• Revenue slump, unpaid rent led to Todai’s eviction

Living in a condominium tower above restaurants makes it convenient to dine out. But for residents of Canterbury Place in Waikiki, the arrangement has been quite distasteful.

The restaurants — Singha Thai Cuisine and Todai Restaurant — have had trouble paying rent over certain periods starting with the 2008 recession and became contributing factors in repeated legal disputes between their neighbors living above and Canterbury’s developer, who also owns the building’s commercial space.

Recently, Todai was evicted. And the developer, Bruce Stark, put his company, which controls Canterbury’s commercial space, in bankruptcy. Stark has racked up about $1 million in unpaid, yet disputed, building fees.

It’s not a pretty picture for those living in the 40-story tower that features views of landscaped Fort DeRussy, Diamond Head and the ocean.

"It’s been a huge battle," said Canterbury resident David Griggs. "It just keeps going."

It is the second time in five years that Canterbury residents have been embroiled in a mess of lawsuits and bankruptcy with Stark, a high-profile Hawaii condo developer in the 1970s and 1980s who for the last 15 years or so has lived in Las Vegas.

Stark, 79, placed his company that owns Canterbury’s commercial space, 1910 Partners, in bankruptcy Jan. 5.

In an interview, Stark said he plans to turn the financial situation around and settle his debt with the association of condo owners, though he added that he’s not sure about turning around views that Canterbury residents have of him.

"I know they pray for me to die or go broke," he said. "It’s been a battle."

The Chapter 11 filing followed a move in September by the building’s association of apartment owners to foreclose on Stark’s holdings in the tower, which include the two restaurant spaces, a couple retail spaces and 112 parking stalls.

The same series of events, a foreclosure lawsuit and bankruptcy, occurred five years ago between Stark and Canterbury residents. Yet a settlement, which was approved by U.S. Bankruptcy Court in 2012 and expected to resolve the nagging problems, failed.

At the core of the trouble five years ago and today are financial difficulties for Stark’s commercial operations in the tower, which he developed with partner Robert Pulley in 1977. Stark later bought out Pulley’s share of 1910 Partners.

There also has been a nagging dispute over maintenance and utility charges billed to Stark’s commercial space.

Stark and Pulley built Canterbury without separate electricity or water meters for commercial and residential spaces. That led to disagreements over how utility charges were allocated.

In 2001, retired state Judge John McConnell issued an arbitration decision that set the split at 40 percent for commercial uses and 60 percent for residents, according to a filing in the 2009 bankruptcy case.

Stark regarded his share as unfair and claimed that he was being overcharged by the association of condo owners. He said he was previously in the dark about the commercial operations because Pulley had run them until becoming ill and turning the business over to Stark in 2008. "I inherited a can of worms," Stark said.

In the 2009 bankruptcy case, Stark claimed that utility and maintenance fee overcharges totaled hundreds of thousands of dollars "or possibly more than $1 million" over a decade.

The association claimed in 2009 that Stark had not paid about $300,000 in charges over roughly six months.

Stark said Singha Thai and Todai had trouble paying rent amid the recession around 2008, and that because they couldn’t pay him full rent he couldn’t pay the building expenses.

Additionally, Stark called the condo owners association "pirates" in a 2009 interview, and vowed to contest what he viewed as overbilling.

Condo owners complained that they were left to cover the shortfall that on average in 2009 amounted to an extra $350 every month for each of the owners in the tower, which has 146 residential units.

The settlement called for the installation of submeters, which was completed in 2013 after more disputes over the process and a round of mediation, according to Jerrold Guben, an attorney representing the condo owners.

Guben said the submetering resulted in roughly the same 60-40 split in utility charges.

However, during four years over which the 2009 bankruptcy case dragged on, Stark was allowed to pay a set rate that the association said was less than his validated fair share.

The association said that just for three months in early 2013 Stark’s shortfall totaled about $46,000.

Guben said Stark didn’t make up past underpayments as was called for in the settlement agreement.

"Bruce just didn’t want to pay," Guben said. "He didn’t like the allocation."

Griggs, who bought a unit at Canterbury in 2011 and has been on the board since 2012, said the submetering shows whose earlier claims were right or wrong. "Who’s the pirate now?" he asked.

Chuck Choi, a bankruptcy attorney representing Stark, said his client wasn’t collecting enough rent from commercial operations at Canterbury to repay the accrued debt. A filing in the case by Stark said Todai owes him $1.1 million. Stark evicted the restaurant last month and is trying to collect the unpaid rent. Singha Thai, however, has been current on rent for about five years.

Stark also claimed in the filing that the association continues to overcharge him for nonutility maintenance fees.

The association claims Stark owes $994,819. Stark disputes the figure and said it could be close to nothing.

Some Canterbury residents have been particularly upset by the disputes because Stark is a wealthy developer.

One asset Stark has that was noted in the bankruptcy filing is a share of lease payments that many Canterbury condo owners make to him because the building was developed on land leased from another owner.

Stark and Pulley set up what is called a sandwich lease for themselves between the ground owner and condo buyers. The developers have sold 60 sandwich positions to condo owners but still own 86. The sandwich leases generate about $22,500 a month and have a value of about $12.5 million for Stark, the filing said.

However, Stark owns the lease positions through a separate company not connected with the commercial space at Canterbury. Stark’s position is that he is doing what is in his best business interest, and that he does not have to take money from other holdings to cover shortfalls of 1910 Partners.

Canterbury residents and Stark attempted to resolve the continuing disagreements and debt through mediation, but that led to an impasse in August.

A filing by Stark in the bankruptcy case called the impasse predictable.

Terry Revere, another attorney representing the condo owner association’s board, said in an email to Choi that Stark demonstrated an absence of good faith.

"It is the board’s firmly held belief that Mr. Stark once again is stringing things out while failing to pay his obligations," Revere said in the email attached to a Stark filing in the bankruptcy case.

In September, the association sued in state court to take over the commercial space through foreclosure. Stark, in turn, filed bankruptcy, which automatically puts foreclosure on hold.

The developer said he will attempt to resolve the debt issue and retain the commercial spaces, which he claims are much more valuable than the debt owed.

Meanwhile, Stark is trying to find a new tenant to take the place of Todai and anticipates that he will have one by summer.