LIHUE — The state Intermediate Court of Appeals on Wednesday vacated a judgment that let 17 insurance companies out of a Ka Loko Dam disaster civil suit and remanded the case to the 5th Circuit. On March 14, 2006, a
LIHUE — The state Intermediate Court of Appeals on Wednesday vacated a judgment that let 17 insurance companies out of a Ka Loko Dam disaster civil suit and remanded the case to the 5th Circuit.
On March 14, 2006, a large portion of the Ka Loko dam collapsed and released an estimated 300 million gallons of water. The rushing wall of water claimed seven lives and caused extensive property damage.
Three civil cases in 5th Circuit, James Pflueger vs. State of Hawaii, and two negligence suits filed by the victims against Pflueger, were stalled when Judge Kathleen Watanabe ruled against a motion filed by defendant C. Brewer and Company, Ltd., a previous title holder to the property that filed a complaint for declaratory relief regarding insurance coverage obligations.
The appellate court ruled that 5th Circuit erred in ruling that insurers had no duty to defend against “continuous, incremental, and indivisible” property damage.
Tom Grande, an attorney for the victims, said the decision involves three lawsuits, and 17 different insurers over three duty levels of property, general liability and excess coverage policies from 1987 through the date of the breach.
“The appeals court did rule that some of the insurance companies had a duty to defend and to indemnify C. Brewer in the underlying lawsuits,” Grande said. “We are taking a careful look at the decision to determine what is the next appropriate step.”
C. Brewer was party to a settlement with the victims and has since gone insolvent. The company is no longer party to negotiations with insurers moving forward and would be through attorneys of the plaintiffs.
Pflueger Properties and Pflueger Management filed a complaint seeking recovery of damages, including indemnification against claims as a result of the breach. Pflueger asserted 23 claims against the insured parties, alleging negligence in failing to meet responsibilities and duties in maintaining the Ka Loko dam.
According to the appeal, Pflueger alleges that C. Brewer and its subsidiaries failed to disclose purchasers of the property makai of the Ka Loko dam, or the content of reports questioning the structural stability of the dam.
Pflueger’s attorney, William McCorriston, could not be reached for comment.
The 5th Circuit had ruled the insurers had no duty to defend claims against pre-breach insurance policies over damages.
All claims for declaratory relief from C. Brewer, Pflueger and the state were dismissed. The appellate decision found the 5th Circuit incorrectly applied a manifestation trigger of coverage.
Of the 17 insurers named in the appeal, the James River company was listed as the active insurance policy at the date of the Ka Loko dam breach.
Pflueger, 87, of Honolulu, pleaded no contest to a felony charge in a separate felony case in July and is scheduled for sentencing on Jan. 23, 2014. His company, Pacific 808 Properties LLC, pleaded no contest to seven manslaughter charges through his attorney, William McCorriston.
The timing of the appellate decision was unrelated to the criminal case, according to a source related to the case. However, a trial date for the civil matter would not be forthcoming until the resolution of the criminal matter.
