In The News

Major Verdict Against Water District for Failure of Hydrants- Berger Kahn’s Clients Prevail in Yorba Linda 2008 Freeway Complex Fire

(filed under: In The News | August 28, 2012)

CBS MONEY WATCH — YORBA LINDA, CA  — 08/28/12 — A lawsuit arising from the historic 2008 Freeway Complex Fire was almost equally as fiery as the original event, with a July 13, 2012 judgment awarding a group of homeowners and subrogating insurers for 12 homes more than $69 million. While the defendant Yorba Linda Water District did not start the fire, the losses happened because the fire hydrants went dry just as homes were threatened by the fire.

Berger Kahn’s clients were awarded $9.2 million of the total verdict. Shareholder David Ezra worked as unofficial liaison counsel along with several other plaintiff attorneys (including Robert Wolfe (Engstrom, Lipscomb & Lack), Gary Hamblet (Morris, Polich & Purdy), Ric Jones, Eric Traut and Geraldine Ly (Real, Hernandez & Ly)), each of whom was instrumental in achieving the group victory.

The Freeway Complex Fire burned over 30,000 acres and affected 381 homes in North Orange County in 2008 in the Yorba Linda area, but this suit was focused on a subset of the homes affected by the sudden loss of water in the small upper Hidden Hills section of Yorba Linda.

“This was a very significant judgment,” says David Ezra, “primarily because of the shocking series of accidental events that led to the catastrophic failure of the Yorba Linda Water District’s essential pumping station.”

The lawsuits alleged that the Yorba Linda Water District was liable for the damage under principles of inverse condemnation. The homeowners and subrogating insurers prevailed on 12 of the 19 involved homes, obtaining a total judgment of $69,459,834.95. Approximately 117 homes in the upper Hidden Hills area of Yorba Linda received their water from a pump-fed system that pushed water uphill, while the rest of the City received water from reservoirs and merely used gravity to pull the water downhill. Just as fire threatened the upper Hidden Hills homes, three electrical pumps stopped working because of a wiring short and the emergency gas powered fire pump quickly overheated. The hydrants went dry, and at least 19 homes were damaged or destroyed.

The Water District attacked the cause of action for inverse liability at the trial court level several times, and even took the matter to the Court of Appeal by writ. It took the position that if it did not start the fire, it could not be liable, but the Judges who heard the argument believed the law to be otherwise.

AIG, the insurer for the Water District, would not pay for the Water District’s litigation expenses or contribute to a settlement. The Water District sued AIG in Federal Court and that action is ongoing.

“We give a lot of credit to the Water District and its defense counsel, Linda Bauermeister, for prevailing on seven of the 19 homes and for substantially reducing the cost and duration of the trial,” said Berger Kahn’s Managing Partner Craig Simon, but he noted the verdict would not have been any different even after a several month jury trial. David Ezra added, “By allowing an experienced and very knowledgeable jurist to analyze deposition testimony and evaluate the critical evidence and arguments, everyone saved a tremendous amount of time and money.”

The case was tried before a retired Justice from the California Court of Appeal, John K. Trotter.

For more information about the judgment and history of the fire, see the OC Register article:

ABOUT DAVID EZRA: David Ezra is the principal at Berger Kahn’s Irvine office, and practices in the areas of employment and insurance law. Ezra was named as a Top 5 Orange County Employment Law Attorney from 2009 – 2011 by OC Metro and to the list of Top 50 Orange County Southern California Super Lawyers from 2010 – 2012.

ABOUT CRAIG SIMON: Craig Simon is the Managing Partner of Berger Kahn, A Law Corporation, and practices in the areas of insurance law, business litigation, insurance bad faith and subrogation. Simon was listed as a Top 50 Orange County Super Lawyer in 2010 – 2012, a Southern California Super Lawyer in 2009 – 2012 and as a Top 100 Attorney in California in 2010 by the Los Angeles Daily Journal.

ABOUT BERGER KAHN: Berger Kahn is a California-based law firm with practice areas including insurance coverage and litigation, business litigation, labor and employment, serious personal injury, wrongful death, and subrogation.


Jess Block