HILO — Kamehameha Schools is suing the HSC Inc. and Realty Investment Co., alleging the Hilo companies are in default of a five-decade-plus lease of commercial property on Kekuanaoa Street near the Hilo Shopping Center.
The civil action, filed May 8 in Hilo Circuit Court by Honolulu attorney Cheryl Nakamura, seeks termination of the lease. There are several businesses on the property in dispute, including Big Island Used Cars, which is at the corner of Kekuanaoa and Mililani streets on the site of the former Excelsior Dairy. The car lot, and other tenant businesses, are not parties to the lawsuit.
The filing doesn’t state a specific amount allegedly owed by HSC and Realty Investment to the educational trust established in the will of Princess Bernice Pauahi Bishop. Prominent Hilo businessman Richard Henderson, a former state senator, is the president of both HSC and Realty Investment.
“They’re (Kamehameha Schools) looking to collect what they claim are past rents and to foreclose on the lease,” Kona attorney Frank Jung, who represents Henderson and his companies in the matter, said Friday.
According to the lawsuit, the rent for the period of Sept. 1, 2010 to April 31, 2015 is to be set by agreement of Kamehameha Schools and HSC or, if they fail to reach such agreement, by appraisal and arbitration as provided in the lease, which is dated Dec. 12, 1960. The suit claims that the parties have not reached an agreement on the rent amount since Sept. 1, 2010.
The suit states that HSC paid $83,885.22 a year for rent on the property from Sept. 1, 2000 to Aug. 31, 2010. In the two decades prior, the annual rent was $54,260, according to the document.
“There’s another action that’s been filed by (Kamehameha) to compel arbitration on what the rent should be from 2010 on and that’s pending still,” said Jung. “Of course, there were settlement discussions going on. With respect to this new suit, we’re a little surprised, because there’s another suit that’s pending involving the same property where lease rents are concerned.
“In the meantime, the parties are still in the process of negotiating a settlement.”
Asked if HSC had paid any rent since Sept. 1, 2010, Nakamura said she didn’t have that information available and referred questions to Kamehameha Schools spokesman Kekoa Paulsen.
“Since the matter you are inquiring about is in litigation, we would prefer not to comment on it at this time,” Paulsen wrote in an email on May 14.
Jung said some rent had been paid on the property since Sept. 1, 2010.
“How much, I’m not exactly sure,” he added.
The lawsuit alleges that HSC and Realty Investment owe Kamehameha Schools “sums for rent, late charges, interest, advances, costs, expenses, attorneys’ fees and other amounts due and to become due under said lease” and that Kamehameha “reserve(s) the right to seek any other remedy permitted by the terms of the lease or the law including but not limited to establishment of a rent trust fund and/or appointment of a receiver.”
The filing asks that the court order “that the lease is cancelled and that plaintiffs are the owners of the subject property, free and clear of the lease,” and that a writ of possession be issued “to remove defendant lessee and/or any tenants or occupants … from the subject premises.”
Jung said that despite the two legal actions, he remains optimistic a settlement can be reached.
“With the latest suit, it looks like (Kamehameha) is trying to take the property back, but I believe they’re still open to negotiation,” he said. Asked how the businesses on the property will be affected by the legal dispute, Jung replied: “I don’t believe they’ll be affected at all.”