GARY VICTOR DUBIN 3181 FREDERICK J. ARENSMEYER 8471 PETER T. STONE 2788 Dubin Law Offices Suite 3100, Harbor Court 55 Merchant Street Honolulu, Hawaii 96813 Telephone: (808) 537-2300 Facsimile: (808) 523-7733 Email: gdubin@dubinlaw.net Email: farensmeyer@dubinlaw.net Email: pstone@dubiniaw.net Attorneys for Plaintiffs Ke Kailani Development LLC and Michael J. Fuchs IN THE CIRCUIT COURT OF THE FIRST CIRCUIT STATE OF HAWAII KE KAILANI DEVELOPMENT LLC, a CIVIL NO. 11-1- 1577- 07 BIA Hawaii limited fiabilty company; and (Foreclosure) MICHAEL J. FUCH! FIRST AMENDED COMPLAINT (1) FOR Plaintiffs, WRONGFUL FORECLOSURE, (2) FOR BREACH OF CONTRACT, (3) FOR BUSINESS COMPULSION, (4) FOR TORTIOUS INTERFERENCE, (5) FOR REPUDIATION OF CONTRACT, (6) FOR FRAUD AND DECEIT, (7) FOR LEGAL MALPRACTICE, (8) FOR INDEMNIFICATION, (9) FOR SPECIFIC PERFORMANCE, (10) FOR REFORMATION OF CONTRACTS, (11) FOR RESCISSION, (12) FOR ACTUAL AND FOR PUNITIVE DAMAGES, (13) FOR DISCHARGE OF GUARANTIES, AND (14) FOR INJUNCTIVE AND. DECLARATORY RELIEF; EXHIBITS 4 THROUGH 83; RENEWED DEMAND FOR TRIAL BY JURY; CERTIFICATE OF SERVICE; SUMMONS vs. KE KAILANI PARTNERS LLC, a Hawaii limited liability company, HAWAII RENAISSANCE BUILDERS LLC, a Delaware limited liability company registered in Hawaii; BAYS DEAVER LUNG ROSE & HOLMA, a Hawaii law partnership, GEORGE VAN BUREN, solely in his capacity as Foreclosure Commissioner; JOHN DOES 1-50; JANE DOES 1-50; DOE PARTNERSHIPS 1-50; DOE CORPORATIONS 1-50; DOE LIMITED LIABILITY COMPANIES 1-50; DOE ENTITIES 1-50; AND DOE GOVERNMENTAL UNITS 1-50, Defendants, FIRST AMENDED COMPLAINT (1) FOR WRONGFUL FORECLOSURE, (2) FOR BREACH OF CONTRACT, (3) FOR BUSINESS COMPULSION, (4) FOR TORTIOUS INTERFERENCE, (5) FOR REPUDIATION OF CONTRACT, (6) FOR FRAUD AND DECEIT, (7) FOR LEGAL MALPRACTICE, (8) FOR INDEMNIFICATION, (9) FOR SPECIFIC PERFORMANCE, (10) FOR REFORMATION OF CONTRACTS, (11) FOR RESCISSION, (12) FOR ACTUAL AND FOR PUNITIVE DAMAGES, (13) FOR DISCHARGE OF GUARANTIES, AND (13) FOR INJUNCTIVE AND DECLARATORY RELIEFA. JURISDICTION AND VENUE 2 B, THE PARTIES 3 C. BACKGROUND FACTS 4 The Ke Kailani Resort Development 4 ‘The Funding of the Ke Kailani Development 6 ‘The Worldwide Recession Commercially Frustrates KKD's Performance 8 ‘The July 13, 2009 Unconstitutional Arbitration Decision and Award 10 Lenders interfere with KKD’s Ability To Repay Its Secured Loans 2 The Related Foreclosure Case 4 D. OPERATIVE FACTS 15 KO and Fuchs Contract with HRB in Order To Settle with Their Lenders 15 Lenders Negotiate with HRB Preconditioned on KKO's and Fuchs’ Permission 17 Lenders Enter into a Settlement with KKD and Fuchs 18 HRB Takes Advantage of KKD and Fuchs, Then Refuses To Close 21 HRB Misleads Lenders into Canceling Their Settlement with KKD and Fuchs 27 HRB's Attorneys Commit Ethical Misconduct, Harming Its Clients KKD and Fuchs 28 HRB Tortiously Breaches Its Contractual Promises to KKD and Fuchs 30 HRB Procures an Escrow Cancellation and Release Agreement through Fraud 38 KKP Wrongfully Substitutes as Plaintiff in the Related Case To Foreclose 41 KKD Is Forced into Unsuccessful Chapter 11 Bankruptcy Proceedings 2 KKP Wrongfully Pursues a Foreclosure Auction and Confirmation of Sale 2 E, DEFENDANTS’ LIABILITY TO KKD AND FUCHS 44 Count One: Liability of HRB and KKP for Breach of Contract 44 Count Two: Liability of HRB and KKP for Business Compulsion 50 Count Three: ty of HRB and Bays Law Firm for Tortious interference 57 Count Four: Liability of HRB for Wrongful Contract Repudiation 59 Count Five: Liability of Bays Law Firm for Breach of Services Contract 61 Count Six: Liability of Bays Law Firm for Fraud, Deceit, Misrepresentation 64 Count Seven: Liability of Bays Law Firm for Legal Malpractice 68 Count Eight: Liability of Bays Law Firm for Indemnification 69 Count Nine: Liability of HRB and KKP for Specific Performance 70 Count Ten: Liability of HRB and KKP for Reformation of Contacts n Count Eleven: Liability of HRB and KKP for Rescission of Escrow Cancellation 72 Count Twelve: Liability of HRB and KKP for Rescission of Sale Agreements B F. PRAYER FOR RELIEF 4 Specific Contract Remedies Sought Against HRB and KKP 4 Specific Tort Remedies Sought Against HRB and KKP 75 Specific Injunctive Remedies Sought Against HRB and KKP 76 Specific Fraudulent Transfer Remedies Sought Against HRB and KKP 7 Specific Tort Remedies Sought Against the Bays Law Firm 7 Discharge of Guaranty Remedies Sought Against HRB and KKP B Specific Legal Malpractice Remedies Sought Against the Bays Law Firm 2 Punitive Damages Sought Against HRB, KKP and the Bays Law Firm. 73 ‘Attorneys’ Fees and Costs Sought Against HRB, KKP and the Bays Law Firm 79COME NOW Plaintiffs KE KAILANI DEVELOPMENT LLC, a Hawaii limited liability company ("KKD"), and MICHAEL J. FUCHS (“Fuchs”) (collectively referred to as “Plaintiffs"), by and through their undersigned attorneys, and for their First Amended Complaint against Defendants KE KAILANI PARTNERS LLC, a Hawaii limited liability company ("KKP"), HAWAll RENAISSANCE BUILDERS LLC, a Delaware limited liability company registered in Hawaii (‘HRB"), BAYS DEAVER LUNG ROSE & HOLMA, a Hawaii law partnership, (‘Bays Law Firm’); GEORGE VAN BUREN, solely in his capacity as Foreclosure Commissioner ("Commissioner") and DOE Defendants (‘Does’), allege and aver as follows: A. JURISDICTION AND VENUE 1. The State of Hawaii is the proper jurisdiction for the adjudication of this Complaint, as all of the underlying transactions referred to herein were executed in this State where the property that forms the center of this dispute is located. 2. Venue is proper in this Circuit Court where all of the underlying transactions referred to herein were executed, where all of the named Defendants are headquartered and/or conduct business, and where the underlying documents referenced below were recorded at the State Bureau of Conveyances in the City and County of Honolulu which in part form the basis for the relief requested 3. This First Amended Complaint is filed as of right, pursuant to Rule 15(a) of the Hawaii Rules of Civil Procedure, and amends the Complaint filed in this action on July 27, 2011, while incorporating herein by this reference pursuant to Rule 10(c) of the Hawaii Rules of Civil Procedure, as if attached hereto, all of its prior Exhibits 1 through 81 that were separately bound and previously filed on July 27, 2011 in this action