BOBBY N. HARMON, CPCU, ARM
Website: www.the-catbird-seat.net
Defendant, Pro Se
UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF HAWAII
MARY LOU WOO, TRUSTEE, ) CASE NO. CV05-00030 DAE KSC
)
Plaintiff, ) DEFENDANT BOBBY N. HARMON’S
) PRELIMINARY ANSWER TO
v. ) APPLICATION BY
) PLAINTIFF-TRUSTEE MARY LOU
BOBBY N. HARMON, ) WOO FOR CONFIRMATION OF
) OF ARBITRATION AWARD AND FOR
Defendant ) ENTRY OF JUDGMENT AGAINST
) BOBBY N. HARMON
) EXHIBITS A - R
)
________________________________)
DEFENDANT BOBBY N. HARMON’S PRELIMINARY ANSWER TO APPLICATION BY PLAINTIFF-TRUSTEE MARY LOU WOO FOR CONFIRMATION OF ARBITRATION AWARD AND FOR ENTRY OF JUDGMENT AGAINST BOBBY N. HARMON;
COMES NOW Defendant BOBBY N. HARMON and submits this PRELIMINARY ANSWER TO THE APPLICATION BY PLAINTIFF-TRUSTEE MARY LOU WOO FOR CONFIRMATION OF ARBITRATION AWARD AND FOR ENTRY OF JUDGMENT AGAINST DEFENDANT BOBBY N. HARMON:
I. FACTS
On October 18, 1996, Bobby N. Harmon, Risk/Insurance & Safety Manager of Kamehameha Schools/Bishop Estate (“KSBE”), and President of P&C Insurance Company, Inc. (“P&C”), Kamehameha’s for-profit, captive insurance company, met with P&C’s auditors, Cary Okawa and Dennis Tsuhako, from the accounting firm of Coopers & Lybrand (now PricewaterhouseCoopers), regarding P&C’s annual financial report, which was to be a Consolidated Report with Pauahi Holdings Corp. (“PHC”), and certain other for-profit subsidiaries of the charitable trust. At this meeting, Harmon expressed his concerns regarding what he considered to be over-billings by the Captive Manager (Marsh & McLennan), and improper claims reserves. He also described improper “arms-length” issues between KSBE and P&C, as they related to what he believed were illegal “efforts to direct and control the operations of P&C” by Kamehameha’s General Counsel Nathan Aipa, in-house attorney Louanne Kam, and Trustee Henry Peters who also held the position of Chairman of the Board of P&C Insurance Company.
On November 20, 1996, in a follow-up to their meeting, Harmon, in his position as President of P&C, and on P&C letterhead, wrote a letter to Cary Okawa of Coopers & Lybrand, in which he provided further information, along with hundreds of pages of documents, which gave factual evidence regarding what he believed were financial improprieties and violations of insurance laws being conducted between named individuals at Kamehameha Schools/Bishop Estate and Marsh & McLennan. Individuals singled out at KSBE included Nathan Aipa, Louanne Kam, Colleen Wong, Henry Peters, and Richard Wong, among others. Individuals connected with P&C included Gil Tam, William S. Richardson, Nathan Aipa, Peter Lowe, and Rocco Sansone. A copy of this letter was sent to Hawaii’s Insurance Commissioner who has the responsibility for regulating Captive Insurance Companies domiciled in the State of Hawaii.
On November 20, 1996, Harmon was terminated from his positions as Risk/Insurance & Safety Manager of KAMEHAMEHA SCHOOLS/BISHOP ESTATE (“KSBE”) n.k.a KAMEHAMEHA SCHOOLS, and as President of P&C INSURANCE COMPANY, INC.
On December 29, 1996, Harmon wrote a letter to the Bishop Estate Trustees providing details of improper and illegal activities being conducted by some of the top management at the estate and its subsidiaries. Copies of this letter were sent to Michael Goolsby, Chubb Group, which provided the professional liability insurance policy to KSBE and its subsidiaries; Robert Kuroda, of John Mullen & Co., the independent claims adjuster contracted by P&C; and Pat Onogi, the Claims Manager for Marsh Insurance Management Services (MIMS), a subsidiary of Marsh & McLennan, which was the captive management company contracted by P&C.
On January 5, 1997, Harmon sent a Notice of Claim letter to John T. Sinnott, President and CEO of Marsh & McLennan, and enclosed a copy of his Notice of Claim letter dated December 29, 1996, which Harmon had sent to the Bishop Estate trustees.
On January 10, 1997, David Loo, John Mullen & Co., acknowledged receipt of Harmon’s Notice of Claim letter dated December 29, 1996, to the KSBE Trustees, and advised: “Various employees of our company have been listed as potential witnesses should the matter proceed to litigation. Under the circumstances, we have disqualified ourselves from handling this claim and have notified the insured and the insurer of our decision.”
On January 22, 1997, Harmon applied to the Hawaii Dept. of Labor & Industrial Relations for unemployment insurance benefits.
On January 30, 1997, Robert Katz, Esq., of Torkildson Katz Fonseca Jaffe Moore & Hetherington, wrote to Harmon:
“I have been retained by Kamehameha Schools Bishop Estate (‘KSBE’) to assist and advise it in connection with your December 29, 1996 settlement proposal ... Due to the extent and complexity of your settlement proposal, it will not be possible for KSBE to respond by your requested date of January 31, 1997.”
On February 2, 1997, Harmon replied to Robert Katz:
“...Your letter does not disclose other information which is important in my responses to you and in my pursuit of these claims:
1. You state that you have been retained by KSBE. You do not indicate that you are also representing P&C Insurance Company, Inc. (P&C). Does this mean that your comments regarding disclosure of confidential information, etc. apply only to KSBE documents? Could you please provide me a copy of your retention letter in order to confirm your appointment.
2. Could you please clarify your statement that you have been retained by KSBE ‘to assist and advise it’ in connection with my claims. Does the scope of your responsibilities extend to actual settlement negotiations.
3. Has your engagement by KSBE been approved by any insurance carrier(s). If so, may I please have a copy of any letter evidencing this fact...
“...I am not aware of any information which may violate Hawaii’s Trade Secrets Law (H.R.S. Chapter 482B). However, if you will specify which documents you believe may be in violation of either KSBE’s policies or any applicable statutes, and detail valid reasons, I will certainly consider their immediate return.”
A copy of this letter was sent to Trustees; Chubb Group; Mullen & M&M.
On February 7, 1997, P&C and KSBE filed Civil No. 97-0512-02 against Harmon in the First Circuit Court, State of Hawaii, alleging theft of KSBE trade secrets, and confidential documents.
On February 8, 1997, Harmon tendered defense of this lawsuit to Michael Goolsby, Federal Insurance Co., stating in part:
“...I am hereby tendering this claim to the Federal Insurance Company (Chubb Group) under the terms of its Directors & Officers and Association Liability policies issued to Kamehameha Schools Bishop Estate (KSBE), and as an officer of P&C. As an insured person under the above policies, I am requesting that your company provide defense for this lawsuit... I understand an answer to the complaint is due within twenty days of service. As I have not yet selected an attorney, I would appreciate your immediate response and recommendations...”
On February 15, 1997, P&C and KSBE filed a Motion for Preliminary Injunction and Notice of Hearing of Motion. The Hearing of Motion was scheduled for February 18, 1997.
On February 15, 1997, Harmon sent a letter to Michael Goolsby, Federal Insurance Co., stating:
“This is to advise that I was served at 8:10 a.m. Saturday, Feb. 15, 1997 with PLAINTIFFS’ MOTION FOR PRELIMINARY INJUNCTION and NOTICE OF HEARING OF MOTION... The hearing is scheduled for this Tuesday, Feb. 18, 1997 at 1:30 p.m. As I have not had a response to my tender letter to you dated Feb. 8, 1997, or a return of my phone calls to your office, and as Monday, February 17th is a holiday, I am very concerned that this hearing may be held before I have the time and opportunity to obtain adequate and proper legal advice... As I stated in my tender letter of February 8, 1997, I have not yet selected or retained an attorney. I have been awaiting Chubb’s response and advice before taking this action as I am unaware if the company intends to appoint an attorney of its choosing, or if I am to be permitted to select the attorney subject to your approval...”
Chubb did not respond to Harmon’s letter in time for him to comply with the terms of Federal’s insurance policy which stated in Paragraph 1.3:
“The company shall have the right and duty to defend any suit to which the insurance applies. ... No Defense Costs shall be incurred or settlements made without the Company’s consent, which shall not be unreasonably withheld. The Company shall not be liable hereunder with respect to any settlement or Defense Costs to which it has not consented.”
On February 18, 1997, Harmon, through his attorney, John Marshall, filed an Answer to KSBE’s Complaint, and a Counterclaim, alleging and averring, in part:
2. Counterclaim Defendants P&C INSURANCE COMPANY, INC. (hereinafter “P&C”) and/or RICHARD S.H. WONG, OSWALD K. STENDER, LOKELANI LINDSEY, GERARD A. JERVIS and HENRY H. PETERS, as TRUSTEES OF THE ESTATE OF BERNICE PAUAHI BISHOP (hereinafter sometimes collectively referred to as “Bishop Estate”) were during the relevant period the employer(s) of Counterclaimant.
3. While so employed, Counterclaimant witnessed and refused to participate in or acquiesce to acts and practices by the Counterclaim Defendants which were in violation of Federal and/or State of Hawaii laws and/or regulations and/or rules.
4. As a result of Counterclaimant’s refusal to participate in or acquiesce to said acts and practices, as well as because the Counterclaim Defendants believed that Counterclaimant had reported and/or was about to report said acts and/or practices to governmental authorities, Counterclaim Defendants wrongfully terminated Counterclaimant.
5. Counterclaim Defendants’ conduct and wrongful termination of Counterclaimant violated clear mandates of public policy.
6. Counterclaim Defendants’ conduct and wrongful termination of Counterclaimant violated the Hawaii Whistleblowers’ Protection Act, set forth in Hawaii Revised Statutes Chapter 378, such that he is entitled to, amongst other things, injunctive relief, actual damages, reinstatement, back wages, reasonable attorneys’ fees and/or costs of suit.
7. Counterclaim Defendants’ conduct and wrongful termination of Counterclaimant constitutes a breach of contract.
8. Counterclaim Defendants’ conduct and wrongful termination of Counterclaimant constitutes a tortious breach of contract.
9. Counterclaim Defendants’ conduct and wrongful termination of Counterclaimant constitutes a violation of HRS Chapter 480, for which Counterclaimants are liable to pay treble damages and reasonable attorneys’ fees, together with costs of suit.
10. Counterclaim Defendants’ conduct caused Counterclaimant serious mental distress and anguish; and constitutes the negligent and/or intentional infliction of emotional distress upon Counterclaimant.
11. As a result of Counterclaim Defendants’ above-described acts, practices and wrongful termination, Counterclaimant has sustained injury and/or damages.
12. Counterclaimant is entitled to general, special, consequential and/or incidental damages in such amounts as shall be proven at the time of trial.
13. Counterclaim Defendants’ conduct was wilful and wanton, so as to warrant the imposition of punitive damages.
14. Counterclaim Defendants are the alter-egos of each other and are in such a controlled relationship with one another that they should be treated as one and the same entity under the law and the fiction of their separate existences should be disregarded such that they are each liable for the debts and obligations of the other.
WHEREFORE, Counterclaimant prays for judgment against the Counterclaim Defendants, and each of them, for compensatory damages in such amounts as may be proven at the time of trial, together with treble and/or punitive damages, attorneys’ fees and costs, and such other relief as is provided by the statutes referenced and/or is just in these premises.”
On February 19, 1997, a Hearing was held on P&C/KSBE’s Motion for Preliminary Injunction, before Judge Karen M. Radius. Appearing at the hearing were Aipa, Katz and Tsukazaki for Plaintiffs, and Harmon and Marshall for Defendant. A written statement prepared by Plaintiff’s attorney, John Marshall, to be presented orally to Judge Radius at the hearing, made the following points:
“Your Honor, it is important to know why these documents are such a bone of contention.
- On 11/20/96, Mr. Harmon was terminated from his job as the president of Bishop Estate’s captive insurance company, P&C. Although it is a wholly owned subsidiary, it is supposed to have a separate corporate existence.
- And, Bishop Estate knows that if it doesn’t maintain an ‘arms length’ with this profit-making subsidiary, then it has implications for its non-profit tax-free status.
- Mr. Harmon has documents which show, amongst other things, that Bishop Estate did not maintain an ‘arms-length’ relationship and that Mr. Harmon wasn’t going along with it. Said another way, there may have been, and continue to be, some tax fraud afoot and Mr. Harmon got in the way of it.
- Yesterday, Mr. Harmon filed a Counterclaim against Bishop Estate claiming a Parnar-public policy type wrongful termination, and that Bishop Estate violated the Hawaii Whistleblower Statute.
- Mr. Harmon believes that if he didn’t have these documents, there is some chance that they won’t still be in existence when he requests them in discovery.
- When Bishop Estate’s papers herein say that Mr. Harmon said he might be providing the documents to third-parties, I believe the facts will show that two of those parties were the Internal Revenue Service and the Justice Department.”
On February 19, 1997, Patrick A. Richard, Chubb Group, acknowledged receipt of the claim and advised that Tony Rangel would be conducting an investigation and evaluation of the facts and policies issued to KSBE to determine the availability of coverage.
On February 20, 1997, Judge Karen Radius issued an Order Granting Plaintiffs’ Motion for Preliminary Injunction against Harmon.
On February 21, 1997, the Court issued an order granting Plaintiff KSBE’s Motion for Preliminary Injunction for the recovery of the alleged “stolen documents” and “trade secrets”.
On February 25, 1997, Tony Rangel (Chubb Claims Dept.) contacted Marshall by phone and advised that he had only a renewal binder so he cannot be certain what coverages are afforded under the actual policy. He thinks the actual policy should be issued soon and he is working with the underwriters.
On February 28, 1997, Marshall filed Harmon’s Counterclaim against P&C and KSBE for wrongful termination.
On February 29, 1997, a Hearing was held on P&C/KSBE’s Motion for Preliminary Injunction Against Harmon before Judge Karen M. Radius, who issued an Order Granting Plaintiff’s Motion for Preliminary Injunction.
On March 4, 1997, Rangel wrote to Marshall (received 03//10/97) and enclosed a copy of the renewal policy. Rangel advised: “I anticipate being able to provide you with our coverage opinion within the very near future, or at least within the next 30 days.” Harmon contended that this undue delay in Federal’s response constituted an act of bad faith, and an unfair claims practice under Hawaii Insurance Statutes.
On March 13, 1997, Harmon, on the advice of his attorney, turned over the allegedly “stolen” and “confidential” documents to the Court under seal. These included his letter of 12/29/96 to Trustees with all enclosures, and even his personal records, such as performance evaluations, personal commendation letters, paycheck stubs, etc.
On March 13, 1997, the Hawaii Dept. of Labor denied Unemployment Insurance benefits to Harmon on the basis of KSBE’s statement that Harmon was discharged for misconduct.
On March 20, 1997, Harmon filed Appeal No. 9701016 to Dept. of Labor for Unemployment Benefits.
On March 27, 1997, Rangel wrote to Marshall advising of Federal’s decision to decline coverage. Note that Federal delayed informing Harmon of their decision until after KSBE and P&C had obtained the return of all incriminating evidence. Rangel cited Endorsements No. 1, 8 and 9 which amend Section 8.1, Definitions, and Endorsement No. 6 which amended Section 3.1, Exclusions, which had been cited by Federal as the primary reason for denying coverages
On April 11, 1997, Harmon and Marshall met with Robert Katz, Esq. and Sandie Wicklein, KSBE Personnel Director, to discuss a possible settlement. A tentative settlement proposal was made to Harmon which Katz and Wicklein indicated would need to be presented to KSBE Trustees for their approval. Although Harmon believed the tentative offer was far less than his actual losses, Federal’s refusal to defend him and the fact that he could not afford to pay his attorney for defending against P&C’s lawsuit, weighed heavily in Harmon’s mind to accept the offer. Upon closer review of the actual policy, however, Harmon discovered that Federal had back-dated material exclusion endorsements which appeared to be acts of fraud and unfair claims practices.
On April 14, 1997, Harmon responded to Rangel’s letter of 03/27/97, disagreeing with his coverage position. Harmon pointed out that Endorsement No. 6 was issued on February 13, 1997, but back-dated to be effective October 27, 1995. This endorsement replaced End. # 4 which was also effective October 27, 1995. Endorsements 6, 7, 8 and 9 were also issued on the same date, and were also back-dated to show an effective date of 10/27/95. BH also argued that this claim was employment related, which would allow the claim to be covered even under End. # 6. To Harmon, this backdated alteration of the insurance appeared to constitute fraud, and due to its malicious and deceptive nature seemed to be an act of bad faith. The policy was sent by mail, which Harmon believed may have constituted mail fraud.
On April 7, 1997, Harmon was hired by American Mutual Underwriters, Ltd. as Marketing Manager (not a VP as he had been when he voluntarily left AMU to join KSBE), at annual salary of $52,000 (compared to $70,000 a year at KSBE). AMU had no retirement plan comparable with KSBE, and no monthly auto allowance.
On April 28, 1997, Rangel wrote to Marshall and stated that Federal was undertaking a review of Harmon’s arguments and anticipated being able to provide a response within the next 30 days.
On April 28, 1997, Harmon wrote to the California Dept. of Insurance to request review of this case due to Federal’s unfair claims settlement practices:
“ ... It is my belief that the Federal Insurance Company; the insured organizations, P&C Insurance Company, Inc. and Kamehameha Schools Bishop Estate; their insurance broker, Marsh & McLennan, Inc.; their captive manager, M&M Insurance Management Services, Inc.; and certain officers, directors and employees of these entities, have conspired to wrongfully decline coverages under the referenced policy. In the process, the Federal Insurance Company, in collusion with these entities, has fraudulently altered and misrepresented the terms of the policy; has engaged in deceptive claims practices; and has acted in bad faith by declining to defend me in the referenced lawsuit. ... My primary concern is that the insurance company, in collusion with the insured organizations and the broker, Marsh & McLennan, Inc., knowingly and deliberately back-dated an exclusion endorsement in order to deny coverages for the referenced claim. . . I consider the company’s refusal to defend this claim based upon the retroactively revised wording in Endorsement No. 6 to be one of the most extreme examples of fraud and bad faith that I have encountered in my 35 years of experience in the insurance business. If I were a typical insured without this background and experience in insurance matters, this retroactive revision in the terms of the policy would probably have gone unnoticed. By bringing this matter to your attention, I hope that your office will take prompt and appropriate action in this case in order to protect the public from similar unfair claims settlement practices... “
cc: Insurance Commissioner, State of Hawaii; John Marshall, Esq.; Tony Rangel, Chubb Group; Elizabeth K. Kellner, Assoc Litigation Counsel, M&M (w/encls.)
On May 6, 1997, J. Craig Collins, Assoc. Claims Officer of the Calif. Dept. of Insurance, responded to Harmon stating that his inquiry does not relate to a matter within the jurisdiction of this Department, and it was being sent to the Insurance Commissioner, State of Hawaii.
On May 8, 1997, Harmon made a counteroffer for settlement to KSBE and P&C, to expire 05/15/97. There was NO RESPONSE from Federal, P&C, Katz, M&M or Mullen to this offer, again appearing to be acts of bad faith and unfair claims practices.
On May 14, 1997, Cecelia Chock, Investigator, State of Hawaii, Insurance Div., answered BH’s letter of 04/28/97: “... We regret to advise you the State of Hawaii Insurance Division does not have jurisdiction over the denial of a claim or interpretation of coverage. Proper jurisdiction would rest with the Court system....”
On May 14, 1997, the first Unemployment Appeals hearing was held before Hearings Officer, Ernest Hanaumi.
On May 15, 1997, more than 500 Kamehameha Schools parents, students, alumni and supporters marched on Bishop Estate headquarters to protest what they said was trustees’ micromanagement of the campus.
On May 19, 1997, H. Paul Breslin, Esq., of Archer McComas Breslin McMahon & Chritton, responded to Marshall:
“...We have been retained by Federal Insurance Company to represent its rights in connection with this coverage dispute... In his letter of April 14, 1997 Mr. Harmon claims that Endorsement No. 6 which changed the language of the Insured v. Insured exclusion should not apply to his claim. He then makes the following specific charges against Federal:
‘From this chronology, it would strongly appear that a deliberate attempt has been made by your company to back-date this exclusion in Endorsement No. 6 solely for the purpose of denying coverages for this litigation.’ ‘. . . It is evident that Federal Insurance Company, in collusion with the insurance broker, Marsh & McLennan, Inc, has knowingly and intentionally breached its duty to defend in this case, and has flagrantly engaged in deceptive claims practices by back-dating endorsements to the policy in order to deny coverages.’
“Each of these charges is totally unfounded and totally untrue. The statements are libelous per se. Since they have now been published to a variety of third parties, they detrimentally impact Federal’s reputation in the insurance market place and the ability to do business therein....
“We vehemently reject Mr. Harmon’s assertions of collusion, deceptive claims practices, and breaches of duty. We demand that Mr. Harmon cease and desist from continued publication of such libelous statements....”
On May 23, 1997, Harmon responded to Collins’ letter of 05/06/97:
“My reason for writing the California Department of Insurance on April 28, 1997, was due to the advice of Tony Rangel, Federal Insurance Company, in his letter dated March 27, 1997...’I relied on this advice of the insurance carrier [Federal] to have your office investigate my complaints of possible fraud ...misrepresentations by the broker and carrier, and deceptive and unfair claims settlement practices. ... My primary concern was that the insurance company, in collusion with certain individuals in the insured organizations and the broker, Marsh & McLennan, Inc., knowingly and deliberately back-dated an exclusion endorsement in order to deny coverages. By filing this complaint, I hoped to help protect others from being victimized by such deceptive practices.... In light of this new information, I would appreciate further clarification of the jurisdictional issues you raised...”
On May 24, 1997, Harmon replied to Cecelia Chock’s letter of 05/14/97:
“I recognize the fact that the State of Hawaii Insurance Division does not have jurisdiction over the denial of a claim or interpretation of coverages. . . . My primary concern was that the insurance company, in collusion with certain individuals in the insured organizations and the broker, Marsh & McLennan, Inc., may have knowingly and deliberately back-dated an exclusion endorsement in order to deny coverages. If this is true, then by filing this complaint, I hoped to help protect others from being victimized by similar deceptive claims practices. ... Contrary to the information provided by Federal’s claims adjuster, it now appears that my complaint should have been addressed to the State of Hawaii Insurance Division. Therefore, I am formally filing this complaint at this time in accordance with ¶ 431:13-103 of the State of Hawaii insurance statutes. . . . It is my belief that the Federal Insurance Company; Marsh & McLennan, Inc. (M&M), and it officer, Rocco Sansone; Marsh & McLennan Insurance Management Services, Inc. (MMIMS), and its officer, Peter Lowe, may have made false, deceptive and misleading statements regarding the insurance coverages provided to me as an insured person in order to improperly influence the settlement of the referenced claim.”
“... The following sections of ¶ 431:13-103 Unfair methods of competition and unfair or deceptive acts or practices appear to apply in this case:
(a) The following are defined as unfair methods of competition and unfair or deceptive acts or practices in the business of insurance:
(1) Misrepresentations and false advertising of insurance policies. Making, issuing, circulating, or causing to be made, issued, or circulated, any estimate, illustration, circular, statement, sales presentation, omission, or comparison which:
(A) Misrepresents the benefits, advantages, conditions, or terms of any insurance policy...”
(M&M and Federal represented that the referenced Directors and Officers Liability policy would defend claims made against directors and officers of P&C and against employees of KSBE for “wrongful acts” as defined in the policy. I consented to serve as President of P&C based partially on the conditions that: 1) P&C would indemnify and hold me harmless for acts performed in connection with my services to the company; 2) that Directors and Officers Liability insurance would be provided to defend me in the event of claims for any wrongful acts arising from my serving in this capacity.)
(10) Unfair claim settlement practices...
(A) Misrepresenting pertinent facts or insurance policy provisions relating to coverages at issue;
(Prior to purchasing the referenced policy, M&M and Federal represented to me in my capacity as the Risk/Insurance & Safety Manager of KSBE, and as the President of P&C, that the policy had a duty to defend trustees, officers, directors and employees against claims for “wrongful acts”. I relied on the representations of M&M and Federal that the policy that was issued and in force at the time of P&C and KSBE’s claims against me provided this coverage. M&M, Federal and the plaintiffs in this case have apparently conspired and caused the policy to be changed through a “back-dated” endorsement in order to deny this defense.)
(O) Failing to promptly settle claims, where liability has become reasonably clear, under one portion of the insurance policy coverage in order to influence settlements under other portions of the insurance policy coverage;
“ . . . This case involves an “insured vs. insured” situation with both defendants claiming coverages under the same policy. The carrier stated to me that they would assign separate adjusters to each side in order to create a “Chinese wall” in this case, so that any knowledge gained, or actions taken, by one adjuster would not be disclosed to the other. . . Apparently, this duty has been breached. A meeting was recently held with plaintiff’s attorney regarding a proposed settlement. It was after this meeting that I again reviewed the insurance policy and discovered that Federal’s letter denying coverages had been based on the back-dated endorsement. After reporting this fact to the adjuster, I relied on his advice that, under California statutes, I could report this matter to the California Department of Insurance for investigation. The fact that I had registered a complaint with the California Department of Insurance was somehow passed on to Robert Katz, Esq., the plaintiff’s attorney. I was informed that he was very upset at my action--to the point that the plaintiff’s were considering withdrawing the proposed settlement offer. . . .Consequently, it appears the purported “Chinese wall” has been breached to the advantage of the plaintiffs, as well as to the benefit of the insurance agents and carriers, P&C, M&M and Federal. It appears possible that the delays and refusal of Federal to provide defense coverages to me under the policy may have been deliberate and intentional in order to influence the settlement of my counter-claim covered under other portions of the insurance policy. . . . As stated earlier, I recognize that your office would not get involved in the court case or in the settlement negotiations. However, I believe that under these Hawaiian insurance statutes, your office would be responsible for investigating complaints against the insurance companies and their agents for unfair and deceptive practices. I also hope that your office will discourage and appropriately deal with any attempts by the plaintiffs, the insurance company or broker to retaliate against me in any manner for filing this complaint.”
cc: Craig Collins, Calif Dept of Ins; Tony Rangel, Federal Ins Co; Elizabeth Keliner, Esq., Marsh & McLennan; Board of Directors P&C; Trustees of KSBE; & Richard Wong, Pres., Pauahi Holdings.
BH received NO RESPONSE from the Insurance Dept. or any other entity.
On June 2, 1997, Hawaii Dept of Labor, Unemployment Appeals Hearing, before Ernest Hanaumi. A major argument in Harmon’s Appeal was that he was not allowed to subpoena any witnesses or documents in his original case. Witness for KSBE is Louanne Kam.
On June 12, 1997, Harmon responds to Federal’s letter of May 19, 1997:
“... In your conclusion you reiterate, ‘There was never any discussion whatsoever between Federal on the one hand and Marsh on the other concerning the change in the Insured v. Insured endorsement.’ . . . If this is true, then it appears that you are admitting that Federal unilaterally made these changes without discussion with Marsh and without the mutual consent of the Insured . . . In what appears to be a contradiction, however, you indicate that Federal ‘suggested certain changes to the Insured v. Insured exclusion’ when they began to construct the exact language of the requested endorsements. You do not disclose the date these suggestions were made, or who was involved in the discussions and approval of these suggestions. I must assume, however, that these suggestions were made to Marsh and/or the Insured, and were made sometime prior to the issuance of Endorsement No. 6. If so, then this would bring us right back to collusion among these parties in the back-dating of this endorsement. Then it would appear that this is even further evidence of misrepresentation, wrongful denial of claims, unfair and deceptive claims practices, and bad faith. . . As the Federal has declined to provide defense to me under its insurance policy, this letter is written without advice of counsel...”
On June 18, 1997, Harmon sent Katz a new settlement proposal.
On June 19, 1997, Labor Board Appeals Hearing.
On June 25, 1997, Harmon retained attorney John Goemans to represent him in his whistle-blower countersuit.
On June 26, 1997, Harmon received phone call from Katz that Trustees had rejected his settlement proposal of 06/18/97.
On June 27, 1997, another Labor Board Appeals Hearing. Harmon’s appeal is denied.
In July, 1997, Harmon tendered KSBE’s claim against him to Tradewind Insurance Co. (an Island Insurance Co. subsidiary), under his homeowner’s insurance policy. Tradewind accepted the tender with a reservation of rights letter, and assigned attorney Roy Hughes to handle the defense of KSBE’s lawsuit.
On July 10, 1997, Breslin responded to Harmon’s letter of 06/12/97, and again denied defense coverages under Federal’s policy.
On July 16, 1997, the Calif. Dept.of Insurance responded to Harmon’s letter of 05/23/97: “... Unfortunately, due to staffing cuts we are no longer able to furnish individual case investigation where an attorney is involved or the matter is in litigation....”
On July 23, 1997, Harmon responded to Federal’s letter of July 10, 1997:
“. . . I do not see that the complaint is ‘unequivocally clear that all of the alleged breaches and damage occurred after the termination of employment.’ As stated previously, the complaint specifically alleges that wrongful acts were committed both before and after my termination. And how does the fact that I allegedly breached my duties to the Association lead to the conclusion that there is no duty of the insurance company to defend me against these allegations? Again, I am the Insured Person under this policy . . . not P&C Insurance Company.”
“You state: ‘Mr. Harmon alleges that Marsh & McLennan is an agent of Federal. As Mr. Harmon well knows, Marsh & McLennan is an independent insurance broker which in this case acted as an agent of P&C Insurance and the other Insureds. Therefore, Federal had a perfect right to negotiate with and rely upon Marsh & McLennan regarding the insurance contract’.
“THIS IS A COMPLETELY FALSE AND MISLEADING STATEMENT!”
“According to the Insurance Commissioner’s records, Marsh & McLennan, Inc. is an appointed agent of Federal Insurance Company in the State of Hawaii. They are not an independent insurance broker acting as an agent of P&C and other Insureds. . . . Consequently . . . Federal can be held legally liable for any misrepresentations made by its agent, Marsh & McLennan.
“You state: ‘Mr. Harmon’s principal objection seems to be that he was not personally consulted about the retroactive applicability of Endorsement No. 6. Under the policy terms and conditions his specific consent is not required. The Association acts on behalf of all Insureds. At the time of the issuance of Endorsement No. 6, Mr. Harmon was no longer employed by the Association and therefore it is axiomatic that he was not involved and not authorized to be involved in the decision making process’.
“Obviously, at the time of issuance of Endorsement No. 6, I was not involved in the decision making process. But you have not denied that I was directly involved in the decision making process at the time the contract was negotiated and the policy was issued. The highly questionable act is the back-dating of the endorsement to retroactively amend the contract conditions that I originally negotiated. Furthermore, Endorsement No. 6 is an exclusion which restricts the coverages originally afforded; and this exclusion endorsement was specifically cited to deny coverages. My objection is not that I wasn’t personally consulted; my objection is that this appears to constitute fraud, misrepresentation, breach of contract, wrongful denial of claims, unfair and deceptive claims practices, and extreme bad faith.”
“You state: ‘Mr. Harmon does not adequately respond to Federal’s allegations that the statements made in his prior letter are libelous per se.’ As I am not an attorney, I do not feel qualified to respond to these allegations. I am told, however, that truth is an absolute defense in libel suits. To the best of my knowledge and belief, all of the statements I have made regarding this matter are truthful and factual.”
Federal did not respond to Harmon’s letter of July 23, 1997, which Harmon alleges were further acts of bad faith and unfair claims practices.
On July 25, 1997, Sally Apgar, Honolulu Advertiser reporter, interviews Harmon regarding KSBE. Atty. John Goemans is present.
On August 4, 1997, first meeting with Roy Hughes, Esq., attorney assigned by Island Insurance Co. under the coverages of Harmon’s Homeowners’ insurance policy.
On August 4, 1997, interviewed by Bruce Dunford, Associated Press.
On August 9, 1997, the “Broken Trust” article in the Star-Bulletin authored by Randy Roth, Judge Samuel King, and others alleges mismanagement of Bishop Estate assets and conflicts of interests by trustees.
On August 12, 1997, Gov. Ben Cayetano orders Attorney General Margery Bronster to investigate KSBE.
On August 15, 1997, TV reporter Jim Dooley interviews Harmon for KITV regarding the KSBE controversy. Harmon’s attorney, John Goemans, is present.
On August 19, 1997, Harmon had conference with Larry Goya, Deputy Attorney General, with regard to the Attorney General’s investigation of KSBE trustees.
On August 21, 1997, P&C and KSBE filed an Emergency Motion to Enforce the Preliminary Injunction Order against Harmon, seeking contempt of court charges for allegedly violating a previous injunction that prevented him from disclosing “confidential” information and “trade secrets” about KSBE and P&C. Harmon was out-of-state.
On August 26, 1997, Harmon’s Attorney, John Goemans, filed a Verified Petition for Writ of Prohibition in the Hawaii Supreme Court.
On August 26, 1997, a hearing was held by Circuit Court Judge Bambi Weil on an emergency motion filed by Bishop Estate seeking contempt of court charges against Harmon for allegedly violating a previous injunction that blocked him from disclosing “confidential” information about his previous employer. As reported in an article in the August 26, 1997 edition of the Honolulu Star-Bulletin:
Estate tries to Muzzle fired exec
Bishop Estate is seeking to silence Bobby Harmon again.... Matt Tsukazaki, attorney for the charitable trust, asked for a closed hearing “to protect the confidentiality of the information that may be discussed.” Judge Weil continued the matter to September 26; Bishop Estate attorneys were scheduled to conduct a deposition with Harmon Sept. 12.
John Goemans, who was representing Harmon in his $1.8 million wrongful-termination suit against Bishop Estate, told Weil: “Anything that Harmon has said has been either a matter of opinion or in aid of law enforcement.”
Harmon has said his questions about irregular and possibly illegal activities led to his ouster. The Attorney General has interviewed Harmon as part of its investigation into the estate’s dealings. “Here’s a guy who brought to the attention of his company things that were of benefit to the company,” Goemans said. “Instead of being rewarded for his diligence, the whole machinery of the estate came down on him like a ton of bricks, ending his career, to which he’d reached the pinnacle.”
Harmon said he questioned an annual payment the estate made without accounting for why it was made, his salary as chief of the for-profit insurance subsidiary being paid by the nonprofit trust in apparent violation of IRS regulations, and the parceling out of legal work to selected lawyers.
On August 27, 1997, the Honolulu Star-Bulletin ran a front-page story, which read, in part:
Cayetano: Estate can’t hide behind confidentiality
Gov. Ben Cayetano says the Bishop Estate cannot use confidentiality agreements to bar employees from cooperating with the state’s investigation into whether trustees breached their fiduciary responsibilities.
Cayetano’s remarks yesterday came an hour after a hearing in Circuit Court on the estate’s emergency motion for a contempt finding against a fired executive for allegedly violating an injunction that prevented him from revealing ‘confidential’ information about his former employer.
Bobby Harmon, who was fired last year ... was questioned last week by state attorneys. They talked with Harmon after Cayetano ordered Attorney General Margery Bronster to begin an investigation into the $10 billion charitable trust, the largest private landowner in Hawaii.
Estate attorneys are also alleging that Harmon talked with reporters, leaking sensitive information. ‘The confidentiality provision, in my view as an attorney,’ said Cayetano, ‘will not hold any weight or water if the information that’s coming out is used to demonstrate or prove that there has been in fact a breach of fiduciary duty. You cannot hide information. The confidentiality provision should stand only if it is in fact protecting the trust and the beneficiaries - and not the trustees.’
Several hours after Cayetano spoke with reporters, Harmon’s attorney, John Goemans, filed a writ with the state Supreme Court, challenging Circuit Judge Bambi Weil’s jurisdiction to enforce the injunction against his client. The injunction, Goemans claims, denies Harmon’s ‘established First Amendment right to express his opinion as to the corruption and criminality of the officers and directors of the Bishop Estate in matters of public concern and in aid of law enforcement by the attorney general of the state of Hawaii and others.’
On October 27, 1997, Bishop Estate’s controller subpoenaed (AG Subpoena #97-98), to appear at the Attorney General’s office with Bobby Harmon’s listing of all disbursements to Harmon from 9/1/94 to present. Larry Goto was to be contacted at 586-1160.
On October 31, 1997, court hearing before Judge Bambi Weil.
On November 10, 1997, I met with Janet Hughes, and Carolyn Woods, IRS, regarding audits and investigation of KSBE and P&C. John Goemans, Esq. accompanied me. I hand-delivered my letter dated November 10, 1997, addressed to Carolyn Woods. (EXHIBIT A)
On November 12, 1997, met again with Carolyn Woods, IRS.
On November 15, 1997, met again with Carolyn Woods, IRS.
On November 24, 1997, met with Colbert Matsumoto, KSBE Master, accompanied by Island Insurance lawyer, Roy Hughes, Esq, regarding the KSBE investigation. Hand delivered my letter to Matsumoto dated November 24, 1997. (EXHIBIT B)
On November 25, 1997, another Labor Board Appeals Hearing.
On April 7, 1998, Harmon gave Deposition to Attorney General’s office, re EQ2048. Deputy AG’s Hugh Jones, and Dorothy Sellers, and investigator Steve Goodenow were present for the Deposition.
On August 7, 1998, KSBE Master Colbert Matsumoto filed a report critical of all Trustees’ past conduct. Later in August, 1998, the Attorney General exercised its statutorily mandated responsibility to act as parens patriae and sought interim removal, permanent removal and surcharges of the trustees for alleged past misconduct. Said action by the Attorney General was based, in part, upon the criticisms by Master Matsumoto. “In other words, as of August issues of Trustee misconduct/breach of duty as well as conflict of interest were clearly before the Court and Trustees were on notice.” (“Richards Report”)
On October 16, 1998, “Trustee Stender filed a response to the Master’s First Supplemental Report in which he admitted that individual trustees were in conflict with the interests of the Trust itself with regard to the Attorney General’s petition to remove the trustees. Trustee Jervis also filed a response to that Report in which he admitted that the trustees were in conflict with regard to responding to discovery requests propounded by the Attorney General. Based in part upon these admissions Master Matsumoto filed a Third Supplemental Report on November 20, 1998 in which he concluded that a conflict did exist for all trustees with regard to the pending action by the Attorney General, as well as the then pending action to remove Trustee Lindsey. Again ... Trustees Wong, Peters and Lindsey nonetheless authorized and paid from trust assets for legal expenses incurred by non staff counsel to defend the action by the Attorney General.” (“Richards Report”)
On November 25, 1998, Trustees Oswald Kofoad Stender and Gerard Aulama Jervis filed Petitions for Instruction with the Court concerning the Board of Trustees decision to retain non-staff legal counsel at Trust expense. The Petitions specifically referenced approval on November 17, 1998 by Trustees Wong, Peters and Lindsey, over objections by Stender and Jervis, of resolutions authorizing the retention of non-staff legal counsel on two separate matters. However, opposition to the Petitions was not limited to the two specific instances but encompassed the Trustees’ general right at all times to retain non-staff counsel. The Petitions were based upon the assertion that such retention was (a) a waste of trust assets, (b) a breach of the Trustees’ duties and/or (c) constituted a conflict of interest between the personal interests of the Trustees and the best interests of the Estate. (“Richards Report”)
On December 7, 1998, I received a phone call from Michael Goolsby, Chubb Group Claims Dept., acknowledging that they had NOT RECEIVED many of my previous “demand” letters that I had sent to Kamehameha Schools, verifying my suspicions that KSBE’s legal department was not reporting my Claims Notices to the insurance carrier.
On February 22, 1999, met with Randy Roth, co-author of Broken Trust.
On February 26, 1999, the First Circuit Court issue an Order adopting the conclusions of Master Colbert Matsumoto that “incumbent Trustees face actual, apparent and material conflicts of interest between their individual interests and the interests of the Trust Estate with respect to the issues raised in the IRS Form 5701s and the IRS Examination”. The Court specifically referenced the intermediate sanctions and excessive compensation issues. “As will be seen and discussed below the Trustees retained and paid non staff attorneys with Trust assets for legal work done with reference to this Examination. ... Shortly after Master Matsumoto’s August 7 report, based in part upon findings of that report, the Attorney General filed an action, to include temporary removal, permanent removal and surcharge of the Trustees. With reference to the ‘legality’ of such an action being brought, the Trustees were on notice from at least 1995 [emphasis added] that same was proper. In that year they had authorized and paid for non staff counsel Cades, Schutte, Fleming & Wright to prepare a legal opinion which covered the subject. Counsel had concluded that ‘the attorney general has the power, as parens patrias of a charitable trust, to bring independent actions against the Trustees” ... That same counsel concluded that the trust had a duty to give the Attorney General information related to the administration of the trust and that ‘the bulk of [legal] authority seems to indicate that the courts prefer full disclosure by the trustees’. As will be seen ... the Trustees did not heed the earlier advice of counsel. They constantly took action to attempt to question and at least limit the authority of the Attorney General and also instituted Hercullean efforts to avoid full disclosure of information.” (“Richards Report”)
On April 27, 1999, Harmon, pro se, filed a Racketeer Influenced Corrupt Organizations (“RICO”) lawsuit against defendants, Federal Insurance Company; P&C Insurance Company, Inc.; Marsh & McLennan Companies, Inc.; Pricewaterhouse, Coopers & Lybrand, LLP; Torkildson, Katz, Fonseca, Jaffe, Moore & Hetherington, A Law Corporation; Henry H. Peters, Richard S. H. Wong, Lokelani Lindsey, Gerard Jervis and Oswald Stender, Trustees of the Estate of Bernice Pauahi Bishop; John Mullen & Co., Inc.; Nathan Aipa; Louanne Kam; Rodney Park; William S. Richardson; Gilbert Tam; Peter Lowe; John & Jane Does 1 - 1000, in U.S. District Court. Case was initially assigned to Judge Samuel King, who recused himself due to the possible appearance of bias due to his outspoken remarks regarding the Kamehameha Schools trustees. Case was reassigned to Judge David Ezra and Magistrate Judge Barry Kurren.
On March 3, 1999, an Order was entered in First Circuit Court on the Petitions of Oswald Stender and Gerard Jervis, which appointed Robert Richards as Master and directed that issues and matters related to KSBE’s retention and payment of non-staff legal counsel be addressed. The report was intended to address those issues for the time frame August 1998 to May 1999. (“Richards Report”)
On August 17, 1999, a Scheduling Conference was held in the RICO case in the Court of Magistrate Judge Barry Kurren.
On September 3, 1999, Federal Court Hearing, Judge Barry Kurren.
On September 24, 1999, Conference with Judge Kurren. Deadline of October 1, 1999, set for refiling RICO against Federal Insurance Co., et al.
On November 15, 1999, met with Tai K. Lee, Special Agent, U.S. Dept of the Treasury, regarding IRS criminal investigation of KSBE.
On December 22, 1999, I attended a Settlement Conference in Judge Kurren’s chambers.
On January 27, 2000, attended Settlement Conference in Judge Kurren’s chambers, and signed the Settlement Agreement on that date with the understanding, based upon the statement by my attorney, Bradley Tamm, to all parties present at the Conference, that the total settlement proceeds would be characterized as “wages”.
On May 18, 2000, Special Master Robert P. Richards filed REPORT OF MASTER REGARDING RETENTION OF NON-STAFF COUNSEL in EQ2048. The following excerpts from the Richards Report are relevant to this case:
“In January 1998 Cades Schutte Fleming & Wright began work with reference to the IRS audit. There is no applicable trustee minute authorization or retention letter [emphasis added], but we do know from later correspondence to Miller & Chevalier that, pursuant to the instructions of the trustees, Michael Hare was to act as “local contact/counsel” with reference to the audit. ... Trustee/AG Review. In many ways this is the most disturbing of all the legal bills reviewed, both in terms of propriety and reasonableness. As we know late in 1997 certain “non legal” events occurred, including public protests and the publication of a newspaper article, which became known as the “Broken Trust:, which lead to the announcement by the Governor that he was requesting the Attorney General to launch an investigation into the operations of the Trust. In 1998 the Attorney General filed an action against the trustees, seeking removal and surcharge. That was done pursuant to its statutory obligation as parens patriae. After the announcement, in apparent anticipation of the investigation, the trustees authorized that certain legal work be done by non staff counsel to “defend” the trust. Primary or lead counsel was the firm of McCorriston Miho Miller & Mukai. When the AG actually filed its action this firm answered on behalf of “trustees under the Will and of the Estate of Bernice Pauahi Bishop, Deceased”. ... Cades Schutte Fleming & Wright also participated in the defense without ever being listed as counsel of record [emphasis added] and without apparent limitation in scope one is left with the clear impression that the firm, through its senior counsel Michael Hare, acted as “shadow” lead counsel. Mr. Hare, from a review and comparison of task descriptions in invoices, emerges as a critical figure in policy formation and implementation. There is no documentation as to why this was necessary or even advisable. It certainly constituted a waste of trust assets. ... In addition and of greater importance, this firm carried out work that was wholly inappropriate to any defense of the trust. When reviewing the matter in total one comes to the inescapable conclusion that this firm was representing the interests of the individual trustees and was actively formulating an obstructionist defense to the AG’s investigation designed to discredit that investigation and/or to wear down and win by attrition, if possible. ... This Master will now review and, in some instances, comment upon certain of the work done by this firm under the ‘Trustee/AG Review’ heading. ... Randy Roth was one of the authors of the Broken Trust article which criticized the actions of the trustees. In August his ‘claims were investigated’. Then the claims of employee Harmon, who also criticized trustee conduct, were investigated. ... Senior Federal Judge Sam King was also one of the authors of Broken Trust. In what can only be described as chilling and wholly inappropriate legal work, the firm spent 16 hours researching and drafting a memo ‘limits on freedom of federal judge regarding public statements on social issues and conclusions of law’... This best illustrates the conclusion of this Master that no stone would be left unturned by the trustees in attempting to silence or at least discredit their critics. To charge the trust for such legal work is outrageous! Time was spent in September researching the issue of ‘trustees duty to furnish information’, followed by research on conflict and ‘independent counsel’. Conferences were held with attorneys Pitluck and Graham, who similarly conducted research on conflicts. Further, apparently as more information became available, further research was done regarding ‘trustees’ duties and trust counsel’s duties, duties to investigate suspected wrongdoing’.... This firm researched the issues of remedies in the event Mr. Harmon spoke about the conduct of trustees, in violation of the injunction gotten against him. What was the benefit to the trust? It is clear what the benefit to the trustees was, hope that employees would be silenced by fear of reprisal [emphasis added]. If they and their attorneys wish to adopt that as a tactic, that is their right. It is not their right to have the trust pay for it!. The firm researched and then discussed quashing an AG subpoena. All too often this was the first step, repeated often when a subpoena was received. ... Often times the result of such discussion was to claim privilege and not produce documents or to redact documents. ... All too often the process of document production became lengthy and expensive. By the repetitive nature of this strategy, it appears clear that the trustees were attempting to block productions in whole or in part and to make it so laborious a process that the opposition would ‘give up’. How does that benefit the trust? Further, many of the documents to be produced must have or at least should have tipped off those who reviewed them that there was a conflict between trustees and the trust. For example beginning 10/1/97 ‘lobbying documents’ were reviewed and summarized. We know from other sources that one of if not the central point of lobbying was maintenance of high trustee commissions/salary. In December [Milton] Holt documents were reviewed and redacted. In January Mid Ocean documents were reviewed and privilege was claimed. In that same month Kalele Kai documents were reviewed, summarized and those summaries reviewed. Beginning 10/13/97 Punalu’u documents were summarized. We know that those related directly to charges of misconduct by Trustee Lindsey, which actually formed the basis in part for her removal. This raised a clear notice of conflict between her and the trust as well as between trustees. The same is true with the Van Dyke documents, which this firm reviewed and redacted. Shortly thereafter trustees Stender and Jervis filed their Petition to Remove Lindsey. Nonetheless, despite the ‘split’ that existed within the board after that, as late as 6/9/98 and 6/17/98 this firm was withholding the Van Dyke appraisal as privileged and was redacting same. ... In another chilling example of the length to which the trustees would go to silence criticism, on 9/12/97 the firm began to research ‘journalist privilege’ in an effort to legally support efforts to obtain sources from a reporter. In the same vein, they researched the issue of whether the AG had a conflict which would support disqualification. ... One of the question in the action to seek removal of Trustee Lindsey by Stender related to Stender’s alleged misconduct in certain Maui Land & Pineapple dealings. ... In the trial for removal of Lindsey this firm became actively involved, along with other firms, in an effort to prevent the disclosure by KSBE General Counsel Nathan Aipa of certain trustee meeting minutes, as requested at the trial by two of the five trustees. Further, even after the ‘split’ on the board following filing of the removal petition and the petition for instruction which led to the appointment of this Master, the Cades firm continued to respond to individual requests by ‘majority’ trustees and bill the trust. For example, on 2/19/99 Mr. Hare spent 6.25 hours ‘complete review and revisions to chart and documents re subpoenas and requests and transmit to Trustee Peters’. The majority of the other individual requests also involved Trustee Peters. ... McCORRISTON MIHO MILLER & MUKAI. This firm was the only one of the non staff counsel whose scope of work was defined in some detail in writing. ... In reviewing the scope of work done by McCorriston, one comes to certain inescapable conclusions. The most critical is that this was a defense of the trustees, not of the trust. There were monumental efforts to keep trustee conduct from coming to light or, if it did come to light, to rationalize it. Second, there was an effort, despite clear realization of problems with conflict, to explain away any conflict. ... There was the adoption by the Trustees of a strategy of obstruction and delay. The apparent thought was to make every inquiry so difficult that the opposition would either become confused or give up. This is particularly evident in the strategy adopted with respect to document production ... Finally there was also apparently the adoption of a ‘destroy the opposition’ strategy. There was a constant effort made to take steps to silence or discredit what was perceived as the ‘opposition’, whether that was an employee, a reporter, the AG, a Judge or a Master. ... In what had to be the ultimate show of arrogance a Complaint against the IRS was drafted for the refusal to communicate and then a complaint against the AG and the Master was drafted for interference in that right to communicate. ... In an effort to limit disclosure, research was also conducted on ‘confidentiality of employee information.’ ... Then research was conducted on ‘privileges and defenses that can be asserted against subpoenas of former employees’. One of the first motions filed in this matter sought by injunction to silence such a person. ... The effort to block or at least limit production of information is best illustrated by the approach to document requests. These were often objected to on numerous grounds, including relevancy, attorney-client privilege, work product and even right to privacy and qualified immunity. This was not done once, but repeatedly. ... Early in 1998 a report on KSBE, which the trustees considered confidential, was disclosed to the press. The ‘punish your enemies’ defense adopted by the trustees and carried out by this firm is best illustrated by what was done in response to this disclosure. First it was investigated [4/6/98]. The subpoena was served on the reporter to identify his source or sources. Time was spent researching the journalist’s qualified privilege [5/1/98]. Then time was spent determining whether civil liability could be imposed against the Star Bulletin [5/8/98, 6/19/98]. The Star Bulletin obtained a protective order. The Trustees would not be stopped. They had research done to see if the order could be lifted [5/15/98]. When it could not, rather than leave it alone, this firm researched the issues of conversion and replevin ‘to seek return of leaked IDR material from the Star Bulletin’ [6/17/98]. A motion was drafted [6/19/98]. Research went further, into the possible civil liability of the reporter himself [6/19-22/98]. A motion was filed and lost. An appeal was drafted [7/24/98]. The ‘punish your enemies’ defense was not limited to Rick Daysog and the Star Bulletin. This firm researched the issue of both disqualification of the Watanabe law firm and Judge Chang based on the assertion of conflict [[9/2/98]. This Master finds it beyond comprehension how conflicts could be seen with everyone involved in the prosecution of the removal action and yet no conflict seen in defense of the trustees. In fact, the trustees went so far as to consider action against Federal Judge Sam King for ethical violations in authoring the Broken Trust article [9/2/98]. The Trustees also drafted a complaint against the Campaign Spending Commission [10/20/98]. How either of these is of benefit to the trust is beyond rational explanation.
On May 19, 2000, Attorney General Earl I. Anzai filed his Final Naming of Witnesses in the First Circuit Court for EQUITY 2048, Petition of the Attorney General on Behalf of the Trust Beneficiaries to Remove and Surcharge Trustees, Judge Kevin Chang presiding. The Witness List contained 163 named witnesses, including myself. Others on the Witness List included persons I had named as Defendants and/or potential Witnesses in my RICO lawsuit, including:
Nathan Thomas Kahaula Aipa; Lynn Anzai, Esq.; Paul Cathcart; Wallace Chin; Michael Chun; Doyle Davis; Dennis Fern; Fredrick Field; Rockne Freitas; Richard Frunzi, Esq; Shevron Garnett; Mitchell Gilbert; W. Clay Hamner; Glenn Hara; Samuel T. Hata; Clayton Hee; Michael C. Heihre; Robert Herkes; Milton Holt; Richard Humphreys, Marsh & McLennan; Marshall Kaoru Ige; Albert Jeremiah, Jr.; Gerard Aulama Jervis; Allen Y. Kajioka, Kajioka, Okada, Yamachi Architects, Inc.; Dan Jones; Louanne L. Kam; Erv Y.T. Kau; Louis A. Kau; Francis Ahloy Keala; Robert K.U. Kihune; Carol Koza; Constance Hee Lau; Ronald Dale Libkuman; Christine Lee; Marion Mae Lokelani Lindsey; Garrett Liu, Marsh & McLennan; Peter Lowe, P&C Insurance Co., c/o Marsh & McLennan; Pamela Martin, XL Insurance Co., Ltd; Eric Martinson, MN Capital Partners, LLC; Hamilton McCubbin; Mark McConaughy, PricewaterhouseCoopers; Adam McDonough, Marsh & McLennan; Harben Michael McKenzie, McKenzie Methane; Larry Mehau, Hawaii Protective Assoc; Myron J. Mitsuyama; Bruce Nakaoka, MN Capital Partners; Gordon Nishiki, Hawaii Insurance Division; Rodney Park; Henry H. Peters; Lorene Philips, XL Insurance Co., Ltd; Wayne Pitluck, Esq.; Lynn Pummill; Stacy Rezentes, Esq.; Robert Richards; William S. Richardson; John Rocha; Rocco Sansone, Marsh & McLennan; Peter Savio, Savio Realty; Calvin Say; Eric Schall, Asst. V.P., Directors & Officers Liability, Chubb & Son; Howard Schoenfield, PricewaterhouseCoopers; Peter Simmons; Joseph S. Souki; Oswald Kofoad Stender; Jeffrey Stone; Randy Stone; Matsuo Takabuki; Yukio Takemoto; Gilbert Tam; Kenneth K. Teshima; Alika Thompson; Myron Bennett Thompson; Arthur Tokin, PricewaterhouseCoopers; John D. Waihee; Colleen I. Wong; Richard Sung Hong Wong; Richard Sau Hong Wong, Royal Hawaiian Shopping Center; Elisa Yadao; Allan Yee; Allen Young; Eric Yeaman, Arthur Andersen, LLC; and the Custodians of Records of the following organizations: Arthur Andersen LLC; Bank of Hawaii; Pricewaterhouse-Coopers; Kamehameha Schools; Pauahi Holdings; Royal Hawaiian Shopping Center, Inc.; State of Hawaii; City & County of Honolulu; Cades Schutte Fleming & Wright; Ashford & Wriston; Miller & Chevalier; Marsh & McLennan, Inc.; and P&C Insurance Co.
On October 10, 2000, I sent a letter to Janet Hughes, IRS, giving reasons why the IRS should not approve the insurance settlement for KSBE. This is only one example of the letters in my so-called “letter writing campaign” which Plaintiff has wrongly claimed violated the terms of the Settlement Agreement (EXHIBIT C