A $300 million waterfront retail village would be a welcome amenity for many Hoakalei Resort and Ocean Pointe homeowners in Ewa Beach, but some of them still want something else: $27 million from a jury award two years ago and more in pending claims.
Haseko Development Inc. announced the retail village plan Thursday, saying it represents a big step toward finishing its master-planned Hoakalei and Ocean Pointe project. Yet litigation over a key component tied to the retail development, a recreational lagoon, is still being waged.
Nine homeowners filed a class-action lawsuit in 2013 against Haseko for changing what it promoted as the centerpiece of its community from a boat marina to a lagoon.
Haseko said the marina was inhibiting development of a hotel and retail component in its 20-year-old project because hotel operators weren’t interested in a marina partly because demand from boaters had waned since original plans were created in the 1970s. The company also argued that a lagoon would be a better community benefit, and said it had reserved its rights for master-plan changes while also disclaiming the certainty of a marina.
A jury sided with homeowners who regarded the change as a bait-and-switch, and found Haseko guilty of unfair and deceptive trade practices in September 2015. But a judge nullified the jury’s $27 million award a month later.
Plaintiffs failed to obtain a new trial on this part of the case when Circuit Judge Gary W.B. Chang denied a motion for a new trial in February. An appeal of Chang’s initial decision to nullify the jury’s monetary award is still possible. But other claims in the case await an initial decision.
These claims were reserved for a judge to decide, and final arguments were made before Circuit Judge Karen Nakasone in January.
Terrance Revere, an attorney representing the homeowners, argued at trial that Haseko should pay $149 million in damages, or $49,667 for 3,000 homeowners, in the piece of the case pertaining to claims that Haseko unjustly enriched itself and violated the state’s condominium law.
The previously decided part of the case focused on consumer protection law. Chang ruled that punitive damages can’t be awarded under Hawaii consumer protection law and that the plaintiffs failed to prove that their property values had suffered because of Haseko’s marina-to-lagoon change.
One of the plaintiffs, state Rep. Matt LoPresti, who owns a home at Hoakalei,
expressed disdain for Haseko after the company announced that it plans to break ground next year on the retail project after it finishes construction documents and applies for building permits.
LoPresti accused Haseko, which he called a “habitually lying developer,” of promoting the retail plans to help market remaining homes (about 1,000 of 4,850 are left to be built and sold), and questioned whether the company will follow through to deliver the 215,000 square feet of retail, restaurant and entertainment facilities fronting the lagoon where recreational uses are envisioned.
“I hope that something happens,” he said. “I hope it’s representative of what they say they intend to build. … I just don’t believe them.”
Revere said evidence in the trial supports this disbelief. He cited a Haseko document from 2011, which is when the company announced the lagoon plan, that said there was an issue with the retail site not being suitable because of its distance from the highway, and that tourists and area residents aren’t likely to support a “large scale shopping mall.” The document also said the plan was to sell the retail site after infrastructure installation.
Sharene Saito Tam, a Haseko vice president, said in an email that the document was part of a report to Haseko’s parent company in Japan that identified different options that may be considered, possibly for further study if warranted.
“We have conducted numerous studies for the commercial portion of our project over the years to help determine what would be the best way to proceed,” she said. “The retail plan announced (Thursday) reflects our decision, and we believe its unique focus on smaller local merchants blended with targeted national retailers, plus a significant number of both local and mainland restaurants and cafes and the recreational opportunities afforded by the lagoon will provide residents and visitors with an experience they can’t find anywhere else.”
Tam said construction on the retail project, which is not a large shopping mall, is imminent. “We’ve been working hard to complete Hoakalei, and with only about 1,000 homes left to be brought to market for sale, we’re naturally focused on finishing the remaining parts of our project, which includes the retail, the resort (hotel, condos or timeshare), the remaining residential, and implementing and increasing the accompanying recreational use of the lagoon.”
Tam added that Haseko hopes to receive judgments in its favor on the claims in the
lawsuit that have yet to be decided, and anticipated that an appeals process would likely begin after a ruling.
