Luxury boat owners appeal $1.8 million fine for February 2023 grounding at Honolua Bay

The owners of a luxury yacht that broke loose from its moorings in February 2023 and went aground north of Honolua-Mokulē‘ia Bay are appealing a $1.8 million fine assessed against them by the Board of Land and Natural Resources.

They maintain that the Land Board violated Hawaiʻi administrative procedures and their constitutional right to due process in denying them a formal contested case proceeding on the matter during a May board meeting.

On Tuesday, the Department of Land and Natural Resources’ communications office acknowledged that the case is in court, and “we can’t comment further at this time.”

New Mexico and part-time Maui residents Kevin and Kimberly Albert maintain that they’re not responsible for the MV Nakoa detaching from its mooring in February 2023 and drifting onto a rocky shoreline between Honolua Bay and Līpoa Point, according to a statement of the case filed in 1st Circuit Court.

In late May, the Land Board rejected a request from the Alberts, made through their Honolulu attorney Randall Schmitt, for a formal contested case hearing to dispute the $1.8 million fine, which was more than 10 times greater than a fine proposed by the Division of Aquatic Resources.

In court documents, the Alberts, who serve as trustees of the Albert Revocable Trust AUD, said they sold the vessel for $1.45 million to Noelani Yacht Charters and Jim Jones by way of a vessel installment purchase and management agreement dated Dec. 29, 2022.

The $1.45 million was to have been paid over a period of 15 years. Then, less than two months after the deal was finalized, the Nakoa went aground off of West Maui.

The Alberts say in court papers that three days before the grounding on Feb. 20, 2023, Jim and Isabella Jones, four juvenile family members or friends, Captain Kim Higa, a first mate, and a crew took the Nakoa on a personal trip.

In accordance with the terms of the purchase agreement between the Alberts and Jones/Noelani Yacht Charters, “the vessel was supposed to be used exclusively for commercial charters.” However, on the weekend of the grounding incident, “Jim Jones admitted that his use of the vessel was for a personal family weekend voyage,” the Alberts say.

The personal use was not approved by the Alberts. Capt. Higa was not approved to operate the vessel, and “moreover, neither Mr. or Ms. Albert knew anything about the unauthorized use of the vessel until they were notified of the vessel’s grounding,” court papers say.

As a result of the grounding, the Nakoa was a “complete and total loss.”

The state’s enforcement action against the Alberts, Jones and Noelani Yacht Charters was for violations of Hawaiʻi administrative rules and for unlawful damage to coral and live rock caused when the vessel went aground.

The Alberts note that they “were not present on the vessel at any time on or around the grounding incident.” Nevertheless, the Land Board brought the enforcement action against the Alberts, “implying that (their) attenuated relationship with the wrongdoers somehow constitutes violations” of Hawaiʻi administrative rules.

The board’s enforcement action came over the course of four board meetings. In the third meeting on April 26, the board approved an administrative penalty of $1,818,851.97 to “purportedly compensate the State of Hawaiʻi for stony coral and live rock damage.” The board detailed the damage as being to 119 coral colonies and 1,640.5 square meters of live rock.

The Division of Aquatic Resources’ recommendation to the board was to assess an administrative fine of $60,220 for the value of the lost resources, $400 for administrative rule violations and $56,851.97 for administrative costs — a total assessment of $117,471.97 against Jones, Noelani Yacht Charters, the Alberts and their trust.

The Alberts say the board has made no formal consideration of their liability or for an apportioning of the fine in the enforcement action. According to comments made during an April board meeting, a Division of Aquatic Resource official was quoted as suggesting that, as far as culpability, that “90% of the fine towards Mr. Jones and 10% towards the Alberts if (the board) were going to go to a higher amount than (the recommended fine).”

During the April meeting, the board failed to provide Alberts’ counsel, Schmitt, with an opportunity to request a contested case hearing, according to court papers. Instead, it went into an executive session and closed public testimony and comment before introducing the motion to amend the motion to increase the fine by 10 times, the Alberts court papers say. The motion did not address how much the Alberts were responsible for paying.

It remains unclear whether a combination of parties is supposed to pay the $1.8 million fine, or if the Alberts will be required to bear the full burden of paying.

“These outstanding issues must be resolved before any fine is collected,” the Alberts say in court papers.

The Alberts are asking a 1st Circuit judge to reverse the Land Board’s denial of their request for a contested case proceeding and find that they conformed to procedural requirements and that the board’s decision that no good cause is present for a contested case is improper.

The Alberts are also seeking a declaratory judgment that they are not required to pay any amount of the $1.8 million prior to the board’s consideration of whether and to what extent they are liable for paying the fine.