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I’m confused by why the landowner is being sued here.
Because it's the US of A. It's hard to win lawyers fees so why not?
Either the hail mary, being incredibly stupid, or possibly some form of insurance requirement.
Based on previously presented evidence option two seems likely.
They are suing everyone: the county, the contractors, the current owner, the kids of the dead previous owner. They are claiming everyone but them is being unreasonable and hoping a judge gives them some sympathy. They know they fucked up and are just hoping that either at least one of the people they sued caves or the judge is an idiot/easy to buy off.
This is common because our legal system is fucked up. Standard practice is to sue everyone remotely involved and let the judge throw it out as they see fit. Of course, the people tangently involved now need to spend money and effort making sure it gets thrown out.
They're not going to get a judgment against her. Only question is how to make her whole at this point, and if trees were knocked down. That would require the cost of getting a comparable tree somewhere and putting it into the same spot with a reasonable chance to survive. You can imagine that gets quite expensive. In some states, it's then treble damages, but I can't find anything specific about Hawaii there. Possibly it doesn't, since it doesn't have the same forestry history that other states do.
They want a judge to force her into a settlement that allows the developer to own the land and house.
I’m betting they’re trying to get a judge to force her to take the house as payment so that everyone can walk away.