Ka Loko insurance case could dwarf settlement

LIHU‘E — A case of a business versus its insurance company could result in a pay-out for victims of the Ka Loko Reservoir disaster nearly 50 percent larger than the $25.4 million already awarded, an attorney said.

There is also the chance for a “potential recovery of zero dollars,” said Bert Sakuda, one of the plaintiffs’ attorneys in the recently settled civil cases involving, among many other defendants, former reservoir owner C. Brewer and Co.

The earthen reservoir failed March 14, 2006 during a three-week period of rain, releasing millions of gallons of water that claimed seven lives and caused millions of dollars in property damage en route to the ocean.

Among those named as defendants in the wrongful-death and property-damage civil suits are the State of Hawai‘i, County of Kaua‘i, James Pflueger personally and various Pflueger entities, C. Brewer and many others.

The insurance case, C. Brewer v. Industrial Indemnity Co. et al, originated before 5th Circuit Judge Kathleen Watanabe, who ruled that the insurance company doesn’t have to pay C. Brewer’s $38 million claim because C. Brewer has dissolved as a corporation, court records show.

Watanabe’s decision has been appealed to the state Intermediate Circuit Court of Appeals. C. Brewer has assigned the appeal to plaintiffs’ attorneys, Sakuda said.

The former Big Five company (one of the five largest private corporations in Hawai‘i at one time, along with Amfac, Alexander & Baldwin, Theo Davies and Castle & Cooke) at one time owned all or part of Ka Loko Reservoir, and has agreed to pay an amount into the Honolulu law firm of Cronin Fried Sekiya Kekina & Fairbanks Client Trust Account for eventual disbursal to the plaintiffs.

The amount C. Brewer has to pay is confidential under terms of the settlement agreement. Efforts were unsuccessful Friday to reach C. Brewer attorneys handling the case.

But with the insurance case pending before the state Intermediate Court of Appeals, the may not have commented anyway. Sakuda also did not want to speak about the appeal, but did talk briefly about the court’s recent history of hearing many cases in some years and none in other years.

“The court is hearing arguments on some appeals” this year, he said.

“Everything is done,” he said of the necessary appellate paperwork. C. Brewer has assigned the appeal to the plaintiffs’ attorneys, said Sakuda.

“It’s not a yes-or-no situation,” he said of the complex case that has been ongoing since 2006, like many of the other Ka Loko actions.

The amount C. Brewer has agreed to pay in the global settlement does not include any amounts which might be won versus its insurance companies, meaning those who lost property and loved ones near Kilauea on March 14, 2006, when the dam failed, could be looking at a substantial second pay-out.

There are 77 plaintiffs and around 20 defendants in the civil settlement. 

Sakuda, with Cronin Fried Sekiya Kekina & Fairbanks, said all defendants are instructed to pay into the client trust account, and many have done so, including Pflueger. Pflueger’s amount is confidential per the settlement agreement.

An amount agreed to by another defendant, the Mary Lucas Estate as an adjacent landowner or former owner of a portion of the reservoir, is also confidential.

The amount is expected to be approved by an O‘ahu probate court next month, and is included in the overall $25.4 million settlement amount agreed to late last year, said Sakuda.

The state’s share of the settlement amount is $1.5 million, and the county’s share is $7.5 million, though the county insurance policy will pick up all but $250,000 of the bill.

Pflueger is scheduled for a jury trial this year on criminal charges of seven counts of manslaughter for the seven lives lost in the tragedy.


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