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County Responds to Lawsuit Over 2008 Procurement Dispute

Media Release

The County of Hawai‘i today received a complaint filed in the Third Circuit Court by HMP Inc. claiming breach of contract and a violation of the State procurement code.  The lawsuit asks the court to order the County not to terminate its contract with HMP to provide paving material, and to prevent the County from “disqualifying (HMP) from future bids.”  The lawsuit also seeks “loss profits,” but fails to state the amount lost or a factual or legal basis for making this claim.

“HMP’s lawsuit is very weak in both law and facts,” said Corporation Counsel Lincoln Ashida.

This dispute arose in 2008 after the County awarded a contract to HMP to provide paving material for work being done on Saddle Road. The County’s contract with HMP was a “price term agreement,” meaning under the terms of the agreement, for the period of the contract, HMP was obliged to supply usable material to the County.  In turn the County was obligated to purchase the material from HMP.

After a County employee determined the material delivered by HMP was not usable, the County sought usable material from another company so the job could move forward. HMP’s attorney complained about this substitution, and the County investigated the claim. Negotiations with representatives of HMP followed.

HMP’s lawsuit claims “(HMP) submitted a request to resolve the breach of the terms and conditions of the…contract.” This suggests the County did not attempt to negotiate a reasonable resolution of this dispute, but the lawsuit fails to mention the offers of a fair settlement the County made, Ashida said.

HMP’s lawsuit also lists as “facts” allegations such as “a rumor” “heard…” by HMP employees as the basis for its current claims.  The County will ask the Court to dismiss this lawsuit as failing to state a basis upon which any relief may be granted, Ashida said.

The case also has been turned over to the Corporation Counsel’s Fraud Division, Ashida said. The County’s attorneys will determine whether it may be appropriate for the County to file a cross-claim alleging false claims made by HMP and their attorney.

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