United States District Court, D. Hawaii
ORDER GRANTING DEFENDANT'S MOTION TO
Oki Mollway, United States District Judge
the court is Defendant State of Hawaii's motion to dismiss
Plaintiff DW Aina Le'a Development, LLC's Complaint
pursuant to Rule 12(b)(6) of the Federal Rules of Civil
Procedure. Motion to Dismiss, ECF No. 5. This court dismisses
DW's federal and state takings claims as time-barred.
case concerns the classification of over 1, 000 acres of land
in South Kohala on Hawaii Island. Complaint, ECF No. 1-2,
PageID # 9. In 1989, the State's Land Use Commission
reclassified the land from agricultural to urban to allow the
development of almost 2, 000 homes, with facilities and
amenities, as part of a residential community. Id.
The reclassification was subject to various conditions,
including a condition that a certain percentage of the
housing units be affordable. Id.
1990 until 2008, the Land Use Commission amended and revised
the original order's affordable housing condition several
times, working with various successor landowners and
developers, including DW. Id., PageID #s 9-11. In
2008, the Commission issued an order to show cause why the
land should not revert back to an agricultural classification
because of the developer's alleged failure to timely
comply with certain conditions. Id., PageID # 11. On
April 25, 2011, after several years of proceedings and
DW's acquisition of development rights for the land, the
Commission ordered the land reverted from its urban
classification back to its original agricultural use.
Id., PageID #s 11-21.
landowners and developers, including DW, sought judicial
review of the Commission's decision. Id., PageID
# 21. The Hawaii Supreme Court ultimately consolidated the
cases and held that the Land Use Commission “erred in
reverting the land without complying with the requirements of
HRS § 205-4 because the land owners had substantially
commenced use of the land in accordance with the
representations they had made to the Commission.”
DW Aina Lea Dev., LLC v. Bridge Aina Lea, LLC., 134
Haw. 187, 190, 339 P.3d 685, 688 (2014). The court observed
that, by the time the land was reverted to agricultural use,
DW “had substantially commenced use of the land in
accordance with [its] representations” to the
Commission and had spent more than $20 million on the
project. Id. at 191, 339 P.3d at 689.
February 23, 2017, DW filed its Complaint in the First
Circuit Court for the State of Hawaii seeking just
compensation from the State for the alleged regulatory
taking. Complaint, ECF No. 1-2. The State removed the case to
federal court and then filed the present motion to dismiss.
Notice of Removal, ECF No. 1; Motion to Dismiss, ECF No. 5. A
hearing was held on May 15, 2017. See ECF No. 15.
STANDARD OF REVIEW.
Rule 12(b)(6) of the Federal Rules of Civil Procedure, the
court's review is generally limited to the contents of a
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). However, the court may take
judicial notice of and consider matters of public record
without converting a Rule 12(b)(6) motion to dismiss into a
motion for summary judgment. See Emrich v. Touche Ross
& Co., 846 F.2d 1190, 1198 (9th Cir. 1988).
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. WMX Techs., Inc. v.
Miller, 197 F.3d 367, 372 (9th Cir. 1999). 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 Dep't, 901 F.2d
696, 699 (9th Cir. 1988) (citing Robertson v. Dean Witter
Reynolds, Inc., 749 F.2d 530, 533-34 (9th Cir. 1984)).
survive a Rule 12(b)(6) motion to dismiss, “[f]actual
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 Atl. Corp. v. Twombly, 550 U.S.
544, 555 (2007) (internal citations omitted); accord
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)
(“[T]he pleading standard Rule 8 announces does not
require ‘detailed factual allegations, ' but it
demands more than an unadorned,
“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 (internal citations
omitted). The complaint must provide “enough facts to
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.
seeks monetary damages from the State for the alleged taking
of property without payment of just compensation in violation
of Article I, section 20 of the Hawaii constitution, as well
as the Fifth Amendment to the United States Constitution.
Complaint, ECF No. 1-2, PageID # 25. The State seeks
dismissal of the “takings-inverse condemnation”
claims, arguing that they are barred by the applicable
statutes of limitations. Memorandum in Support of Motion to
Dismiss, ECF No. 5-1, PageID #s 40-41.
This Court Has Subject Matter Jurisdiction Over the Federal
court first considers whether the federal takings claim is
ripe for review. Ripeness “is drawn both from Article
III limitations on judicial power and from prudential reasons
for refusing to exercise jurisdiction.” Reno v.
Catholic Soc. Servs., Inc., 509 U.S. 43, 57 n.18 (1993);
Portman v. Cty. of Santa Clara, 995 F.2d 898, 902
(9th Cir. 1993) (“The ripeness inquiry contains both a
constitutional and a prudential component.”). Article
III ripeness is jurisdictional, while “[p]rudential
considerations of ripeness are discretionary.”
Thomas v. Anchorage Equal Rights Comm'n, 220
F.3d 1134, 1142 (9th Cir. 2000) (en banc).
Williamson County Regional Planning Commission v.
Hamilton Bank, 473 U.S. 172 (1985), a federal regulatory
takings claim does not ripen until two prongs are satisfied.
Under the first prong, a plaintiff must establish that
“the government entity charged with implementing the
regulations has reached a final decision regarding the
application of the regulations to the property at
issue.” Id. at 186. Under the second prong, a
plaintiff must show that “the owner has unsuccessfully
attempted to obtain just compensation through the procedures
provided by the State for obtaining such compensation.”
Id. at 195.
court recently opined in a related case on whether a federal
takings claim is ripe for judicial review under
Williamson County when a case is removed to federal
court. In that related case, the plaintiff had filed a
complaint in state court seeking, among other things, just
compensation for the alleged regulatory taking relating to
the reversion of the land in issue here to agricultural use.
Bridge Aina Le'a, LLC v. Haw. Land Use
Comm'n, 125 F.Supp.3d 1051, 1054-55, 1057 (D. Haw.
Aug. 25, 2015). The defendants removed the case to federal
court before a determination of just compensation had
occurred in state court. Id. at 1057. In addressing
a motion to dismiss brought by the defendants in that case,
this court wrote:
To the extent any Defendant is found liable to Bridge for a
taking, no determination of just compensation has yet
occurred such that Bridge could claim that any compensation
is inadequate. The absence of such a determination does not
necessarily mean that this court is barred from considering
Bridge's takings claims. The Supreme Court has referred
to the Williamson County state exhaustion
requirement as prudential rather than jurisdictional. See
Suitum v. Tahoe Reg'l Planning Agency, 520 U.S. 725,
733 (1997); see also Guggenheim v. City of Goleta,
638 F.3d 1111, 1117-18 (9th Cir. 2010). Although the Ninth
Circuit treats ripeness as implicating both Article III and
prudential considerations, see Guatay Christian
Fellowship v. Cnty. of San Diego, 670 F.3d 957, 980 (9th
Cir. 2011), it has recognized that the Williamson
County ripeness requirements are discretionary when the
case “raises only prudential concerns, ” as is
the case here. Adam Bros. Farming v. Cnty. of Santa
Barbara, 604 F.3d 1142, 1148 (9th Cir. 2010). This court
has the discretion to consider Bridge's takings claim if
warranted by “the fitness of the issues for judicial
decision and the hardship to the parties of withholding court
consideration.” Thomas v. Anchorage Equal Rights
Comm'n, 220 F.3d 1134, 1141-42 (9th Cir. 2000).
This court notes that Bridge's takings claims have been
pending in this court for years. See Yamagiwa v. City of
Half Moon Bay, 523 F.Supp.2d 1036, 1109 (N.D. Cal. 2007)
(finding hardship when parties had litigated case for two
years and decision would soon issue). Both parties point to
Defendants' removal of this case in addressing
Bridge's federal takings claims. See ECF No. 88,
PageID #s 1172-73; ECF No. 89, PageID # 1182. Although other
circuits have determined that the Williamson County
state exhaustion requirement does not apply to cases that
have been removed to federal court, see Sherman v. Town
of Chester, 752 F.3d 554, 564 (2d Cir. 2014);
Sansotta v. Town of Nags Head, 724 F.3d 533, 545-47
(4th Cir. 2013), it does not appear that the Ninth Circuit
has opined on the matter. Cf. Alpine Vill. Co. v. City of
McCall, No. 1:11-CV-00287-BLW, 2011 WL 3758118, at *2-3
(D. Idaho Aug. 25, 2011) (applying state exhaustion
requirement in removed case). This court does not decide this
Id. at 1061 n.3.
separate but related order addressing the defendants'
motion for summary judgment, this court applied the second
prong of Williamson County, concluding:
Under Williamson, Bridge's takings claims
ripened on June 7, 2011, when Bridge satisfied the second
prong by availing itself of state procedures for seeking just
compensation. On that date, Bridge filed its Complaint in
state court, which included its state and federal takings
The first prong of Williamson was earlier satisfied
on April 25, 2011, when the LUC entered an order adopting the
proposed findings of fact, conclusions of law, and decision
and order reverting the land to its agricultural use
Bridge Aina Le'a, LLC v. Haw. Land Use
Comm'n, Civ. No. 11-00414 SOM-BMK, 2016 WL 797567,
at *7 (D. Haw. Feb. 29, 2016).
State did not specifically raise the issue of ripeness in its
moving papers in the present case, and this court, noting
that DW had not been a party to the earlier related case,
offered the parties a chance to address any potential
jurisdictional issues. Both DW and the State took the
position that there was no jurisdictional bar to this
court's proceeding, and asked this court to go forward
with the hearing.
court has satisfied itself that it has subject matter
jurisdiction over this case and that the federal takings
claim is ripe for review.
determination has occurred with respect to what, if any, just
compensation DW is entitled to. As this court has previously
opined on the issue of ripeness, “The absence of such a
determination does not necessarily mean that this court is
barred from considering [DW's] takings claims.”
See Bridge Aina Le'a, LLC, 125 F.Supp.3d at 1061
n.3. The Williamson County state exhaustion
requirement raises prudential concerns and does not implicate
this court's Article III subject matter jurisdiction.
See Suitum v. Tahoe Reg'l Planning Agency, 520
U.S. 725, 734 n.7 (1997) (describing Williamson
County requirements as “prudential hurdles”
distinct from Article III jurisdictional requirements). This
court therefore may exercise its discretion to ...