Federal lawsuit re real estate interference with buyer's prospective economic advantage at Aloha Open Market Lahaina
Lawsuit alleges interference in Lahaina business
venture
reprinted courtesy Maui News 9/30/07
LAHAINA – Evelyn Goo, who operated an open-air market at the corner of Lahainaluna Road and Honoapiilani Highway, is suing West Maui Community Federal Credit Union in federal court for allegedly swooping in and buying her business location after she had signed an agreement to purchase it herself.
The lawsuit has slowed the credit union’s plans to relocate to a more visible location from the offices it has occupied for many years at 349 Lahainaluna Road, but Manager Michelle Hee said last week that on the advice of its attorney, the union would have no comment.
Goo contends the county has put her out of business, because she tried two other locations but neither worked as well as the main intersection in Lahaina.
All three of her locations were junk lots until she fixed them up for trade, she says. “We cleaned up Lahaina unbelievably,” she says. But while she was successful at the first spot – which was sometimes called “mango manor” – the two alternative locations “just did not work.”
Although he is not named in the lawsuit, the complaint says Mike Foley, when he was Maui County planning director, induced the credit union to interfere in Goo’s business in order to keep the open-air market from occupying the highly visible spot.
Foley says he could not recall exactly when he was involved with the issue, but “my involvement was very brief.”
He says he met with representatives of the credit union, who wanted to know whether their business would be a permitted use on the property. After consulting his zoning staff, he concluded it would be.
According to the narrative of the complaint, which was filed for Goo by attorney James Fosbinder, Goo’s firm Maui’s Best Gift & Craft LLC opened a gift and craft fair called International Open Market in September 2004.
It was not a swap meet but an open-air market at which Goo rented out tented spaces to vendors. The tents were taken down at the end of each day.
Goo leased the property with an option to buy, and she alleges that in March 2006 she exercised her option by entering a DROA (deposit, receipt, offer and acceptance – the usual method of initiating a real estate transaction).
Goo had obtained a sign permit and had her business plans reviewed by county planning department staff when she opened.
The suit says Foley “apparently disagreed” with his staff and rescinded the sign permit. An exhibit with the suit includes the text of an e-mail forwarded to Goo by Council Member Jo Anne Johnson. It came from Foley and says, “I also will do anything I can to see that the swap meet is NOT approved.”
The property has B2 Business Zoning with conditions. Among the permitted uses in B2 are haberdasheries and jewelry or fine art shops.
Goo alleges those were the kinds of businesses she rented to.
However, in November and December 2004, Goo was given notices of violation for “noncompliance with change in zoning.”
Foley alleges that Goo did not have an environmental assessment or special management area permit. He told Johnson the lot needed an assessment because it is in the Lahaina Historic District.
Fosbinder says similar nearby businesses also did not have these permits or assessments.
Goo alleges that her escrow company terminated her escrow less than two months after she initiated her purchase. The suit says the credit union made an agreement with Foley to purchase the property, although B2 conditional zoning would not permit a bank.
The suit says Foley then proposed an agreement with the credit union that it would purchase the property. And then, if it would agree to immediately terminate the existing lease with Goo’s gift and craft business, Foley would ensure that the credit union would be given an approved use permit of the lot despite the change in zoning approved by the County Council in 1999 specifically prohibiting banks.
Foley says the meeting was not unusual. Every week, he says, he would be visited by prospective land buyers who wanted to know whether their supermarket, dentist’s office or veterinary clinic would be allowable.
“That was the extent of my involvement,” he said.
The suit quotes a letter from Foley that says: “We recognize that the West Maui Community Federal Credit Union will not operate as intensively as a bank and is therefore an acceptable use.”
The lawsuit alleges that the credit union intentionally interfered with Goo’s purchase and damaged Goo by interfering with her prospective economic relations.
It also alleges that the credit union violated Goo’s civil rights by acting as an agent of the planning director who wanted Goo removed from the lot, which she was.
Fosbinder notes the irony that from 1981 to 2004, the credit union’s offices had operated in a residential district without a conditional permit.
The credit union did obtain a 10-year conditional permit in November 2004, just after Goo was starting her venture, but the suit does not allege the two events were connected at that time.
The suit seeks an injunction to allow Goo’s firm to conduct its business on the same terms and in the same location as it did before the credit union evicted it.
It also seeks actual and punitive damages. A jury trial in U.S. District Count in Honolulu is demanded.
Harry Eagar can be reached at heagar@mauinews.com
reprinted courtesy Maui News 9/30/07
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