Unity House
facing another hurdle
in foreclosure bid

A request to combine suits
against Hanahano Enterprises may
cloud the Punaluu land issue

By Peter Wagner
Star-Bulletin

Apartment owners at Hanohano Hale in Punaluu have asked a Circuit Court judge to combine two lawsuits against Hanohano Enterprises, a family trust that sold 75 acres in Punaluu to union nonprofit Unity House two years ago.

But Unity House, seeking to foreclose on the property, says the move would cloud an already complicated matter.

"Consolidation of the lawsuit is only going to confuse and delay," said Unity House attorney Roger Moseley yesterday. A hearing is scheduled tomorrow before Judge Kevin Chang.

The 131-member Association of Apartment Owners of Hanohano Hale in March filed suit to nullify a 1997 transaction in which a 75-acre ahupuaa -- a tract of land that stretches from the mountains to the sea -- was sold to Unity House. The sale included the land under their condominium. Unity House is an arm of the Hotel Employees and Restaurant Employees Union.

The apartment owners say they should have had a chance to buy their leases under the state's right of first refusal law. The law says fee-simple land under a condominium must first be offered for sale to its tenants.

But while the land was transferred to Unity House in a series of transactions beginning October of 1997, title to the property is not clear.

Hanohano Enterprises, representing numerous family heirs to the property, and heiress Sarai Ann Kalai Hanohano Vahey, sold the land to Unity House in a "hybrid transaction" designed as a loan. According to court records, virtually all of the ancient Hawaiian ahupuaa stretching from the Punaluu shoreline to nearby hills was put up as collateral on a $3.7 million loan earmarked for Kailua businessman Norman F. Frank, Sr.

Frank, recently evicted from Kailua Town Center for nonpayment of rent, is president of Capital Resources International and Trans-Oceanic International, companies that claim to have major contracts to clean up oil in the former Soviet republic of Azerbaijan.

The deal allowed Hanohano to repurchase the property for $8.7 million within six months of the transaction, a figure Frank had promised to raise but failed to come up with, according to court records.

A second option to repurchase the property for $10.5 million similarly came and went with no payment from Frank.

Unity House in July sued Hanohano Enterprises for nonpayment of the loan, seeking public sale of the property on foreclosure. Frank yesterday could not be reached for comment.

Hanohano Hale attorney Tom Watts argues the two cases should be consolidated because their facts and legal issues are identical.

Mosely says that isn't so because Hanohano Hale had no involvement in the loan between Unity House and Hanohano Enterprises.