HONOLULU — About 1,800 homeowners at Ocean Pointe and Hoakalei Resort are entitled to $27 million in damages under a 2013 class-action lawsuit against the developer of the Ewa community, according to an appellate court.
The Hawaii Intermediate Court of Appeals last week decided to uphold a $20 million damage award decided by a state Circuit Court judge, and reinstated a $7 million jury award negated by another Circuit judge in the case brought against developer Haseko (Hawaii) Inc. for changing the main feature of the master-planned community from a marina to a lagoon.
The Sept. 16 ruling by the ICA comes more than a decade after nine homeowners in Haseko’s project filed a lawsuit on behalf of themselves and other original homeowners at Ocean Pointe and Hoakalei after the developer announced in 2011 that it would not complete an envisioned marina because it would be less viable than a lagoon.
Plaintiffs in the case alleged that they had been misled and therefore unknowingly overpaid for their homes, which Haseko had developed and sold over nearly three decades while touting a boat marina as the community’s main attraction and central selling point.
After a nine-week trial in 2015, a jury decided that homeowners should receive $7 million in loss-related damages due to unfair or deceptive acts and $20 million in punitive damages.
But a month later Circuit Judge Gary W.B. Chang set aside the $27 million jury award, partly on grounds that state law governing unfair and deceptive trade acts or practices doesn’t permit punitive damages. Chang also said there wasn’t enough evidence showing that homeowners sustained damages from Haseko’s change.
There also was a second trial in 2017 on part of the lawsuit where a judge was to determine whether Haseko’s marina-to-lagoon switch unjustly enriched the company. Circuit Judge Karen Nakasone in 2018 awarded plaintiffs $20 million, which was less than $130 million sought by plaintiffs.
“The weight of the evidence shows that the switch from the marina to the lagoon was an economic decision by Haseko to save money on the unprofitable marina and make more money on the more profitable lagoon,” Nakasone’s ruling said.
Nakasone’s ruling also said plaintiffs could rescind their purchases instead of sharing in the $20 million award, and get a refund of what they paid plus interest, taxes and attorneys’ fees.
Haseko and the plaintiffs appealed certain aspects of the earlier decisions.
The ICA’s decision said purchase rescissions are not allowed, but upheld Nakasone’s $20 million award over unjust enrichment while also reinstating the jury’s $7 million award over losses due to unfair or deceptive trade practices.
The $7 million represents $1,300 in damages per plaintiff tripled. There are roughly 3,000 homes at the Haseko project, but the class represented in the case involves about 1,800 original homeowners. The combined $27 million in damages equates to $15,000 per plaintiff.
Haseko, in a written statement, expressed disappointment with the decision and said it is evaluating further legal options.
“For over 50 years, we have built a strong reputation for high-quality, award-winning projects and a deep commitment to Hawai‘i’s community,” the company said. “We still believe it was the right choice to pursue the recreational lagoon, and we remain dedicated to making Hoakalei a mixed-use waterfront destination for everyone to enjoy.”
Kyle Smith, an attorney representing plaintiffs, said he expects that Haseko might ask the Hawaii Supreme Court to consider reviewing the case, and is generally pleased with the ICA decision.
“We are very happy with the outcome of this long-awaited appeal and hope the decision will help successfully resolve this case for the benefit of our clients in the near future,” he said in an email.
If the ruling stands as is or after further appeal, a judge is expected to determine added attorneys fees, and plaintiffs will be owed interest on the awards.
