WAILUKU - A 2nd Circuit Court judge granted a motion Wednesday to lift parts of a temporary restraining order in the ongoing case over operations at the troubled Ritz-Carlton Club and Residences at Kapalua Bay.
The move is expected to help the apartment owners' association fund operations until Oct. 29, at which time The Ritz-Carlton Management Co. has said it will no longer manage the luxury property.
"It means the association can work with the current operating company to pay some bills and continue to manage the project through October 29, 2012," said Honolulu attorney Mike Formby, representing the association of apartment owners, after the court hearing. "I think it's good news for everybody - the association and members, (meaning) the whole ownership owners."
Judge Joseph Cardoza had imposed a temporary restraining order in June against the property's developer, management company, homeowner's association and others.
It stemmed from a lawsuit filed earlier that month by 10 owners of the multimillion-dollar condominiums who allege the developer and management company have "allowed the project to fall into disarray."
The $355 million Ritz-Carlton Club and Residences at Kapalua Bay opened in mid-2009 on the site of the former Kapalua Bay Hotel as a joint venture development between affiliates of Maui Land & Pineapple Co., Marriott International and Exclusive Resorts, with ML&P holding a majority interest.
The lawsuit names Kapalua Bay LLC - the joint venture entity - and the three partner companies as defendants, as well as affiliates of Ritz-Carlton, the property's association of apartment owners, and six members of the association's board, including ML&P President Ryan Churchill.
The plaintiffs in the lawsuit are owners in the residences portion of the property, which is made up of 84 wholly- owned condominiums. With only one-third of those residences sold, the developer was responsible for the common area's maintenance fees for the 56 unsold units, according to the lawsuit.
The lawsuit alleges that the developer stopped paying its share of the maintenance fees earlier this year, "thereby rendering the (apartment owners' association) and the project woefully underfunded."
The temporary restraining order in part prohibited any of the defendants from withdrawing funds from accounts belonging to the Association of Apartment Owners of Kapalua Bay Condominium for any fees or payments to Marriott International, Ritz-Carlton or any affiliates.
In granting the initial restraining order, Cardoza said it was "necessary to maintain the status quo pending the resolution" of the issues raised.
On Wednesday, Formby told Cardoza the association had reached an agreement Friday with Ritz-Carlton on certain business terms.
"We're simply asking the court to allow us relief from the TRO consistent with the terms that have been agreed upon," he told the court. "Specifically, (the agreement) requires that (the Ritz-Carlton Development Co.) and the operating company be able to access funds, dues that are being paid in. . . . It allows them to work on a transition management plan with the (association of apartment owners), and it covers certain insurance requirements for the project."
Attorneys for the plaintiffs agreed to the motion to lift those parts of the restraining order. Cardoza ordered the relief be granted effective immediately.
A preliminary hearing on the underlying case will resume Oct. 17 in Wailuku.
* Nanea Kalani can be reached at nkalani@mauinews.com.
