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Gold Coast Neighborhood Assn. v. State

Intermediate Court of Appeals of Hawaii

June 30, 2015

GOLD COAST NEIGHBORHOOD ASSOCIATION, Plaintiff/Appellee/Cross-Appellant,
v.
STATE OF HAWAI'I, Defendant/Appellant, and DOE GOVERNMENTAL ENTITIES 1-10, DOE GOVERNMENTAL AGENCIES 1-10, Defendants (CIVIL NO. 07-1-1122) STATE OF HAWAI'I, by its ATTORNEY GENERAL, Plaintiff/Appellant/Cross-Appellee,
v.
TROPIC SEAS, INC.; THE ASSOCIATION OF APARTMENT OWNERS OF DIAMOND HEAD BEACH, INC.; DIAMOND HEAD APARTMENTS, LTD.; CS APARTMENTS, LTD.; THE ASSOCIATION OF APARTMENT OWNERS OF 2987 KALAKAUA CONDOMINIUM; TAHITIENNE, INCORPORATED; THE ASSOCIATION OF APARTMENT OWNERS OF 3003 KALAKAUA, INC.; and THE ASSOCIATION OF APARTMENT OWNERS OF 3019 KALAKAUA, INC., Defendants/Appellees/Cross- ppellants, and OLIVIA CHEN LUM, Trustee of the Olivia Chen Lum Revocable Living Trust; CLARENCE KWON HOU LUM, Trustee of the Clarence Kwon Hou Lum Trust and Trustee under the Will and Estate of Chow Sin Kum Lum; JEANNE S.J. CHAN and HOWARD N.H. CHAN, Trustees of the Jeanne S.J. Chan Trust; and THE DIAMOND HEAD AMBASSADOR HOTEL, LTD., Defendants/Appellees/Cross-Appellees, and JOHN DOES 1-20, DOE CORPORATIONS 1-20, DOE PARTNERSHIPS 1-20, DOE ASSOCIATIONS 1-20, DOE GOVERNMENTAL AGENCIES 1-20, AND DOE ENTITIES 1-20, Defendants (CIVIL NO. 10-1-0888)

APPEAL FROM THE CIRCUIT COURT OF THE FIRST CIRCUIT

William J. Wynhoff Deputy Attorney General for Defendant/Plaintiff/ Appellant/Cross-Appellee State of Hawai'i.

Robert G. Klein Randall K. Schmitt Jordon J. Kimura Troy J.H. Andrade (McCorriston Miller Mukai MacKinnion) for Plaintiff/Appellee/Cross-Appellant Gold Coast Neighborhood Association and Defendants/Appellees/Cross-Appellants Tropic Seas, Inc.;

The Association of Apartment Owners of Diamond Head Beach, Inc.; Diamond Head Apartments, Ltd.; CS Apartments, Ltd.; The Association of Apartment Owners of 2987 Kalakaua Condominium; Tahitienne, Incorporated; The Association of Apartment Owners of 3003 Kalakaua, Inc.; and The Association of Apartment Owners of 3019 Kalakaua, Inc.

Stephen K.C. Mau (Rush Moore) for Defendant/Appellee/Cross-Appellee Diamond Head Ambassador Hotel, Ltd.

FOLEY, PRESIDING J., LEONARD AND REIFURTH, JJ.

OPINION

FOLEY, JUDGE.

This consolidated appeal arises from two cases that sought declaratory relief as to the ownership of a certain stretch of dilapidated seawalls at the Diamond Head end of Kalakaua Avenue in Waikiki on O'ahu. Defendant/Plaintiff/ Appellant/Cross-Appellee State of Hawai'i (State) appeals from the (1) Final Judgment filed February 3, 2014 and (2) "Findings of Fact, Conclusions of Law, and Order" (FOFs/COLs/Order) filed November 29, 2013 by the Circuit Court of the First Circuit[1] (circuit court) Plaintiff/Appellee/Cross-Appellant Gold Coast Neighborhood Association (Gold Coast) and Defendants/Appellees/ Cross-Appellants Tropic Seas, Inc. (Tropic Seas); The Association of Apartment Owners of Diamond Head Beach, Inc. (AOAO of DH Beach); Diamond Head Apartments, Ltd. (DH Apartments); CS Apartments, Ltd. (CS Apartments); The Association of Apartment Owners of 2987 Kalakaua Condominium (AOAO of 2987); Tahitienne, Incorporated (Tahitienne); The Association of Apartment Owners of 3003 Kalakaua, Inc. (AOAO of 3003); and The Association of Apartment Owners of 3019 Kalakaua, Inc. (AOAO of 3019) (collectively, the Kalakaua Group) cross-appeal from the circuit court's "Order Denying Plaintiff Gold Coast Neighborhood Association Etal's Motion for Attorneys' Fees and Costs Filed February 18, 2 014" filed May 13, 2014 (Order Denying Fees and Costs).

On appeal, the State contends the circuit court lacked jurisdiction and erred on the merits, and the Kalakaua Group contends the circuit court erred by not awarding it attorneys' fees and costs.

I. BACKGROUND

Gold Coast filed a complaint, first amended complaint, and second amended complaint against the State on June 22, 2007, August 19, 2008, and September 13, 2010, respectively (Civil No. 07-1-1122).[2] Gold Coast alleged that it "is a non-profit organization . . . comprised of individuals who own real property along Kalakaua Avenue on the Waikiki coastline . . . ." Gold Coast alleged that it was in a dispute with the State over "whether the State has the duty to maintain in good and safe condition a long stretch of seawall on the Waikiki coastline along Kalakaua Avenue . . . (the 'Gold Coast')[.]" Gold Coast also alleged that

(1) "the Seawall was built by unknown private parties at least 80 years prior to the date of this filing";

(2) "the public has used the Seawall as a thoroughfare along the coastline for most, if not all, of its existence";

(3) Gold Coast nor "its predecessors . . . prevented or discouraged members of the public from accessing the Seawall";

(4) "[t]he Seawall is in an unsafe condition and poses an imminent danger to members of the public who use the Seawall as a thoroughfare"; and

(5) in 1992, the State issued a notice declaring that it "has a right-of-way" over the Seawall "and is responsible to keep [it] in good and safe condition."

Gold Coast further alleged that the State "repaired and rehabilitated the Seawall in 1992"; "appropriated funds for improvements to the Seawall in years since the 1992 rehabilitation, but did not release these funds for actual use"; and despite Gold Coast's "repeated demands[, ] . . . has consistently informed [Gold Coast] that the State does not have a duty to maintain the Seawall in a safe condition." Gold Coast claimed the "State is responsible to maintain and keep the Seawall in a good and safe condition and further, as the Seawall is a public highway, the State has a duty to maintain the Seawall in a condition safe for travel." Gold Coast sought a declaration "that the State is required to maintain the Seawall and keep it in good and safe condition" and an award of attorneys' fees and costs.

The State filed answers to Gold Coast's complaints on July 12, 2007, September 24, 2008, and September 20, 2010. The State contended that

(1) Gold Coast failed to state a claim upon which relief can be granted;

(2) Gold Coast's claims were barred by the State's sovereign immunity, the statute of limitations, the political question doctrine, the provisions of Hawaii Revised Statutes (HRS) chapters 501 and 520, waiver, estoppel, and laches;

(3) Gold Coast does "not own the [(Seawall[3]) ] or any interest in it"; the State "does not have a duty to repair and maintain the [Seawall]" and "will not repair or maintain the [Seawall]"; (4) the circuit court lacked subject matter jurisdiction;

(5) the alleged controversy was not ripe; and

(6) Gold Coast lacked standing.

On April 26, 2010, the State filed a complaint (Civil No. 10-1-0888) for declaratory relief against Tropic Seas; AOAO of DH Beach; DH Apartments; CS Apartments; AOAO of 2 987; Tahitienne; AOAO of 3003; AOAO of 3019; Defendants/Appellees/ Cross-Appellees Olivia Chen Lum, trustee of the Olivia Chen Lum Revocable Living Trust (Olivia Lum); Clarence Kwon Hou Lum, trustee of the Clarence Kwon Hou Lum Trust and trustee under the Will and Estate of Chow Sin Kum Lum (Clarence Lum); Jeanne S.J. Chan and Howard N.H. Chan, trustees of the Jeanne S.J. Chan Trust (the "Chans"); Diamond Head Ambassador Hotel, Ltd. (DH Ambassador Hotel); and Oceanside Manor Association (Oceanside Manor). The State alleged, inter alia, that each parcel of real property listed in the complaint "is located on or adjacent to the ocean shore and makai[4] of Kalakaua Avenue . . . [and] has a seawall at its makai boundary"; "Defendants own, control, or manage the subject real properties, including the property on which the [Seawall is] located"; "[n]one of the [Seawall was] built by the Kingdom, Territory, or [State]"; and "an actual controversy that may be resolved by a declaratory judgment" exists between the State and the "defendants as to the ownership of the seawalls and the real property under the [Seawall] and as to whether or not the State has an easement on or over the [Seawall]" because a lawsuit brought by Gold Coast against the State "is pending." The State sought "a declaration that it does not own the seawalls or the real property under the seawalls and . . . does not have an easement by prescription or implication over the [Seawall]" and costs.

Answers to the State's complaint were filed by (1) Olivia Lum, Clarence Lum, and the Chans (collectively Individual Defendants); (2) AOAO of 3003; (3) Tropic Seas, AOAO DH Beach, DH Apartments, CS Apartments, AOAO of 2987, Tahitienne, and AOAO of 3019 (collectively AOAO Defendants); (4) Oceanside Manor; and (5) DH Ambassador Hotel. The Individual Defendants, AOAO of 3003, and the AOAO Defendants alleged in their answers to the complaints that the public consistently used "the [Seawall] as a public thoroughfare for at least 50 to 100 years"; the State's "claims are barred by its consent or voluntary participation"; and the State accepted "responsibility over the [Seawall] over the past several decades." The Individual Defendants and the AOAO Defendants alleged that the State's lawsuit was barred because the State's claims could have been brought as compulsory counterclaims pursuant to Hawai'i Rules of Civil Procedure (HRCP) Rule 13(a). DH Ambassador Hotel alleged that the "seawall along Makai boundary of [its] property was rebuild [sic] and/or reconstructed after 1991 by the [State]" and the State "knowingly and voluntarily assumed the dominion and control over portions of the [Seawall] adjoining [DH Ambassador Hotel's] property."

On June 15, 2010, the State filed a motion to consolidate its case (Civil No. 10-1-0888) with the case brought by Gold Coast against the State (Civil No. 07-1-1122), and the circuit court granted the motion on August 10, 2010.

On March 18, 2011, the circuit court filed the "First Stipulation of Facts" (SOF). The SOF refers to the "Seawall" without prejudice because "[t]he parties disagree as to whether it is more appropriate to refer to them as one seawall or multiple seawalls." The SOF includes but is not limited to the following stipulations:

• AOAO Defendants, DH Ambassador Hotel, and AOAO of 3003 are members of Gold Coast.
• The Seawall is "on, at, or near the seaward boundary of" eleven parcels of real property.
• Tropic Seas, AOAO of DH Beach Hotel, DH Apartments, CS Apartments, AOAO of 2987, Tahitienne, AOAO of 3003, and AOAO of 3019 each own one of the eleven parcels of property, and DH Ambassador Hotel owns three of the eleven parcels.
• "Sometime around 1982, " the Land Division of the State's Department of Land and Natural Resources (DLNR) "repaired and rehabilitated broken sections of the Seawall" that included the portion of the Seawall on the makai boundaries of DH Apartments, CS Apartments, and AOAO of 2 987.
• In June 1982, DLNR completed "emergency repair work ... to shore approximately 40 feet of the Seawall along the boundary of [DH Apartments]."
• "Sometime after May 1984, the State did additional work on one or more portions of the Seawalls[, ]" referring to that work as the "Waikiki Seawall, Walkway Rehabilitation, Phase III, " and describing its work completed as repairs to "walkway on top of existing wall."
• The "Waikiki Seawall, Walkway Rehabilitation, Phase III" affected the portions of the Seawall on the makai boundaries of eight of the eleven parcels at issue, not including the portion on the boundary of Tropic Seas (TMK 3-1-032-030) or the portions on the boundaries of two of DH Ambassador Hotel's three parcels (TMK 3-1-032-029 and TMK 3-1-032-28).
• In September 1993 and pursuant to a Special Management Area Use Permit and Shoreline Setback Variance granted by the City and County of Honolulu, DLNR "built or rebuilt essentially the entire" portion of the Seawall on the makai boundary of the DH Ambassador Hotel (TMK Nos. 3-1-032:026, 027, 028) in response to damage caused by Hurricane Iniki.
• In September 1993, the makai boundary of the DH Ambassador Hotel (TMK Nos. 3-1-032:026, 027, 028) was essentially the same as the shoreline, and "[t]herefore to the extent the State built the wall makai of the then shoreline the wall is on State property."
• On or about March 15, 2002, the State, via a letter from DLNR, informed a "concerned resident" "that no permits were ever obtained to attach a sea ladder to the sea wall adjacent to the [DH] Ambassador Hotel."
• On July 25, 2003, the State granted Gold Coast a "Non-Exclusive Easement for a term of 55 years for the right, privilege, and authority to construct, use, maintain and repair a ladder 'in, over, under, and across" a portion of the Seawall on the makai boundary of one of DH Ambassador Hotel's parcels (TMK 3-1-032:027).
• Gold Coast paid the State $2, 406 for the Non-Exclusive Easement and procured commercial general liability insurance in accordance with the terms of the Non-Exclusive Easement.
• "The State reserved the right to withdraw the Non-Exclusive Easement for public use or purposes, at any time during the term of the easement upon the giving of reasonable notice to [Gold Coast]."
• On August 12, 2003, Gold Coast installed a sea ladder onto the TMK 3-1-032:027 portion of the Seawall (i.e., a ladder that is bolted to the Seawall and descends into the ocean).
• The portion of the Seawall on the makai boundary of AOAO of 3019's parcel (TMK 3-1-033:009) was apparently worked on in 2006 but the parties do not know who did the work.
• In 2006, "the State appropriated $2 million for plans, design and construction for the resurfacing of the seawall and installation of railings along Waikiki's Gold Coast."
• "Since at least 1960 [, ]" the State has held an express "easement of right of way for pedestrians only over, across and along the seawall along the highwater mark at seashore" with regard to the portion of the Seawall on the makai boundary of AOAO of 3019's parcel.

On March 22, 2011, the circuit court held a bench trial at which June Anderson (Anderson), Robert Gentry (Gentry), and Guy Bishaw (Bishaw) testified for the Kalakaua Group.[5] On March 31, 2011, the circuit court conducted a site visit.

On November 29, 2013, the circuit court entered its FOFs/COLs/Order. The "Findings of Fact" (FOFs) section of the circuit court's FOFs/COLs/Order included the facts that were stipulated to by the parties in the SOF and the following pertinent FOFs:

• No part of the Seawall existed in 1872; the portion of the Seawall that is on the makai boundaries of four of the eleven parcels existed in 1904; the portion of the Seawall that is on the makai boundaries of five other of the eleven parcels existed in 1912; and the portion of the Seawall that is on the makai boundaries of the two remaining parcels was constructed sometime between 1921 and 1930.
• The Seawall was built "for the primary purpose of protecting private ...

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