DHHL contract flap could cost taxpayers hundreds of thousands of dollars

HO'OLEHUA, MOLOKAI (HAWAIINEWSNOW) - The Department of Hawaiian Home Land's refusal to pay a $15,000 bill could wind up costing taxpayers hundreds of thousand of dollars.

Back in July, the DHHL hired Red Dirt Construction to build a dirt road through six miles of rugged terrain in Hoolehua on Molokai.

They told owner Santos Pico that it was an emergency job that would allow the DHHL could build a water pipeline. The verbal agreement called for $15,000 up front -- and the promise of more later.

But when it came time to pay, DHHL balked, forcing Pico to sue.

"I was mad, I kept calling the guys on Oahu, every day, every week and they kept putting me off and giving me run around," he said. "They kept blowing me off, blowing me off like they don't have to pay me."

Contract disputes like this are commonplace.

What's unusual here is that the DHHL's Molokai supervisor Edward Ayau authorized the work, but the department's Oahu managers said he shouldn't have.

"Mr. Ayau ... had no authority to contract on behalf of DHHL," said state deputy Attorney General Matthew Dvonch. Because of that, he argued, "The state is immune from suit for money damages."

Pico's attorney says the state's arguments are nonsense.

"They've stolen my client's services. He built a road for them at their request and they're turning around and claiming sovereign immunity," said attorney Eric Seitz.

A state judge agreed.

On Thursday, the judge not only awarded Pico $15,000, but also ordered the DHHL to pay the amount the road is worth.

Seitz said that could be 20 to 40 times the original amount.

"They didn't want to resolve the matter by paying him a penny, so as a consequence of that they're now in a position of having to pay out several hundred thousand dollars," he said.

The DHHL will likely appeal.

Copyright 2016 Hawaii News Now. All rights reserved.