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Does My Sole Proprietorship Have A Claim Against Hawaiian Electric For Damage Caused By The Maui Fie

August 23, 2023 Posted In

The Maui Fires, caused by Maui Electric’s failure to turn off the power during a extreme high-wind event, destroyed many small businesses, including sole proprietorships in and around Lahaina.  A sole proprietorship is unique in that business operations may be conducted out of the owner’s home, an office or workspace, or on-site at a client’s property.

Owners and operators of sole proprietorships do have claims for damages caused by the Maui Fire. Many common claims include:

  • Value of Equipment, Tools, and Supplies. A business owner that suffered damage to equipment or supplies may claim the fair market value or the cost to replace those items. For example, the owner of a custom woodworking business can claim the value of tools, equipment, and any raw materials that were either destroyed or rendered unusable in the fire.
  • Recovery and Restart Expenses. A small business owner also has a claim for any costs incurred in the aftermath of the fire, such as cleaning and recovery costs. A business owner can also recover costs associated with restarting, relocating, or otherwise reopening the business.
  • Lost Income. If a business is forced to close due to the Maui Fire, the owner loses income. Furthermore, a business that is unable to operate for an extended period of time or forced to relocate may not generate the same income. A business owner has a claim for lost or diminished income related to damage caused by the Maui Fire.
  • Damage to Reputation and Goodwill. A business might also have a claim for loss of goodwill. Business goodwill is the additional value that a business has beyond the sum of its tangible assets. A business goodwill valuation accounts for intangible factors including a business’s reputation, the loyalty of their customers, and business practices. To make a claim for business goodwill, it may be necessary to consult with a business valuation expert.

What can a business owner do now to prepare to make a claim against HECO?

  • Recover any records of inventory, materials, equipment, and supplies. If records were destroyed in the fire, begin to recreate these records to the best of your ability.
  • Collect financial documents that support claims of lost income. Contact your tax preparer to request copies of tax returns including Schedule C attachments that were damaged in the fire. Form 4606-T or Form 4606-T-EZ can be used to obtain copies of tax return transcripts from the IRS. If you kept additional financial records, make preparations to collect those documents as well.
  • Document ongoing expenses. As you begin the recovery and rebuild process, collect documentation of additional costs as they are incurred.

Consult with an experienced Maui Fire attorney like those at Mālama Law Group to help you prepare your legal claim. Attorneys at Mālama Law Group are available to discuss your situation free of charge.