MARK C. KELLBERG, Respondent/Plaintiff-Appellant,
CHRISTOPHER J. YUEN, in his capacity as Planning Director, County of Hawai'i, and COUNTY OF HAWAI'I, Petitioners/Defendants-Appellees
CERTIORARI TO THE INTERMEDIATE COURT OF APPEALS. CAAP-12-0000266; CIV. NO. 07-1-157.
Laureen L. Martin for petitioners.
Robert H. Thomas for respondent.
RECKTENWALD, C.J., NAKAYAMA, McKENNA, AND POLLACK, JJ., AND CIRCUIT JUDGE GARIBALDI, IN PLACE OF WILSON, J., RECUSED.
[135 Hawai'i 237] OPINION
Mark E. Recktenwald,
This appeal requires us to consider the circumstances under which a court must consider ordering the joinder of unnamed parties under Rule 19 of the Hawai'i Rules of Civil Procedure (HRCP).
A dispute arose when the Planning Director of the County of Hawai'i (Planning Director) approved the application of Michael Pruglo to consolidate and resubdivide the pre-existing lots on his 49-acre parcel of land in Ninole, Hawai'i (Subject Property). Respondent/plaintiff-appellant Mark C. Kellberg, who owned land adjacent to the Subject Property, objected to the approval because he claimed that the consolidation and resubdivision violated the Hawai'i County Subdivision Control Code, also known as Chapter 23 of the Hawai'i County Code (HCC), by increasing the number of lots on the Subject Property.
Kellberg later filed suit against petitioners/defendants-appellees, Christopher J. Yuen, in his capacity as Planning Director, and the County of Hawai'i (collectively, " County Defendants" ) in the Circuit Court of the Third Circuit.
Kellberg's complaint included six counts: Count I alleged that the Planning Director violated Chapter 23; Count II alleged that the Planning Director's violations of Chapter 23 rendered the subdivision void and entitled Kellberg to a declaratory judgment; Count III alleged that the County Defendants violated
[135 Hawai'i 238] Kellberg's right to due process; Count IV alleged that the Planning Director abused his discretion by not remedying the violations of Chapter 23 in a timely manner; Count V alleged that Kellberg was entitled to an injunction requiring the County Defendants to comply with Chapter 23; and Count VI alleged that Kellberg was entitled to monetary damages. Kellberg prayed for a declaratory judgment that the subdivision was illegal and void under Chapter 23, a decree of specific performance for the Planning Director to bring the subdivision into compliance with Chapter 23, an injunction enjoining further subdivision of the Subject Property inconsistent with Chapter 23, monetary damages, and attorney's fees and costs.
The circuit court granted the County Defendants' motion for summary judgment on all counts. Kellberg appealed, and the Intermediate Court of Appeals (ICA) vacated and remanded with instructions for the circuit court to dismiss the case for lack of subject matter jurisdiction because Kellberg failed to exhaust his administrative remedies. Kellberg filed an application for a writ of certiorari, which was accepted.
This court held that the ICA erred " by holding that Kellberg's Complaint should have been dismissed for lack of subject matter jurisdiction based on the exhaustion doctrine."
Kellberg v. Yuen, 131 Hawai'i 513, 534, 319 P.3d 432, 453 (2014) ("
Kellberg I" ). Accordingly, this court vacated the ICA's judgment and remanded to the ICA for consideration of the remaining issues raised by Kellberg in his appeal. Id. at 537, 319 P.3d at 456.
On remand, the ICA held that the Planning Director's approval of Pruglo's subdivision was invalid because it increased the number of lots, and therefore, Kellberg was entitled to judgment as a matter of law on Counts I and II. The ICA further held that Counts III and IV were moot. The ICA vacated the circuit court's judgment in favor of the County Defendants and remanded to the circuit court.
We accepted the County Defendants' timely application for a writ of certiorari, which presented the following questions:
1. Where the undisputed evidence demonstrated the subject property consists of six, not seven lots, was it error to declare the subdivision invalid?
2. Prior to vacating the judgment in favor of the County and entering judgment in favor of Kellberg, should the ICA have considered all of the County's arguments which were relied upon by the Circuit Court in granting summary judgment?
3. When a party seeks to invalidate a subdivision must the owners of the subject property be joined as parties prior to voiding the subdivision?
As set forth below, the ICA erred in ruling on the merits of Kellberg's claims without addressing whether the owners of the lots within the Subject Property (lot owners) were required to be joined as parties under HRCP Rule 19. Because Kellberg sought to have the subdivision declared void, the lot owners were necessary parties under Rule 19(a). Nothing in the record establishes that they could not have been joined. Therefore, we vacate the judgments of the ICA and circuit court and remand to the circuit court with instructions to order the joinder of the lot owners under Rule 19.
On remand, if it is not feasible to join the lot owners, the circuit court must consider the factors set forth in HRCP Rule 19(b) and determine whether in equity and good conscience the action should proceed among the parties before it, or whether the action should be dismissed, the lot owners thus being regarded as " indispensable." In other words, a court may not reach the merits of a case until either the necessary parties are joined, or the court determines that the action may proceed in their absence.
A. Factual background
In April 2000, Prudential Orchid Isle Properties (Prudential) requested from the County of Hawai'i Planning Department a determination of the number of pre-existing lots
[135 Hawai'i 239] on a 49-acre parcel of land zoned as AG 20 in Ninole, Hawai'i. Kellberg I,
131 Hawai'i at 516, 319 P.3d at 435. On May 22, 2000, then-Planning Director, Virginia Goldstein, wrote to Prudential that the Subject Property consisted of six preexisting lots. Id. A map attached to Goldstein's letter showed that the larger 48.47--acre portion of the Subject Property consisted of five adjoining lots, and that the smaller 0.6--acre non-contiguous portion of the Subject Property constituted a sixth lot (identified as Lot 4 on the map). Id.
In December 2003, the then-owners of the Subject Property informed the Planning Department that they desired to consolidate and resubdivide the Subject Property and believed that the property consisted of at least seven lots. Id. In June 2004, Yuen, who had taken over as Planning Director, responded that the Subject Property consisted of two separate lots, one of which was the small non-contiguous plot. Id.
Also in 2004, Pruglo purchased the Subject Property. Id. In January 2005, Sidney M. Fuke, a planning consultant working with Pruglo, wrote to the Planning Director to memorialize a discussion between Fuke and Yuen, in which Fuke claimed that the Planning Director agreed that based on Goldstein's May 2000 letter, the Subject Property consisted of six pre-existing lots. Id. On April 7, 2005, Fuke, on Pruglo's behalf, filed a " Consolidation/Resubdivision Application" with the Planning Department, seeking to consolidate and resubdivide the Subject Property's six pre-existing lots into six new lots. Id.
On June 1, 2005 the Planning Director granted tentative approval of the preliminary plat map included with Pruglo's application. Id. Fuke submitted a final plat map to the Planning Director on July 1, 2005. Id. Both the preliminary plat map and the final plat map identified a 48-acre portion of the Subject Property as " Parcel 1," and divided Parcel 1 into six lots. Id. Both maps also showed the existence of a 0.6-acre non-contiguous portion of the Subject Property. Id. While the non-contiguous portion was labeled " Parcel 2" on the preliminary plat map, it was not labeled on the final plat map. Id.
In July 2005, the Planning Director approved Pruglo's consolidation and resubdivision application. Id. Kellberg, an owner of a parcel of land adjacent to the Subject Property, claimed that he first learned of Pruglo's application and the Planning Director's approval " on August 11, 2005, when he observed a 'for sale' sign on the Subject Property, and a realtor later called him with an offer to sell him a newly created lot along his property line." Id. at 517, 319 P.3d at 436. The next day, Kellberg went to the Planning Department and attempted to file an appeal. Id. A Planning Department employee informed Kellberg that he could not file an appeal because the thirty-day period for filing appeals had already passed. Id. Kellberg left his contact information with the employee and requested that the Planning Director call him later that day. Id. The Planning Director did not call Kellberg. Id.
Kellberg voiced his concerns about the subdivision approval in letters to the Planning Director on August 16, 2005, and January 17, 2006. Id. In both letters, Kellberg explained that because the subdivision resulted in seven lots instead of six, it was inconsistent with the Planning Director's prior approval for a six-lot subdivision. Id. Kellberg further explained that this error was
[135 Hawai'i 240] evident in the final subdivision plan on file with the Planning Department, which revealed that the Planning Department did not account for the existence of the non-contiguous portion of the Subject Property. Id.
In March 2006, Kellberg requested from the Planning Department information on how to appeal the Planning Director's approval of Pruglo's subdivision application to the Board of Appeals, County of Hawai'i (BOA). Id. The Chairman of the BOA informed Kellberg that he could not appeal because the thirty-day period for filing appeals had passed. Id.
On April 19, 2006, Pruglo submitted a second consolidation and resubdivision application to the Planning Department, this time seeking to consolidate the non-contiguous portion of the Subject Property with one of the six lots created by the previous subdivision. Id. at 517-18, 319 P.3d at 436-37. Kellberg asked the Planning Director to notify him when Pruglo's subdivision application was approved. Id. at 518, 319 P.3d at 437.
Several months later, in August 2006, Kellberg's counsel informed the Planning Director that he assumed an appeal was premature because Kellberg had not received notice of any action on behalf of the Planning Director in regards to Pruglo's pending application. Id. Kellberg's counsel requested notification of when tentative approval was granted. Id.
The following passage is taken from an October 23, 2006 letter from the Planning Department to Kellberg and his counsel:
On May 22, 2000, the Planning Department sent a letter on this subject stating that the department recognized six pre-existing lots within this tax map key [(TMK)] parcel. However, in response to a December 24, 2004 request to recognize seven lots, based on some old plantation camp houses, the Planning Department sent a letter stating that only two lots were recognized. This was a mistake, because the Department should have respected the previous determination. Later, Mr. Fuke, representing the owner, met with me to discuss the case for more lots based on the old houses. . . . When [Fuke] brought it to my attention that the Department had previously recognized six lots, I told Mr. Fuke that we would honor the previous letter, which is our general policy. I did not re-analyze the number of lots based upon the old houses.
[Pruglo] then submitted a consolidation/resubdivision (Sub. 05-00064) based on the six pre-existing lots. As Mr. Kellberg correctly points out, there was a mistake in the approval of that subdivision. One of the six recognized lots was a 0.699 acre portion of Grant 11,070. For some reason, it was not contiguous with the remainder of TMK No. 3-2-2-35. In the consolidation/resubdivision, the Planning Department did not notice that this noncontiguous portion had been included in the lot count. Thus, it remained separate, and is now TMK No. 3-2-2-110. Thus, with the six lots in Sub. 05-00064 and parcel 110, there are now seven lots instead of six.
I am not going to do anything to undo this situation at this time. Sub. 05-00064 has received final subdivision approval and at least some of the lots have been sold. Given that parcel 110 is physically separated from the remainder of Sub. 05-00064, and from any property owned by the subdivider, I cannot see a way to erase its separate existence.
Kellberg responded to the Planning Director in a February 6, 2007 letter, asserting that it was within the Planning Director's power under Chapter 23 " to resolve the original lot count 'mistake' by simply . . . reducing the total number [of lots] created to the requisite six."
Kellberg I, 131 Hawai'i at 519, 319 P.3d at 438.
B. Proceedings in the circuit court and before the BOA
In May 2007, Kellberg filed a complaint in the circuit court against the County Defendants. Id. Kellberg's complaint included six counts.
Although not pled with precision, Count I alleged the Planning Director violated Chapter 23 of the HCC by approving Pruglo's application because the subdivision resulted in seven lots rather than two, and that Kellberg was " a person aggrieved" by the approval;
[135 Hawai'i 241] Count II alleged that the Planning Director's violations of Chapter 23 rendered the subdivision void and that Kellberg was entitled to a declaratory judgment as to these violations; Count III alleged that the County Defendants violated Kellberg's right to due process under the United States and Hawai'i constitutions by not providing him with notice of the Planning Director's approval of Pruglo's application and by depriving him of an opportunity to voice his objections to the approval; Count IV alleged that the Planning Director abused his discretion by not remedying the violations of Chapter 23 in a timely manner and thus his approval of the subdivsion was void; Count V alleged that Kellberg was entitled to an injunction requiring the County Defendants to comply with Chapter 23 and prohibiting them from permitting more than two lots on the Subject Property and from allowing any subdivision of the Subject Property other than in accordance with the HCC; and Count VI alleged that Kellberg's property had been " adversely and materially impacted" by the Planning Director's approval of Pruglo's subdivision application, that Kellberg suffered " material and substantial disadvantage and monetary harm," and that he was entitled to monetary damages. Id. at 519-20, 319 P.3d at 438-39. Counts II-VI incorporated all of the allegations in the prior counts.
The complaint included the following prayer for relief:
A. Pursuant to all Counts, that SUB-05-00064 be declared illegal and violative of the Subdivision Control ...