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Sakatani v. City and County of Honolulu

United States District Court, D. Hawaii

February 28, 2019

MICHAEL SAKATANI; 808 FARMS LLC; KURTIS L. DERELL; AND CAROL H. JUNG, Plaintiffs,
v.
CITY AND COUNTY OF HONOLULU, HAWAII; CITY AND COUNTY OF HONOLULU DEPARTMENT OF PLANNING AND PERMITTING; DIRECTOR OF CITY AND COUNTY OF HONOLULU DEPARTMENT OF PLANNING AND PERMITTING; JOHN DOES 1-10; JANE DOES 1-10; DOE GOVERNMENT ENTITIES 1-10; DOE CORPORATIONS 1-10; DOE PARTNERSHIPS 1-10; and DOE ENTITIES 1-10, Defendants.

          ORDER GRANTING PLAINTIFFS' MOTION TO REMAND

          Jill A. Otake United States District Judge

         I. INTRODUCTION

         This case concerns a dispute over whether the City and County of Honolulu (“the City”) is required to issue sewer and building permits to Plaintiffs 808 Farms LLC, Michael Sakatani, Kurtis L. Derell, and Carol H. Jung (“Plaintiffs”). After being denied sewer and building permits for the development of their properties, Plaintiffs filed suit in state court asserting state law, federal takings, and due process claims against the City, its Department of Planning and Permitting (“DPP”), and the Director of the DPP (collectively “Defendants”). Defendants removed the case on federal question jurisdiction. Now before the Court is Plaintiffs' motion to remand pursuant to Railroad Comm'n of Tex. v. Pullman Co., 312 U.S. 496 (1941). After careful consideration of the parties' submissions and argument, for the reasons set forth below, the motion to remand is granted.

         II. BACKGROUND

         Plaintiffs own parcels of undeveloped residential-zoned land on Papahehi Place in Honolulu. Doc. No. 1-2 at ¶¶ 1-2. Both parcels suffered from flooding and ground movement in the 1980s, which damaged portions of Papahehi Place. Id. ¶¶ 17, 27. According to the Complaint, the Housing and Community Development Corporation of Hawaii (“HCDCH”), [1] a public agency, purchased the parcels of land after the flooding and ground movement had damaged the properties. Id. ¶ 17. On October 3, 2005, the HCDCH granted the properties by quitclaim deed (“the 2005 Quitclaim Deed”) to Metropolitan Maintenance, Inc. Plaintiffs subsequently purchased the properties. Id. ¶¶ 1, 13, 14, 16. Plaintiff 808 Farms, through its agent Plaintiff Sakatani, purchased its parcel of land by warranty deed on March 2, 2016. Id. ¶¶ 1, 13. Plaintiffs Darell and Jung co-purchased their parcel of land by warranty deed on August 25, 2016. Id. ¶ 14.

         Plaintiffs' warranty deeds are subject to the “terms and conditions” of the 2005 Quitclaim Deed. Id. ¶¶ 13-14. The 2005 Quitclaim Deed states that the purchasers recognize and accept the purchase of land in an “as is, where is” condition; that the grantor of the property has made no warranties or representations as to the suitability of the property for any use or as to the physical condition of the property; and that the purchaser is not relying on any representations or covenants about the condition of the property (the “As Is Clause”). Id. ¶ 18. The 2005 Quitclaim Deed also states that the purchaser acknowledges that the property has been subject to ground movement and continues to move. Id.

         In 2015, prior to Plaintiffs Darell and Jung purchasing their property, the DPP issued what Plaintiffs describe as a conditional approval for a sewer connection. Id. ¶ 20. The conditional approval stated that to receive a sewer connection permit, Plaintiffs needed to submit: (1) construction plans for review and approval; and (2) a geotechnical report to (a) confirm that there was no ground movement and (b) determine the proper design and construction to protect new sewer lines from future ground movement. Id. Plaintiffs Derrel and Jung assert that they purchased the property in reliance on the conditional approval, expecting that a sewer permit would be granted if they met the conditions stated. Id. ¶ 21. Plaintiff 808 Farms did not receive a conditional approval. Id. ¶ 23.

         Both sets of Plaintiffs applied for sewer connection permits. Id. ¶¶ 22-26. They each submitted a geotechnical report showing that there was no detectable ground movement. Id. ¶¶ 22, 25. Plaintiffs Derrel and Jung also submitted construction plans for their sewer connections in compliance with the conditional approval. Id. ¶ 22.

         In February 2016, DPP denied 808 Farms' sewer connection application because the State had determined there was ground movement in the area, and that ground stability had not been established. Id. ¶ 23. The denial stated that the Hawai‘i Housing Financial Development Corporation (“HHFDC”)[2] “noted that no dwellings shall be constructed on the subject lot.” Id. Subsequently, in a letter to Plaintiffs Derell and Jung on May 4, 2017, and in a letter to Plaintiff Sakatani on August 22, 2017, DPP informed Plaintiffs that it would not issue sewer connections or building permits until the HHFDC had, upon cessation of ground movement, repaired the damage to Papahehi Place and installed new utility and sewer lines. Id. ¶ 26. The denial letters also stated that the “As Is Clause” of the 2005 Quitclaim Deed established that no warranties or representations were provided regarding the suitability of the property for any particular use. Id. The Complaint alleges that contrary to the DPP's denial of Plaintiffs' sewer applications, the DPP has issued sewer permits to other property owners on Papahehi Place, allowing them to construct residences in the area. Id. ¶ 28.

         On August 3, 2018, Plaintiffs sued Defendants in state court. Doc. No. 1-2. Plaintiffs assert causes of action for declaratory relief (Count I) to declare that DPP must issue sewer and related building permits; for injunctive and mandamus relief (Count II) to require DPP to issue sewer and related building permits; for estoppel and vested rights (Count III) asserting that the City cannot deny them sewer connection permits after giving Plaintiffs a conditional approval on which they relied; for violation of due process rights under the United States and Hawai‘i Constitutions (Count IV); for inverse condemnation under the United States Constitution (Count V); and for violation of 42 U.S.C. § 1983 (Count VI). Id.

         On August 28, 2018, Defendants removed the case to this Court on the basis of federal question jurisdiction. Doc. No. 1. On August 31, 2018, Defendants moved to dismiss the Complaint for failure to state a claim upon which relief could be granted. Doc. No. 5. On September 24, 2018, Plaintiffs filed the present motion to remand the case back to state court under the Pullman abstention doctrine.

         III. DISCUSSION

         A. Applicable Law

         The Pullman abstention doctrine was first established in Railroad Commission of Texas v. Pullman Co., 312 U.S. 496 (1941). The doctrine authorizes federal courts to abstain from adjudicating federal constitutional challenges when a sensitive issue of state law would moot or narrow the federal issue and allows a state court to address the state law issue first. See, e.g., Pullman, 312 U.S. at 501; Haw. Hous. Auth. v. Midkiff, 467 U.S. 229, 236 (1984). The doctrine provides federal courts with a way to “avoid both unnecessary adjudication of federal questions and ‘needless friction with state policies.'” Midkiff, 467 U.S. at 236 (quoting Pullman, 312 U.S. at 500). Thus, ...


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