An Oahu developer who filed a lawsuit against a California woman who owns a Hawaiian Paradise Park lot on which his contractor mistakenly built a house more than a year ago testified Thursday that he paid contractors, subcontractors and vendors more than $300,000 in cash and that there was no insurance bond on the construction.
Paul Fujinaga, partners with John Mendonca in Keaau Development Partnership, also said that no surveyor was brought in to ensure that the contractor, PJ’s Construction, built the house on the one-acre lot on 8th Avenue owned by the developer instead of on the adjoining vacant parcel owned by Annaleine “Anne” Reynolds.
Keaau Development is suing Reynolds, PJ’s Construction, Hawaii County, previous lot owner Leora White Thompson and her heirs and others, seeking to recoup its losses over the construction snafu.
Reynolds is counter-suing, and she has filed a motion seeking a court order to demolish the house and return her lot to its original state. The current proceedings are in regard to that motion, which is being heard by Third Circuit Chief Judge Robert Kim in Kailua-Kona.
Fujinaga testified his company owned 12 parcels in HPP and built on and sold 11 of those. The other parcel is the vacant one-acre lot on which the house built on Reynolds’ land was supposed to be constructed.
According to Fujinaga, a surveyor was brought in on a previous construction job when it was thought there was possibly a telephone pole on the property, but not for the construction at issue in the court case.
“At some point in time, you came to realize the house was erroneously constructed on (the wrong lot)?” asked Peter Olson, Keaau Development’s attorney.
“Yes,” Fujinaga replied.
“Are you sorry about what happened?” the lawyer asked.
“Very sorry, yes,” said Fujinaga.
Fujinaga said once the error was discovered, he and his partner sent a letter to Reynolds.
“We thought we could solve this,” he said.
According to Fujinaga, the reply came in the form of a text message from attorney Cindy Watson, who was representing Reynolds.
“As soon as our conversation started, she came out with a comment for us and PJ’s to get creative with our offer, and don’t low-ball it. So, we were confused because low-ball could be, like, anyone’s opinion,” Fujinaga testified. “When I asked her what she was talking about, she was like, ‘Well, you know, maybe in exchange for three lots or for beachfront property.’ And I told her, ‘You know, I can’t agree to this because I have to go back to (PJ’s Construction) and with my partner. We have to discuss it.
“We can’t afford something like that.’”
Gene Lau, PJ Construction’s attorney, asked if Fujinaga understood that “what Cindy Watson said to you regarding three lots or beachfront property was a counter offer?”
“That’s completely understood, yes,” he replied.
Reynolds bought the lot for $22,500 in a tax auction sale in 2018. She testified that the current mess makes it impossible to insure the property, although she has liability for what occurs there.
Fujinaga also testified it is unlikely he or Reynolds would be able to obtain title insurance on the property, making it impossible to sell the house to anyone but a cash buyer.
James DiPasquale, Reynolds’ attorney, said Keaau Development’s last offer to Reynolds was contingent on title insurance being available. He hammered on Keaau Development’s claim that Reynolds has been unjustly enriched by the erroneous building of the home on her property.
“And that claim presupposes that someone would come and offer that value to Ms. Reynolds, correct?” DiPasquale continued.
“Yes,” Fujinaga answered.
“Now she can’t obtain title insurance. So, how does she sell that property?” DiPasquale inquired.
“I believed she weren’t going to sell it,” Fujinaga testified.
“So, in other words, the house only has value to her if she were to accept, like move into and live within, that home, because she can’t sell it. Correct?”
Kim overruled an objection by Olson at that point, and Fujinaga said he didn’t know if Reynolds would be able to sell the house.
“Now, you said you were extremely sorry for what happened. … But you weren’t so sorry that you didn’t sue her. Correct?” Di Pasquale inquired.
“Well, I guess we had nowhere to go,” Fujinaga answered. “We were out-of-pocket. We didn’t have the home, you know, and we just needed some way to recover our loss. We just needed some help.”
“And did you understand that, pursuing your avenue of help, it would cost Ms. Reynolds attorneys fees and stress and time and inconvenience to come over here and defend against your lawsuit?” DiPasquale queried.
“I-I-I think we are feeling that pain,” Fujinaga responded. “We’re all absorbing the cost of attorney’s fees. We didn’t want that. We wanted to talk story with her directly and see if we could’ve worked something out.
“This was never our intention.”
Email John Burnett at jburnett@hawaiitribune-herald.com.