Maui wildfire plaintiffs reach $4 billion settlement as anniversary nears

Nearly a year after a ferocious wildfire on Maui killed 102 people and leveled the historic town of Lahaina, Hawaii’s largest utility has agreed to pay the largest share of a legal settlement totaling just more than $4 billion and compensating more than 10,000 homeowners, businesses and other plaintiffs.

The proposed agreement was filed late Friday in a Maui-based state court, six days before the anniversary of the disaster. Fire victims and insurers have spent months in court-ordered mediation with the state, Maui County, large private landowners and utilities within the fire zone to resolve more than 600 lawsuits brought in state and federal courts by survivors of the catastrophe.

The settlement, which remains subject to court approval, will cover less than half of the overall cost of the disaster — estimated at nearly $12 billion — which cut a path of destruction through one of the world’s most spectacularly beautiful destinations. More than 3,000 homes and other structures were damaged or destroyed, and thousands of residents were killed, injured or displaced.

Gov. Josh Green had pushed for a single global agreement among all the parties to litigation to swiftly compensate fire victims, rather than extending negotiations for years without payment. State officials had also hoped to ward off a potentially devastating financial hit to Maui County and the bankruptcy of Hawaiian Electric, which provides electricity for more than 9 in 10 of the state’s residents on Oahu, Maui, Molokai, Lanai and Hawaii Island.

“Settling a matter like this within a year is unprecedented,” Green said Friday. “And it will be good that our people don’t have to wait to rebuild their lives as long as others have in many places that have suffered similar tragedies.”

Under the proposed terms, which do not include any admission of liability, the utility is expected to pay a little less than half of the $4.037 billion settlement, $1.99 billion, a considerable amount but less than the potential $4.9 billion liability that the investment research firm Capstone estimated last year would most likely bankrupt the company.

“Achieving this resolution will allow all parties to move forward without the added challenges and divisiveness of the litigation process,” said Shelee Kimura, president and CEO of Hawaiian Electric. “It will allow all of us to work together more cohesively and effectively to support the people of Lahaina and Maui to create the future they want to see emerge from this tragedy.”

Although the cause of the horrific Aug. 8 blaze officially remains under investigation, attention focused almost immediately after the fire on a spot where winds had roared down the slopes of West Maui and toppled power lines operated by Hawaiian Electric.

Dry grass was ignited, causing a small blaze that firefighters believed they had extinguished. But soon after fire crews left the area, flames were again reported. Stoked by high winds and fed by drought-parched vegetation, much of it nonnative, the wildfire blew out of control before firefighters, who had moved on to battle other fires elsewhere on the island, realized what was happening.

Investigations and analyses in the year since have not explicitly confirmed ongoing suspicions that the initial fire had not been completely extinguished. An official report on the cause and origin of the fire by the federal Bureau of Alcohol, Tobacco, Firearms and Explosives has not yet been released.

Preliminary examinations found a range of shortcomings in the response to the fire, including lapses in communication and decision making that left thousands of people exposed to lethal danger.

Lawsuits have accused Hawaiian Electric of negligence in maintaining its equipment and failing to shut off power preemptively during a period of known fire danger, as utilities do in California. Imperiled by looming litigation, the company’s market value and credit ratings have plunged. The utility this past spring charged that Maui County was responsible for the disaster, “by failing to act within its authority to curtail invasive vegetation, by failing to properly plan for an emergency, by fumbling the emergency response” and by committing other acts of negligence. Plaintiffs, too, have accused the county of failing to sound emergency sirens and of underestimating the peril of the fire.

Plaintiffs have singled out telecom companies that shared the power poles and equipment with Hawaiian Electric, as well as large landowners, including the state, Maui County and private entities such as Kamehameha Schools, a major benefactor of Native Hawaiian children. Those property owners, some of the state’s largest, have been accused of neglecting large stretches of dry vegetation despite warnings that their property had become highly flammable.

Participants in the proposed settlement had expected it to be completed weeks earlier, but talks hit a last-minute snag over how much should go to insurers. One group of fire victims sued several insurance carriers, including Allstate and State Farm, on July 19 in Circuit Court on Maui, accusing them of seeking reimbursement before the fire victims had been fully compensated, which is illegal under Hawaiian law.

“There are some parties on the mainland that are simply asking for too much of the settlement, resources that I am insisting must go to those families who were devastated by the fire,” Green said in a statement July 19 as the participants extended the deadline to sign the agreement. The governor threatened to “personally call them out by name” if they were to “hurt Hawaii’s people or block this settlement.”

The plaintiffs and defendants subsequently agreed to settle without including the insurers, who will have 90 days to reach an agreement with the plaintiffs on the division of proceeds before a judge will intervene.

Jesse Creed, a Los Angeles-based lawyer for the plaintiffs, said the insurance companies “shouldn’t take a penny as long as the victims are not fully compensated,” but otherwise called the settlement “fair justice.”

“I hope the people can use the money to rebuild their lives, their homes and their communities,” he said.

Separately from the global settlement, fire victims who suffered significant injuries and lost loved ones have been offered accelerated compensation. The state, the county, Hawaiian Electric, private landowners and other donors have created a $175 million One Ohana Fund that has offered payments of up to $1.5 million in exchange for a pledge not to litigate.

Although the Federal Emergency Management Agency has borne much of the overall cost of the disaster, the state’s share has been significant.

Hawaii lawmakers have estimated that the state will ultimately pay a total of nearly $1.5 billion for expenses arising from the disaster, including its share of the global settlement and hundreds of millions of dollars for emergency housing and rental assistance for those who were displaced.

Green said that all but a handful of people had been moved from hotels and relocated to long-term shelter. More than 1,000 new units of transitional housing are being built for fire victims, he said, and a new law has given counties the authority to phase out vacation rentals in order to preserve more units for island residents.

The state has also pumped tens of millions of dollars into additional fire prevention, created a new position of state fire marshal, upgraded equipment and fire breaks, and installed scores of new fire sensors and other equipment to improve detection of high-risk fire conditions.

Hawaiian Electric announced in July that it may now shut off electricity preemptively when conditions warrant it, and began installing weather stations and video cameras equipped with artificial intelligence to detect wildfires. Green predicted that the company “will be able to invest more in safety and modernization” after the settlement is completed.

“But anyone who’s going to be our energy partner will have to live up to new standards,” Green said. “And that’s not cheap.”

This article originally appeared in The New York Times.

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