Attorney gives update on Lloyd’s of London lawsuits

Lawyers continue to file cases against Lloyd’s of London and its associated agents, brokers and adjusters on behalf of lower Puna residents whose homes were lost during last year’s eruption of Kilauea volcano and whose lava-related insurance claims have been denied.

“We’re nearing 50 filed cases,” said Kona attorney Jeffrey Foster, who is representing the majority of the plaintiffs in those cases. “We have a hearing scheduled for May 15 and then, possibly later on down the road.”

There also is a class action lawsuit filed in U.S. District Court in Honolulu under Aquilina et al vs. Certain Underwriters at Lloyd’s of London.

“The class does include numerous plaintiffs,” Foster said.

The lawsuits allege breach of implied covenant of good faith and fair dealing and conspiracy to sell surplus or excess lines of insurance when other options were available to homeowners. Lloyd’s is a “non-admitted insurer,” which means it’s not licensed to do business in the state but can write coverage through an excess or surplus line broker licensed in Hawaii, state Department of Commerce and Consumer Affairs spokesman William Nhieu told the Tribune-Herald last year.

“Unlike licensed insurance companies, surplus lines insurers do not have guaranty fund protection that helps to pay claims if an insurer becomes insolvent,” he said.

Many of the policies sold to the homeowners under the Lloyd’s banner have a so-called “lava exclusion” — which exclude coverage for homes inundated by lava, unless the homeowners can prove their home was taken by fire prior to the arrival of lava.

Another major insurer in Puna’s lava zones is the Hawaii Property Insurance Association, which the state crafted in the early 1990s after lava inundated Kalapana.

“In terms of what I’ve heard, HPIA has done a really good job and is a good model of how things should’ve been done by the other folks,” Foster said.

Two of the state lawsuits against Lloyd’s and the others have received a court hearing. Hilo Circuit Judge Henry Nakamoto denied motions by attorneys representing Lloyd’s and other defendants to dismiss lawsuits brought by Philip and Lanell Haysmer, a couple in their 70s who lost their Leilani Estates home, and Susie Osborne, founder and director of Kua O Ka La Public Charter School, who also lost her Leilani home. The school was covered by lava July 12, 2018, but isn’t a party to the lawsuit.

More than 700 homes, all in lower Puna, were destroyed during the lower East Rift Zone eruption, which started on May 3, 2018, and ended in early October.

Foster called the Haysmers and Osborne “remarkable people” — the Haysmers for being the first and “the leaders, so to speak” of the plaintiffs seeking redress of their claims and Osborne for her commitment to education and the community.

He said after the Haysmers’ hearing they had proof their home was taken by fire and not by lava, despite the decision by a mainland claims adjuster who never visited or inspected their property.

“Our goal is to get to trial as soon as possible. That’s our objective. Let the jury decide,” Foster said. “People are still struggling financially. People are still not receiving the benefits of the contract that they’ve paid thousands of dollars into, for which Lloyd’s has collected millions of dollars in premiums. And we want to make that right.”

Another lawsuit was filed April 30 against Lloyd’s and others in Hilo Circuit Court by Hilo attorney Stan Roehrig on behalf of Hilary Wilt, a Leilani Estate homeowner whose Makamae Street home was destroyed on May 27, 2018.

In addition, a pair of lawsuits have been filed in state court in connection with the so-called “lava bomb” incident which injured 23 people, one seriously, on a lava tour boat on July 16, 2018.

Hilo Circuit Judge Greg Nakamura granted a request by attorneys of the family of Jessica Tilton to exclude their suit against Lava Ocean Tours from a court-annexed arbitration program, in which the judge would act as arbitrator. Tilton, then a 20-year-old student at Bradley University in Peoria, Ill., suffered broken bones in her legs and pelvis when a boulder of fiery rock tore through the roof of the “Hot Spot.” They claim the boat’s captain, Shane Turpin, willfully endangered passengers by piloting the vessel too close for safety to a lava entry point in Puna.

Turpin filed his own suit in U.S. District Court in Honolulu seeking to limit his own liability in the case. The next hearing is set for May 31 before Judge Leslie Kobayashi.

A second lawsuit was filed in February against Lava Ocean Tours and Turpin by Erin Walsh and William D. Bryan Jr., an Oregon couple, and Californians Dawn Li — on her own behalf and on behalf of her minor son, Christopher Li — Dr. Ka Ming Li, a trauma surgeon and Dawn Li’s husband, and the couple’s adult daughter, Erica Li.

There havn’t been additional filings in that case.

Email John Burnett at jburnett@hawaiitribune-herald.com.