| Commitments and Contingencies | (7) Commitments and Contingencies At September 30,
2015, the Company has no principal contractual obligations related to the land improvements in conjunction with Phase I of the
Kaanapali Coffee Farms project. On November 23, 2015,
the SEC contacted Kaanapali Land regarding the Companys compliance with the reporting requirements under Section 13(a)
of the Securities Exchange Act of 1934, as the Company is delinquent on its annual and interim SEC filings. In light of this letter,
Kaanapali Land is unable to determine whether the SEC might pursue some future action related to this matter. Material legal proceedings
of the Company are described below. Unless otherwise noted, the parties adverse to the Company in the legal proceedings described
below have not made a claim for damages in a liquidated amount and/or the Company believes that it would be speculative to attempt
to determine the Company's exposure relative thereto, and as a consequence believes that an estimate of the range of potential
loss cannot be made. Any claims that were not filed on a timely basis under the Plan have been discharged by the Bankruptcy Court
and thus the underlying legal proceedings should not result in any liability to the Debtors. All other claims have been satisfied.
Proceedings against subsidiaries or affiliates of Kaanapali Land that are not Debtors were not stayed by the Plan and were permitted
to proceed. However, two such subsidiaries, Oahu Sugar Company, LLC (Oahu Sugar) and D/C Distribution Corporation
(D/C), filed subsequent petitions for liquidation under Chapter 7 of the Bankruptcy Code in April 2005 and July
2007, respectively, as described below. As a consequence of the Chapter 7 filings, both subsidiaries are not under control
of the Company. As a result of an administrative
order issued to Oahu Sugar by the Hawaii Department of Health (HDOH), Order No. CH 98-001, dated January 27, 1998,
Oahu Sugar was engaged in environmental site assessment of lands it leased from the U.S. Navy and located on the Waipio Peninsula.
Oahu Sugar submitted a Remedial Investigation Report to the HDOH. The HDOH provided comments that indicated that additional testing
may be required. Oahu Sugar responded to these comments with additional information. On January 9, 2004, the Environmental Protection
Agency (EPA) issued a request to Oahu Sugar seeking information related to the actual or threatened release of hazardous
substances, pollutants and contaminants at the Waipio Peninsula portion of the Pearl Harbor Naval Complex National Priorities List
Superfund Site. The request sought, among other things, information relating to the ability of Oahu Sugar to pay for or perform
a clean up of the land formerly occupied by Oahu Sugar. Oahu Sugar responded to the information requests and had notified both
the Navy and the EPA that while it had some modest remaining cash that it could contribute to further investigation and remediation
efforts in connection with an overall settlement of the outstanding claims, Oahu Sugar was substantially without assets and would
be unable to make a significant contribution to such an effort. Attempts at negotiating such a settlement were fruitless and Oahu
Sugar received an order from EPA in March 2005 that would purport to require certain testing and remediation of the site. As Oahu
Sugar was substantially without assets, the pursuit of any action, informational, enforcement, or otherwise, would have had a material
adverse effect on the financial condition of Oahu Sugar. Counsel for the trustee, EPA, the Navy, and for Firemans Fund,
one of Kaanapali Lands insurers, are exploring ways in which to conclude the Oahu Sugar bankruptcy. There are no assurances
that such an agreement can be reached. Therefore, as a result
of the pursuit of further action by the HDOH and EPA as described above and the immediate material adverse effect that the actions
had on the financial condition of Oahu Sugar, Oahu Sugar filed with the United States Bankruptcy Court, Northern District of Illinois,
Eastern Division its voluntary petition for liquidation under Chapter 7 of Title 11, United States Bankruptcy Code. Such
filing is not expected to have a material adverse effect on the Company as Oahu Sugar was substantially without assets at the time
of the filing. While it is not believed that any other affiliates have any responsibility for the debts of Oahu Sugar, the EPA
has indicated that it intends to make a claim against Kaanapali Land as further described below, and therefore, there can be no
assurance that the Company will not incur significant costs in conjunction with such claim. The deadline for filing
proofs of claim with the bankruptcy court passed in April 2006. Prior to the deadline, Kaanapali Land, on behalf of itself and
certain subsidiaries, filed claims that aggregated approximately $224,000, primarily relating to unpaid guarantee obligations made
by Oahu Sugar that were assigned to Kaanapali Land pursuant to the Plan on the Plan Effective Date. In addition, the EPA and the
U.S. Navy filed a joint proof of claim that seeks to recover certain environmental response costs relative to the Waipio Peninsula
site discussed above. The proof of claim contained a demand for previously spent costs in the amount of approximately $260, and
additional anticipated response costs of between approximately $2,760 and $11,450. No specific justification of these costs, or
what they are purported to represent, was included in the EPA/Navy proof of claim. Due to the insignificant amount of assets remaining
in the debtor's estate, it is unclear whether the United States Trustee who has taken control of Oahu Sugar will take any action
to contest the EPA/Navy claim, or how it will reconcile such claim for the purpose of distributing any remaining assets of Oahu
Sugar. EPA has sent three requests
for information to Kaanapali Land regarding, among other things, Kaanapali Land's organization and relationship, if any, to entities
that may have, historically, operated on the site and with respect to operations conducted on the site. Kaanapali Land responded
to these requests for information. By letter dated February 7, 2007, pursuant to an allegation that Kaanapali Land is a successor
to Oahu Sugar Company, Limited, a company that operated at the site prior to 1961 ("Old Oahu"), EPA advised Kaanapali
that it believes it is authorized by the Comprehensive Environmental Response Compensation and Liability Act (CERCLA)
to amend the existing Unilateral Administrative Order against Oahu Sugar Company, LLC, for the clean up of the site to include
Kaanapali Land as an additional respondent. The purported basis for the EPA's position is that Kaanapali Land, by virtue of certain
corporate actions, is jointly and severally responsible for the performance of the response actions, including, without limitation,
clean-up at the site. No such amendment has taken place as of the date hereof. Instead, after a series of discussions between Kaanapali
and the EPA, on or about September 30, 2009, the EPA issued a Unilateral Administrative Order to Kaanapali Land for the performance
of work in support of a removal action at the former Oahu Sugar pesticide mixing site located on Waipio peninsula. The work consists
of the performance of soil and groundwater sampling and analysis, a topographic survey, and the preparation of an engineering evaluation
and cost analysis of potential removal actions to abate an alleged "imminent and substantial endangerment" to public
health, welfare or the environment. The order appears to be further predicated primarily on the alleged connection of Kaanapali
Land to Old Oahu and its activities on the site. Kaanapali Land is currently performing work, including the conduct of sampling
at the site, required by the order while reserving its rights to contest liability regarding the site. With regard to liability
for the site, Kaanapali Land believes that its liability, if any, should relate solely to a portion of the period of operation
of Old Oahu at the site, although in some circumstances CERCLA apparently permits imposition of joint and several liability, which
can exceed a responsible party's equitable share. Kaanapali Land believes that the U.S. Navy bears substantial liability for the
site by virtue of its ownership of the site throughout the entire relevant period, both as landlord under its various leases with
Oahu Sugar and Old Oahu and by operating and intensively utilizing the site directly during a period when no lease was in force.
The Company believes that the cost of the work as set forth in the current order will not be material to the Company as a whole;
however, in the event that the EPA were to issue an order requiring remediation of the site, there can be no assurances that the
cost of said remediation would not ultimately have a material adverse effect on the Company. In addition, if there is litigation
regarding the site, there can be no assurance that the cost of such litigation will not be material or that such litigation will
result in a judgment in favor of the Company. Currently, Kaanapali and the EPA are exchanging comments relative to further studies
to be performed at the site, including a possible ecological risk assessment. Kaanapali expects that after a further review, the
next phase is likely a consideration of the remedial alternatives for the Site. On February 11,
2015, the Company filed a complaint for declaratory judgment, bad faith and damages against Firemans Fund Insurance Company
(Firemans Fund) in the Circuit Court of the First Circuit, State of Hawaii, Civil No. 15-1-0239-02, in connection
with costs and expenses it has incurred or may incur in connection with the Waipio site. In the five-count complaint, the Company
seeks, among other things, a declaratory judgment of its rights under various Firemans Fund policies and an order that Firemans
Fund defend and indemnify Kaanapali Land from all past, present and future costs and expenses in connection with the site, including
costs of investigation and defense incurred by Kaanapali and the professionals it has engaged. In addition, Kaanapali seeks general,
special, and punitive damages, prejudgment and post judgment interest, and such other legal or equitable relief as the court deems
just and proper. Firemans Fund has not yet filed a responsive pleading. There are no assurances of the amounts of insurance
proceeds that may or may not be ultimately recovered. Kaanapali Land, as successor
by merger to other entities, and D/C have been named as defendants in personal injury actions allegedly based on exposure to asbestos.
While there are relatively few cases that name Kaanapali Land, there were a substantial number of cases that were pending against
D/C on the U.S. mainland (primarily in California). Cases against Kaanapali Land (hereafter, Kaanapali Land asbestos cases)
are allegedly based on its prior business operations in Hawaii and cases against D/C are allegedly based on sale of asbestos-containing
products by D/C's prior distribution business operations primarily in California. Each entity defending these cases believes that
it has meritorious defenses against these actions, but can give no assurances as to the ultimate outcome of these cases. The defense
of these cases has had a material adverse effect on the financial condition of D/C as it has been forced to file a voluntary petition
for liquidation as discussed below. Kaanapali Land does not believe that it has liability, directly or indirectly, for D/C's obligations
in those cases. Kaanapali Land does not presently believe that the cases in which it is named will result in any material liability
to Kaanapali Land; however, there can be no assurance in that regard. On February 12, 2014,
counsel for Firemans Fund, the carrier that has been paying defense costs and settlements for the Kaanapali Land asbestos
cases, stated that it would no longer advance fund settlements or judgments in the Kaanapali Land asbestos cases due to the pendency
of the D/C and Oahu Sugar bankruptcies. In its communications with Kaanapali Land, Firemans fund expressed its view that
the automatic stay in effect in the D/C bankruptcy case bars Firemans Fund from making any payments to resolve the Kaanapali
Land asbestos claims because D/C Distribution is also alleging a right to coverage under those policies for asbestos claims against
it. However, in the interim, Firemans Fund advised that it presently intends to continue to pay defense costs for those
cases, subject to whatever reservations of rights may be in effect and subject further to the policy terms. Firemans Fund
has also indicated that to the extent that Kaanapali Land cooperates with Firemans Fund in addressing settlement of the
Kaanapali Land asbestos cases through coordination with its adjusters, it is Firemans Funds present intention to
reimburse any such payments by Kaanapali Land, subject, among other things, to the terms of any lift-stay order, the limits and
other terms and conditions of the policies, and prior approval of the settlements. Kaanapali Land continues to pursue discussions
with Firemans Fund in an attempt to resolve the issues, however, Kaanapali Land is unable to determine what portion, if
any, of settlements or judgments in the Kaanapali Land asbestos cases will be covered by insurance. On February 15, 2005,
D/C was served with a lawsuit entitled American & Foreign Insurance Company v. D/C Distribution and Amfac Corporation, Case
No. 04433669 filed in the Superior Court of the State of California for the County of San Francisco, Central Justice Center. No
other purported party was served. In the eight-count complaint for declaratory relief, reimbursement and recoupment of unspecified
amounts, costs and for such other relief as the court might grant, plaintiff alleged that it is an insurance company to whom D/C
tendered for defense and indemnity various personal injury lawsuits allegedly based on exposure to asbestos containing products.
Plaintiff alleged that because none of the parties have been able to produce a copy of the policy or policies in question, a judicial
determination of the material terms of the missing policy or policies is needed. Plaintiff sought, among other things, a declaration:
of the material terms, rights, and obligations of the parties under the terms of the policy or policies; that the policies were
exhausted; that plaintiff is not obligated to reimburse D/C for its attorneys' fees in that the amounts of attorneys' fees incurred
by D/C have been incurred unreasonably; that plaintiff was entitled to recoupment and reimbursement of some or all of the amounts
it has paid for defense and/or indemnity; and that D/C breached its obligation of cooperation with plaintiff. D/C filed an answer
and an amended cross-claim. D/C believed that it had meritorious defenses and positions, and intended to vigorously defend. In
addition, D/C believed that it was entitled to amounts from plaintiffs for reimbursement and recoupment of amounts expended by
D/C on the lawsuits previously tendered. In order to fund such action and its other ongoing obligations while such lawsuit continued,
D/C entered into a Loan Agreement and Security Agreement with Kaanapali Land, in August 2006, whereby Kaanapali Land provided certain advances against a promissory note delivered
by D/C in return for a security interest in any D/C insurance policy at issue in this lawsuit. In June 2007, the parties settled
this lawsuit with payment by plaintiffs in the amount of $1,618. Such settlement amount was paid to Kaanapali Land in partial satisfaction
of the secured indebtedness noted above. Because D/C was substantially
without assets and was unable to obtain additional sources of capital to satisfy its liabilities, D/C filed with the United States
Bankruptcy Court, Northern District of Illinois, its voluntary petition for liquidation under Chapter 7 of Title 11, United
States Bankruptcy Code during July 2007, Case No. 07-12776. Such filing is not expected to have a material adverse effect on the
Company as D/C was substantially without assets at the time of the filing. Kaanapali Land filed claims in the D/C bankruptcy that
aggregated approximately $26,800, relating to both secured and unsecured intercompany debts owed by D/C to Kaanapali Land. In addition,
a personal injury law firm based in San Francisco that represents clients with asbestos-related claims, filed proofs of claim on
behalf of approximately two thousand claimants. While it is not likely that a significant number of these claimants have a claim
against D/C that could withstand a vigorous defense, it is unknown how the trustee will deal with these claims. It is not expected,
however, that the Company will receive any material additional amounts in the liquidation of D/C. On or about April 28,
2015, eight litigants who filed asbestos claims in California state court (hereinafter, Petitioners) filed a motion
for relief from the automatic stay in the D/C bankruptcy (hereinafter life stay motion). Under relevant provisions
of the bankruptcy rules and on the filing of the D/C bankruptcy action, all pending litigation claims against D/C were stayed pending
resolution of the bankruptcy action. In their motion, Petitioners asked the bankruptcy court to lift the stay in the bankruptcy
court to name D/C and/or its alternate entities as defendants in their respective California state court asbestos actions and to
satisfy their claims against insurance policies that defend and indemnify D/C and/or their alternate entities. The Petitioners
motion to lift stay thus in part has as an objective ultimate recovery, if any, from, among other things, insurance policy proceeds
that were allegedly assets of both the D/C and Oahu Sugar bankruptcy estates. As noted above, Kaanapali, the EPA, and the Navy
are claimants in the Oahu Sugar bankruptcy and the Firemans Fund policies are allegedly among the assets of the Oahu Sugar
bankruptcy estate as well. For this and other reasons, Kaanapali, the EPA and the Navy opposed the motion to lift stay. After briefing
and argument, on May 14, 2015, the United States Bankruptcy Court, for the Northern District of Illinois, Eastern Division,
in In Re D/C Distribution, LLC, Bankruptcy Case No. 07-12776, issued an order lifting the stay. In the order, the court permitted
the Petitioners to proceed in the applicable nonbankruptcy forum to final judgment (including any appeals) in accordance
with applicable nonbankruptcy law. Claimants are entitled to settle or enforce their claims only by collecting upon any available
insurance Debtors liability to them in accordance with applicable nonbankruptcy law. No recovery may be made directly against
the property of Debtor, or property of the bankruptcy estate. Kaanapali, Firemens Fund and the United States appealed
the bankruptcy court order lifting the stay. In March 2016, the district court reversed the bankruptcy court order finding that
the bankruptcy court did not apply relevant law to the facts in the case to arrive at a reasoned decision. On appeal the district
court noted that the law requires consideration of a number of factors when lifting a stay to permit certain claims to proceed,
including consideration of the adequacy of remaining insurance to meet claims still subject to the stay. Among other things, the
court noted that the bankruptcy court failed to explain why it was appropriate for the petitioners to liquidate their claims before
the other claimants whose claims remained subject to the stay. The district court remanded the case for further proceedings. It
is uncertain whether such further proceedings on the lift stay will take place. The parties in the D/C
and Oahu Sugar bankruptcies have reached out to each other to determine if there is any interest in pursuing a global settlement
of the claims in the Oahu Sugar and D/C bankruptcies insofar as the Firemans Fund insurance policies are concerned. If such
discussions take place, they may take the form of a mediation or other format and involve some form of resolution of Kaanapalis
interest in various of the Firemans Fund insurance policies for Kaanapalis various and future insurance claims. Kaanapali
may consider entering into such discussions, but there is no assurance that such discussions will take place or prove successful
in resolving any of the claims in whole or in part. The Company has received
notice from Hawaiis Department of Land and Natural Resources (DLNR) that DLNR on a periodic basis would inspect
all significant dams and reservoirs in Hawaii, including those maintained by the Company on Maui in connection with its agricultural
operations. A series of such inspections have taken place over the period from 2006 through the most recent inspections that occurred
in January 2013. To date, the DLNR has cited certain deficiencies concerning two of the Companys reservoirs relating to
dam and reservoir safety standards established by the State of Hawaii. These deficiencies include, among other things, vegetative
overgrowth, erosion of slopes, uncertainty of inflow control, spillway capacity, and freeboard. The Company has taken certain corrective
actions as well as updating important plans to address emergency events and basic operations and maintenance. In 2012, the State
of Hawaii issued new Hawaii Administrative Rules for Dams and Reservoirs which require dam owners to obtain from DLNR Certificates
of Impoundment (permits) to operate and maintain dams or reservoirs. Obtaining such permits requires owners to completely
resolve all cited deficiencies. Therefore, the process may involve further analysis of dam and reservoir safety requirements, which
would likely involve hiring specialized engineering consultants, and ultimately could result in significant and costly improvements
which may be material to the Company. The DLNR categorizes
the reservoirs as "high hazard" under State of Hawaii Administrative Rules and State Statutes concerning dam and reservoir
safety. This classification, which bears upon government oversight and reporting requirements, may increase the cost of managing
and maintaining these reservoirs in a material manner. The Company does not believe that this classification is warranted for either
of these reservoirs and has initiated a dialogue with DLNR in that regard. In April 2008, the Company received further correspondence
from DLNR that included the assessment by their consultants of the potential losses that result from the failure of these reservoirs.
In April 2009, the Company filed a written response to DLNR to correct certain factual errors in its report and to request further
analysis on whether such "high hazard" classifications are warranted. It is unlikely that the high hazard
designation will be changed. Other than as described
above, the Company is not involved in any material pending legal proceedings, other than ordinary routine litigation incidental
to its business. The Company and/or certain of its affiliates have been named as defendants in several pending lawsuits. While
it is impossible to predict the outcome of such routine litigation that is now pending (or threatened) and for which the potential
liability is not covered by insurance, the Company is of the opinion that the ultimate liability from any of this litigation will
not materially adversely affect the Company's consolidated results of operations or its financial condition. The Company often seeks
insurance recoveries under its policies for costs incurred or expected to be incurred for losses or claims under which the policies
might apply. While payouts from various coverages are being sought and may be recovered in the future, no anticipatory amounts
have been reflected in the Companys consolidated financial statements. Kaanapali Land Management
Corp. (KLMC) is a party to an agreement with the State of Hawaii for the development of the Lahaina Bypass Highway. An approximate
2.4 mile portion of this two lane state highway has been completed. The more significant portion remains uncompleted. Under certain
circumstances, which have not yet occurred, KLMC remains committed for approximately $1,100 of various future costs relating to
the planning and design of the uncompleted portion of the Bypass Highway. Under certain conditions, which have not yet been met,
KLMC has agreed to contribute an amount not exceeding $6,700 toward construction costs. Any such amount contributed would be reduced
by the value of KLMCs land actually contributed to the State for the Bypass Highway. These potential commitments
have not been reflected in the accompanying consolidated financial statements. While the completion of the Bypass Highway would
add value to KLMCs lands north of the town of Lahaina, there can be no assurance that it will be completed or when any future
phases will be undertaken. |
