Orchidland Community Association
|click for LARGER TEXT|
||Association Business »
Here's a list of our association current and past legal actions in PDF format. Click Here to download Adobe Acrobat Reader.
We will try to post updates on the current status of cases here. Please keep in mind that 100% of our board is volunteers, and if we are in a legal case, that already significantly takes up our time and energy as it is.
As directors and especially as officers of OLCA a certain amount of scrutiny is expected. There have been slanderous remarks and even propaganda distributed at our meetings. Generally, we choose to ignore these and let our actions speak for themselves.
If you are a Orchidland owner, you are STRONGLY encouraged to get involved or ask questions at our board meetings (dates posted on our calendar page).
Below where case numbers are indicated, you can find a list of, and information about legal papers filed on that suit at:
As you may know former Board member Bob Ely and Kwan Sung are suing OLCA to intervene in current negotiations to settle a foreclosure suit that the old Board (and Bob) began more than a year ago. That foreclosure suit has already cost the Association--that's you and me--nearly $40,000, and the Ely-Sung suit has the potential to cost us an additional $15,000. Moreover, all of these legal proceedings have diverted the current Board's energies and time away from the real business of the Association: fixing the roads, building community, etc. To help you better understand the situation we offer the following chronology of events that have led us to this point. Please take the time to read it carefully, as the legal issues have become quite complex.
If you are unfamiliar with OLCA’s history, please check out our History of Orchidland page before reading this.
On 12/21/05 the OLCA Board of Directors appointed Bob Ely Collections Manager and passed a motion to implement foreclosure proceedings on up to ten property owners at a time. Mr. Ely began immediately, and within a few months had filed several foreclosures with the court. Stuart Oda was hired. In January 2006, Mr. Ely was admitted to the BOD.
One of the foreclosures turned out to be the father of a very prominent Honolulu attorney named Allan Murakami, who chose to fight the foreclosure. He filed a counter-suit on April 17, 2006. Nine days later, at our General Membership Meeting, this information was not revealed. The identity of our attorney was revealed only after the membership stood up and angrily demanded it. The fact that we were being counter-sued was kept secret for nearly a year.
In July, 2006, there was an attempt to settle. Murakami agreed to pay his fees, but would not drop the counter-suit. The BOD at that time rejected this offer. However wise or unwise this was, it establishes that all Board members at that time were informed of the counter-suit. During this time, the membership was organizing a movement against the BOD. In September 2006, four members accepted nominations to the BOD. In October 2006, a petition was served to the President calling for a Special Membership Meeting for the purpose of removing Bob Ely from the BOD, in accordance with the bylaws. Rather than face the membership, Mr. Ely resigned at the November BOD meeting. The resignations of Jerry Gardner, Sherri Carden, and Carol Noel were also announced at this meeting.
On December 1, 2006, the Murakami foreclosure case was heard by the court. Stuart Oda, Steven Starnes, and Bob Ely were there representing OLCA. Again, this hearing date was kept a secret from the community and even from the newly elected directors. When new director Dean Monroe asked Steve Starnes about the counter-suit, he was told there was none. The judge ruled in favor of Murakami, saying that since the encumbrances were not on his deeds, he was under no obligation to the association. In February 2007, Stuart Oda filed a motion to amend the complaint on the theory of “implied contract”, which was a new law stemming from a recent Hawaii Supreme Court decision in Kaanapali Hillside Homeowners Association vs. Doran. Check the minutes of the February 2007 Special Membership Meeting for more on this. The judge agreed to hear this new argument. The two sides were given time to prepare their arguments. Meanwhile, more directors were elected, some stayed, some didn’t. President Glenn Pressel resigned in April 2007, leaving VP Steven Starnes in charge. Starnes left at the end of his term on June 30, 2007.
On July 1, 2007, the new officers were installed as follows: Roger Hawney, President; Dean Monroe, VP; Lisa Tostensen, Secretary; Yen Chin, Treasurer; and Andrew Coyne, Road Chair. Dean Monroe and Lisa Tostensen have resigned, Wes Owens is now VP. We had learned of the counter-suit through research at the Court Records Dept. in Hilo, and our first order of business was to report to our insurance company, who promptly told us that we would not be covered because it had been kept secret from them, too, for over a year. This, of course, seriously affects where we go from here. None of us is willing to risk our own assets for this.
We entered into settlement negotiations with Murakami hoping to resolve the situation. Bob Ely and Kwan Sung have filed a suit against us to intervene in these negotiations.
This was the status of the situation last November, and we covered it in great detail in that membership meeting. There were many opinions, but the general mood was “let’s get out of this mess as cheaply and painlessly as possible and move forward”. We have given the Ely/Sung suit much consideration, and have concluded that it has very little merit, if any. We began negotiating with Murakami again with the best interests of our membership in mind. This process has been slow, but so far, fairly inexpensive. But things have changed drastically in the last couple of weeks. It has become apparent that the sides are too far apart to reach an out of court settlement. The case will proceed to the courtroom.
Had we reached a settlement, the terms would have been shared, however, the contents of our negotiations are confidential, as is normal and ethical in settlement negotiations. Suffice to say, if Murakami had agreed to our terms, he would have suffered substantial loss, and if we had agreed to his, likewise. So the decision as to who will suffer the losses and how much will lie with the judge. And we should get at least some definition as to the authority of OLCA. The hearing is scheduled for July 8, 2008 at 8:30am in Judge Nakamura’s courtroom.
One would think that this would have satisfied Ely/Sung, however, they did not drop their case. The day after our attorney informed them of this new development Mr. Sung filed another complaint, a continuation of the previous one with some additions. Yen Chin and Dawn Spurrell-Robinson were served on the eve of our Annual Membership Meeting, the rest of us were served at the beginning of the meeting.
We have posted the complaint here on this website. Those of you who have been keeping up with the events of the past couple of years should have no trouble seeing the truth. As you read the file, please note the abundance of accusations, yet the lack of examples or substantiation. Mr. Sung claims to be suing “on behalf of all shareholders of Orchidland Community Association, Inc.” We have been supporting our membership to the best of our abilities, and you have appeared to support us, so we wonder how many of you actually gave him permission to do this.
Aside from being costly, these lawsuits are a time consuming nuisance. We have been working very hard to put an end to this, but there are a couple of people who would like the litigation to continue. We currently have 7 open lawsuits, and one counterclaim. It is important to note that the current Board of Directors had nothing to do with the initiation of any of these lawsuits. All 7 were started by Bob Ely, Shikwan Sung, or both, and the counterclaim is a response to one of these.
We will post our answer to the latest complaint once we have condensed it into legal form with our attorney. Please stay tuned…
Board of Directors
Another 5 months have passed. To update the previous paragraphs, we no longer have 7 open lawsuits. We are now dealing only with the counterclaim in the foreclosure action, the latest action by Mr. Sung, and our counterclaim in that action. All others have either been dismissed or decided.
On July 8, 2008 the court heard the foreclosure case. OLCA’s authority to collect mandatory road fees was upheld, but the right to foreclose was denied. Also, the process by which we attach liens has been changed. We must now obtain a judicial decision for the amount owed, and then place the lien for that amount. We are now in the process of correcting this, but it will take some time. A new collections policy needs to be established in accordance with the court’s decision, and then we must start over.
Stuart Oda, the attorney hired by the previous Board of Directors to pursue foreclosures, has asked to withdraw as counsel. He had requested this about a year ago when we wanted to attempt negotiating a settlement, stating that he did not believe in this direction and could not represent us in these negotiations in good faith. We did not approve his withdrawal at that time due to the uncertainty of the negotiations, and the fact that he had already been paid to prepare his case, and he had done a satisfactory job of doing so. This time, we did not object to his withdrawal, and the court has approved it. Our replacement counsel to defend the association in the foreclosure counterclaim is Ivan Van Leer. Our first approach, of course, will be an attempt to negotiate.
The recent action by Mr. Sung has been determined to be a derivative of the previous claim, Ely/Sung vs. OLCA (to intervene in our settlement negotiations). The earlier claim has been dropped, and the derivative claim will be treated as a continuation by our insurance company, so the costs will be applied to the same deductible under the policy. This news is bittersweet – the deductible is $15,000. We have filed an answer, basically that it is frivolous, and a counterclaim for damages. The case is now in the discovery phase.
The real damage that these lawsuits create is our inability to fill up the Board of Directors. Peaceful people are not usually willing to jump into a mess such as this, and when they do, they realize very quickly what they have done, and want out. This is sad, because the vast majority of the people in our community are peaceful, and would be of great assistance in developing positive relations between the Board and the members, rather than perpetuating the war. As this continues we find ourselves ever closer to being unable to make a quorum, and unable to do business, and therefore susceptible to receivership.
We speak of receivership only because it is a real possibility. To some, the idea of the association dissolving is a pleasant one. OLCA has had rough times from the beginning, as any of you who have served on the Board can attest. But it isn’t that simple. If we close up shop, our governing body will not go away, it will just change hands. The court will appoint a management company to take over. They will be paid, and they will determine how much the fees will be to cover their administrative costs and the road maintenance operations. The fees will increase substantially without your vote, and your voice will be lessened considerably.
The only thing that will save us from receivership is action from this community. At the very least, please come to the membership meeting on November 15th and learn more about the lawsuit you are involved in, and what all of this could mean to you personally. Ignoring it won’t make it go away. You are at risk, and we urge you to read the documents, talk to your neighbors, AND COME TO THE MEETING. Saturday, November 15th, 2008 at the HPP Owners’ Association on 16th and Makuu in Paradise park. 9am sign in, potluck lunch.
Board of Directors
At the General Membership meeting in November the Board of Directors revealed the current liability insurance situation. In short, have only been able find a Directors and Officers insurance policy that carries significant exclusions. These exclusions mean that the Association will have to foot the bill for any new legal actions that these named exclusions may file.
After about 3 hours of very serious and cooperative discussion, we came away with a directive to ask the full membership to vote for a special assessment for a legal fund, to provide protection for the Association and its Directors when the insurance does not.
The requirement that the Directors and Officers are protected by the association is already in our bylaws. However, a realistic assessment of our finances clearly shows that normal budget cannot provide such protection. The special assessment is to make sure that the funds are available, and to give confidence to future Directors that they will be protected in these volunteer positions.
Without this confidence, it is doubtful that anyone would agree to serve on the Board of Directors, and the prospect of receivership becomes even more real.
The ballots have been sent out, and we will have a Special Meeting to answer any remaining questions on January 17, 2009 at the HPP Community Center on 16th and Makuu in Hawaiian Paradise Park. 8:30am sign in, meeting starts at 9am. Ballots are due January 24th.
(New entry, October 12, 2009)
The one-time $50 assessment to create a Legal Defense Fund was passed by a vote of 255 for, 141 against. The policy for the proper use of this fund was worked out in the April 2009 Membership Meeting. To view the document, go to the minutes of this meeting. We thank you for supporting this.
There is now a tentative settlement agreement on the table in the Sung case. The agreement has been approved as to form by the Board of Directors and the named individuals. Mr. Sung has approved the form of the agreement except for provisions concerning the amount of time that future disputes or claims must be mediated. We expect to determine a fair number of hours in the upcoming membership meeting, and amend the agreement if necessary. Membership approval and ratification must be obtained because the Orchidland Community Association, Inc. is named as both plaintiff and defendant in the lawsuit.
The case is titled “Shikwan Sung, individually and on behalf of all shareholders of Orchidland Community Association, Inc.; Plaintiff, vs. Roger Hawney, an individual; Wes Owens, an individual; Yen Chin, an individual; Andrew Coyne, an individual; and Dawn Spurrell-Robinson, an individual; Orchidland Community Association Inc., a Hawaii non-profit corporation; and DOES 1-10, Defendants”. Therefore, the membership (shareholders) must approve it as well for this to be a binding, enforceable and complete settlement agreement.
We have posted here on our website the complaint, our answer and counterclaim, the settlement agreement and the related documents. We will be discussing this issue first thing in the Semi-Annual Membership Meeting on November 21, 2009 at the HPP Community Center. Sign in at 8:30am, meeting starts at 9am. Please read through the documents before the meeting, and print your own copies if possible. We will have a few copies, but some of the documents are too long to print large amounts.
We will try to answer all of your questions in this meeting as best we can. We would like to keep the discussion limited to the pros and cons of the settlement as much as possible. We understand that you will need at least some discussion of the merits in order to make an informed decision on the settlement, but avoiding the costs of continuing litigation will ultimately be the reason for this settlement.
If the settlement is approved in this meeting, it will then go out to a ratification vote of the full membership. We will post the unapproved minutes of the meeting on this website as soon as possible after the meeting so that those who could not attend will have access to the discussion, questions and answers. If you still have questions after reading the documents and the minutes, you can contact us directly using the e-mail form on the website. You may also use the community forum for a more public discussion. We would like to discourage the use of telephone or U.S. mail for discussion of this, as the accuracy of documentation of these can be questioned. Once the form of the settlement agreement is approved by all parties, including ratification, we will all sign it. The OLCA President will sign for the membership.
Shikwan Sung & ALL OLCA owners/members vs. OLCA
Information about this case is covered in the synopsis of current legal situation above.
Yet another suit, served to the current board members April 25th, 2008 [PDF: 472 KB - Apr 12, 2013]
Sung's Motion for Entry of Default Judgment against OLCA (July 15th, 2008) [PDF: 218 KB - Apr 12, 2013]
Explanation of Time Frame
The latest complaint by Mr. Sung was served to the Directors on April 26, 2008. We immediately informed our insurance company, and were initially denied coverage due to a clause in the policy that excludes claims for emotional distress. We retained Ivan Van Leer to represent us. He felt that, under the terms of the policy and a Hawaii State law that says that “the duty to defend is greater than the terms of the policy”, the insurance company should cover us, and his first order of business was to file a Motion for Declaratory Relief with the court to compel them to do so. During this time period, Mr. Van Leer was unable answer the complaint, because to do so would “taint” the case, i.e., the insurance company’s attorney may not choose to address the case in the same manner, and this would have given them legitimate grounds to deny coverage. Plaintiff filed a Motion for Entry of Default Judgment. A hearing was held on July 15, 2008. The Judge suggested to Plaintiff’s attorney that he withdraw the motion, and he did so immediately, in the hearing. The Judge also instructed Mr. Van Leer to provide the answer within 10 days. Since the answer was now court-ordered, there would be no “tainting” of the case. The answer and counterclaim were filed on July 24, 2008. Shortly thereafter, the insurance company agreed to defend without court intervention, and the case was turned over to the law firm of Ayabe, Chong, Nishimoto, Sia, and Nakamura.
OLCA's response to the court of the allegations and demands. [PDF: 29 KB - Apr 12, 2013]
OLCA's 1st request for Interrogatories (Nov 7, 2008) [PDF: 323 KB - Apr 12, 2013]
OLCA's 1st request for Production of Documents (Nov 7, 2008) [PDF: 180 KB - Apr 12, 2013]
OLCA's 2nd request for Interrogatories (Nov 10, 2008) [PDF: 117 KB - Apr 12, 2013]
OLCA's 2nd request for Production of Documents (Nov 10, 2008) [PDF: 93 KB - Apr 12, 2013]
UPDATE! Orchidland Letter to Sung [PDF: 19 KB - Apr 12, 2013]
UPDATE! Sung Letter to Orchidland [PDF: 92 KB - Apr 12, 2013]
UPDATE! Proposed Settlement Agreement pages 1-9 [PDF: 363 KB - Apr 12, 2013]
UPDATE! Proposed Settlement Agreement page 10 [PDF: 11 KB - Apr 12, 2013]
UPDATE! Explanation of the settlement in layman's terms from our Attorney Gary Miyamoto. [PDF: 22 KB - Apr 12, 2013]
Bob Ely and Shikwan Sung vs. OLCA
Case Number: 3CC0710301
On Wednesday, September 25th, the Sheriff served OLCA with papers that initiate a lawsuit against OLCA to prevent settlement of the Murakami foreclosure suit. The named plaintiffs in the case are Orchidland property owners Bob Ely and Kwan Sung, and the papers arrived on the eve of initial discussions between the Board and the Murakamis.
OLCA must defend itself in court against this suit, which will cost money. Fortunately, OLCA has insurance that gives it some protection. Unfortunately, the policy carries a $15,000 deductible, so OLCA must pay the first $15,000 in legal costs. Obviously, this means that the already slender budget will have to absorb an additional strain.
We will share with the community all the details of this case that we can via this website.
Initial Suit [PDF: 46 KB - Apr 12, 2013]
Initial Suit [PDF: 114 KB - Apr 12, 2013]
Injunction [PDF: 774 KB - Apr 12, 2013]
Dismissal [PDF: 70 KB - Apr 12, 2013]
Dismissed June 16, 2008
OLCA vs. Murakami Trust
Case Number: 3CC0610099
This case revolves around OLCA's legal right to foreclose on property where the owners have not paid the required road fees. This case is currently in Settlement discussions. We will update this site soon with at least a summary of the case.
May 2008 - Settlement discussions were unable to produce a mutually acceptable result, so the case was sent to the court for a decision from the Judge.
Court's Decision [PDF: 542 KB - Apr 12, 2013]
The court's decision is basically that OLCA may collect road maintenance fees (MRMA's) from Land Court properties, all properties in Orchidland, even if it is not listed on their deeds. Further, the court outlines the process by which OLCA may place liens on Land Court properties for which are in arrears in their MRMA's. The court denies OLCA's ability to seek foreclosure on liens for delinquent MRMA's, stating: "... Plaintiffs remedy is execution on a judgment lien and not foreclosure on the lien."
OLCA's attorney's response to Judement [PDF: 52 KB - Apr 12, 2013]
Mr. Oda's explanation of the Judgement, and next actions
Road fees Encumberance
Summary Judgement April 6, 1992 [PDF: 265 KB - Apr 12, 2013]
Gave the OLCA the legal right to asses and collect road fees. Also gave the OLCA the legal right to place a lien on a property for non-payement of these road fees.