OCP files suit against
Oahu homebuilder

Hawaiian Palisade Homes
did not deliver more than 100
homes, the lawsuit contends

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By Lyn Danninger
ldanninger@starbulletin.com

The state Office of Consumer Protection filed a lawsuit yesterday in state Circuit Court against pre-fabricated home manufacturer Hawaiian Palisade Homes LLC.

The suit alleges that the publicly traded Kapolei-based company, Chief Executive Officer Art Smith and Stuart Furman, the chief financial officer, misled consumers and some government agencies.

The 2-year-old company employed about 30 people at its manufacturing facility. Calls to the company and its executives were not returned.

Steve Levins, executive director of the state Office of Consumer Protection, said that out of about 170 contracts for pre-fabricated houses with Hawaiian Palisade, only about 13 houses were ever delivered.

The suit also alleges the company misrepresented that it had sponsorship, approval or certification by the federal Department of Housing and Urban Development.

Hawaiian Palisade markets its homes as certified by the department. When homes are inspected, a certification label is placed on it. County inspectors look for the label and will often waive building codes because the home is HUD-certified.

The state suit also accuses Hawaiian Palisade of misrepresenting the quality, workmanship and available options and features that were to be included in the homes as well as completion and delivery dates.

It also accuses Helen Langlois, an insurance solicitor associated with the company, of writing and issuing invalid performance bonds used in the sale and financing of the Hawaiian Palisade homes. The bonds are supposed to protect a homebuyer in case the seller does not fulfill the contract terms. But because the bonds were improperly issued, the suit says, any claims made later by homebuyers have been denied.

Langlois is listed as the director, president and secretary of Honolulu company Contractors Surety Insurance Inc. She could not be located for comment. The number to Contractors Surety Insurance was disconnected.

In April, Hawaiian Palisade Homes said it had signed a letter of intent with Menehune Development Co. to build 30 houses on Molokai. Menehune was to supply the homes as part of its contract with the state Department of Hawaiian Homelands.

But in June, creditors of Hawaiian Palisade Homes filed a petition to force the company into involuntary Chapter 7 liquidation bankruptcy. The filing, made by three local building supply and service companies, claimed unpaid debts amounting to $300,000.

The Office of Consumer Protection's Levins said he did not think the bankruptcy filing would prevent his department going ahead with the lawsuit.

Hawaiian Palisade also ran into trouble last year when it said the mainland inspection company hired to certify the homes for HUD, California-based Radco Inc., failed to properly certify the homes. Hawaiian Palisade subsequently filed a $1.5 million lawsuit against Radco, alleging breach of contract.

The Department of Commerce and Consumer Affairs first began investigating Hawaiian Palisade and issued a $25,000 fine because the company had not obtained a state contractors licenses.

Hawaiian Palisade maintained it was not required by federal law to obtain the license.