Owners of million-dollar lots in the Hokuli'a project filed a federal lawsuit yesterday seeking $265 million for what they claim are their losses after a state judge halted the luxury development in South Kona.

The suit alleges the owners suffered losses by Hawai'i County's refusal to issue building permits following Big Island Circuit Judge Ronald Ibarra's 2003 ruling that the project is not a permitted use of agricultural lands.

The suit said the lot owners were not parties to that court case and Ibarra's decision "destroyed" their dreams to build homes on the one-acre lots. In addition to seeking money, the suit asks the court to declare Ibarra's ruling unconstitutional.

The suit is against the county and Ibarra.

Joseph Kamelamela, the deputy litigation supervisor for the Big Island corporation counsel's office, said he had not seen the suit, but that the office will oppose the request for payment.

He said the office earlier this year rejected an administrative claim filed by the lot owners seeking money for losses. A lawyer representing 96 lot owners wanted the county to pay $265 million.

Kamelamela said the claim was denied as "speculative" because an appeal of Ibarra's ruling is pending before the Hawai'i Supreme Court. The developer and the county appealed Ibarra's decision.

Bridget Holthus, special assistant to the state attorney general whose office represents judges, said she could not comment because they had not been served with the lawsuit.

The project involves a 1,540-acre development on agriculture-zoned land. It was being built by 1250 Oceanside Partners, a joint venture between Arizona developer Lyle Anderson and Japan Airlines.

The suit said the owners relied on approvals by the county, including a development agreement with 1250 Oceanside, but the county later refused to issue permits for the project after Ibarra's ruling.

Reach Ken Kobayashi at kkobayashi@honoluluadvertiser.com.