Canterbury developer says battle not over yet

Bruce Stark often exhibited tenacity as one of Hawaii’s prolific high-rise developers in the 1970s and 1980s. Now, at age 81, he is refusing to concede a protracted fight with residents in a tower he developed long ago in Waikiki.

The struggle involving Canterbury Place goes back more than a decade and revolves around how homeowners share utility and maintenance expenses with Stark, who owns the commercial space in the building through a company called 1910 Partners.

A federal judge ruled against Stark in March, siding with Canterbury residents for the second time in five years. Stark, however, isn’t backing down and vows to extend the battle, perhaps on a couple of different fronts.

“We’re appealing everything,” he said in a recent interview. “There’s no solution to that problem.”

Stark developed Canterbury with 146 residential units and several restaurant and retail spaces in 1977 with Robert Pulley. Allocating expenses between the commercial and residential units became an issue because units weren’t built with separate electrical or water meters.

A retired state judge, John McConnell, arbitrated the issue in 2001 and determined the cost split to be 60 percent for residents and 40 percent for commercial uses. Yet Stark challenged the allocation in 2009 when he sought bankruptcy protection for 1910 Partners.

Stark, who had acquired Pulley’s interest in the company, called the association of homeowners “pirates” in 2009 while alleging that the association had overcharged him by hundreds of thousands of dollars — possibly more than $1 million — in utility and maintenance fees over a decade.

The association contended that Stark refused to pay his fair share and shorted the association about $300,000 over roughly six months that year, which forced every homeowner to cough up an additional $350 a month.

Under a settlement approved by a U.S. Bankruptcy Court judge in 2012, submeters were installed and roughly validated the 60-40 split, according to Jerrold Guben, an attorney representing the condo owners.

Two years later, however, the split was still being argued over, and after a failed mediation the homeowners association filed a lawsuit in 2014 to take over Stark’s commercial space through foreclosure because Stark hadn’t paid what was decided in the bankruptcy settlement.

In turn, Stark sought bankruptcy again for 1910 Partners last year, which automatically put the foreclosure action on hold.

Homeowners, through their board, claimed that Stark owed about $1 million in unpaid fees and other costs.

Stark disputed the debt and maintained that the homeowners association was overcharging him for nonutility maintenance fees. He also said he was unable to pay because his two biggest commercial tenants, Singha Thai Cuisine and Todai Restaurant, had trouble paying him rent amid the recession around 2008. Though Singha Thai rebounded, Todai was evicted after Stark claimed in a court filing that the restaurant owed him $1.1 million in unpaid rent.

In March, Bankruptcy Judge Lloyd King ruled in favor of the homeowners after a trial and ordered Stark’s company to pay $1.3 million by January 2019 in monthly installments starting at $18,000.

As part of the ruling, King awarded two local law firms representing the homeowners, O’Connor Playdon &Guben LLP and Revere and Associates LLLC, $567,936 for their work in the bankruptcy case.

King also decided that Stark improperly made $326,529 in payments to himself, family members or entities he controlled in the year preceding the bankruptcy filing while he wasn’t paying Canterbury expenses required under the 2012 bankruptcy settlement.

The judge reaffirmed his ruling in April after Stark asked for a reconsideration. But on June 22 Stark, represented by local law firm Wagner Choi and Verbrugge, filed a notice to appeal the judgment to a U.S. Bankruptcy Appellate Panel.

Stark, who moved to Las Vegas about 20 years ago, also said he continues to experience difficulty with one major commercial tenant and that he is considering opening new fronts in the battle with homeowners.

Stark filed a lawsuit last month to evict Crab House Makino, which took over the Todai space, over alleged delinquent rent. He said other tenants hopefully will do well, including a recently opened massage studio, a Korean yakiniku restaurant expected to take over Chai’s old space and Rock Island Cafe, slated to open next month.

As for homeowners, Stark maintains disdain and said he is looking forward to raising the rent on about 80 leasehold units in which he owns what is called a sandwich lease between the condo owners and the owner of the ground under the tower when the rental rate opens for renegotiation in 2019.

If condo owners are unable or unwilling to pay the higher rent, then Stark possibly could acquire the condo units himself.

“I think maybe that’s the answer,” he said.