Hawaii Supreme Court Approves Next Steps in $4 Billion Settlement for Maui Fire Victims

The hall of historic Waiola Church in Lahaina and nearby Lahaina Hongwanji Mission are engulfed in flames along Wainee Street in Lahaina, Hawaii, on Aug. 8, 2023. Matthew Thayer/The Maui News via AP

The Hawaii Supreme Court has ruled in favor of finalizing a $4 billion settlement meant to resolve numerous lawsuits related to the devastating 2023 Lahaina wildfires. The unanimous decision, issued on Monday, dismissed objections from insurers seeking reimbursement for payouts they made to affected homeowners and businesses in the historic port town.

Insurance companies had attempted to block the settlement to recoup property damage payouts they had made from those deemed responsible for the disaster, including the local governments and the electric power company whose equipment may have caused the fires. The ruling prevents insurers from independently suing third parties found liable for the disaster.

The settlement initially agreed upon in August 2024 involves claims against multiple defendants, including Hawaiian Electric Company, the state of Hawaii, Maui County, telecommunications providers, and private landowners accused of failing to prevent the rapid spread of the blaze. The fires destroyed large portions of Lahaina, killing at least 100 people and displacing thousands, with an estimated $5.5 billion in damages.

More than 100 insurers attempted to stall the settlement, arguing that their right to recoup $2.3 billion in payouts should not be negotiated away by other parties. The court rejected that argument, stating that insurers’ rights were preserved under existing state laws and did not justify blocking the settlement.

The justices also ruled that Hawaii’s “made whole” doctrine, which typically prevents insurers from seeking reimbursement until policyholders are fully compensated, does not apply in this case. They noted that the complex nature of the Maui fire lawsuits necessitated a streamlined resolution process to avoid prolonged litigation.

The ruling follows a last-minute deal reached in January that spared wildfire victims from testifying in court. The agreement, reached just before trial proceedings were set to begin, avoided the emotional burden of survivors reliving their trauma. Plaintiffs included individuals who lost loved ones and property, as well as a class-action group representing other affected parties.

Legal representatives for Hawaiian Electric have previously warned that allowing insurers to file independent claims could have pushed the utility into bankruptcy, further delaying payments to fire victims. Hawaiian Electric has faced increasing scrutiny for a possible role in the fires, with allegations that downed power lines and delayed de-energization efforts may have contributed to the rapid spread of flames.

Advocates for the plaintiffs argued that the settlement was the most practical way to ensure Lahaina’s recovery. One attorney representing the plaintiffs stated during last week’s hearings that Maui needs every dollar of the settlement to rebuild.

The case will now go back to a local court for finalization, clearing the way for victims and their families to be paid.

Payments are expected to begin later this year. Meanwhile, the state Supreme Court is still set to rule on whether insurers can seek additional reimbursement outside the settlement, a decision expected to be the final step before the agreement is fully implemented.

Neither Hawaiian Electric nor representatives for the insurers immediately responded to requests for comment on the ruling.

The Associated Press contributed to this article.