Splitting the Baby Means Every Side Comes Out a Loser

I wrote recently about the intriguing story of a developer that hired a contractor to build a house for him in Puna on the Big Island.  The contractor built the home on the wrong lot by mistake.  The rightful owner of the lot wanted the house removed.  The developer sued the contractor and the lot owner to recoup money he’s lost.  A judge this week issued a ruling on a motion for injunction filed by the lot owner.

Photo courtesy of Kelsey Walling/Tribune-Herald

A quick synopsis of what happened:

Keaau Development Partnership owns several lots in Hawaiian Paradise Park in Puna on Hawaii Island.  KDP hired Patrick John Lawrence Jr., doing business as PJ’s Construction, to build the modest home on one of KDP’s lots.  Permits were pulled and issued by the county and the home was built.  At the hearing County Planning Director Steven Pause testified that the home had the proper building permits, but they were issued for the adjacent property owned by KDP.

The parties first learned the house was built on the wrong property from Dana Kenny of Savio Realty.  Kenny sold the completed home on behalf of the developer and ran a title check for the prospective buyer.  It was then that the error was first discovered.

The developer offered to do a lot swap with Annaleine “Anne” Reynolds, the lot’s owner for the lot next door owned by KDP (the lot the home was supposed to be built on).  Lots in HPP are mostly identical 1-acre lots covered in dense growth covering old lava flows.  The developer stated that Ms. Reynolds refused the offer, demanding the lot plus addition money and other lots owned by KDP.  KDP refused, which led to the developer going to court.

The developer sued the lot owner Ms. Reynolds and the contractor PJ’s Construction.  KDP is seeking general damages of $307,318.57 and special damages between $200,000 and $300,000 for lost profits had the home been sold.

Ms. Reynolds filed a motion to have the house removed and the lot restored to its original natural state.  Ms. Reynolds’ plan for the lot was to hold spiritual gatherings there in a natural setting.  That’s an important point because when the home was built, the contractor cleared the one-acre lot of all foliage.

 

The Ruling on Ms. Reynolds Motion:

The judge ruled that the house be demolished along with the septic system and water catchment tank be removed from Mr. Reynold’s lot.  The judge denied the lot owner’s request to have the lot restored to its original state, as that was in all practicality impossible.  The judge also ruled that Reynolds is entitled to “reasonable attorney’s fees and costs.”

The judge ordered the contractor to bear the cost for the demolition and removal.  Judge Kim also ruled that PJ’s can seek reimbursement in court for the demolition from KDP.  Kim’s order instructs Reynolds, within 60 days, to present to the court three licensed contractors not previously associated with KDP or PJ’s to remove the unauthorized structures on her lot.  Those companies are to submit estimates for the demolition of the structures and removal of debris, with the court selecting a contractor and approving the budget proposal, which is to be paid by PJ’s.

“This was not a minor encroachment, but an entire house was built (on the wrong lot),” Kim wrote.  Kim ruled that both the developer and contractor “intentionally took a big risk” by proceeding with the lot-clearing and construction without having a survey done.  “By taking a chance they assumed the risk that a negligent mistake could be made,” he noted.

 

All Parties Lose:

What’s sad about this outcome is that none of the parties got what they wanted.  In fact, each came away losing something.

• Reynolds will get her lot back free of a house she didn’t want. But if her true intentions were to hold spiritual gatherings on the lot due to its rustic natural state, that won’t happen.  The lot will be returned to her as a cleared acre of former lava field.  She should have taken the original offer of the adjacent lot.
• The developer KDP is out the costs to construct the home with nothing to show for it.
• The contractor must pay a competitor to undo what he built.

I’m not sure why the judge ordered the home demolished.  I would think there would be some way to potentially move the structure.  I’m sure it could be moved for significantly less than what is cost to build from scratch.  What a waste of building materials.

Maybe it’s not too late.  If Reynolds really wants a undeveloped lot, maybe she can negotiate with the developer for the lot next door.  She should get her attorney’s fees paid too.  This would also benefit the developer because he can then take title to the house he paid for and sell it and make a profit.

We shall see…….

 

This is not the end of the story:

This ruling was for the request of the lot owner to remove the house.  The lawsuit brought by the developer against the lot owner and contract is still pending.  All parties are to meet in court on July 29^th.  Ironically, the judge that issued this ruling will not preside over the remainder of the case.  Judge Kim retires on July 1^st.  Maybe all parties can come together and make some sour Puna Gold oranges into orange-aide!