A lawsuit that could have nullified a $250,000 cash payout to former Honolulu Police Chief Louis Kealoha was dismissed Wednesday by Hawaii Circuit Court Judge Virginia Crandall.

The suit was filed in January in response to the Honolulu Police Commission’s decision to work in secret on its response to Kealoha being named as a target of a U.S. Justice Department criminal investigation.

The suit filed by the Civil Beat Law Center for the Public Interest contended the commission violated the state’s Sunshine Law — which governs open meetings — by retreating behind closed doors to discuss Kealoha’s future.

Cory Lum/Civil Beat

The suit said there was a compelling public interest in discussing the chief’s future in an open forum.

Crandall didn’t buy the Law Center’s argument. In her decision, she effectively dismissed the public’s interest in matters involving the Sunshine Law and executive sessions. She said that the need to balance a public interest with a private interest only applies to government records.

She also noted that while the commission was not required to meet in executive session to discuss the status of the chief, it had the authority to do so to preserve its attorney-client privilege.

Brian Black, executive director of the Civil Beat Law Center, said that he plans to appeal the ruling. He declined to discuss the case further.

Black filed the lawsuit Jan. 26, about a week after the commission approved a $250,000 settlement agreement with Kealoha, who at that time had just been named a target of major corruption investigation by the U.S. Justice Department.

He has since been indicted on charges of criminal conspiracy, bank fraud and obstruction of justice.

Cory Lum/Civil Beat

That $250,000 lump sum payment was in addition to Kealoha’s pension that‘s estimated to pay him about $150,000 a year, in addition to benefits.

Only one police commissioner, Loretta Sheehan, a former city prosecutor and assistant U.S. attorney, voted against the payout. The Honolulu City Council didn’t have a say in its approval, despite having authority over signing off on legal settlements.

The commission attached a few caveats to the deal, however, including one in which Kealoha would be forced to pay back the $250,000 if he is convicted of a felony within six years.

Commissioners also agreed that Kealoha would be leaving the department in “good standing.”

The law center’s lawsuit could have nullified the vote to pay Kealoha $250,000.

Black had warned commissioners in writing before he filed the suit that they might be violating the state’s Sunshine Law by talking in secret.

“Backroom discussions are unacceptable,” Black said then, noting that the commission is the only entity that can hire or fire a chief:

“How the Police Commission addresses this issue goes to the heart of the public interest. Is the Commission adequately monitoring the Chief of Police and has the Chief of Police been doing his job? The Chief of Police — no matter who holds that position — is a person too critical to the fabric of our community for these discussions to occur outside public view.”

The commission — which was relying on the advice of the Honolulu Department of Corporation Counsel — rejected Black’s request for more transparency.

Once a deal was announced, Commission Chairman Max Sword said the $250,000 cash payout was a “small price to pay” to resolve the issue.

“Can you put a price tag on that the safety of the community? I don’t think so,” Sword said. “The department has been under a dark cloud for the past two years with all this federal investigation. We believe that the Police Department needs to move on to get out from under that cloud.”