Edison Caused Eaton Fire, Officials Say: Settlement Offer Risks

By Yosi Yahoudai Founder and Managing Partner

August 4, 2026

Wildfire Lawsuits

The Los Angeles County Fire Department said Tuesday that Southern California Edison equipment caused the Eaton Fire, the January 2025 blaze that killed 19 people and destroyed or damaged more than 9,000 homes and businesses in Altadena.  

For the thousands of survivors weighing whether to accept a payout through SCE’s own compensation program, the finding raises a question with real financial consequences: what happens to your legal options once you sign. Get a free consultation with our Los Angeles wildfire lawyers. 

Investigators, working with electrical and metallurgical experts over 18 months, concluded that electrical arcing on an out-of-service SCE transmission tower in Eaton Canyon ignited dry brush at the base of the structure. The fire spread within seconds under Santa Ana wind conditions and burned for weeks before crews contained it.  

SCE spokesperson Kathleen Dunleavy said the utility received the report and is reviewing it, and that the company has taken its potential role in the fire’s start seriously since the early days of the investigation. 

SCE has offered a voluntary Wildfire Recovery Compensation Program since late 2025, allowing homeowners, tenants, business owners, injured survivors and the estates of those who died to submit documentation and receive a settlement offer calculated under the company’s own formulas. Claimants have until Nov. 30th to file.  

The program advertises fast turnaround: an offer within 90 days of a substantially complete submission, payment within 30 days after all settlement conditions are met, and a Direct Claim Premium on top of standard damages categories. Represented claimants also receive an additional amount equal to 20% of net damages to help cover legal costs. 

What Accepting the Edison Offer Actually Costs 

Submitting a claim does not, by itself, waive a survivor’s right to sue. That right disappears only when a claimant accepts SCE’s offer and signs a notarized settlement agreement releasing further claims. 

SCE designed, administers, and evaluates the compensation program while remaining the potential defendant in any litigation the program is meant to resolve, which makes it a settlement process rather than a neutral one. Offers are calculated using SCE’s own formulas and are generally not negotiable beyond a Detailed Review procedure that can take up to nine months and require extensive records, insurer access and property inspections.  

Insurance offsets can substantially reduce what a claimant receives, and depending on the claim category, SCE may subtract the full amount of available policy limits rather than only the money an insurer has actually paid out. 

Once a claimant signs, the release is typically final. SCE’s release language waives both past and future Eaton Fire claims against the company and related entities. A survivor whose rebuilding costs later exceed the offer’s estimate, or who develops a medical complication after settlement, may find the release bars additional recovery — a result that depends on the exact wording of the agreement and the narrow legal grounds available for challenging a signed release.  

For survivors with catastrophic property loss, serious injuries, business interruption or disputed valuations, that finality is the central risk of moving through the program without independent legal review first. 

Eaton Fire and Edison’s Responsibility 

Tuesday’s report establishes fire investigators’ conclusion about the origin and cause of the fire. It does not, by itself, establish civil negligence, determine damages, resolve comparative-fault or other defenses SCE may raise, or guarantee that any individual claimant would recover more in court than through the settlement program. What it does provide is significant causation evidence, often the most contested issue in a wildfire liability case, that survivors weighing litigation over a formula-driven offer would otherwise have to establish largely on their own. 

For owners of destroyed or damaged real property, that evidence carries weight beyond negligence claims. California appellate courts have recognized that utilities like SCE can face inverse-condemnation liability for property damage caused by their equipment, a theory distinct from ordinary negligence that does not require proving SCE acted unreasonably.  

Personal-injury and wrongful-death claims depend more heavily on negligence and related tort theories, including the general duty of care under Civil Code Section 1714 and the standards utilities must meet when maintaining equipment in fire-prone areas. 

The temporary IRS exclusion for qualifying wildfire-relief payments applied only to payments received through Dec. 31, 2025, so a payment accepted under an SCE settlement in 2026 may not qualify under that exclusion, though the actual tax treatment still depends on what the payment compensates and other applicable rules.  

H.R. 5366, which would extend the exclusion to payments received in taxable years beginning after Dec. 31, 2025, passed the House and has been referred to the Senate Finance Committee, where it remained pending as of Aug. 4. Survivors should not assume a 2026 settlement will receive the same tax treatment as earlier Eaton Fire payments without reviewing their own situation. 

None of this means the SCE program is a bad option for every claimant. For straightforward, well-documented losses where the offer clearly covers remaining uninsured damages, it can resolve a claim faster than years of litigation. But a settlement offer calculated by the party being accused of causing the fire, attached to a release that leaves limited room to reopen the claim later, deserves independent review before anyone signs. 

Talk to a Los Angeles Wildfire Attorney Before You Sign Anything 

If you lost a home, a business or a loved one in the Eaton Fire, an SCE settlement offer may undervalue your claim, and the release you’d sign leaves limited room to reopen it later. J&Y Law can review your offer, release, insurance offsets and losses, then explain your legal options.  

Personal-injury and wrongful-death claims against Edison generally carry a two-year deadline under Code of Civil Procedure Section 335.1; property-damage claims generally have three years under Section 338, and your specific deadline depends on your claim.  

If a public entity may also share responsibility, a separate, often shorter deadline can apply. We work on contingency, so there’s no fee unless we recover for you. Contact J&Y Law today for a free review of your offer.