Litigation between two companies on Maui with billionaire owners has spread from contention over water to land, and specifically control of an association representing landowners at Kapalua Resort.
TY Management, the owner of two golf courses at the resort that are shuttered due to a lack of water flowing through a system owned by Maui Land &Pineapple Co., filed a second lawsuit against MLP in September after suing in August over the water shortage that led to the cancellation of a prestigious January PGA Tour Sentry tournament worth $50 million to Maui’s economy.
The new lawsuit contends that MLP “sneakily” acquired supermajority voting power in the nonprofit Kapalua Resort Association by adding nearly 2,000 acres of largely undeveloped land to the West Maui resort area.
According to the complaint, which was filed Sept. 25 by TY Management and an association representing owners in the gated Plantation Estates subdivision at the resort, the move by MLP boosted its voting power in the resort association to 73.5% from 33.2% and gave MLP the ability to unilaterally change things including rules and fees for maintaining resort common areas.
“These actions stripped Plaintiffs (and all other KRA members) of meaningful participation, voting power, and financial protections, leaving them subject to the unchecked dominance of a single corporate member: MLP,” the complaint filed in state Circuit Court said.
In a statement, TY Management, a firm headed by Japanese billionaire and Uniqlo founder Tadashi Yanai, said the complaint attempts to correct “serious breaches of governance, transparency, and fairness within the Kapalua Resort Association” by MLP promoting its own interests at the expense of Kapalua homeowners and businesses.
MLP, which began developing Kapalua Resort on former pineapple fields in the 1970s and previously owned the two golf courses, called the lawsuit a frivolous attempt to obstruct progress toward “revitalizing the association” and enhancing the resort.
“This won’t deter us from exercising our rights or moving forward as a community,” the public company, majority owned by Hawaii-born billionaire Steve Case, said in a statement. “We invite the luxury estate owners and billionaire-backed golf courses to join us in advancing the resort for the benefit of all.”
Land and power
The property owners association for the master-planned resort was established in 1977, and over the last several decades as more of the resort was developed, additional land and members were added to the organization led by a board of directors to govern certain elements of the resort that include maintenance of roads, landscaping and other things.
MLP, a kamaaina company with roots dating to 1909, quit farming pineapple in 2009 and since then has largely sustained itself financially by selling assets.
According to the lawsuit, TY Management, which bought the Plantation Course and Bay Course from MLP in 2009 and 2010, held the most voting power among resort association members at the end of 2023 with a 39.5% share compared with 33.2% for MLP.
Homeowners in multiple communities within the resort collectively held a 15.3% voting stake, the suit also said, while the smallest stakes were held by the Ritz-Carlton Kapalua hotel at 8.4% and the Montage Kapalua Bay hotel at 3.3%.
MLP, which owns 22,000 acres on Maui and is the master developer of Kapalua Resort, exercised reserved rights to add 1,936 acres it owns to the resort area in December and January.
The lawsuit alleges that MLP CEO Race Randle, one of five resort association board directors, on May 14 asked for a special June 16 board meeting to adopt a proposed amendment that among other things would give MLP one additional vote for every 10,000 square feet of land it owns within the resort.
MLP’s desired change, according to the complaint, would boost MLP’s voting power to 73.5% from 33.2%, beyond a 66.66% supermajority threshold allowing unilateral amendments to association governing documents.
Such power, the suit also said, would allow MLP to replace board directors and alter the amount of dues each member pays.
Disputed meeting
The Plantation Estates owners association on June 10 petitioned Circuit Court for a temporary restraining order to prevent the special meeting.
The special meeting was canceled, but TY Management and the Plantation Estates owners association contend in the subsequent lawsuit that MLP’s proposed amendment was adopted at “an impromptu and undisclosed” board meeting on June 10, and that Randle along with two other members of the five-person board approved MLP’s additional voting rights.
One of those two other board members accused of voting for the change subsequently resigned, according to the lawsuit. The other one named as a defendant in the complaint is John Tolbert, senior vice president of asset management at BRE Hotels &Resorts, which is affiliated with the investment firm Blackstone that owns the Ritz-Carlton Maui hotel in Kapalua.
The lawsuit alleges that the hotel intentionally didn’t pay $353,793 in resort association fees from January through April upon an expectation of its fees being reduced, but later paid the overdue fees without penalty.
In a statement, the hotel owner said, “For more than 30 years, we have been a leading financial contributor to the Kapalua Resort Association. Our commitment to working with our neighbors to ensure Kapalua continues to thrive as a world-class resort community remains as strong as ever. We cannot comment further on pending litigation.”
The lawsuit also suggests that MLP gained its additional voting power with no increase in annual fees.
MLP said in a statement that the alleged meeting and vote never took place, and that its dues may increase with the inclusion of the additional land.
Equity claims
According to MLP, the 1,936-acre addition includes includes completed, ongoing and planned development projects for the resort along with community amenities like hiking trails and open space.
Part of the addition, currently used for walking trails, covers over 930 acres slated to become Kapalua Mauka, which is approved for 639 homes, resort amenities and a golf course or recreational space. An initial phase of Kapalua Mauka, a subdivision with 51 residential lots called Mahana Estates, is complete and was previously added to the resort area.
MLP said part of its goal with resort association changes is to establish equal dues payments by all Kapalua homeowners, and ensuring that short-term vacation rental operators pay a fair share.
Specifically, MLP contends that owners in the 103-lot Plantation Estates subdivision created along the Plantation Course have the largest and most expensive house lots at Kapalua and unfairly pay less per home than other neighborhoods.
According to real estate listings, one Plantation Estates property is listed for sale at $26 million, and another one sold earlier this year for $18 million.
The Plantation Estates owners association contended in its restraining order petition that resort association fee assessments for its subdivision have not been fair and equitable in part because its subdivision is zoned for agriculture, and as such owners cannot operate transient vacation rentals. The petition also said Plantation Estates owners derive “minimal benefit” from resort common areas because it is farther from main parts of the resort than other resort association members.
“Despite this, (the resort association) has imposed the same assessment burdens on (Plantation Estates) as it has on members with hotel zoning and superior access to these amenities,” the petition said.
TY Management said the lawsuit aims to protect rights of all resort association members, and ensure that decisions affecting homeowners, businesses and community stakeholders are made responsibly and legally.
MLP counters that its goal is no different. “MLP has the kuleana (responsibility) and associated rights, as the developer of the resort, to ensure the association fairly supports all owners in the resort.”
On Friday, MLP filed a petition in state court to force the resort association’s four remaining and deadlocked board members to hold a meeting by Dec. 15 to fulfil a legal requirement to hold an annual meeting.
“We’re asking the court to allow the Kapalua Resort Association to continue serving the community while this fabricated dispute is resolved,” Randle said in a statement.
Source: The Garden Island
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