Attorneys representing Maui wildfire victims want the Hawaii Supreme Court to weigh in on a recent lower state court ruling in an effort to finalize a proposed $4 billion settlement.
The attorneys filed a motion last week to have 2nd Circuit Chief Judge Peter Cahill ask Hawaii’s high court to opine on the lawfulness of his recent ruling, which prevents insurance companies from pursuing damages directly from wildfire litigation defendants, including Hawaiian Electric, the state, Kamehameha Schools and Maui County.
More than 160 insurance companies, through litigation in 1st Circuit Court on Oahu, have sought to obtain from the defendants reimbursement of property loss claims paid to fire victims because the insurance companies allege that the defendants were responsible for the fire.
Insurers, which have already paid at least $2.2 billion to policyholders for fire losses and expect to pay another $1 billion, are not a party to the tentative $4 billion “global” settlement pending in 2nd Circuit Court on Maui.
Cahill ruled Aug. 13 that he had jurisdiction to bar such direct reimbursement claims as part of facilitating the settlement proposed by independent mediators and agreed to by defendants and counsel for fire victims.
Instead, insurers would be left to seek reimbursements by asserting claims against their policyholders, possibly as part of the settlement distribution process or afterward.
Attorneys for the insurers disagree with Cahill’s ruling and could appeal the judge’s decision. An appeal, however, could derail the settlement.
Under terms of the tentative settlement, Cahill’s ruling on the insurance claims has to be final and unappealable within nine months for the settlement to become effective.
“Plaintiffs and Defendants entered into the Global Settlement all firmly believing that (Cahill’s ruling) is the law of the State of Hawaii,” the recent motion states. “But the Parties require finality to make the deal work.”
Finality under terms of the settlement is defined as one of three things. Either all parties with a right to appeal waive their right to do so, or the time to appeal expires with no appeal filed, or the order is affirmed by an appellate court with no further possibility of appeal.
The attorneys for fire victims are seeking the latter, an affirmation by the Hawaii Supreme Court, in part because a deadline for insurance companies to appeal is unclear. Hawaii’s high court is expected to have the final say on the matter because the disagreement between insurance companies and attorneys for the plaintiffs involves state law.
Jesse Creed, the lead attorney filing the recent motion, said it would be a huge waste of effort and expense to administer claims for victims only to have the insurance companies appeal a year or two or more from now.
“That would be a colossal waste of time and resources,” he said.
According to the motion, the Hawaii Supreme Court’s view on the critical question of whether Cahill’s ruling is correct will determine whether all the wildfire litigation — more than 650 cases filed so far as well as future claims that could ultimately involve around 10,000 claimants — is resolved under the pending $4 billion settlement or resumes because the settlement is terminated.
Vincent Raboteau, liaison counsel for the insurance companies referred to as subrogation plaintiffs, reserved comment on the action seeking to involve the Hawaii Supreme Court in Cahill’s recent settlement ruling.
“The subrogation plaintiffs are reviewing the motion and defer from making any comment about it at this time,” he said in a statement.
Attorneys for fire victims filed their “interlocutory appeal” Wednesday, and it is scheduled for a hearing Friday before Cahill.
The settlement was reached Aug. 2, and involves three defendants paying most of the $4.037 billion sum. Hawaiian Electric would pay $1.99 billion, Kamehameha Schools would pay $872.5 million and the state would pay around $750 million. Amounts by Maui County and three other defendants — West Maui Land Co., Spectrum Oceanic LLC and Hawaiian Telcom — have not been disclosed, but add up to about $400 million.
Generally, fire victims allege that the Aug. 8, 2023, fire that destroyed most of Lahaina town was started by Hawaiian Electric power lines that blew down in gale-force winds and that the fast-moving inferno was fueled by dry vegetation on land owned by some of the other defendants.
The Lahaina fire killed 102 people and destroyed around 3,500 homes, numerous businesses and other structures.
If the settlement is finalized, defendants are expected to pay plaintiffs over four years starting in mid-2025.
