LIHU‘E — At a hearing in Lihu‘e Circuit Court on Tuesday, Chief Judge Randal Valenciano tossed out the lawsuit from Hope Treatment Services over the county’s termination of its contract to operate the embattled adolescent drug treatment center.
After building the $7 million facility on land donated by development company Grove Farm, the county hired the Honolulu-based Hope Services to operate it in October 2019.
The relationship between the county and the provider quickly soured, and in March 2020 Mayor Derek Kawakami issued an emergency requisition to take over the treatment center for pandemic use. The site housed dozens of patients during the peak of the COVID-19 outbreak. The county terminated the contract with Hope Services in May 2020.
In June 2021, Hope Services filed suit against the county alleging that it terminated the contract “based on patently false and otherwise misleading facts and reasoning.” County representatives argued in court filings the termination was legal and it took over the facility “to fight the spread of COVID.”
“The court’s dismissal of this case Tuesday vindicates the county’s position that it has the right to terminate county contracts when it becomes necessary,” said Deputy County Attorney Mark Bradbury in a statement to The Garden Island on Wednesday.
The suit also alleged the county unjustly profited from personal property
remaining in the building when it was taken over, to which the county responded by providing a check showing payment for personal property requisitioned by the county sent in 2021.
The case was dismissed in part because the plaintiffs stopped showing up for their court dates. The attorney representing Hope Services dropped the case in October, and representatives of the company did not appear at three hearings throughout October and November.
$750,000 in the hole
The lack of responsiveness might be a result of the fact the company has its hands full with other litigation.
Hope Services and their former program manager on Kaua‘i, Stanley Perpignan, face an active lawsuit from former investor John Rust, who accused the company of failing to pay back a hefty loan and of sending misleading emails from a fake employee’s account.
Rust, who became acquainted with Perpignan through work at a laboratory that Hope Services also used, said Perpignan approached him in January 2020 asking for a loan to operate the Kaua‘i treatment center. Rust agreed to loan him $375,000, to be paid back double in two years — a total of $750,000.
The contract with the county was terminated shortly thereafter. In January 2021, Hope Services defaulted on their first repayment of the loan.
In an absurd twist, the lawsuit alleges that Perpignan created a fake employee named “Liz Ogasaawa” and sent false and misleading emails from the fake employee’s email in order to calm Rust’s concerns about the lack of payment.
A court ruling this summer held Perpignan and Hope Services liable for the $750,000 owed to Rust but did not rule on other claims in the suit, including the allegations related to creating a fake employee.
The Garden Island could not reach Perpignan or any representative of Hope Treatment Services before press time on Wednesday, but a letter filed in court by Perpignan showed he was working a new job in the Midwest and struggling financially.
“I have lost everything through this investment and (am) currently in the process of starting my life over and strongly considering filing for bankruptcy once I am able to afford the attorney fees,” wrote Perpignan.
Originally proposed by late former Mayor Bryan Baptiste, plans to open an adolescent drug treatment center on Kaua‘i have been in the works as far back as 2003.
In September, the Kaua‘i County Council voted to return the $7 million adolescent drug treatment facility to Grove Farm after the development company filed a separate suit against the county, citing a memorandum of understanding that required the property to be used solely for adult and adolescent health-care purposes and be operating within two years.
Grove Farm dropped its suit shortly after the land was returned.
According to Civil Beat reporting, Grove Farm has formed a new nonprofit corporation to oversee the opening of a drug treatment center — led by retired Judge Edmond Acoba, former state Department of Education Kaua‘i Complex Area Superintendent William Arakaki and Hawaiian cultural practitioner Jade Wai‘ale‘ale Battad.
•••
Guthrie Scrimgeour, reporter, can be reached at 808-647-0329 or gscrimgeour@thegardenisland.com.
