BY MALIA ZIMMERMAN – A long awaited Hawaii Supreme Court ruling has affirmed Kuleana Rights, a Hawaiian law established 160 years ago that assures property owners with land located within a larger private property owned by someone else have the right to access their property.
The 135-page high court ruling written by Associate Justice Paula A. Nakayama, with one dissenting vote by Associate Justice Simeon R. Acoba, Jr., issued on April 27, 2012, overturned an Intermediate Court of Appeals ruling, and affirmed a lower court ruling by Kauai 5th Circuit Judge Kathleen Watanabe.
The case stemmed from a 2001 incident that involved the Marvin family of Pilaa, Kauai, and retired auto dealer James Pflueger, who owned more than 300 acres of property around their beachfront home.
In November of that year, Amy and Rick Marvin and their five children were enjoying dinner together in their quaint, white two-story beach cottage on the edge of Pilaa Bay as a storm raged outside what they believed was their safe haven.
Rick, who spent many happy days on that land during his childhood, built that home with his own hands on an isolated property several minutes off Kauai’s main Kuhio highway. He was in good company – his brother’s home was on the other side of the famous bay where they filmed the Hollywood movie, None But The Brave. The brothers had many happy childhood memories there, and could enjoy the pristine ocean waters and coral so vibrant, the area was under national consideration for preservation status.
As the storm’s intensity built, the Marvins witnessed what looked like a scene from a horror movie: The hillside just behind their home had turned into a chocolate waterfall. Red mud began to seep under their doors at such a fast pace, the family fled to escape what they believed was a dangerous and potentially life-threatening situation. As they tried to drive away, mud and debris swamped the wheels, forcing them to flee on foot to Rick’s brother’s house.
Sunrise the next morning cast light on a distressing scene. An estimated 1,000 tons of mud streamed around and under their home, through their doors and windowsills and into the ocean. Their home, their car and their home office for their small ocean tour business were surrounded by 4-feet of mud. But the Marvins agreed losing their possessions wasn’t the biggest tragedy. The sparkling ocean the family swam in every day had turned to a sea of debris and pristine Pilaa reef was buried.
As they looked out on the devastation, the Marvins had no idea the mudslide would trigger a federal criminal investigation into Pflueger and spawn a series of civil lawsuits that would keep them in litigation and suspense for the next decade.
Federal, State Investigation Lead to Conviction for Illegal Grading
After state and federal agencies teamed up to investigate the mudslide, they came to the conclusion “Pflueger conducted grading and other land-disturbing construction at the site beginning in 1997 without obtaining permits.”
The Department of Health, state Attorney General, and U.S. EPA collectively prosecuted and convicted Pflueger on 10 felony counts for illegal grading and grubbing and pollution of Pilaa Bay in what would be the most serious and significant criminal environmental case in Hawaii’s history.
Pflueger avoided prison time. But the June 2006 settlement included the requirement that he pay $2 million in penalties to the state of Hawaii and the United States and spend approximately $5.3 million on the remaining work required by the settlement “to prevent erosion and restore streams in areas damaged by the construction activity.”
The EPA fine of $7.5 million was the largest penalty against an individual polluter in U.S. history. The state fine of $4 million and the 10 felony convictions were the most substantial penalties against an individual polluter in Hawaii’s history.
“As a result of this case, new laws were passed to hold landowners and developers accountable when they damage natural resources. Where the government once turned a blind eye on illegal grading, the practice has come to a halt on Kauai. Coastal resources now have a chance to survive for the benefit of future generations. In addition, the case is being cited in national workshops as the model for assessing damages in environmental cases,” Public Justice Foundation says.
The June consent decree required Pflueger to complete specific restoration and repair work by the end of October 2006. But Pflueger did not stick to the deal resulting in the EPA fining him twice: $135,000 on Nov. 26, 2006, and $23,500 a week earlier on Nov. 21.
In July 2005, the Hawaii Board of Land and Natural Resources fined Pflueger $4 million for damages to Pilaa from sediment runoff to the beach and coral reef. He appealed the case with the help of Colleen Hanabusa, then the state senator, and now a congresswoman.
In late 2006, Pflueger lost the case. Kauai’s Fifth Circuit Court found against Pflueger and the fine was upheld. That brought the fines by the state and federal government agencies against Pflueger to $12.5 million. Hanabusa appealed the Department of Land and Natural Resources fine before the Intermediate Court of Appeals.
Marvins’ Case Was Significant
While the local media has focused on the landmark EPA consent decree with automobile mogul James Pflueger, and his businesses, Pflueger Properties and Pilaa 400, LLC ($7.5 million), the historic Land Board fine against Pilaa 400, LLC ($4 million), and the unprecedented criminal convictions, the Marvin family case surrounding Pilaa and their home was largely ignored.
Yet, Amy Marvin and Tico note their civil case against Pflueger resulted in a groundbreaking and essential ruling that upholds over 150 years of kuleana law, going back to the Mahele of 1848, and the Kuleana Act of 1850 that guaranteed the rights of kuleana owners to property access and water.
Tico said Kauai Judge Cathy Watanabe’s 44-page decision that she issued on this matter is “extraordinary for its historical perspective of the reasons for kuleana rights, and the need to protect those rights.”
Pflueger appealed that ruling, and the Intermediate Court of Appeals sided with him on a technicality. The dispute was over whether Heidi Huddy-Yamamoto, also a neighbor of the Marvins and Pflueger’s at Pilaa, had to join the lawsuit against Pflueger for access to their Kuleana. The lower court said Huddy-Yamamoto, who did not want to get involved, did not have to join the lawsuit, but the Intermediate Court disagreed.
The Marvins appealed, and on Friday, the Hawaii Supreme Court upheld Watanabe’s original decision and sided with the Marvins.
Tico said it’s been a long road to justice. “We filed a lawsuit against Mr. Pflueger in 2002 because he killed the Pilaa reef, and then he retaliated by blocking my client’s access to their kuleana. Ten years later, justice prevailed when the Hawaii Supreme Court upheld Judge Watanabe’s decision in favor of my clients’ right to access their property,” Tico said. “My clients and I are deeply humbled and grateful to the Hawaii Supreme Court for upholding these fundamental property rights.”
Amy and Rick Marvin said: “We have been going through this experience for so many years it hardly feels possible that we could have resolution. With the perseverance of our attorneys Teri Tico and (Appelate attorney) Peter Esser, it is a great day for all kuleana owners in the state of Hawaii. We are eternally grateful to the Supreme Court for their careful consideration and utlimate decision. Mahalo nui loa.”
Marvins Won Civil Case Against Pflueger
The Marvins, with Tico’s help, filed a civil lawsuit in 2002 against Pflueger, Marvin v. Pflueger, for their property losses. Because her involvement in the civil and criminal cases were so time consuming, Tico asked more than a dozen Hawaii law firms to act as co-counsel, but each declined saying Pflueger was too wealthy and too powerful to beat and there wasn’t enough money involved. The Public Justice Foundation notes, “Like David in the age-old story, Tico stood alone against her Goliath.”
The Public Justice Foundation, which recognized Tico for her work on the case, wrote “Pflueger retaliated with a SLAPP suit, blaming the Marvins for destroying the reef and hiring thugs to harass and intimidate the couple. Pflueger claimed that the Marvins had no legal access or water rights and his employees went so far as to bulldoze the Marvins’ access road and destroy their water lines. Tico was forced to hire her own attorney, at an expense of more than $10,000, to defend herself against Pflueger’s smear campaign. Her life was threatened twice.”
For 6 years, Pflueger refused to turn over his financials to Tico, even appealing the court order to the Hawaii Supreme Court. After losing his appeal, Pflueger complied. Tico, who had compiled several dozen pages of his financials through her own research of public record and media reports, including transfers of property to his family, was in the process of disproving Pflueger’s financial records when his attorneys quickly made a settlement offer that still remains confidential.
Cases Settled, But Clashes Continue
While legal proceedings were contentious, life for the Marvins during the years of litigation was so too. The Marvins’ phone line was cut more than a dozen times. Even though Pflueger has hundreds of acres of property on Kauai, he corralled an assortment of dozens of smelly pigs and cows just above their home.
Pflueger granted the media, he told Hawaii Reporter that it is his land, and he has the right to place the animals where he chooses.
Pflueger also added vagrants to the mix. The homeless campers made their home in a makeshift village of abandoned cars, trailers, tents and urinals just above the Marvins home.
The Marvins told Hawaii Reporter in past interviews that when they drove by or the kids walk by these men as they must to get home, they’ve had beer cans thrown at them and they’ve been cursed at.
But with all the troubles, the Marvins say they have a deep love for their home in Pilaa. Now with this final determination by the Supreme Court that they have a right to access their Kuleana, they hope their lives will be more peaceful.
Pflueger’s Legal Troubles Continue
Shortly after the Pilaa criminal case was settled in 2006, the Ka Loko Dam breached in the early morning hours of March 14, 2006.
After more than 40 days of rain, which drenched the island, the Ka Loko Reservoir on the island’s North Shore reached its maximum capacity. Just before dawn that Tuesday, its dam breached sending 370 million gallons of water crashing down on the peaceful community below.
Without warning or time to escape, the deadly force slammed into the Fehring family’s 6-acre property, sweeping Aurora Solveig Fehring, her husband Alan Gareth Dingwall, and their 2-year-old son, Rowan Grey Makana Fehring-Dingwall, from their beds to their death.
Christina Michelle McNees, who was 7 months pregnant, and Daniel Jay Arroyo, her fiancé who she was set to marry just hours later; Timothy Wendell Noonan, Jr., a friend of Aurora’s; and Carl Wayne Rotstein, the Fehring’s caretaker and business partner, also were killed.
After an extensive investigation, the state attorney general charged Pflueger with seven counts of manslaughter for allegedly causing the breach.
Pflueger maintained his innocence, entered a plea of not guilty on January 7, 2009, and took his case all the way to the Hawaii Supreme Court to stop the criminal prosecution.
But a Kauai grand jury, which heard from 20 witnesses and reviewed 207 exhibits and 607 pages of documentation, believed there was enough evidence to go to trial, and the Intermediate Court of Appeals and Hawaii Supreme Court agreed and denied his appeals. Pflueger’s new trial date is October 1, 2012.
The civil case against Pflueger filed by the victims’ families and property owners who suffered damage was settled in 2011, but Pflueger still owes millions of dollars to the victims’ families and landowners. His attorneys asked for a two-year extension.
Pflueger was named one of Hawaii’s wealthiest people in a recent edition of Hawaii Business magazine. He is the founder of one of the most profitable car dealerships, Pflueger Auto.
His wealth has funded an extensive legal team that has protected him through his many civil cases and the criminal indictment. But it also has made him the target of yet another criminal probe – this time by the Internal Revenue Service and the U.S. Attorney.
Pflueger, his son Charles Alan Pflueger, his accountant, Dennis Lawrence Duban and his employees, Julie Ann Kam and Randall Ken Kurata, were indicted on September 5, 2010, on charges of “conspiracy to defraud the United States for the purpose of obstructing the Internal Revenue Service in its collection of taxes.”
The U.S. attorney added charges for James Pflueger and his accountant Dennis Duban in connection with James Pflueger’s sale of a property in California.
The U.S. Attorney said an estimated $14 million in proceeds “were sent to a bank account located in Switzerland” and that Pflueger failed to disclose the existence of the foreign bank account to the IRS. Duban, a CPA, is also charged with “aiding in the filing of false federal tax returns on behalf of Charles Alan Pflueger (two counts) and James Pflueger (one count).”
As Hawaii Reporter’s Jim Dooley reported April 20, over prosecutors’ protests, the criminal tax case against Pflueger and several co-defendants has been splintered into three separate trials.
Pre-trial rulings in federal court have held that Pflueger must be tried separately from accountant Dennis Duban, who allegedly helped Pflueger file false income tax returns.
U.S. District Judge Leslie Kobayashi held that three of Pflueger’s co-defendants, including his son, Alan, and two employees of the Pflueger family’s auto dealerships, must go to trial next month on charges that the car dealership was used to illegally pay James Pflueger’s personal expenses.
Duban must go to trial in September and James Pflueger early next year, Kobayashi ruled.
Editor’s note: Hawaii Reporter editor Malia Zimmerman was subpoenaed in the Ka Loko Dam civil case by James Pflueger and the criminal case by the state attorney general.