Seawall Litigation

Board of Directors

C S Apartments, Ltd.
2979 Kalakaua Avenue
Honolulu, HI  96815

February 28, 2012

Subject: Seawall litigation, information for legal disclosure

Dear Shareholders,

In our summer 2011 newsletter we described our involvement in litigation between the Gold Coast Neighborhood Association (GCNA) and the State over the seawall fronting our property (repeated here on page 2). Following is more specific information should you find it necessary to disclose this litigation in real-estate transactions or for other purposes.
C S Apartments, Ltd. is a party in 2 lawsuits pertaining to our adjacent seawall as a member of Gold Coast Neighborhood Association (GCNA).
Civil No. 07-1-1122-06 (June 22, 2007), GCNA vs State of Hawaii, is a complaint claiming that the State has a right-of-way over the seawall and walkway and is responsible for keeping the seawall in good and safe condition for travel, as it is used by the public as a thoroughfare along the coastline.
Civil No. 10-1-0888-04 (April 26, 2010), State of Hawaii vs GCNA, is a complaint seeking declarations that the State does not own the seawall or the real property under the seawall, and that the State does not have an easement by prescription or implication over the seawall.

Copies of the legal pleadings are available from circuit court by reference to the case numbers above.
Legal arguments were made in First Circuit Court March 22, 2011. The presiding judge has yet to rule in the case.
GCNA is being represented by Attorney Robert Klein (808-529-7323).  Costs or fees incurred for inquiries to Mr. Klein will be at the inquirer’s expense and will not be borne by GCNA or C S Apartments, Ltd.
An April 1, 2011 article in Pacific Business News presents a good overview of the issues involved (“Judge will decide who must pay to fix crumbling seawall”).

                            Board of Directors
                            C S Apartments, Ltd.

Here again is the brief summary that was included in our summer 2011 newsletter.

SEAWALL UPDATE – At our 2011 Annual Meeting the Board was asked for an update on the legal status of the seawall along our property. Final arguments have been heard in Circuit Court in a 4-year old lawsuit in which the Gold Coast Neighborhood Association (GCNA) seeks to have the State assume responsibility for repair and upkeep of the seawall; a ruling is expected any day. Rationale for the suit was that the seawall is freely used by the public for shoreline access (fishing, swimming) and that the State historically has made repairs. GCNA has sought donations for legal expenses since 2007, and at our January 2007 Board meeting presented property maps showing that the seawall along our building rests partly on our property and partly on public land. Our Board supported GCNA’s effort in principle but initially declined to offer Corporation funds, leaving donations to individual Shareholders as announced in our newsletters. In 2008 we received indications that our Corporation would likely be affected by any ruling in the seawall case and therefore should probably be a party to the case. The Board approved joining GCNA for $50 and becoming a nominal plaintiff after consultation with our Corporation Attorney, who advised that potential benefits to our Corporation outweighed potential costs and risks. In May 2010 the State filed a complaint for a declaratory ruling on rights and responsibilities of parties in connection with the seawall and named C S Apts as a defendant. The Board approved a retainer of $1,000 for representation by attorneys handling the GCNA lawsuit, again after consultation with our Corporation Attorney and insurance carrier. We await a final ruling by the court.

1 (808) 728-5253

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