This is Part Two of a three part series on wildfires and economic damages. To navigate to Part One, please click here, or to read Part Three, please click here.
As explored in Part One of our series, the initial aftermath of a wildfire presents a chaotic landscape of destruction, where immediate damage assessment forms the foundation for future litigation efforts. However, as legal proceedings begin to take shape, the focus must shift from rapid data collection to methodological refinement and strategic adaptation. This second phase of wildfire damages assessment—throughout the litigation process—requires a sophisticated understanding of legal frameworks, evidentiary challenges, and the complex interplay between multiple stakeholders and defendants, each with shared or competing interests and varying degrees of liability. This foundation helps provide a clear path forward, particularly when resolving claims or in cases of long-term disputes and litigation, scenarios which are explored in Part Three of our series.
Refining Methodology Through Strategic Partnerships
The transition from immediate response to sustained litigation support demands a fundamental evolution in approach. While initial assessments rely heavily on broad data gathering and preliminary loss estimates, the litigation phase requires precision, defensibility, and adaptability. This transformation begins with establishing coordinated partnerships across multiple disciplines. Outlined below are some of the key partners and ways their role contributes to evaluating damages:
- Construction professionals become critical allies in this phase, offering expertise that extends beyond simple replacement cost calculations. Construction experts help quantify the true cost of rebuilding business facilities, roads, technical equipment, accounting for code upgrades, permit delays, and material price fluctuations that may have occurred since the original construction. Residential construction specialists provide crucial insight into the nuances of home rebuilding, from foundation issues created by extreme heat to the challenges of matching architectural details in historic properties.
- Arborists and forestry experts contribute essential perspective on vegetation losses that often represent significant economic value, particularly in rural and agricultural areas. Their expertise becomes critical when quantifying losses to mature or exotic landscaping, orchards, or timber stands—assets that require years or decades to replace and may have unique characteristics that affect valuation.
- Medical experts play an increasingly important role in quantifying non-economic damages, particularly in cases involving pain, suffering, and emotional distress. The psychological impact of losing one’s home or business to wildfire extends far beyond immediate financial losses. Medical professionals help establish the framework for these more intangible but equally real damages.
- Legal experts specializing in local and state-specific tort law provide the crucial foundation upon which all economic models must rest. Their insights ensure that damages calculations align with legal recoverability, and help prevent the development of theoretically sound, but practically unenforceable, claims.
Some Complexities in Working Without a Named Defendant or a Bankrupt Named Defendant
One of the unique challenges in wildfire litigation is the frequency with which cases proceed without clearly identified defendants. Whether due to ongoing investigations into fire origin and cause, or situations where the responsible party cannot be immediately determined. Damages experts must develop methodologies that remain viable across multiple liability scenarios.
This uncertainty necessitates the construction of multiple parallel models, each reflecting different liability allocation scenarios. For example, a partial liability model might assume the defendant bears responsibility for only a portion of the total damages, requiring careful consideration of how losses would be apportioned under relevant state law. Joint liability models explore scenarios where multiple parties share responsibility, while full liability models assume complete responsibility by a single defendant. This exercise can become more complex as fires can sometimes (or often) converge, and the causes of each fire can vary.
These scenario-based approaches prove invaluable in settlement negotiations and early-stage litigation strategy. By presenting a range of potential outcomes based on different liability theories, damages experts work as true partners in the dispute process, helping attorneys and clients make informed decisions about litigation strategy, settlement positions, and resource allocation.
The key to managing this uncertainty lies in communicating effectively to all stakeholders. Clients, attorneys, and insurers must understand that initial damages models may represent starting points rather than final conclusions. The phrase “you don’t know until you know” becomes a crucial concept in managing expectations while maintaining the flexibility to adapt models as facts develop. This adaptability becomes a value proposition in itself, demonstrating to courts and opposing parties that the damages analysis remains grounded in evidence rather than advocacy.
The context of the case (such as in the case of bankrupt defendants for instance), can change the demands on the approach to the measurement of damages, and related timelines by imposing different requirements on the scope of measurement of the damages. For example, specific damage calculations may be required for the purpose of an estimation hearing in bankruptcy which contemplates the evaluation of damages to assist the court in determining the approximate value of contingent or unliquidated claims against the debtor’s estate.
Legal and Regulatory Complexities
The legal landscape surrounding wildfire liability varies dramatically across jurisdictions, creating significant implications for damages modeling. For example, California’s doctrine of inverse condemnation, which holds utilities strictly liable for fires caused by their equipment regardless of negligence, creates a fundamentally different analytical framework than states that apply traditional comparative liability principles. Understanding these distinctions becomes crucial when developing damages models, as legal recoverability directly impacts the relevance and admissibility of various economic losses, and understanding the parameters early on allows experts to build scenarios with that in mind.
To illustrate through an example: The Porter Ranch gas leak litigation demonstrates how legal frameworks shape damages analysis. In that case, the application of California’s strict liability standards created opportunities for recovery that might not exist in other jurisdictions, directly influencing both the scope and methodology of damages calculations.
Factoring in Government Aid Programs
Federal and emergency program interactions add additional layers of complexity. FEMA reimbursements can significantly impact net losses, but the availability and extent of such programs often remain uncertain, particularly during periods of government transition or budget constraints. Damages experts must carefully navigate these overlapping programs to avoid double-counting recoveries while ensuring that legitimate losses are not inadvertently excluded from calculations.
The timing of these federal programs can also create challenges. Emergency aid may cover immediate needs but leave long-term losses unaddressed, while disaster declarations may provide certain types of relief but exclude others. Understanding these limitations becomes crucial when developing comprehensive damages models that accurately reflect net economic impact.
Long-Term Litigation Challenges
Wildfire cases frequently involve extended litigation timelines, creating unique challenges for damages quantification. Unlike many tort cases where losses are largely fixed at the time of injury, wildfire damages continue to evolve throughout the litigation process. Ongoing losses due to delayed rebuilding, extended business interruption, and property value fluctuations must be continuously monitored and incorporated into evolving damages models.
Contractual disputes frequently emerge in these extended proceedings, particularly regarding force majeure clauses and their application to wildfire events. Quantifying the economic impact of delayed performance, missed deadlines, and contract non-performance requires sophisticated analysis of both direct costs and opportunity losses. These calculations become particularly complex when multiple parties claim force majeure protection, creating competing narratives about responsibility for delays and their associated costs.
Property and title issues add another dimension of complexity, particularly in rural or unincorporated areas where property boundaries may be less clearly defined or where easement rights affect both liability exposure and claim scope. These issues can dramatically impact damages calculations, particularly when they affect access rights, utility easements, or shared infrastructure that influences rebuilding costs and timelines.
Methodological and Evidentiary Challenges
The litigation phase demands rigorous attention to causation analysis, requiring damages experts to isolate wildfire-related losses from other economic factors that may affect property values, business performance, or market conditions. Counterfactual analysis becomes crucial, establishing “but-for” scenarios that demonstrate what would have occurred absent the wildfire event. This analysis must account for broader economic conditions, seasonal variations, and market trends that might independently affect the claimed losses (e.g., establishing baseline economic activity for businesses while the COVID crisis was unfolding).
Document destruction due to the fires presents ongoing challenges throughout litigation, requiring creative yet reliable approaches to data reconstruction. Third-party sources such as tax records, insurance files, and vendor invoices become crucial when primary business records are destroyed. Financial institutions, utility companies, and government agencies often maintain records that can help reconstruct lost data, but accessing and integrating these sources require careful coordination and often involves additional discovery costs.
The multidisciplinary nature of wildfire litigation demands sophisticated coordination across expert disciplines. Engineers provide crucial insight into infrastructure damage and rebuilding requirements, environmental scientists assess contamination and remediation needs, and GIS experts help visualize and quantify spatial relationships that affect both liability and damages, including scale of destruction of infrastructure, structures and vegetation and the intensity of the damage. Maintaining consistency and coherence across these different expert perspectives requires careful project management and clear communication protocols.
Foundation for Expert Testimony
Throughout this complex litigation process, every methodological decision and analytical choice serves a single ultimate purpose: supporting credible expert testimony that will withstand scrutiny in both settlement negotiations and trial proceedings. The robustness of the underlying methodology directly correlates with the persuasiveness of expert opinions, making the litigation phase investments in analytical rigor a crucial determinant of ultimate case outcomes.
The most sophisticated damages analysis provides little value if it cannot be effectively communicated to judges, juries, and opposing counsel. The litigation phase must therefore balance analytical complexity with accessibility, ensuring that economic models remain comprehensible to legal audiences while maintaining the technical precision necessary for professional credibility.
As wildfire litigation continues to evolve and expand, the importance of this methodological foundation becomes increasingly clear. The cases proceeding through courts today will establish precedents that influence future litigation, making the quality and defensibility of damages analysis a crucial factor, not only in individual case outcomes, but in the broader evolution of wildfire liability law. The litigation phase represents the crucial bridge between immediate response and final resolution, where careful methodology transforms raw data into persuasive legal arguments that can withstand the rigors of adversarial proceedings.
If you have any questions or would like to discuss this topic please reach out to Xavier Oustalniol, Kristofer Buchan or Kimberly Ratto.
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