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Will the Hawaii Fire Class-Action Settlement Be Allowed To Stand?

By Kit Yona, M.A. | Reviewed by Joseph Fawbush, Esq. | Last updated on

Considering the magnitude of the destruction, the number of plaintiffs involved, and the amount of money earmarked for relief, the speed of the settlement for the 2023 wildfires that incinerated Lahaina is remarkable. After negotiating for about a year, the defendants agreed to pay over $4 billion in damages to the victims and their families.

Alas, a quick resolution is no longer guaranteed. Almost half a year later, the matter finds itself before a judge to determine who gets how much. To further complicate the issue, another case pending in Hawaii's Supreme Court may sink the entire deal.

Rising From the Ashes

The fires that devastated the island of Maui on August 8, 2023, were considered the worst natural disaster in Hawaii's history and one of the worst American wildfires ever. At least 102 people died and over two thousand homes and businesses went up in flames.

Over 600 lawsuits filed in the aftermath placed responsibility on the state of Hawaii, the power utility Hawaiian Electric, and five other defendants that included large landowners. They were bundled into two groups of plaintiffs.

One was a class-action suit that included tourists looking for reimbursement for canceled vacations. The other was made up of individual suits by homeowners, businesses, and family members who lost loved ones in the blaze.

The alacrity with which a settlement amount was reached surprised some. Hawaii Gov. Josh Green lauded the deal and hoped it would help the victims heal and recover.

Problems arose when it came time to allocate the funds, such as how to determine priority. Does getting a business that provides income for numerous employees up and running carry more weight than rebuilding a family's home? Do those who lost loved ones deserve quicker relief? With attorneys unable to reach a consensus, they turned to the courts for a ruling.

Circuit Court Judge Peter Cahill will hear testimony both live and prerecorded from victims of the wildfires as he tries to find an equitable solution for dispersing the settlement. However, another ruling may render the entire procedure moot.

Subrogation Nation

A key condition of the $4 billion settlement is that insurers who have made payments can't attempt to recoup by legal actions against the victims. Known as subrogation, this is a fairly common practice used by insurance companies. It can also seek remedy from the person or entity responsible for their client's loss.

Insurers have paid out over $2 billion in claims to policyholders who suffered losses in the fire. The Hawaii Supreme Court will hear arguments on Feb. 6, 2025, to determine if the insurers have the right to sue for repayment directly from those receiving a settlement. If not, their portion will come from the $4 billion settlement.

As Hawaii permits equitable subrogation, the Supreme Court must determine if it applies here. If the Court allows insurers to sue their policyholders, the entire settlement deal could collapse. For those still awaiting funds to help rebuild their lives, further delays could carry the impact of another catastrophe.

Restoring Paradise

For those who lost family to the Maui fires, no amount of money can bring their loved ones back. Still, the $4 billion settlement allows victims to rebuild their homes and businesses. With questions swirling about the financial stability of Hawaii Electric, it's a safe bet that victims would like the settlement issue solved sooner rather than later.

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