Maui Fire Settlement Cases Toward Payment to Victim

Parties to the proposed Maui wildfire settlement have agreed to dismiss the federal class action lawsuit, expediting the process to provide relief to victims of the August 2023 fires.

It remains to be seen whether U.S. District Court Judge Jill Otake will allow the case to end.

Fire victims want federal lawsuit dismissed. So are Hawaiian Electric Industries, Kamehameha Schools and others sued in the Maui fires case. A document presented on Tuesday makes their position clear.

On Wednesday, Otake issued an order stating that all parties in the case had failed to sign the dismissal document as required by civil litigation rules. He gave the parties one day to correct the technical error and re-file.

Meanwhile, the global insurance industry wants to keep the federal lawsuit open, and Otake has not ignored the insurers’ request.

The outcome can have a significant impact on the final resolution and payment to victims.

Why Does the Federal Case Matter?

Major litigation over the fires is playing out in state court, but a protracted federal class-action lawsuit could delay and possibly eliminate the proposed settlement.

After a series of defeats in state court, insurers want to use federal courts to file suit against Found to be caused by HECO and others The fire killed 102 people and destroyed most of Lahaina.

Insurers, including 140 companies worldwide, federal courts provide a more impartial forum more for them than Hawaii state court. In response, attorneys for the settlement parties accused the insurers of “blatant forum shopping” in seeking Otake’s help following their losses before state judges.

By early 2025, Hawaii Supreme Court The parties are expected to decide a question that could help finalize the proposed deal.

But the federal case is a wild card. Federal rules of civil procedure recognize that state courts sometimes provide circuit court advantage to local parties. Therefore the rules vest jurisdiction in federal courts in various cases normally falling within the jurisdiction of state courts. class actions.

Who Benefits from the Home Court Benefit?

In this case, the potential for home advantage for sides in Hawaii is clearly evident.

Giant corporations, including insurance companies as far away as London and Zurich, are battling Maui fire victims and some of Hawaii’s oldest institutions, including HECO, Hawaii Telcom and Kamehameha Schools, trying to get money to victims. Hawaii Gov. Josh Green helped negotiate the proposed deal and criticized the insurers.

Insurers essentially argued that they should have a say in whether the federal lawsuit will be dismissed. And Otake has yet to deny this claim.

From a practical standpoint, an ongoing federal lawsuit could mean more than just a supposedly fairer place for insurers. This could also mean a quagmire of federal court proceedings and appeals that could overturn the proposed settlement.

Why Do Insurers Keep You Waiting?

Insurers have so far paid out more than $2.3 billion to Maui fire victims, and They want to be able to sue the parties responsible for the fire to compensate for their losses. Such so-called subrogation cases are traditional in mass catastrophe cases.

But the settlement parties want Hawaii courts to halt the subrogation lawsuits.

In such a case, instead of suing those responsible for starting and fueling the fires, insurance companies will have to go after fire victims, in effect suing their own customers, to recover insurance losses.

What Happened to the Proposed $4.04 Billion ‘Global Compromise’?

Reports of a global solution were greatly exaggerated. It’s true that Hawaiian Electric Industries and its subsidiaries agreed to pay $1.99 billion and Kamehameha Schools agreed to pay $872.5 million. The state of Hawaii is expected to contribute approximately $800 million. The rest of the $4.04 billion will be covered by parties such as Spectrum and Hawaiian Telecom.

Victims and their lawyers agree that this is enough.

However, this plan is temporary. It specifically requires “each Subrogation Claimant” to waive its claims before the proposal becomes a final settlement. Insurers will not give up on these claims either.

Still, the proposed solution gives settlement parties another option: They could obtain an order from a court requiring insurers to recover losses from fire victims rather than the parties who started the fire.

That’s what’s happening right now. HECO, Kamehameha Schools, the state of Hawaii, victims and other residents have requested such an order from Maui District Court Judge Peter Cahill. Insurers argue this scheme would violate Hawaii law. These are the main questions Cahill poses to the Hawaii Supreme Court.

When Will Victims Be Paid – How Much is the Settlement Amount?

The Hawaii Supreme Court is expected to issue a decision in early 2025.

If Otake dismisses the federal lawsuit and the Supreme Court rules on a settlement of the victims and defendants, this will allow the proposed settlement to become final and the process of allocating the settlement proceeds can begin.

There are still questions to be answered. For example, it is not clear how to address victims who choose to withdraw from the agreement. It is also unknown how much each victim will receive and when. Another issue is legal fees to be paid to victims’ lawyers, which could eat up $1 billion of the $4.04 billion settlement.

But if the Supreme Court rules in favor of the defendants, the current proposed settlement will likely fail and victims will be thrust back into limbo unless insurers agree to settle.

C.ivil Beat’s coverage of Maui County is supported in part by a grant from the Nuestro Futuro Foundation.