Hawaii Federal Court Gets Rid Of Most Claims Against Land Use Commission, But Allows Takings And Vested Rights Claims To Go Forward

by Robert Thomas, Inverse Condemnation, September 3, 2015

Here's the latest in a case that we've been following, which was in both state and federal court, Bridge Aina Lea v. Land Use Comm'n.

The litigation is a series of two lawsuits that originated in state court in the Third Circuit (Big Island), one an original jurisdiction civil rights lawsuit, the other an administrative appeal (that's a writ of administrative mandate for you Californians). The State removed the civil rights lawsuit to U.S. District Court in Honolulu and promptly moved to dismiss, and this portion of the case nearly caused us to flash back to our Federal Courts class in law school, since it raised a host of procedural questions such as the effect of removal, whether certain defendants are "persons" under 42 U.S.C. § 1983, whether the federal court must abstain from addressing the federal takings claim, whether there is a state damage remedy for deprivation of constitutional rights, and zoning estoppel under Hawaii law, among others.

Many of these issues were brought about as a result of Hawaii's unusual state-based zoning scheme, whereby all land in the four of Hawaii's five counties that exercise home rule was initially "classified" by the State into one of four classifications (urban, agricultural, rural, conservation). The four counties are allowed to zone the land within the "urban" and "agricultural" districts into the more familiar Euclidean zones that we're familiar with. What most folks would call a "rezoning" is called a "boundary amendment" or "reclassification" when dealing with the State land use designations, and the Land Use Commission is the agency that takes action, not the counties.

The cases arose out of a reclassification of land from urban to agricultural, and, in the words of the latest federal court federal court order, "Plaintiff Bridge Aina Lea, 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." Order at 1-2. For more background on the federal action, see this post, "Guest Post: Federal Courts Flashback - Takings And Vested Rights Challenge To Land Use Commission."

Initially, the District Court stayed the federal action to allow the administrative appeal to get resolved in state court. Eventually, the Hawaii Supreme Court held the Commission was wrong when it reclassified the land to agricultural, but only because it did not comply with the requirements of state law (the Commission did not make specific findings of fact as required by statute and did not resolve the order to show cause within one calendar year), but rejected the owner's state and federal constitutional claims. The federal case, which by then was in the Ninth Circuit -- which held off its decision pending the ruling by the Hawaii Supreme Court -- was sent back to the District Court.

In this order issued last week, the U.S. District Court for the District of Hawaii got rid of most of the federal case. It's a long decision (65 pages), but is full of the issues we are familiar with:

• The Hawaii Supreme Court's decision in Bridge's favor rendered its federal court request for an injunction preventing the reclassification moot. 
• An injunction is not an available remedy for a taking -- only just compensation. That's a due process claim. 
• Preclusion principles bar Bridge's due process and equal protection claims. "Those issues, contained in Counts I and III, were decided by the Hawaii Supreme Court in the state administrative appeal." Order at 34-35. 
• Hawaii law does not allow for money damages as a remedy for equitable estoppel, only equitable (injunctive) relief. And the court already held that injunctive relief is moot (see above). 
• And immunity. Lots of immunity. See Order at 45-60.
• You can't sue officials in their individual capacities for a taking. Order at 60-63.

So here's what's left in the federal case: the takings claim seeking just compensation against the Commission and certain commissioners in their official capacities, as well as the vested rights claim for damages against the same parties.

The portion of the District Court's order that stands out the most to us is its analysis of issue and claim preclusion. [Sidebar: some of us raised on "collateral estoppel" and "res judicata" still can't get used to the more precise -- but less law-ish -- "preclusion" labels.] Recall that Bridge split its claim between two state court lawsuits, an "appeal" from the Commission to circuit court under the Administrative Procedures Act (again, a Writ of Administrative Mandamus to you Californians), and a separate original jurisdiction action which asserted its constitutional and common law claims. Which it was entitled to do. Indeed, which it was required to do, based on Williamson County, at least for its takings claims. Based on federal question jurisdiction, the Commission removed the latter complaint to federal court. Again, fine with us.

But although the Hawaii Supreme Court was just supposed to be dealing with the state law administrative law issues, the court reached out and "[i]n the interest of judicial economy" decided the federal constitutional issues. Thus, when the federal court was eventually presented with the federal questions, it says too bad, so sad, you already had your shot, even though the Hawaii Supreme Court really wasn't acting on an record developed in the course of an original jurisdiction lawsuit, it was only on an administrative record. An argument raised, ironically, by the Commission:

As a preliminary matter, the LUC argues that the circuit court erred in ruling on DW’s and Bridge’s due process and equal protection arguments because the LUC had no opportunity to present evidence and did not have the benefit of a trial by jury. The LUC argues that it was “inappropriate” for the circuit court to rule on these constitutional claims under such ;circumstances, and that in doing so, the court “deprived the LUC and Commissioners of any process whatsoever.”

DW Aina Lea Dev. LLC v. Land Use Comm'n, No. SCAP-13-00000091, slip op. at 70 (Haw. Nov. 24, 2014).

So once again, a property owner's federal constitutional claims -- raised in a federal forum -- get decided by a state court. We suppose that this may be a no harm, no foul situation since Bridge did originally raise its federal constitutional claims in state court, and it was the Commission which removed the case to federal court. So Bridge couldn't squawk too loudly about having those claims decided by the Hawaii Supreme Court and being deprived of a federal forum. They got what they asked for, after all. But perhaps the only reason Bridge filed its federal claims in state court was because Williamson County required it to. This the head-spinning stuff that we get under that case's state procedures requirement.

The only question we had is whether this would be a fair result if Bridge could have filed its original jurisdiction action in federal court. It just doesn't seem so.

PDF: Order Granting Revised Motion to Dismiss, Bridge Aina Lea, LLC v. State of Hawaii Land Use Comm'n, No....