Business
California FAIR Plan continues denying smoke damage claims despite court loss and regulatory action
Despite a court loss and sanctioning by state regulators, California’s home insurer of last resort continues to deny smoke damage claims from the January wildfires — even when toxic substances have been found in homes, according to a Times review of denial letters.
The California FAIR Plan Assn. has rebuffed policyholders seeking to have their smoke-damaged homes remediated through professional cleaning or the replacement of structures and fixtures such as drywall, insulation and lighting, the half dozen letters and email exchanges sent during July and August show.
In denying the claims, the plan initially cited language deemed illegal by a Los Angeles County Superior Court judge in a landmark June decision that had required policyholders to show that their property suffered “permanent physical changes.”
Last month, the plan changed the wording and told policyholders with smoke damage claims that they must show “distinct, demonstrable and physical alteration” to their property — citing a 2024 state Supreme Court case that established that threshold in an insurance dispute over a COVID-related business closure.
Hilary McLean, a spokesperson for the FAIR Plan, said the insurer is no longer applying the language at issue in the June court decision and has been “updating all customer communications to ensure they consistently reflect the correct language.”
“Our goal is and continues to be to provide fair and reasonable coverage for wildfire-related losses while maintaining the financial integrity of the FAIR Plan for all policyholders,” she said in an emailed statement.
But attorney Dylan Schaffer, who represented the plaintiff in the June decision and shared the correspondence reviewed by The Times, said whatever the language cited by the plan, the result is denials that are unfair to policyholders.
“This stuff is going everywhere and it’s not dirt — it’s toxic,” he said, referring to smoke damage. “And you tell me that some 82-year-old is going to get up in the attic with a hazmat suit on, rip out the insulation and start vacuuming around?”
On Friday, Gov. Newsom called on the FAIR Plan to “expeditiously and fairly” process smoke damage claims arising out of the fires, saying the state has received hundreds of complaints from policyholders.
The January fires have been the worst catastrophe in decades to hit the FAIR Plan, which is operated and backed by the state’s licensed home insurers, including State Farm, Farmers and Mercury.
The plan estimates losses of $4 billion and it has assessed its member carriers $1 billion in order to pay claims.
In recent years, the plan took on hundreds of thousands of policyholders as insurers began pulling out of the state’s fire-plagued homeowners market. Enrollment in the Eaton and Palisades fire zones nearly doubled to 28,440 from 2020 to 2024, according to a Times analysis.
Schaffer believes the plan may have received more than 2,500 smoke damage claims given how many the plan reported it received for partial losses, indicating the structures were still standing.
McLean said the plan could not say how many smoke damage claims it has received due to the fires, nor the number rejected or paid.
The smoke damage policy has been controversial for years and sparked multiple lawsuits, but it wasn’t until June in a case brought by a Northern California homeowner that a judge found the policy violated state law.
That decision by Los Angeles County Superior Court Judge Stuart Rice found that the FAIR Plan’s requirement that smoke damage result in “permanent physical damage” violated the insurance code because it provides less coverage than what is required by the state’s Standard Form Fire Insurance Policy. The case is pending.
Consumer advocates had hoped the decision might prompt the plan to alter how it handled smoke damage claims, even though the ruling wasn’t issued by an appellate court. However, in several letters denying the claims, the plan said the decision had no bearing, noting in one letter “it is not controlling legal authority.”
“Trial court decisions have no precedential value in California; they bind the parties but not another court,” noted James Fischer, an insurance law expert and professor at Southwestern Law School in Los Angeles.
After the decision, the state Department of Insurance took legal action on July 31, threatening the FAIR Plan with a cease-and-desist order over the language. It also accused the insurer of failing to investigate claims fairly and denying legitimate claims without a reasonable basis.
The plan has denied wrongdoing and is seeking an administrative hearing to dispute the allegations.
In one smoke damage case, the plan acknowledged that it had received a report from a policyholder’s industrial hygienist that found a home in Pacific Palisades had been exposed to “toxic” levels of carcinogens, chemicals and particulates, according to a letter sent to the homeowner in August viewed by The Times.
The firm recommended the removal of drywall, plaster, wooden floors and other building materials, according to the letter. However, an expert hired by the plan concluded the home only needed to be cleaned and so the smoke claim was rejected.
“Under the terms of your dwelling property insurance policy, coverage for smoke damage is available only when there is a direct physical loss, which is defined in California law as a distinct, demonstrable and physical alteration of covered property,” the letter stated.
“If the hygienist recommendations call for cleaning, including cleaning of lead and/or asbestos, and there is no direct physical loss to the property, there is no coverage,” it went on to say.
The plan did offer to reinspect the home if cleaning was not successful in removing the contaminants.
Schaffer said he expects that the new language will become a point of contention in the dozens of lawsuits that he and other attorneys have filed on behalf of fire victims against the FAIR Plan.
In March, California Insurance Commissioner Ricardo Lara issued a bulletin advising insurers that the Supreme Court decision does not state “smoke damage is never covered as a matter of law.” A department spokesman declined to comment further, citing the litigation with the plan.
Altadena homeowner Maral Donoyan, 59, who spoke to The Times in April about her difficulties in dealing with the plan, said she and her husband were only able to move back into their smoke-damaged home in June after taking out a Small Business Administration loan.
The plan denied the couple’s smoke damage claim, even though their garage partially burned, she said. That forced the couple to spend close to $200,000 of their own money on remediation, with the bedroom above the garage still needing work, said Donoyan, who is a plaintiff in another lawsuit against the plan.
“Toxic, traumatic, bad faith, immoral,” is how she describes her interactions with the plan.
Business
In a first for the country, voters in Monterey Park ban data centers
Residents of Monterey Park voted overwhelmingly to ban data centers on election day, making the San Gabriel Valley city the first in the nation to do so by public vote.
As of Wednesday, 86% of votes were in favor of Measure NDC, the city ban, according to the Los Angeles County registrar-recorder/county clerk.
Other cities and towns have passed moratoriums on data centers, as a wave of opposition sweeps the country. But the Monterey Park vote can only be overturned by another ballot measure, making it the most permanent data center ban in a jurisdiction.
Monterey Park’s City Council had already banned data centers by ordinance, after a proposed 247,000-square-foot data center met an outpouring of public anger and concern. The developer withdrew that plan.
That facility would have been less than 500 feet away from the nearest home, and would have used three times the electricity of the entire 60,000-person city. Residents said it would have caused noise and air pollution and driven up electricity rates.
“This ensures long-lasting protections for current and future generations,” Amy Wong, co-founder of the group San Gabriel Valley Progressive Action, said of the vote. “It means that future city councils cannot overturn a data center ban, even if data center developers wanted to spend money to fund pro-data center candidates.”
The measure had no formal opposition. The developer of the proposed facility, investment firm HMC StratCap, said it wouldn’t engage in the ballot fight when it withdrew in March.
The Data Center Coalition, an industry trade group, expressed disappointment in the vote.
“It sends a signal that the area is closed for business, both for data centers and for other significant economic development projects,” state policy director Khara Boender said.
“It deprives local residents of the opportunity to compete for jobs and investment, while also causing the area to relinquish substantial long-term economic investment, high-wage jobs, and critical tax revenue to neighboring areas or other states.”
SGV Progressive Action worked with hyperlocal groups including No Data Center Monterey Park to rally support for the measure.
The group is now focused on stopping data center proposals in the City of Industry and fighting a move by City of Industry, Santa Fe Springs, Vernon and City of Commerce to welcome data centers and other industry with fast-tracked permitting and tax incentives.
City of Industry, in the San Gabriel Valley, and Vernon, south of downtown L.A., are primarily industrial areas, each with around 300 permanent residents. They are employment centers, and tens of thousands of workers commute in daily.
There has been little vocal opposition to data centers among the few residents of these cities. Wong said the protest is primarily coming from the surrounding neighborhoods.
“If a data center gets built in City of Industry, residents across the region would bear the brunt of pollution and increased utility costs,” Wong said, noting that it is surrounded by 16 other cities and unincorporated communities.
Data center proposals have been limited in California compared to Virginia, Texas, Georgia, Illinois and Arizona, which sit at the center of a recent boom in hyperscaler facilities to power artificial intelligence.
California has the third-most data centers in the country, with 300, but high electricity rates, expensive land and regulatory hurdles mean that fewer, and smaller, facilities are currently planned than in other hotspots.
That doesn’t mean opposition hasn’t been fierce. In Coachella and Imperial County, residents are showing up in droves to protest local proposals.
In the San Gabriel Valley, Montebello, El Monte and Baldwin Park have all enacted temporary moratoriums, and Alhambra recently banned data centers as part of a zoning code update.
Wong said she hoped the ballot measure vote would galvanize the opposition. “The vote is a testament to the people power of our region,” she said. “Our region is worth protecting, and we won’t let data centers determine our future.”
Business
Rent-hike ban to protect fire victims ends despite gouging concerns
A rule intended to prevent rent gouging in the wake of the Eaton and Palisades fires has lapsed in Los Angeles County, possibly exposing some renters to hikes.
The executive order that blocked rent increases was issued by Gov. Gavin Newsom amid the devastating wildfires last year. Under the order, landlords couldn’t increase rents by more than 10% above their prefire levels.
The rule, which was supposed to be temporary and was repeatedly extended, ended Friday after a vote to extend it again failed to garner enough votes. Supervisor Lindsey Horvath, whose district includes Pacific Palisades, sounded the alarm in a motion to extend price protections that failed to pass at the Board of Supervisors’ May 19 meeting.
“These price gouging protections continue to be necessary as construction and rebuilding continue, and as thousands of people remain displaced,” the motion said. “Families which signed short-term leases could face drastic price increases of 50% or more without further price gouging protection.”
Los Angeles County is home to more than 1 million rental properties, though not all of them needed protection from the new rule. There are already stricter rent increase caps for many residences, depending on the location, type and age of the building. Despite the rent control in the region, the people of Los Angeles pay among the highest rents in the country.
It is uncertain whether renters will face rapidly rising rents now that the protection has lapsed. But some real estate experts and policymakers said there was no need for the temporary rule that was part of the governor’s state of emergency.
Supervisors Kathryn Barger, Janice Hahn and Holly Mitchell abstained from voting on the motion to extend the protection, while Supervisors Hilda Solis and Horvath supported it.
“I abstained because I did not see sufficient evidence to justify extending this emergency ordinance, nor did I see evidence to eliminate it entirely,” Hahn said.
Barger’s office said she supported allowing the protections to sunset while waiting to see whether new information emerged.
“Market data already shows countywide rents are only about 2% above pre-emergency levels and rental inventory has grown,” Barger representative Helen E. Chavez Garcia said. “The Supervisor is also mindful of the burden these ongoing protections place on small property owners throughout the county.”
Mitchell did not immediately respond to a request for comment.
There haven’t been steep rent hikes in neighborhoods within three miles of the Palisades fire, according to a Times analysis of data from Zillow, the property listing company.
In ZIP Codes within three miles of the Palisades fire, rent increased 4.8% from December 2024 to April 2025. In areas around the Eaton fire, which destroyed swaths of Altadena, rent jumped 5.2% in the same period.
In L.A. County, ZIP Codes farther from the fires saw only about a 2% increase.
A landlords representative, Jesus Rojas of the Apartment Owners Assn. of Greater Los Angeles, told the supervisors during public comment at the meeting that the county’s rent-gouging rules have “long outlived the emergency they were intended to address” and are now being “wrongfully used to harm thousands of rental housing providers throughout the county.”
“There is no proof that multifamily rental housing providers are hugely increasing rents for impacted homeowners,” Rojas said.
Indeed, there are strong signs that the property market in the Los Angeles area has at last begun to cool.
L.A. metro-area rent prices recently fell to a four-year low, with the median rent slipping to $2,167 in December.
Meanwhile, condominium sales had their slowest start of the year in decades. Condo sales in Los Angeles have plummeted to a 20-year low, with fewer than 2,000 units sold in January and February — the worst start to the year since 2005.
Newsom defended the price-gouging protections shortly after they went into effect.
“In the days following the Los Angeles firestorms, we worked quickly to protect Los Angeles survivors from any form of exploitation,” he said in February 2025. “The state has the tools in place to not only block price gouging during this emergency, but also to prosecute bad actors.”
The Los Angeles County Department of Consumer and Business Affairs said it received more than 2,000 complaints after the fires, alleging that retailers and landlords were taking advantage of people put in hardship by their losses, and sent out more than 2,000 cease-and-desist letters to businesses and landlords for alleged price gouging, said Morine Merritt, who oversees department investigations into consumer and real estate fraud.
“Close to 90% of the complaints that we received involved allegations of rent increases,” Merritt said in an interview. Now that the fire-related protections have expired, existing laws and “regular market conditions determine price increases for goods and services, including rents,” she said.
Crackdowns on fire-related rent gouging have been rare, said Chelsea Kirk of the activist organization the Rent Brigade, which analyzed L.A. County’s rental market in the year after the fires. It reported 18,360 potential examples of price gouging in listings but said that few lawsuits had been filed by authorities so far.
Last week, Rent Brigade announced what it said was the first private civil lawsuit brought by a family that claimed to be rent-gouged in the aftermath of the wildfires. Plaintiffs Randall and Candy Renick, whose Altadena home was damaged, said they were charged nearly three times the maximum permitted rate for nearly 10 months. They seek restitution of $96,000 plus civil penalties and attorneys’ fees.
The rental market has probably stabilized since the fires, Kirk said, but other families may still be “locked into illegal rents” that they agreed to pay when they were in a rush to find housing after they were displaced.
Business
Read Nick Bilton’s Letter to Scott Pelley
Dear Mr. Pelley:
I meant what I said in my letter last week to the 60 Minutes team: joining 60 Minutes is the honor of my career and I am grateful to be working alongside the people who have contributed to the most important television journalism brand this country has ever produced. While I’m new to 60 Minutes, I’ve devoted my career to investigative journalism and storytelling. I started this job excited to collaborate and to benefit from the wisdom and experience of the 60 Minutes veterans, with you among them. For that reason, one of the first things I did in my new role was call you to talk and invite you to dinner. It is a profound disappointment that you rejected that overture and chose ambush instead. Yesterday, you hijacked my first meeting with staff to disparage me, my qualifications, and my intentions with remarkable incivility and contempt. I welcome a diversity of viewpoints and respectful debate among the team, but this was nothing of the sort. Yesterday’s performative display of hostility enacted in front of the staff instead of in a civil, private conversation-demonstrated that you have no interest in contributing to the future success of the show, or approaching my new tenure with a mind open to collaboration and progress. I am here to deliver first-in-class news programming, not to make headlines about newsroom drama. I am eager to work alongside those who share this goal.
Despite yesterday’s misconduct, I had hoped that in sitting down with you today we could find a path forward together. You made clear that you are not interested in such a path.
Your antipathy to the future of the show has come through loud and clear. And I have heard you. I therefore write on behalf of CBS News, Inc. (“CBS”) to inform you that your employment with CBS is terminated for cause effective immediately. Enclosed is your formal termination letter.
Sincerely,
Nick Bilton
Executive Producer, 60 Minutes
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