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Pofolk Aviation Haw., Inc. v. Department of Transportation

Intermediate Court of Appeals of Hawai'i

October 24, 2014

POFOLK AVIATION HAWAII, INC. and HALE O'LELE CORP., Plaintiffs-Appellants,
v.
DEPARTMENT OF TRANSPORTATION FOR THE STATE OF HAWAI'I, GLENN M. OKIMOTO, FORD FUCHIGAMI, and SIDNEY A. HAYAKAWA, Defendants-Appellees, and JOHN AND/OR JANE DOES 1-10, DOE ENTITIES 1-10, Defendants

APPEAL FROM THE CIRCUIT COURT OF THE FIRST CIRCUIT. CIVIL NO. 13-1-0787-03.

On the briefs: Eric A. Seitz, Della Au Belatti, Sarah R. Devine, for Plaintiffs-Appellants.

Michael S. Vincent, Jack Rosenzweig, Deputy Attorneys General, for Defendants-Appellees.

FOLEY, PRESIDING J., FUJISE AND GINOZA, JJ.

OPINION

Page 1057

[134 Hawai'i 256] FOLEY, J.

Plaintiffs-Appellants Pofolk Aviation Hawaii, Inc. (Pofolk Aviation) and Hale O'lele Corp. (Hale O'lele), (together, Plaintiffs) appeal from (1) the August 1, 2013 " Order Denying Plaintiffs Pofolk Aviation Hawaii, Inc. and Hale O'lele Corp. Motions for Temporary and Permanent Injunctions" (Order Denying Injunctions); (2) the September 24, 2013 " Order Denying Plaintiffs' Claim for a Permanent Injunction and Approving the Voluntary Dismissal of All Other Claims and Counter Claims," (Dismissal Order); and (3) the September 24, 2013 Judgment (Judgment) all entered in the Circuit Court of the First Circuit[1] (circuit court).

Plaintiffs contend the circuit court erred by:

(1) incorrectly applying Hawaii Revised Statutes (HRS) § 261-12 (2007 Repl.) in the Order Denying Injunctions by determining Plaintiffs were unlikely to succeed on the merits of their case; [2]

Page 1058

[134 Hawai'i 257] (2) determining that the process by which Defendants-Appellees Department of Transportation for the State of Hawai'i (DOT), Glenn Okimoto (Okimoto), Ford Fuchigami (Fuchigami), and Sidney A. Hayakawa (Hayakawa) (collectively, Defendants) adopt written procedures includes an informational hearing and opportunity for the public to comment before procedures are adopted; and

(3) concluding that Defendants duly exercised their power to impose landing fees on flight operations at the Dillingham Airfield on O'ahu by and through its adopted procedures.

I.

The DOT Airport Division operates a single 5,000 foot runway primarily for commercial glider and sky diving operations at Dillingham Airfield in Mokuleia, O'ahu (Dillingham Airfield) under a lease from the United States Army (Army Lease). Plaintiffs are Hawai'i corporations whose operations are based out of Dillingham Airfield.

Clause 32 of the Army Lease, titled " Additional Site Conditions," provides " Dillingham Airfied shall be used by and under the authority of the lessee [DOT] for the sole purpose of operating an airport[.]" According to Hayakawa, the Administrative Services Officer for DOT, Airports Division, the term of the lease was for five years, ending July 5, 2014.

By letter dated December 17, 2012, Eric A. Seitz (Seitz), counsel for Frank Hinshaw (Hinshaw), Pofolk Aviation and Hale O'lele's principal, wrote to Okimoto in his capacity as Director of Transportation with the DOT. Seitz stated Hinshaw was willing to file all required reports and pay all past and future landing fees that were lawfully owed.

By letter dated February 20, 2013, Fuchigami, Deputy Director of DOT Airports Division, wrote to Hinshaw informing him that Pofolk Aviation was delinquent in its reporting since the end of November 2012 and its payment of landing fees to DOT in the amount of $267,261.36. DOT stated it would forego its recovery rights for thirty days if Pofolk Aviation tendered payment of the previously billed amount of $50,837.99, payment of the previously unbilled amount of $214,152.10, and a full up-to-date report of all landings. Fuchigami also attached an accounting sheet listing airport landings dating from April 2005 and ending June 2013.

By letter dated February 26, 2013, Fuchigami wrote to Hinshaw in his capacity with Hale O'lele, informing him that the DOT concluded:

all landings reported by [Hale O'lele] since 2005 as " non-revenue" landings were, in fact, subject to the payment of landing fees to [the DOT]. Additionally, [the DOT] is concerned that [Hale O'lele] may have been operating between 2007 and 2011, and after November 2012, during which [134 Hawai'i 258]

Page 1059

time no landings of any kind were reported.

Fuchigami stated Hale O'lele owed $2,271.27 plus interest in the amount of $952.81, which was to be paid no later than March 11, 2013.

By letter dated February 28, 2013, Seitz responded by submitting the monthly landing reports from December 2012 and January 2013, and $50,837.99 as partial, payment for disputed landing fees, noting that the payment was made under protest.

By letter dated March 1, 2013, Hayakawa informed Hinshaw the DOT concluded that Pofolk Aviation's interpretation of what qualifies as a flight exempt from landing fees was " incorrect" and extended the DOT's offer to forego its rights to recovery for another thirty days due to errors in its earlier February 2013 letter.

On March 14, 2013, Plaintiffs filed their " Complaint for Return of Funds Paid Under Protest, Declaratory and Injunctive Relief" (Complaint). Plaintiffs alleged HRS § 261-12(a), which provides " [n]o rule of the director shall apply to airports or air navigation facilities owned or operated by the United States [,]" precluded the DOT from enforcing rules requiring payment of landing fees for operations at Dillingham Airfield. Plaintiffs sought: (1) a return of $50,837.99 paid under protest, along with interest; (2) a declaratory judgment that landing fees set forth under Hawaii Administrative Rules (HAR) § 19-16.1-3 (am. 2000)[3] were inapplicable to Dillingham Airfield and therefore Plaintiffs were exempt from such fees; and (3) injunctive relief preventing Defendants from taking further action to impose these fees on Plaintiffs.

On April 8, 2013, Plaintiffs filed their " Motion for a Preliminary and Permanent Injunction" (Motion for Injunction) restraining and preventing Defendants " from imposing illegal and unauthorized landing fees on Plaintiffs for landings at Dillingham Airfield . . . ." Plaintiffs argued that landing fees imposed under HAR § 19-16.1-3 on Pofolk Aviation and Hale O'lele were " clearly invalid, unauthorized[,] and exceed [the DOT's] grant of statutory authority because this airfield is an airport or air navigation facility owned by the United States."

On April 8, 2013, Defendants filed their " Answer of [Defendants] in their Official Capacities" (Answer) to Plaintiffs' Complaint and a " Counterclaim by [Defendants] in Their Official Capacities Against [Pofolk Aviation and Hale O'lele] to [the Complaint]" (Counterclaim). Defendants' Counterclaim alleged Plaintiffs had accrued landing fee obligations and asked the circuit court to award the DOT judgment against Plaintiffs for unpaid landing fees, interest, and penalties in an amount to be determined at trial; declare the DOT ...


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