on the Komir Property for decades. However, this 5 glosses over the reality of PG&E’s construction of new, lower 6 height transmission lines in 2018. Komir’s lawsuit relates 7 explicitly to this construction and was filed within months of 8 the changes that occurred earlier that year. That the use and 9 rights changed in 2018 means PG&E cannot prove any type of use 10 of those rights over the minimum five-year period for a 11 prescriptive easement to be established. 12 The second and third arguments fail for the same reason. 13 Without more facts from PG&E, the court could not determine as a 14 matter of law that Komir acted beyond the statute of limitations 15 or had that his state court causes of action were discharged in 16 2001, when the acts prompting Komir’s 2018 lawsuit also occurred 17 in 2018. For those reasons the court might well have granted a 18 cross-motion for summary judgment had Komir sought one. 19 VI. PG&E’s Arguments at Hearing 20 At the hearing on May 9, PG&E presented a new argument not 21 stated in the Counter-MSJ: PG&E was not a named Defendant in 22 the original Complaint as to Parcel 2, and thus its easements as 23 it relates to Parcel 2 were outside of the Complaint at all 24 times. 25 The court will disregard PG&E’s troubling presentation of 26 this novel argument that it was not a defendant as to Parcel 2, 27 affording no opportunity for Komir to meaningfully respond 28 before the hearing. -10- 1 Taking this argument on its face, it fails as a matter of 2 law. Section VII of the Complaint states:

3 The names of all owners of and claimants to the property sought to be acquired herein, 4 insofar as known to plaintiff, are 5 hereinafter set forth in this paragraph. Each defendant named has, or claims to have, 6 some right, title, or interest in or to the parcels of real property heretofore 7 described. For the convenience of the court 8 and parties, and not as allegations to which plaintiff intends to be bound, plaintiff has 9 set out the name of each defendant and opposite each name a statement of the 10 respective interest in said parcel. 11 (emphasis added) 12 The Complaint then goes on to list, by Parcel or group of 13 Parcels, the name of the defendant and type of interest held by 14 that defendant. PG&E is listed as a defendant with a right of 15 way interest in Parcels 5A and 5B, but not as a defendant with 16 any interest in Parcel 2. 17 The plain text of the Complaint itself states that the list 18 of Defendants per Parcel was a matter of convenience to the 19 court and parties, and not allegations regarding every interest 20 in each party to which the State of California intended to be 21 bound. This was a Complaint in eminent domain, an in rem 22 proceeding meant to take each parcel of land in fee simple, 23 unless otherwise stated within the Complaint itself. The plain 24 text of the Complaint shows that the State intended to take all 25 of Parcel 2, with no easement described therein. PG&E cannot 26 now purport to prevail in the face of a Complaint that 27 explicitly stated its list matching Defendants to specific 28 -11- 1 portions of the Parcel and noting that it was not binding on the 2 Plaintiff. 3 VII. Conclusion 4 For the foregoing reasons, the court GRANTS Komir’s Partial 5 Motion and DENIES PG&E’s Counter-MSJ. The court further STRIKES 6 PG&E’s late filed declarations and pleadings as requested, for 7 being filed outside the agreed-upon and ordered filing schedule. 8 Komir’s evidentiary objections to the Counter-MSJ are well 9 considered, but as the inclusion of such evidence was not 10 necessary to the court’s ruling, the objections are OVERRULED as 11 moot. 12 The court is concurrently issuing Orders on those motions, 13 consistent with this Memorandum Decision. 14 A further status conference on the matter is HEREBY SET for 15 July 11, 2023, at 10:00 AM. 16 17 **END OF MEMORANDUM DECISION** 18 19 20 21 22 23 24 25 26 27 28 -12-