RCA Trade Center, Inc., and MP Unit 21, LLC, are not letting go of their lawsuit against a couple that complained last year about large warehouses erected near its home within the Marconi Point Condominiums project. The companies hope to convince the Intermediate Court of Appeals that the couple’s accusations of wrongdoing with regard to the warehouses are false, personal grievances, and not matters of public concern.
Therefore, they argue, their lawsuit seeking damages, a declaration that the warehouses can stay, and to squash any further meddling from the couple should not have been dismissed under Hawaiʻi’s Public Expression Protection Act by 1st Circuit Judge Jon Tonaki earlier this year.
In the opening brief of their appeal, however, the companies admit that even their lender believes that something is amiss with the warehouse development on their property known as the RCA Trade Center.
They note that the lender, North Avenue Capital, received a copy of an August 29, 2023, complaint letter the couple’s attorney sent to the companies’ attorneys and copied to various government officials and agencies, including the USDA. The bank’s receipt of that letter, via the USDA, “commenced a chain of events that ultimately led to RCA’s lender declaring RCA to be in default.”
The companies state that their lawsuit against condo unit owners Wayne and Tara Hu was filed, in part, to allay the concerns of North Avenue Capital, which had placed a hold in early October 2023, on draws from the loan.
Filing the lawsuit later that month, however, didn’t stop the bank from declaring on December 14, 2023, that RCA was in default “despite RCA’s efforts to satisfy the lender that RCA’s project is in compliance with all applicable laws,” the brief states.
“RCA’s position is that its lender should not have withheld draws and should not have declared RCA to be in default because RCA was in full compliance with all zoning and building restrictions related to the warehouses,” the brief states.
The companies do not explain what applicable laws the bank believes the companies have not complied with. They do acknowledge that there is a related federal case that they, along with other related companies, have filed against the City & County of Honolulu over its requirement that further development within the condominium project undergo a Special Management Area review. During the course of that case, the city has argued that an SMA review preceding construction of the warehouse interiors might be warranted, given that restrooms are anticipated.
Even so, the companies lay the blame for the bank’s decisions and subsequent delays at the Hus’ feet.
“RCA is being damaged by Hus’ conduct because it has caused delays to RCA’s construction project. RCA is incurring additional carrying costs and loan interest accrual due to RCA’s inability to draw from the loan, and because of the now year-long delay in completion of the warehouse buildings for occupancy,” the brief states.
(Although not listed as related litigation, in a federal case against a supplier of warehouse building components, the companies are also blaming the provision of what they say were shoddy materials for construction delays.)
Free Speech Rights
In his April 24 decision on a motion to dismiss filed by the Hus in March, Judge Tonaki stated that the Hus “were exercising their constitutional First Amendment rights and rights of any citizen. … Under 634G [the Hawaiʻi Public Expression Protection Act], the complaint should be dismissed.” He also awarded the Hus attorneys fees and costs.
The 52-page grievance letter that the Hus’ attorney, Peter Lenhart, sent to the companies’ counsel covered a wide range of complaints the couple had with the development and management of the agricultural condominium project.
“Since the purchase of their Unit 11, you have, in our view: 1) breached the purchase contract entered into with the Hus; 2) violated Hawaiʻi condominium law; 3) violated state and county land use, zoning laws, and building permit laws and ordinance; 4) violated Honolulu county building permit ordinances; 5) violated federal and state environmental laws; and 6) violated the project’s condominium governing documents,” Lenhart wrote, going on to list more than two dozen examples.
Those examples included, “allowing and condoning the construction of illegal septic/wastewater tanks,” “allowing construction of improvements at the project without first meeting State and Federal Historic Architectural and Archeological guidelines given the site’s designation as a ‘National Historic Landmark,’” and “allowing people vehicular access to the beach areas for ‘4-wheeling’ in sensitive environmental areas having nesting native birds and turtles.”
Given the scope of their complaints, they sent copies of the letter to the state Department of Land and Natural Resources’ Division of Forestry and Wildlife and State Historic Preservation Division, the Honolulu Department of Planning and Permitting, the state Department of Commerce and Consumer Affairs, Honolulu City Council member Matt Weyer, the U.S. Fish and Wildlife Service and the USDA.
That last agency had backed the $7.8 million loan from North Avenue Capital for the construction of the agricultural warehouses within the agricultural condominium project. And upon receiving Lenhart’s letter, the bank inquired about some of the claims regarding the warehouses. Among other things, the Hus claimed that the warehouses were being improperly advertised for industrial — not agricultural — use, and that they had been used for non-agricultural purposes, such as weddings, craft fairs and social gatherings.
While the plaintiffs’ attorneys argued that the Hus’ letter focused mainly on private concerns with the development of the Marconi Point Condominiums, and, therefore, was not covered under the HPEPA, Tonaki countered, “Doesn’t any citizen have a right … to bring attention” to the government matters of concern?
“The fact that the agencies were cc’d forms the basis of the case,” he said.
In appealing his decision, the companies argue that Judge Tonaki should not have found that the Hus had a good reason to miss the 60-day deadline by which a motion to dismiss under the HPEPA must be filed.
The Hus had filed it more than a month and a half late, but Lenhart argued that the couple believed it had more time because the companies’ attorneys had given the impression that there was no rush to proceed with the case until the Hus secured insurance coverage for their legal fees.
Judge Tonaki was convinced that the Hu’s had been “lulled” into believing they had extra time.
In their brief appealing Tonaki’s decisions, the plaintiffs’ attorneys write, “RCA does not claim that Hu should be prevented from petitioning the government. Rather, RCA’s claim is that, despite Hu’s objection, RCA was permitted to construct the agricultural warehouses on its Property. Merely copying government agencies on the demand letter does not transform the parties’ dispute into protected speech and insulate Hu from the underlying dispute.”
They continue, “Even assuming the Circuit Court correctly determined that the motion was timely filed (or that there was good cause to excuse Hu’s untimely filing), the Circuit Court was still required to analyze: (1) whether the complaint covers matters of public concern, (2) whether RCA has established a viable cause of action from a prima-facie perspective, and (3) whether RCA established a legally viable cause of action. …
“The Circuit Court erred with respect to each phase of this analysis, either by not undertaking any analysis at all, or by misapplying the analysis.”
“To shoehorn this case into the scope of Chapter 634G, Hu attempted to recharacterize the letter as raising matters of public concern. Hu attached several exhibits to the Motion to show that Environment Hawaiʻi, Civil Beat, and the Star Advertiser have reported on some issues also in the letter. …
“Hu points to these irrelevant news articles that, save for one article about the
warehouses, do not overlap with the issues here. The fact that there may be issues of public concern related to the activities of other owners within the Project, or related to matters that are not raised in Hu’s letter, does not automatically transform all disputes related to the project into matters of public concern. The letter focuses exclusively on Hu’s own personal grievances and contractual disputes and seeks relief in favor of Hu, individually. The matters are exclusively of private interest. Hu failed to show that HPEPA applies, and to the extent the Circuit Court concluded that the Complaint is a cause of action related to issues of public concern, the Circuit Court was erroneous in its ruling.”
With regard to whether the Hus had good cause for the late filing of their motion to dismiss under the HPEPA, the plaintiffs argue that Tonaki’s order “disregards both parties’ discussion of insurance coverage, and instead cites RCA’s verbal
extension of Hu’s answer deadline as ‘good cause’ for allowing the untimely motion. …
“Section 634G-3(a) imposes a strict sixty-day statutory deadline to file a motion to dismiss, and there is no provision whereby the statutory deadline can be ‘extended’ by agreement of the parties. Under Haw. Rev. Stat. 634G-3(a), the sixty-day deadline to file a motion to dismiss is only extended by the filing of an amended complaint, or upon motion granted by the court.”
They add, “Hu’s reliance on an illusory hope of insurance coverage is not good cause. Thus, the Circuit Court erred in finding that the pending insurance coverage determination constituted good cause to excuse untimely filing of the motion.”
They ask that the ICA remand the case with instructions for the Circuit Court to deny the Hus’ motion to dismiss.
(For more background on this, see our May 2024 cover story, “Judge Dismisses Case Brought to Silence Complaints About Warehouses at Marconi”.)
Documents Dispute
On November 14, companies involved in the development of agricultural lands at Marconi Point on Oʻahu’s North Shore renewed their efforts to compel the Honolulu Department of Planning and Permitting to provide documents that they argue may prove their claims that corruption — not a genuine desire to protect the Special Management Area — was at the root of their permitting delays.
Attorneys representing the companies in a federal lawsuit against the DPP filed a motion to compel on September 25. The city filed its opposition on October 10.
On October 18, counsel for both sides signed a stipulation to extend to November 14 the deadline for the companies to respond. The city was expected to produce a significant amount of the requested documents by October 31, which it did.
According to a November 14 memorandum in support of the September motion to compel, attorneys for Makai Ranch, LLC; Marconi Farms, LLC; RCA Trade Center, Inc.; and MP Unit 21, LLC argued that what the city had provided was incomplete.
“Plaintiffs’ theory of the case is that Defendants refused to approve Plaintiffs’ applications for building permits, and agricultural and roadway subdivisions, after Plaintiffs refused to pay ‘consulting fees’ to William Wong. Wong was paying bribes to Defendants’ employees, and when Plaintiffs refused to pay, Wong used his influence to cause Defendants’ employees to delay Plaintiffs’ project. Defendants now claim that the reason for the delay is their determination, after issuing exterior building permits for Plaintiffs’ agricultural warehouses, that an SMA permit would be required to complete interior construction. Plaintiffs believe that Defendants’ change of position is pretextual,” the memorandum states.
(It should be noted that the original lawsuit filed in May 2023 by the companies argued that they had vested rights to building permits and for roadway and agricultural subdivision approvals. However, the court later dismissed the building permit claims, among other things, and on June 24 of this year, the companies and the city filed a stipulation that included the dismissal of the companies’ building permit claims and the city’s withdrawal of its motion to dismiss the complaint.)
In its complaint, the companies asked the DPP for copies of all documents and communications it shared with the FBI and/or and other federal or state investigative law enforcement agencies regarding investigations into Wong and DPP employees Wayne Inouye, Kanani Padeken, Jocelyn Godoy, Jason Dadez, and/or Jennie Javonillo.
“Each of these individuals were a target of the federal corruption investigation, and eventually pled guilty and/or were convicted for bribery in the course of their employment with Defendants (or in the case of Wong, in the course of his interactions with Defendants). As a result, Plaintiffs believe it is highly probable that DPP has documentary evidence in its possession or control that led to the convictions, and that evidence must have been turned over for the FBI as part of its investigation.
“The outstanding documents relate to communications, such as e-mail correspondence between Defendants’ former employees and Wong, which would tend to connect Defendants’ convicted former employees and Wong to Plaintiffs’ project,” the memorandum states.
The day after the companies renewed the motion to compel, all parties in the case submitted a proposed joint stipulation with the court to “continue discovery and dispositive motions deadlines.”
As later directed by the court, the parties on November 25 jointly requested that the court push the trial date from May 19 to September 1, “or as soon thereafter as the Court’s calendar allows, and extend all pre-trial deadlines which occurred after November 18, 2024, based on the new trial date.”
The non-jury trial is now set for August 25. The new deadline to file dispositive motions is March 28. A settlement conference is scheduled for April 29.
Historic Structures
Last month, we reported on documents provided by the State Historic Preservation Division regarding compliance with a Memorandum of Agreement that was required as part of a $7.8 million USDA-backed loan for several large warehouses at Marconi Point.
Those documents showed that the terms of the MOA — designed to protect the contributing resources of the Marconi Wireless Telegraphy Station historic district — have not been complied with. Even so, the current owner of those resources, which include four buildings, proceeded to renovate them without necessary approvals from SHPD or the Honolulu Department of Planning and Permitting. In the process, the roof of the large powerhouse building collapsed.
The DPP issued notices of violation last year for the unauthorized work, but so far, SHPD has issued none.
The MOA requires that one of its deliverables, an interim stabilization plan, be completed before the DPP issues any certificates of occupancy for seven of the eight warehouses that make up what is known as the RCA Trade Center.
According to an attorney for the companies that own the warehouses, they do not plan to prepare such a plan for the historic structures. Even though they signed the MOA,they transferred their obligations to meet its requirements to the new owner of the lands on which the historic structures sit.
That new owner, Greystone HI Investments, LLC, is working on resolving the situation with the DPP and SHPD, according to its attorney, Kalani Morse.
Morse reported in an email to Environment Hawaiʻi, “With respect to the notices received from DPP, Greystone’s architectural and compliance teams have been working with DPP to ensure compliance and resolution of the pending notices of violation. Given the encouraging progress made thus far on our end, DPP recently indicated that there are no immediate timing concerns with respect to the repairs being made and the permit work in progress. …
“With respect to the MOA, Greystone’s team has also been working directly with SHPD to determine how to best memorialize the historic restoration work on the structures and finalize approvals for the restoration work in progress.”
He added that Greystone and its owner, Sushil Garg, “are committed to restoring the Marconi station back to its former historic glory, in accordance with all applicable standards and in consultation with all the relevant agencies and organizations that were parties to the MOA.
“With respect to certificates of occupancy for RCA Trade Center and their construction and MOA compliance obligations, we are not privy to those details. Our limited understanding is that things are on track and that completion of their construction is delayed pending their litigation with the City and County over SMA permits that are now being required in the middle of construction. We do not possess any information regarding their lawsuit, their dealings with DPP, the agencies review of their MOA compliance obligations, or the status of their certificates of occupancy.”
Questions to SHPD about the status of the ISP, violation investigations, and discussions with Greystone on remedies did not receive a response by press time.
—Teresa Dawson
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