Mediation, time and the law of rebuilding Los Angeles

The rebuilding of LA will be a test of our legal system.

Rebuilding as soon as possible is imperative for the future of Los Angeles. The Olympics in the summer of 2028 will be a worldwide television event. It may not be possible to entirely rebuild by then but if the images at that time show no rebuilding, Los Angeles will be permanently seen as a city that not only failed to prevent fire damage but also can't take action when it's crucial for its residents and future.

There is a real risk legal proceedings will delay rebuilding. If we review the existing and potential litigation and disputes and the normal time for their resolution, almost nothing may be rebuilt by the summer of 2028.

Three types of disputes and litigation will delay construction:

The first will be preconstruction permit disputes revolving around the dollar amounts of residential and commercial fire insurance that will be paid by insurance companies. There are complex issues regarding the amounts to be paid and the timing of those payments. Since an emergency has been declared, insurance companies may reasonably take up to three years to determine and pay the final amounts for many properties.

There will also be preconstruction permit disputes and potential litigation between residential and commercial landlords and tenants, banks and borrowers, and other lien and covenant holders. In the context of those issues, condominiums will pose their own special issues because of separate insurance policies for buildings and common areas and each condominium owner in the context of complex homeowner association decision processes.

The second type will be disputes in the application to build and post-application period. Even after a building application has been approved there will be litigation over moving forward. Despite regulatory attempts to limit their application, there will be issues and probable litigation involving the Coastal Commission, CEQA, and private rights in existing community covenants. Those issues will come to the fore especially if there has been a zoning change, or there is not a rebuilding of what was there before the fire but an attempt to consolidate separate parcels or build multifamily housing on previous single-family lots.

All the above issues will have an impact on when construction can begin.

The third type of dispute and litigation may not directly affect when construction can begin, but it could have a significant indirect impact on the process. They are the numerous individual and class actions filed against Southern California Edison, and the City of Los Angeles and its Department of Water and Power.

There have to date been four actions for compensation filed against LA and the DWP on the Palisades fire, and forty-one actions filed against Southern California Edison on the Eaton Canyon/Altadena fire. Many are individual or individual joinder actions; some are class actions. However, the amount of compensation and the amount of liability of the defendants will impact decisions to rebuild.

Knowledge of the financial situation is essential to decisions about moving forward. Uncertainty is the enemy of accomplishment. Lives are on hold. Businesses and individuals cannot make decisions about rebuilding without knowing what financial resources they have. Governments and utilities need similar knowledge. Even the ultimate subrogation claims by insurance companies need to be determined for utilities and the government to know the full cost of the fires.

In addition to private interests, time is the essential public interest. In all these disputes and litigation, who represents the public interest in timely rebuilding? People cannot be asked to not assert claims they believe they have. And the loyalty of lawyers must be to their clients, not to public concerns.

There is one historical example that might help. London faced the same public interest question after the Great London Fire of 1666. The city was destroyed. Its wealth was held in leases and subleases on property. Until those legal claims could be resolved there could be no rebuilding. The normal legal process would delay rebuilding for years.

Parliament created a special fire court, which essentially wound up serving as a court of mediation with special powers. The leading judges of the time served on the fire court, pro bono, without compensation. The matters were resolved in record time, as was the rebuilding of London. (See Miller, "Los Angeles and the Great London Fire Court," Daily Journal, Jan. 10, 2025.)

The article suggested the same effect could be achieved in Los Angeles through pro bono mediation. The response to that suggestion has been gratifying. Dozens of mediators responded they would be happy to do pro bono mediations on the fire cases. Seven major ADR organizations - JAMS, ADR Services, Judicate West, ARC, Signature Resolution, FedArb and The Mediation Center of Los Angeles - have agreed they would waive all their administrative fees for the pro bono mediations so they would be cost-free.

The process for counsel to obtain the pro bono cost-free mediation is straightforward. Counsel should simply call the ADR organization they would normally call to schedule a mediation and indicate they are requesting pro bono mediation for a fire case. They will then receive the names of mediators in the organization who have volunteered pro bono and counsel may choose the mediator and proceed at no cost.

For maximum effect, counsel should do this at the earliest possible time. Early mediation may settle the matter immediately, or result in an agreement on the process for resolving it quickly. This could be especially helpful before litigation is filed.

For disagreements between policyholders and insurance companies about the amount or timing of coverage, pro bono mediators engaged before any litigation could help resolve the matter expeditiously and have an enormous positive impact on rebuilding.

In complex cases, early mediation could help in developing agreements on efficient procedures. But that may not be enough. If the cases are consolidated and assigned to one judge in Judicial Council Coordination (JCCP) Proceedings, there will be common questions of law or fact in those proceedings.

If the central issues are factual, as they appear to be at first glance in the Eaton Canyon/Altadena cases, vigorous supervision of the discovery practice will be required to meet the public interest time requirements. If a dominant issue appears to be legal, as in the claims of inverse condemnation in the Palisades cases, early motions for summary judgment with strict briefing schedules may be in the public interest.

These are all important issues - especially timing - and the Daily Journal will report on their resolution and will periodically publish articles highlighting organizations and individuals doing pro bono work or otherwise helping to get results in a timely manner.

Following the work of the Great Fire Court of London Sir Christopher Wren was able to rebuild St. Paul's cathedral, which had been gutted in the 1666 fire. His crypt is in the basement of the cathedral, and its inscription, in Latin, says: "Reader, if you seek his monument look around you."

The rebuilding of LA depends on how our legal system will perform. The result will be known in 2028 when you "look around you."