Maunalua Bay Beach Ohana 28 v. State

547 P.3d 1174

MAUNALUA BAY BEACH OHANA 28, a Hawai‘i Non-Profit Corporation; Maunalua Bay Beach Ohana 29, a Hawai‘i Non-Profit Corporation; and Maunalua Bay Beach Ohana 38, a Hawai‘i Non-Profit Corporation, individually and on behalf of all others similarly situated, Plaintiffs-Appellants/Cross-Appellee,

v.STATE of Hawai‘i, Defendant-Appellee/Cross-Appellant

NO. CAAP-19-0000776

Intermediate Court of Appeals of Hawai'i

March 18, 2024

APPEAL FROM THE CIRCUIT COURT OF THE FIRST CIRCUIT (CIVIL NO. 1CC051000904)

On the briefs:

Paul Alston, Claire Wong Black, Honolulu, for Plaintiffs-Appellants/ Cross-Appellees.

David D. Day, William J. Wynhoff, Deputy Attorneys General, State of Hawai‘i, for Defendant-Appellee/ Cross-Appellant.

HIRAOKA, PRESIDING JUDGE, NAKASONE AND McCULLEN, JJ.

OPINION OF THE COURT BY HIRAOKA, J.

Maunalua Bay Beach Ohana 28, Maunalua Bay Beach Ohana 29, and Maunalua Bay Beach Ohana 38 (the Beach Lot Owners) own thin strips of beach in the Portlock area of east O‘ahu (the Beach Lots).¹ They sued the State of Hawai'i They sought a declaration that the State, by enacting 2003 Haw. Sess. Laws Act 73, took existing and future accreted land² without paying just compensation. The circuit court agreed, but let the State take an interlocutory appeal. We held that "Act 73 effectuated a permanent taking of’ ownership rights in accreted land existing and unregistered as of Act 73’s effective date. Maunalua Bay Beach Ohana 28 v. State, 122 Hawai'i 34, 57, 222 P.3d 441, 464 (App. 2009), cert. rejected, No. 28175, 2010 WL 2329366 (Haw. June 9, 2010), cert. denied, 562 U.S. 1005, 131 S. Ct. 529, 178 L. Ed. 2d 374 (2010). We remanded for the circuit court to decide whether Beach Lot Owners owned land that had accreted before Act 73’s effective date and, if so, to determine just compensation for the taking. Id.

On remand, the parties stipulated that the Beach Lots included land that accreted before Act 73 took effect (the Accreted Land). The circuit court held a bench trial.³ It found that just compensation was $0. It also granted the State’s motion for costs and denied Beach Lot Owners’ motion for attorneys fees. Beach Lot Owners appeal from the resulting Final Judgment. We hold: () the law of the case doctrine did not prevent the circuit court from considering a change in the controlling legislation enacted after we decided Maunalua Bay; () the circuit court’s finding that just compensation was $0 was not clearly erroneous; () Beach Lot Owners were not entitled to nominal damages; () Beach Lot Owners were not entitled to attorneys fees; () the circuit court did not abuse its discretion by denying certification of a damages class; and () the circuit court’s determination that the State was the prevailing party is not material to the issues presented by this appeal, and moot. We affirm the Final Judgment.

I. BACKGROUND⁴

The Estate of Bernice Pauahi Bishop (Bishop Estate) owned the land in the Portlock area of east O‘ahu. In the 1930s Bishop Estate subdivided the land into Home Lots. It kept the fee interest and leased the Home Lots. Many of the Home Lots were near the beach, but Bishop Estate never leased the Beach Lots — long, narrow strips of beach between the Home Lots and the ocean.

Bishop Estate never restricted the Beach Lots for exclusive use by lessees of Home Lots bordering the Beach Lots. In the 1990s Bishop Estate sold the fee interests in the Home Lots to their lessees, but continued to own the Beach Lots. Bishop Estate never restricted the Beach Lots for exclusive use of owners of Home Lots bordering the Beach Lots.

Before May 20, 2003, Hawai'i Revised Statutes (HRS) § 171-2 provided:

Definition of public lands. "Public lands" means all lands or interest therein in the State classed as government or crown lands previous to August 15, 1895, or acquired or reserved by the government upon or subsequent to that date by purchase, exchange, escheat, or the exercise of the right of eminent domain, or in any other manner; including submerged lands, and lands beneath trial waters which are suitable for reclamation, together with reclaimed lands which have been given the status of public lands under this chapter, [subject to exceptions not at issue in this case.]

HRS § 171-2 (Supp. 2002).

Act 73 amended HRS § 171-2 by adding "accreted lands not otherwise awarded" to the definition of "public lands." 2003 Haw. Sess. Laws Act 73, § 2 at 128. It took effect on May 20, 2003. Id., § 8 at 130. It effectively made any land accreted to the Beach Lots after May 20, 2003, public land not owned by Bishop Estate.⁵

On May 6, 2005, Bishop Estate sold the Beach Lots to Beach Lot Owners for $3,000. Each Beach Lot owner paid $1,000 for its lot. The deeds had a "restriction limiting the use of the parcels for non-residential use only." They also had restrictive covenants running with the land. The covenants require that the Beach Lots be "used by the public for access, customary beach activities and related recreational and community purposes … in perpetuity[.]"

Two weeks after buying the Beach Lots, Beach Lot Owners sued the State for inverse condemnation. They sought a declaration that Act 73 took the Accreted Land, an injunction against enforcement of Act 73 without payment of just compensation, and payment of just compensation. The circuit court certified a plaintiff class "consisting of all non-governmental owners of oceanfront real property in the State of Hawai'i on and/or after May 19, 2003."

The circuit court granted Beach Lot Owners’ motion for partial summary judgment, declaring that Act 73 "effected an uncompensated taking of, and injury to, [Beach Lot Owners’] accreted land[.]"⁶ Maunalua Bay, 122 Hawai'i at 36, 222 P.3d at 443. The State took an interlocutory appeal. We held that Act 73 "effectuated a permanent taking of" accretions existing and unregistered as of Act 73’s effective date. Id. at 57, 222 P.3d at 464. But we also held that Beach Lot Owners "and the class they represented had no vested property rights to future accretions to their oceanfront land and, therefore, Act 73 did not effect an uncompensated taking of future accretions[.]" Id. We remanded for the circuit court to decide whether Beach Lot Owners owned land that had accreted before Act 73’s effective date and, if so, to determine just compensation for the taking. Id.

On remand, Beach Lot Owners moved to certify a damages class of "[a]ll private owners of oceanfront property in the State of Hawai'i who, as of May 19, 2003, owned accreted land[.]" The circuit court denied class certification. The parties stipulated that Beach Lot Owners owned land that accreted before Act 73 took effect, and that "[j]ust compensation, if any, shall be based on the fair rental value of the accreted land as of [Act 73’s effective date], but taking into account restrictions on [Beach Lot Owners’] use of the property, if appropriate."

The circuit court held a bench trial to determine just compensation. It found that just compensation was $0. It granted the State’s motion for costs, denied Beach Lot Owners’ motion for attorneys fees, and entered the Final Judgment for the State and against Beach Lot Owners.⁷ Beach Lot Owners appealed.⁸

Beach Lot Owners contend that the circuit court erred by: () concluding that no permanent taking occurred; () not awarding damages; () not awarding nominal damages; () denying their motion for attorneys fees; () denying their motion to certify a damages class; and () determining that the State was the prevailing party.

II. STANDARDS OF REVIEW

A. Findings of Fact and Conclusions of Law

[1, 2] We review findings of fact under the clearly erroneous standard. Est. of Klink ex rel. Klink v. State, 113 Hawai'i 332, 351, 152 P.3d 504, 523 (2007). A finding of fact is clearly erroneous when the record lacks substantial evidence to support the finding or when, despite substantial evidence to support the finding, we are left with a definite and firm conviction that a mistake has been made. Id. "Substantial evidence" is "credible evidence which is of sufficient quality and probative value to enable a person of reasonable caution to support a conclusion." Id. (citations omitted).

[3–5] We review conclusions of law de novo under the right/wrong standard. Klink, 113 Hawai'i at 361, 152 P.3d at 523. But a conclusion of law presenting mixed questions of fact and law is reviewed under the clearly erroneous standard because the court’s conclusion depends on the facts and circumstances of the individual case. Id. A conclusion of law supported by the trial court’s findings of fact and applying the correct rule of law will not be overturned. Id.

B. Attorneys Fees Under the Private Attorney General Doctrine

[6] We review a denial of attorneys fees under the private attorney general doctrine de novo under the right/wrong standard. Pub. Access Trails Haw. v. Haleakala Ranch Co., 153 Hawai'i 1, 21, 526 P.3d 526, 546 (2023).

C. Class Certification

[7] We review the denial of class certification for abuse of discretion. Gurrobat v. HTH Corp., 133 Hawai'i 1, 14, 323 P.3d 792, 805 (2014).

D. Prevailing Party Determination

[8] We review a trial court’s determination of who is the prevailing party de novo under the right/wrong standard. Molinar v. Schweizer, 95 Hawai'i 331, 334–35, 22 P.3d 978, 981–82 (2001).

III. DISCUSSION

A. The circuit court did not err by concluding, given Act 56 (2012), that Act 73 effected a temporary taking.

Beach Lot Owners argue that the circuit court "erred in disregarding the law of the case … and concluding that there was no taking" of the Accreted Land. The argument fails for two reasons.

First, the circuit court did not conclude there was no taking; had it done so, it would not have had to try the claim for just compensation. Beach Lot Owners cite to the circuit court’s conclusions that Act 73 did not effect a regulatory taking under various tests commonly called Loretto, Lucas, and Penn Central. See Lingle v. Chevron U.S.A. Inc., 544...