HONOLULU (HawaiiNewsNow) – The Hawaii Supreme Court heard a $4 billion argument Thursday over the Maui wildfire lawsuits.
The court faces a decision that could kill the so-called “global” settlement between victims, Hawaii Electric, the state, Kamehameha Schools and other entities.
The unusual arguments pitted supporters of the settlement, including those responsible for the damage, against the insurance industry.
The key issue was whether insurance companies should have been included in the settlement for the $3 billion they say they are paying out in property damage claims.
Insurance industry attorney Adam Romney pointed out that the industry has already paid out more than the $1.9 billion Hawaiian Electric has committed to the settlement.
“We will have to pay more than the people who actually caused the damage and that is fundamentally inequitable,” he said. “Ultimately we didn’t start the fire. We’re the people who start paying moneys immediately when the claims start coming in.”
Before the settlement, the insurers filed their own lawsuit against many of the same defendants.
So plaintiffs’ attorney Jesse Creed accused the insurers of a money grab.
“The insurers want a bigger piece of the pie and they want the leverage they can exploit out of a direct claim,” he said.
The plaintiffs as well as attorneys for the defendants are also hoping the courts will block the insurers from filing their own lawsuits which would upend the settlement.
An attorney for the defendants, Ginger Anders, says $4 billion was all they could afford.
“The mediator did find that this was the most that the defendants could reasonably be expected to pay,” she said.
Also participating Thursday was attorney Terrance Revere, who expects to represent another batch of defendants in a class action case, alongside victims who have hired attorneys and filed individual lawsuits.
“We don’t want our county to go bankrupt. We don’t want to take huge amounts from the biggest charity in the state,” he said. “We are trying to do something that is reasonable.”
Victims aren’t supposed to double dip, or get money from both the settlement and their insurance company for the same damages. That’s why insurers say they are entitled to money from the settlement.
But Chief Justice Mark Recktenwald and other justices asked whether the law provides a process to reimburse insurers after the victims are paid.
“You file a claim for a lien or assert a claim for a lien, and then the court is supposed to decide whether to recognize that claim or not,” Recktenwald said.
Romney responded that the insurers did not want to be in the position of filing claims against their own clients and that a global settlement, including insurers, is the right answer.
“We welcome settlement of this case,” Romney said. “We would like there to be a settlement that helps everybody, that resolves all claims.”
The chief justice promised a ruling as soon as possible. Both sides expressed confidence they had carried the day.
“I’m very confident,” said plaintiffs’ attorney Cynthia Wong. “I’m very confident in our Hawaii Supreme Court.”
Creed agreed, “I’m confident not only based on the argument, but on the law, we are right on the law.”
Mark Grotefeld spoke for the insurers outside the courts chambers.
“We feel very good about our chances here,” he said.
Even if the Supreme Court does rule quickly in favor of the plaintiffs, that will not immediately release money to the victims.
Attorneys say there will be a process in Maui Circuit Court that will determine if everyone is getting the right amount of money, including the insurance companies.
Meanwhile, the attorneys said there may still be time for a new agreement.
Both sides say they are still willing to work out a new deal.
The industry says it was given a cold shoulder by negotiators for victims and defendants and the state, during mediation that led to the $4 billion deal.
“Did we meaningfully participate?” Romney told the court. “We were present. We were present, but we really didn’t have a say in what happened.”
He said insurers were offered some money in the mediation, but not enough.
“They walked in and said here is the number. We are not going to tell you how much of the number you get,” Romney said. “That was not an acceptable proposal for large client, large insurance companies that have to say, ‘What does that mean for all future cases for all future wildfire settlements?’”
The dispute has been delayed the settlement by five months as insurers pursued their own lawsuits against the electric company and other defendants, including the county.
The justices’ questions didn’t indicate either side was a clear winner, so to avoid losing and a potential precedent that could harm either side for the future, both sides may try to rewrite the settlement.
“We want to sit at the table with the defendants, with the lawyers for the individuals and come to a proper resolution that would be well within the defendants ability to pay,” Grotefeld said. “We aren’t looking to bankrupt everybody.”
Plaitiffs attorneys say they are also willing to talk.
“We haven’t stopped the process of mediation. We’re still always trying to discuss settlement,” Wong said, “But if we can’t settle, the Hawaii Supreme Court will allow us to move forward with finality.”
With uncertainty about how long the court may take to rule, the negotiations could accelerate to try and finish before a ruling. If the court rules for the insurers, all negotiations would begin from nearly the beginning.
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