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Kaho'ohanohano v. State Page 3 of 46
<br /> As to Trustees, we vacate the court's June 24, 2003 judgment and remand this matter to the court. The court is
<br /> instructed to enter summary judgment against the State and in favor of Trustees on Trustees' declaratory judgment
<br /> claim that Act 100 violated article XVI, section 2 of the Hawaii Constitution. See Univ. of Hawaii v. City & County
<br /> of Honolulu, 102 Hawaii 440, 443-44, 77 P.3d 478, 481-82 (2003) ("'[A] court may enter judgment for the non-
<br /> moving party on a motion for summary judgment where there is no genuine issue of material fact and the non-moving
<br /> party is entitled to judgment as a matter of law."' (Quoting Konno v. County of Hawaii, 85 Hawaii 61, 76, 937 P.2d
<br /> 397, 412 (1997) (Brackets in original.) (Other citation omitted.)). We remand to the court Trustees' other claims for
<br /> declaratory relief raised in Trustees' Complaint in Intervention (complaint)for disposition as appropriate. The
<br /> injunctive relief sought by Trustees shall not issue under the circumstances of this case, inasmuch as "the prospective
<br /> injunctive relief requested by [Trustees] would not appear to be necessary in view of our explication of the applicable
<br /> law[.]" Rees v. Carlisle, 113 Hawaii 446, 459, 153 P.3d 1131, 1144 (2007).
<br /> I.
<br /> The ERS provides retirement benefits to State and county employees, who become members upon their entry or
<br /> reentry into service of the State or any county. HRS §§ 88-22 (1993), 88-42 (1993). Chapter 88 of the HRS governs
<br /> the operation of the ERS and vests "general administration and the responsibility for the proper operation" in Trustees.
<br /> HRS § 88-23 (Supp. 2002). The system is funded by contributions from State and county employers, as well as State
<br /> and county employees. See e.g., HRS §§ 88-45 (Supp. 2006), 88-122 (Supp. 2006), 88-123 (Supp. 2002), 88-125
<br /> (Supp. 2002). Pursuant to HRS § 88-127 (1993), Trustees must hold the ERS funds "in trust . . . for the exclusive use
<br /> and benefit of the system and for the members of the system" and those funds "shall not be subject to appropriation for
<br /> any other purpose whatsoever." (Emphasis added.) "The assets of the system are assigned to . . . (1) [t]he annuity
<br /> savings fund; (2) [t]he pension accumulation fund;[] and (3) [t]he expense fund." HRS § 88-109 (Supp. 2006).
<br /> "Pursuant to HRS § 88-22, the ERS possesses the full 'powers and privileges of a corporation . . . and by [its] name
<br /> may sue or be sued, transact all of its business, invest all of its funds, and hold all of its cash and securities and other
<br /> property."' Chun v. Bd. of Trs. of Employees' Ret. Sys. of the State of Hawaii, 87 Hawaii 152, 162-63, 952 P.2d
<br /> 1215, 1225-26 (1998) (citation omitted) (emphasis added). This court has further explained that "pursuant to HRS §
<br /> 88-23, '[t]he general administration and the responsibility for the proper operation of the [ERS] . . . are vested in
<br /> [Trustees]; subject . . . to the area of administrative control vested in the department of budget and finance by HRS §§
<br /> 26-8 [(Supp. 2002)] and 26-35 [(1993)]." Id. at 163, 952 P.2d at 1226 (footnotes omitted) (some brackets in original
<br /> and some added). In that regard then this court has described the powers and duties of Trustees as "functionally
<br /> equivalent to those of the board of directors of a private corporation and are limited only by 'the area[s] of
<br /> administrative control' reserved to the department of budget and finance by HRS §§ 26-8 and 26-35." Id. (quoting
<br /> HRS § 88-23).�
<br /> Pursuant to HRS chapter 88, Trustees owe a fiduciary duty to the retirement system itself, as well as to members of
<br /> the system. Honda ex. rel. Kamakana v. Bd. of Trs. of the Employees' Ret. Sys., 108 Hawaii 338, 344, 120 P.3d 237,
<br /> 243 (2005) (hereinafter, Honda II). In Honda II, Trustees' fiduciary duties were described in the following manner:
<br /> HRS § 88-22 (1993),the statute establishing the ERS,provides that the retirement system"shall have the powers and privileges of a
<br /> corporation." (Emphasis added.)It is axiomatic that a corporation's directors and officers assume fiduciary duties. See Chambrella v.
<br /> Rutledge,69 Haw. 271,274,740 P.2d 1008, 1010(1987) (finding that plaintiffs-union members should not be precluded from equitable
<br /> relief in an action against defendant nonprofit corporation for breach of fiduciary duties);Hawaiian Int'l Fin.v.Pablo, 53 Haw. 149,
<br /> 153,488 P.2d 1172, 1175 (197 1)("It is a well established rule both in Hawaii and in a majority of the [s]tates that the relation of
<br /> directors to the corporations they represent is a fiduciary one.");Lum v.Kwong,39 Haw. 532, 538 (1952)("The relation of directors to
<br /> corporations is a fiduciary one and the well-established rule both in Hawaii and in a majority of the [s]tates is that when fiduciaries deal
<br /> with themselves relative to their trust property the burden is upon such fiduciaries to establish the fairness of the transaction.");Bolte v.
<br /> Bellina, 15 Haw. 151, 153-54(1903)("Directors stand towards the corporation which they represent and act for in the relation of
<br /> trustees to a cestui que trust. . . . They must act in good faith and for the interests of the stockholders whom they represent.");Lussier v.
<br /> Mau-Van Dev.,Inc.,4 Haw. App.359,381,667 P.2d 804, 819(1983) ("A corporate director or officer occupies a fiduciary
<br /> capacity." (Internal quotation marks,brackets,and citations omitted.)). See also HRS §§ 414-221,-233 (1993)(delineating standards of
<br /> conduct for corporate directors and officers).
<br /> . . .HRS § 88-23,which creates the ERS Board,vests the "general administration and the responsibility for the proper operation of the
<br /> retirement system and for making effective the provisions of this part and part VII of this chapter. . .in a board of trustees
<br /> [.]" (Emphasis added.)Trustees,by definition,are imbued with fiduciary duties. See Black's Law Dictionary 1514 (6th ed. 1990)
<br /> (defining"trustee" as "[o]ne who holds legal title to property'in trust'for the benefit of another person(beneficiary)and who must carry
<br /> http://www.state.hi.us/jud/opinions/sct/2007/26178.htm 8/12/2008
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