Moloaa Farms LLC v. Kauai Planning Comm'n

MOLOAA FARMS LLC; EL PASO INVESTMENTS LIMITED LIABILITY COMPANY;BOCA HOLDINGS, LLC; ROBERT B. LINDNER, Jr., Trusteeof the ABL Family Legacy Trust U/A/D December 20, 2012, Plaintiffs, v. KAUAI PLANNING COMMISSION; COUNTY OF KAUAI; JOHN DOES 1-10;DOE CORPORATIONS 1-10; DOE ENTITIES, 1-10, Defendants.

CIV. NO. 20-00020 HG-KJM

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF HAWAII

December 15, 2020

ORDER DENYING THE COUNTY DEFENDANTS' MOTION TO DISMISS COMPLAINT (ECF No. 18)

Plaintiffs Moloaa Farms LLC, El Paso Investments Limited Liability Company, Boca Holdings, LLC, and Robert Lindner, Jr., Trustee of the ABL Family Legacy Trust U/A/D December 20, 2012 (referred herein collectively as "Lindner Plaintiffs") own a property in the Agricultural District on the island of Kauai, consisting of approximately 134 acres identified by TMK No. (4)4-9-009-001 ("Lot 2").

Lot 2 was previously part of a larger tract of land consisting of 757 acres in the Agricultural District. In 1998, the property was divided into two lots and a separate roadway area. Lot 1, consisting of approximately 590 acres, was subdivided and leased to farmers. Lot 2 remains undivided following the subdivision in 1998.

The Lindner Plaintiffs submitted an application for subdivision of Lot 2 with the County of Kauai Planning Department pursuant to the Kauai County Zoning Ordinance and the Kauai County Subdivision Ordinance.

On January 22, 2019, the County Planning Department denied the first application. Following the denial, the Lindner Plaintiffs appealed the Planning Department's decision to the Kauai County Planning Commission.

The Commission held a meeting on April 9, 2019, where the Lindner Plaintiffs' petition was scheduled as a "General Business Matter." The Commission denied the petition without holding a Contested Case Hearing or without referring the matter to a Hearings Officer.

On May 8, 2019, the Lindner Plaintiffs submitted a second application for subdivision of Lot 2 with the County of Kauai Planning Department. The County Planning Department again denied the application. The Lindner Plaintiffs appealed the decision to the County of Kauai Planning Commission a second time.

The Commission held a meeting on June 25, 2019, where the Lindner Plaintiffs' petition was again scheduled as a "General Business Matter." At the meeting, the Kauai Planning Commission denied the appeal without holding a Contested Case Hearing.

Four months later, on October 29, 2019, the Kauai Planning Commission sent a letter to the Lindner Plaintiffs stating thatthe Planning Commission had referred their appeal to a Hearings Officer.

On January 2, 2020, the appointed Hearings Officer sent an e-mail to the Parties to schedule a hearing.

On January 15, 2020, the Lindner Plaintiffs filed suit in this Court against the County of Kauai and the Kauai Planning Commission (hereinafter "County Defendants"), seeking review of the Commission's decision denying their applications for subdivision of Lot 2. The Lindner Plaintiffs claim that the County Defendants violated the Taking Clause of the Fifth Amendment to the United States Constitution. The Lindner Plaintiffs also claim the County Defendants violated their rights to Due Process and Equal Protection pursuant to the United States Constitution. The Lindner Plaintiffs seek declaratory and equitable relief.

On February 19, 2020, the Hearings Officer issued a Minute Order dismissing the Lindner Plaintiffs' appeal before the Planning Commission.

On March 18, 2020, the Planning Commission sent a letter to Plaintiffs. In the March 18, 2020 letter, the County claims that the October 29, 2019 letter referring the appeal to a Hearings Officer was sent in error.

Two days later, on March 20, 2020, the County Defendants filed a Motion to Dismiss which is before this Court. The Motion asserts that this Court lacks subject-matter jurisdiction overthe Complaint based on the doctrine of res judicata.

The County Defendants' Motion to Dismiss (ECF No. 18) is DENIED.

PROCEDURAL HISTORY

On January 15, 2020, Plaintiffs Moloaa Farms LLC, El Paso Investments Limited Liability Company, Boca Holdings, LLC, and Robert Lindner, Jr., Trustee of the ABL Family Legacy Trust U/A/D December 20, 2012 (referred herein collectively as "Lindner Plaintiffs") filed a Complaint. (ECF No. 1).

On March 20, 2020, the County Defendants filed a MOTION TO DISMISS COMPLAINT. (ECF No. 18).

On May 1, 2020, the Lindner Plaintiffs filed the Opposition. (ECF No. 25).

On June 1, 2020, the County Defendants filed their Reply. (ECF No. 26).

On July 15, 2020, the Court held a telephonic hearing on Defendants' Motion to Dismiss. (ECF No. 30).

On August 7, 2020, the Lindner Plaintiffs filed a Motion for Leave to File Supplemental Brief in Opposition to Motion to Dismiss. (ECF No. 33).

On August 13, 2020, the Court issued a Minute Order granting Plaintiffs' Motion and deeming their Supplemental Brief as filed. (ECF No. 34). The Court ordered Defendants to respond to the Supplemental Brief and answer four questions the Court put forward. (Id.)

On September 14, 2020, Defendants filed their Response to Plaintiffs' Supplemental Brief. (ECF No. 40).

BACKGROUND

Plaintiffs Moloaa Farms LLC, El Paso Investments Limited Liability Company, Boca Holdings, LLC, and Robert Lindner, Jr., Trustee of the ABL Family Legacy Trust U/A/D December 20, 2012 (referred hereinafter collectively as "Lindner Plaintiffs") allege that they own real property in the Agricultural District on the island of Kauai near Moloaa, consisting of approximately 134 acres identified by TMK No. (4)4-9-009-001 ("Lot 2"). (Complaint at ¶¶ 1, 16, 23, ECF No. 1).

Lot 2 was previously part of a 724-acre parcel that was subdivided in 1998 when the County of Kauai Planning Commission granted a variance permit to divide the large parcel into Lot 1, Lot 2, and a roadway lot. (Id. at ¶ 23). The 1998 Variance required the lot density of future subdivisions to be based on the overall size of the original 724 acre parcel, as set forth in Kauai County Comprehensive Zoning Ordinance § 8-1.5. (Id. at ¶ 25).

According to the Complaint, in February 2000, the Kauai Planning Commission approved a subdivision of Lot 1 into multiple agricultural lots. (Id. at ¶¶ 33-36).

LINDNER PLAINTIFFS' FIRST APPLICATION FOR SUBDIVISION OF LOT 2

Article 8 of the Kauai County Comprehensive Zoning Ordinance governs zoning in the Agricultural Districts in the County of Kauai. The County of Kauai has a separate Subdivision Ordinance, set forth in Chapter 9 of the Kauai County Comprehensive Zoning Ordinance, that governs subdivision of lands on Kauai.

Pursuant to these provisions of the Kauai County Comprehensive Zoning Ordinance and the Subdivision Ordinance, on January 16, 2019, the Lindner Plaintiffs filed an application for subdivision of Lot 2 with the Kauai Planning Department. (Id. at ¶ 41).

On January 22, 2019, the Kauai Planning Department sent a memorandum to the Lindner Plaintiffs stating that the Department was "unable to process" the subdivision application. (Letter from the Planning Department to Plaintiffs, dated January 22, 2019, attached as Ex. A to Def.'s Motion to Dismiss, ECF No. 18-2). The Department explained that the subdivision application was deficient because it was not filed jointly with the owners of Lot 1 and because it did not meet the minimum lot size requirements based on the original 724 acre parcel. (Id.) The letter explained the basis for the denial pursuant to the Kauai County Zoning Ordinance, as follows:

Pursuant to Section 8-8.3(b)(2) "Contiguous lots of parcels of record in common ownership existing to or on September 1, 1972, larger than three hundred (300) acres, may be subdivided," as prescribed in Section 8-8.3(b)(2) of the Kauai County Code (1987).

Historically, the applicant's lot and the adjacent lot (Moloaa Hui) was a contiguous parcel of record existing prior to September 1, 1971. Considering the applicant's subdivision request, a joint subdivision applicant needs to be filed with the adjacent property owner to meet this CZO requirement.

Pursuant to 8-8.3(b)(2)(A)&(B) "A maximum if [sic] seventy-five (75) acres may be subdivided into not more than ten (10) parcels, none of which shall be smaller than five (5) acres. An additional twenty percent (20%) of the total parcel area or three hundred (300) acres, whichever is less, may be subdivided into parcels, none of which shall be smaller than twenty-five (25) acres." Currently, the subdivision application does not comply with the minimum lot size requirements within the Agricultural District, as prescribed in Section 8-8.3(b)(2)(A)&(B) of the Kauai County Code (1987).

(Id.)

LINDNER PLAINTIFF'S FIRST APPEAL OF THE DENIAL OF THE APPLICATION FOR SUBDIVISION OF LOT 2

On March 22, 2019, the Lindner Plaintiffs appealed the Planning Department's decision to the Kauai Planning Commission. (Petition to Appeal Director's Rejection of Moloaa Farms LLC's Subdivision Application, attached as Ex. B to Def.'s Motion to Dismiss, ECF No. 18-3).

Chapter 9 of the Rules of Practice and Procedure of the Kauai County Planning Commission sets forth the procedure for an appeal from the Kauai Planning Department. Submission of an appeal requires a petition setting forth the reasons for the appeal, including a statement as to why the appellant believes that the Director's action was based on an erroneous finding of a material fact, or that the Director had acted in an arbitrary orcapricious manner, or had manifestly abused his discretion. Kauai Commission Rules of Practice § 1-9-2(6).

The Parties agree that the Plaintiffs' appeal to the Planning Commission fulfilled the requirements of Section 1-9-2(1)-(6). (Def.'s Supp. Brief at p. 8, ECF No. 40).

Plaintiffs' appeal was subject to Sections 1-9-3 and 1-9-4 of the Kauai Planning Commission Rules of Practice. Such appeals are to be decided as a Contested Case hearing before the Planning Commission itself. See Kauai Planning Commission Rules of...