A significant legal challenge has been halted as a court dismissed a $324.1 million lawsuit from Hitachi Rail Honolulu JV against the Honolulu Authority for Rapid Transportation (HART) and the City and County of Honolulu. The ruling, issued by Judge Shirley Kawamura on August 14, 2023, pertains to claims of breach of contract and unjust enrichment linked to delays in constructing the city’s expansive rail system, which is projected to cost more than $10 billion.
The dismissal follows motions to dismiss filed by the city in January, effectively terminating Hitachi’s claims on three counts. Notably, two of these counts were dismissed “without prejudice,” allowing Hitachi the option to refile in the future if it chooses. Attorneys for Hitachi did not respond immediately to inquiries regarding the dismissal or the potential for a new claim.
During a recent HART board meeting, city Deputy Corporation Counsel Lisa Hirahara announced the dismissal, which was followed by a closed-door executive session to discuss the implications of the ruling. HART later confirmed that “the parties are preparing orders for the court’s approval,” as they work through the process of finalizing the dismissal.
In comments addressing the court’s decision, Ian Scheuring, deputy communications director for the mayor’s office, stated that the lawsuit was dismissed primarily because Hitachi did not adhere to the required dispute resolution process mandated by their contract. “The court ruled from the bench and did not issue a written decision,” Scheuring noted. He added that no settlement agreement existed between the parties related to the lawsuit.
The lawsuit alleged that HART’s management issues led to significant delays, costing Hitachi tens of millions of dollars. Specifically, the suit claimed that HART allowed installation of track by another contractor that did not meet the specifications for the trains, resulting in financial losses for Hitachi. Furthermore, HART’s request for Hitachi to mobilize a workforce was said to have incurred costs exceeding $92 million, as the workforce was not needed for an extended period.
Hitachi was contracted by HART in 2011 under a $1.4 billion agreement to design, build, operate, and maintain a fleet of fully automated, driverless electric trains across an 18.75-mile elevated guideway system. The ongoing legal issues have raised concerns over HART’s financial management, particularly since a report indicated that the claim could exceed $120 million.
Despite the dismissal, Scheuring indicated that Hitachi could pursue a new lawsuit if it finds the resolution process unsatisfactory. Earlier this summer, HART had reported that it was negotiating a settlement with Hitachi, with some reports suggesting an agreement in principle was close. This included provisions for Hitachi to justify additional costs that could increase the settlement by as much as $30 million.
In related updates, HART Executive Director and CEO Lori Kahikina announced that Segment 2 of the rail system is set to open for public revenue service on October 16, 2023. An official opening ceremony will take place on October 15, with free rides offered on the entire system following the opening. Kahikina emphasized that access to Segment 2 would not be available prior to the official launch, contrasting the previous opening that allowed immediate public rides.
As the situation develops, both HART and Hitachi remain engaged in discussions surrounding the future of the rail project and its associated legal matters.
