Court Rules Largely Against Plaintiff In Lawsuit Over Kahala Resort Permit

For the last two years, David Kimo Frankel has tried to get the Department of Land and Natural Resources and its board to stamp out what he saw as illegal commercial use of a state beachfront parcel rented since the 1960s by the owners of what is now the Kahala Hotel & Resort.

The resort had for years held weddings, operated a portion of a restaurant and rented out cabanas, loungers, and surfboards on the parcel. This despite the fact that the state allowed the parcel to be created as a public beach and permits for years limited its use to maintenance and landscaping.

On November 9, 2018, the Land Board approved a new permit to the current owner, ResortTrust Hawai‘i, LLC, al- lowing it to continue to rent clamshell loungers and cabanas and store other beach-related equipment on the parcel on the condition that the City and County of Honolulu also agrees to the uses.

Frankel had requested a contested case hearing on the permit before the board voted, but was denied. Seeking to invalidate the permit, he sued the board and ResortTrust in 1st Circuit Court on December 6.

On August 20, the court issued orders denying Frankel’s motion for partial summary judgment and granting in part and denying in part summary judgment motions by the state and ResortTrust.

Frankel had argued that the board improperly approved the permit without rules setting clear standards for decision-making (Count 1), that the permit was void because the board approved it before ResortTrust obtained a Special Management Area permit from the city (Count 2),that the permit required an environmental assessment or impact statement (Count 3), and that the board breached its public trust duties (Count 4).

After a hearing on July 17 on motions filed by the parties for summary judgment, Judge Jeffrey Crabtree issued a minute order on July 31 detailing his inclinations.

He granted ResortTrust’s motion to dismiss Frankel’s Count 1. In his minute order, Crabtree stated that “there is no statute requiring rule-making,” and that the Land Board arguably needs more flexibility in its decision-making ability “to make fruitful use of the lands, partly since there are vast differences in state land parcels, and it would be difficult at best to adopt formal rules … which addressed all such parcels in a consistent, fair, and predictable way.”

“If the Legislature wanted to require rule-making for short-term temporary occupancy of the myriad parcels of state land, it could easily have done so. It did not,” he wrote.

With regard to Count 2, Crabtree denied ResortTrust’s motion to dismiss, but also declined to require ResortTrust to obtain an SMA permit from the city before receiving approval of its Land Board permit.

“The court is not aware of any required sequential process between the city and BLNR that would force Plaintiff to first apply to the city for relief under the circumstances of this case. BLNR has obligations under 205A [the state Coastal Zone Management Act] which overlap with and are independent from the city’s obligations and decision-making,” Crabtree wrote.

He also found that Frankel’s Counts 3 and 4 were moot.

Count 3 was moot because of a June decision by the Intermediate Court of Appeals in a water permit case regarding the diversion of stream water in East Maui (Carmichael v. BLNR). That court found that the state’s law regarding environmental assessments and impact statements does not apply to revocable permits issued under Hawai‘i Revised Statutes 171-55.

Count 4 was moot, Crabtree stated, because “the court already ruled there is no recognition under Hawai‘i law that the public trust doctrine applies to this urban parcel.”

Crabtree noted in his order that “a substantial amount of his time and analysis was spent separating out and disregarding what is not at issue in this motion.”

One of the issues not covered by any of the counts in the complaint is the Department of Land and Natural Resources and the Land Board’s decision to not bring any enforcement action against ResortTrust for its years of unauthorized commercial use on the parcel. For example, in July 2016, Land Board chair and DLNR director Suzanne Case sent a letter to ResortTrust’s attorney informing him that the company’s permit for the parcel did not allow commercial activities and directing the hotel to cease hosting weddings there. Even so, the resort continued to do so for some time.

In an April 19 motion for partial summary judgment, Frankel asked the court to order the Land Board to initiate enforcement actions against ResortTrust or justify to the court why it did not pursue an enforcement action.

In testimony submitted to the state Legislature earlier this year in opposition to the reappointment of Case as DLNR director, Frankel raised her handling of the Kahala permit as an example of “unequal application of the law.”

“When Hawaiians occupied public land on Mauna Kea, Suzanne Case mobilized DLNR’s resources to threaten them with jail and arrest them. In contrast, when the owners of the Kahala hotel used public land for commercial purposes DLNR has testified were illegal, Ms. Case took no enforcement action. The hotel operated a restaurant on public land, built and rented tall cabanas on public land, conducted weddings on public land, and generated hundreds of thousands of dollars from public land — all without authorization. Although brought to Ms. Case’s attention, DLNR has refused to make any effort to recover the illegal profits generated on the public lands makai of the Kahala hotel. Why are Hawaiians subject to prosecution while a large corporation is allowed to illegally profit from public land with impunity?” he asked.

Frankel also pointed out that despite a January 2016 order from a 1st Circuit judge invalidating revocable permits allowing Alexander & Baldwin to divert East Maui stream water, the company was allowed to continue its diversions without permits until the Land Board voted in December of that same year to grant them. “DLNR took no enforcement action against A&B. There appears to be a double standard,” he said.

Frankel formerly worked as an attorney for the Native Hawaiian Legal Corporation, which represents parties in the Maui case.

In its response to Frankel’s April motion, ResortTrust’s attorneys called his requests regarding enforcement “preposterous.” “Plaintiff appears to be using this courtroom to vindicate his individual value preferences, and those of his clients, while at the same time arguing these same positions to the Legislature,” they wrote.

 —Teresa Dawson

For Further Reading

• “Land Board Grants New Permit For Hotel’s Use of Kahala Parcel,” December 2018;

• “New & Noteworthy: Kahala Update,” November 2018;

• “Contested Case Request Halts Attempt to Condone Commercial Use at Kahala,” October 2018;

• “Board Talk: Kahala Hotel’s Beach Use, Helicopters on Kaua‘i,” September 2018;

• “Kahala Hotel Beach Weddings Not Sanctioned by DLNR Permit,” July 2017.

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