Court orders state to pay SPI $24 million

Dan McDonald
Managing Editor


Judge says CalFire was corrupt in its lawsuit to recover Moonlight Fire expenses from timber company

A judge ruled last week that CalFire wasn’t truthful in its attempt to sue Sierra Pacific Industries for its alleged role in the 2007 Moonlight Fire.

The judge told the state to pay for its “corrupt and tainted” actions against the timber company.

The state of California was ordered to pay SPI more than $24 million in penalties, legal costs and fees incurred during its defense of the Moonlight Fire lawsuit.

Judge Leslie C. Nichols imposed sanctions against CalFire for engaging in “the pervasive and systematic abuse of California’s discovery rules in a misguided effort to prevail against these defendants.”

Nichols ruled that CalFire investigators weren’t truthful in their testimony about the Moonlight Fire.

“Had they (CalFire) testified truthfully from the start, as required, defendants would have likely spent nothing, or very little, as the case most likely could not have advanced,” the court added.

The fire, which ignited Sept. 3, 2007, on private forestland in Plumas County, raged for more than two weeks. It burned 65,000 acres, including 46,000 acres in the Plumas and Lassen national forests.

Judge Nichols’ decision was the opposite of a 2012 ruling in federal court that cost the family-owned timber company millions of dollars.

In July 2012, SPI and other defendants agreed to pay the federal government $122.5 million in damages. It was the largest recovery ever received by the government for damages caused by a forest fire.

SPI’s share of the settlement was $55 million and the forfeiture of 22,500 acres of timberland to the government.

Sierra Pacific said it agreed to the 2012 settlement because U.S. District Judge Kimberly J. Mueller ruled that SPI would be liable for the fire damages even if it proved it didn’t start the fire.

Prosecutors in that case argued that there was evidence the fire was started by a spark from a bulldozer being used by an SPI subcontractor.

Sierra Pacific argued in the 2012 case that CalFire and the U.S. Forest Service were trying to cover up the actual cause of the fire — and that those agencies should have been held responsible for letting the fire get out of control.

When asked if SPI planned to appeal the 2012 ruling and settlement, the company’s acting general counsel, David Dun, said SPI is looking into it carefully.

CalFire was suing SPI in civil court to recover the $8 million it spent fighting the fire.

But SPI maintained, as it did during the federal lawsuit, that the state’s case was baseless. The timber company argued that CalFire investigators suppressed documents, photographs and diagrams that would have proved an SPI subcontractor didn’t start the fire.

Judge Nichols agreed with SPI.

In a 28-page order issued Tuesday, Feb. 4, Nichols echoed, sometimes word for word, an order proposed by SPI. The judge blasted the behavior of CalFire and two of its attorneys.

“The court finds that CalFire’s actions initiating, maintaining and prosecuting this action, to the present time, is corrupt and tainted,” Nichols wrote. “CalFire failed to comply with discovery obligations, and its repeated failure was willful.”

The judge said CalFire withheld documents and destroyed evidence critical to the case.

CalFire spokesperson Janet Upton told the Sacramento Bee that the agency “vigorously disputes many of the facts and legal findings in the orders.” She said CalFire is considering an appeal.

Judge Nichols said he calculated the cost of SPI’s attorney fees and then added 20 percent to punish CalFire.

“This is a significant victory for SPI and the other defendants in the case,” SPI spokesman Mark Pawlicki said. “Although the vast majority of CalFire employees conduct themselves with professional integrity, the investigators on this fire did not live up to that high standard.”

Pawlicki said that during depositions, CalFire’s own expert on wildland fire investigations concluded that it was “more probable than not” that the Moonlight investigators engaged in acts of deception while testifying about the primary aspect of their investigation.

Sierra Pacific’s lead attorney in the case, William R. Warne, said, “After four years of litigation, we are relieved and thankful that justice has finally been done. The court’s orders speak for themselves.”

Dun said it took a “tremendous amount of courage and money” by the Emerson family (owners of Sierra Pacific Industries) to defend this case. He said it is very expensive to take on the state of California.

Dun said the actual judgment against the state was about $32 million. It represented the largest sanction ever made by a judge in the state.

He said SPI was awarded close to $25 million. Approximately $7 million was awarded to other, perhaps as many as 20, defendants in the case.

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