MSM Wins Court Battle for AOAO Against Owner
After a two-year court battle, MSM’s litigation team, led by partners William McKeon and Keri Mehling, successfully obtained an injunction for an oceanfront condominium project on Maui’s west side against an owner who refused to allow repairs to his unit that were required to strengthen one of the project’s buildings. MSM also obtained a sizeable recovery of attorneys’ fees and court costs against the owner.
The oceanfront project was built in the 1960s over an undetected, underground and intermittent stream. Over time, the stream caused the adjoining soil to settle. This, in turn, caused one of the project’s buildings, a two-story wood frame building, to visibly sink, lean and rack. The building and units suffered visible damage, including cracking of walls and counter tops. The leaning was bad enough that the Association’s insurance carrier threatened to cancel the Association’s insurance.
MSM, as the Association’s general counsel, worked with the board of directors and engineering consultants to maintain the mandatory property insurance, implement a major repair scheme that required drilling of deep micro-piles, lifting and straightening of the building, strengthening the building to resist lateral forces, and hiring appropriate specialty contractors. The Association successfully completed the construction project to the satisfaction of all owners, except one.
One owner in the leaning building refused to allow the Association to make minor changes to his unit, which two structural engineers said were necessary to keep the building straight and to strengthen the building with regard to lateral loads. Although all other owners agreed to the repairs and slight loss of floor space, this owner refused, and the Association was forced to take the owner to court.
MSM represented the Association in court and argued that, the under the project’s governing documents, Hawaii Revised Statutes §514B-106(a)(Hawaii’s business judgment rule) and the newly enacted §514B-10(b)(allowing courts to liberally interpret governing documents for the benefit of the Association), the Association had the right to make the structural repairs which slightly reduced the floor area of the owner’s unit. The trial judge, after a long-fought battle that included competing structural engineering experts, ultimately agreed with MSM and its interpretation of the governing documents and the applicable statutes. The trial judge ruled that the Association had the right to make the repairs in order to maintain the structural integrity of the building and awarded injunctive relief against the owner that allowed the Association to make the necessary repairs. The trial judge also granted MSM’s motion to recover the Association’s legal fees and court costs against the owner.