Lawsuit over Kakaako condo tower ‘defects’ dismissed

A federal judge in Honolulu has dismissed a lawsuit in which a developer sought more than $75 million in damages from a contractor for alleged construction defects in the ultraluxury Waiea condominium tower in Kakaako.

The dispute over the tower at Ward Village, however, is not necessarily done because the ruling dealt with the timing of the case.

U.S. District Judge J. Michael Seabright made the ruling Monday on grounds that Waiea’s developer, an affiliate of Howard Hughes Corp., didn’t pursue mediation before filing its legal complaint almost a year ago against the tower’s general contractor, Nordic PCL Construction.

Nordic had argued, among other things, that the case should be thrown out because a state law known as the Hawaii Contractor Repair Act requires that anyone asserting a claim over alleged construction defects must follow certain procedures that include mediation.

Seabright said in his written order that the Hughes Corp. affiliate neglected that step. The order doesn’t bar the developer from refiling the case if the deficiency is addressed.

Hughes Corp. said in a statement that it intends to complete the required procedural steps to pursue its claims.

Waiea was the first of 16 towers Texas-based Hughes Corp. envisions at Ward Village under a master plan to turn 60 acres of mainly retail and industrial space into a residential community with up to 4,300 homes and 1 million square feet of retail space.

The 36-story tower cost close to $425 million and featured 174 condo units with an average $3.6 million price including two penthouses priced at $35 million and $36 million. The tower opened at the end of 2016, and 163 of the units had been sold as of June 30.

The biggest defect claim in the lawsuit was that loud popping noises “resembling sonic booms” were emanating from Waiea’s wavy glass curtain wall and disturbing residents.

Hughes Corp. said in a financial report Monday that it spent $13.4 million for Waiea window repairs and that the company expects to recover this cost later.

Nordic claimed that Hughes Corp. filed the lawsuit because Nordic threatened to place a lien on the tower after not receiving payments it claimed had been almost a year overdue. In December, a month after Hughes Corp. filed its lawsuit, Nordic applied for the lien in a state Circuit Court filing.

Nordic claimed that Hughes Corp. had not paid for $39.7 million of work the company or its subcontractors did on Waiea. The lien seeks a security interest in 18 Waiea units of which 15 had not yet been sold at the time. The lien case remains pending in state court.

Mike Betz, Hawaii district manager for Nordic PCL, declined to comment on the pending litigation but said the company is pleased with Seabright’s ruling.