Jury tells Haseko to pay $27 million

A Circuit Court jury awarded about $27 million Tuesday in special and punitive damages to Ewa Beach homeowners who filed a class-action lawsuit against Haseko over a marina dispute, saying the developer violated a consumer protection law.

“It’s a very good day for homeowners in Hawaii,” said Terrance Revere, one of the plaintiffs’ attorneys. “This is a big hurdle for us to clear, and we’re very glad the jury sent the strong signal they did.”

Special damages were awarded at $1,300 per homeowner. That number will triple due to the state’s consumer protection law for about 1,800 homeowners, totaling about $7 million. Punitive damages were an additional $20 million.

Revere said that in addition to the jury’s decision, the developer, which is affiliated with Japanese-owned Haseko Corp., must pay attorneys’ fees.

Michael Green, who also represented the plaintiffs, said, “You have a local jury sending out a message to a foreign corporation that comes to Hawaii and rips off homeowners.”

The verdict came after about three days of jury deliberations for the nearly two-month trial. The lawsuit stems from Haseko’s announcement in November 2011 that it would build a recreational lagoon instead of a marina, citing environmental concerns, problems during the permitting process and a lack of hotel interest to develop near a marina.

Nine homeowners who filed suit in July 2013 maintained that they were misled by Haseko that a marina, located between Oneula Beach Park and White Plains Beach, would be the “focal point” of the Ocean Pointe and Hoakalei area.

Haseko’s attorney Steven Chung said he will file motions asking the court to set aside the judgment and call for a new trial because there is no evidence of liability or damage. In addition, he said, juries cannot award punitive damages in cases of unfair or deceptive acts or practices, one of the claims in the lawsuit, under case law.

“The verdict is contrary to the law,” said Chung, adding that he wasn’t sure why the jury felt it needed to punish the defendants.

“We felt that the plaintiffs had never established damages,” he said. “They have their homes. They have the substitute, the lagoon. Their homes have risen in value.”

Homeowners made claims against Haseko for unfair or deceptive acts or practices, negligent misrepresentation and breach of implied duty of good faith.

The jury received a list of 13 questions from Circuit Judge Gary W.B. Chang to go over to reach their verdict. In reviewing those questions in court, all 12 jurors affirmed that they believed at least one defendant engaged in an unfair or deceptive act or practice. Those defendants were Haseko Hawaii, Haseko Ewa, Haseko Development and Haseko Realty Hawaii.

The jury unanimously agreed that the defendants did not violate the other two claims in the lawsuit.

The nine homeowners who sued had purchased properties in the neighborhood prior to 2012 and include state Rep. Matt LoPresti (D, Ewa Villages-Ocean Pointe-Ewa Beach). Lawyers for the homeowners said last week in closing arguments in Circuit Court that Haseko promised residents a “world-class marina” but instead violated public policy by switching to a lagoon, calling it “one of the biggest bait-and-switches in Hawaii history.”

Homeowners were initially seeking compensation and damages of $38,000 per home for thousands of residents, as well as other punitive damages. Their claims included negligent misrepresentation, breach of implied duty of good faith, and consumer protection issues. They maintained that the switch to a lagoon decreased property values and that they have been paying association fees for the upkeep of a marina.

Haseko’s lawyer maintained that officials intended to deliver a marina but that several problems prompted them to seek an alternate plan.

The value of homes was not affected by the switch of plans, Haseko said.

Tom Sagawa, president of Haseko, said in a statement Tuesday that the company remains “committed to realizing our vision of Hoakalei as a mixed-use waterfront recreational destination all can enjoy.” He said the company is confident that the punitive damages will be set aside.

“As a responsible member of Hawaii’s business community for over 40 years, Haseko has built a solid reputation for award-winning, high-quality projects and a genuine commitment to the community,” Sagawa said. “We understand that some homeowners were disappointed with the difficult decision to change from a marina to a recreational lagoon, but we believe it was the right decision as it offers greater benefits for the broader community.”

A rezoning request that accommodates a lagoon instead of a marina on the 1,100-acre site passed first reading at last week’s City Council meeting. Haseko will also need approval of a separate special management area use permit and shoreline setback variance.