Country Club:$1.3M in delinquent maintenance fees

The managing agent of a beleaguered Banyan Drive condominium testified Wednesday in Hilo Circuit Court the building’s owners association is owed about $1.3 million in delinquent maintenance fee payments and owes about $400,000 in accounts payable.

Richard Emery, president of Hawaii First, said the battle of two boards competing for control of Country Club-Hawaii hampered efforts to pay the bills and meet other responsibilities. That, he said, has resulted in a six-figure debt to Hawaii Electric Light Co., which has at least twice threatened to turn off the lights at the six-story building.

“Some owners paid the competing board (maintenance fees), some owners paid what we believe the lawfully elected board, and some owners took the position ‘I’m not paying until this all gets settled in court,’” Emory said.

He said he started efforts to collect from delinquent apartment owners.

Kauai Circuit Judge Randall Valenciano on Wednesday dismissed the second of two lawsuits brought by the competing board controlled by Carl Oguss, an apartment owner who has fought to wrest control of the building from the previously established board chaired by Pearl Elena Macomber.

Defendants in the dismissed suit are Country Club-Hawaii Inc., Ala Kai Realty, Property Professionals, Kevin Aoki, Herbert Arata, Alyce Arata, Sadao Aoki, Ken Takahashi, John Reed and India Shor.

Valenciano dismissed Oguss’ previous suit May 23.

The judge said Wednesday that Oguss’ board “was not properly constituted, and because of that they didn’t have standing (to sue).” Both dismissals are without prejudice, which leaves Oguss free to file subsequent suits.

Valenciano also denied a motion by Oguss to order another mail-in board election, ruling an apartment owners’ meeting is already scheduled for Oct. 25.

The Kauai judge is presiding over the matter because all of the Big Island’s circuit judges have recused themselves. He is still hearing a suit brought by the Macomber board against Oguss, and on Wednesday, he allowed attorney Peter Steinberg, who was representing Oguss to withdraw from representing him, and also dismissed Steinberg as a defendant in the suit by the building’s board against Oguss.

Oguss proceeded as his own attorney, but protested the judge’s insistence on proceeding Wednesday violated his right to due process, to which Valenciano replied Steinberg had made his intention to withdraw evident at an Aug. 27 hearing and Oguss had time to find another lawyer.

At one point, Oguss called the proceedings “a farce” and repeatedly attempted to introduce what he said was evidence the building’s bylaws are illegal because master leaseholder Herbert Arata sold condos before the bylaws were incorporated in 1987.

The judge told Oguss that issue would be decided later.

Emery testified the lack of records by the Oguss board means “a complete, accurate financial statement” can’t be constructed, and taxes and vendors have gone unpaid.

“You look at the competing board, we have owners sending payment to them that we have no record of, so we can’t give proper accounting for those monies,” he said. “You have some owners making payments directly to HELCO, so there’s no records of those. … We have no way to prove one way or another without research and validation. Some paid to the (Macomber) board, and we have those records.”

Emery said when his company took over the building’s management from Property Professionals on Jan. 1, “the first thing I noticed is that the Country Club did not have all the statutory insurance required.”

“For example, both the state ground lease and the condominium’s bylaws … requires it to have flood insurance, because it’s in a flood zone. And it had no flood insurance,” he said. “And we all know we had a recent hurricane scare … and rising waters from the tide is considered a flood, not a hurricane.”

Emery also testified the worst-case scenario is the Department of Land and Natural Resources voiding the lease on the state-owned property and people in the building losing their homes.

Valenciano ordered Oguss to turn over any funds, records, monies and accounts controlled by Oguss pertaining to the building.

“Given the court’s ruling on two prior cases, I’ve already ruled that (the Macomber board) is the appropriate group,” Valenciano said. “… If the lease is lost, there is going to be serious ramifications.”

Said Emory afterward, “If we can get a proper accounting and collect everything that’s owed to the association, we could pay all the bills that are owed.”

The next hearing is scheduled for 9 a.m. Oct. 22.

Email John Burnett at jburnett@hawaiitribune- herald.com.