A group of commercial boat operators located at Kewalo Basin Harbor has sued the Howard Hughes Corp. for allegedly violating state and federal laws by discharging construction debris laden with minute metal particles from the developer’s massive condo construction sites in Kakaako.

The complaint, filed in U.S. District Court in Honolulu, asserts that Howard Hughes’ projects – specifically the Waiea, Aalii, Victoria Place and Koula condo towers – have demonstrated that the company allowed the discharge of “fugitive dust” that has harmed the plaintiffs’ boats and created risks to public health and the ocean environment.

Attorneys for both sides are scheduled to meet Tuesday for a settlement conference likely to determine whether the dispute escalates. The complaint was filed in March with little fanfare.

“Defendants have been alerted to the harmful fugitive dust but have not taken proper or effective measures to prevent the discharge of such fugitive dust,” the complaint says. “Defendants will continue to discharge harmful fugitive dust into Kewalo if not permanently enjoined from continuing construction without taking proper and effective measures to prevent such fugitive dust.”

The lawsuit is part of a dispute that’s been simmering for more than a year between the boat owners and Howard Hughes, the Texas-based developer that owns the area of Kakaako known as Ward Village. Howard Hughes also has a contract to manage the Kewalo Basin Harbor on behalf of the Hawaii Community Development Authority, a state entity that oversees development in Kakaako.

The plaintiffs include nearly a dozen boat owners, primarily small, independent operators of sailing and fishing charter vessels — many aimed at tourists as a classier alternative to the classic sunset “booze cruises” — with names like Nahoku II, Manu Kai, Aloha Kai and Sashimi II. Their central complaint is that metal particles in Howard Hughes’ construction dust cause serious rust and corrosion on their vessels.

The plaintiffs want Howard Hughes to adopt practices that will prevent dust from blowing off of its construction sites into the air, the ocean and their boats.

Through a spokeswoman, Ward Village issued a statement saying it already takes reasonable steps to prevent the release of fugitive dust.

“Ward Village is a dedicated good neighbor and requires its contractors to take every reasonable precaution to minimize the amount of dust and debris surrounding construction projects,” the company said. “Ward Village works directly with each project’s general contractors to ensure best practices and prevention measures are being employed.”

Nonetheless, the company said it has settled with numerous boat owners.

“Despite these efforts, the owners of certain vessels believe dust and debris from the projects had caused damage during the COVID-19 pandemic, when most of these vessels remained moored in the harbor,” the company said. “Ward Village and its affiliates maintain insurance for these situations and, with assistance from the carrier, have already resolved numerous disputes with owners who could substantiate their claims.”

In the past several years, Howard Hughes has transformed the oceanside neighborhood with new retail space and the development of five condo towers containing more than 2,100 units – primarily luxury properties often bought as investments. The company has two more buildings, 565-unit Koula and 349-unit Victoria Place, under construction and two more in predevelopment.

But for years, as construction has been underway, the boat owners have complained that dust from condo construction has created a nuisance and damaged their property. The latest round of complaints started around July 2020, when boat owners complained about the rust to Hawaii News Now. Boat owners continued to voice concerns into 2021, while Howard Hughes denied knowing anything about the problem.

Howard Hughes’ attorney David Minkin of McCorriston Miller Mukai MacKinnon did not return a call for comment. Francine Murray, a spokeswoman for the Hawaii Community Development Authority, declined to comment. Andrew Porter, who represents the plaintiffs, declined to comment but pointed to the complaint.

Rusty Sails, Seat Cushions

According to the document, Howard Hughes’ dust problems date back as far as 2016, when the company paid damage compensation to some vessel owners in Kewalo Basin Harbor during construction of the Waiea condo tower. The current lawsuit focuses on projects that started with the Aalii tower in 2020.

The dust that appeared on boats related to Aalii was different from normal dust in amount, consistency and color, the complaint says. It alleges the dust caused rust to form on a wide variety of non-metal items, including sails and seat cushions. Plaintiffs allege they complained to the harbormaster and Howard Hughes, to no avail.

Central to the complaint are allegations that Howard Hughes’ dust is not only damaging the plaintiffs’ boats but also causing “negative impacts to their health from breathing the fugitive dust containing metal particulates and other harmful substances that now permeates the air in the Kaka’ako neighborhood, Kewalo, and nearby beach parks due to Defendants’ construction activities.”

Concerns also were raised about negative environmental impacts.

“The fugitive dust containing metal particulates and other harmful substances that is falling on the vessels is also falling into the waters of Kewalo and likely contaminating the waters off of nearby beach parks causing damage to Hawaii’s fragile coral reefs and the ecosystems and species that depend on them,” the suit says. “Many protected and endangered species are likely affected including whales, monk seals, and turtles as well as treasured species of coral, fish, dolphins, and more.”

In addition, the suit points out an aspect of the dispute that the plaintiffs say has made it hard for more boat owners to come forward. While Howard Hughes’ role as harbor manager places a legal duty to protect the boat owners who are tenants, the boat owners worry Howard Hughes will punish them for speaking out, the complaint says.

“Due to the Howard Hughes Corporation’s dual authority as the parent company in the construction in Ward Village and managing Kewalo Harbor, many leaseholders of slips in Kewalo Harbor were apprehensive about speaking up and taking action against the Howard Hughes Corporation for fear that they might lose their slip leases in retaliation – a move that would completely shut down Plaintiffs’ businesses,” the complaint says.

The lawsuit goes beyond standard nuisance and trespass allegations involving the discharge of material on private property. The complaint alleges Howard Hughes also violated the federal Clean Air Act, which includes a special “citizen suit” provision that allows private citizens to step into the role of the Environmental Protection Agency and enforce the law.

To boat owners like Richie Maddaloni, a partner in the Royal Hawaiian Catamaran company, a plaintiff in the lawsuit, the issues go beyond his narrow business interests. He says he and his partners spent considerable time and sweat equity restoring a vintage 52-foot catamaran designed in 1968 by Rudy Choy. They also survived the worst of the coronavirus pandemic.

Now, he said, the partners face the additional burden and loss of business that will go with having to repaint the vessel to mitigate the rust damage.

Maddaloni wonders how many of his residential neighbors, who often pay top dollar to live in tony Kakaako, know what Howard Hughes is putting into the air and water.

“They’re getting industrial air quality for a premium price,” he said.