Agency favored firm over public, lawsuit alleges

It is a lawsuit that draws attention to the intersection of Hawaii’s political and real estate worlds.

The plaintiff is Close Construction Inc., a contractor hired last year by the Hawaii Community Development Authority to renovate the historic but long-vacant American Brewery building in Kakaako.

The defendant is HCDA.

In a lawsuit filed this month, Close Construction accused the state agency of breach of contract and not acting in good faith and is seeking at least $596,900 in damages due to the alleged infractions.

A key factor in the dispute is work done by Mitsunaga & Associates, an engineering and architectural firm that HCDA hired under a $290,000 contract in 2011 to develop drawings and plans for the renovation.

Mitsunaga is headed by Dennis Mitsunaga, a prominent Democratic fundraiser and a longtime supporter of Gov. Neil Abercrombie. His daughter, Lois Mitsunaga, who also is with the firm, was appointed by Abercrombie to the HCDA board in 2011.

Employees and others connected with Mitsunaga & Associates have donated more than $130,000 to the two gubernatorial campaigns of Abercrombie, according to a Honolulu Star-Advertiser analysis of campaign fundraising data.

Close Construction accused Mitsunaga & Associates of providing inaccurate drawings, which contributed to delays and created additional contractor costs that HCDA indicated it was unwilling to cover, according to the lawsuit.

The complaint also said Close Construction was directed to proceed with the project despite a structural engineer’s instructions that work be halted because of safety concerns related to the instability of the building’s exterior brick walls. The structure is more than 100 years old.

Noting Mitsunaga’s position as vice chairwoman of the board, Close Construction alleges that HCDA’s actions created the impression the agency was more interested in protecting Mitsu­naga & Associates than the public’s interests or in acting in good faith with the contractor.

Because of the litigation, HCDA said in a statement it would not comment on unresolved matters but is committed to reviewing each claim and responding appropriately.

Aaron Fujii, Mitsunaga & Associates’ chief operating officer, noted that his company was not a defendant in the lawsuit, has not received a copy of the complaint and had not had an opportunity to review the allegations. Still, he said, Mitsunaga & Associates disputes any allegations made against it and has always stood behind its designs.

He also said HCDA has remained objective throughout the project and has not acted to protect Mitsunaga & Associates in any way.

The company "makes every effort to fulfill its professional fiduciary duties to protect all parties involved, especially the interest of the general public," Fujii said in a written statement.

Lois Mitsunaga said as an HCDA board member she has recused herself from participating, discussing or voting on any issues related to Mitsunaga & Associates and the renovation project and intends to recuse herself from any future board votes regarding the project.

She also said she has an understanding with her Mitsunaga & Associates colleagues that no discussions about the brewery building or any HCDA-related issue take place in her presence.

"I have taken every step to act in an ethical manner regarding the ABB project," she wrote in an email to the Star-Advertiser.