Posted on: Wednesday, March 6, 2002

State tries to settle with landlord

By Johnny Brannon
Advertiser Staff Writer

The state has asked lawmakers to spend nearly $1 million to settle a lawsuit over warehouse space in Waipahu that it abandoned a year before its lease expired.

The building was used by the Department of Labor and Industrial Relations, and later by the Department of Education and Department of Health. Monthly rent for the 31,500-square-foot space started at nearly $35,000, and the company that owned the space, Certified Storage, eventually billed the state as much as $68,000 per month, court records show.

Gov. John Waihe'e's administration agreed in 1989 to a 10-year-lease on the property, on Farrington Highway and known as West Waipahu Center, from a company owned by longtime Waihe'e friend and campaign supporter Tom Enomoto.

But in 1996, Gov. Ben Cayetano's administration decided to use less space at the property, began paying a smaller rent amount, then later vacated the site a year before the lease had expired in 1999.

Enomoto argued that he had never agreed to such changes, and demanded more than $1 million in back rent, plus $112,000 in late rent fees and more than $413,000 in interest.

He filed suit in 1998 after the state refused to pay, and First Hawaiian Bank later foreclosed on the property, according to court documents. During the course of the suit against the state, Certified Storage asked for as much as $4,733,272 plus punitive damages.

Enomoto could not be reached for comment. His brother Dennis, a member of the Honolulu Liquor Commission, said Enomoto generally does not speak with reporters. Waihe'e said he did not recall the Waipahu property or the lease.

Court documents indicate that the state moved out of the West Waipahu Center because state-owned space became available elsewhere. A spokeswoman for Cayetano said the governor was not familiar with the property or the lawsuit.

The case is scheduled for trial in July, but the state has tentatively agreed to settle it by paying the company $900,000, according to documents attached to a bill that seeks legislative approval for the money.

Grant Kidani, attorney for Certified Storage, said the company had not agreed to final terms of the settlement so far, however.

"There's discussions going on, and we want it to be resolved, but it's still pending," he said. "It's a real delicate situation right now."

Deputy attorney general Patricia Ohara said the state had admitted no wrongdoing under the proposed settlement and that officials had believed they had the authority to use less space, pay less rent, and terminate the lease early.

In court papers, the state argued that it had notified the company of its plans within a time period required in the lease, but that the company's property manager "refused to say what he intended to do about the notice, except that he was 'working on it.'"

As a consequence, the Department of Accounting and General Services, which administered the lease for the state, never obtained a written agreement to amend the lease, but "relied on the agent's representation that there was no problem."

The company argued that it had never intended to release the state from the lease obligations and that the state's move caused it to lose $1.2 million when the bank foreclosed.

Enomoto is a former member of the state's Judicial Selection Commission, and has owned or invested in numerous commercial properties, a construction company, karaoke bars and other businesses.

Early in his administration, Cayetano publicly questioned several state land deals that involved Enomoto, including the $110 million state purchase of 'Ewa land that included the Hawaii Raceway Park and a nearby feedlot.