More than 150 insurance companies are suing Xcel Energy over the Marshall fire in an attempt to reclaim money those insurers paid in settlements to the wildfire’s victims.
The companies’ joint lawsuit comes less than a month after the Boulder County sheriff and district attorney named the utility as one of two entities responsible for the deadly Dec. 30, 2021, fire, which caused more than $2 billion in property damage.
A 17-month investigation determined that the fire was started in part by a faulty Xcel Energy power line that arced and sent burning pieces of metal into dry brush at a county park. But the investigation also pinned blame on lingering embers from a debris fire that had been started a week earlier on property owned by the Twelve Tribes, a religious cult.
The lawsuit, filed Thursday in Boulder County District Court, does not name the Twelve Tribes or its members as defendants. It also does not specify the amount of money the insurance companies are seeking from the utility.
Efforts to reach Xcel Energy officials on Monday were unsuccessful, but the company previously said it “strongly disagreed” with the conclusion that its power lines caused a second ignition point for the Marshall fire,
Lawyers representing the 155 insurance companies declined to comment.
But Carole Walker, executive director of the Rocky Mountain Insurance Information Association, an industry trade group, said such lawsuits by insurance companies are common when fault has been found with another person or business.
“This happens whenever it’s a situation that isn’t caused by Mother Nature,” Walker said.
The insurance companies have an obligation to reclaim some of the money on behalf of their policyholders, she said. If the companies end up paying billions of dollars in claims, premiums for all Colorado homeowners will go up.
“If they don’t recoup the dollars, those dollars are passed on,” Walker said. “It is an important part of the process to at least get in line.”
These litigations are lengthy, and if a jury or judge rules in favor of the insurance companies, they will be last in line to receive payments from Xcel, she said.
A similar lawsuit was filed by insurance companies in Colorado after the 2012 Lower North Fork Fire, which started after a Colorado Department of Natural Resources prescribed burn got out of control and killed three people, destroyed 22 homes and burned 4,140 acres.
In that case, the Colorado General Assembly in 2014 passed legislation that eliminated liability caps for state government and created an $18 million fund to pay victims.
And insurers have successfully sued utility companies in California to recoup their claims.
In 2021, Southern California Edison agreed to a $2.2 billion settlement with insurance companies over the Woolsey fire, which killed three people and burned 1,600 homes and other buildings outside of Los Angeles, according to the . Edison did not acknowledge wrongdoing in the settlement.
Already, dozens of homeowners have sued Xcel Energy over the Marshall fire. More are on the way as lawyers have lined up to take on class-action lawsuits.
The Marshall fire is the most costly fire in Colorado history, destroying more than $2 billion in property. Two people — Robert Sharpe, 69, and Nadine Turnbull, 91 — died as an estimated 35,000 residents fled the flames. The fire destroyed more than 1,000 homes and businesses in Superior, Louisville and unincorporated Boulder County.
The fire started around 11 a.m. on Dec. 30, 2021, when strong winds blew dirt off a pile of smoldering embers on the Twelve Tribes property near the intersection of Colorado 93 and Eldorado Springs Road. Those embers blew onto dry brush and grass, and flames were fueled by the strong winds, the sheriff’s investigation determined.
But the sheriff ruled that no criminal charges would be filed because fire and law enforcement authorities had visited the compound on Dec. 24 when members were burning wood and other debris. Those officials approved of the fire and the members’ plans for burying it when they were finished.
A second fire sparked around 12:20 p.m. at an Xcel Energy electrical power distribution system near the Marshall Mesa trailhead, which is down the street from the Twelve Tribes property on Eldorado Springs Drive.
The sheriff’s investigation determined the power lines were a potential source a few days after the fire when investigators reviewed video from a motion-activated trail camera and noticed a power line sagging. Other videos from that day showed the power line twisting and bouncing in the wind, and the sheriff’s office took photos of the line that showed chunks of metal missing, according to released once the investigation was concluded.
No criminal charges were filed against Xcel or its employees.
The lawsuit, however, says Xcel was negligent and is liable for damage because it did not properly maintain its equipment and knew that strong winter winds could damage its power lines.
The insurance companies’ lawsuit cites the sheriff’s investigation and says that the insureds’ property destruction was “the inescapable and unavoidable consequence of Xcel Energy’s Electrical Equipment as deliberately designed, constructed and maintained. This damage was the necessary and probable result of Defendants’ public improvement that supplied electricity for a public use.”
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