A year-old legal battle over water between two Maui companies with billionaire owners has branched into federal court, where a lawsuit making racketeering allegations was filed Wednesday.
TY Management, the owner of two Kapalua Resort golf courses where water constraints led to closures last year, filed the complaint in U.S. District Court in Honolulu contending that its irrigation water supplier, Maui Land &Pineapple Co., fraudulently inflated the price for water amid supply cutbacks that also led to the cancellation of a PGA Tour event worth $50 million to Maui’s economy.
The complaint alleges that MLP officials took “repair, replacement, or capital improvement” expenses for its Honokohau Ditch water system, which can’t be passed on to TY under water delivery agreements, and relabeled them as “maintenance” expenses that can be passed on.
“After years of neglect, MLP had finally decided to make the repairs and capital improvements the ditch system needed,” the complaint states. “But instead of paying for them as the (agreements) require, MLP put those costs in TY’s rates and called them ‘maintenance.’”
TY, led by Japanese billionaire and Uniqlo founder Tadashi Yanai, who also has a luxury vacation home at the resort, said its water rates soared by 339% over less than two years in part due to the alleged fraud.
The lawsuit claims that at least $447,000 was “mislabeled” and fraudulently billed to TY in 2025, and that the inflated rate “scheme” continues.
Examples cited in the complaint include purported MLP documents in which descriptions of planned work on the
system had noted red-line amendments that changed the word “repair” to “maintain” or “maintenance” in instances that include some that don’t make sense and illustrate what TY alleges is “textbook financial fraud.”
For instance, one amended item read “Maintain and replacement of failed equipment or infrastructure” while another one read “Increased costs to maintain damage to roadways, trails, or infrastructure due to storm events.”
TY claims the alleged scheme was carried out by MLP CEO Race Randle and Kainoa Casco, an MLP vice president, with assistance from Hawaii Water Service, which operates the system under partial control of MLP and bills customers for certain costs at the direction of MLP.
A Hawaii Water Service official could not be reached for comment Wednesday.
MLP said in a statement that it believes the lawsuit is another effort by Yanai, who previously proposed acquiring and improving the water system before donating it to the state, to pressure MLP into transferring the system to his company.
“A foreign billionaire wants control of the water system that serves his luxury golf courses and sprawling estate,” MLP said. “That pressure will not change our commitment to stewarding this critical resource. MLP has already prevailed in one of the many proceedings TY has brought against it, and we believe this case is no different: the claims lack merit, and we will defend against them. We refuse to be bullied by a billionaire who seeks control of the system while refusing to pay his fair share of the costs to maintain it.”
The proceeding referenced by MLP is an action in which TY unsuccessfully sought regulatory relief from the state Public Utilities Commission.
TY’s new lawsuit is partly based on documents the company forced MLP to produce as part of previous litigation that remains pending in state court.
The earlier lawsuit, filed in August 2025 against MLP by TY along with three Kapalua homeowners associations and a nonprofit farm, alleges that MLP couldn’t provide the five plaintiffs with sufficient irrigation water amid a drought because MLP had poorly maintained the system that uses reservoirs, tunnels and ditches with gates to deliver surface water from the mountains to customers miles away.
TY also filed a second lawsuit in state court last year alleging that MLP unfairly gained supermajority control in the nonprofit Kapalua Resort Association by adding undeveloped MLP land to the resort and allowing MLP to unilaterally change rules and fees for maintaining resort common areas. An association representing owners in the gated Plantation Estates subdivision where Yanai owns a home, also was a plaintiff in that case.
MLP has filed counterclaims in the water supply litigation, contending in part that the plaintiffs violated state water use restrictions designed to protect the public trust resource and reduced fire protection for the Kapalua community. MLP also has contended that the water shortage is due to drought and heightened state requirements limiting how much streamwater can be diverted to customers.
The case involving control of the Kapalua Resort Association, which MLP contends is frivolous, is in court-mandated arbitration.
Meanwhile, MLP, a public company majority owned by Hawaii-born billionaire Steve Case, has been working to sell the water system serving Kapalua and other water resource assets including wells to Maui County under the threat of condemnation.
The county in May signed a memorandum of understanding with MLP that said the two parties intended to produce a binding purchase agreement subject to an appraisal, other conditions and Maui County Council approval. An agreement, which also contemplates support for rezoning MLP land, has yet to be signed.
If the water asset transaction is completed, it would continue a string of asset sales that MLP has largely relied upon to improve its finances over the past two decades after major financial trouble that threatened the solvency of the company whose roots began in 1909 with agriculture and
expanded to resort development.
Those asset sales included the two golf courses at Kapalua Resort, which MLP began developing in the 1970s on former pineapple plantation land.
TY bought the Plantation Course for $50 million in 2009, and then bought the Bay Course for $24 million in 2010. MLP, which quit farming pineapple in 2009 and still owns about 22,000 acres of land on Maui, provided the water delivery agreements to TY as part of the golf course sales.
Both courses were shut down by TY in September 2025 after struggles with water cutbacks and cutoffs for over a year. As a result, The Sentry, a signature PGA Tour event scheduled for January, was canceled by tournament operators after the
annual event had been held at the Plantation Course for 27 years.
TY reopened the Plantation Course in November, and earlier this month it was announced that the course will host next year’s LPGA Tour Lotte Championship on March 18-21. The Bay Course remains closed.
