The Edmund C. Olson Trust has filed a lawsuit against two executives of Tower Development Inc. for pursuing redevelopment projects on Banyan Drive.
A lawsuit filed in Third Circuit Court on Tuesday alleges that Ed Bushor and Stewart Miller, CEO and chairman of Tower Development Inc., respectively – and partner of the company that owns the Grand Naniloa Hotel on Banyan Drive – sued a pair of redevelopments projects in violation of an agreement with Olson / Naniloa LLC.
According to the lawsuit, Tower and Olson / Naniloa have teamed up to form WHR LLC, owner of Grand Naniloa. In doing so, Bushor and Miller signed an agreement prohibiting Tower from acquiring, developing or owning potential competing properties – defined as “a hotel project with more than 50 rooms within a 30 mile radius of Naniloa.”
However, last year, Tower submitted to the state Department of Lands and Natural Resources two proposals for redevelopment projects on Banyan Drive – one to demolish and partially replace the former Uncle Billy’s Hilo Bay Hotel and the other to renovate the old Country Club Condominium Hotel. .
The two proposals would replace the two sites with Hilton franchises, which, under the terms of the agreement, would compete directly with Greater Naniloa.
Emails submitted with the lawsuit indicate that Olson Trust chairman Ed Olson expressly disapproved of Tower’s potential interest in Uncle Billy’s and the Country Club as early as 2016.
The lawsuit alleges Tower submitted the development plans to DLNR without notifying Olson / Naniloa, who only discovered the plans in a newspaper article earlier this month on a DLNR committee’s decision to recommend that the Board of Land and Natural Resources approve Tower’s proposals. for Uncle Billy’s and Country Club properties.
“The idea of Tower getting involved in the Uncle Billy’s redevelopment has been around for years,” read a September 16 letter to Bushor and Miller on behalf of Olson / Naniloa. “At all times, Mr. Olson has made his objections clear. He thought it was a dead question until recent newspaper articles revealed that you were pursuing this project without disclosing your plans to the members of WHR. To make matters worse, documents found on DLNR’s website reveal that you are using WHR’s assets to improve Tower’s offerings. The whole situation is scandalous, for it reflects a blatant and inexcusable disregard for your fiduciary obligations to the members of WHR. “
The letter went on to criticize the Bushor and Miller branch of Tower, noting that WHR intervened days after breaching its Grand Naniloa lease with the state earlier this year.
“As we all know, WHR is insolvent and on the verge of bankruptcy and / or foreclosure,” the letter read. “You’ve done your best to keep investors separate, misinformed, and divided in their views on your leadership. The fact that WHR intervened within days, not just weeks, of a fatal lease default is inexcusable.
“Besides demonstrating an unparalleled ability to squeeze money from investors with bogus budgets, deceptive projections and plans, and soft talk, you haven’t done anything worthy of note,” the letter continued.
The letter ended by demanding that Bushor and Miller withdraw their proposals by last Monday. After the two clearly failed to do so, Olson / Naniloa filed the complaint on Tuesday – three days before the BLNR discussed proposals for both properties, including Tower, on Friday.
Based on those complaints, Olson / Naniloa charged Bushor and Miller with breach of fiduciary duty and tortious breach of contract. The lawsuit asks the court to order the defendants to stop their redevelopment plans and seek additional damages to be proven at trial.
Email Michael Brestovansky at [email protected]