Hitachi Rail files $324M lawsuit against Honolulu, HART

Costly delays and mismanagement over Honolulu’s over-budget, long-overdue rail line are the basis for a new lawsuit being brought by the project’s principal contractor.

On Dec. 20, Hitachi Rail Honolulu JV filed a more than $324.1 million “breach of contract and unjust enrichment” claim against the city and the Honolulu Authority for Rapid Transportation involving construction of the nearly $10 billion Skyline project.

Hitachi’s lawsuit, filed in First Circuit Court, alleges HART’s seeming dysfunction to set timely schedules caused cost increases to go off the tracks by tens of millions of dollars — expenses the train company says it’s been forced to solely absorb.

This week HART officials said little about their train contractor’s sizable lawsuit or its allegations.

“HART appreciates the opportunity to respond, but at this time we are not able to discuss or comment on the active claim,” Joey Manahan, HART’s director of government relations and public involvement, said in a statement.

Famous for Japan’s iconic high-speed bullet train, Hitachi was hired by HART in 2011 on a $1.4 billion contract.

In return the company was to design, build, operate and maintain the city’s cutting-edge fleet of fully automated, driverless electric trains, expected to run along the 18.75-mile elevated guideway system to 19 stations, from East Kapolei to Kakaako.

Since then, however, the terms of Hitachi’s original contract with HART apparently derailed.

HART’s “mismanagement of the Skyline rail project has led to countless delays and other errors resulting in significantly increased costs for HRH in performing its design-build work and operations and maintenance services for the project,” Hitachi’s lawsuit states.

“Defendants’ mismanagement even included allowing track to be installed by another of HART’s contractors that was incompatible with the approved passenger vehicle wheel specifications that HART provided to HRH, which HART required HRH to resolve without compensation,” the suit claims.

“Additionally, defendants directed HRH to commence a costly 18-month operations and maintenance workforce mobilization effort at the same time HART knew or should have known that HRH’s mobilized workforce would not be needed for a substantial period,” the claim states. In that instance, HART’s request allegedly cost Hitachi more than $92 million, the lawsuit claims.

“Defendants have delayed any good faith efforts to resolve HRH’s claims, no doubt to delay further public criticism of its Skyline project mismanagement,” the complaint states. “As a result, HRH has effectively been required to fund a large part of the project itself.”

Hitachi asserts the hiring of multiple contractors to design-build the city’s rail line — the largest public works project in Hawaii’s history — led to costly mistakes.

“As one would expect, a complex project such as the Skyline, with numerous contractors performing independent design and construction services, requires competent and effective owner coordination,” the lawsuit states.

The contractors — Kiewit Pacific Co., Shimmick/ Traylor/Granite JV, or STG, and Tutor Perini Corp. as well as other firms — were all respectively hired “to design and build the project’s elevated guideways and stations and to supply the track and special trackwork for the three segments that comprised the project,” the lawsuit states.

“As a result, for HRH to perform its work, substantial work first needed to be completed by the fixed facilities contractors,” the claim states. “HRH’s ability to timely perform its design-build work was and remains dependent on the timely performance of HART’s other contractors.”

“HART, however, was not up to the task of coordinating the numerous contractors involved — a task vital to the project delivery system HART chose,” the suit states. “HART’s failures in leadership and coordination resulted in extraordinary delays and cost overruns.”

By 2019 the project was five years behind schedule, the suit asserts.

HART now says the rail to Kakaako will be open for public use by 2031.

“In 2019, due to the extraordinary delays, HRH and HART amended their contract with a change order that extended the dates by which HRH would complete each of the project’s three segments by more than five years,” the claim states.

That amendment — known as Change Order 52 — also added dozens of new milestone dates “by which HART was required to provide HRH access to project facilities to perform HRH’s work and increased HRH’s contract price by $160,000,000 because of the delay,” the claim states.

“Almost immediately after signing Change Order 52, however, HART resumed its practice of failing to provide HRH with access to the project facilities by the requisite dates, and in fact, did not even come close to complying with the new milestone dates,” the suit states.

“HRH has been at the mercy of HART’s failures to coordinate and advance the work required to provide HRH timely access to the project facilities,” the suit states. “As a result of HART’s and its contractors’ failures to perform timely and effective work, HRH has been significantly delayed, and the project is now delayed three years (and counting) beyond even the five-year extension provided by Change Order 52.” “A significant part of the $160,000,000 has not yet been paid to HRH,” the lawsuit states.

“HART has refused to accept responsibility for its failures to provide HRH access to facilities as promised and has consistently denied HRH’s requests for reimbursement for the substantial additional costs incurred, and to be incurred, as a result of HART-caused delays along with the other damages that HRH has suffered,” the lawsuit states.

But HART’s alleged breaches extend beyond the project delays, the contractor also claims.

“HART has even gone so far as to take affirmative acts that have caused HRH to incur substantial additional costs,” according to Hitachi’s suit.

“By way of example in February 2019, HART directed HRH to mobilize its project operations and maintenance workforce and vendors in anticipation of HRH initiating its operation and maintenance duties for Segment 1” — from East Kapolei to Halawa, the claim states.

“At that time, however, HART knew, or certainly should have known, that Segment 1 was not going to be complete for several years,” the suit states. “Needless to say, this premature mobilization — as directed by HART — caused HRH to incur extraordinary unnecessary costs.”

As a result of “project delays and impacts for which HART was and remains responsible and other HART contract breaches, HRH has incurred and continues to incur financial damages that exceed $300 million,” the lawsuit states.

Hitachi, per its lawsuit, demands its case be heard in a jury trial or before a state court judge.

This complaint comes a year after HART settled a separate lawsuit with the builder of the rail line’s second segment route past the airport.

On Dec. 14, 2023, HART’s board of directors voted to boost its rail contract with STG to nearly $1 billion, to allow for a $59.9 million settlement agreement with that firm.

Five months earlier, STG filed a more than $99.1 million lawsuit against HART for alleged unpaid extra time and work.

At the time, STG claimed HART failed to compensate the joint venture for delays stemming from a prematurely issued contract, and problems with utility relocation work that were beyond the company’s control and held up its work building the rail line toward Kalihi.

The board’s subsequent approval meant the builder’s contract amount of more than $930 million was increased to a total contract price of $990 million.

In exchange, STG agreed to finish the 5.2-mile route of elevated guideway and four stations and associated facilities from Joint Base Pearl Harbor-­Hickam to the Middle Street transit center.

Skyline’s second segment past the airport will be open to the public by mid-2025, HART states.