Attorneys for a developer and construction company that last year built a house on the wrong lot in Hawaiian Paradise Park on Wednesday cross-examined the lot’s owner, who they’re suing for unjust enrichment.
Peter Olson, who represents Keaau Development Partnership — which is suing Annaleine “Anne” Reynolds, PJ’s Construction and Hawaii County — pointed out that Leora Thompson, who previously owned Reynolds’ lot, defaulted on a tax bill of about $1,600 on the one-acre property on 8th Avenue.
Olson asked Reynolds, who is counter-suing and seeking a court order to have the unwanted house removed and her lot restored to its original state, if she had attempted to contact Thompson to inquire why she had defaulted on such a small tax bill.
‘When there are properties that are for sale in a tax sale, that means … they defaulted on the taxes for a certain amount of time, such that it is going to be auctioned off in order to pay the tax obligation,” Reynolds answered. “So, all the tax sale properties have this issue. … It’s common knowledge that’s the reason they’re being auctioned off.”
One of the claims in the developer’s suit is that Reynolds doesn’t have clear title to the property, and that Thompson — who is believed to be deceased — or her heirs might have a valid claim to the land.
“You’re aware of the right of redemption, right?” Olson asked, referring to the ability of the debtor, within a legally specified time period following the foreclosure sale, to take title away from the foreclosure purchaser by reimbursing the purchase price, plus interest.
“Yes, yes, I’m aware of the right of redemption,” Reynolds replied.
“Would it be a fair thing to say you have an incentive not to notify the prior record owner of the tax lien and your acquisition of the property?” Olson queried.
James DiPasquale, Reynolds’ attorney, objected on the grounds the question was argumentative, and Third Circuit Chief Judge Robert Kim sustained the objection.
According to county property tax records, the tax bill on Reynolds’ lot jumped from $444.13 in 2022 to $2,019.60 in 2023.
“It says on the tax notice you’re allowed to appeal a decision if you disagree with the assessment. Correct?” Olson inquired.
“That is correct, yes. That’s what it says,” Reynolds responded.
“With respect to your 2023 property tax assessment, you actually paid that. Right?”
“I did.”
“And now, you’re coming into court … roughly a year after being notified of this construction, and you’re asking the court to tear this down. Right?”
After asking Olson to repeat the question, Reynolds acknowledged a year had passed since she was told about the construction.
Under questioning by Olson, Reynolds said she had up to $150,000 to purchase properties in the 2018 tax auction in which she paid $22,500 for the 8th Avenue lot where the home construction snafu occurred. She testified that she bid, unsuccessfully, for two other lots that same day — an oceanfront property in Kapoho for $52,300 and another lot in HPP for $34,900.
“Is it your testimony today that there wouldn’t really be any money that would compensate you for this mistake?” Olson asked.
“Yes,” Reynolds replied.
Olson asked if a previous attorney retained by Reynolds “requested that my clients purchase you a beachfront property in exchange for resolving this?”
DiPasquale objected, and Kim sustained the objection.
“Your Honor, this is offered for a limited purpose regarding her testimony that her damages are irreparable — and this regards her bias and credibility,” Olson told the judge. “The offer of proof is that I have in an exhibit that I produced the text message from her agent asking my client … for a beachfront lot. And my client would be prepared to testify to that, as well.”
The injunction hearing is scheduled to continue today. The proceedings are in Kim’s courtroom in Kona because both Hilo Circuit judges, Henry Nakamoto and Peter Kubota, recused themselves from hearing the case.
Email John Burnett at jburnett@hawaiitribune-herald.com.