A judge has dismissed a lawsuit brought by a group of Country Club-Hawaii apartment owners who challenged the Banyan Drive building’s board of directors for control of the condominium-hotel property.
On Friday, Kauai Circuit Judge Randal Valenciano granted a motion by defendants Sadao Aoki, Pearl Macomber, Dennis Compton and Robert Eaton to dismiss the suit.
Valenciano, who heard the case because all four Big Island circuit judges recused themselves from hearing the suit, ruled the group calling itself “The Association of Apartment Owners of Country Club Hawaii, Inc.” didn’t have legal standing to sue because the mail-in election the group ran was not according to the apartment’s bylaws.
Steve Strauss, attorney for the apartment owners’ group, led by Carl Oguss, asked Valenciano to hold off on his ruling so another election could be held, but the judge denied the request.
The dismissal was without prejudice, which means plaintiffs can re-file the suit, and Oguss said he intends to do so.
“We suffered a very strange fate on Friday,” Oguss said. “… The only thing we had to do is prove that (apartment) sales had occurred before 1987, before the declaration of bylaws were written.” Oguss claimed Strauss had evidence Oguss said would legally invalidate the building’s bylaws but failed to submit it to the court.
“We’re wondering if this is merely gross negligence or truly willful misconduct,” Oguss said. “The suspicion of my board is that this is willful misconduct.”
The dismissal upholds the authority of the building’s original board of directors chaired by Macomber, a board Oguss claimed was improperly controlled through proxy votes by building leaseholder Herbert Arata.
“As I said all along, the truth will prevail,” Kevin Aoki of Property Professionals said Tuesday. Aoki, who was the building’s former managing agent, is Sadao Aoki’s son and Arata’s nephew.
Honolulu attorney George Van Buren was appointed as a receiver for the property due to financial gridlock and non-payment of bills caused by the battle of the boards. Valenciano terminated the receivership as part of his ruling. Van Buren said he will turn over maintenance fee funds collected from unit owners to the Macomber board.
The building had been more than $200,000 in arrears in paying its electric bill to Hawaii Electric Light Co., and the utility had threatened in February to turn the lights out at the six-floor Hilo building if payments were not paid.
In April, the utility said Van Buren was making progress in paying the outstanding bill. Van Buren said Tuesday “at least” $150,000 is still owed HELCO.
The building’s managing agent, Richard Emery of Hawaii First, called the ruling “very good news, because we know now who is in charge, and we can move forward in a positive way,” and added he and the board “are doing our best to make payments to them.”
“If we look at ownership (of apartment units), we had some paying this rogue board, we had some paying the receiver, and you had some waiting to hear from the judge,” Emery said. “Now that the judge has made his decision, we’re expecting those who had been waiting to make their payments and in very short order we should be in a position to pay everybody.
“I feel we can move forward and get Country Club-Hawaii squared away. They have a lot of opportunity, and if we can get everybody working together through the elected board of directors, we can solve all their problems in the next few months.”
Another lawsuit brought by Oguss’ group, which names Arata, his wife, Alyce Arata, both Aokis, Property Professionals and Ala Kai Realty is still active. That suit alleges misuse of apartment owners’ common area maintenance fees to operate the building’s hotel operation and pay its state transient accommodations taxes.
Valenciano is also the judge in that case, and his ruling Oguss’ group lacks legal standing to sue could have implications in that case, as well.
“I haven’t actually seen the written order …,” said Peter Steinberg, Oguss’ attorney for the still-active lawsuit. “We are studying the outcome and can’t really comment yet.”
Emery predicted a similar outcome.
“They didn’t have the standing to file the (first) suit, so you can pretty much figure out what’s gonna happen on that one,” he said. “The judge basically said … the Pearl Macomber board is the correct board.”
Neither Strauss nor Macomber returned phone calls Tuesday or Wednesday.
Email John Burnett at firstname.lastname@example.org.