HomeMy WebLinkAbout2005-04-01_Defendant-Appellant-Cross_Appellees_County_of_Hawaiis_Amended_Opening_Brief No. 26813
IN THE SUPREME COURT OF THE STATE OF HAWAII
WALTER JOHN KELLY, et al. CIVIL NO. 00-1-0 1 92K
Plaintiffs-Appellees/Cross-Appellants, (Kona)(Other Civil Action)
VS. APPEAL OF:
1250 OCEANSIDE PARTNERS, a Hawaii Limited Third Amended Final Judgment Filed
Partnership, August 27, 2004
Defendant-Appellee/Cross-Appellant,
and
Third Circuit Court
STATE OF HAWAII,DEPARTMENT OF HEALTH,
a Department of the State of Hawaii, et al., Judge: The Honorable Ronald Ibarra
Defendants-Appellees/Cross-Appellants,
and
DEPARTMENT OF LAND AND NATURAL
RESOURCES; et al.,
Defendants-Appellees,
and
LAND USE COMMISSION;
Defendant-Appellee,
and
DO
COUNTY OF HAWAII; et al.,
Defendants-Appellants/Cross-Appellees,
and _ -E.y' - C7
JOHN DOES 1-10, JANE DOES 1-10; DOE
Corporations, Partnerships, Governmental Units or
Other Entities 2-20,
Defendants-Appellees.
s:liAOceansideUppeahOpening Brief\Amended Opening Brief D5\3-28-05 IMTpc.wpd
1
DEFENDANT-APPELLANTS/CROSS-APPELLEES COUNTY OF HAWAII,
CHRISTOPHER YUEN IN HIS CAPACITY AS THE PLANNING DIRECTOR
FOR THE COUNTY OF HAWAII,AND DENNIS LEE,IN HIS OFFICIAL CAPACITY AS
THE CHIEF ENGINEER, COUNTY OF HAWAII'S AMENDED OPENING BRIEF
CERTIFICATE OF SERVICE
LINCOLN S. T. ASHIDA 4478
Corporation Counsel
IVAN M. TORIGOE 4327
Deputy Corporation Counsel
101 Aupuni Street, Suite 325
Hilo, Hawaii 96720
Telephone No. 961-8251
Email: itorigoe @co.hawaii.hi.us
Attorneys for Defendants-Appellants/Cross-Appellees
COUNTY OF HAWAII, CHRISTOPHER YUEN, in his
official capacity as the Planning Director for the County of
Hawaii and DENNIS LEE, in his official capacity as the
Chief Engineer, County of Hawaii
2
TABLE OF CONTENTS
Table of Authorities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . v-ix
I. Statement of the Case . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
A. Executive Summary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1. The Hokuli'a Development and Kelly v. Oceanside,
Civil No. 00-01-0192K. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2. Administrative Practice and Interpretation of HRS Chapter 205. . . . . . . . . . . 3
3. The Hokuli'a Agricultural Plan for HRS Chapter 205 Compliance. . . . . . . . . 4
4. Plaintiffs' HRS Chapter 205 Violation Claims. . . . . . . . . . . . . . . . . . . . . . . . . 5
B. Laches,Zoning Estoppel, Vested Rights Re: Land Use Law Violation Claims. . . . . . 6
1. Zoning, Permits, and Public Notice of the Hokuli'a Agricultural
Subdivision Concept. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
a. The Villages At Hokukano Final Environmental Impact Statement
(September 1993). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
b. Planning Commission Action of November 5, 1993 on Rezoning
Application 95-5,Use Permit Application USE 93-2, and Special
Management Area Use Permit Application SMA 93-1. . . . . . . . . 7
c. Rezoning Ordinance No. 94 - 73, Effective June 28, 1994 (current
subdivision). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
d. Special Management Area Use Permit Application No. 95-3,
Approving SMA Permit No. 356, September 28, 1995. . . . . . . . . 7
e. Rezoning Ordinance No. 96 7,January 3, 1996. . . . . . . . . . . . . . . . . . 7
f. Rezoning Ordinance No. 96 8, January 3, 1996. . . . . . . . . . . . . . . . . . 7
g. General Plan Amendment Ordinance No. 97-34, State Land Use
Boundary Amendment Ordinance No. 97-35, and Rezoning
Amendment No. 97-36,All March 7, 1997. . . . . . . . . . . . . . . . . . 7
h. Public Meetings from 1993 through 1996. . . . . . . . . . . . . . . . . . . . . . . 8
i. The April 20, 1998 Development Agreement. . . . . . . . . . . . . . . . . . . . . 8
j. Visible Start of Construction, January 1999. . . . . . . . . . . . . . . . . . . . . . 8
2. Unreasonable Delay by Plaintiffs, and Prejudice to Defendants. . . . . . . . . . . . 8
C. Attorneys' Fees and Costs. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
II. Points of Error . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
III. Standard of Review . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
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IV. ARGUMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
A. Plaintiffs Lacked Standing to Challenge the Development
Under Chapter 205,HRS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
B. The Circuit Court Erred In Ruling that Plaintiffs' HRS Chapter 205
Claims Were Not Barred by Laches or Limitations . . . . . . . . . . . . . . . . . . . . . . 29
1. Principles of Lacher. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
2. There Was Ample Public Notice of A Planned Substantial 1-Acre
Subdivision In the State Land Use Agricultural District from
September 1993 Onward. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
3. Plaintiffs Delayed Filing Their HRS Chapter 205 Claims Until
December 21, 2000, To the Substantial Prejudice of
Defendants Oceanside and County, and Nonparty Lot Purchasers. . . . . . 31
4. The Circuit Court Erred in Holding that As a Matter of Law,
Laches Does Not Apply. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32.
a. Laches Does Not Require"Good Faith Reliance"
On County Approvals. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
b. The County's Alleged Failure to Enforce HRS Chapter 205 Is
Irrelevant to Laches. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
c. The Development Agreement Poses No County
Enforcement Conflict or Collaboration With Developer
Barring Equitable Laches Relief. . . . . . . . . . . . . . . . . . . . . . . . . . 34
d. The Circuit Court Erred to the Extent That It Denied Laches Due to
Defendant-Appellants' Differences With the Court's
Ultimate Chapter 205 Analysis. . . . . . . . . . . . . . . . . . . . . . . . . . . 35
C. The Circuit Court Created New,Unconstitutional and Erroneously
Restrictive HRS Chapter 205 Farm Dwelling Requirements, Discarding
Administrative Interpretation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
1. Summary: HRS Chapter 205 on Permissible Uses in the Agricultural District.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
2. Administrative Interpretation of HRS Chapter 205 Agricultural or Farm
Dwelling Requirements Considered Hokuli'a In Compliance. . . . . . . . . 37
3. The Circuit Court Erroneously Added Rigorous"Economic Viability"
Substantive and Procedural Requirements to Subdivision
Approvals in the State Land Use Agricultural District. . . . . . . . . . . . . . . 40
4. The Circuit Court Erroneously Refused to Consider The Project As an
Accessory Use. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
5. As Applied By the Circuit Court. HRS Chapter 205's Farm Dwelling and
Agricultural Use Restrictions Are Unconstitutional Violations of Due
Process and Separation of Powers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
D. The Circuit Court Erred in Rejecting Defendant-Appellant Oceansides' Zoning
Estoppel or Vested Rights Defense. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
1. Defendant Oceanside Acted in Good Faith Reliance On the State of the Law
And Its Existing Permits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
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a. Only the Circuit Court Has Changed the Law, and The Agricultural
Lots Were Permitted as Farm Dwellings, Accessory To or
Compatible To Agricultural Uses. . . . . . . . . . . . . . . . . . . . . . . . . 49
b. Oceanside Complied With Advice of Counsel to Comply With
HRS Chapter 205. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
c. State Agencies Were Consulted at Various Stages;No State Agency
Required or Advised that a State Land Use Boundary
Amendment Was Required. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
d. Defendant-Appellant Oceanside Was Not Obligated to Seek
an LUC Declaratory Ruling or Boundary Amendment. . . . . . . . 54
2. The Permits and Zoning Relied Upon Were Not Illegal. . . . . . . . . . . . . . . . . 54
a. The Rezoning and Subdivision Approvals Were Not Illegal
"Parceling"of an"Urban Resort"Use. . . . . . . . . . . . . . . . . . . . . 55
b. The Rezoning and Subdivision Approvals Were Not Illegal
"Spot Zoning." . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
c. Summary: The Hokuli'a Permits and Zoning Are Valid,
and Vested Rights or Estoppel Should Apply to
Bar This Action. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
3. Even if Some Permits or Ordinances Are Found Invalid,
It Was Reasonable for Oceanside to Have Relied Upon Them,
and Estoppel or Vested Rights Should Apply. . . . . . . . . . . . . . . . 60
E. The Trial Court Erred in Ruling that the County of Hawaii Violated
a Public Trust Duty to Protect the Coastal Waters Offshore of Hokuli'a. . . . . . . 62
1. The State of Hawaii,Not the County,has Public Trust
Obligations Under the State's Public Trust Doctrine. . . . . . . . . . . . . . . . 62
2. Plaintiff-Appellees Failed to Carry Their Burden of Proof
Regarding the Alleged Runoff Pollution. . . . . . . . . . . . . . . . . . . . . . . . . 64
F. The Trial Court Erred When it Awarded Plaintiffs' Attorneys Fees Under The
"Private Attorney General"Doctrine. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
1. This Court Should Reject the Private Attorney General
Doctrine in Land Use Cases. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
2. The PAG Doctrine Application Factors Are not Met In This Case. . . . . . . . . 68
3. The Trial Court Erred in Failing to Distinguish Between Successful and
Unsuccessful Claims. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
V. Law Relevant to the Issues Involved . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
VI. Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
Appendices
Statement of Related Cases
Certificate of Service
-iii-
APPENDICES
Appendix A: Excerpts of Ms. Virginia Goldstein and LUC Executive Esther Ueda transcripts of
July 22, 2003.
Appendix B: Development Agreement, April 30, 1998 (without Exhibits, except for
Exhibit"J".)
Appendix C: Amended Findings of Fact, Conclusions of Law; Order Regarding Trial on Count
IV of The Fifth Amended complaint, filed October 22, 2003.
Appendix D: 1250 Oceanside's Farm Business Plan for Hokuli'a Phase I,May 2002.
Appendix E: Relevant portion of Declaration of Covenants, Conditions and Restrictions for
Hokuli'a, Recorded December 20, 1999.
Appendix F: First Amendment to Declaration of CCR for Hokuli'a, Recorded May 31,2002.
Appendix G: Excepts of Transcript of Testimony of Robert A. Stuit,July 23, 2003.
Appendix H: Agricultural Plan(Exhibit PKO-195) and related letters.
Appendix I: Agency Letters on Hokukano/Hokuli'a.
Appendix J: Relevant parts of constitutional provisions, statutes, rules and ordinances.
Appendix K: Third Amended final Judgment filed August 27, 2004.
Appendix L: Findings of Fact, conclusions of Law; Order Regarding Attorneys Fees and Costs,
filed January 21, 2004.
-iv-
TABLE OF AUTHORITIES
Cases
Adair v. Hustace, 64 Haw. 314, 640 P.2d 294(1982) . . . . . . . . . . . . . . . . . . . . . . . . . . . 29-30, 33
Akau v. Olohana Corp., 65 Haw. 383, 652 P.2d 1130(1982) . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Allen v. City and County of Honolulu, 58 Haw. 432, 571 P.2d 328 (1977) . . . . . . . . . . . . . . . . 67
Allstate Insurance Co. v. Ponce, 105 Hawaii 445,_, 99 P.3d 96, 104 (2004) . . . . . . . . . . . . 27
Alyeska Pipeline Serv. Co. v. Wilderness Socy, 421 U.S. 240, 95 S. Ct. 1612 (1975) . . . . . 65-67
Biser v. Deibel, 128 Md.App. 670, 739 A.2d 948 (1999) cert. Den. 357 Md. 482,
745 A.2d 436 (Md. 2000) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Bremner v. City& County of Honolulu, 96 Hawaii 134, 28 P.d 350 (App.2001) . . . . . . . . . . . 30
Brown v. Bishop Trust Company, 44 Haw. 385, 355 P.2d 179 (1960) . . . . . . . . . . . . . . . . . . . . 33
Burien Bark Supply v. King County, 106 Wash.2d 868, 725 P.2d 994(1986) . . . . . . . . . . . . . . 45
Chun v. Board of Trustees of Employees'Retirement Sys., 92 Haw. 432,
992 P. 2d 127 (2000) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
Citizens for the Protection of the North Kohala Coastline v. County of Hawai i, et.al.,
91 Hawaii 94, 979 P.2d 1120 (1999) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37, 40, 53, 56
City of Berea v. Wren, 818 S.W.2d 274(Ky.App. 1991)reh'g den. Aug. 2, 1991,
Discret. Rev. Den. by S.Ct. Dec. 11, 1991 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
Coon v. City and County of Honolulu, 98 Hawaii 233,47 P.3d 348 (2002) . . . . . . . . . . . . . . . 43
Cootey v. Sun Investment, Inc., et.al., 68 Hawai 480, 718 P.2d 1086 (1986) . . . . . . . . . . . . . . . 41
County of Hawai i v. Sotomura, 55 Haw. 176, 517 P.2d 576, 63 (1973) . . . . . . . . . . . . . . . . . . 63
County of Kauai v. Pacific Standard Life Insurance Company, et.al., 65 Haw. 318,
653 P.2d 766(1982) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33, 48, 60, 62
Drain v. Clackamas County, 36 Or.App.799, 585 P.2d 746 (Or.App. 1978) . . . . . . . . . . . . . . . 60
Foster Village Community Association v. Hess, 4 Haw.App. 463, 667 P.2d 850(1983) 38,40, 42
-v-
Grant County v. Bohne, 89 Wash.2d 953, 577 P.2d 138 (1978) . . . . . . . . . . . . . . . . . . . . . . . . . 45
Grayned v. City of Rockford,408 U.S. 104, 92 S.Ct. 2294, 33 L.Ed.2d 222 (1972) . . . . . . . 45-47
Hawaii Community Federal Credit Union v. Keka, 94 Hawaii 213 11 P.3d 1, 9 (2000) . . . . . 27
Hawai i Management Alliance Association v. Insurance Commissioner, 106 Haw. 21,
100 P.3d 952 (2004) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Hill v. Board ofAdjustment of the Borough of Eatontown, 122 N.J.Super. 156,
299 A.2d 737 (1972) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32, 60, 61
Hui Alaloa v. County Planning Commission, 68 Haw. 135, 705 P.2d 1042 (1985) . . . . . . . . . . 10
In the Matter of the Water Use Permit Applications, 96 Haw. 27, 29, 25 P.3d 802, (2001) . 65, 68
Ka Pa'akai O Ka Aina v. Land Use Commission, State of Hawai i, 94 Hawaii 31,
7 P.3d 1068 (2000) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10, 23, 24, 27
Kim v. Contractor's License Bd., 88 Haw. 264, 965 P.2d 806 (1998) . . . . . . . . . . . . . . . . . . . . 15
Konicki v. Village of Hinsdale, 100 Ill. App.3d 560, 427 N.E.2d 325 (1981) . . . . . . . . . . . . . . . 34
Kosalka v. Town of Georgetown, 752 A.2d 183 (Me 2000) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Life of the Land, Inc. v. City and County of Honolulu, 60 Haw. 446, 592 P.2d 26 (1979) . . . . . 47
Life of the Land, Inc. v. City Council of the City and County of Honolulu, 61 Haw. 390,
606 P.2d 866 (1980) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39,47
Lum Yip Kee, Limited v. City and County of Honolulu, 70 Hawaii 179, 767 P.2d 815,
820 (1989) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55, 56, 57
Maha'ulepu v. Land Use Commission, 71 Haw. 332, 790 P.2d 906 (1990) . . . . . . . . . . . . . . . . 36
Mottl v. Cayetano, 95 Hawaii 381, 389, 23 P.3d 716, 724 (2004) . . . . . . . . . . . . . . . . . . . . . . . 27
New Mexico Right to Choose/NARAL v. Johnson, 986 P.2d 450 (N.M. 1999) . . . . . . . . . . . . . . 67
PASH, 79 Hawaii 425, 903 P.2d 1246, n.15 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Pele Defense Fund v. Puna Geothermal Venture, 77 Hawaii 64, 881 P.2d 1210 (1994) . . . . . . 47
Pelosi v. Wailea Ranch Estates, 91 Hawaii 478, 985 P.2d 1045 (1999) . . . . . . . . . . . . . . . 26, 29
Pigott v. City of Wilmington, 50 N.C.App. 401, 273 S.E.2d 752 (198 1) . . . . . . . . . . . . . . . . . . . 34
-vi-
Save Sunset Beach Coalition v. City and County of Honolulu, 102 Hawaii 465,
78 P.3d 1, (1999) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27, 55, 57, 58
Schefke v. Reliable Collection Agency, Ltd., 96 Hawaii 408, 444, 32 P.3d 52 (200 1) . . . . . . . . 69
Searfoss v. School District of Borough of White Haven, 397 Pa. 604, 156 A.2d 841, (1959) . . . 31
Sierra Club v. Hawai i Tourism Authority, 100 Hawaii 242, 59 P. 3d 877 (2002) . . . . . . . 27, 28
Small v. Badenhop, 67 Haw. 626, 701 P.2d 647 (1985) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Waianae Model Neighborhood Area Association, Inc. v. City and County of Honolulu,
55 Haw. 40, 514 P.2d 861 (1973) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
Waikiki Resort Hotel v. City and County of Honolulu, 63 Haw. 222, 624 p.2d 1353 (198 1) . . . 37
Rules
Haw. Admin. Rules § 15-15-25(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Haw. Admin. Rules § 15-15-98 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Haw. Admin. Rules § 15-15-98(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Haw. Admin. Rules § 103 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Hawaii Rules of Evidence, Rule 201 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Statutes
HRS Chapter 146, Part VII, §§ 46-121-132. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
HRS Chapter 205 . . . . . . . . . . . . . 2-14, 16-20, 25, 27-41, 43-47, 49-50 52-56, 59, 61-62, 66, 70
HRS Chapter 421J . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
HRS Chapter 6E . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28, 29, 35
HRS Chapter 91 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43,47
HRS § 171-11 (1988) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
HRS § 171-3 (1999) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
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HRS § 205-12 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12, 16, 19, 35, 37,49, 54
HRS § 205-2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18,36
HRS § 205-2(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
HRS § 205-2(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36, 37
HRS § 205-3.1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,21,22, 53, 56
HRS § 205-3.1(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4, 22, 23, 53, 58, 59
HRS § 205-4 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
HRS § 205-4.5 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12, 20, 37, 41
HRS § 205-4.5(a)(12) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43, 44
HRS § 205-4.5(a)(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3, 15, 18, 36, 38
HRS § 205-4.5(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36,42
HRS § 205-4.5(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
HRS § 205-4(e)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
HRS § 205-5 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
HRS § 205-5(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14, 36, 37,41
HRS § 205-5(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
HRS § 205-5-(b)(1994) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15, 37, 41
HRS § 46-121 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
HRS § 46-123 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1, 35
HRS § 46-128 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
HRS § 46-131 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
HRS § 607-25(e)(1997) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
HRS § 607-25(e)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
-viii-
HRS § 661-12 (1986) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
FIRS § 6E-43, 43.6 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
HRS § 91-1(5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
HRS § 91-14(b)(1993) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
HRS § 91-3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
HRS § 91-8 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
HRS § 92F-27 (1989) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
Other
1 Rathkopf, The Law of Zoning and Planning, § 5:22, p. 5-53 (2001 Rev.) . . . . . . . . . . . . . 45, 60
6 Rohan,Zoning and Land Use Controls, § 36.03[8],p. 36-81 . . . . . . . . . . . . . . . . . . . . . . . 45, 58
Haw. Const. Art. XI, sec. 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
Hawaii County Charter Section 6-4.2(e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Random House Dictionary of the English Language, The Unabridged Edition(1966) . . . . 38,42
W. McClintock, Equity § 28 at 72 (2d Ed. 1948) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
-ix-
DEFENDANT-APPELLANTS/CROSS-APPELLEES COUNTY OF HAWAII,
CHRISTOPHER YUEN IN HIS CAPACITY AS THE PLANNING DIRECTOR FOR THE
COUNTY OF HAWAII, AND DENNIS LEE, IN HIS OFFICIAL CAPACITY AS THE CHIEF
ENGINEER, COUNTY OF HAWAII'S AMENDED OPENING BRIEF
I. Statement of the Case
A. Executive Summary.
This is an appeal from the Third Amended Judgment in Walter John Kelly, et.al. v. 1250
Oceanside Partners, et. al., Civil No. 00-01-0192K("Kelly v. Oceanside").
Plaintiff-Appellees Walter John Kelly, Charles Ross Flaherty, Jr., Patrick M.
Cunningham, and Michele Constans Wilkins("Kelly Plaintiff-Appellees") settled and released
their claims against County Defendant-Appellants under Counts II (Public Trust) and IV (Land
Use Law)below, (Record on Appeal at Vol. 35,pp. 12122-12128), and have no other surviving
claims or judgments against County Defendant-Appellants. Therefore,this Opening Brief does
not address any claims of Kelly Plaintiff-Appellees.
Hokuli'a is a development containing 730 individual lots with a minimum size of one
acre, and a golf course. The project is primarily located in the state land use agricultural district.
A 15-acre portion was reclassified to the urban district and zoned for a 100 unit lodge. After a
long process of public hearings and meetings beginning in 1993,the project received county
zoning approvals in 1994, 1996, and 1997, and various administrative approvals, including
subdivision approvals. In April, 1998, Hawaii County entered into a Development Agreement
with Hokuli'a, under H.R.S. § 46-123, ensuring the developer's right to proceed and requiring
certain public benefits, including a five-mile highway and a 140-acre shoreline park. The
developer began actual construction in January 1999 pursuant to these final discretionary
approvals.
In December 2000, after the developer had spent$45 million on roads,water systems,
and other necessary infrastructure, the plaintiffs (several individuals and an advocacy group)
filed an amended complaint, arguing that the project was illegal in the state land use agricultural
district, and that it should have been taken to the State Land Use Commission for reclassification
to the urban district. The trial court agreed and on Sept. 9, 2003, issued an order(amended
October 22, 2003) enjoining further construction and requiring the developer to go to the LUC
for reclassification. The court added many new requirements for proof of agricultural economic
1
viability before subdivision approval. The order shut down a construction project employing
many workers and prevented over 100 individual lot owners (who had not been made party to
the suit) from building homes on their properties. The court had earlier invalidated the zoning
and other land use approvals for the 15 acre urban site on the grounds that these constituted
"spot"zoning.
The trial court decided that the project as a whole was illegal in the agricultural district,
although the state land use law expressly allows one-acre lots and golf courses in the agricultural
district(except on class A and B soils,not involved here), and the project would result in far
more land in active cultivation than past uses. The court also decided that the plaintiffs' claims
were not barred by laches, although, if plaintiffs were correct that LUC action was required,that
should have preceded the county's zoning actions, and the claims regarding the agricultural
district could have been brought by the plaintiffs long before the developer began actual
construction. The Court also rejected zoning estoppel and vested rights defenses,holding that
the developer did not act in good faith and relied on illegal entitlements. The Court further
awarded attorneys' fees and costs to the Plaintiff-Appellees.
1. The Hokuli'a Development and Kelly v. Oceanside. Civil No. 00-01-0192K.
In Kelly v. Oceanside, Plaintiffs-Appellee-Cross-Appellants ("Plaintiffs")complained of
alleged water pollution,burial treatment,Hawaiian trails protection and other problems arising
from Defendant-Cross-Appellant 1250 Oceanside Partners' ("Oceanside")Hokuli'a development.
Fifth Amended Complaint for Declaratory and Injunctive Relief, ("Fifth Amended Complaint"),
Record on Appeal, ("R") at Vol. 26,p. 9252 ("26: 9252"). Hokuli'a includes a 730-lot, minimum
1-acre subdivision associated with a golf course, member's lodge and other amenities. The entire
project involves about 1,540 acres south of Kailua-Kona and Keauhou, Kona. Special
Management Area Permit No. 356, R, Defendant Oceanside's ("DO") Exhibit DO-1287. The
initial complaint was filed on October 30, 2000. R at pp. 1: 1-10. The HRS Chapter 205 claims
first appeared in the Second Amended Complaint filed on December 21, 2000. R at 2: 473, 488.
Hokuli'a is in the state land use agricultural district. Hokuli'a Phase I Public Offering
Statement,R: Plaintiff Protect Keopuka Ohana("PKO")Exhibit PKO-458,p. 3. It was formerly
known as the Villages of Hokukano. Test. Robert A. Stuit, Transcript of Proceedings("Tr."),
July 23, 2003, a.m.,p. 12. The Hokuli'a agricultural subdivision lands are classified by the State
2
Land Study Bureau as Class"C,""D" and`B"soils except for 8 acres in class`B"in the far
mauka/south corner. Villages of Hokukano Final EIS,p. 37,Figure 11, R: Exhibit PKO-679.
The initial 1993 Hokuli'a concept included 1,073 residential units in the state Urban land
use district in its makai portion. Exhibit PKO-679. After holding community meetings,
Oceanside voluntarily reduced density, in response to Kona community sentiment against
redistricting to Urban. The 1,073 Urban units were eliminated, in favor of more 1 to 3- acre
"farm dwelling"lots in the state Agricultural district. Exhibit DO-1225, at CO-00097.
2. Administrative Practice and Interpretation of HRS Chapter 205.
Residences are permitted within the agricultural district as "farm dwellings"under HRS
§205-4.5(a)(4). "Farm dwellings"are defined therein as "a single family dwelling located on
and used in connection with a farm, including clusters of single-family farm dwellings
permitted within agricultural parks developed by the State, or where agricultural activity
provides income to the family occupying the dwelling." (Bold italics added).
Prior to this case, the"farm dwelling"requirement was applied simply and literally.
Ms. Virginia Goldstein was the Hawaii County Planning Director from 1992 through 2000, the
period in which Hokuli'a was conceived, permitted and construction begun. R. Tr. July 22,
2003,p.m.,p. 43. Ms. Goldstein met with the representatives of 1250 Oceanside Partners
regarding the Villages of Hokukano and Hokuli'a projects. This included in 1994 when the
project was changed to 1-acre agricultural lots. Tr. July 22, 2003,p.m.,pp. 44-46.
Ms. Goldstein did not advise Oceanside that it needed to get a state land use district
boundary amendment for the entire project,because except for the lodge, it was all going to be in
Agriculture 1-acre zoning. Tr. July 22, 2003,p.m.,pp 46-47, 94-95. Ms. Goldstein also
determined,using site inspections,that the proposed Hokuli'a agriculture uses met the HRS
Chapter 205 requirements. Tr. July 22, 2003,p.m.,p. 69, 77. The proposed agricultural uses
appeared to be more intensive than the former seasonal grazing uses. Tr. July 22, 2003,p.m.,pp.
69-70. Agricultural uses in compliance with HRS Chapter 205 were also a condition of
rezoning. Tr. July 22, 2003,p.m.,pp. 76-77. R.,Exhibit DO-1234. The agricultural easement
would also be on the subdivision map. R. Tr. July 22,2003,p.m.,p. 106-107.
Ms. Goldstein testified that in relation to her tenure as Planning Director,there were four
other approvals of projects in the County situated in the state agricultural district which
contained agricultural subdivisions and a lodge and a golf course. None of these were required to
3
go through a state land use district amendment for areas over 15 acres. Tr. July 22, 2003,p.m.,
pp. 70-74. (The County has exclusive jurisdiction over district amendments for up to 15 acres.
HRS §205-3.1(c)).
Given the elimination of the proposed urban residential component, Ms. Goldstein did
not see a need for the project to obtain additional State Land Use Commission("LUC") approval.
Transcript,July 22, 2003,p.m.,p. 60. Former LUC Executive Director Esther Ueda agreed.
Transcript,July 22, 2003,p.m.,p.13.
Neither did LUC Executive Director Esther Ueda have any specific concern about the
County's redistricting of the sub-15 acre lodge parcel from the Agricultural to the Urban district.
Transcript,July 22, 2003,p.m., p. 19. Actually, Ms Ueda explained her general concerns
regarding"parceling"or piecemeal urbanization, and how Hokuli'a simply did not involve such
concerns. R. Transcript, July 22, 2003,p.m.,p.13. (Portions of Goldstein and Ueda transcripts
attached as Appendix "A".)
The County and Oceanside also signed a Development Agreement requiring HRS
Chapter 205 compliance,pursuant to HRS Chapter 146, Part VII, §§ 46-121 through 132. See
attached Appendix`B". The County agreed, inter alia,that Oceanside could develop Hokuli'a
in accordance with the laws,permits, zonings and other approvals granted to date. Oceanside
would contribute public benefits, including a bypass highway between Keauhou and Captain
Cook, and a 140-acre shoreline park. All was to be done in compliance with applicable laws,
including HRS Chapter 205. See Development Agreement,paragraphs 5(p.10); 20(p. 19); 22a(p.
19-20). Oceanside believed no further discretionary permits were needed. Test. Richard Frye,
Tr. July 9, 2003,p.m.,p. 60-61.
The Development Agreement does not avoid HRS Chapter 205,but expressly requires
compliance with it. The Circuit Court itself so held. AMENDED FINDINGS OF FACT,
CONCLUSIONS OF LAW; ORDER REGARDING TRIAL ON COUNT IV OF THE FIFTH
AMENDED COMPLAINT, filed October 22, 2003 ("Count IV Order", attached as Appendix
"C"), COL No. 50. (Bold Italics added).
3. The Hokuli'a Agricultural Plan for HRS Chapter 205 Compliance.
Given the known restrictions of HRS Chapter 205, Oceanside had consulted with
multiple land use counsel to ensure legality of Hokuli'a within the State agricultural district. R,
Exhibit PKO-195. Oceanside's planners thought from the beginning, that to be safe, they should
4
satisfy the"farm dwelling"requirement. Test. Richard T. Frye, Tr. July 9, 2003, p.m.,pp. 28-29,
July 10, 2003, a.m.,pp. 94-102.
The agricultural plan ultimately included millions of dollars' worth of agricultural wells
and transmission system. Tr., July 9, 2003,p.m.,pp. 35-37, 61-66. Oceanside also consulted
with local farmers and investigated existing agricultural operations to see how the farm system
worked for different crops and how that might be adapted to the project. They also looked at
how the crops might influence the local markets. Tr. July 9, 2003,p.m.,pp. 33-34. Oceanside
has installed much of the infrastructure,has begun ordering and nursing plants, and is fuming up
the final business plan. R, Exh. DO-1384, attached as Appendix"D". They are still committed
to ensure that the project comports with the agriculture requirements of Chapter 205. Tr. July 9,
2003,p.m.,pp.61-62.
The Association provides for the land improvements, irrigation,planting,maintenance
and care, and cultivation. It also distributes income to each of the landowners. The agricultural
easements comprise approximately 20 to 23 percent of each lot. R, Testimony of Robert A.
Stuit, Tr. July 23, 2003, a.m.,p. 50.
Under the Amended Covenants, lot owners are allowed to conduct agriculture on any or
all of their lot, including, with association permission, in the association agricultural easement.
Income from the owner's own efforts is solely his own. Income from the collective program is to
be used to conduct association business,with excess to be distributed to the owners. R,
Testimony of Robert A. Stuit, Tr. July 23,2003, a.m.,pp. 51-53, Exhibits DO-1387, 1389
(Relevant portions of Declaration of Covenants, Conditions and Restrictions for Hokuli'a, and
First Amendment thereto, attached as Appendices `B" and'7).
Elaintiffs' -Chapier205 VQn Claims.,
4: . . ,
Regarding HR$..Chapter 205.,:in CGunt IV,Plaintiffs alleged that: "None of the Hokuli'a
development project is designed to promote the sort of economic activity that would normally be
allowed in lands classified Agriculture under the applicable land use statutes and regulations."
Fifth Amended Complaint for Declaratory and Injunctive Relief, filed November 8, 2001 ("Fifth
Amended Complaint'), Paragraph 122, R. at 26: 9271. Plaintiffs claimed that Hokuli'a"would
violate the uses permitted on agricultural land under HRS chapter 205."Fifth Amended
Complaint,Paragraph 123, R. at 26: 9271.
5
Plaintiffs also alleged that the County of Hawaii Planning Director had failed to enforce
HRS chapter 205 regarding Hokuli'a's violations. Plaintiffs asked for an injunction preventing
Oceanside and County defendants"from relying on any County permit approvals inconsistent
with HRS chapter 205." Fifth Amended Complaint, Paragraphs 125 - 126, R. at 26: 9271.
The Court partially granted Plaintiffs' Count IV motions for summary judgment,ruling
that:
1. The uses and activities, stated in the Declaration of Covenants, Conditions
and Restrictions for Hokulia(CCR's) filed December 20, 1999 pertaining
to agricultural lots do not currently meet the language, spirit and intent of
the statutory characterization of an agricultural district as defined in
Hawaii Revised Statute Chapter 205.
2. Ordinance No. 97-35 regarding TMK:8-104: Por. 3 which reclassified
14.854 acres from agriculture to urban district constitutes "spot zoning"
and is invalid.
Count IV MSJ Order(R.at 35:11884, 11885, 11894-5).
After trial, the Court made additional findings regarding the violation of Chapter 205,
HRS and rejecting laches, vested rights and zoning estoppel defenses. The Circuit Court
disregarded the County and LUC administrative practice and interpretation of HRS Chapter 205,
and created new,previously unknown prerequisites for subdivision in the state agricultural
district. While acknowledging that the statute does not require profitability, the Circuit Court
held that the County should have done a"thorough, `before approved' investigation"into the
economic viability of proposed agricultural uses of the new subdivision,with a presumption
against approval.
The Court also held that the project should have gotten LUC approval or redistricting to
Urban, and broadly enjoined further development in the project until such LUC action. Lot
owners who were not party to the suit were effectively enjoined from building, since the County
was barred from issuing building, grading and other permits. Construction of the Bypass
highway and other public benefits was also halted. Count IV Order, R at 66:21413A237.
B. Laches, Zoning Estoppel, Vested Rights Re: Land Use Law Violation Claims.
Since 1993,the public had notice that a substantial 1-acre lot subdivision design, with
golf course and lodge was proposed on this property within the State Land Use Agricultural
District. Such public notice was given as follows:
1. Zoning, Permits, and Public Notice of the Hokuli'a Agricultural Subdivision Concept.
6
a. The Villages At Hokukano Final Environmental Impact Statement(September 1993).
The EIS states, . . . the upper portion of the project is proposed to remain as part of the
State Agricultural District and zoned Agriculture(A-1 a)under the County Zoning Code." Rat
PKO Exhibit 679, p. 5, 23-4. (Bold italics added).
b. Planning Commission Action of November 5, 1993 on Rezoning Application 95-5.
Use Permit Application USE 93-2, and Special Management Area Use Permit Application SMA
93-1.
Rezoning to 1-acre,Use and SMA Permits for Golf Course, all in the Agricultural
District. R at Exhibit DO - 1207, 1285.
c. Rezoning`Oriiinance No. 94 - 73, Effective June 28, 1994 (current subdivision).
Rezoning to 1-acre Agriculture(A-1 a) for the currently approved Phase I subdivision. R
at Exhibit PK0401, DO- 1216, 1217.
d. Special Management Area Use Permit Application No. 95-3. Approving SMA Permit
No. 356, September 28, 1995.
SMA Permit to allow 100 agricultural lots on 110 acres zoned A-la, as part of the 1,540
acre Hokukano development. R, Exhibits DO- 1223 through 1225, 1287.
e, Rezoning Ordinance No. 96 7. January 3. 1996.
Rezoned 755.962 acres of the Hokukano project from Unplanned(Ul)to Agricultural
(A-la), for"small lot subdivision,"expressly conditioned upon HRS Chapter 205 compliance.
R, Exhibits DO- 1227 through 1234, DO-1234, Condition`B", p. 9, Conditions"D"and"L", pp.
10 and 14.
f. Rezoning Ordinance No. 96 8. January 3, 1996.
Amended Rezoning Ordinance 94-73 (Item"C"above)to update its conditions on public
�- z..�+w.y..-•.;...'sr.++:r'?`_�»c;►jfri�.W�!Mwn!-;e+h acce g, i ig; '
ddhtr : it -of " u
Hig wa% '; _f*;share contributions.
R, Exhibit DO-1245 through 1247.
g. General Plan Amendment Ordinance No. 97-34, State Land Use Boundary
Amendment Ordinance No. 97-35, and Rezoning Amendment No. 97-36,All March 7. 1997.
General Plan Amendment for 25 acres of the property for the Lodge, from"Orchards"to
"Resort"on the Land Use Pattern Allocation Guide Map, and added the area to the list of
Resort(Retreat)Areas of the Land Use Element; (2)Amended the State Land Use Boundaries for
14.854 Acres of this area from Agricultural to Urban; and (3)Rezoned that 14.854 Acres from
County Agricultural (A-la)to Resort(V-6.0). R., Exhibits DO-1278 through 1284.
7
h. Public Meetings from 1993 through 1996.
Defendant-Appellant Oceanside held a"series of meetings"with the community from 1993
through 1996,"to provide details on the project,to give the public and whoever attended a clear
understanding of what the project was all about."Oceanside eliminated the Urban residential
component due to public objections. Test. of Robert A. Stuit,Tr.,July 23,2003, a.m.,p. 13-15.
i. The April 20, 1998 Development Agreement.
As required by HRS § 46-128 and Section 30-5(f) of the Hawaii County Code("HCC")
the Hawaii County Council held public hearings on March 18 and 30, 1998 regarding a
proposed development agreement between Defendant-Appellants County and Oceanside. R,
Exhibits DO- 1344, 1345, 1346, 1348, 1349. No one requested a contested case hearing for the
Development Agreement, and the Council adopted Resolution 244-8 on April 1, 1998,
authorizing the Development Agreement. R, Exhibit DO-1351.
j. Visible Start of Construction. January 1999.
Robert A. Stuit testified that actual construction began in January 1999,beginning with
the clearing and grubbing for the golf course. Tr., July 23, 2003, a.m.,p. 62. Since then, until
trial,Defendant-Appellant Oceanside constructed an 18-hole golf course, and improvements for
all Phase I lots including over 10 miles of road and utilities. They have built water reservoirs and
wells, started a wastewater treatment plant, and completed 80%of the bypass road between
Keauhou and the project. About$45 million was invested in construction by the filing of the
Chapter 205 claims in December 2000. R, Test. Stuit, Tr. July 23, 2003, a.m.,pp. 62, 64-65.
Plaintiff PKO's President, Jim Medeiros, Sr. was an employee of KPK Malama Aina,a
contractor on the Hokuli'a project, from August 1999 to August 2000. He did road repair and
was also a cultural crew supervisor, to care for burial sites. Test. Jim Medeiros, Sr., Tr.,July 16,
2002, a.m.,pp.105-106. Mr. Medeiros was aware of his ancestors being buried on the Hokuli'a
site from the early 1990's. Test. Jim Medeiros, Sr., Tr., July 17, 2002,p.m., p. 82.
2. Unreasonable Delayby Plaintiffs, and Prejudice to Defendants.
The record does not reflect any attempt by Plaintiffs to intervene in any of the numerous
administrative SMA, Use or other permit application proceedings leading to this development.
Nor did Plaintiffs challenge the Development Agreement of 1998. In short,Plaintiffs slept on
their HRS Chapter 205 claims from September 1993 through December 21, 2000, over seven
years. Defendant-Appellants had no warning until the Second Amended Complaint of
8
December 21, 2000, that there was any challenge to the proposed development's compliance
with HRS Chapter 205. R, 2: 473, 488-489.
C. Attorneys' Fees and Costs.
Applying a"private attorney general"theory,the Circuit Court ultimately awarded
Plaintiff-Appellee/Cross-Appellant PKO attorneys' fees of$628,518.26 and costs of$33,357.12
from both of the County Defendant-Appellants and from Defendant-Appellee/Cross-Appellant
Oceanside. Kelly Plaintiffs-Appellees were awarded attorneys' fees of$219,210.00 and costs of
$2,435.01 from Oceanside. Third Amended Final Judgment,R. at 86: 28009, 28029 (See
Appendix "K7).
H. Points of Error
For convenience,Points are referenced to the relevant court decisions as appropriate:
1 Order Granting in Part and Denying in Part Plaintiff's Motion for Partial Summary
Judgment Re: HRS Chapter 205[Count IV in the Fifth Amended Complaint] Filed
October 12, 2001, (filed April 5, 2002)("Count IV MSJ Order")R at 35: 11884
2 Amended Findings of Fact, Conclusions of Law; and Order As to Count V Regarding
Paragraphs 138(b), 139(a) and 139(b) and Count VI (Burial Sites) (filed March 17,
2003) (`Burial Decision")R at 52: 16528
3 Amended Findings of Fact; Conclusions of Law and Order With Respect to Counts II
and V in the Fifth Amended Complaint Pursuant to the Order Granting in Part State
of Hawaii Department of Land and Natural Resource's Rule 60 Motion to Amend the
October 21, 2002 FOF/COL and Order With Respect to Counts II and V Filed July
24, 2003 Filed August 6, 2003 (filed August 8, 2003)("8-8-03 Order")R at 63: 20523
4 Amended Findings of Fact; Conclusions of Law; Order Regarding Trial on Count IV
of the Fifth Amended Complaint(filed October 22, 2003) ("Count IV Order")R at
66: 21413A237
5 Findings of Fact; Conclusions of Law; Order Regarding Attorneys' Fees and Costs
(See Appendix"L")(Filed January 21, 2004)("Attorneys' Fees Order")R at 72: 23449
6 Third Amended Final Judgment(Filed August 27, 2004)R at 86: 28009
Unless otherwise stated, "FOP means "Finding of Fact"and "COL"means"Conclusion
of Law."
9
Point of Error No. 1: The Circuit Court erred in ignoring the Plaintiff-Appellees/Cross-
Appellants' lack of standing to bring HRS Chapter 205 claims. In the Count IV MSJ Order,
R at 35: 11884, and Count IV Order, R at 66:21413A237, there are no cognizable findings or
conclusions establishing Plaintiffs' standing to bring HRS Chapter 205 claims. This error was
brought to the attention of the Circuit Court via the NOTICE OF SUBMISSION OF
PROPOSED FINDINGS OF FACT AND CONCLUSIONS OF LAW REGARDING THE
TRIAL ON COUNT IV; EXHIBIT"A" filed July 30, 2003 ("County Proposed Count IV
Order"),Proposed COLS 1 through 4,pp. 12-13, R at 62:20280, 20293-94. These proposed
findings pointed out the lack of evidence of standing on the part of Plaintiff-Appellees.
Point of Error No. 2 : The Circuit Court erred in holding that the Development
Agreement placed the County in a conflict of interest as enforcer of grading and grubbing
ordinances and HRS Chapter 205, or was an improper delegation of enforcement:
27. The terms of the Development Agreement do not
authorize Oceanside to proceed without complying with HRS
chapter 205, as long as Oceanside attempts to comply in the future.
Hui Alaloa v. County Planning Commission, 68 Haw. 135, 137;
705 P.2d 1042, 1044 (1985)(holding that imposing self-serving
conditions on an SMA permit without requiring a compliance
hearing was in error). The LUC should have been given the
opportunity to make that prior determination with specific findings
and conclusions as to the effect of the development on agricultural
resources in advance of any land use approvals.Id.
28. The County of Hawaii may not delegate the power and
responsibility to determine the means to preserve the uses on
agricultural land to a private developer,whose interest is in selling
land for recreational and luxury residential uses. Ka Pa'akai 94
Haw. 31, 51; 7 P.3d 1068, 1088 (2000)(holding, as in Hui Alaloa,
that the delegation of the protection and preservation of native
Hawaiian practices to a developer was inappropriate.).
Count IV Order,p. 21, COL Nos. 27,28, R at 66:21413A257.
70. The County's execution of the Development Agreement places
it in a conflict of interest as the regulator of Oceanside and
compromises its ability to implement the law in guarding against
violations of the County's grubbing and grading ordinances and
land use restrictions as regulated by Haw. Rev. Stat. Chapter 205.
10
Burial Decision,p. 28, COL No. 70, R at 52: 16555. The error was brought to the
attention of the Circuit Court via the DEFENDANTS COUNTY OF HAWAII, CHRISTOPHER
YUEN,IN HIS OFFICIAL CAPACITY AS THE PLANNING DIRECTOR FOR THE
COUNTY OF HAWAII,DENNIS LEE, IN HIS OFFICIAL CAPACITY AS THE CHIEF
ENGINEER, COUNTY OF HAWAII'S MOTION TO AMEND FINDINGS,FOR NEW
TRIAL, OR FOR RELIEF FROM SECOND AMENDED JUDGMENT (TO BE FILED) filed
July 23, 2004 ("County's Motion to Amend 2d Amended Judgment"). See, Memorandum in
support of the motion, at p. 17, R at 86:27798, 27821. The foregoing was incorporated by
reference in the DEFENDANTS COUNTY OF HAWAII, CHRISTOPHER YUEN,IN HIS
OFFICIAL CAPACITY AS THE PLANNING DIRECTOR FOR THE COUNTY OF HAWAII,
DENNIS LEE,IN HIS OFFICIAL CAPACITY AS THE CHIEF ENGINEER, COUNTY OF
HAWAII'S MOTION TO AMEND FINDINGS,FOR NEW TRIAL, OR FOR RELIEF FROM
THIRD AMENDED JUDGMENT FILED AUGUST 27,2004, filed August 27, 2004
("County's Motion to Amend 3rd Amended Judgment"),R at 86:28037
Point of Error No. 3: The Circuit Court erred in holding that Plaintiff-Appellees/claims
were not barred by applicable legal and equitable limitations,particularly laches:
25. ...Any delay in bringing Plaintiffs' claims was caused by County of
Hawai`i's failure to enforce HRS Chapter 205,which failure to act this Court
concludes is the result of the Development Agreement....
26. ...Oceanside has failed to meet its burden to prove its affirmative
defenses under the doctrine of laches.
ORDER
2. As a matter of law, Oceanside is barred from asserting an equitable
estoppel or laches defense to Count IV of the Fifth Amended Complaint because
it cannot prove it relied in good faith on its county approvals for various land use
permits and subdivisions for Hokuli'a; . . .
Count IV Order, COL 25—26, Order, R at 66: 21413A256-257, 266. The error was brought to
the attention of the Circuit Court via the County's Motion to Amend 2d Amended Judgment.
The Memorandum in support of the motion, at pp. 17-18, pointed out that the Circuit Court had
erred in various ways leading to its rejection of laches, estoppel and vested rights defenses
(These foundational errors are noted as Points of Error Nos. 4 to 9 below). R at 86:27798,
27821-822.
11
Point of Error No. 4: The Circuit Court erred in focusing upon the alleged lack of County
enforcement of HRS Chapter 205, allegedly due to the Development Agreement, as an excuse for
the prejudicial delay in filing the Chapter 205 claims:
"18. Given the concerns that Defendant Oceanside' development violated
HRS Chapter 205, the County has a duty at a minimum to objectively investigate
and enforce compliance with Chapter 205. The County did not investigate, cite,
nor report any violations to the LUC or to any other state agency. HRS § 205-12
provides, "[t]he appropriate officer or agency charged with the administration of
county zoning laws shall enforce within each county the use classification districts
adopted by the land use commission and the restriction on use and the condition
relating to agricultural districts under section 205-4.5 and shall report the
commission all violations." Certain language and content in the Development
Agreement placed the County in a position of conflict regarding enforcement of
Chap.205,HRS. The County is faced with a breach of the Development
Agreement had they"held up"or"stalled"the development through any
investigation or reporting to the LUC. The County did not disapprove,but
approved, all requested permits involving the development."
24. Despite the contrary advice and information available to both
Oceanside and the County of Hawaii, the County appeared to be accommodating
Oceanside's desire to avoid LUC involvement by privately assuring Oceanside
that LUC involvement was not needed, in dereliction of the County's explicit duty
to enforce"the restriction on use and conditions relating to agricultural
districts[.]"HRS §205-12. In view of HRS §§ 205-3.1 and 205.12, this Court
concludes that the County of Hawaii and Oceanside deliberately collaborated to
avoid LUC involvement in exchange for the conditions imposed in the
Development Agreement.
25. Any delay in bringing Plaintiffs' claims was caused by County of
Hawai`i's failure to enforce HRS Chapter 205, which failure to act this Court
concludes is the result of the Development Agreement. Any financial prejudice to
Defendant Oceanside was caused by the County of Hawai`i's failure to enforce
HRS Chapter 205, and Oceanside continuously and consciously did not comply
with the spirit and intent of Chap.205."
Count IV Order,pp. 18, 20, COL Nos. 18, 24-25,R at 66: 21413A254-256. This error was
brought to the attention of the Circuit Court in the Memorandum in Support of the County's
Motion to Amend 2d Amended Judgment,p. 17,R at 86:27821.
Point of Error No. 5: The Circuit Court erred and abused its equitable discretion in
ignoring the lapse of time, the construction expenditures, and balance of equities, holding that the
Chapter 205 claims were diligently brought:
12
26. The project is not yet substantially complete. Of the approximately
seven hundred houselots, only one house is in the process of being built. Given
these circumstances, Plaintiffs were diligent in advancing these claims, and any
delay that resulted in Plaintiff's pursuing these claims is not unreasonable;
therefore, Oceanside has failed to meet its burden to prove its affirmative defenses
under the doctrine of laches.
Count IV Order,p. 20-21, COL No. 26, R, 66: 21413A256-257. The Court ignored the
uncontradicted evidence of about $45 million spent in infrastructure development and$128
million in contract obligations incurred between start of actual construction in January 1999 and
the filing of Count IV claims in December 2000, nearly two years. R, Testimony of Robert A.
Stuit, July 23, 2003, a.m.,pp. 62, 64-65, 69. (See Appendix'V'). This error was brought to the
attention of the Circuit Court in the Memorandum in Support of the County's Motion to Amend
2d Amended Judgment,p. 17,R at 86:27821.
Point of Error No. 6: The Circuit Court clearly erred in inferring that Defendant-
Appellee/Cross-Appellant Oceanside and the County had notice from state agencies and
attorneys that Hokuli'a uses would violate HRS Chapter 205, and that therefore Oceanside
unreasonably failed to seek some undefined LUC consultation or approval:
"58. The 1995 plan to rezone all residential lots to AG-la was the final
project configuration; Oceanside management ignored Ms. Schutte's advice that
they seek review of its planned project by the LUC once it was amended and
finalized, even though its Final Environmental Impact Statement("FEIS")
provided that Oceanside would seek a boundary amendment from the LUCA
(Footnote)4. Specifically,the FEIS, Exh. PKO-679, at p. 114, states:
For the project to move forward, a land use district boundary
amendment will be submitted to the State Land Use Commission,
to redesignate approximately 863 acres of the Agricultural District
Lands for Low and Medium Density Urban uses. This will allow
development of the proposed members' lodge and a predominantly
single family residential development in neighborhoods ranging in
density from 2 to 4.7 units per acre.
While the FEIS contemplates lot sizes that are smaller than the current project,
Oceanside knew that in order to build luxury residences (non-farm dwellings) on
Agricultural land, it would need to have the land reclassified as Urban.
60. Given the advice and comments from attorneys and state agencies
with expertise in land uses and agriculture, at the very minimum, any reasonable
developer reading these letters would have consulted with the LUC between
1989-95.
13
72. County officials reviewing the project allowed the project to proceed
in spite of the comments by the state agencies.
73. Absent a court order, Oceanside will proceed with construction of its
agricultural subdivision contrary to state land use law requirements, and the
County Planning Director will grant approvals pursuant to the Development
Agreement.
74. Oceanside officials testified they are convinced that their
interpretations of state land use laws are correct, despite the numerous letters on
record suggesting the contrary."
Count IV Order,p. 12, 13, 15,FOF Nos. 58, 60, 72-74, R at 66: 21413A250-251. These
findings ignore the plain intent of the evidence upon which they are based,which was to comply
with all applicable governmental procedures, and to seek counsel to ensure compliance with HRS
Chapter 205. The quotations on which these findings are based are taken clean out of historical,
textual, administrative and intentional context, and are used plainly contrary to their meaning in
context. See, Count IV Order,pp. 9-15, FOF Nos. 40-71,R at 66: 21413A245-251. This error
was brought to the attention of the Circuit Court in the Memorandum in Support of the County's
Motion to Amend 2d Amended Judgment,p. 17-18, R at 86:27821-2.
Point of Error No. 7: The Circuit Court erred in assuming that rezoning or subdivision to
1-Acre lots (specifically allowed under HRS §205-5(b))was not allowable without pre-approval
proof that"bona fide agricultural use"will in fact be implemented on the smaller-sized lots:
46. Commenting on Oceanside's application for rezoning its mauka
portion of its property from AG-5a and Unplanned to Ag-la, the DOA noted that
the smaller size lots "will seriously limit range of economically viable uses of
property." Exh. PKO-571, Ltr.from Y. Kitagawa to R. Frye (7112193)p.2.
47. Oceanside did not adequately address this concern nor establish to any
satisfactory extent that it will in fact implement a"bona fide agricultural use."
Exh. PKO-573, Ltr.from Y. Kiatagawa to V. Goldstein (812193);see, Exh. PKO-
575, 816193 Ltr.from J. Leonard to Y. Kitagawa;see also, Exh. PKO-579, 9110193
Ltr.from J. Leonard to Y. Kitagawa.
Count IV Order,p.10, FOF Nos. 46-47, R at 66: 21413A246. This error was brought to the
attention of the Circuit Court in the Memorandum in Support of the County's Motion to Amend
2d Amended Judgment,p. 10,R at 86:27814.
Point of Error No. 8: The Circuit Court erred in holding that Hokuli'a is an Urban use,
and that Oceanside must seek a boundary amendment from Agricultural to Urban from the LUC
for houses to be built:
14
9. Oceanside's omission or deminimis reference to any agricultural use of
land in its promotional material and its emphasis instead on the exemplary life
style surrounded by a golf course, club house,dining facilities,members' lodge,
beach club, and private luxury home sites selling for one to three million dollars
each collectively indicate a planned and continued urban use of land.
10. Pursuant to HRS § 205-4.5(a)(4), Oceanside must seek a boundary
amendment from Agricultural to Urban from the LUC for houses to be built. AG
Op. 75-8.
43. Unlike Life of the Land, in the instant case there has been no
subsequent change in the law. The State's land use laws are the same now as they
were when Oceanside started the permitting process for the Hokuli'a
development. Those land use laws required Oceanside to seek a reclassification
of the Agricultural lands at that time,just as they do now.
46. Both the LUC Executive Director and the County Planning Director
expressed concerns about the failure to view the Hokuli'a project"in its entirety"
to determine the appropriate land use designation for the project under HRS
chapter 205. These opinions lend persuasive weight to the conclusion that when
viewed"in its entirety,"the Hokuli'a project is essentially an urban, not
agricultural,use of lands."
Count IV Order, p. 17, COL Nos. 9-10,43 R at 66:21413A253,260. This error was brought to
the attention of the Circuit Court in the Memorandum in Support of the County's Motion to
Amend 2d Amended Judgment,p. 4-16,R at 86:27808-820.
Point of Error No. 9: The Circuit Court erred in retroactively requiring the County to do a
"before the fact"or "before approved"thorough investigation for economic feasibility of
agricultural use, including cost of land and infrastructure,before subdivision approval. This
requirement was unauthorized, vague, and contrary to the HRS § 205-5-(b)(1994) allowance of
1-acre subdivisions in the agricultural district:
4. The feasibility or viability of agriculture is a relevant consideration in
evaluating whether use of agricultural lands will comply with HRS Chapter 205.
AG Op. 75-8. While the statute does not require profitability, any analysis must
include the costs of operations, including land and infrastructure costs.
Otherwise, any deminimis agriculture activity will be able to satisfy the
restrictions of that chapter, an absurd result that the Legislature could not have
intended. Kim v. Contractor's License Bd., 88 Haw. 264, 270, 965 P.2d 806, 812
(1998) (holding that the legislature is presumed not to intend an absurd result, and
legislation will be construed to avoid, if possible, inconsistency, contradiction and
illogicality.).
19. This Court has already ruled:
15
4. Pursuant to Haw. Rev. Stat. Sec. 205-12,the counties must
take before-the-fact measures to insure preservation of prime
agricultural land, and when investigation shows that a proposed
subdivision in an agricultural district will in all likelihood not be
used for agricultural purposes and may be an attempted
circumvention of the land use district amendment procedure and
controls provided in this chapter,the county should disapprove the
subdivision application. Op.Att'y Gen. No. 75-8 (September 3,
1975). Conclusion of Law No. 4, April S Order at 8.
20. This Court does not have to wait until Hokuli'a residents obtain
building permits for their residences before it can act to enforce HRS Chapter 205
and/or its regulations, given the intended uses.
21. The County must take affirmative preventative action to protect
agricultural land and"cannot rely only on after-the-fact measures when a large
area of agricultural land is involved." Attorney General Opinion 75-8. Without
affirmative action prior to subdivision approval, the Countys' enforcement ability
will be impractical when the County must prosecute 750 separate lot owners after
a subdivision approval. See Id. "Any doubt as to whether a proposed subdivision
will result in a significant change of land use should be resolved in favor of a
disapproval." Id.
22. The general public must be able to rely on the County of Hawaii to
enforce HRS Chapter 205. The County of Hawaii, as the agency responsible for
enforcement of HRS Chapter 205,must"thoroughly investigate any application
for subdivision of a large area of agricultural land into lots that appear to be too
small for economically feasible agricultural activity."
23. The County of Hawaii approved Defendant Oceanside's applications
for subdivision approval of Phases I and II without considering the applicable
CCR's and therefore failed to conduct the required thorough"before approved"
investigation. The County of Hawai`i's failure to conduct such an investigation
left enforcement of HRS Chapter 205 to Plaintiffs.
Count IV MSJ Order, p. 8, COL No. 4,R at 35:11891, Count IV Order,pp. 16, 19, COL Nos. 4,
19 through 23, R at 66:21413A252, 255-256. This was especially erroneous as the Court
recognized that"the statute does not require profitability,"Count IV Order,p. 16, COL No. 4, R
at 66: 21413A252, and because the Court required use of a presumption against allowing
subdivision,holding that"any doubt as to whether a proposed subdivision will result in a
significant change in land use should be resolved in favor of a disapproval." Count IV Order,
COL No. 21, Rat 66:21413A255. This error was brought to the attention of the Circuit Courtin
the Memorandum in Support of the County's Motion to Amend 2d Amended Judgment,p. 10, R
at 86:27814.
16
Point of Error No. 10 : The Circuit Court erred in judicially amending HRS Chapter 205
to add substantive requirements such that"farm dwelling"uses allow a farmer"complete
control"over agricultural activities, and that they allow for"maximum use of agricultural lands"
for active agriculture, and that on one-acre lots, "high intensity crops such as hot-house tomatoes,
orchids and anthuriums"must be grown:
"23. Farming operations must be able to adapt and diversify with changing
market conditions Test. G. Teves (7/8/03). If a farmer does not have complete
control over his farming activities,he will not be able to adapt to these changing
conditions, and his prospects for a successful farming operation would be severely
constrained. Id.
29. Oceanside's condition that a lot owner need only place 20%of his/her one-
acre lot in active agriculture will lessen the likelihood that there will be maximum
use of agricultural lands. Id.
30. In order to run a viable farm on a one-acre lot, one would need to grow high
intensity crops like hot-house tomatoes, orchids and anthuriums. The agricultural
plan for Hokuli'a does not include these crops. Id."
Count IV Order, FOF Nos. 23, 29, 30, R at 66: 21413A242-243. This error was brought
to the attention of the Circuit Court in the Memorandum in Support of the County's Motion to
Amend 2d Amended Judgment,p. 10, R at 86:27814.
Point of Error No. 11 : The Circuit Court erred in prejudging, as a matter of law,before
anyone had an opportunity to occupy, that the Hokuli'a subdivisions' uses will not comply with
HRS Chapter 205, and by creating a ban on"luxury residences"in connection to properly land
use districted golf courses and amenities,when HRS Chapter 205 contains no such prohibition.
In so doing, the Circuit Court rejected County and State LUC administrative interpretation and
practice:
"15. Pursuant to Hawaii Revised Statutes Chapter 421J,Hokulia CCR's
are binding upon the Hokulia agriculture lot owners. The Court concludes under
the totality of the circumstances that the Hokulia activities and uses as proposed in
the CCR's particularly within the agricultural lots violates Hawaii Revised
Statute Chapter 205.
16. The activities and uses within the CCR's do not currently meet the
spirit and intent of the statutory characterization of agricultural districts as
provided for in Hawaii Revised Statute Chapter 205.
17
b. The uses and activities in the agriculture lots in Hokulia Developments' CCR's
are in violation of Hawaii Revised Statutes Chapter 205; . . ."
Count IV MSJ Order,pp. 10-12, COL Nos. 15, 16, Order, R at 35: 11895.
"8. Any dwelling on land classified Agriculture must be a"farm
dwelling" as defined by HRS Chapter 205-4.5(a)(4). The Hokuli'a residences are
not farm dwellings. They will not be located on or used in connection with a
farm, nor provide income to its occupants. Rather,they are luxury residences
built around and to be used in connection with recreational activity centered
around a golf course,members lodge and beach club and spa. Exhs. PKO-709,
PKO-710.
9. Oceanside's omission or deminimus reference to any agricultural use of
land in its promotional material and its emphasis instead on the exemplary life
style surrounded by a golf course, club house,dining facilities,members' lodge,
beach club, and private luxury home sites selling for one to three million dollars
each collectively indicate a planned and continued urban use of land.
10. Pursuant to HRS § 205-4.5(a)(4), Oceanside must seek a boundary
amendment from Agricultural to Urban from the LUC for houses to be built. AG
Op. 75-8.
11. Golf courses and golf clubhouses are a permitted use of agriculturally-
zoned lands, if a use permit is first obtained for the use from the Planning
Commission. Haw. Cty. Code § 25-2-61.
Count IV Order,p. 17, COL Nos 8-11,R at 66: 21413A253. This error was brought to the
attention of the Circuit Court in the Memorandum in Support of the County's Motion to Amend
2d Amended Judgment,pp. 6-10, 16-17,R at 86:27810-814, 27820-821.
Point of Error No. 12-: The Circuit Court erred in ignoring the express differences in
permissible uses between different soil classes in the agricultural district under HRS Chapter
205, and finding the Hokuli'a agricultural uses "insubstantial." The Circuit Court held the C,D
and E class soils in the instant case to the same(judicially amended)use restrictions as for Class
A and B soils under HRS Chapter 205: That the"primary uses"must be agricultural, or that they
must be"consistent with an Agriculture classification"or"principally agriculture":
"1. This Court previously found:
14. The primary use and activities within the agricultural lots are not
agriculture. Furthermore,the agricultural use and activities are insubstantial."
3. HRS § 205-2 permits only land uses consistent with an Agriculture
classification.
7. Oceanside's amendment of its CCR's, even if relevant as an attempt to cure this
defect,does not alter this Court's conclusion that the use of the agricultural lots are
18
not principally agriculture; the amendment merely gives the lot owner the ability to
engage in farming activity as directed by the homeowner's association. Exhibit
PKO-724. Moreover, the agricultural activities proposed are deminimis and do not
change the purpose and character of the development,which is luxury residential
living within the setting of a golf course, club house,private lodge, and other
amenities unrelated to agricultural activities."
Count IV Order,pp. 16-17, COL Nos. 1, 3, 7; R at 66: 21413A252-253. This error was brought
to the attention of the Circuit Court in the Memorandum in Support of the County's Motion to
Amend 2d Amended Judgment,pp. 6-10, 16,R at 86:27810-814,27820.
Point of Error No. 13-: The Circuit Court erred in rejecting as"immaterial"any developer
attempts to comply with Chapter 205 after"court intervention":
"6. The information and proposals available at the time of subdivision approval
are the only relevant evidence of the legality of what uses are going to be made of
the land. Any subsequent attempts to comply with HRS chapter 205 after court
intervention are immaterial to this determination."
Count IV Order,p. 16, COL No. 6; R at 66: 21413A252. This error was brought to the
attention of the Circuit Court in the Memorandum in Support of the County's Motion to Amend
2d Amended Judgment,pp. 10,R at 86:27814.
Point of Error No. 14 : The Circuit Court erred in holding that Defendant-
Appellee/Cross-Appellant Oceanside had no vested rights or equitable estoppel defense due to
allegedly invalid permits:
36. Oceanside has a vested right to use the land for agriculture. It has no
vested right to build luxury residences in the guise of"farm dwellings,"or to
operate an urban resort development on Agricultural lands.
37. Because both its rezoning and subdivision approvals are defective,
Oceanside's reliance on its prior subdivision approval to assert a defense of either
vested rights or equitable estoppel for its planned"agricultural" subdivision must
fail, and the County cannot ignore its enforcement duties under HRS § 205-12."
Count IV Order,pp. 22-23, COL Nos. 36, 37,R at 66: 21413A259. This error was brought to
the attention of the Circuit Court in the Memorandum in Support of the County's Motion to
Amend 2d Amended Judgment,p. 4-18,R at 86:27808-822.
Point of Error No. 15 The Circuit Court erred in holding that Defendant-Appellee/Cross-
Appellant Oceanside had no vested rights or estoppel defense due to lack of good faith:
19
"43. Unlike Life of the Land, in the instant case there has been no
subsequent change in the law. The State's land use laws are the same now as they
were when Oceanside started the permitting process for the Hokuli'a
development. Those land use laws required Oceanside to seek a reclassification
of the Agricultural lands at that time,just as they do now.
44. Oceanside is presumed to know the governing laws and cannot rely on
permission obtained from the County contrary to law. Oceanside disregarded
advice from several of its own counsel to be more careful,as evidenced when Mr.
Frye proceeded with the Hokuli'a development under his erroneous presumption
that: (a)Ag-la zoning by the County of Hawaii alone was sufficient to assure
compliance with HRS chapter 205; (2)the"farm dwelling"requirement only
applied to lands rated A and B under the ALISH rating system; and(3)all parts of
the 1450 acre development did not need to be evaluated"in its entirety" for
purposes of evaluating its proper land use evaluation. Test. R. Frye (719103).
46. Both the LUC Executive Director and the County Planning Director
expressed concerns about the failure to view the Hokuli'a project"in its entirety"
to determine the appropriate land use designation for the project under HRS
chapter 205. These opinions lend persuasive weight to the conclusion that when
viewed"in its entirety,"the Hokuli'a project is essentially an urban, not
agricultural, use of lands.
48. Given the advice Oceanside received from its counsel and the
comments of the County of Hawaii Planning Director, the Executive Director of
the State LUC, the director of the State OSP; and the director of the State DOA, it
was unreasonable for Oceanside to proceed with the development of Hokuli'a
without seeking state LUC approval or a declaratory ruling. Oceanside's
insistence on proceeding with only County approval for its rezoning of the
agricultural lot area to Ag-1a in its residential subdivision,without regard for the
additional requirement of HRS §205-4.5 is a disregard for known risks that does
not constitute"acting in good faith."
49. Oceanside's decision to nearly triple its alleged$55 million spending
prior to the filing of this action establishes that it knowingly risked the additional
$136 million it allegedly expended since the filing of the complaint. Test. R. Stuit
(7/23/03).
52. Given Oceanside's substantial resources and the exclusive nature and
costs of its development, and balancing this with the risks raised by Oceanside's
advisors, Oceanside acted unreasonably in not seeking declaratory relief or review
and approval of the Hokuli'a development from the LUC prior to expending
substantial amounts of money. Oceanside has the financial assets to secure land
use approvals. It hired multiple attorneys and land use planners to advise it of
applicable land use requirements.
55. Oceanside"took a chance"when it disregarded its own counsel's July
30, 1989 advice to seek review by"the appropriate state and county agencies
20
involved in the land use permitting process... . ...after a more concrete
development proposal is established." DO-1354 at 15.
56. The comments from both Virginia Goldstein(County Planning
Department)informing Oceanside of the need to view Hokuli'a"in its entirety"
and Esther Ueda's (LUC) "parcelling"caution,put Oceanside on reasonable
notice that it took a substantial risk of proceeding without review by the LUC.
Oceanside cannot claim it acted in good faith on the affirmative acts of the County
of Hawaii,while ignoring the LUC and these notices. Despite knowledge of the
risk of doing so, Oceanside, presumed the Ag-la zoning was consistent, and
parceled out only a 14.854-acre lot for the members' lodge for county
reclassification to "urban"under HRS § 205-3.1. October 1, 2002 Order, Finding
of Fact No. 3."
Count IV Order,pp. 24-27, COL Nos. 43, 44,46,48, 49, 52, 55, 56, R at 66: 21413A260-
263. This error was brought to the attention of the Circuit Court in the Memorandum in Support
of the County's Motion to Amend 2d Amended Judgment,p. 17, R at 86:27821.
Point of Error No. 16-: The Circuit Court erred in holding that for vested rights or
equitable estoppel, the "last discretionary permit" for Hokuli'a was a state land use district
amendment from Agricultural to Urban, and therefore rejecting those defenses:
58. In the instant case, the existing law required Oceanside to seek
reclassification of the lands from Agricultural to Urban by the LUC. Unlike
Nukolii, the instant case does not involve a change in existing law.
59. Vested rights and equitable estoppel protect development only after
issuance of required discretionary permits. The Development Agreement was not
that discretionary permit.
60. Rather, as advised by state officials, Oceanside needed to assure that
the LUC amend the Hokuli'a land use classification from Agricultural to Urban in
compliance with state land use laws if it intended to develop a residential-golf
course subdivision project.
61. Oceanside's presumption that reduction of lot density(from 5 acres to
one-acre Ag) absolved it of the requirement to reclassify its land to"urban"uses.
By ignoring contrary advice from its own counsel, its presumption was
unreasonable. Proceeding without state land use approval does not confer a
vested right upon Oceanside, even though Oceanside may have made substantial
expenditures in reliance thereon from county officials. Miller, 521 A.2d at 647.
Count IV Order,pp. 27-28, COL Nos. 58-61,R at 66: 21413A263-264. This error was
brought to the attention of the Circuit Court in the Memorandum in Support of the County's
Motion to Amend 2d Amended Judgment, pp. 4-18,R at 86:27808-821.
Point of Error No. 17 : The Circuit Court erred in holding that the simultaneous passage
of County ordinances for general plan amendment, land use district boundary amendment, and
21
rezoning for the 14.854 acre lodge parcel was invalid, and therefore rejecting equitable estoppel
defenses:
"62. The simultaneous passage of Ordinances 97-34 (general plan
amendment of 25 acres), 97-35 (land use reclassification of 14.854 acres), and 97-
36(rezoning)indicates that neither the County of Hawaii nor Oceanside
considered the general welfare of the people of the County of Hawai`i."
Count IV Order,p. 28, COL No. 62,R at 66: 21413A237. This error was brought to the
attention of the Circuit Court in the Memorandum in Support of the County's Motion to Amend
2d Amended Judgment,p. 17, R at 86:27821.
Point of Error No. 18 : The Circuit Court erred in disregarding HRS § 205-3.1(c), and
invalidating the lodge parcel state land use district amendment and rezoning,based on the sub-
15-acre size of the redistricting and alleged failure to consider all parts of the development:
"12. Ordinance 97-35 reclassifying the 14.854 acres from agriculture to
urban district for the purpose of constructing a private lodge for members and
guests only constitutes spot zoning and is invalid. The urban use is not in accord
with the general plan.
ORDER
a. Ordinance No. 97-35,regarding TMK: 8-1-04: por. 2 rezoning
(sic) 14.854 acres of land for the site of the member lodge at Hokulia from
agriculture to urban district constitutes"spot zoning"and is invalid;
Count IV MSJ Order,p 10-11, COL No. 13, Order,R at 35: 11884, 11893-894.
63: The General Plan Amendment redesignating 25+acres from
"Orchard"to "Retreat Resort,"immediately followed by the reclassification of a
smaller area of 14.854-acres from Agricultural to Urban and subsequent rezoning
from Agricultural to Resort Hotel reveals an intent to circumvent both the County
General Plan and the State land use laws.
64. Because this Court has declared both the general plan amendment
(Ord. 97-34) and the county reclassification of the 14.584-acre parcel (Ord. 97-35)
both invalid, Ordinance 97-36, the attempt to rezone the parcel from Agricultural
(A-la)to Resort Hotel (V-6.0) is also invalid.
65. The 14.584 acres was a portion of the 25-acre parcel Oceanside
redesignated for resort use under the County General Plan, and was below the
maximum acreage subject to county jurisdiction under HRS § 205-3.1 by only
0.146 acre.
66. Had the resort area remained as the original 25+acre parcel affected by
Ordinance No. 97-34, Oceanside would have been required to go before the LUC
to reclassify the parcel from Agricultural to Urban as required by HRS § 205-4.
22
67. Oceanside's circumvention of the rules and regulations applying to its
application for approval of its lodge is evidence of a bad faith response to an
obvious problem Oceanside faced, not an innocent, good faith belief that its
project was in compliance with the existing rules and regulations.
68. The County's assent to limit the reclassification for the Members'
Lodge to 0.146 acres less than the maximum allowable acreage under HRS § 205-
3.1, indicates a lack of good faith in processing land use approvals in the instant
case.
69. The County cannot subvert HRS §205-3.1(c)by refusing to consider
all parts of a development to deny the LUC jurisdiction over the larger
development.
70. Because the ordinances on which it relies are invalid as a matter of
law, Oceanside cannot rely on vested rights or equitable estoppel as defenses to an
injunction against construction of its planned Members' Lodge."
Count IV Order,pp. 28-29, COL Nos. 63-70, R at 66: 21413A264-265. This error was
brought to the attention of the Circuit Court in the Memorandum in Support of the County's
Motion to Amend 2d Amended Judgment,p. 17,R at 86:27821.
Point of Error No. 19 : The Circuit Court erred in holding that the County Defendant-
Appellants have, and violated a public trust duty to protect coastal waters from grubbing and
grading runoff, including affirmative assessment of natural resources, impact on such resources,
and feasible measures for reasonable protection of such resources:
13. State Defendants, including the State of Hawaii,Director or(sic)
Health, and DLNR, and County Defendants have an affirmative duty to take the
public trust into account before, during and after the approval and authorization of
ground alteration activities, storage of soil, silt, and the use of herbicides on the
Hokuli'a property even prior to being decided by the Hawaii Supreme Court.
14. None of the permits, approvals or authorization documents issued by
the State Defendants and County Defendants required a prior assessment on the
effect of Defendant Oceanside's permitted activities on pristine waters off
Hokuli'a. The pollution of the adjacent coastal waters were cased by Hokuli'a's
ground latering activities allowed and approved by the State and County
Defendants. The State and County Defendants did not act prudently by not
affirmatively requiring an assessment prior to permit approvals or an assessment
after the runoffs.
15. In 2000, the Hawaii Supreme Court stated in KaPdakai in order to
protect customary and traditional native Hawaiian rights, the State, at a minimum
was required to make specific findings and conclusion as to the following: (1)the
identity and scope of valued cultural,historical, or natural resources in the area,
including the extent to which traditional and customary native Hawaiian rights are
exercised in the area: (2)the extent to which those resources—including traditional
and customary native Hawaiian rights will be affected or impaired by the proposed
23
action; and(3)the feasible action to be taken to reasonably protect native Hawaiian
rights if they are found to exist. KaPa'akai at 47.
16. Runoffs from the Hokuli'a project into the adjacent pristine coastal
waters polluted the waters.
17. This pollution interfered with members of the public's use and
enjoyment of the pristine waters.
18. This pollution affected the marine life immediately after the runoffs.
19. Plaintiffs have proven by a preponderance of the evidence that the
State and County Defendants violated their duties as public trustees by not
protecting the adjacent coastal waters from pollution.
ORDER
IT IS HEREBY ORDERED,ADJUDGED AND DECREED:
1. As to Count II, State Defendants,DOH, Bruce Anderson, and State of
Hawaii, and County Defendants, Christopher Yuen,Dennis Lee, and County of
Hawaii,breached their public trust duty to Plaintiffs and other members of the
general public who use or would use the pristine waters off the Hokuli'a property. . .
8-8-03 Order, pp. 12-13, COL Nos.13-19, Order,R at 63: 20534-35. This error was
brought to the attention of the Circuit Court in the NOTICE OF SUBMISSION OF FINDINGS
OF FACT AND CONCLUSIONS OF LAW REGARDING THE TRIAL ON COUNTS H AND
V; EXHIBIT "A" filed September 30, 2002,p. 6, Proposed COL No. 2,R at 42: 14100.
Point of Error No. 20-: The Circuit Court erred in ordering injunctive relief in light of the
foregoing points of error:
"72. Absent a court order, Oceanside will proceed with construction of its
agricultural subdivision contrary to state land use requirements,making a
prohibitory injunction necessary.
73. Absent a court order,the County Planning Director will continue to
grant approvals pursuant to the Development Agreement, and contrary to state
land use requirements."
Count IV Order,p. 30, COL Nos. 72, 73,R at 66:21413A266. This error was brought to
the attention of the Circuit Court in the Memorandum in Support of the County's Motion to
Amend 2d Amended Judgment,p. 18,R at 86:27822.
Point of Error No. 21 : The Circuit Court erred in awarding attorneys' fees and costs
under a Private Attorney General ("PAG')theory, and equally apportioning them between the
County and Defendant-Appellee/Cross-Appellant Oceanside:
4. Collectively,the three judgments following the three phases of trial
cumulatively enhanced the capability of community residents and groups to insist
on the enforcement of their rights as articulated by the Legislature and other laws
24
as they affected important Hawaiian cultural concerns. Dec. of Alan T.
Murakami, Para. 44. Furthermore,they clarified for the first time the importance
of following prescribed processes mandated by legislative action,which were
previously being ignored by both government bodies and private developers
without restraint. Id.
6. Prior to judgment in this action,the County reviewed development
proposals without considering the proposed project in its entirety for purposes of
determining whether it had jurisdiction to approve uses on lands classified as
Agricultural based on the size of the project involved, contrary to HRS Chapter
205. Dec. of Alan T. Murakami, Para. 33.
10. Generally, the State and the County abandoned their trust duties to
protect the Alaloa and the burial sites on the Hokulia property, and the traditional
and customary rights associated with those historic and cultural properties. Id. at
Paras. 7-12.
11. In Phase III of the trial,the court found that the County abdicated its
responsibility to enforce the land use laws. The court recognized that, "absent a
court order, Oceanside will proceed with construction of its agricultural
subdivision contrary to state land use requirements,making a prohibitory
inunction necessary,"and"the County Planning Director will continue to grant
approvals pursuant to the Development Agreement and contrary to state land use
requirements."
19. All three phases of the litigation resulted in decisions that benefit the
general public and future generations. Hawai`i's residents,both present and
future,benefitted directly and indirectly by the protection of the natural resources,
as well as the protection of historic and cultural properties established by the
court. Exh"-I to Dec. of A. Murakami, Dec. ofDavianna Pomaika'i
McGregor. Furthermore, the people statewide benefit when the state constitution
and laws pertaining to the state's natural resources are enforced by the state and
county governments.
7. . . . Plaintiffs actions in all three phases of trial vindicated important
public policies of a constitutional nature sufficient to meet the first prong under
the PAG doctrine. Id. at 1315 n. 8
8. The second prong of the test for application of the PAG doctrine looks
at whether it was necessary for Plaintiffs to bring the action at issue, and the
magnitude of the burden placed on Plaintiffs for bringing that action. . . .Plaintiffs
in this case were the sole representatives of the vindicated public interest. The
government in the instant case completely abdicated its duty to protect the Alaloa,
the burial sites, as well as its duty to enforce the state land use laws. The court
therefore finds that the second prong of the PAG doctrine has been met.
9. The"significant benefit"or the third prong under the PAG doctrine,
need not be tangible or concrete but may be recognized from the effectuation of a
fundamental constitutional or statutory policy. . . . Similar to the Whole case,
25
the instant case involved the protection of constitutional rights . . . These
constitutional rights are of profound significance, and all of the citizens of the
state,present and future, stand to benefit from the court's decisions. Waihole II,
96 Haw. at 31, 25 P.3d at 806. The court therefore concludes that the third prong
of the PAG doctrine test is met.
11. In Phase III of the trial,the court found that the County abdicated its
responsibility to enforce the land use laws. The court recognized that,"absent a
court order, Oceanside will proceed with construction of its agricultural
subdivision contrary to state land use requirements,making a prohibitory
inunction necessary,"and"the County Planning Director will continue to grant
approvals pursuant to the Development Agreement and contrary to state land use
requirements."
15. The court ruled in favor of Plaintiffs in Counts II, IV,paragraphs
138(b), 139(a), and 139(b) of Count V, and Counts VI and X. The court has
determined that, on balance,that the plaintiffs prevailed on these issues as against
Defendants Oceanside and the County of Hawaii. The court has determined that
neither defendant was a nominal defendant, and thus finds it equitable to
apportion responsibility for attorneys' fees between Defendants Oceanside and the
County of Hawaii.
Attorneys' Fees Order, COL Nos. 7,8, 9, 15,R at 72:23449, 458-460, 462. This error
was brought to the attention of the Circuit Court in the Memorandum in Support of the County's
Motion to Amend 2d Amended Judgment, p. 16, 18, R at 86:27820, 822, and the County
Defendant-Appellants' Memorandum Regarding Attorneys' Fees filed December 15, 2003,R at
70: 22990.
Point of Error No. 23: The Circuit Court erred in denying, without explanation,the
County Defendants' combined Motion to Amend Second Amended Judgment and Motion to
Amend Yd Amended Judgment. Order denying motions, filed September 9, 2004, R at 87:
28381-384.
III. Standard of Review
Whether a court possesses subject matter jurisdiction is a question of law reviewable de
novo. Hawai i Management Alliance Association v. Insurance Commissioner, 106 Haw. 21,_,
100 P.3d 952, 957 (2004). The relief granted by a court in equity is discretionary and will not be
overturned on review unless the circuit court abused its discretion. Pelosi v. Wailea Ranch
Estates, 91 Hawaii 478, 487, 985 P.2d 1045, 1054(1999). Findings ojFact("FOF') are
subject to the clearly erroneous standard of review,reversible when, "despite evidence to support
the finding,the appellate court is left with the definite and firm conviction that a mistake has
26
been committed." Allstate Insurance Co. v. Ponce, 105 Hawaii 445,_, 99 P.3d 96, 104
(2004). A Conclusion of Law("COL') is not binding upon an appellate court and is freely
reviewable for its correctness . . . This court ordinarily reviews COLs under the right/wrong
standard. However, a COL that presents mixed questions of fact and law is reviewed under the
clearly erroneous standard because the court's conclusions are dependent upon the facts and
circumstances of each individual case. Id. The interpretation of a statute is a question of law
reviewable de novo. Id. Rezoning is a legislative act and is subject to the deference given
legislative acts. Save Sunset Beach Coalition v. City and County of Honolulu, 102 Hawaii 465,
474, 78 P.3d 1, 10(1999). "We review questions of constitutional law de novo,under a
right/wrong standard." Id. (bold italics added). "We review the circuit court's grant or denial of
summary judgment de novo." Hawai i Community Federal Credit Union v. Keka, 94 Hawaii
213,221, 11 P.3d 1, 9 (2000).
IV. ARGUMENT
A. Plaintiffs Lacked Standing to Challenge the Development Under Chapter 205, HRS.
"A plaintiff without standing is not entitled to invoke a court's jurisdiction." Sierra Club
v. Hawai i Tourism Authority, 100 Hawaii 242, 250, 59 P. 3d 877, 885 (2002). To establish
standing, a plaintiff must show"that he has suffered an injury in fact, and that the concerns of a
multiplicity of suits are satisfied by any means, including a class action." PASH, 79 Hawaii
425, 434, 903 P.2d 1246, 1255,n. 15, quoting Akau v. Olohana Corp., 65 Haw. 383, 388-389,
652 P.2d 1130, 1134 (1982). Injury-in-fact is composed of three parts: "(1) an actual or
threatened injury(2)which is fairly traceable to the challenged action, and(3) is likely to be
remedied by favorable judicial action." Ka Pa'akai O Ka Aina v. Land Use Commission,State
of Hawai i, 94 Hawaii 31,42, 7 P.3d 1068, 1079 (2000). The plaintiff "must show a distinct
and palpable injury to himself'that is"distinct and palpable, as opposed to abstract, conjectural,
or merely hypothetical."Mottl v. Cayetano, 95 Hawaii 381, 389, 23 P.3d 716, 724(2004).
Plaintiffs have the burden of proving injury-in-fact. Sierra Club v. Hawai 'I Tourism Authority,
100 Hawaii at 250, 59 P.3d at 885. "While the basis for standing has expanded in cases
implicating environmental concerns and native Hawaiian rights,plaintiffs must still satisfy the
injury-in-fact test." 100 Hawaii at 251, 59 P.3d at 886.
Plaintiff PKO fails to meet the injury-in-fact test for HRS Chapter 205. The record
27
reflects no PKO ownership or other interest in the subject property implicating any HRS Chapter
205 claims.
Although PKO did allege that at least two of its members are descendants of ancestors
buried at Pu'u Ohau on the subject property, they failed to allege (or prove)how the county's
decision regarding Wlicability of HRS Chapter 205 would impact that interest. A Plaintiff
"must establish a causal connection between the injury suffered and the action at issue." Sierra
Club v. Hawai i Tourism Authority, 100 Haw. at 252-53, 59 P.3d at 887-888 (bold italics added).
In the instant case,there is no causal nexus between the county's allowance of Hokuli'a
under Chapter 205 and the disposition of PKO members' ancestors' remains. The legislature has
delegated responsibility over burial sites,to the Historic Preservation Division("SHPD")of the
state Department of Land and Natural Resources("DLNR") and to island Burial Councils under
HRS Chapter 6E. HRS Chapter 205 does not address burial sites at all. Decisions regarding
treatment of ancient burial sites and remains interred there are made solely by the state. Haw.
Rev. Stat. § 6E-43, 43.6.
The Burial Decision itself reflects that burial issues are DLNR's jurisdiction,not the
County's. The Burial Decision orders DLNR/SHPD to identify traditional cultural practices on
the development pertaining to graves, assess impact of the development on those practices, and
provide reasonable protective measures for any such practices,before ground alteration may
continue. The County Defendant-Appellants are only ordered to issue no further permits until
DLNR/SHPD does its work, and to take measures to avoid conflicts of interest. Burial Decision,
Order,R at 52:16555-56.
Hawaii County's decisions regarding whether the Oceanside 1250 development is
permitted on lands in the agricultural district has no relation to the disposition of the remains of
ancestors of members of PKO. The county has no authority under HRS Chapter 205 or Chapter
6E to make decisions regarding the burial sites on Oceanside 1250's property affected by the
proposed development. Therefore, any injury associated with burials of PKO members'
ancestors cannot be caused by the county's HRS Chapter 205 decisions and the PKO Plaintiff-
Annellees fail the second prong of the injury-in-fact requirement to demonstrate standing to
bring an action.
Moreover, any relief that the courts could provide the PKO plaintiffs in relation to
interpretation of HRS Chapter 205 would not redress plaintiffs' alleged injury. The circuit court's
28
injunction against any further construction by the landowner and issuance of permits by the
county until such time as the landowner obtains redistricting of the property to Urban by the
Land Use Commission ultimately gives no protection to the burial sites on the property. In fact,
the Urban designation ordered by the Circuit Court permits higher density uses than those
allowed in the agricultural districts, which could lead to conflict with even more burial sites than
with Oceanside 1250's current proposed agricultural subdivision.
Thus,only a remedy tailored under HRS Chapter 6E could redress plaintiff PKO's injury
and such a remedy would have to be(and was) directed to the state not to the county. As a
result,plaintiffs are unable to prove the third prong of standing to o bring Chapter 205 claims,
redressibility.
Likewise, nothing in HRS Chapter 205's agricultural district use restrictions provide the
County with any authority or duty regarding erosion and runoff. There is no causal connection,
nor any judicial redress available under Chapter 205. Plaintiff-Appellees have no standing under
HRS Chapter 205 regarding either burials or pollution control. Neither does the record show any
other basis for Chapter 205 standing for Plaintiff-Appellees/Cross-Appellants.
Based on the foregoing, the Circuit Court did not have jurisdiction over the plaintiffs'
Chapter 205 claims, since Plaintiff-Appellees/Cross Appellants do not have standing to bring the
suit against the county over its interpretation of permissible uses in the agricultural district. The
Chapter 205 claims should be remanded to the Circuit Court for dismissal.
B. The Circuit Court Erred In Ruling that Plaintiffs' HRS Chapter 205 Claims Were Not Barred
by Laches or Limitations.
1. Principles of Laches.
"There are two components to laches,both of which must exist before the doctrine will
apply. First, there must have been a delay by the plaintiff in bringing his claim, and that delay
must have been unreasonable under the circumstances."Pelosi v. Wailea Ranch Estates, 91
Hawaii 478, 490, 985 P.2d 1045, 1057 (1999); Adair v. Hustace, 64 Haw. 314, 320, 640 P.2d
294, 300 (1982). The court will entertain a suit if it has been"brought without undue delay after
plaintiff knew of the wrong or knew of facts and circumstances sufficient to impute such
knowledge to him"and the time lapse has not"resulted in prejudice to the defendant." Small v.
Badenhop, 67 Haw. 626, 640, 701 P.2d 647, 656-657(1985). Examples of such prejudice are
changes in the value of the subject matter, changes in defendant's position, and intervening rights
29
of third parties. Adair v. Hustace, 64 Haw. at 321, 640 P.2d at 300, citing W. McClintock,
Equity § 28 at 72 (2d Ed. 1948). The doctrine of laches is not limited by the statute of
limitations,but may preclude an equitable action brought within the applicable statutory period.
Adair v. Hustace, 64 Haw. at 321-322, 640 P.2d at 300, Footnote 6.
Plaintiffs never took an administrative appeal from any of the SMA or Use permits,
subdivision approvals, or the Development Agreement(an"administrative action,"HRS § 46-
131),within the 30-day appeal period of HRS § 91-14(b)(1993) (the legislature clearly meant a
very short appeal window for such entitlements). The complaints herein have never pled
invalidation of subdivisions,County zoning, land use boundary or general plan amendments.
There does not appear to be a specific limitation statute for zoning or Chapter 205 claims,but
even properly pled zoning invalidation claims appear governed by the limitations applicable to
the basis of the claim. See,Bremner v. City& County of Honolulu, 96 Hawaii 134, 145,28 P.d
350, 361 (App.2001)(Zoning challenge barred by 120-day limitation on underlying Chapter 343
claim.). The trial court's sua sponte invalidation of zoning, general plan or land use boundary
amendments was barred by the underlying limitations on entitlements.
2. There Was Ample Public Notice of A Planned Substantial 1-Acre Subdivision In the
State Land Use Agricultural District from September 1993 Onward.
It is undisputed that Plaintiff-Appellee PKO's President, Jim Medeiros Sr., was employed
on the Hokuli'a project from August 1999 to August 2000. He also knew of his ancestors'
burials on the project site from the early 1990's. PKO and its principals plainly had actual notice
of the significance of this property for years, and of the construction ongoing.
Beyond this,none of the Plaintiff-Appellees have any interest in, or agricultural use
claims on the subject property which would have entitled them to any personal, actual notice of
any of the rezoning or permitting actions on which this project was based.
It would be absurd to say that general public interest plaintiffs without any known
ownership or agricultural interest in a particular property should be entitled to any ern sonal
notice of proposed uses there. Moreover, This Court has held that even in cases of personal
confidential relationship or fraud,there is no requirement of actual notice if facts and
circumstances are sufficient to impute knowledge of a claim. Adair v. Hustace, 64 Haw. 314,
322; 640 P.2d 294, 300-301 (1982).
30
Similarly, Laches bars challenges to government actions taken after public notice,when it
would be"unjust and inequitable"to affected agencies and parties. Searfoss v. School District of
Borough of White Haven, 397 Pa. 604, 156 A.2d 841, 845-846(1959). Hence, the issue of when
such public interest plaintiffs had notice of their claims turns on the extent to which the public
had imputed notice.
Based on the complaint,Plaintiff-Appellees are challenging the design of the subdivision,
claiming that the 730-lot subdivision design, associated with a golf course,would be inherently
violative of HRS Chapter 205. R at 26: 9252, 9270
Hence, from the time that the public had notice that a substantial 1-acre subdivision
design with a golf course and lodge was proposed on this property within the State Land Use
Agricultural District, any persons interested in challenging such a use(like Plaintiff-Appellees)
should have begun diligently pursuing their claims. As summarized in the Statement of the Case,
the public had notice since 1993 of the nature of this project, from public proceedings on the
EIS,the SMA Permits,rezonings, state land use redistricting, general plan amendments, and
even a Development Agreement.
3. Plaintiffs Delayed Filing Their HRS Chapter 205 Claims Until December 21, 2000,
To the Substantial Prejudice of Defendants Oceanside and Co=. and Nonpartyot
Purchasers.
Despite the years of repeated and varied public notice, from 1993 on, of the planned
residential/agricultural subdivision on the property,the Plaintiffs failed to file their HRS Chapter
205 claims in any forum until the Second Amended Complaint in this case, filed December 21,
2000. R at 473, 488-489. In short,Plaintiffs slept on their HRS Chapter 205 claims from
September 1993 through December 21, 2000, over seven years.
During the seven years of Plaintiffs slumber, Defendant-Appellant Oceanside diligently
pursued its SMA Permits, Use Permits, rezonings, general plan amendments, and state land use
boundary amendments in public forums as needed.
In the years 1999-2000, after the rezonings and Development Agreement,Defendant-
Appellant Oceanside invested approximately forty-five million dollars ($45,000,000.00) in
construction. R, Test. Robert A. Stuit, Tr., July 23, 2003, a.m.,pp. 62, 64-65. This included the
golf course, and improvements for all Phase I lots, including over ten miles of road and utilities,
water wells and reservoirs, and the start of a wastewater treatment plant. Id., at 63.
31
Defendant-Appellant Oceanside has outstanding contracts for completion of the
improvements, dating back to 1999. The value of these outstanding contracts is 128 million
dollars. R, Test. Robert A. Stuit, Tr., July 23, 2003, a.m.,p. 69.
In the absence of timely legal challenge, in 1999, approximately 60 Hokuli'a lots were
sold. In 2000,40 to 60 lots were sold. Test. R. Stuit, July 23, 2003, a.m.,p. 77. Thus
approximately 100 lots were sold prior to the filing of Plaintiff-Appellants'HRS Chapter 205
claims. These third-party purchasers are also severely prejudiced by the cloud cast by Plaintiff-
Appellee's tardy HRS Chapter 205 claims. (Stuit Transcript See Appendix"G'.)
Defendant-Appellants can now look forward to these third-party purchasers seeking
relief,rightly or wrongly, from Defendant-Appellants should this matter not be speedily
resolved.
The Circuit Court ignored all of the foregoing. It concluded in COL No. 26 of the Count
IV Order:
26. The project is not yet substantially complete. Of the approximately
seven hundred houselots, only one house is in the process of being built. Given
these circumstances,Plaintiffs were diligent in advancing these claims, and any
delay that resulted in Plaintiffs' pursuing these claims is not unreasonable;
therefore, Oceanside has failed to meet its burden to prove its affirmative defenses
under the doctrine of laches.
R at 66:21413A256-57. The foregoing is plainly erroneous, an abuse of equitable
discretion and legally wrong in light of the substantial evidence in the record. Courts have
applied laches to bar zoning violation injunctions where complainants knew or should have
known of the claim but waited four months to sue,while the developer did$3,500 out of an
estimated total cost of$6,000 worth of work, and removal would have cost an additional$1,500.
Hill v. Board of Adjustment of the Borough of Eatontown, 122 N.J.Super. 156, 163, 299 A.2d
737, 741 (1972). See also Argument Section "D(3)"below. The Circuit Court's findings of no
unreasonable delay are grossly inequitable and unrealistic.
Without question, there has been severe prejudice to Defendant-Appellants due to
Plaintiff-Appellees' delay in bringing their claims. There will never be a clearer case in which
laches should bar claims. Plaintiff-Appellees' HRS Chapter 205 claims should be barred.
4. The Circuit Court Erred in Holding that As a Matter of Law,Laches Does Not Apply.
In Paragraph No. 2 of its Count IV Order,p. 30, the Circuit Court avoided laches by
concluding that"As a matter of law, Oceanside is barred from asserting an equitable estoppel or
32
laches defense to Count IV of the Fifth Amended Complaint because it cannot prove that it relied
in good faith on its county approvals for various land use permits and subdivisions for Hokuli'a."
R at 66: 21413A266.
a. Laches Does Not Require"Good Faith Reliance"On County Approvals.
The Count IV Order appears to confuse the elements of zoning estoppel or vested rights
with laches. Good faith reliance upon governmental approval or assurance is an element of
zoning estoppel or vested rights. County of Kauai v. Pacific Standard Life Insurance Company,
et.al., 65 Haw. 318, 327-330; 653 P.2d 766 (1982). However reliance on governmental
approvals is not an element of laches. As the Circuit Court itself correctly noted, all that is
required for laches is: (1) A delay by the plaintiff in bringing his claim, and that delay must have
been unreasonable under the circumstances; and(2) That delay must have resulted in prejudice
to defendant. Count IV Order, COL No. 12, citing Adair v. Hustace, 64 Haw. 314, 320; 640 P.2d
294, 300 (1982). R at 66:21413A253-254. As stated above, those elements are amply satisfied
here.
b. The County's Alleged Failure to Enforce HRS Chapter 205 Is Irrelevant to Laches.
The Circuit Court's Count IV Order does not clearly articulate any rationale for denying
laches except the alleged lack of good faith reliance on County approvals. However, Conclusion
of Law No. 25 seems to imply that the Plaintiffs' delay was reasonable because it was"caused by
the County of Hawai`i's failure to enforce HRS Chapter 205,which failure this Court concludes
is the result of the Development Agreement. Any financial prejudice to Defendant Oceanside
was caused by the County of Hawai`i's failure to enforce HRS Chapter 205, and Oceanside
continuously and consciously did not comply with the spirit and intent of Chap. 205." R at 66:
21413A256.
Such an analysis erroneously focuses on the defendants' allegedly wrong acts or
omissions,rather than on the plaintiffs' delay. The question in laches is not whether defendants
allegedly committed some wrongful act or omission. Laches is an affirmative defense,which
only arises assuming that there is an alleged wrongful act or omission by defendants. Thus,
laches can even apply in cases of alleged fraud or breach of trust relationship. See,Adair v.
Hustace, 64 Haw. 314, 640 P.2d 294(1982);Brown v. Bishop Trust Company,44 Haw. 385, 355
P.2d 179(1960). If the focus was on whether defendants had"caused" some prejudice to
33
themselves by allegedly wrongful acts or omissions,the answer would always be"yes,"and
laches would never apply.
Instead, the Circuit Court should have focused on whether Plaintiffs had slept on known
claims unreasonably, to the unfair prejudice of Defendants. Clearly Plaintiffs did sleep,
Defendants now suffer huge prejudice, and laches should apply.
Moreover,there is no general duty personally owed to developers or individuals for
county zoning interpretation or enforcement. Biser v. Deibel, 128 Md.App. 670, 739 A.2d 948
(1999) cert. Den. 357 Md. 482, 745 A.2d 436 (Md. 2000)(Planning Director and Zoning
Administrator had no negligent misrepresentation duty for construction of office buildings in
residential area);Konicki v. Village of Hinsdale, 100 Ill. App.3d 560,427 N.E.2d 325
(1981)(Village had no duty regarding negligent zoning advice to owner);Pigott v. City of
Wilmington, 50 N.C.App. 401, 273 S.E.2d 752 (1981)(Chief Building inspector had no
negligence duty regarding building code interpretation on permitted uses).
If the County has no negligence duty to persons regarding interpretation or enforcement
of zoning laws, it should certainly not be held to "cause"the damages resulting from Plaintiffs'
delay in bringing known HRS Chapter 205 claims. The Count IV order does not present any
laches authority which would excuse delay in seeking enforcement because of a lack of
enforcement. Laches should apply here.
c. The Development Agreement Poses No County Enforcement Conflict or
Collaboration With Developer Barring Equitable Laches Relief.
Plaintiff-Appellees may argue that the Court's excuse of delay here is based on the
"unclean hands"conclusion that the"County of Hawaii and Oceanside deliberately collaborated
to avoid LUC involvement in exchange for the conditions imposed in the Development
Agreement." R, Count IV Order, COL No. 24,R at 66: 21413A256.
This argument fails for several reasons. First,the Development Agreement does not
avoid HRS Chapter 205,but expressly requires compliance with it. The Circuit Court itself
correctly held: "Oceanside's April 20, 1998 Development Agreement with the County was
explicitly conditioned on compliance with HRS Chapter 205. . ." Count IV Order, COL No.
50,p. 25, R at 66:21413A261. (Bold Italics added). See, Appendix"C", Paragraphs 20, 23.
Strangely, the Circuit Court seemed to infer something nefarious from the very existence
of the Development Agreement, thinking that it"placed the County in a position of conflict
34
regarding the enforcement of Chapter 205,HRS." Count IV Order, COL No, 18,pp. 18-19, R at
66:21413A254-255.
The legislature must be assumed to have known that counties would be both parties to
Development Agreements under HRS §46-123 and enforcers of HRS Chapter 205 under § 205-
12. The legislature expressly authorized that public benefits"may be negotiated for in return for
the vesting of development rights for a specific period." HRS § 46-121. The plain intent of the
statute is to ensure development securi ty; developer reliance upon an unchallenged Development
Agreement is the epitome of good faith,by statute. Unaccountably,the Circuit Court inferred
the opposite, inferring bad faith and invalidating development rights. By express statutory
policy, there is no conflict generated by such Development Agreements, and the Circuit Court
was in error to so conclude. The Circuit Court abused its equitable discretion and was legally
erroneous in denying laches.
d. The Circuit Court Erred to the Extent That It Denied Laches Due to Defendant-
Appellants' Differences With the Court's Ultimate Chapter 205 Analysis.
The Circuit Court may have imputed some unclean hands or bad faith to Defendant-
Appellant Oceanside based on its failure to seek Land Use Commission approvals,based upon
the Court's faulty conclusions about HRS Chapter 205 requirements. (Argument Section"C')
To the extent that the Circuit Court may have done so, it based its laches analysis on legally
faulty grounds.
Moreover, the Circuit Court should not have focused on the alleged faultiness of the
developer's Chapter 205 legal analysis, for this is irrelevant to the equitable laches analysis.
And even if developer's legal position on Chapter 205 were somehow relevant to laches, it is
clear that this was a matter of first impression. Even Plaintiffs-Appellees PKO, in their request
for attorneys fees, stated that there was no precedent for their claims:
"The lawyers literally had no precedent upon which to base their claim
with only uncertain prospects of succeeding. Id. The work involved in this case
was procedurally complex,with novel issues relating to the merits of the case
requiring substantial lawyer time and a thorough knowledge of Native Hawaiian
legal issues,real property law, legal history,HRS Chapters 6E and 205 and state
court proceedings."
Memorandum in Support of Protect Keopuka Ohana's Motion for Order Setting Rates and
Enhancement for Attorneys' Fees and Costs, filed November 2, 2003, R at 67: 21676(Bold
Italics added). The Circuit Court should not have drawn any inferences of bad faith or unclean
35
hands from Defendant-Appellee Oceanside's legal position on novel issues. As explained in the
Estoppel and Vested Rights section of this Brief, Section"D",the strong trend is toward
allowing equitable relief in cases where permits have been wrongfully granted,but on reasonable
grounds. And as explained in Argument Section"C(2)", the Planning Director,LUC and
developer's Chapter 205 reading was reasonable.
The Circuit Courts' bases of avoiding laches are in legal error, and an abuse of equitable
discretion, and laches should apply. The Circuit Court's Count IV decisions should be reversed.
C. The Circuit Court Created New,Unconstitutional and Erroneously Restrictive HRS Chapter
205 Farm Dwelling Requirements, Discarding Administrative Interpretation.
1. Summary: HRS Chapter 205 on Permissible Uses in the Agricultural District.
"Farm dwellings" are permissible when agricultural activity provides"income"to the
occupants. HRS § 205-4.5(a)(4), 205-2(d). "Income"is not defined.
Nor is there any requirement of a pre-subdivision kroof of economically viable
agricultural use, for any class of soil. Nothing in Chapter 205 mandates any particular type or
intensity of agricultural use, on any class soil. The intent of Chapter 205 is not to mandate
intensive agricultural uses,but to prevent land from being disabled from agricultural uses. For
instance,the"farm dwelling"requirement embodies this; as long as a residential use still allows
for income producing agriculture, it is permissible even on AM soils. What is impermissible is
the disabling paving over of agricultural lands. See, e.g.,Maha'ulepu v. Land Use Commission,
71 Haw. 332, 790 P.2d 906 (1990)(103- acre theme park required boundary amendment to
Urban,not special permit).
On A and B Class agricultural land, the legislature required that there be no subdivision
" . . . unless the said A and B lands within the subdivision shall be made subject to the restriction
on uses as prescribed in this section and to the condition that the uses shall be primarily in
pursuit of an agricultural activity(emphasis added)." H.R.S. § 205-4.5(b).
No such strictly limiting language is present in relation to lands in class C.D. E.or U.
Under HRS §205-4.5(c)the legislature merely stated that the use of such lands is restricted to the
much broader reach of H.R.S. § 205-5(b),which permits the Land Use Commission(LUC)to
determine the uses in C, D, E,or U lands as long as such uses are"compatible to the activities
described in section 205-2." H.R.S. § 205-5(b). (Bold italics added). Neither does the statute
require residences on these soil classes to be"farm dwellings"as defined in HRS § 205-4.5.
36
Pursuant to its authority under HRS §205-5(b), the LUC by rule has tracked the statute
and defined the uses permitted on C, D, E, and U lands to be the uses permitted by the legislature
in § 205-4.5 for A and B lands and those in 205-2(d). Haw. Admin. Rules § 15-15-25(b). Thus,
"farm dwellings"are permitted on all classes of soils. HAR§ 15-15-25 (b) (Permissible uses on
class C, D, E, and U soils"shall be those permitted in A and B lands as set forth in section 205-
4.5,HRS, and also those uses set forth in section 205-2(d).") Like the statute,the Rules do not
provide any guidance for definition of"farm"or agricultural "income"for a"farm dwelling."
Nor do the rules provide any guidance for determining what uses are"compatible to"HRS §
205-2(d) activities.
Regarding subdivision lot size, the statute expressly authorizes 1-acre subdivisions,in all
classes of land. The Counties have substantial discretionary authority to allow smaller lots. The
Counties retain general zoning powers, and may even further define accessory agricultural uses
by ordinance. HRS § 205-5.
2. Administrative Interpretation of HRS Chapter 205 Agricultural or Farm Dwelling_
Requirements Considered Hokuli'a In Compliance.
"It is a well established rule of statutory construction that,where an administrative
agency is charged with the responsibility of carrying out the mandate of a statute which contains
words of broad and indefinite meaning, courts afford persuasive weight to administrative
construction and follow the same,unless the construction is palpably erroneous. . . .
Administrative practice, consistent and generally unchallenged,will not be overturned except for
very cogent reasons if the scope of the command is indefinite and doubtful. . . Waikiki Resort
Hotel v. City and County of Honolulu, 63 Haw. 222, 242-243, 624 p.2d 1353, 1368 (1981).
This Court has said: "Because our sole duty is to give effect to a statute's plain and
obvious meaning, . . . we are not at liberty to circumvent HRS chapter 205's express mandate."
Citizens for the Protection of the North Kohala Coastline v. County of Hawai i, et.al., 91 Hawaii
94, 107, 979 P.2d 1120, 1133 (1999)(upholding County jurisdiction over state land use boundary
amendment of 15 acres or less). With the foregoing principles in mind, we turn to the
administrative interpretation of the statute.
The enforcement of HRS Chapter 205 is delegated to the"officer or agency charged with
the administration of co=zoning laws.' HRS §205-12. In Hawaii County,the Planning
Director is responsible for administration of county zoning laws. Hawaii County Charter
37
Section 6-4.2(e). (The Planning Director shall, inter alia: "Administer the subdivision and
zoning ordinances and regulations adopted thereunder."). The State Land Use Commission also
has authority to render declaratory rulings regarding matters under its jurisdiction. HRS § 91-8;
HAR § 15-15-98.
Here,the record reflects that the State Land Use Commission and the Hawaii County
Planning.Director both considered the Hokuli'a project in compliance with HRS Chapter 205.
As summarized in the Statement of the case,this was because the proposed subdivision
was in compliance with the 1-acre minimum lot size, and agricultural use would be enabled by
covenants, easements, and infrastructure,with income to the benefit of the owners. The project
plainly enabled more intensive agriculture than the previous seasonal grazing. This was also
consistent with the County's prior allowance of four(4) similar agricultural subdivisions
associated with a golf course and lodge.
This straightforward view comports with the plain, literal meaning of the"farm dwelling"
definition of HRS § 205-4.5(a)(4): A single-family dwelling is either(1) "located on or used in
connection with a farm"; or(2)"where agricultural activity provides income to the family
occupying the dwelling."
Neither"farm"nor"income" are further defined by the statute. "Zoning laws and
ordinances are strictly construed, as they are in derogation of the common law, and their
provisions may not be extended by implication. . . . Ambiguities in a zoning regulation should
not be resolved in further derogation of common-law rights." Foster Village Community
Association v. Hess, 4 Haw.App. 463,469-470, 667 P.2d 850, 854 (1983).
"Farm"broadly means: "1. A tract of land, usually with a house,barn, etc., on which
crops and often livestock are raised for livelihood. 2. Land or water devoted to the raising of
animals, fish, etc. . . ." Random House Dictionary of the English Language. The Unabridged
Edition(1966).
Mr. Richard Frye, Vice President of Red Hill 1250, a general partner of the Lyle
Anderson Company, (R. Transcript,July 9,2003,p.m.,p.22) explained that the agricultural
easements are a 150 to 200-acre farm,with water and other infrastructure subsidized by the
development. R., Transcript,July 10, 2003,p.m.,p. 47. Given the level of agricultural planning,
infrastructure and easements reserved,this is a reasonable characterization,making the
residential uses"farm dwellings"within the plain statutory meaning.
38
Moreover, the Association will be conducting agricultural activity and selling its yield for
profit, to be applied for the benefit of the owners. Owners also are free to conduct their own
independent agricultural activity for profit. Hence,the residential uses will be"farm dwellings"
where"agricultural activity provides income to the family occupying the dwelling."
Actually,the system of easements,water system and association initiation of planned
agricultural activities goes far beyond what is simply required by the statute in terms of ensuring
some agricultural income. It is hard to imagine a greater effort to ensure compliance with the
literal requirements of HRS Chapter 205.
From the LUC's view, Executive Director Esther Ueda agreed with Ms. Goldstein that
the development concept did not require LUC redistricting to Urban, once the denser sub-l-acre
component had been eliminated and the project was all 1-acre and larger agricultural subdivision.
Such a position is consistent with the LUC's prior holding in Waikapu Mauka Partners,LUC
Docket No,DR89-13 (June 28, 1989),which recognized residential uses as permissibly
"accessory"where associated with a common farm and agricultural easements. (For purposes of
determining the constitutionality or proper interpretation of the statute, or extension of common
law rules, upon grounds of policy, the holdings of the LUC may be considered as "legislative
facts"which This Court may take judicial notice of. The Hawaii Rules of Evidence"do not
attempt to deal with judicial notice of legislative facts." Hawaii Rules of Evidence,Rule 201,
commentary to section(a). LUC rulings may also be noticed if"mentioned in the record and
readily available . . . as being a matter of verifiable certainty." Life of the Land, Inc. v. City
Council of the City and County of Honolulu, 61 Haw. 390,457, 606 P.2d 866, 904(1980)).
In Waikapu Mauka, the LUC was asked to declare whether dwellings on a proposed
subdivision of 623 acres of"E"class soil into two golf course lots, a 10 acre community farm,
and 100 two-acre farm lots was a permissible"accessory use"in the agricultural district. The
Community farm was to be owned prorata by the lot owners and run by a nonprofit organization.
There would also be a minimum of 2,000 square feet of agricultural easement or license on each
lot for the nonprofit to also farm. Plants would be grown for sale to the golf courses and the
public. The LUC held the homes "permissible as accessory uses."
Hokuli'a compares favorably with Waikapu Mauka, since Hokuli'a involves agricultural
easements of at least 20%of minimum 1 acre lots, or 8,712 square feet.
39
Thus,the Planning Director and LUC applied HRS Chapter 205 to the Hokuli'a project in
a manner consistent with its plain, unembellished words. This was consistent with past historical
practice, and was reasonable,practical and predictable. The Circuit Court erred in disregarding
the administrative interpretation of the agencies authorized to administer the statute.
3. The Circuit Court Erroneously Added Rigorous"Economic Viability" Substantive and
Procedural Requirements to Subdivision Approvals in the State Land Use Agricultural
District.
Since zoning laws should not be extended by implication, and any ambiguities not
construed to further diminish common-law rights,the courts should not embellish the plain
language of the"farm dwelling"definition by appending new and restrictive use qualification
requirements. Foster Village Community Association v. Hess,4 Haw.App. 463, 469-470, 667
P.2d 850, 854 (1983). The Circuit Court should not amend the"farm dwelling"requirement so.
"Our sole duty is to give effect to a statute's plain and obvious meaning. . ." Citizens for the
Protection of the North Kohala Coastline v. County of Hawai i, 91 Hawaii 94, 107, 979 P.2d
1120, 1133 (1999).
Unfortunately,the Circuit Court added very substantial and restrictive new
requirements to the statutory `farm dwelling"definition. It did so in the following ways:
1. While acknowledging that"the statute does not require profitability"(correct)(Count
IV Order, COL No. 4,R at 66:21413A252) the Court added the requirement that the County
must conduct a"thorough `before approved' investigation"when"large areas of agricultural
lands are to be subdivided into lots that appear too small for economically feasible agricultural
activity."(Count IV Order, COL No. 22-23,R at 66:21413A256). Said"thorough investigation"
must consider"feasibility or viability of agriculture"as a relevant consideration. The analysis
"must include the costs of operations, including land and infrastructure costs."(Count IV Order,
COL No. 4,R at 66:21413A252).
Not only does the statute not require profitability,but it expressly allows homes not only
on formal "farms"but also where the occupants simply derive"income"from agricultural
activity. It does not mandate intensive cultivation,just protection from agricultural disability.
Further, the Court's economic viability requirement would, in legislating new
requirements and forcing the County to embark on new ventures of economic regulation, "be
40
impermissibly reallocating the County's resources,reordering its priorities, and setting policies
that more rightly belong to the legislative body of the County." Cootey v. Sun Investment, Inc.,
et.al., 68 Hawai 480, 486, 718 P.2d 1086, 1091 (1986) (declining to find County duty to ensure
that subdivision would not create flood risks).
Current Planning Director Christopher J. Yuen testified that County HRS Chapter 205
compliance is reviewed and conditioned at the zoning level,not at subdivision level. Transcript,
July 8, 2003,p.m.,pp. 60-61, 68-69. It is at the legislative zoning level that appropriate
conditions requiring agriculture use can be applied, as they were here in Ordinances 94-73 and
96-7. R.,Exhibits PKO-501, Conditions"R" and"S." DO-1234,Condition`B." To the extent
that the County already addresses agricultural use compliance at the zoning level, the County
Council already actively addresses the issue. It was not for the Circuit Court to amend such
policies.
As authority for its new rules, the Circuit Court relied heavily upon Attorney General
Opinion 75-18. Such an opinion is of no authoritative or precedential value. Also, it was
superceded by the 1976 HRS § 205-4.5 codification of the"farm dwelling"requirements.
2. Despite requiring a"thorough `before approved' investigation"for Chapter 205
compliance, the Court severely limited the scope of evidence relevant to support agricultural use
to"the information and proposals available at the time of subdivision approval are the only
relevant evidence of the legality of what uses are going to be made of the land. Any subsequent
attempts to comply with HRS Chapter 205 after court intervention are immaterial to this
determination." (Count IV Order, COL No. 6,R at 66:21413A252.)
3. The Court assumed that 1-acre lots were"too small for economically feasible
agricultural activity, and thus required a"thorough before the fact investigation"of the economic
viability of the proposed uses. Count IV Order, COLS 22-23,R, 66:21413A256. This is
contrary to HRS § 205-5(b),which establishes 1-acre as the lawful minimum lot size for
agricultural use.
4. The Court added a ban on"luxury residential living within the setting of a golf course,
club house,private lodge, and other amenities unrelated to agricultural activities." (Count IV
Order, COL No. 7, 8,R. 66:21413A252-3). There is absolutely nothing in HRS Chapter 205 that
bans any particular level of investment in a dwelling,or proximity to a golf course.
41
5. The Court added a requirement that the County"must take affirmative preventative
action to protect agricultural land and `cannot rely only on after-the- fact measures when a large
area of agricultural land is involved."'It also added a presumption against common-law property
rights,holding that"Any doubt as to whether a proposed subdivision will result in a significant
change of land use should be resolved in favor of a disapproval." (Count IV Order, COL No. 21,
R. 66: 21413A255).
The Circuit Court's new presumption is particularly noxious as it requires rejection of a
subdivision if there is "any doubt"as to whether there will be a vague"significant change in land
use." Strictly followed,this presumption would disqualify most, if not all proposed subdivisions.
A presumption more contrary to the proper one(in favor of common-law rights)would be hard
to create. Foster Village Community Association v. Hess, 4 Haw.App. 463, 469-470, 667 P.2d
850, 854 (1983).
6. The Court added a requirement that farm dwelling uses on class C,D, E and U soils be
"consistent with an agriculture classification"and that"the primary use and activities within the
agricultural lots"must be agriculture or"principally agriculture."(Count IV Order, COL Nos. 1,
3, 7, R, 66:21413A251-2)
The Circuit Court disregarded the clear use distinctions made between Class A and B
soils and the other classes. There is nothing in the statute about uses being"consistent with an
agriculture classification." It is only with respect to A and B class soils that subdivisions must be
subject to agricultural use restrictions of HRS §205-4.5(b), "and to the condition that the uses
shall be primarily in pursuit of an agricultural activity." (Emphasis added).
HRS § 205-2(b) only requires uses on Class C,D, E. and U soils to be"compatible to"
agricultural and other permitted uses.
"Primarily"means: "1. Essentially; mostly; chiefly;principally: They live primarily
from farming." The Random House Dictionary of the English Language, The Unabridged
Edition(1966). (Italics in original)
"Compatible"is much broader and looser, denoting mere coexistence: "1. capable of
existing together in harmony; the most compatible married couple I know. 2. Able to exist
together with something else:Prejudice is not compatible with true religion; . . . ." The Random
House Dictionary of the English Language, The Unabridged Edition(1966)
42
The legislature used the term"compatible"in one other part of HRS Chapter 205. In
HRS § 205-4.5(a)(12), the legislature permitted in Class A and B soils:
Wind energy facilities, including the appurtenances associated with the
production and transmission of wind generated energy; provided that such
facilities and appurtenances are compatible with agriculture uses and cause
minimal adverse impact on agricultural land.
(Bold italics added). Wind energy facilities are obviously not agricultural in any sense, certainly
not"primarily"so. However, they are A/B class permitted uses if they are"compatible with,"
can coexist with, do not substantially adversely impact agricultural uses. "Compatible"is
obviously different from"primarily." The Circuit Court erred in obliterating this distinction.
7. The Court added a requirement that farm dwelling uses allow a farmer"complete
control over his farming activities"to "be able to adapt and diversify with changing market
conditions."(Count IV Order,FOF No. 23, R at 21413A242).
8. The Court added a requirement that farm dwelling uses allow for"maximum use of
agricultural lands" for active agriculture. (Count IV Order, FOF No. 29, R, 21413243). Such a
requirement is contrary to the clear legislative scheme to differentiate between different levels of
protection for different classes and qualities of land within the district, and is legally wrong.
9. The Court added a requirement that"in order to run a viable farm on a one-acre lot,
one would need to grow high-intensity crops like hot-house tomatoes, orchids, and anthuriums."
(Count IV Order,FOF No. 30). R, 66:21413A293.
10. The Court's creation of new rules was in violation of HRS Chapter 91 rulemaking
procedures. Here, the Circuit Courts' imposition of very demanding and vague new procedures
prescribing law and policy,was at the very least rulemaking, if not legislation. This was
obviously not done in compliance with any of the procedures of HRS §91-3 for public notice,
public hearing,public filing, etc.
Even if these were properly adopted rules, they would have been invalid since rules may
not"enlarge, alter, or restrict the provisions of the act being administered." Coon v. City and
County of Honolulu, 98 Hawaii 233, 252, 47 P.3d 348, 367 (2002)(citations omitted).
11. The Court ordered that for houses to be built, the project must get state land use
boundary amendment to Urban, when Rural would suffice. Count IV Order, COL No. 10,R,
66:21413A253. "Low density residential uses"are permitted in the Rural district. The minimum
lot size is one-half acre. HRS §205-5(c).
43
In summary, the court wrongfully added to statutory requirements, ignored statutory
distinctions, and these requirements should be reversed. They cannot be the basis for the Court's
rejection of equitable defenses.
4. The Circuit Court Erroneously Refused to Consider The Project As an Accessory!Use.
The developer was making concrete plans to ensure agriculture would take place as part
of the subdivision, including legally enforceable agricultural easements and sale of product.
Agricultural water system was being installed to enable this. And the ultimate plan allows
owners to do whatever agricultural work for profit they please. Not only does this subdivision
allow for agriculture, it enables it year-round and far more intensively than any previous use.
Moreover, the proposed dwellings would be no more intrusive than any other"farm
dwellings"or other allowed uses of similar size(compare wind energy facilities, 205-4.5(a)(12)
allowed even on A or B soils if"compatible with"agriculture uses). Thus could the LUC in the
Waikapu Mauka case hold the residential uses"compatible with" and accessory to the
agricultural uses. Waikapu Mauka, p. 17.
Without question this development is"compatible to"the listed agricultural and
accessory uses. In fact, the legal and physical infrastructure of the development is directly
accessory to enabling year-round diversified agriculture on the property for any owner.
The Circuit Court was clearly erroneous,ignored the bulk and overall import of the
substantial evidence and was legally wrong in finding that the proposed subdivision was in
violation of HRS Chapter 205.
5. As Applied By the Circuit Court. HRS Chapter 205's Farm Dwelling and Agricultural
Use Restrictions Are Unconstitutional Violations of Due Process and Separation of Powers.
The Count IV Order creates many new substantive and procedural requirements for
subdivision and residential uses in the State Agricultural district. These new requirements do not
appear in Chapter 205 or its rules. And yet more hearings before the LUC would be required to
validate the use. If the proposed decision correctly states the intent and application of HRS
Chapter 205, there is another problem. Then Chapter 205 would be void for vagueness as
applied, and in violation of due process. The United States Supreme Court has explained the
problem with vagueness:
It is a basic principle of due process that an enactment is void for vagueness if its
prohibitions are not clearly defined. Vague laws offend several important values.
First,because we assume that man is free to steer between lawful and unlawful
44
conduct, we insist that laws give the person of ordinary intelligence a reasonable
opportunity to know what is prohibited, so that he may act accordingly. Vague
laws may trap the innocent by not providing fair warning. Second, if arbitrary and
discriminatory enforcement is to be prevented, laws must provide explicit
standards for those who apply them. A vague law impermissibly delegates basic
policy matters to policemen,judges, and juries for resolution on an ad hoc and
subjective basis,with the attendant dangers of arbitrary and discriminatory
application.
Grayned v. City of Rockford, 408 U.S. 104, 108-109, 92 S.Ct. 2294, 2298-2299; 33 L.Ed.2d 222
(1972). See, 1 Rathkopf, The Law of Zoning and Planning, § 5:22,p. 5-53 (2001 Rev.). See
also, 6 Rohan, Zoning and Land Use Controls, § 36.03[8],p. 36-81.
When necessary, courts have invalidated zoning laws as unconstitutionally vague.
Kosalka v. Town of Georgetown, 752 A.2d 183, 186 (Me 2000)("the public should not have to
guess at the meaning of a statute `leaving them without assurance that their behavior complies
with legal requirements. . . ."');Burien Bark Supply v. King County, 106 Wash.2d 868, 871, 725
P.2d 994, 996 (1986) ("An ordinance is unconstitutional when it forbids conduct in terms so
vague that persons of common intelligence must guess at its meaning and differ as to its
application. . . . Such an ordinance violates the essential element of due process of law—fair
warning."); Grant County v. Bohne, 89 Wash.2d 953, 956, 577 P.2d 138, 139-140(1978)
(Prohibition on"buildings to be moved in"unconstitutional as applied to mobile homes")
In applying these vagueness principles to the instant case, it is essential to start with the
fact that the Hawaii County Council and County Planning Director, Virginia Goldstein,
interpreted and applied the Chapter 205 agricultural use requirements in the most literal,
straightforward, understandable way. Indeed, all the advice of attorneys and consultants from
1994 to 1998 referenced in PKO-195 basically says the same thing as Director Goldstein and
Waikapu Mauka: If you have a farm dwelling or your home is"compatible with"agricultural
use, dwellings are permissible in the agricultural district.
The Circuit Court herein cast aside this plain reading. Instead, the Circuit Court added
many technical procedural and substantive requirements to HRS Chapter 205 for permissible
agricultural subdivisions with dwellings. These had never before been announced or articulated
by any rule, statute or authorized agency. Such an application is void for vagueness.
First, "we insist that laws give the person of ordinary intelligence a reasonable
opportunity to know what is prohibited, so that he may act accordingly. Vague laws may trap the
45
innocent by not providing fair warning." Grayned v. City of Rockford, 409 U.S.104, 108, 92
S.Ct. 2294, 2298-2299 (1972).
The root problem here is that no one has had fair warning of the new procedural and
substantive requirements that the Circuit Court has now articulated. HRS Chapter 205, as
applied by the Circuit Court, fails to give fair warning of where the lines between legal and
illegal conduct are. HRS Chapter 205, as applied by the Circuit Court, would be clearly void for
vagueness.
The second evil is that"if arbitrary and discriminatory enforcement is to be prevented,
laws must provide explicit standards for those who apply them. A vague law impermissibly
delegates basic policy matters to policemen,judges and juries for resolution on an ad hoc and
subjective basis with the attendant dangers of arbitrary and discriminatory application." Grayned
v. City of Rockford,409 U.S.104, 108-109, 92 S.Ct. 2294, 2299 (1972).
Again,the Circuit Court's new standards and procedures are not found in HRS Chapter
205. The Circuit Court created these new procedures and standards ex nihilo, arbitrarily
expressing basic policy matters,without explicit standards to base them on. Indeed, as pointed
out above, many of the Circuit Court's requirements are worse than arbitrary,being contrary to
the operative statute.
Moreover, even the Circuit Court's new requirements lack clear, explicit standards.
What is a"large area of agricultural land?" What is a"small lot?" What is an adequate state of
"economic feasibility?" What is an adequate level of"thorough investigation" for the
subdivision process? At what value level is a house"too luxurious?" What amenities will
disqualify a subdivision? If"any doubt" as to whether a proposal will"result in a significant
change of land use"disqualifies a proposed subdivision, can any subdivision ever qualify? What
level of"primarily"or"principally"agricultural use will suffice? What is"complete control"of
farming activities? What is"maximum use"of agricultural lands? What"high-intensity crops"
will suffice for 1-acre lots? And so on.
The Circuit Court's remedy requiring the developer to seek LUC boundary amendment to
Urban, or to seek an approving declaratory ruling also embodies the dangers of vagueness. This
remedy admits that HRS Chapter 205, as applied, does not tell the(presumably ordinarily
intelligent)parties, agencies and the court where the line is between permissible and
impermissible use. It admits that the law, as applied, does not give developers "reasonable
46
opportunity to know what is prohibited, so that he may act accordingly." Grayned v. City of
Rockford, 409 U.S.104, 108, 92 S.Ct. 2294, 2298-2299 (1972).
Worse,this remedy requires the developer(and any owner in the agricultural district)to
go through a contested case or contestable declaratory procedure simply to tell if a proposed
use, which includes very substantial agricultural elements, is permissible. This is not a
practical burden to lay upon all owners in the agricultural district. It will severely burden the
LUC. Worst of all, it embodies the second evil of Grayned: It puts the ultimate decision as to
where the line is drawn, in the unguided discretion of judges, lay commissioners, and litigants,to
make on an ad hoc basis.
The problem is exacerbated by the unsuitability of the declaratory ruling process to
handle the contested issues which these agricultural use questions are likely to generate. The
LUC may refuse to rule, or rule without a hearing. HAR§§ 15-15-98(b), 103.
"According to HRS § 91-1(5), a discretionary hearing cannot be a `contested case'
because it fails to meet the `required by law' test." Pele Defense Fund v. Puna Geothermal
Venture, 77 Hawaii 64, 68, 881 P.2d 1210, 11214 (1994). Thus, although property rights may
be profoundly affected by the Circuit Court's suggested declaratory ruling remedy, that remedy
may not even be judicially reviewable under HRS Chapter 91. The Courts' remedy of seeking
LUC contested case boundary amendment or declaratory rulings only takes an unconstitutional
interpretation and adds an unconstitutional remedy. This is not a reasonable view of HRS
Chapter 205,nor one that is faithful to its plain language.
From its conception in unauthorized assumption of legislative power, to its remedy
demonstrating the evils of vagueness, the Circuit Court's interpretation of the farm dwelling
requirements of HRS Chapter 205 is unconstitutional as applied. It should be reversed.
D. The Circuit Court Erred in Rejecting Defendant-Appellant Oceansides' Zoning Estoppel or
Vested Rights Defense.
This Court has recognized the defense of Equitable Zoning Estoppel against attempts to
force a County to enforce changed zoning laws to stop a development. Life of the Land, Inc. v.
City Council of the City and County of Honolulu, 61 Haw. 390, 606 P.2d 866 (1980);Life of the
Land, Inc. v. City and County of Honolulu, 60 Haw. 446, 592 P.2d 26 (1979) as amended March
21, 1979,Recon. den. April 3, 1979) (Preliminary injunction denied). This Court has further
recognized that the defense of vested rights may accompany zoning estoppel,but from a
47
constitutional real property rights perspective. County of Kauai v. Pacific Standard Life
Insurance Co and Committee to Save Nukolii, 65 Hawaii 318, 653 P.2d 766 (the"Nukolii case").
This Court further explained the general rule of zoning estoppel:
The doctrine of equitable estoppel is based on a change of position on the
part of a land developer by substantial expenditure of money in connection with
his project in reliance,not solely on existing zoning laws or on good faith
expectancy that his development will be permitted,but on official assurance on
which he has a right to rely that his project has met zoning requirements, that
necessary approvals will be forthcoming in due course, and he may safely proceed
with the project.
Nukolii, 65 Hawaii at 327; 653 P.2d at 774. This Court further refined the rule by stating
that"final discretionary action constitutes official assurance for zoning estoppel purposes." The
hoped for result would be predictability. Nukolii, 65 Hawaii at 328-329, 653 P.2d at 774-775.
"In each case, the central focus must be on the existing legal process. Identification of the
operative mechanisms also will determine whether analogous governmental actions give rise to a
similar right to rely." 65 Hawaii at 329, 653 P.2d at 774-775.
This Court noted two additional elements: Good faith and legality of permits. In
considering whether a developer's expenditures were made in good faith,we employ an
objective standard that reflects `reasonableness according to the practices of the development
industry."'65 Hawaii at 332, 653 P.2d at 776-777. "Finally,we note that even good-faith
expenditures will be disregarded if made in reliance on an invalid building permit." 65 Hawaii
at 335, 653 P.2d at 778.
When a property owner has actually proceeded toward development pursuant to then
existing zoning, "the initial inquiry is whether a developer's actions constituting irrevocable
commitments were reasonably made or were speculative business risks not rising to the level of a
vested property right. . . . The particular circumstances of each case will determine whether
`regulation has interfered with distinct investment-backed expectations' sufficient to require
compensation therefor." Nukolii, 65 Hawaii at 338, 653 P.2d at 780. This Court noted that its
estoppel analysis "comports with the flexible formula`for determining when `justice and
fairness' require that economic injuries caused by public action be compensated by the
government' under the fifth and fourteenth amendments." Nukolii, 65 Hawaii at 339, 653 P.2d
at 780-781.
48
Here, the Circuit Court rejected application of the zoning estoppel and vested rights
defenses. The Circuit Court was in error for the following reasons:
1. Defendant Oceanside Acted in Good Faith Reliance On the State of the Law And Its
Existing Permits.
The Circuit Court first held that Defendant-Appellant Oceanside did not act in good faith.
Count IV Order, COLs Nos. 43 through 48,R at 66: 21413A260-21413A261.
Essentially,the Circuit Court reasoned that:
1. There has been no change in the law;
2. Oceanside disregarded its counsel's cautions about complying with Chapter 205;
3. Oceanside disregarded agencies' cautions about complying with Chapter 205; and
4. Oceanside acted in bad faith by not going to the LUC for approval or boundary
amendment for what was an urban, not an agricultural project.
The Circuit Court reasoning is erroneous, as follows:
a. Only the Circuit Court Has Changed the Law, and The Agricultural Lots Were Permitted
as Farm Dwellings, Accessory To or Compatible To Agricultural Uses.
The Circuit Court was convect in stating that there was no change in HRS Chapter 205,
except for the changes that the Circuit Court itself declared in its Count IV Order. As explained
in Argument Section C(3) above, the Circuit Court undertook to add very substantial and
restrictive procedural and substantive requirements to qualify as a"farm dwelling." The Circuit
Court also undertook to amend Chapter 205 by obliterating express distinctions between
categories of uses permissible on different soil classes of lands.
Moreover, the County,responsible for Chapter 205 enforcement(§205-12), specifically
approved the Hokuli'a agricultural subdivision concept. The Concept was reviewed with the
Planning Director, and endorsed through years of approval by County SMA and use permits,
rezonings, a Development Agreement and subdivision approvals. What more governmental
assurance could be expected or required? This is a textbook zoning estoppel/vested rights
scenario.
The Circuit Court changed the law. Oceanside acted in good faith, the Circuit Court was
legally wrong and its findings of bad faith should be reversed.
b. Oceanside Complied With Advice of Counsel to Comply With HRS Chapter 205.
The Circuit Court based its finding of bad faith by Oceanside on several letters from legal
49
counsel retained by Oceanside from 1989 through 1998. However, the Circuit Court took
isolated quotations completely out of context. In doing so,the Circuit Court ignored the express
purpose of these letters: To get as much professional advice as possible to ensure compliance
with HRS Chapter 205.
The Circuit Court referenced some letters included in Exhibit PKO-195 (Appendix"H"
attached). That exhibit is an"Agricultural Plan"memo dated January 21, 1999,which appends
the letters. The number one objective of the Agricultural Plan is to: "provide uses and
procedures that we believe will meet the requirements of the State's land use laws relative to
agriculturally classified lands based upon the advice of our consultants."R, Exhibit PKO-195,
p.1. This is quite the opposite of a bad faith attempt to avoid the law.
Finding of Fact No. 52 addresses the first letter in Exhibit PKO-195, the December 20,
1994 letter from Christine Low, Esq. to Oceanside's Richard T. Frye("Christine Low letter").
Ms. Low advised that: "The `farm dwelling' requirement could potentially be satisfied by setting
aside a common area for agricultural activity tied to each and every residential unit." Oceanside
did this, as part of its extensive agricultural use program.
The other letters attached to Exhibit PKO-195 also evidence Oceanside's intent to
comply. The April 29, 1996 memo from R. Ben Tsukazaki,Esq. also notes the"farm dwelling"
requirements, and states, "It appears that your agricultural concept would fall within this
criterion."
The letter dated December 14, 1998 from David K. Wong and Tim Lui-Kwan notes, "the
purpose of this memo is to outline possible strategies for managing agricultural use requirements
within the residential-agricultural subdivisions . . ." Again,the entire point is to ensure
compliance, not avoid it. Messrs Wong and Lui-Kwan proceeded to provide the framework for
the agricultural plan, including the use of agricultural easements on at least 20%of the lots.
Wong/Lui Kwan letter, pp.3-4.
The final letter in Exhibit PKO-195 is a letter from Mr. Frye to Mr. Lui-Kwan, asking
him to prepare sufficient additional information to allow Oceanside's Georgia attorneys to go
ahead and prepare CC&Rs for the agricultural compliance plan.
Thus, the inescapable overall meaning of Exhibit PKO-195 is that Defendant-Appellant
Oceanside was carefully and intently seeking eeking legal counsel to design an agricultural plan that
would ensure project compliance with HRS Chapter 205. What more good faith can one ask of a
50
developer than to seek multiple legal counselors and follow their advice, to the tune of millions
of dollars?
The other letters referenced in the Circuit Court Count IV Decision only reinforce the
foregoing. (See Appendix"H") The September 2, 1994 letter to Mr. Dick Frye from Benjamin
A. Kudo, Esq. (Exhibit PKO-709)is a very short,two paragraph missive which only anticipates
from hearsay that the LUC "may be ready to render a decision"on the"Crazy Horse"declaratory
petition by John Godfrey, Docket No. DR94-17 (Exhibit PKO-681). Mr. Kudo speculated that
"developers will be forced to urbanize their lands in order to put them to residential uses in the
future." Count IV Order,FOF No. 56, R at 21413A248. But Mr. Kudo had not even seen the
decision at that point!
As it turned out, Mr. Kudo's dire speculation was unfounded. The Crazy Horse ruling
did no more than reiterate that dwellings in the agricultural district should meet the"farm
dwelling"requirements,nothing new or beyond that. Exhibit PKO-681, COL No. 8.
Despite the foregoing, the Circuit Court plucked Mr. Kudo's warning that"developers will be
forced to urbanize"for residences out of context, and inferred bad faith. Clearly, in context of
the entire letter, the Crazy Horse decision as it ultimately emerged, the other advice of counsel,
the position of the Planning Director, and the longstanding industry practice, this letter is really
just one more example of how Oceanside kept in contact with multiple counsel in attempts to
achieve compliance.
Other correspondence referenced by the Circuit Court is to the same effect. In Count IV
Order FOF No. 42 (R, 66: 21413A245),the June 30, 1989 letter from Sandra Schutte, Esq. is
mentioned, as recommending that the proposal be further reevaluated when a more concrete
proposal is established, and"also reviewed by the appropriate state and county agencies involved
in the land use permitting process." Exhibit DO-1354.
Actually, even the sentence quoted in FOF No. 42 does not specifically say that an LUC
boundary amendment or declaratory ruling would be required. And in fact, the development was
reviewed by County and state agencies at many points. There is nothing in the Count IV Order
quoting any agency as mandating an LUC declaratory ruling or boundary amendment. Hence,
the inference of bad faith from FOF No. 42 is completely unsupported in the record.
The Count IV Order further references Ms. Schutte's letter in FOF No. 58 (R, 66:
21413A248). FOF No. 58 infers that an LUC review should have been formally taken, since the
51
original Environmental Impact Statement("FEIS") stated that a boundary amendment would be
sought from the LUC. This again is taken out of context. The FEIS actually affirmed that the
upper subdivision would remain in agriculture. And former LUC Executive Director Esther
Ueda agreed with former Planning Director Virginia Goldstein that LUC approval was not
required. Tr., July 22, 2003,p.m.,p.13,Tr., July 22, 2003,p.m.,p. 60. Hence, the Circuit Court,
in drawing inferences of bad faith refusal to go before the LUC, ignored the context of
substantial evidence.
In Count IV Order FOF No. 43 (R, 66: 21413A245), a June 30, 1989 memo from Ms.
Schutte's firm is also quoted as notifying Oceanside of the need to comply with state land use
law. Exhibit PKO-704. Again, that is nothing new, Oceanside's officers such as Mr. Frye
readily admit that they knew of such requirements and were diligently hiring counsel in efforts to
ensure compliance. Again,the evidence of compliance efforts only supports good faith. The
Circuit Court's inferences of bad faith are clearly erroneous and legally wrong, and should be
reversed.
c. State Agencies Were Consulted at Various Stages;No State Agency Required or
Advised that a State Land Use Boundary Amendment Was Required.
In Count IV Order FOF No. 60 (R, 66:21413A249), the Circuit Court found that"Given
the advice and comments from attorneys and state agencies with expertise in land uses and
agriculture, any reasonable developer reading these letters would have consulted with the LUC
between 1989-95." The record reflects, however, that various state agencies associated with the
permitting and rezoning process,including the LUC, did review and comment on the project.
Of the agencies quoted in the Count IV Order, none actually required or even advised that an
LUC boundary amendment was required. There was no basis for the Court's implication of
developer's bad faith from these comments. See letters attached as Appendix"I."
In Count IV Order FOF Nos. 45 and 46 (R, 66: 21413A246), a July 12, 1993 letter
(commenting on REZ 93-5)from Y. Kitagawa of the State Department of Agriculture is quoted.
Exhibit PKO-571. The Department of Agriculture does not have any HRS Chapter 205
regulatory authority. Mr. Kitagawa did not ig ve any opinion regarding the necessity of an LUC
boundary amendment.
The Count IV Order at FOF No. 48 (R, 66: 21413A246) also quotes concerns in the
June 3, 1993 letter(commenting on REZ 93-5) of Office of State Planning("OSP")Director
52
Harold Masumoto. R, Exhibit PKO-568. The OSP does not have any enforcement authority
under HRS Chapter 205, and said nothing about an LUC boundary amendment.
The Count IV Order at FOF No. 50(R, 66: 21413A246) quotes a June 6, 1993 letter
(again on REZ 93-5) from Planning Director Goldstein cautioning that the project should be
viewed in its entirety to assess the project for the various zoning amendments and permits.
Exhibit PKO-569. As noted above, Ms. Goldstein was satisfied with the planned agricultural
uses later included. She found no need to retract her earlier statement, as her concerns were
satisfied. Transcript, July 22, 2003, ,p.m.,pp. 111-112.
The Count IV Order at FOF No.59 (R, 66:21413A248-249) quotes a July 20, 1995 letter
(apparently commenting on SMA 356 and rezoning Ordinance 96-7) from then Office of State
Planning Director Gregory Pai (Exhibit PKO-589). Again, OSP does not have statutory
authority to administer or enforce HRS Chapter 205. (OSP only is a party to and makes
recommendations on boundary amendments over 15 acres,before the LUC, not before the
Co=.) HRS § 205-4(e)(1)). Again,there is no recommendation to go before the LUC.
The Count IV Order at FOF Nos. 63 to 66 (R, 66:21413A249-250) cites as notice of
possible illegality, a letter from Ms. Esther Ueda, then Executive Director of the LUC, and her
testimony regarding her concern about"parcelling"the project to allow reclassification of land
by the County under HRS § 205-3.1. However, as noted above,both Ms. Ueda and then
Planning Director Goldstein agreed that no LUC redistricting was necessary. In addition,Ms.
Ueda testified that her letter was not a formal objection by the LUC to the project,nor was it a
demand for boundary amendment. Transcript, July 22, 2003,p.m.,p. 16. She was not
conveying any specific concern on this particular project. Transcript, July 22, 2003,p.m.,p. 19.
Actually, Ms Ueda explained her general concerns regarding"parceling,"and how
Hokuli'a simply did not involve such concerns: R. Tr., July 22, 2003,p.m.,p.13. (Besides, This
Court in Citizens for the Protection of the North Kohala Coastline, 91 Hawaii 94, 107; 979 P.2d
1120, 1133 (1999),made clear that HRS §205-3.1(c)means what it says in giving the County
exclusive jurisdiction over state land use boundary amendments for up to 15 acres).
There is also mention in FOF No. 70 (R, 66: 21413A250) of a letter from Ms. Ueda to
Ms. Goldstein dated March 6, 2000(Exhibit PKO-604A). This letter only reiterates that
dwellings must be farm dwellings in the agriculture district.
53
Hence, no inference of bad faith can be drawn from the foregoing letters. There are not
"numerous letters on record suggesting the contrary"to the sensible plain meaning application of
HRS Chapter 205 by Defendant-Appellants. Count IV Order, FOF No. 74(R, 60: 21413A251).
The cited letters only reflect years of continuous efforts by Defendant-Appellant Oceanside to
achieve compliance with HRS Chapter 205. The Circuit Court was clearly erroneous and legally
wrong to infer bad faith based on this record.
d. Defendant-Appellant Oceanside Was Not Obligated to Seek an LUC Declaratory
Ruling or Boundary Amendment.
The Circuit Court held that"it was unreasonable for Oceanside to proceed with the
development of Hokuli'a without seeking state LUC approval or a declaratory ruling." The
Circuit Court viewed this as lack of good faith,negating equitable defenses. Count IV Order,
COL No. 48 (R, 66: 21413A251).
As stated above, neither then LUC Executive Director Esther Ueda nor then Planning
Director Virginia Goldstein thought that the project as configured(with at least 1-acre zoning,
and no denser urban component)needed to go before the LUC for redistricting. They respected
the plain wording of the"farm dwelling" and accessory/compatible use statutes. They also
respected the HRS §205-3.1 exclusive County statutory jurisdiction over small area land use
redistricting.
Moreover, the County has Chapter 205 enforcement authority. HRS §205-12. The
Circuit Court's attempt to make the LUC the Chapter 205 primary preemptive enforcement
authority would be contrary to the statutory delegation of enforcement to the County, and
inefficient, cumbersome redundancy.
The Circuit Court's finding of bad faith for failure to go through the LUC should be
reversed.
Likewise, since no LUC boundary amendment was required, This Court should reverse
the Circuit Court's holding that Defendant-Appellant Oceanside needed to get an LUC boundary
amendment to Urban as the final discretionary action for zoning estoppel or vested rights
purposes. See, Count IV Order, COL Nos. 57 through 61, R., 66:21413A263 - 264.
2. The Permits and Zoning Relied Upon Were Not Illegal.
Besides lack of good faith, in its rejection of estoppel and vested rights the Circuit Court
relied upon alleged illegality of the General Plan amendments, land use redistricting, and
54
rezoning. Upon such alleged illegality, the Circuit Court also held the subdivision approvals
"defective."Count IV Order, COL Nos. 37, 70, R at 66: 21413A259, 265.
". . . [W]e bear in mind the general rule that the courts will not and cannot inquire into the
motives of members of a municipal government body or other zoning authority where the
validity of zoning plans or laws is under consideration." Lum Yip Kee, Limited v. City and
County of Honolulu, 70 Hawaii 179,187, 767 P.2d 815, 820(1989). Rezoning ordinances,
including development plan amendments, "are legislative functions, and subject to the deference
given legislative acts." Save Sunset Beach Coalition v. City and County of Honolulu, 102
Hawaii 465, 473, 78 P.3d 1, 9 (2003).
a. The Rezoning and Subdivision Approvals Were Not Illegal"Parceling"of an"Urban
Resort"Use.
The Count IV Order never expressly explains what"defects"exist in the overall rezoning,
and the agricultural 1-acre zoning ordinances are never expressly invalidated. The subdivision
approvals are apparently allegedly defective due to prejudgment that the"primary activities and
uses" are not agricultural, and in violation of Chapter 205. Count IV Order, COL Nos. 1, 2, 3
(R, 21413A251-252).
As explained in Argument Section C above, the Circuit Courts' creation of new economic
viability requirements for subdivision approval in excess of statute was unauthorized and
unconstitutional. Hence,the subdivision approvals cannot be invalid based on the Circuit
Court's legally erroneous application of HRS Chapter 205.
The Circuit Court also held the rezoning and subdivision defective because the proposed
uses were not really agricultural,but an"urban resort development,"not farm dwellings. Count
IV Order, COL No. 36,R at 66:21413A259. The Circuit Court held that the 14.854 acre Lodge
site"was parceled out and rezoned from agriculture to urban by the County, and the County
should have considered the project as a whole including the surrounding agriculture district
boundaries within the comprehensive general plan."Count IV MSJ Order, COL No. 8, R at
35:11892). (This would have required a trip to the LUC, as the area would exceed 15 acres).
The Circuit Court and Plaintiff-Appellees' characterization of the project"as a whole"as
an impermissible"urban resort development"seems based upon the faulty premise that the
presence of a"members' lodge"somehow converts all nearby otherwise permitted uses into
"urban." Nothing in HRS Chapter 205 authorizes the LUC,the County or the Circuit Court to
55
deem otherwise permissible uses"urban"merely because they are in the vicinity of a distinct
urban use.
Actually FIRS Chapter 205 expressly says that the County has exclusive statutory
jurisdiction over State land use district boundary amendments for land of 15 acres or less.
HRS § 205-3.1. This Court has expressly upheld County jurisdiction over such small
amendments, against claims of"parceling"of a 14.5 acre Urban area(precisely analogous to
Hokuli'a). Citizens for the Protection of the North Kohala Coastline, 91 Hawaii 94, 107; 979
P.2d 1120, 1133 (1999). The Circuit Court necessarily acknowledged this. Count IV MSJ Order,
COL No. 8,R.,p.35:11892. It would not be for the LUC, or the Circuit Court, to interfere with
the County's exclusive small boundary amendment jurisdiction.
There is no factual or legal basis for any imagined"tainting"or"guilt by association"of
the other permissible farm-dwelling or other uses proposed. The Urban-districted and Resort-
zoned lodge parcel is clearly defined and limited. The other distinct uses are agricultural, farm
dwellings,permitted golf course, or otherwise permissible under the plain terms of Chapter 205.
Citizens governs, and the rezoning and subdivision approvals were not illegal as "parceling."
Zoning estoppel and vested rights should apply.
b. The Rezoning and Subdivision Approvals Were Not Illegal"Spot Zoning."
The Circuit Court also invoked"spot zoning"to invalidate the land use district boundary
amendment from Agricultural to Urban for the 14.854 lodge parcel. This Court has defined
"spot zoning"as:
We have defined"spot zoning"as "an arbitrary zoning action by which a
small area within a large area is singled out and specially zoned for a use
classification different from and inconsistent with the classification of the
surrounding area and not in accord with a comprehensive plan." . . . The burden of
demonstrating that a particular zoning amendment is"spot zoning"rests upon the
attacker . . . This is in accordance with the principle discussed previously that
legislative acts of the Council are entitled to a presumption of validity, and the
burden of invalidity falls upon the attacker.
Lum Yip Kee, Limited v. City and County of Honolulu, 70 Hawaii 179,190-191, 767 P.2d 815,
822-23 (1989). This Court also stated that:
. . . we bear in mind the general rule that the courts will not and cannot
inquire into the motives of members of a municipal government body or other
zoning authority where the validity of zoning plans or laws is under consideration.
56
. . . We have recognized that the enactment of and amendments to development
plans constitute legislative acts of the City Council . . . and as such they are
entitled to a presumption of validity. . . . the challenger of the ordinance bears the
burden of showing that it is arbitrary, unreasonable, or invalid."
Lum Yip Kee, Limited v. City and County of Honolulu, 70 Hawaii 179,187, 767 P.2d 815, 820
(1989).
This Court recently expressly held that rezoning ordinances, including development plan
amendments, "are legislative functions, and subject to the deference given legislative acts." Save
Sunset Beach Coalition v. City and County of Honolulu, 102 Hawaii 465, 473, 78 P.3d 1, 9
(2003). In Sunset Beach, This Court also elaborated on the basis of"spot zoning,"noting that
smallness of the property in itself is not the issue,but rather the resultant limited public interest
and debate. Save Sunset Beach, 102 Hawaii at 473, 78 P.3d at 9 (2003)(italics added in
original). This Court determined spot zoning analysis was unnecessary where"there is no
indication of arbitrariness or concern over whether rights have been properly safeguarded, . . .
inasmuch as the property encompasses a large area and substantial public comment and
deliberation took place. Therefore, further spot zoning analysis is unnecessary." Save Sunset
Beach, 102 Hawaii at 473, 78 P.3d at 9.
"Further spot zoning analysis is unnecessary"in the instant case also. As documented in
previous Argument sections,this project has had intensive public notice and debate since 1993.
and continuously through 1998,when the County Council noticed and held the public hearings
on the Development Agreement. Just as in Save Sunset Beach, the project"encompasses a large
area and substantial public comment and deliberation took place. Therefore, further spot zoning
analysis is unnecessary."Save Sunset Beach, 102 Hawaii at 473, 78 P.3d at 9.
On Summary Judgment, the Circuit Court based its application of"spot zoning"upon
inconsistency with the General Plan. Count IV MSJ Order, COL Nos. 9 through 13,R,
35:11892-93. The Court erroneously found that the"County General Plan for the area as stated
in the Final EIS is extensive agriculture with orchards and open space."Count IV MSJ, FOF No.
8, R at 35:11889. Actually,the specific area of the lodge parcel had been amended to "urban"
under the County General Plan,by Ordinance 97-34. R, Exhibit DO-1282. The Circuit Court
later acknowledged this, noting the concurrent passage of that Ordinance, Ordinance 97-35 (land
use district boundary amendment) and Ordinance 97-36 (County zoning amendment). Hence,
the land use boundary and zoning amendments actually were consistent with the General Plan.
57
However,rather than acknowledging its prior mistake,the Circuit Court instead shifted
its rationale. It drew the unwarranted inference that the concurrent passage"indicates that
neither the County of Hawaii nor Oceanside considered the general welfare of the people of the
County of Hawaii" and"reveals an intent to circumvent both the County General Plan and the
State land use laws." Count IV Order, COLs 62, 63,R at 66: 21413A264.
Actually,HRS Section 205-3.1(c)expressly authorizes consolidation of land use
boundary amendment proceedings with general plan amendments and zoning amendments.
Hence,the Court's inferences of invalidity based on concurrent passage are wrong as a matter of
law and public policy. The Circuit Court's invalidation of the foregoing ordinances should be
reversed.
As noted in Save Sunset Beach, 102 Hawaii 465, 78 P.3d 1 (2003), the relative smallness
of a uniquely zoned parcel is not in itself"spot zoning." It's not the smallness per se that is bad,
but the resultant possible lack of sufficient public interest and debate. Actually:
. . . There are a great many instances in which the zoning of a small area
differently from what surrounds it makes a great deal of sense, a fact that many
courts have acknowledged by recognizing that spot zoning is not invalid per se.
Consider these examples:
—Zoning to allow a truck stop,motel or restaurant at an Interstate highway
interchange in a rural, agricultural area; or
All of these are examples of uses that are likely to be surrounded by
dissimilar uses. Is that necessarily undesirable,No. A good comprehensive plan
should provide for such uses and should indicate the circumstances in which they
will be allowed. . . .
6 Rohan,Zoning and Land Use Controls, §38A.01[2](Nov. 2000 Rev).
As suggested by Professor Rohan, the County General Plan recognizes the need for
flexibility in resort zoning. (See Appendix "J", tab"CTY") One of the general land use Policies
states: "Incorporate the concept of a"floating zone" for future industrial and retreat resort areas,
to allow flexibility in locating future needed development which cannot be pinpointed at this
time, especially in the more rural and/or remote areas." 1989 General Plan, Hawaii County,p.
14 (underscore added)R,PKO Exh. 719. (A retreat resort"provides the user with rest, quiet and
isolation for an environmental experience"including"recreational facilities,"up to 100 rooms
and 15 acres. General Plan,p. 20. This precisely covers the 80-unit Lodge parcel).
58
Likewise, one of the Policies for Resort land use states: "The concept of a"floating
zone" shall be used to allow for the future development of retreat resort areas." 1989 Hawaii
County General Plan,p. 18. Further, "Agricultural land shall be used as one form of open space
or green belt." And"Rural-style residential-agricultural developments, such as new small-scale
rural communities or extensions of existing rural communities, shall be encouraged in
appropriate locations." General Plan,p. 15.
Thus, the General Plan contains policies and standards allowing for substantial flexibility
in zoning generally and for retreat resorts in particular. Hence, the Courts should be particularly
deferential to the legislative and political decisions made by the County Council under such
flexible policies and standards. The Circuit Court failed to properly defer to the Council, and
substituted its own"legislative"judgment, directly contrary to HRS § 205-3.1(c). Plaintiff-
Appellees having failed to provide any cognizable basis for invalidating the Lodge parcel
General Plan,boundary amendment, and zoning ordinances, the presumption of validity should
govern. Estoppel and vested rights should apply.
c. Summary: The Hokuli'a Permits and Zoning Are Valid, and Vested Rights or Estoppel
Should Apply to Bar This Action.
As the record stands, there is no basis for holding the agricultural zoning and subdivisions
"defective." There was no basis for any"parceling"invalidation of the land use redistricting,
General Plan Amendment, or rezoning for the 14. 854 Lodge parcel. Nor was there any legal
basis for inferring any illegality of those actions due to their concurrency, which is expressly
authorized by HRS §205-3.1(c). Nor is there any factual or legal basis for inferring some
conversion of the entire project into an impermissible"urban"use as a whole; the project
elements are clearly defined, separated, and independently permissible under HRS Chapter 205.
Neither is there any basis for invalidating the Ordinances as"spot zoning."
The Circuit Court ignored all of the foregoing. It held, "as a matter of law"that the
zoning and subdivision were"defective"and the Lodge parcel ordinances were invalid. Count
IV MSJ Order, R, at 35: 11894; Count IV Order, COL No. 70, R at 66:21413A265. Actually,
the Circuit Court was wrong, as a matter of law.
Based on the foregoing, Defendant-Appellant Oceanside was entitled to rely on the
foregoing land use approvals for estoppel and vested rights purposes, and the Circuit Court's
rejection of those defenses should be reversed.
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3. Even if Some Permits or Ordinances Are Found Invalid, It Was Reasonable for
Oceanside to Have Relied Upon Them, and Estoppel or Vested Rights Should Apply.
In County of Kauai v. Pacific Standard Life Insurance, 65 Hawaii 318, 335, 653 P.2d
766,778 (1982)(the"Nukolii Case") This Court noted that"even good-faith expenditures will be
disregarded if made in reliance on an invalid building permit." In Nukolii,the permits obviously
could not be relied upon because they were still subject to a zoning referendum vote.
However, a different rule applies when reliance on the invalid permit is reasonable due to
debatable interpretation. Permitting by a zoning administrator, "done in good faith and within
the ambit of his duty,upon an erroneous and debatable interpretation of an ordinance, is no more
than an irregularity, and the validity of such act may not be questioned after expenditures have
been made and contractual obligations have been incurred in good faith. We agree with that
proposition as being eminently fair and equitable." Waianae Model Neighborhood Area
Association, Inc. v. City and County of Honolulu, 55 Haw. 40,44, 514 P.2d 861, 864 (1973).
"[T]he harsh and sometimes unjust results of the"no estoppel"rule as applied to
unlawfully issued building permits has led some courts, under the facts of particular cases,to
reach a different result." Rathkopf, The Law of Zoning and Planning, § 69.10,p. 69-20(Rev.
11/2001). This should be one of those cases.
Some courts simply weigh the equities in allowing equitable relief to developers who
reasonably rely on invalid permits. Drain v. Clackamas County, 36 Or.App.799, 585 P.2d 746
(Or.App. 1978) (balancing the equities and hardships on the parties); Hill v. Board of
Adjustment of the Borough of Eatontown, 122 N.J.Super. 156, 299 A.2d 737 (1972) (applying
laches and estoppel rule of"relative hardship"of parties);
The Hill Court summarized the equitable trend allowing illegal but good faith permits to
support zoning estoppel against both municipalities and complainants:
Plaintiffs would have us ignore the ` . . . strong recent trend towards the
application of equitable principles of estoppel against public bodies where the
interests of justice, morality and common fairness clearly dictate that course. . . .
In simple language, estoppel will be applied against a municipality in the interest
of equity and essential justice. Morality and common fairness clearly dictate that
course. . . .(citations omitted)
. . . . If estoppel and laches apply against the municipality so much the
more so against plaintiffs, even though they be deemed to be acting vicariously
for the municipality."
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Hill, 122 N.J.Super. At 164-165, 2999 A.2d At 741-742 (1972).
Later Courts have straightforwardly applied these equitable doctrines,under a doctrine of
"honest error." See, City of Berea v. Wren, 818 S.W.2d 274 (Ky.App. 1991)reh'g den. Aug. 2,
1991,Discret. Rev. Den. by S.Ct. Dec. 11, 1991, (estoppel where the proper official mistakenly
issued a building permit, under reasonable interpretation of law).
A similar equitable approach should apply here. As explained extensively above,
multiple legal counsel was obtained throughout the development process, seeking to ensure
compliance with HRS Chapter 205. Under guidance by counsel and expert consultants,
extensive improvements, including an agricultural water system,were installed, and easements
over at least 20%of each lot were used to ensure and enable diversified agricultural uses.
Agricultural use plans were made and are in the process of being implemented. All of this was
done within the regular procedures of the proper County administrative and Council authority.
All of this was done with the approval or assent of the then Planning Director, Planning
Commission and Council, and LUC Executive Director, as applicable.
As also extensively established above, the various approvals of the Planning Director and
other County authorities were facially compliant with the plain language of HRS Chapter 205.
At the very least, the County authorities' interpretations of HRS Chapter 205 were reasonable,
and consistent with prior practice in Hawaii County and elsewhere. Even if ultimately found
erroneous, the Defendant-Appellants' interpretations of HRS Chapter 205 were not in bad faith,
and should be governed by the equitable"honest error"or"balance of hardships"rule allowing
estoppel, laches and the balancing of equities to apply.
Such equitable relief is necessary in this case. There is no evidence of Plaintiffs being
actually and substantially prejudiced by the alleged Chapter 205 violations. On the other hand,
the financial and legal consequences of stopping the project, for Defendant-Appellants County
and Oceanside are tremendous. Oceanside had put about$45 million into the ground between
start of construction in January 1999 until suit was filed in December 2000. About 100 lots were
sold in that time period also. There could be no clearer case for equitable relief due to the balance
of hardships. Waianae Model Neighborhood Area Assn., 55 Haw. 40, 514 P.2d 861 (1973).
Zoning Estoppel or vested rights should plainly apply in all equity and morality here,
under a"balancing of hardships"or"honest error"rule.
61
Equitable estoppel or vested rights is particularly appropriate in light of the
unpredictability of the Circuit Court's holding. Until the Plaintiffs filed suit, there was no
indication from the LUC, the County, or any other arguably authoritative source that any other
Chapter 205 discretionary permitting action was needed for this development. As explained in
Argument Section C(3)of this Brief, the Circuit Court's additional substantive and procedural
requirements had never been articulated in any statute or rule, or even by the LUC or County.
This Court has said that predictability, consistent with important public policies, is the
point of the last discretionary action rule. "A proper understanding of the last discretionary
action in a governmental process will lead to predictable results consistent with the important
public policy considerations that underlie Hawai`i's estoppel rule." Kauai v. Pacific Standard
Life Insurance, 65 Hawaii 318, 328-329; 653 P.2d 766, 774 (1982). In order for Hawai`i's
estoppel rule to be fair, it must be predictable. It must not result in destructively expensive
regulatory ambush. Here, the Circuit Court's holdings were unforeseeable, and equitable relief
consistent with Defendant-Appellants' reasonable interpretations and expectations would be only
fair.
Based on all of the foregoing, the Circuit Court's rejection of zoning estoppel and vested
rights defenses should be reversed as legally wrong and an abuse of equitable discretion.
E. The Trial Court Erred in Ruling that the County of Hawaii Violated a Public Trust Duty
to Protect the Coastal Waters Offshore of Hokuli'a.
1. The State of Hawaii,Not the County, has Public Trust Obligations Under the State's
Public Trust Doctrine.
In its"8-8-03 Order"the Circuit Court held that the County Defendant-Appellants, along
with state parties, "breached their public trust duty to Plaintiffs and other members of the general
public who use or would use the pristine waters off the Hokuli'a property." R at 63:20535.
However, it is the state,not the County,which has the public trusteeship regarding the coastal
waters.
The public trust doctrine as it applies to coastal waters arises under property law. As the
Hawaii Supreme Court noted in In re Water Use Permit Applications, the public trust doctrine
"traces its origins to the English common law and ancient Roman Law." 94 Hawaii 97, 127,
9 P.3d 409, 439, Footnote 25 (2000). (citations omitted). Under the public trust doctrine,the
owner of the public property holds up to"three separate interests in resources: the jus privatum,
62
or private property right,the jus regium, otherwise known as the police power, and the jus
publicum,the public trust."94 Hawaii at 128, 9 P.3d at 440, Footnote 26. (citation omitted).
Public trust responsibilities, thus, arise from the sovereign's ownership of public lands.
The state,not the county, owns the coastal waters, lands beneath them, and natural resources
within them.
First, as noted by the U.S. Supreme Court and cited with approval by the Hawaii
Supreme Court, "At common law, the title and dominion in lands flowed by the tide water were
in the King for the benefit of the nation. . . . Upon the American Revolution,these rights, charged
with a like trust,were vested in the original States within their respective borders, subject to the
rights surrendered by the Constitution of the United States. . . . The new States admitted into the
Union since the adoption of the Constitution have the same rights as the original States in tide
waters, and in the lands under them,within their respective jurisdictions."94 Hawaii at 129, 9
P.3d at 441, Footnote 28. (emphasis added). "Land below the high water mark . . . is a natural
resource owned by the state subject to,but in some sense in trust for,the enjoyment of certain
public rights." 94 Hawaii at 128, 9 P.3d at 440, quoting County of Hawai i v. Sotomura, 55
Haw. 176, 183-84, 517 P.2d 576, 63 (1973).
Second, under the Hawaii Constitution, "All public natural resources are held in trust by
the State for the benefit of the people."(emphasis added). Haw. Const. Art. XI, sec. 1. And
under Art. XI, sec. 6, the state has been given the power to"manage and control the marine,
seabed, and other resources within state boundaries."(Emphasis added)
Third, under Article XI, sec. 2,the legislature is given the responsibility to designate the
governmental bodies with the authority to manage state-owned public resources. The state
legislature has vested the state Board of Land and Natural Resources with the authority to
"manage, administer, and exercise control"over all public lands, ocean waters, and coastal areas.
Haw. Rev. Stat. §171-3 (1999)
Furthermore, the Governor, in concert with the Board of Land and Natural Resources, can
transfer public lands to the counties for a public use or purpose. Haw. Rev. Stat. §171-11 (1988).
The state also has the authority to sell public lands to the counties or exchange properties.
However, the state has never transferred the waters or submerged lands off Hokulia to the county
of Hawaii.
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As a matter of law, the State is the sole sovereign owner of the ocean waters, submerged
lands, and resources off Hokulia. As sovereign owner, the state is also the sole trustee of those
resources for the people of Hawaii under the public trust doctrine. Unless and until the state
transfers all or some of its interest in those coastal waters to the county of Hawaii, the county
has no attendant obligations under the public trust doctrine. Therefore,the court erred in ruling
that the county of Hawaii had breached its public trust duty to protect the waters and resources
off shore of the Hokulia property.
2. Plaintiff-Appellees Failed to CaM Their Burden of Proof Regarding the Alleged
Runoff Pollution.
Plaintiff-Appellees,in Paragraphs 35, 81, and 104 through 107 of the Fifth Amended
Complaint, made various allegations of County violation of grading ordinances, and public trust
duties,resulting in damage to the"natural and cultural resources of the coastal area."
The Circuit Court did not address the specific allegations,but only generally found that
"none of the permits, approvals or authorization documents issued by the State Defendants and
County Defendants required a prior assessment on the effect of Defendant Oceanside's permitted
activities on pristine waters off Hokuli'a. The pollution of the adjacent coastal waters were
caused by Hokuli'as ground altering activities allowed and approved by the State and County
Defendants. The State and County defendants did not act prudently by not affirmatively
requiring an assessment prior to permit approvals or an assessment after the runoffs." Counts
HN Order,p. 12, R at 63:20534. However, the record is lacking in substantial,probative
evidence to sustain key factual matters which the Plaintiff-Appellees had the burden of proving.
These include:
A. That the waters off Hokuli'a are in fact Class AA waters;
B. That the objectionable runoff into the waters off Hokuli'a in fact came from Hokuli'a
and were caused by Hokuli'a grading.
C. That there was a lack of reasonable erosion control measures at Hokuli'a.
D. That the actions or inactions of County Defendant-Appellants caused any damage to
the coastal waters.
E. That the County defendants have any duty, in issuing and monitoring ministerial
grading and grubbing permits, to take affirmative action to make pre-permit or post-flood event
assessments of the specific effect of development on coastal resources.
64
W
Given the lack of evidence to support the Circuit Court's conclusions, the Circuit Court
erred in holding that the County breached public trust duties and other alleged duties relating to
the protection of coastal resources.
F. The Trial Court Erred When it Awarded Plaintiffs' Attorneys Fees Under The
"Private Attorney General"Doctrine.
1. This Court Should Reject the Private Attorney General Doctrine in Land Use Cases.
"Normally,pursuant to the `American Rule',each party is responsible for paying his or
her own litigation expenses. This general rule, however, is subject to a number of exceptions:
attorney's fees are chargeable against the opposing party when so authorized by statute,rule of
court, agreement, stipulation or precedent." Chun v. Board of Trustees of Employees'Retirement
Sys., 92 Haw. 432 439, 992 P. 2d 127, 134 (2000).
Under the private attorney general ("PAG")doctrine, courts have"discretion to award
attorneys' fees to plaintiffs who have `vindicated important public rights."'In the Matter of the
Water Use Permit Applications, 96 Haw. 27, 29, 25 P.3d 802, 804 (2001) Many courts have not
accepted the doctrine, including the U.S. Supreme Court. See Alyeska Pipeline Serv. Co. v.
Wilderness Socy, 421 U.S. 240, 95 S. Ct. 1612 (1975).
In Alyeska,the U.S. Supreme Court observed:
"What Congress has done . . . while fully recognizing the general rule,is to make
specific and explicit provisions for the allowance of attorney's fees under selected
statutes granting or protecting various federal rights. These statutory allowances
are now available in a variety of circumstances,but they also differ considerably
among themselves. . . . Under this scheme of things, it is apparent that the
circumstances under which attorneys' fees are to be awarded and the range of
discretion of the courts in making those awards are matters for Congress to
determine."
421 U.S. at 260-262, 95 S.Ct. at 1623-24. In rejecting the PAG doctrine, the U.S. Supreme
Court concluded that "courts are not free . . . to pick and choose among plaintiffs and the statutes
under which they sue and to award fees in some cases,but not in others, depending upon the
courts' assessment of the public policies involved in particular cases. . . . and it is not for us to
invade the legislature's province by redistributing litigation costs . . ." 421 U.S. at 269-271, 95
S.Ct at 1627-28.
Likewise,the Hawaii legislature has undertaken to provide specifically for attorneys'
fees awards under selected statutes. For instance, the legislature has provided for attorneys' fees
65
against the government in certain special cases. See, e.g., HRS §92F-27 (1989) (allowing
attorneys' fees and costs against an agency which fails to comply with the Uniform Information
Practices Act,or to an agency against a frivolous claimant);HRS §661-12 (1986) (allowing
attorneys' fees to a small business against an agency whose action"lacked reasonable basis"and
to an agency if the small business' claim was frivolous, subject to fee and eligibility limits).
In the arena of land use, the Circuit Court herein used HRS §607-25(e) (1997),which
allows attorneys' fee awards to the prevailing party when one private party sues another for
undertaking development without obtaining all permits or approvals required by law. The
Circuit Court properly rejected the mandatory fee award of HRS §607-25(e)(2),which required
specific types of notice be given prior to suit(which had not been given herein).
Thus,in the area of land use permitting,the Hawaii legislature has allowed attorneys'
fees against private litigants,but not against government parties. And among private litigants,
there are specific notice provisions that separate discretionary from mandatory fees. Thus, the
legislature has applied a strong hand in taking detailed control of this issue and drawing
precise lines. The legislature has NOT chosen to allow attorneys'fees against the County
under Chapter 205.
Where the legislative body has implemented a careful selection and line-drawing to
define when attorneys' fees may be awarded,the U. S. Supreme Court has declined to use the
PAG doctrine to usurp the legislative scheme:
. . . . But congressional utilization of the private-attorney-general concept
can in no sense be construed as a grant of authority to the Judiciary to jettison the
traditional rule against nonstatutory allowances to the prevailing party and to
award attorney's fees whenever the courts deem the public policy furthered by a
particular statute important enough to warrant the award.
Congress itself presumably has the power and judgment to pick and
choose among its statutes and to allow attorneys' fees under some,but not others.
But it would be difficult, indeed, for the courts, without legislative guidance, to
consider some statutes important and others unimportant and to allow attorneys'
fees only in connection with the former. . .
. . . . Moreover, should courts, if they were to embark on the course urged
by respondents, opt for awards to the prevailing party, whether plaintiff or
defendant, or only to the prevailing plaintiff? Should awards be discretionary or
mandatory? Would there be a presumption operating for or against them in the
ordinary case?
Alyeska Pipeline Service Company v. Wilderness Society, 421 U.S. 240,263-264, 95 S.Ct. 1612,
1624-25 (1975).
66
Additionally, as noted by the New Mexico Supreme Court, "Unbridled authority to `pick
and choose' which plaintiffs and causes of action merit an award of attorney fees under the
private attorney general doctrine would not promote equal access to the courts for the resolution
of good faith disputes inasmuch as it lacks sufficient guidelines to prevent courts from treating
similarly situated parties differently and could easily result in decisions that favor a particular
class of private litigants while unduly discouraging the government from mounting a good faith
defense." New Mexico Right to Choose/NARAL v. Johnson, 986 P.2d 450,459 (N.M. 1999).
Land use law requires the County to take public input and balance many public interests
in regulating uses. County and state agencies must pick and choose among competing positions
and make decisions that promote the public policies embodied in the laws they administer, even
if it results in disappointment to certain segments of the public. Applying the private attorney
general doctrine as the Circuit Court did here would open the floodgates of litigation against the
state and county governments whenever they make such policy decisions.
This Court has already recognized the need to avoid litigiously penalizing government
flexibility in land use policy. In Allen v. City and County of Honolulu, 58 Haw. 432, 571 P.2d
328 (1977), the City appealed from the trial court's order awarding damages to a developer after
the City was held equitably estopped from enforcing a new zoning ordinance. This Court
reversed, holding that the City was not liable in damages, for land use policy reasons:
"In our opinion,to permit damages for development costs is not only
unprecedented but would also be unsound policy. Were we to affirm the award of
damages, the City would be unable to act, if each time it sought to rezone an area
of land it feared judicially forced compensation. Monetary awards in zoning
disputes would inhibit governmental experimentation in land use controls and
have a detrimental effect on the community's control of the allocation of its
resources."
58 Haw. at 438, 571 P.2d at 331. Much less, then, should the County defendants herein be
penalized by a six-figure award of attorneys' fees,based on longstanding practice consistent with
the plain language of the statute.
The legislature, after opportunity for open and public debate, should make the selective
policy decision on fee-shifting to the benefit of land use and other public interest litigants. Such
legislative policy decisions should not be done through ad hoc litigation. County Defendant-
Appellants urge the Court to reject the private attorney general doctrine as a matter of policy for
the state of Hawaii in land use cases such as this.
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2. The PAG Doctrine Application Factors Are not Met In This Case.
Courts that have adopted the private attorney general doctrine"consider three basic
factors: `(1)the strength or societal importance of the public policy vindicated by the litigation,
(2) the necessity for private enforcement and the magnitude of the resultant burden on the
plaintiff, (3)the number of people standing to benefit from the decision."'In re Water Use
Permit Applications, 96 Hawaii 27, 29, 25 P.3d 802, 804 (2000). (citation omitted).
Even if This Court chooses to adopt PAG, the plaintiffs have not met their burden under
the three-part test articulated by the court in In Re Water Use Permit Applications. The plaintiffs
must prove all three factors.
The first factor requires an analysis of the strength or societal importance of the public
policy vindicated by the litigation. As noted above, This Court has held that land use public
policy dictates against monetary awards against zoning agencies,which would"inhibit
governmental experimentation in land use controls and have a detrimental effect on the
community's control of the allocation of its resources." Allen v. City and County of Honolulu, 58
Haw. 432, 438, 571 P.2d 328, 331 (1977). Plainly,public policy in land use precludes awarding
of attorneys' fees against the County Defendants herein.
This case also fails the second prong, the necessity for private enforcement and the
magnitude of the resultant burden on the plaintiff. As the Court noted in In Re Water Use
Applications, in cases where the second prong was met, "[t]he government either completely
abandoned, or actively opposed, the plaintiff s cause." 96 Haw. at 31, 25 P.3d at 806. In this
case, the county was simply interpreting the state's land use law in a manner consistent with its
own past interpretations and the interpretation of the state Land Use Commission and other
counties. And these interpretations were consistent with the plain language of the statute.
Therefore,plaintiffs failed to meet the second prong of the test.
The plaintiffs fail the third prong of the test as well: the number of people standing to
benefit from the decision. The only people who stand to directly benefit are the Plaintiff-
Appellees and their attorneys. The declarations of the County Defendant-Appellants and
Defendant-Appellee/Cross-Appellants Oceanside,presented in their respective motions for
expedited treatment of this Appeal, establish that there will be tremendous land use confusion
and fiscal loss spreading in multilayer rippling from the legal tremors caused by this case. If
68
Plaintiff-Appellees prevail the net effect appears to be widespread uncertainty in the land use
community,with attendant financial losses for many.
This case does not meet the PAG fee award factors, and the award of fees under the PAG
doctrine should be reversed.
3. The Trial Court Erred in Failinp,to Distinguish Between Successful and Unsuccessful
Claims.
This Court has stated, in relation to fee-shifting statutes: "If the court awards attorney's
fees for the time a plaintiff s counsel spent on unsuccessful claims which are unrelated to the
plaintiffs successful claims, the award will not constitute"reasonable attorney's fees"under
Hawaii fee-shifting statutes." Schefke v. Reliable Collection Agency, Ltd., 96 Hawaii 408, 444,
32 P.3d 52, 88 (2001).
In Schefke, This Court directed on remand that the court consider whether the successful
and unsuccessful claims"involved a common core of facts or were based on related legal
theories, in arriving at attorneys' fees which are reasonable." The Trial Court was directed to
render written findings of fact and conclusions of law in support of its decision. 96 Hawaii at
445, 32 P.2d at 89.
The Circuit Court herein made no such analysis to determine relation of successful to
unsuccessful claims in determining reasonableness of fees. It simply held that the fees should be
split equally between County Defendant-Appellees and Defendant-Appellee/Cross-Appellant
Oceanside,to the extent not settled. Attorneys' Fees Order, COL No. 21,p. 16, R at 72: 23464.
If Plaintiff-Appellees remain entitled to a PAG award, then the fee and cost award should
be remanded for an evaluation of the extent to which the fee award is reasonable in light of the
relation of successful claims to unsuccessful claims, and in relation to the parties liable for such
claims.
V. Law Relevant to the Issues Involved
The following Constitutional provisions, State statutes and County ordinances are
relevant to the issues raised on this appeal and are included in the Appendix "J"attached hereto:
1. United States Constitution,Article XIV, Section 1
2. Hawaii State Constitution
Article I, Section 5 (Due Process and Equal Protection)
Article III, Section 1 (Legislative Powers)
69
Article VI, Section 1 (Judicial Powers)
Article XI, Sections 1 through 6 (Conservation and Development of Resources)
3. Hawaii Revised Statutes
§§ 46-121 through 132 (Development Agreements)
§§ 91-1 through 91-3, 91-14 (Administrative Procedure)
§92F-27 (UIPA, Civil Actions and Remedies)
§§171-3, 11 (Conservation and Resources)
Chapter 205 (Land Use Commission)
§607-25 (Actions Based on Failure to obtain Government Permit or Approvals)
§661-12 (Awards of Attorneys' Fees Against Agencies)
4. Hawaii Administrative Rules
§§15-15-23 through 27 (Permissible Land Uses)
§§15-15-98 through 104(Declaratory Orders)
5. County Ordinances
Hawaii County General Plan(1989)pp. 14-20
Hawaii County Code Section 30-5 (Negotiating Development Agreements)
VI. Conclusion
Based on all of the foregoing,the County Defendant-Appellants respectfully ask that the
Third Amended Judgment be reversed in respect to the challenged findings and conclusions
herein. The HRS Chapter 205 claims should be dismissed on the grounds aforesaid, the County
should not be liable for any attorneys' fees or costs,there should be no finding of violation of
public trust, and the injunctions against the continued issuance of County permits for Hokuli'a
should be dissolved.
DATED: Hilo, Hawaii, MAR 2 8 2005
County of Hawaii, CHRISTOPHER YUEN, in his
official capacity as the Planning Director for the
County of Hawaii,DENNIS LEE, in his official
capacity as the Chief Engineer, County of Hawaii,
Defendants
By kg��
IVAN M. TORIGO
Deputy Corporation Counsel
Their Attorney
70
Statement of Related Cases
There is one related case: Walter John Kelly, et.al., Plaintiffs-Appellees, v. 1250
Oceanside Partners, a Hawai i Limited Partnership, Defendants Appellant, and State of Hawai
et.al, Defendants., Supreme Court No. 25467. This case involves the same Plaintiffs and
Defendant Oceanside below. It is an appeal from the Circuit Court's decision after trial
determining State of Hawaii ownership of a trail on the Hokuli'a property, and issuing
mandatory injunction against Oceanside and the Hawaii Department of Land and Natural
Resources. The interlocutory appeal was brought under the doctrine of Forgay v. Conrad, 47
U.S. 201, 204(1848)(right to immediate appeal from orders that authorize the immediate
execution of a command that property be delivered to another and where appellant would be
subjected to irreparable injury if review had to await outcome of the case).
DATED: Hilo,Hawaii, MAR 2 8 2005
County of Hawaii, CHRISTOPHER YUEN, in his
official capacity as the Planning Director for the
County of Hawaii,DENNIS LEE, in his official
capacity as the Chief Engineer, County of Hawaii,
Defendants
By
IVAN M. TO GO
Deputy Corporation Counsel
Their Attorney