The sons of two of Honolulu’s most prominent business leaders are being accused of plotting to secretly take over prime Waikiki real estate to make way for a $200-million, 32-story luxury high rise.

A lawsuit filed Monday in state court in Honolulu pits BlackSand Capital, a real estate private equity firm founded by the grandsons of a Big Five chief executive and a major Hawaii general contractor against the former landowner, a family who acquired the property that’s now home to the iconic King’s Village from the estate of Prince Jonah Kuhio Kalanianaole in the early 20th century.

BlackSand managing partners and co-founders Bert A. “BJ” Kobayashi Jr. and Ian MacNaughton are the defendants in this case, accused of fraud, misrepresentation and other improprieties. They have had a hand in some of Honolulu’s most glittering new projects, including the Park Lane Ala Moana and ONE Ala Moana Residential Tower.

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Kobayashi is the son of the well-known builder Bert A. Kobayashi Sr., founder of the Kobayashi Group, known for tony condo towers like Hokua and Capitol Place.

MacNaughton is the son of Duncan MacNaughton, chairman of The MacNaughton Group, a developer that has changed the face of Oahu — and the way people shop and eat — by introducing major retailers such as Costco, Starbucks, Jamba Juice and Whole Foods Market. Ian MacNaughton’s grandfather, Boyd MacNaughton, was president of C. Brewer & Co., one of Hawaii’s Big Five companies.

The plaintiff is Elda Investments, an entity formed to own the King’s Village property, a piece of prime Waikiki real estate that was the family homestead of owner Ellen Fullard-Leo, who acquired it sometime before 1930, the suit says. The suit identifies Marcus Fullard-Leo as Elda’s principal representative for the King’s Village property.

The shopping center is located at 131 Kaiulani Ave., behind the Hyatt Regency Waikiki Beach Resort and Spa. BlackSand envisions in its place a high rise with 213 condo units, commercial spaces, restaurants and rooftop recreational facilities.

In April 2016, BlackSand got a green light to move forward with the project, which some in the Waikiki area had opposed, from the Honolulu City Council. But in January, Kobayashi told Pacific Business News that it was putting the development on hold because of high construction costs and flagging demand.

The detailed, 42-page complaint alleges that Kobayashi used information gathered from a high school classmate who was working for Fullard-Leo to craft a deal to buy King’s Village and wrongly cut Elda and Fullard-Leo out of the loop.

BlackSand says it did nothing wrong.

“We are disappointed that Elda Investment has filed a baseless lawsuit against BlackSand Capital regarding the King’s Village Shopping Center in Waikiki,” the company said in a statement. “In 2012, Elda sold its leased fee interest in King’s Village to BlackSand for more than $40 million.

“Now, five years later, Elda is attempting to unfairly enrich itself after selling its interest and staying silent while BlackSand Capital invested millions of dollars to develop its plans and entitlements with the vision to create a new mixed-use development.”

Elda’s attorney, Christian Porter, did not return calls for comment.

The dispute hinges on property rights purportedly spelled out in a 1968 lease for the property. Under the lease, the suit says, Elda owned the land and leased out improvements on the property to a company called Kahili Hotel, which in 1971 changed to Associated Innkeepers Inc. The 57-year lease ran from 1969 through 2025.

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A key provision of the lease, according to the suit, was a right of first refusal that applied to both the landowner and the leaseholder. If the landowner wanted to sell the land, it had to offer the leaseholder the option to buy it; if the leaseholder wanted to transfer the lease to someone else, it had to offer the landowner the chance to acquire the lease.

The complaint outlines Elda’s version of what happened when it started considering selling the land in 2012.

By that time, the suit says, the leaseholder was a firm called TRS, an affiliate of Goldman Sachs. In April 2012, the suit says, Walgreens offered to buy the property. Elda, complying with the right-of-first-refusal term of the lease, gave TRS first dibs on the deal; TRS accepted and said another Goldman Sachs entity, Finance Sub, would buy the property.

If the deal had stopped there, and Finance Sub had just purchased the land, it appears there would have been no problem.

But that’s not what happened, according to the complaint.

Instead, before the deal closed, between late March and July, a Fullard-Leo financial manager named Scott Gradisnik began discussing the King’s Village property with Kobayashi. He was simply seeking advice from the real estate expert who, the suit says, was a high school friend of Gradisnik.

Gradisnik, who is not named as a defendant in the suit, declined to comment for this article. His LinkedIn profile says he attended Punahou from 1983 to 1989. Kobayashi graduated in 1989, the online Punahou Bulletin says.

The discussions turned to BlackSand buying the land, but, according to the complaint, BlackSand didn’t like the fact that TRS had a lease on property improvements. Such a lease could keep BlackSand from being able to redevelop the property without dealing with the leaseholder, or until 2025, when the lease terminated, the suit says.

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The complaint describes multiple conversations between Gradisnik and Kobayashi as well as a breakfast meeting between Gradisnik, Kobayashi and MacNaughton.

The complaint says the information shared by Gradisnik was supposed to be confidential, the conversations intended to help Elda. But Kobayashi and BlackSand instead used the information to craft a deal to acquire the land and the lease — and to cut Elda out of the loop, the lawsuit says.

Kobayashi and his partners plotted “to secretly secure the Leasehold Estate without offering Elda the right of first refusal to acquire the Leasehold Estate as was required by the 1968 Lease,” the complaint says, noting that BlackSand stood to make a lot more money that way.

The suit alleges BlackSand and its principals committed fraud, among other things, when crafting the deal. It asks for unspecified damages, including punitive damages and attorneys fees.

BlackSand said it would vigorously defend the company’s reputation.

“Elda alleges that BlackSand secretly conspired to defeat Elda’s rights under the ground lease,” BlackSand said. “But Elda had previously sold all of its interests in the ground lease to BlackSand.”