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LLC v. State of Hawaii, Land Use Commission

United States District Court, D. Hawai'i

August 25, 2015

BRIDGE AINA LE'A, LLC, Plaintiff,
v.
STATE OF HAWAII LAND USE COMMISSION; VLADIMIR P. DEVENS; KYLE CHOCK; THOMAS CONTRADES; LISA M. JUDGE; NORMAND R. LEZY; NICHOLAS W. TEVES; RONALD I. HELLER; EDMUND ACZON, in his official capacity; CHAD MCDONALD, in his official capacity; JONATHAN SCHEUER, in his official capacity; KENT HIRANAGA, in his official capacity; BRANDON AHAKUELO, in his official capacity; NEIL CLENDENINN, in his official capacity; AARON MAHI, in his official capacity; SANDRA SONG, in her official capacity; ARNOLD WONG, in his official capacity; JOHN DOES 1-10; JANE DOES 1-10; DOE PARTNERSHIPS 1-10; DOE CORPORATIONS 1-10; DOE ENTITIES 2-10 and DOE, Defendants

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[Copyrighted Material Omitted]

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          For Bridge Aina Le'a, LLC, Plaintiff: Bruce D. Voss, Matthew C. Shannon, Michael C. Carroll, LEAD ATTORNEYS, Bays Deaver Lung Rose & Holma, Honolulu, HI.

         For State of Hawaii, Land Use Commission, Vladimir P. Devens, in his individual and official capacity, Kyle Chock, in his individual and official capacity, Thomas Contrades, in his individual and official capacity, Normand R. Lezy, in his individual and official capacity, Duane Kanuha, in his official capacity, Charles Jencks, in his official capacity, Lisa M. Judge, in her individual and official capacity, Nicholas W. Teves, Jr., in his individual and official capacity, Ronald I. Heller, in his official capacity, Defendants: E. Diane Erickson, LEAD ATTORNEY, Office of the Attorney General-Hawaii, Honolulu, HI; William J. Wynhoff, LEAD ATTORNEY, Office of the Attorney General-State of Hawaii, Honolulu, HI.

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         ORDER GRANTING REVISED MOTION TO DISMISS

         Susan Oki Mollway, Chief United States District Judge.

         I. INTRODUCTION.

         This case arises out of a decision by Defendant State of Hawaii Land Use Commission (the " Commission" ) to reclassify a parcel of land from urban use to agricultural

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use. Plaintiff Bridge Aina Le'a, LLC (" Bridge" ), the owner of the parcel, claims that, in reclassifying the land, the Commission and certain commissioners violated Bridge's rights under the United States Constitution, the Hawaii constitution, and various Hawaii laws. The Hawaii Supreme Court has upheld the state trial court's invalidation of the Commission's reclassification ruling.

         Defendants Vladimir P. Devens, Kyle Chock, Thomas Contrades, Lisa M. Judge, Normand R. Lezy, Nicholas W. Teves, and Ronald I. Heller (collectively, " Individual Capacity Commissioners" ), sued in their individual capacities, were commissioners at the time of the events underlying Bridge's suit. The former commissioners have been removed from this case as Official Capacity Commissioners, and the current commissioners--Edmund Aczon, Chad McDonald, Jonathan Scheuer, Kent Hiranaga, Linda Estes, Aaron Mahi, Nancy Cabral, and Arnold Wong--have been substituted as Defendants in their official capacities pursuant to Rule 25(d) of the Federal Rules of Civil Procedure.[1]

         On March 30, 2012, this court stayed the entirety of the present action pending resolution of Bridge's administrative appeal of the Commission's decision in state court. Defendants appealed the stay, and Bridge filed a cross-appeal challenging this court's denial of its motion seeking a remand of all or part of this removed action to state court. After the Hawaii Supreme Court affirmed the state trial court in the administrative appeal, the Ninth Circuit ruled, " While this case originally met Pullman's requirements, abstention is no longer necessary." ECF 64, PageID # 662. The stay was dissolved, and the case is back on remand before this court, which now considers the merits of Defendants' motion to dismiss. The motion is granted in all respects now being moved on by Defendants.

         II. BACKGROUND.

         A. Factual Background.

         The subject parcel of land consists of 1,060 acres in South Kohala, on the island of Hawaii. See ECF No. 1-2, PageID # 15. On November 25, 1987, Signal Puako Corporation, the then-owner of the parcel, petitioned for reclassification of the land from " agricultural use" to " urban use" to allow development of a large residential community. See id. On January 17, 1989, the Commission issued its Findings of Fact, Conclusions of Law, and Decision and Order approving the petition on condition that 60 percent of the units built be " affordable" units. See id. at PageID # 16.

         On May 4, 1990, Signal Puako Corporation transferred the property to Puako Hawaii Properties (" PHP" ). See id. at PageID # 16.

         On April 1, 1991, PHP filed a motion to amend the 1989 Decision and Order, seeking to decrease the total number of units in the project. See id. at PageID # 17. On July 9, 1991, the Commission issued its Amended Findings of Fact, Conclusions of Law, and Decision and Order, which permitted a decrease in the project's density. See id. The 1991 Decision and Order also amended the affordable housing condition by requiring a minimum of 1,000 affordable units, in addition to the earlier 60 percent requirement. See id.

         By September 1, 2005, Bridge had become the owner of the property. On that date, Bridge filed a motion to amend certain

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conditions imposed by the 1991 Decision and Order so that the affordable housing conditions would be " consistent and coincide with County of Hawaii affordable housing requirements." See id at PageID # 20.

         On November 25, 2005, the Commission entered its Findings of Fact, Conclusions of Law, and Decision and Order granting in part and denying in part Bridge's motion. See id. at PageID # 21. The Commission stated:

Petitioner shall provide housing opportunities for low, low-moderate, and moderate income residents of the State of Hawaii by offering at least twenty percent (20%) of the Project's residential units at prices determined to be affordable by the County of Hawaii Office of Housing and Community Development, provided, however, in no event shall the gross number of affordable housing units within the Petition Area be less than 385 units. The affordable housing units shall meet or exceed all applicable County of Hawaii affordable housing standards, and shall be completed in substantial compliance with the representations made to the Commission.

See id. at PageID #s 21-22. The Commission also required Bridge to " obtain, and provide copies to the Commission [of] the certificates of occupancy for all of the Project's affordable housing units within five (5) years of November 17, 2005." Id. at PageID # 22.

         On December 9, 2008, the Commission issued an order to show cause as to why the property should not revert to its former agricultural classification given Bridge's alleged failure to perform in accordance with the conditions imposed by the Commission and the representations and commitments made to the Commission. See id. at PageID # 24.

         On March 20, 2009, Bridge notified the Commission that it intended to assign its interest in the project to DW Aina Le'a Development, LLC (" DW" ). See id. at PageID #s 26, 27.

         At the end of a hearing on April 30, 2009, the Commission voted unanimously to return the property to agricultural use. See id. at PageID # 27.

         On August 19, 2009, Bridge moved for rescission of the Commission's ruling returning the land to agricultural use. Bridge argued that reversion of the land was improper because Bridge had made " substantial commencement of the use of the land" in accordance with section 205-4(g) of Hawaii Revised Statutes. See id. at PageID # 28. On September 28, 2009, the Commission rescinded its order to show cause but imposed a condition that sixteen affordable units be completed by March 31, 2010. See id. at PageID # 29. The Commission also permitted DW to be named as a co-petitioner with Bridge. See id. at PageID # 30.

         Bridge alleges that sixteen affordable units were completed by March 31, 2010, as the Commission required. See id. at PageID # 30. The Commission, however, determined by vote that Bridge and DW had not completed the sixteen units by March 31, 2010. See id. at PageID # 33. The Commission also voted to keep in place the earlier order to show cause, to have a further hearing on the matter, and to affirm that the date of November 17, 2010, was the deadline by which 385 affordable units had to be built, not just a goal. See id. The Commission issued a written order to that effect on July 26, 2010. See id. at PageID # 34.

         On August 30, 2010, DW moved to amend certain conditions imposed by the Commission. See id. at PageID # 35. Bridge later filed a motion alleging violations of various statutes and administrative

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rules by the Commission, which Bridge contended rendered action by the Commission invalid. See id.

         At a hearing on January 20, 2011, the Commission, by a 5-3 vote, decided to return the property to agricultural use. See id. at 37. The Commission also voted to deny as moot Bridge's motion seeking invalidation of earlier action by the Committee. See id. at 38. The Commission did not at that time rule on DW's motion to amend.

         On April 25, 2011, the Commission entered a written order returning the property to agricultural use. See id. at PageID # 44.

         On May 13, 2011, the Commission denied DW's motion to amend. See id. at PageID # 45.

         B. Procedural Background.

         Bridge filed two actions challenging the Commission's decision to reclassify the land to agricultural use. Bridge not only sought judicial review of the Commission's decision through an administrative appeal, Bridge also filed a separate action in state court. See ECF No. 1-2. It is that separate action that was removed to this court on June 27, 2011. See ECF No. 1.

         Bridge's Complaint in this action asserts the following claims: (1) denial of due process of law in violation of the federal and state constitutions (Count I); (2) inverse condemnation in violation of the federal and state constitutions (Count II); (3) denial of equal protection of the law under the federal and state constitutions (Count III); (4) deprivation of common law vested rights (Count IV); (5) equitable estoppel (Count V); (6) deprivation of constitutional rights under 42 U.S.C. § 1983 (Count VI); (7) violation of chapters 91, 92, and 205 of Hawaii Revised Statutes and chapter 15-15 of Hawaii Administrative Rules (Count VII); (8) unconstitutional land development conditions in violation of the federal and state constitutions (Count VIII); (9) injunctive and declaratory relief (Count IX); (10) declaratory relief pursuant to section 632-1 of Hawaii Revised Statutes and Rule 57 of the Hawaii Rules of Civil Procedure (Count X); and (11) attorneys' fees and costs pursuant to 42 U.S.C. § 1988 (Count XI). See id.

         On July 27, 2011, Defendants filed a motion to dismiss all claims in this action. See ECF No. 14.

         On March 6, 2012, the circuit court in the administrative appeal entered its Findings of Fact and Conclusions of Law, and Order Reversing and Vacating the State of Hawaii Land Use Commission's Final Order. See ECF No. 41-3.

         On March 30, 2012, this court stayed the present action pending final resolution of the administrative appeal of the Commission's decision in state court. See ECF No. 48. This court declined Bridge's remand request. Both sides appealed to the Ninth Circuit. See ECF Nos. 49, 56.

         On June 15, 2012, the state circuit court entered its Amended Findings of Fact and Conclusions of Law, and Order Reversing and Vacating the State of Hawaii Land Use Commission's Final Order. See ECF No. 71-2, PageID # 716. The circuit court concluded that the Commission: (1) exceeded its statutory authority and violated chapter 205 of Hawaii Revised Statutes; (2) violated section 205-4(h) of Hawaii Revised Statutes; (3) violated section 205-16 of Hawaii Revised Statutes; (4) violated section 205-17 of Hawaii Revised Statutes; (5) violated section 205-4(g) of Hawaii Revised Statutes; (6) violated chapters 91 and 205 of Hawaii Revised Statutes and chapter 15 of Hawaii Administrative Rules; and (7) violated Bridge's and DW's federal and state due process and equal protection

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rights. See ECF No. 71-2, PageID #s 716-20.

         The Commission filed a notice of appeal and an application to transfer the appeal from the Intermediate Court of Appeals to the Hawaii Supreme Court. See id. at PageID # 721. The transfer application was granted. See id.

         On November 25, 2014, the Hawaii Supreme Court affirmed in part and vacated in part the state circuit court's second amended final judgment. See DW Aina Le'a Dev., LLC v. Bridge Aina Le'a, LLC., 134 Haw. 187, 339 P.3d 685 (2014). The Hawaii Supreme Court affirmed the state circuit court's determination that the Commission had erred in returning the property to agricultural use without complying with section 205-4 of Hawaii Revised Statutes, but reversed the state circuit court's determination that Bridge and DW had had their procedural due process, substantive due process, and equal protection rights violated. See id. at 191, 339 P.3d at 689.

         On January 23, 2015, the Ninth Circuit remanded this case to this court for appropriate action in light of the Hawaii Supreme Court's decision. See ECF 64, PageID # 663. The Ninth Circuit concluded that, while this case originally met the requirements for Pullman abstention, abstention was no longer necessary. See id. at PageID # 662.

         On April 2, 2015, Defendants filed a request to reopen this case in light of the Ninth Circuit's remand ruling and the Hawaii Supreme Court's decision in the administrative appeal. See ECF No. 71. Defendants also asked this court to resolve their earlier motion to dismiss, which had been subject to this court's stay. See id.

         The court reopened the present action and instructed the parties to submit supplemental briefing discussing what issues remained in dispute in this case following the Hawaii Supreme Court's decision in the administrative appeal. See ECF No. 75.

         The parties dispute the effect of the Hawaii Supreme Court's ruling on this case. See ECF Nos. 76, 77. Bridge contends that the only claims rendered moot by the Hawaii Supreme Court's decision in the administrative appeal are its claims for declaratory relief. See ECF No. 76, PageID # 775; ECF No. 86, PageID # 1121. Defendants, on the other hand, have taken the position in supplemental briefs, as amended by statements at the hearing on June 29, 2015, that all of Bridge's claims except the monetary relief portions of the claims based on alleged takings, imposition of unconstitutional land development conditions, and deprivation of common law vested rights were resolved by the Hawaii Supreme Court. See ECF No. 77, PageID #s 786-89; ECF No. 83, PageID #s 1114-15.

         The court first addresses the viability of Bridge's claims for declaratory and injunctive relief, and turns thereafter to the claims for monetary forms of relief.

         III. LEGAL STANDARDS.

         The motion to dismiss relies on both jurisdictional and failure-to-state-a-claim grounds.

         A. Rule 12(b)(1).

         Under Rule 12(b)(1) of the Federal Rules of Civil Procedure, a complaint may be dismissed for lack of subject matter jurisdiction.

         This court's subject matter jurisdiction is limited to " cases" or " controversies." Temple v. Abercrombie, 903 F.Supp.2d 1024, 1030 (D. Haw. 2012). This requires a federal court to determine whether a plaintiff's challenge is justiciable,

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a task accomplished through consideration of the doctrines of standing, mootness, and ripeness. See Culinary Workers Union, Local 226 v. Del Papa, 200 F.3d 614, 617 (9th Cir. 1999). These doctrines reflect that the court's role " is neither to issue advisory opinions nor to declare rights in hypothetical cases, but to adjudicate live cases or controversies consistent with the powers granted the judiciary in Article III of the Constitution." Thomas v. Anchorage Equal Rights Comm'n, 220 F.3d 1134, 1138 (9th Cir. 2000).

         Federal courts may raise a jurisdictional issue sua sponte if not raised by the parties. See Bernhardt v. Cnty. of Los Angeles, 279 F.3d 862, 868 (9th Cir. 2002); S. Pac. Transp. Co. v. City of Los Angeles, 922 F.2d 498, 502 (9th Cir. 1990).

         B. Rule 12(b)(6).

         Under Rule 12(b)(6) of the Federal Rules of Civil Procedure, the court's review is generally limited to the contents of the complaint. Sprewell v. Golden State Warriors, 266 F.3d 979, 988 (9th Cir. 2001); Campanelli v. Bockrath, 100 F.3d 1476, 1479 (9th Cir. 1996). If matters outside the pleadings are considered, the Rule 12(b)(6) motion is treated as one for summary judgment. See Keams v. Tempe Tech. Inst., Inc., 110 F.3d 44, 46 (9th Cir. 1997); Anderson v. Angelone, 86 F.3d 932, 934 (9th Cir. 1996).

         On a Rule 12(b)(6) motion to dismiss, all allegations of material fact are taken as true and construed in the light most favorable to the nonmoving party. Fed'n of African Am. Contractors v. City of Oakland, 96 F.3d 1204, 1207 (9th Cir. 1996). However, conclusory allegations of law, unwarranted deductions of fact, and unreasonable inferences are insufficient to defeat a motion to dismiss. Sprewell, 266 F.3d at 988; In re Syntex Corp. Sec. Litig., 95 F.3d 922, 926 (9th Cir. 1996).

         Dismissal under Rule 12(b)(6) may be based on either: (1) lack of a cognizable legal theory, or (2) insufficient facts under a cognizable legal theory. Balistreri v. Pacifica Police Dept., 901 F.2d 696, 699 (9th Cir. 1988) (citing Robertson v. Dean Witter Reynolds, Inc., 749 F.2d 530, 533-34 (9th Cir. 1984)).

         " [T]o survive a Rule 12(b)(6) motion to dismiss, factual allegations must be enough to raise a right to relief above the speculative level, on the assumption that all the allegations in the complaint are true even if doubtful in fact." Bell A. Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) (internal quotation marks omitted); accord Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (" [T]he pleading standard Rule 8 announces does not require 'detailed factual allegations,' but it demands more than an unadorned, the-defendant-unlawfully-harmed-me accusation." ). " While a complaint attacked by a Rule 12(b)(6) motion to dismiss does not need detailed factual allegations, a plaintiff's obligation to provide the 'grounds' of his 'entitlement to relief' requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Twombly, 550 U.S. at 555. The complaint must " state a claim to relief that is plausible on its face." Id. at 570. " A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Iqbal, 556 U.S. at 678.

         IV. BRIDGE'S PROCEDURAL COMPLAINTS ARE WITHOUT MERIT.

         Bridge raises various " procedural concerns," contending that it has been prejudiced

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by Defendants' failure to file a new motion to dismiss after the conclusion of the state administrative appeal and the reopening of this case, and by this court's permitting of supplemental briefing regarding the effect of the Hawaii Supreme Court's decision and the viability of certain of Bridge's claims. See ECF No. 86, PageID #s 1123, 1130. This court is unpersuaded by Bridge's complaints about the procedure used in addressing Defendants' motion to dismiss.

         Defendants were under no obligation to file a new motion to dismiss after this case was reopened. Bridge points to no such requirement and fails to explain, nearly four months after this case was reopened, why imposition of such a requirement would have been necessary. Had this court required Defendants to file a new motion, it is the issues raised through supplemental briefing that would likely have been briefed. Bridge identifies no specific matter that has prejudiced it or that it has been denied an opportunity to address.

         At most, Bridge says that Defendants have been permitted to " backfill" their motion to dismiss through supplemental briefing. See ECF No. 86, PageID # 1123. This argument is plainly without merit. First, a new motion could have done the same, or greater, " backfilling." Second, the supplemental briefing, which addressed the effect of the Hawaii Supreme Court's ruling on this action, gave Bridge the same opportunity it gave Defendants to respond to the court's inquiries. It is difficult to envision how Bridge could possibly have been prejudiced by a supplemental briefing process in which it had equal opportunity to respond to the court's inquiries. See ECF No. 75; ECF No. 82; ECF No. 84. In fact, the supplemental briefs and the hearing held on June 29, 2015, have led to a reduction in the scope of Defendants' motion to dismiss. The original motion to dismiss sought dismissal of all claims against all Defendants. See ECF No. 14. However, the original motion to dismiss has been reduced in scope, so that the revised motion to dismiss no longer covers all claims.

         In a supplemental memorandum filed on June 15, 2015, Defendants concede that, to the extent asserted against the Commission and Official Capacity Defendants, the monetary relief portions of certain claims are not rendered moot or otherwise precluded by the Hawaii Supreme Court ruling. Specifically, Defendants agree that the monetary relief portions of Bridge's takings claims may proceed. Count I alleges a regulatory taking, and Count II alleges a taking by inverse condemnation.[2] Defendants also concede that the monetary relief portions of the vested rights claim in Count IV and the unconstitutional conditions claim in Count VIII are not resolved by the Hawaii Supreme Court's ruling. See ECF No. 77.

         At the hearing held on June 29, 2015, the parties therefore agreed that, as against the Commission and Official Capacity Defendants, certain matters would

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be deleted from the motion. The court's minutes reflect that the motion no longer seeks dismissal of the monetary relief portions of the takings claims, the vested rights claim, and the unconstitutional conditions claim. See ECF No. 82 (minutes of hearing). This means that this court does not presently have before it the question of whether those claims for monetary relief are barred by Williamson County Regional Planning Commission v. Hamilton Bank of Johnson City, 473 U.S. 172, 194-95, 105 S.Ct. 3108, 87 L.Ed.2d 126 (1985) (holding that federal takings claim is not reviewable in federal court until plaintiff has sought compensation from state and been denied).[3]

         Bridge's complaints about this court's requests for supplemental briefing on issues of mootness and ripeness are particularly weak. Both issues being jurisdictional, they may be raised by this court even if the parties fail to raise them. See, e.g., Wilson v. Fisch, Civ. No. 08-00347 JMS/KSC, 2009 WL 464334, at *3 (D. Haw. Feb. 24, 2009) (" [T]he court has an obligation to ensure that it has jurisdiction over the claims raised by the parties, and may raise this issue sua sponte." ).

         V. CLAIMS FOR DECLARATORY AND ...


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