State lawsuit claims 2 brothers improperly profiting from public roads in Kakaako, Waikiki

The state Department of the Attorney General is suing brothers Calvert and Cedric Chun, who do business as the Kakaako Land Co., seeking reimbursement for alleged fraudulent collecting of money for the private use of public streets in Waikiki and Kakaako.

First Circuit Court Judge Jeffrey P. Crabtree last year ruled the state owned certain Kakaako streets that were surrendered or abandoned to the state by either the man who developed the roads more than 100 years ago or the man’s heirs after many decades of no asserted ownership.

“The court concludes the State of Hawaii owns the streets at issue,” Crabtree said in his order. “KLC and the Chuns hold no right, title, or legal interest in the streets, and have never had any legal right to charge parking fees, restrict parking, or tow vehicles for using or parking on the streets.”

Crabtree’s ruling covered whole or partial segments of Kakaako streets that include Ward Avenue and Kawaiahao, Queen, Cooke, Cummins, Ilaniwai and Hustace streets. His decision did not directly address Waikiki, where the brothers are managing members of Henlu Waikiki LLC and Calvert Chun is the managing member of Kalakaua Land Holdings LLC.

The ruling invalidated a 1985 quitclaim deed, which the Chuns presented as proof of ownership of 65 acres in Kakaako plus an additional 13 lots in Waikiki, and opened the door for the state’s civil suit that was filed Oct. 21, seeking reimbursement and penalties for the private use of public space in the two urban communities.

The state’s complaint says the “defendants asserted a false claim of ownership over certain roads in the Kakaako and Waikiki areas solely under the guise of a single quitclaim deed, in order to wrongly collect payments from small businesses, property owners and members of the general public with no legal right to do so, turning the publicly owned roads into a personal money-making scheme to the detriment of the public and plaintiff.”

The state said the defendants used “threat and coercion,” including filing suits against those who refused to pay them, adding their actions have cost people “significant time and financial resources” to mitigate.

Cedric Chun declined to comment because of active litigation.

The quitclaim deed doesn’t make clear which streets in Waikiki comprise the 13 lots, other than Pau Lane and Makaoe Lane, which the Chuns previously sold. The state’s complaint mentions Pau Lane and presented an example of private usage on Cartwright Road as part of a court exhibit.

It is uncertain which other Waikiki streets the state’s lawsuit will encompass. However, at various times there have been disputes between the Chuns and businesses and residents on portions of Pau and Makaoe, Lemon Road, Cartwright Road and Lauula Street.

The brothers previously claimed ownership of Lemon Street, which they said they sold around 2018, and currently claim ownership of Cartwright Road and partial ownership of Lauula Street.

The Attorney General’s Office is asking the court to declare that the Chuns and other unnamed defendants committed multiple violations of the Hawaii Unfair or Deceptive Acts or Practices Act and should be subject to the maximum civil penalty of up to $10,000 per violation.

The suit also wants the defendants to pay monetary relief that is threefold the actual damages sustained by Hawaii residents.

Additionally, the state is seeking a court order disgorging all profits, benefits and other compensation obtained by the defendants from the Kakaako and Waikiki streets through what the state alleges are “unfair or deceptive acts or practices.”

The state wants the Chuns to reimburse the state for the $10 million or so the brothers received from the sale of “their purported interests” in Pau Lane and pay the state’s legal costs related to the suit.

The Chun brothers are appealing Crabtree’s ruling and had sought to stay judicial proceedings in the state’s suit. That request was denied by 1st Circuit Judge Dean E. Ochiai at the end of March.

Ochiai wrote in his decision that the court has the discretion to stay judicial proceedings pending an active appeal. However, he said the appeal “does not cover all of the roads at issue in the present case” and that “members of the public are being charged by the defendants to use roads in Waikiki.”

“The complainant alleges that defendants used unfair and deceptive practices to charge members of the public to use streets and roads in Kakaako and Waikiki set aside for public use resulting in unjust enrichment,” he said. “The issues presented within the complaint are of great public importance and any delay in resolution of the issues could greatly affect the state and public.”

The Chuns’ response to the state’s complaint was brief. In their answer, they said the state “fails to state a claim in whole or in part upon which relief can be granted.”

The brothers denied the state’s allegations, saying they stood by “all defenses previously asserted in this matter.”

They argued the case did not meet the statute of limitations and that the state’s claims were barred for a variety of legal doctrines as well as “the constitutional right against the taking of private property without just compensation.”

They added that the state’s claims were not ripe for review, as there had not been a final adjudication of the properties in question.

The Chuns previously contended they bought the roadways from the last living heir of the man who developed part of Kakaako around 1900 and initially owned the streets at issue. That developer, Charles Desky, died in 1924.

In 1985 the Chuns arranged to pay Desky’s last known living heir, granddaughter Adele M. Christian, for any interest she had in the roads along with some land in Waikiki. The price was $5,000 plus 25% of any rental income from the property.

Christian, a retired Dole/Castle & Cooke employee who in 1985 was living alone in a rented basement, died in 2000 before the Chuns began charging $100 or more a month per parking space fronting numerous businesses. During the trial, it was revealed that the Chuns did not pay her or her estate anything from the roughly $10 million sale of Pau and Makaoe lanes, which occurred after her death.

The deal with Christian was made through a quitclaim deed, which offers no warranties against there being other ownership interests in the property.

Crabtree ruled that the deed was a binding agreement but that Christian had no interest to convey in the roads because of a 1947 Hawaii law that has to do with private roads being abandoned if no ownership action is exercised for five years.

“There is not one iota of evidence in this case, not even inadmissible hearsay, that after 1903, Desky or any of his heirs asserted any control over the streets, considered the streets to be theirs, tried to transfer the streets, maintained the streets, paid real property taxes, or tried to monetize the streets in any way — except for the 1985 quitclaim deed,” Crabtree wrote.

The judge’s ruling came seven years after several Kakaako business owners sued the Chun brothers, who had begun charging for parking and towing parked cars along several Kakaako streets in 2010 after dec­ades of free public use. Crabtree issued an injunction against such actions, which the state contends have been going on for more than a decade in Kakaako and Waikiki.

Court documents show a recent dispute on the private use of Lauula Street in Waikiki. Cedric Chun sued the Aqua Oasis Hotel and Honolulu Disposal Service Inc. for $12,000, claiming they owed him $1,200 a month rent for dumpster storage on his land for a 10-month period from April 2019 to January 2020. The case was dismissed last October without prejudice, which means it could be retried.

At one time or another, the public has made complaints that the Chuns and their associates were making money off Cartwright and Lemon roads in Waikiki by allowing food trucks to operate and charging rent.

While some are pleased the state is pursuing civil actions against the brothers, the quality of the food trucks parked on Cartwright Road has attracted positive reviews from foodies.

Some food truck operators said that if the state prevails, it would likely force them from a prime Waikiki location. They said the state previously forced food truck operators to leave Sandy Beach and other popular areas.

Some residents have said the Chuns have been responsive to neighborhood concerns involving their Waikiki roads or businesses.

“When I have contacted the Chun brothers, they did their research, responded to me immediately and solved the problem,” said Kathryn Henski, who lives on Cartwright Road. “My complaints of a loud food truck with bright lights that shone into the condos and was disturbing our homes was dealt with immediately. I called Mr. Chun and he apologized. The next night they were gone.”

However, others say ownership battles have created community unrest and threatened public safety. The Chuns have taken quite a few small businesses to court.

Rolf Nordahl, president of the Waikiki Grand Hotel AOAO, said he is glad to see the state finally intervene in what has become a lengthy and thorny Waikiki land dispute.

Nordahl said that for years the Chuns allowed food trucks to park in the Waikiki Grand’s loading zone on Lemon Road, disrupting the hotel and the residents who live there.

“The first one was a coffee truck with near topless women,” he said. “We didn’t want that here.”

Nordahl said other food trucks were less objectionable but still interfered with business by blocking deliveries as well as pickups and drop-offs. The food trucks also were emergency- response hazards because they and their customers blocked the narrow roadway, he said.

“The AOAO dealt with them immediately when they started putting things in our loading zone several years ago,” Nordahl said. “The Chun brothers took us to small-claims court for towing their food trucks, but they were unsuccessful.”

Nordahl said the food trucks eventually left Lemon Road and are now all parked on Cartwright Road.

“The folks impacted on Cartwright Road have complained bitterly to the city and state,” he said. “It’s time this was resolved.”

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Star-Advertiser reporter Andrew Gomes contributed to this story.