The lawsuits over activities at Marconi Point on Oʻahu’s North Shore just keep coming. This time, they’re over the development of a large solar photovoltaic system on the rooftops of eight agricultural warehouses on land owned by RCA Trade Center, Inc., and MP Unit 21, LLC.
On November 11, the two companies, and an affiliated company, Marconi Farms, LLC, filed a complaint in U.S. District Court against Valta Solar LLC; Hawaii FIT Sixteen, LLC; Hawaii FIT Seventeen, LLC; Clean Power Construction LLC (CPC); and BayWa R.E. Power Solutions, Inc.
The complaint includes 15 counts, alleging breach of contract, misrepresentation, negligence, trespass, and conspiracy, among other things. The plaintiffs seek damages, disgorgement of profits, declaratory and injunctive relief, and attorneys’ expenses.
On January 20, the Valta-related defendants (which do not include BayWa) filed a countersuit, also alleging breach of contract, negligence, and misrepresentation, among other things. They also seek damages, as well as accrued interest on amounts owed and unpaid, disgorgement of funds due to unjust enrichments, and attorneys’ costs.
Basically, the warehouse developers — despite receiving a $7.9 million USDA-backed loan — didn’t have enough money to complete all eight warehouses. So the solar companies, which had lease agreements for the tops of those warehouses, agreed to loan MP Unit 21 up to $2 million to help complete construction.
Once the structures were done, the companies would build and operate a PV installation. Power from the facility would be sold to Hawaiian Electric Company (HECO) under feed-in-tariff agreements secured by Hawaii FIT Sixteen and Seventeen in 2011, each for 500 MW.
According to the complaint by RCA and MP Unit 21, around mid-2023, “Valta, through FIT 16, began to slow disbursal of draws from the MPU 21 note, leaving MPU 21 without the means to timely pay [contractor] AP Builders for its work.
“As a result of the delayed payments, AP Builders threatened to walk off the job and to assert mechanics’ liens against the property for nonpayment.
“Following these threats, Valta demanded that MPU 21 engage its subsidiary, CPC, to complete all remaining work on the property, including (1) completion of improvements on the MPU 21 warehouses; (2) application of roof coatings for both RCA warehouses and MPU 21 warehouses; and (3) installation of underground electrical infrastructure improvements for both RCA warehouses and MPU 21 warehouses.”
RCA and MP Unit 21 entered into agreements with CPC for the remaining work, which they estimated would cost less than $1.2 million. AP was paid what it was owed. CPC then delegated some of the work to BayWa.
In the months that followed, warehouse tenants began complaining about leaks and other problems. MP Unit 21 hired a real estate inspector who found that the roof coating was improperly installed and the PV installation crew “damaged the roofing system during installation,” the complaint states.
The complaint continues that the solar companies promised to fix the roof leaks, but never did, and that roofing company estimates suggest that it would cost nearly $2.4 million to repair the damaged roofs or nearly $3.3 million to replace them, not including solar panel removal, reinstallation, and taxes.
In February 2024, the Marconi companies’ complaint notes, CPC invoiced them for just over $2 million for costs the companies say are unsupported. What’s more, the complaint states, the contractors used the companies’ buildings for storage of equipment and materials without permission and without payment of rent.
“The fair market rental value for such use is approximately $18,000 per month per building,” the complaint states.
It argues that the plaintiffs are entitled to a declaration and injunctive relief, finding that: “(1) the CPC agreements were breached by CPC, (2) defendants must provide a full accounting of all funds disbursed under the MPU 21 note, (3) defendants must correct and repair all defective construction work at no additional cost to plaintiffs, and (4) defendants must cease their unauthorized occupation and use of plaintiffs’ property and compensate plaintiffs for such trespass and use; and (5) plaintiffs are entitled to recover all reasonable attorneys’ fees and costs incurred in enforcing their contractual and equitable rights.”
A Different View
The counterclaim filed by the Valta companies paints a very different picture.
They state that MP Unit 21 “drew down, used and/or received at least $1.69 million in funds from FIT 16 under the MPU note, not including interest,” and was obliged to repay it by the note’s maturity date of March 1, 2023.
With regard to the roof defects identified by the real estate inspector, the solar companies point out that the steel warehouse components bought and installed by RCA and MP Unit 21 had extensive corrosion and deterioration.
In February 2024, RCA and MP Unit 21 sued materials supplier Schulte Building Systems for damages totaling $1.89 million. The companies argue that the metal roof purlins were improperly galvanized and corroded as a result. The case has been stayed pending the outcome of arbitration pursuant to a contract between Makai Ranch (the original project developer) and Rhino Steel Building Systems, which was involved in the sale of the steel frame components.
The failure to inform the Valta companies about that lawsuit is just one instance where RCA and MP Unit 21 breached lease terms that require that the tenants be promptly informed and given copies of any pending litigation, the counterclaim argues.
“RCA/MPU discovered and/or had actual notice of the material defects, problems and unacceptable condition of the steel components sold by Rhino Steel and/or Schulte Building as early as March 2021 and no later than June 4, 2021,” it states, noting that counsel for the landowners sent a letter to Rhino on that day, demanding replacement components.
Four subsequent demand letters “stated that the steel components ordered by RCA, MPU and/or Makai Ranch were non-conforming and defective,” it adds.
In 2021, RCA and MP Unit 21 sued Rhino in federal court in Texas. The February 2024 lawsuit against Schulte followed. And in between, RCA, MP Unit 21, Makai Ranch, and Marconi Farms all sued the City & County of Honolulu and its Department of Planning and Permitting over construction delays caused by Special Management Area requirements. (Last year, the U.S. District Court issued a ruling against the companies in its complaint against the city, which the companies are appealing.)
“RCA/MPU deliberately and consciously withheld material information from the Valta tenants about the condition of the warehouse structures and their disputes, arbitrations and litigation with the sales representative, Rhino Steel, the supplier/manufacturer, Schulte Building, and the DPP (as to permitting problems). RCA/MPU neglected, failed and/or refused to inform, disclose, reveal and/or share the information that it had about pre-existing problems with the steel and purlins that it ordered and received and with permitting and entitlements as to the DPP. … RCA/MPU are liable for each and every non-disclosure of material facts that it made to the Valta parties in the leases and CPC agreements in an amount to be established at trial,” the counterclaim states.
The Valta companies also argued that the warehouses, which are near the ocean, are not fully enclosed with windows and walls, leaving the interiors exposed to the elements.
“The unfinished nature of those warehouse structures leads to oxidation, corrosion, and rust of various components and materials framing the buildings. By leaving such warehouses/structures open to the elements, owner(s) created an environment where the structural components of the warehouses, including the manufactured steel, would be directly exposed to the salt air, outside weather, and other conditions contributing to the destruction of usable steel parts,” they stated.
They added that RCA and MP Unit 21 breached the leases by “(i) failing to ensure that the Valta tenants had properly constructed steel warehouses/buildings ready for the installation of the commercial solar rooftop panels, (ii) providing steel structures that were not defective, (iii) notifying Valta tenants of threatened and/or actual litigation and arbitrations that RCA and MPU filed, (iv) complied with its covenant to provide the Valta tenants ‘quiet enjoyment’ as promised under the leases, and (v) failed to honor, abide by and comply with its covenants to deliver property in compliance with permits, regulations, laws and uses as referenced therein.
“Additionally, [the landlords] have thwarted, impeded, prevented and/or failed to honor its obligations to assist and cooperate with FIT 16 and FIT 17 to obtain approval for the electric transmission of solar energy from the rooftop solar panels (sometimes referenced as ‘energizing’ the system),” the counterclaim stated.
Whether the project, as constructed so far, will be eligible to receive the federal tax credits that expired at the end of last year remains to be seen. On December 10, the companies filed with the Federal Energy Regulatory Commission a Form 556, which is a Certification of Qualifying Facility Status for a Small Power Production or Cogeneration Facility.
The companies state that their facilities were expected to be installed by December 31, 2025, and to begin operation that same day.
The form states, “The generation is delivered to the host utility via a 480V interconnection line and metered at the point of delivery.”
However, a 2026 update to the Public Utilities Commission by Hawaiian Electric on its feed-in-tariff program suggests that the FIT 16 and 17 projects are still under construction and have not been completed or received meter installation.
— Teresa Dawson
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