Developer’s Delay in Suing State Is Subject of Appeals Court Hearing

posted in: March 2019 | 0

Two years ago, DW ‘Aina Le‘a Development, LLC (DWAL), brought a federal lawsuit against the state Land Use Commission, claiming $200 million in damages as a result of the agency’s 2011 vote to revert to the Agricultural district land in South Kohala, Hawai‘i Island.

Nearly all of the 1,060 acres downzoned by that action is owned by ‘Aina Le‘a, Inc., of which DWAL is a major shareholder.

The state asked Judge Susan Oki Mollway to dismiss the case, arguing that the statute of limitations had well and truly expired. In July 2017, Mollway agreed. DWAL appealed.

On February 12, in the moot courtroom of the William S. Richardson School of Law in Honolulu, a three-judge panel of the 9th U.S. Circuit Court of Appeals heard arguments in the case.

Central to DWAL’s appeal is its claim that there is no specific law in Hawai‘i that covers the type of claim it is making – what it describes as a “non-tortious takings claim” based on the Fifth Amendment of the U.S. Constitution and Article 1, Section 20 of the Hawai‘i Constitution. For such general claims, Hawai‘i has a six-year statute of limitations. Included among the types of actions that may be brought within that period are “personal actions of any nature whatsoever not specifically covered by laws of the state” (the quotation is from HRS § 657-1(4)).

Judge Mollway didn’t disagree that it was a non-tortious claim, as DWAL had argued. She determined that the best fit for dealing with it was the Civil Rights Act of 1871, codified as 42 U.S.C. § 1983. It’s not a perfect fit, since Section 1983 does not allow claims against a state. Still, she found that the 9th Circuit has made “repeated statements that takings claims must be brought under § 1983.”

There is no federal statute of limitations for Section 1983 claims. Instead, federal court rules say that the applicable time frame is to be determined by referring to the state statute of limitations that applies to personal injury actions.

In Hawai‘i, that statute is HRS § 657-7. It provides for a two-year period within which to initiate actions after an injury has occurred.

Regardless of that, Mollway ultimately agreed with the state that DWAL’s claim should have been brought under either HRS § 661-5 (“Every claim against the state … shall be forever barred unless the action is commenced within two years after the claim first accrues”) or § 657-7 (personal or property injury). “Under either of these provisions, DW failed to timely assert its claim,” Mollway wrote.

‘Playing with Fire’

During arguments before the appellate court, Judge Jay Bybee asked DWAL attorney Sang Peter Sim why the company took so long to seek damages, noting that Bridge ‘Aina Le‘a, which also has a stake in DWAL’s development, had done so early on.

“Bridge filed a timely suit. … Why did [DWAL] wait years?” Bybee asked Sim. Because of the company’s delay, “it’s got to stand on its head to prove [the statute of limitation is] six years. It seems your client was playing with fire,” Bybee said.

Sim said simply that DWAL believed it had six years to file a lawsuit, adding that it also did not want to be in court while it was trying to work with all parties to develop its land.

When it came time for his rebuttal, state solicitor general Ewan Rayner pointed out that DWAL was, in fact, already in litigation at the time with the Land Use Commission.

While the state had argued that two state laws (HRS § 661-5 and § 657-7) cap the statute of limitations in this case to two years, Bybee noted that the state was basing its argument that § 661-5 applied on a single footnote in a Hawai‘i Supreme Court decision regarding Maunalua Bay. “It’s pretty thin,” he said before suggesting that perhaps the 9th U.S. Circuit Court of Appeals should ask the state Supreme Court to settle the issue of which statutes apply.

Rayner replied that such a request was unwarranted, especially since DWAL hadn’t cited any case where the “catch- all” law providing for a six-year statute of limitations applied.

Judge Richard Tallman, however, seemed concerned about issuing a ruling that might be contrary to the state court’s interpretation. “The Hawai‘i Supreme Court is the ultimate arbiter of state law,” he said.

Tallman also questioned how HRS § 657-7 applied. That law covers actions that damage or injure people or property and in this case, he said, “there was no injury to the property itself.”

Rayner countered that the LUC’s decision to change the property’s land use district did, in fact, injure the property.

“Is that injury to the property or the property owner?” Tallman asked.

“Both,” Rayner replied.

As of press time, the appellate court had not issued a ruling.

—Patricia Tummons/Teresa Dawson

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