Mold damage alleged in closure of Waikiki hotel

By Andrew Gomes
Advertiser Staff Writer

Another Waikiki hotel has been shut down and engulfed in litigation amid allegations of extensive mold in guest rooms that may have posed potential health risks to guests and employees.

The former Aston Waikiki Parkside, a 255-room hotel across the street from the mold-racked Kalia Tower at Hilton Hawaiian Village, was closed in February for "cosmetic renovations." But recent lawsuits allege the hotel was shut down to repair mold damage and other major defects.

Three lawsuits involving the hotel's former owner, long-time management company, new owner and recently terminated management company are trying to recover losses associated with the hotel. The hotel at 1850 Ala Moana has been renamed the Aston Hotel Kai at Waikiki.

According to a suit filed by Aston Hotels & Resorts, which began managing the hotel for LaeRoc in December 2001, Aston discovered water line insulation damage and a faulty air handling system that it said contributed to mold growth behind walls and other enclosed spaces in guest rooms and public areas.

Aston said it notified LaeRoc of the problems it considered a potential health risk last fall, but that LaeRoc insisted on keeping the hotel open while mold repairs were made.

In mid-January, LaeRoc informed Aston it planned to begin work in early February, but in late January Aston discovered the hidden mold was more pervasive than previously believed, according to Aston's suit.

Aston, in its complaint, said it would close the hotel after LaeRoc refused to investigate further or make appropriate repairs.

The hotel closed Feb. 18 for what Aston representatives said in an interview at the time was a long-planned $2.1 million water-themed design upgrade scheduled to be completed this summer.

But in its lawsuit, Aston said LaeRoc began $1.5 million of "remediation" work without giving more information about the repairs or cause of mold. That work, anticipated to be completed in mid-May, had been stopped as of May 15, according to Aston's suit. The hotel remains closed.

"Incredibly, the owners continue to object to the closure of the hotel to this day despite overwhelming evidence it is not safe for hotel guests and employees," said Kelvin Bloom, Aston's president.

A LaeRoc official did not return a call for comment yesterday. Glenn Sato, a local attorney representing LaeRoc, declined to comment on the case.

On Friday, LaeRoc sued Aston for defaulting on minimum management contract payments of $133,000 a month since October, but made no mention of the property's closure or mold problem.

LaeRoc in its suit said it notified Aston in February that the management contract would be terminated, and did so April 28 after several contract extensions to provide time to settle "disputes."

Aston in its suit, which was filed in November and amended last Thursday, said it quit paying management payments because the $1.6 million in annual guarantees were premised on operating a renovated hotel with a three-star rating.

Bloom said Aston has been making the payments to a trust account until LaeRoc delivers on its agreement to renovate the hotel.

"It's not about the (payments)," he said. "The owners obviously had a duty to fully disclose the true condition of the hotel ... and we relied upon their misrepresentations and omissions when we entered into the management agreement."

In its suit, Aston said LaeRoc represented the hotel as being in good condition and free from significant defects, then later demanded Aston pay for mold repairs and other significant improvements.

LaeRoc is also seeking damages from hotel seller K.S.K. and affiliated management firm Hawaiiana Resorts Inc. for not disclosing hotel defects, including the mold, roof leaks and termite infestation.

In LaeRoc's suit against K.S.K., filed last August, LaeRoc said it relied on representations of K.S.K. and Hawaiiana that the hotel's air handling system worked properly and that the hotel was free of roof leaks and termites.

Representatives of K.S.K. and Hawaiiana Resorts could not immediately be reached yesterday.

Meanwhile, Hilton Hotels Corp. continues to make repairs to its 453-room Kalia Tower, which is expected to cost $55 million to fix. Hilton is seeking mold-related damages from 18 contractors it sued last month.

Reach Andrew Gomes at agomes@honoluluadvertiser.com or 525-8065.