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Calif. high court blocks businesses' bid to recoup losses from Aliso Canyon leak

California's Supreme Court denied efforts by local businesses to recover losses incurred following the multimonth methane leak at Southern California Gas Co.'s Aliso Canyon storage field that began in late 2015.

The high court on May 30 affirmed a 2017 ruling by an appeals court that business owners could not recoup their losses from SoCalGas for purely economic damages, Justice Mariano-Florentino Cuéllar said in an opinion.

Cuéllar said California law allows for recovery of purely economic losses in negligence cases only when the plaintiff and the defendant have a so-called special relationship, or when the plaintiff was an intended beneficiary of a transaction harmed by the defendant's negligence. He noted that the businesses in this case and SoCalGas do not have such a relationship.

The precedent and other jurisdictions' decisions, according to Cuéllar, "[cut] sharply against imposing a duty of care to avoid causing purely economic losses in negligence cases like this one: where purely economic losses flow not from a financial transaction meant to benefit the plaintiff (and which is later botched by the defendant), but instead from an industrial accident caused by the defendant (and which happens to occur near the plaintiff)."

SoCalGas, a utility subsidiary of Sempra Energy, applauded the court ruling in a statement to the Courthouse News Service, saying the decision "adheres to the long-settled precedents on the economic loss doctrine in California and upholds the appellate court's previous ruling in favor of SoCalGas."

The Aliso Canyon gas leak emitted 109,000 metric tons of methane from October 2015 into February 2016 and prompted thousands of area residents to relocate for months. Earlier in May, a state investigation determined that the leak was caused by a corroded pipe casing and that SoCalGas failed to conduct detailed follow-up inspections or analyses after previous leaks at the site.