2010-04-15_County_of_Hawaii_Motion_to_Dismiss_Counter_Claim_to_Expunge_Lis_Pendens

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%r NMOF Defendants claim of"fraudulent transfer"can only apply to property which WWH held, i.e., the lease.1 t 3. The Termination of a Lease Does Not Provide a Basis For a Fraudulent Conveyance As noted, the only interest which the alleged "debtor", WWH, transferred was the lease. However, the termination of lease cannot serve as the basis for a fraudulent transfer cause of action. HRS § 651 C-8(e)(1)states: A transfer is not voidable under section 651 C-4(a)(2)or section 651 C-5 if the transfer results from: (1)Termination of lease upon default by the debtor when the termination is pursuant to the lease and applicable law. In the present case, the lease held by WWH was terminated on April 22,2009. See Exhibit"F". Therefore, by the express language of FIRS § 651 C-8, the transaction is not voidable and Defendants' allegation that the transaction can be"avoided by UniDev"is patently wrong. 4. The County Provided Significant Value and Had a Valid Mort2alize on the Property Since Defendants were unable to provide financing as promised, the County made available a total of$40 million in financing for the affordable housing project. See Exhibit"D". As a result of the financing provided by the County, various financing agreements and,not surprisingly, a mortgage was recorded against the property.12 See Exhibits "D"and "E". The financing agreement states that if WWH or HIHT fails to perform its obligations the County �1 The lis pendens filed by Defendants is not limited to the lease interest. Rather,it places a"cloud"over the entire property. See Exhibit"C". 12 The financing agreement obligates WWH to"develop and operate the Project Land and the Project,or cause it to be developed and operated,as contemplated by the Project Guidelines..." Seel 1.3,at 3 of Exhibit"D". The mortgage secured not only the County's financial interests,but secured"every obligation"under the financing agreement. See Exhibit"E"at p.2. 9