Kellberg v. Kern

1

MARK C. KELLBERG, Plaintiff-Appellant, v. ZENDO KERN, in his capacity as Planning Director, County of Hawaii; COUNTY OF HAWAII; MICHAEL PRUGLO, indivicually and dba HOME TECH CONSTRUCTION; CHRISTIE D. GUASTELLA and JOHN H. PAYNE, II; GLENN ISAO TAKEMOTO; MICHAEL DANIEL LOCK and MARY ANN LOCK; NIKOLAY PRUGLO; BECKY ANN McQUIRE TRUST; FRANCES SANTA MARIA TRUST, Defendants-Appellees, and JOHN DOES 1-10, JANE DOES 1-10, DOE PARTNERSHIPS, CORPORATIONS, GOVERNMENTAL UNITS OR OTHER ENTITIES 1-10, Defendants

No. CAAP-19-0000833

Intermediate Court of Appeals of Hawaii

June 27, 2024

NOT FOR PUBLICATION IN WEST'S Hawai'i REPORTS AND PACIFIC REPORTER

APPEAL FROM THE CIRCUIT COURT OF THE THIRD CIRCUIT (CASE NO 3CC071000157)

On the briefs: Robert H. Thomas, Mark M. Murakami, Joanna C Zeigler, Veronica A. Nordyke, for Plaintiff-Appellant.

D Kaena Horowitz, Deputy Corporation Counsel, for Defendants-Appellees Zendo Kern and the County of Hawai#i.

Francis L. Jung, Carol Monahan Jung, for Defendants-Appellees

Hiraoka, Presiding Judge, Wadsworth and Nakasone, JJ.

SUMMARY DISPOSITION ORDER

Mark C. Kellberg appeals from the Final Judgment for the County of Hawai'i, its Planning Director,^[1] and others, entered by the Circuit Court of the Third Circuit on November 4, 2019.^[2] We affirm.

The facts of this case were summarized in Kellberg v. Yuen, 131 Hawai'i 513, 319 P.3d 432 (2014) (Kellberg I), and Kellberg v. Yuen, 135 Hawai'i 236, 349 P.3d 343 (2015) (Kellberg II). In April 2005 Michael Pruglo applied to the County to consolidate and resubdivide lots on a 49-acre Property in Nīnole. Kellberg I, 131 Hawai'i at 516, 319 P.3d at 435. The County Planning Director approved the application on July 11, 2005. Id. The first lot was sold on October 19, 2005. Id. at 517, 319 P.3d at 436.

Kellberg owned land next to the Property. He learned of the subdivision approval on August 11, 2005. Kellberg I, 131 Hawai'i at 517, 319 P.3d at 436. He objected to the subdivision. He claimed it violated Chapter 23 of the Hawai'i County Code by increasing the number of lots on the Property. Kellberg II, 135 Hawai'i at 237, 349 P.3d at 344. He sued the County and the Planning Director on May 11, 2007. He didn't name Pruglo or any of the subdivision's Lot Owners as defendants;^[3] he made a "strategic decision" not to sue Lot Owners because he didn't think they were "necessary parties to the action." Id. at 248, 349 P.3d at 355. His complaint sought a declaration that the subdivision was illegal and void; a mandatory injunction requiring the County to comply with Chapter 23; and damages for "materially and adversely impacting [his] property both in monetary value and in use and enjoyment."

Kellberg moved for an injunction. The circuit court denied the motion; it found the "owners of the subdivided property are indispensible [sic] parties to this action as required under Rule 19 of the Hawai'i Rules of Civil Procedure" (HRCP). Kellberg then moved to amend his complaint to add Lot Owners as defendants. The circuit court granted the motion on March 3, 2011, but Kellberg did not file an amended complaint. Kellberg II, 135 Hawai'i at 246, 349 P.3d at 353.

The circuit court eventually granted summary judgment for the County and Planning Director. Kellberg appealed. We held the subdivision approval was invalid. Kellberg v. Yuen, No. CAAP-12-0000266, 2014 WL 1271028 (Haw. App. Mar. 28, 2014) (mem. op.), vacated by Kellberg II, 135 Hawai'i 236, 349 P.3d 343 (2015) (Memorandum Opinion). On certiorari, the supreme court stated we erred by ruling on the merits of Kellberg's claim without addressing whether the Lot Owners had to be joined under HRCP Rule 19. Kellberg II, 135 Hawai'i at 238, 349 P.3d at 345. The supreme court held that Lot Owners were persons to be joined if feasible under HRCP Rule 19(a) because Kellberg sought to have the subdivision declared void. Id. The supreme court remanded the case to the circuit court. The mandate was:

[T]he circuit court must order that the lot owners be made parties if feasible pursuant to HRCP Rule 19(a). If it is not feasible to join the lot owners, the circuit court must then determine, based on consideration of the factors set forth in Rule 19(b), whether the action should proceed or should be dismissed.

Id. at 254, 349 P.3d at 361.

On remand, Kellberg filed an Amended Complaint on December 2, 2015, adding Lot Owners as defendants and omitting his claim for damages. He sought a declaration that the subdivision approval was invalid; an injunction against further development of the subdivision; and an injunction against Lot Owners trespassing on his property. Each Lot Owner was served. Kellberg moved for partial summary judgment based on our Memorandum Opinion's holding that the subdivision approval was invalid. The circuit court denied the motion.

Various Lot Owners moved for partial summary judgment, or joined, based on the statute of limitations. The circuit court granted the motions and joinders. Kellberg's trespass claim was voluntarily dismissed without prejudice. The circuit court entered findings of fact, conclusions of law, and an order dismissing the Amended Complaint on July 23, 2019. The Final Judgment was entered on November 4, 2019. This appeal followed.

Kellberg contends the circuit court erred by: (1) denying his motion for a partial summary judgment declaring the subdivision approval invalid; (2) concluding the statute of limitations had run on his claims against Lot Owners; and (3) dismissing his Amended Complaint after concluding that Lot Owners were indispensable parties.

(1) Kellberg argues the circuit court should have followed our Memorandum Opinion and granted his motion for a partial summary judgment declaring the subdivision approval invalid because "[n]othing material has changed[.]" But it has. The supreme court vacated the Memorandum Opinion because we didn't address whether Lot Owners were persons needed for just adjudication under HRCP Rule 19 before reaching the merits. Kellberg II, 135 Hawai'i at 238, 349 P.3d at 345. The supreme court concluded Lot Owners were needed for just adjudication. Id. at 252-53, 349 P.3d at 359-60.

"A declaratory judgment is a form of equitable relief." Kau v. City & Cnty. of Honolulu, 104 Hawai'i 468, 473, 92 P.3d 477, 482 (2004) (citation omitted). "The relief granted by a court in equity is discretionary and will not be overturned on review unless the circuit court abused its discretion[.]" Id. (cleaned up). It would have been inequitable for the circuit court to grant the declaratory relief sought by Kellberg under the circumstances of this case. Kellberg unreasonably delayed joining Lot Owners. The order letting him amend his complaint was entered on March 3, 2011 - before the statute of limitations on his claims against Lot Owners would have expired. "Kellberg should have filed the amended complaint once approved by the circuit court." Kellberg II, 135 Hawai'i at 253 n.15, 349 P.3d at 360 n.15 (citing HRCP Rule 15(a)(2)). He didn't file the Amended Complaint until December 2, 2015. By then, the statute of limitations against Lot Owners had expired. That prejudiced the County. Lot Owners would not be bound by a judgment declaring the subdivision invalid. The supreme court recognized that could "leave the County Defendants subject to a substantial risk of incurring double, multiple, or inconsistent obligations. For example, if the subdivision is rendered invalid, the lot owners will likely seek their own relief from the County Defendants." Id. at 253, 349 P.3d at 360 (cleaned up). Kellberg says "he does not much care whether the unlawful lots continue to exist on the County's records, or who pays the real estate tax. It is enough that they remain as they are today and that the code not be further abrogated by way of the erection of nonconforming dwellings." (Emphasis added.)

That is the problem. If Kellberg prevailed against the County, and the County tried to enjoin Lot Owners from erecting dwellings, Lot Owners could sue the County for depriving them of constitutionally protected property interests. See In re Application of Maui Elec. Co., 141 Hawai'i 249, 260, 408 P.3d 1, 12 (2017) (noting that "a protected property interest exists in a benefit - tangible or otherwise - to which a party has 'a legitimate claim of entitlement.'" (citations omitted)). Conversely, if the County let Lot Owners develop their lots, or failed to assess fines or penalties against those who developed their lots, Kellberg could sue the County again. Under these circumstances, it would have been inequitable to grant Kellberg the declaratory relief he sought. The circuit court did not abuse its discretion by denying Kellberg's motion for partial summary judgment.

(2) The circuit court concluded Kellberg's claim for declaratory relief against Lot Owners was time-barred. The court did not specify which statute of limitations it applied. In a case seeking declaratory relief on a government contract award, Chief Justice Recktenwald noted:

HRS § 632-1 does not impose any time limitations on declaratory judgment actions. It would appear that a declaratory judgment action challenging an agency's reconsideration decision on a procurement protest would be subject to the general statutes of limitations set forth in HRS chapter 657, which may be as long as six years.

Alaka'i Na Keiki, Inc. v. Matayoshi, 127 Hawai'i 263, 301, 277 P.3d 988, 1026 (2012) (Recktenwald, C.J., concurring in part) (footnote omitted) (citing HRS § 657-1(4) (1993)).

Lot Owners argued Kellberg's claims were time-barred under HRS § 657-1's 6-year catch-all provision. Kellberg's cause of action accrued at the latest on August 11, 2005, when he learned of the subdivision approval. His Amended...