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Raising Cane Rob Perez |
Damon Estate legal
wrangling proceeds
under court secrecyThe Damon Estate, one of Hawaii's largest private landowners and among the nation's richest family fortunes, usually shuns publicity and closely guards details of its internal operations.
No wonder.
If you begin to pierce the veil of secrecy that surrounds the estate, you get a glimpse of a family in the throes of intense internal squabbling.
That has been especially true over the past decade as debates raged on how to interpret the will of Samuel Mills Damon, particularly on the questions of when the trust ends and, once that happens, how hundreds of millions of dollars in assets will be distributed and what share each heir will get.
With so much at stake, the disputes have pitted beneficiaries against beneficiaries and, to a lesser degree, a few beneficiaries against the four trustees who oversee the roughly $800 million estate.
It has become an unfolding soap opera -- Hawaii style -- that almost defies belief and basically boils down to rich people fighting over further riches, all of it inherited. The drama is helping keep a battery of lawyers gainfully employed.
Several of the most contentious legal arguments, including the crucial trust termination questions, have gone all the way to the Hawaii Supreme Court.
Some insiders say most of the squabbling has been caused by only a few of the roughly 20 heirs who would get a piece of the Damon pie if the trust ended today.
The kamaaina trust, started in 1924 with the death of Damon, is scheduled to wrap up when the last of Damon's two remaining grandchildren die. Both women are in their 80s and not in the best of health.
While the infighting has gotten particularly intense in recent years, much of the feuding has remained hidden from public view, largely because of the estate's careful efforts to keep its internal matters private.
The Hawaii judiciary also has helped. A state judge in August 2000 granted the estate's request for blanket confidentiality whenever pleadings related to a review of Damon financial accounts from 1995 through 1998 were filed with the court.
As a result, the estate and its beneficiaries have filed numerous documents -- some potentially embarrassing to the family -- under seal.
So tight was the secrecy that the court's confidentiality order was approved without a hearing, and the order itself was sealed -- and still is.
That means you can't see the document that outlines the court's rationale for authorizing the secrecy, a disturbing fact given that the publicly funded court process is supposed to be open except under the most compelling of circumstances.
Defenders of the estate's secrecy say the trust is a private family organization, and the public has no business poking its nose in family matters, especially financial ones.
But such a defense ignores the fact that the estate is such a large landowner with a virtual lock on Mapunapuna industrial property, mostly leased to small and medium-sized businesses. In that regard, some of the estate's private decisions can have significant public ramifications, a notion alluded to in court documents filed over the past decade in the estate's probate case.
Myrna Murdoch, a Damon beneficiary, recently raised concerns about all the secrecy, saying a more open approach would promote greater competitive pricing for Mapunapuna real estate.
"Clearly, the investment strategies of the Damon Estate significantly impact local land lessees and small business owners in an adverse manner," Murdoch said in a May court filing. "Currently, the veil of secrecy favors only a small few, and even that fact is not established with any degree of certainty."
An adviser to several family members, who spoke on the condition of not being identified, said all but one or two beneficiaries have supported the estate's efforts to keep Damon matters confidential.
He also disputed Murdoch's views on the Mapunapuna property. He said once the estate sells its Oahu commercial land, now being shopped to potential buyers, the public impact issue would become moot -- a contention some question given the other properties, especially culturally important Moanalua Gardens, that the estate still would own.
Murdoch did not respond to a request for comment. Several other beneficiaries also did not respond or declined comment.
Attorney Carroll Taylor, who represents beneficiary Michael Haig, said the secrecy surrounding the case reflects the tension between opening up for public display what are essentially family matters and the public's right to know what's going on in publicly funded courts.
The notion that the estate's private decisions can have significant public effects adds to that tension, he said.
Asked about the internal fighting, Taylor said: "When you have multiple beneficiaries with diverse and sometimes competing interests, it is not surprising to find at any one time that any particular beneficiary might take exception to something the trustees are doing. They can't keep them all happy all the time."
A hint of that behind-closed-doors fighting was evident in a November letter that should have been sealed but apparently was inadvertently included in the public file, where I found it last week.
The letter, written by an attorney for a Damon heir, outlined conflict-of-interest and breach of duty allegations against the four trustees, a powerful bunch that includes First Hawaiian Bank Chairman Walter A. Dods Jr.
The court, however, largely has ruled in favor of the trustees or has dismissed the allegations, and insiders said the accusations lacked merit.
The latest legal controversy involving the estate surrounds last month's appointment of attorney James Kawachika, who as the new master is to review the trust's financial records and operations from 1999 through 2002. Kawachika is a partner with attorney Arthur Reinwald, who represented a Damon beneficiary on estate matters during part of the period Kawachika will be reviewing.
Because the master is supposed to be free of even the appearance of bias, several beneficiaries raised objections to his planned appointment, citing his association with Reinwald. One attorney told the court the appointment "would give rise to a serious appearance of impropriety."
But after Kawachika wrote Judge Colleen Hirai, who oversees the Damon probate case, that the concerns were unfounded and that his Reinwald association would not prevent him from being impartial, Hirai appointed him on July 17.
As if the court didn't have enough contentious issues to deal with, this could easily add to the mix if the objecting beneficiaries pursue a challenge.
At that point, it would become only the latest episode in the ongoing soap opera at the Damon Estate.
See the Columnists section for some past articles.
Star-Bulletin columnist Rob Perez writes on issues
and events affecting Hawaii. Fax 529-4750, or write to
Honolulu Star-Bulletin, 500 Ala Moana Blvd., No. 7-210,
Honolulu 96813. He can also be reached
by e-mail at: rperez@starbulletin.com.
