Title: Office of Hawaiian Affairs v. State. Concurring Opinion by J. Acoba. S.Ct. Order Granting Motion for Reconsideration, filed 12/23/2005 [pdf], 109 Haw. 578. S.Ct. Order Correcting Reference to Civil Number Reflected in Case Caption of the Opinion of the Court, filed September 9, 2005, filed 04/13/2006 [pdf]. S.Ct. Opinion, filed 04/28/2006 [pdf], 110 Haw. 338. J. Acoba Concurring in the Result Only.

State: hawaii

Issuer: Hawaii Supreme Court

Document:

*** FOR PUBLICATION ***

 

IN THE SUPREME COURT OF THE STATE OF HAWAI‘T

=== 000 ---

 

OFPICE OF HAWAIIAN AFFAIRS, TRUSTEES OF THE OFFICE
OF HAWAIIAN AFFAIRS, Plaintiffs-Appellante/
Cross-Appellees,

 

STATE OF HAWAI'T, Defendant -Appellee/
(Cross-Appellant -

No. 26615

APPEAL FROM THE FIRST CIRCUIT COURT
(CIV. NO, 03-1-0505-07 (GwBC))

  

SEPTEMBER 9, 2005

 

MOON, C.J., LEVINSON, and NAKAYAMA, J5., and
CIRCUIT ‘suDGE HARA, IN PLACE OF DUFFY,’ J., RECUSED;
ACOBA, J., CONCURRING IN RESULT ONLY
OPINION OF THE COURT BY MOON, C.J
Plaintiffe-appellante the Office of Hawaiian Affairs
(OHA) and the Board of Trustees of OHA (the trustees)
Ihereinafter, collectively, the plaintiffs) appeal from the
Circuit Court of the First Circuit’s' May 19, 2004 final judgment
in favor of defendant-appellee State of Hawai'i (the State). on

appeal, the plaintiffs contend that the circuit court erred in:

(1) granting the state's motion to dismiss their first amended

 

‘The Honorable Gary W.8. Chang presided over the instant case.

 
*** FOR PUBLICATION ***

complaint (hereinafter, motion to dismiss]; (2) denying the
plaintiffs’ motion for leave to amend the first amended complaint

(hereinafter, motion to amend]; and (3) denying the plaintiffs’

 

motion to bifurcate the justiciable and nonjusticiable i
Presented in this case [hereinafter, motion to bifurcate]. For
the following reasons, we affirm the circuit court’s final
judgment .
1. BACKGROUND

A. The Creation of oHn*

As this court detailed in OHA I, 96 Hawai'i at 390, 32
P.3d at 903 and Yamasaki, 69 Haw. at 158-65, 737 P.2d at 449-53,
the State holds ceded lands’ in a public land trust for five

Purposes, one of which is “for the betterment of the conditions

 

of native Hawaiians[.J* QHA I, 96 Hawai'i at 390, 31 P.3d at 903
(citing Admiseion Act § 5(£)) (emphasis onitted). The State's
trust obligation to native Hawaiians is set forth in various
Provisions of the Hawai'i Constitution, including article xI!,
sections 4-6," wherein OHA was created and charged with managing

+ ____For amore detailed factual account of the historical
circumstances leading up to the creation of OHA and the public land trust
Giscussed herein, ang Office of Hawaiian Affaire v. State, 96 Yavai'i 360,
390, 31 P.34 $01, $03 (2001) (hereinafter, OWA 1], Trustece of OHA v.
Yanasaki, 69 Hav. 154, 158-65, 737 P.2d 446, 443-53, cert. Genied, 466 U.S.
58" (2907) (hereinafter, Yamasaki).

 

2, The ceded lande are defined in section $(b) of the Admission Act
of March 28, 1959, Pub. L. No. 86-3 §5, 73 Stat. , reprinted in, 1 Hava?

Revised statutes (uRS) § 90, 91-92 (1993) {hereinafter, Admission Act). Bee
GHAI, 96 Hawai'd at 390, 31 p.2d at 903 (citing Admiseion Act # 5(b))-

 

‘article x11, sections 4-6 provide:

(continued...)

 
 

*** FOR PUBLICATION **

 

proceeds derived from the ceded lands and designated for the

benefit of native Hawaiians. Additionally, article XVI, section

7 of the Hawai'i Constitution® requires the state to enact

 

«

Haw. const

Haw. Const.

-continved)

Section 4. The lands granted to the state of Hawaii
by section stb) of the Admission Act and pursuant to Article
XW, Section 7, of the State Constitution, excluding
therefrom lands defined aa savatlable lande" by section 203
of the Hawaiian Hones Commission Act, 1920, ae amended,
shall be held by the state as a public trust for native
Mavaiians and the general public:

OPPICE OF HAWAIIAN APFAIRS:

There is hereby established an office of

 

 

  
 

 

 

Co all the real and perscr
ide ‘or conveyed to it which shall be held in trust for
ative Mawaiians and Hawaiians. There shall be a board of
Erustees for the Office of Hawaiian Affaire (.)

 

POMERS OF BORRD OP TRUSTEES
Section. The Board of trustees of (OHA) shall,
exercise power ao provided by law: to manage and acninieter

the proceeds from the eale of other disposition of the
lands, natural resources, minerals and incone derived from
havever sources for native Hawaiians and Nawaliane.
Ineluaing all income and proceeds from ehat pro rata portion
of che crust referred to in section 4 of this article for
ative Hawaiians; to formulate policy relating to affairs of
‘and to exercise control over

jonal property set aside by the state, federal

‘and transferred to the board for native
yeaiians and Hawaiians. The board shall have the power to

‘control over [OHA] through ite executive officer,
She sdninSerrator of [62a], who shell be appoinved by the
board!

 

 

 

   
  

 

 

art. xt, 68 4-6.

Article XVI, section 7 of the Hawai'i Constitution provid

 

Gf this state, in respect of the
by the United Staten oF the
proceeds snd income therefrom, shall b

Appropriate leaislation. such legislation shalt not
Giminian or limit the benefice of native Hawaliane under
Section 4 of Article XII.

   

art. XVI, § 7 (enphases added)

 

 
*** FORPUBLICATION ***

legislation regarding its trust obligations. Id, (citing Haw.

Const. art. XVI, § 7) (emphases added). Thus, in 1979,

 

legislation was enacted that set forth the purposes of OHA and
Id, at 391, 32

 

Gescribed the powers and duties of the trust

L. Act 196, § 2 at 398-99,

 

P.3d at 904 (citing 1979 Haw. se
§ 8 at 406 (codified at HRS chapter 10)). In 1980, the
legislature amended HRS chapter 10 by adding HRS § 10-13.5, which
provided that “(t]wenty per cent of all funds derived from the

public land trust . . . shall be expended by [OHA] for the
L. act

 

Purposes of this chapter." Id, (citing 1980 Haw. Se:
273, § 1 at 525) (emphasis added).
3. Yamasaki

In 1983, the trustees initiated the action in Yamasaki
against the State based on the state's alleged failure to fulfill
its obligation to allocate “twenty per cent of all funds derived
from the public land trust to OHA" as required by HRS § 10-13.5.
id. (citing Yamasaki, 69 Haw. at 165, 737 P.2d at 453). on
interlocutory appeal, this court held that it was unable to
determine the parameters of ERS § 10-13.5 “because the seemingly
clear language of ERS § 10-13.5 actually provided no ‘judicially
discoverable and manageable standards’ for resolving the disputed
issues in the case." Id, (citing Yamasaki, 69 Haw. at 173, 737
P.2d at 457) (brackets omitted). Stated differently, this court
“concluded that the construction of the term ‘funds’ [as used in

HRS § 10-13.5] . . . constituted a non-justiciable political
*** FORPUBLICATION ***

eS

question because the legislature had not provided judicially
manageable standards.“ Id, at 393 n.6, 31 P.3d at 906 n.6
(citing Yamasaki, 69 Haw. at 172-73, 737 P.2d at 457).
Cc.  Post-Yamasaki Lesislation

In response to this court’s decision in Yamasaki, the
Jegislature enacted Act 304, which inter alia, amended HRS
§ 10-13.5 to provide: “twenty per cent of all xevenuel‘) derived
from the public land trust shall be expended by [OHA] for the
betterment of the conditions of native Hawaiians." Id, at

391-92, 31 P.3d at 904-05 (citing 1990 Haw. Sess. L. Act 304, § 7

 

at 951; HRS § 10-13.5 (1993)) (emphs

 

48 in original).
Additionally, section 8 of Act 304 provided a mechanism whereby
the State and OHA were to determine the amounts owed to OHA for
the period of June 16, 1980 through June 30, 1991. id. at 392,
32 P.3d at 905 (citing 1990 Haw. Sess. L. Act 304, § 8 at 951).
‘Thus, pursuant to section 8, the legislature appropriated funds
for the payment of approximately $130 million to OHA on April 16,

1993. Id. (citing 1993 Haw. Sess. L. Act 35, at 41). However,

«ogy TM levislature defined revenue* in section 3 of Act 306 to
include a22

Proceeds, fees, charges, rents, or other income. .
Serives from any... activity(] that ie situated upon and
results fron the actual use of... the public lend erust
1 but excluding any income, proceeds, f

Qther moneys derived through the exereise of sovereign
functions and powers including (11) enuserated descriptions
of sources of revenue that are excluded from che tere"
“revenue” under the statute

   

 

GHRL, $6 Hawai's ax 392, 32 7.34 at 905 (citing 1990 Haw. sess. L. at 308,
5 3 at 948; RS § 10-2) ‘(some brackets omitted) (eome brackets added)
(ellipses points in origina!)

 

 

 
 

* FOR PUBLICATION ***

 

the $130 million appropriation *{did) not include several matters
regarding revenue which OHA (had) asserted [was] due OHA and
Which [the state had) not accepted and agreed to.” Id.
(quotation marks omitted) (brackets added) .
D. OWA
1. Chreuit Court Proceedings
Based on the State’s refusal to appropriate funds for

sveral matters regarding revenue which OHA has asserted (was)

 

due," OHA initiated the action in OHA I on January 14, 1994,
alleging that the State had failed to pay OHA its full share of
wrevenues" that the State had collected from the ceded lands
since June 16, 1980. Id. OHA sought an accounting, restitution
or damages, pre-judgment interest, attorneys’ fees and costs, and
such other relief as the court deemed just and proper. Id.

The State moved to dismiss the case on the following
grounds: (1) lack of justiciability; (2) sovereign immunity;
(3) statute of limitations; and (4) and waiver/estoppel. Id.
The circuit court orally denied the State’s motion to dismiss and
ruled that OHA was entitled to revenues from each enumerated
source. Id, Thereafter, the State filed its notice of appeal on
Novenber 22, 1996. Id.

2. Federal Legislation Enacted While OHA I Was
Pending Appeal

During the pendency of the appeal in OHA I, the United
‘States Department of Transportation (USDOT), in 1995, conducted

an investigation into the propriety of the State’s payments to

 
*** FOR PUBLICATION ***

 

OHA from airport revenues. Id. at 396, 31 P.3d at 909. This
investigation was sought pursuant to: (1) the Airport and Airway
Improvement Act of 1962, Pub. L. No. 97-248, § Si1(a) (12), 96
Stat. 671, 687 (1982) (codified, as subsequently amended, at 49
U.S.C. § 47107(b) (1)), which directed aixport owners to use ‘all
revenues generated by the airport . . . for the capital or
operating costs of the airport, the local airport system, or
other local facilities which are owned or operated by the owner
oF operator of the airport and directly related to the actual
transportation of passengers or property”; and (2) the Federal
Aviation Administration (FAA) Authorization Act of 1994, Pub. L.
No. 103-305, § 212(a) (2) (B), 108 Stat. 1569, 1574-75 (1994)
(codified at 49 U.S.C. § 47107(1) (2) (b)), which prohibited the
wuse of airport revenues for general economic development,
marketing, and promotional activities unrelated to airports or
airport systems(.]* Id. (ellipses points in original)
(quotation marks omitted) .

In a 1996 report, the USDOT Inspector General concluded
that the State’s payments to OHA between 1992 and 1995 in the
amount of $28.2 million ‘were a diversion of airport revenue in
violation of 49 § U.S.C. 47107(b)" because “OHA provided no
services for the $28.2 million” [hereinafter, the USDOT Inspector
General's report will be referred to as the IG Report). Id.
(citing FAA Report No. R9-FA-6-015, Aixport Improvement Program

Grants Provided to the Hawai'i Department of Transportation

 
*** FOR PUBLICATION ***

(HoT), at 11 (Sept. 19, 1996)). The IG Report recommended that

the FAA “withhold paynents on current grants and approval of

recover the §28.2 million

"Ide

 

further grants if the State does not:

 

in airport revenues paid to OHA for nonairport purpot
(citation and brackets omitted). In response to the IG Report,
the State attorney general opined that ‘we view the subject
payment of $28.2 million in airport special fund moneys to OHA
Pursuant to Act 304 as an operating cost of the State's airports
within the meaning of 49 U.S.C.A. § 47107(b) (2) .*

In early 1997, the State began to escrow airport-
related payments owed to OHA pending resolution of the IG Report.
On April 25, 1997, the FAA issued a memorandum (hereinafter, the
FAA Memorandum), stating its concurrence with the IG Report’s
conclusion and recommendation. Id, (citing Memorandum from FAA
Acting Administrator to Acting Inspector General of 4/25/97,
arn.

on July 22, 1997, U.S. Senate Report 105-55 regarding

the Department of Transportation and Related Agencies

 

Appropriations Bill, 1998, state

Federal aviation law . . . prohibits the diversion of
Aixport revenues for non-airport purposes. Recently, the
Departnent of Transportation Inspector General identified
$30, 000,000 in past paynents to the Office of Hawaiian
Rttaize ae illegal diversions of airport revenues. The FAA
agreed with the (IG Report). However, it is unclear whether
a Federal court would agree with che {Inspector General) and
fhe FAA(,] should their determination be challenged. Given
fhe fact that the State of Hawaii ome the lands in trust

“for the bettersent of native Havailans, it is conceivable
that a reviewing court could find that ‘the payments of
Aizport revenues were in the nature of rent, which ie
Permissible use of airport revenue.

 

 

tne 3 2
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congress ature

(Bmphasis added.) On August 19, 1997, the State attorney general
authored a newspaper article, in which she stated that the state
would not challenge the FAA’s position that the use of airport
revenues to pay OHA was improper.

In 1998, Congress enacted the Department of
Transportation and Related Agencies Appropriations Act, Pub. L.
No. 105-66, § 340, 121 Stat. 1425, 1448 (2998) [hereinafter, the
Forgiveness Act], which states in pertinent part:

(7) (Clontrary to the prohibition against diverted airport

Fevenues fron alzport purpores under section 47107 of itie

45. Unites states cose.

‘evenlea may have been ‘nade for the betterment of Native
Hawaiians, or Alaskan natives based upos the claims related
Ho lands ceded to che United statest.1

(b) "TERMINATION OF REPAYMENT RESPONSIBILITY. -- Notwithstanding
the provisions of 47207 of title 49, United Sates Code, oF any.

other provision of law, monies paid for claing related to ceded

Ari Liss, by any entity for the bettersent of Native
Anericans, Native Hawaiians, or Alaska Natives,

ub

(c) — PRONTSITION ON FURTHER DIVERSION. -- There shall be no
Janie, vhether characterizes as operating expenses, rent, or
otherwise, and whether related to claims for periods of time prior
to or after the date of the enactment of this Act.

(a). CLARIFICATION.) =

ko affect any existing Federal statutes, enactments, OF rust
‘bligatione created chereunser, or any statute of the several

States that define she cblications of auch States to Native
americans, wualians or Alaska natives in conection with

used to satisfy euch obliastions.
OHA I, 96 Hawai'i at 396-97, 31 P.3d at 909 (citing Forgiveness

 

  

 

 

 

    

 

 

Act § 340) (emphases, brackets, and ellipses points in original).

 

 
 

FOR PUBLICATION ***
3. This Court's Decision in OHA T

After the Forgiveness Act became law, this court, on
appeal, acknowledged that the plain language of "Act 304

sought in

 

obligates the state to pay to OHA the airport revenu
this case." Id. at 396, 31 P.3d at 909. However, this court
further held that “Act 304, as applied to the airport revenue
sought in this case, conflicts with the provieione of the
Forgiveness Act. As such, by its own terms, Act 304 is
Anvalid.*? Id. at 399, 31 P.3d at 912, This court went on to

hold that, inasmuch as "the invalidity of Act 304 reinstates the

 

inmediately preceding version of HRS § . . . 10-13.5, which then
places this court precisely where it was at the time Yamasaki was
decided{,]* *[this court] is again left with no judicially
manageable standards by which to discern what specific funds OHA
is entitled to receive under chapter 10, without making ‘an

initial policy determination . . . of a kind normally reserved

Specifically, this court invalidated Act 304 pursuant to
section 16 of the act, which stated:

‘The provisions of this Act shall be enforced to the extent
they are not held to conflict with any federal or state law,
‘or reguiations. The provisions of this Act are not

Severable and it any provision of the Act, oF the
application thereot to any person or circumstance i held to
conflict with any federal or state law, rules, oF
Fegulations, this Act, in its entirety, shall be invalid and
‘Sections 10°2, 10-3, i0-5, 10-13 and 10-13,5, hawaii Revises
Statutes, shall be feenacted in the for= in which they vead
fon the day before the approval of this Act

 

 

 

 

1980 Haw. Sess. L. Act 304, § 16 at 952

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for nonjudicial discretion.’** Id, at 400-01, 31 P.3d at 913-14
(citation omitted). Accordingly, this court “dismiss[ed the]
case for lack of justiciability." Id, at 401, 31 P.34 at 914.
B. he Instant Case

1. The Plaintiffs’ First Amended Complaint and the
State's Motion to Diem:

 

The plaintiffs filed a complaint against the State on
July 21, 2003. On August 26, 2003, they filed a firet amended
conplaint [hereinafter, first amended complaint or complaint]
Therein, the plaintiffs alleged that “the Forgiveness Act would
not have become law if the State had properly challenged the FAA
Memorandum and thus there would not have been a federal law in
conflict with Act 304{.]” The plaintiffs asserted that the
State's refusal to challenge the FAA Menorandun was a
“substantial factor[] that resulted in the passing of the
Forgiveness Act and the Hawaii Suprene Court’s opinion rendered
in (OHA 1,]* which invalidated Act 304. As a result of Act 304’
invalidation, the plaintiffs could no longer recover airport-

related revenues from the State. Thus, the plaintiffs claimed

 

that the State breached its trust duties by allowing Act 304 to
become invalidated. Additionally, because the plaintiffe believe
that Act 304 constituted a contract and settlement agreement

between the State and OHA, they alleged that the state “breached

the Act 304 settlement” and “violated the Contract Clause of the

 

+ Additionally, this court held that the State wa not obligated “to
pay amounts “equivalent to! the airport revenie due to GHA from other source
Such'ae the general fund." OHA, Se Hawa at 398, 31 P.3¢ at 302

     

 

-1e
*+** FOR PUBLICATION ***

United States Constitution"? by allowing the Forgiveness Act to

invalidate Act 304. The complaint set forth OHA‘s claims and

Prayer for relief as follows:

of the native Hawaiian public Crust. preached the Act 30s

ual ‘Contract Units
" none ‘by the acts and

onissions set forth above including but not limited to: (1)
failing to challenge the positions set forth in the PAA
Mesorandum; (2) resolving ite diepuve with the FAA by
obtaining a forgiveness of the prior $30 million paywent in
exchange for a promise not to make future airport. revenue
Payments to OHA and not to appeal the positions set forth in
fhe FAA Memorandum; (3) breaching the trust duty of
Anpartiality by not challenging the positions set forth in
he FAA Memorandum in order co use then aa a aword in

(Gia Gand subsequent appeal; (4) failing to tinely aévisi
OWA that the State was not going to continue to challenge
tthe positions set forth in the #AA Memorandun ox 10 Report,
and that it was planning to settle with the federal
Government, in order to provide OWA with a

 

 

 

 

  

 

 

‘position £0 oppor
in inseruceione from the

 

tthe PAA and,

Court on how to proceed given its conflict position of
Gefending the state against OWA in GHA I and having a duty
fo challenge the positions set forth in the FAA Memorandum.

7" iieed_in

 

+ ca or
Gazades including but not iimited to: (1) relief alleged by
OuA'in [OHA T}; and, (2) amounts payable under Act 304 chat
have not been paid, including but not limited to, airport
landing tees.

36. OHA is entitled to a declaratory judament that
(2) ordere che state to reinstate act io4 on the grounds
thar the Forgiveness Act would not have become law sf the
State had properly challenged the FAA Memorandum and hue
Ehere woulé not have been 2 federal lay in conflict with Act
304; (2) orders the State to pay alrport-related income,
Proceeds, funds and/or revenues to OHA from sources other
han airport revenues) (3) appoints an independent trustee
Eo temporarily replace the State as trustee of the native
Hawaiian public trust with respect to natters relating to
Feinstatenent of Ret 30¢ and the paynent of alrport-related
Fevenues to OHA fron sources other than airport revenue

 

 

 

 

 

 

+ the Contract Clause of the United states Constitution provides
that co state shail... pase any Law inpairing the Obligation of
Contracts{.]*" U.8. const, art. I, § io, cl. 2

-12-
*** FOR PUBLICATION ***

 

and (4) determines whether disputed itens should be included
8 income, proceeds, funds and/or revenues owed to OHA.

37." “OHA is also entities to inuunctive celiet that
bars the state and its agents, employees and officials rom

    

opposing steps to reinstate Act 304 and
velated income, proceeds, funds and/or revert
sources other than airport revenues.

WHEREFORE, Plaintiffs pray for judgment against the
State for: (1) accounting, restitution and/or damages; (2)
declaratory relief set forth above; (3) injunctive relief
set forth above; (4) attorneys’ fees and costs; prejudgment
and post-judguent interest; and (5) such other relief a=
Geened fair and equitable to the [cloure,

 

pay aizport
‘co OHA from

 

 

 

In sum, the plaintiffs: (1) asserted claims for (a) breach of
fiduciary duties as trustee, (b) breach of the Act 304 settlement
agreenent, (c) violation of HRS chapter 10, (d) violation of the

Contract Clause, and (e) misrepresentation and non-disclosur

 

and (2) requested relief in the form of (a) accounting,
restitution, and/or damages, (b) declaratory relief,
(c) injunctive relief, (a) attorneys’ fees and costs, (e) pre-
and post-judgment interest, and (f) such other relief deened fair
and equitable to the court.

In response to the plaintiffs’ first amended complaint,

the State filed a motion to dismiss the complaint on September

 

18, 2003. Therein, the State argued that the circuit court
lacked subject matter jurisdiction over the case and that the
complaint failed to state a claim upon which relief could be
granted, Specifically, the State maintained that the plaintiffs’
claims were barred by: (1) lack of justiciability; (2) sovereign
immunity; (3) statute of limitations and various notice
requirements; (4) res judicata; and (5) collateral attack.

on october 13, 2003, the plaintiffs filed a memorandum
in opposition to the State’s motion to dismiss. Therein, the

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plaintiffs alleged that the State waived its sovereign immunity

in HRS § 661-1(1) (2993)*° and HRS chapter 673, entitled "Native
Hawaiian Truste Judicial Relief Act." The plaintiffs also
argued that their claims were not barred by the statute of

Limitations because the instant action was filed within two years

 

of the accrual date and that the notice requirements alleged by
the State were not applicable in this case. Further, the
plaintiffs contended that their claims were not barred by res

judicata and did not seek to improperly collaterally attack

ps § 661-1(2) provides in pertinent part:

Barisdiction. The seversl cizeuit courts of the state
. . , shall, subject to appeal as provided by law, have
original jurisdiction to heat and determine the following
matters, and, unless otherwise provided by law, shall
determine ali questions of fact involved without the
Sstervention of @ Jury
(2) "All elaine against che state founded upon any
statute of the State; or upon any regulation of
fan executive department; or upon any contract,
expressed or implied, with the state, and all,
Caine whieh nay be referred to any such court
by the legislature; provided that no action
shall be maintained, nor shall any process issue
Against the state, based on any contract or any
fet of any state officer which the officer ts
hhot authorized to nake or do by the laws of the
State, nor upon any other cause of action than
ae herein set forth.

 

 

 

 

8 ues § 673-1 (2593) provides in pertinent part:

Kaiver of immunity. (a) The state waives ite
Anmunity for sy Dreach of trust of fiduciary duty resulting
fron the acte of omissions of ite agents, officers and
Geployees in the managenent and disposition of trust funds
and resources of

 

i2i "ime native Hawaiian public trust under Article
XIE, "sections 4, 5, and 6 of the Constitution of
the state of Havali implementing section §(f) of
the Admission Act;
land shail be liable in the same manner and to the sane
extent ae 2 private individual under like circumstances, but
Shall not be liable for punitive danages.

o14-
*** FOR PUBLICATION ***

 

QHAI. On October 17, 2003, the State filed its reply
Memorandum, in which it reiterated arguments advanced in the

motion to diemi:

 

on November 10 and 12, 2003, the circuit court held

At the hearings, the

 

hearings on the State's motion to diems:
Parties reasserted arguments raised in their pleadings. after
indicating its inclination to grant the motion, the court stated:

Ehia [clourt is till of the mind chat there hae been no
legislation since OHA T was handed Gown, and in orger for
(the plaintiffe) to successfully prosecute any claim [they]
ay have against the State for breach of fiduciary duty,
Chere nas to be a measure of damages, and that’s where the
(elourt Le strusgling, is to find the measure of danagt

I don't know how [the plaintiffs) can succes

 

 

 

 

S01 thik ve are in the realm of non-justsciabilicy,
fe the fight over what revenues would have formed che

3 for the percentage to be taken Out and swarded to. (the

plaintiffs) still renaine unclear [sl"

    

Nevertheless, at the close of the November 12, 2003 hearing, the
circuit court “set a schedule for further briefing" because “this
[clourt needs to have further education on some of these
issues[.}*

On November 17, 2003 and in response to the court's
request for further briefing, the plaintiffs filed a supplemental

m

 

menorandum in opposition to the State's motion to dismi

serted, the plaintiffs

 

addition to argunents they previously
posited that, “even if the measurement of compensatory damages
Presents a political question, dismissal of the case is not
warranted." specifically, the plaintiffs argued that *[t)he
easurement -of -damages-using-Act 304 [iesue] does not

‘inextricably’ require dismissal here because it is clear that

nase
 

FOR PUBLICATION ***

 

the liability issues are justiciable and the [c]ourt has the
Power to formulate whatever appropriate renedies should flow from

(2) nominal damages”; (2)

 

a finding of wrongdoing[,]” such a

 

   

"an accounting"; and (3) “attorneys’ fees." The plaintiffs

 

ue

 

further noted that, “regardless of whether the damages
Presents a political question, the [c]ourt can appropriately

resolve the liability issue and leave the remedy for the

 

legislature to enact.” In other words, the plaintiffa maintained
that the "lability issues can be bifurcated in order that
Litigation my proceed.”

on Novenber 21, 2003, the State filed a supplenental
memorandum in support of its motion to dismiss. In addition te
reiterating argunente it had previously made, the state, in
response to the plaintiffs’ suggestion of bifurcation, posited
that such a “suggesticn{) constitute[s] a roadmap for waste of

judicial resource:

 

On November 25, 2003, the cixcuit court held another
hearing on the state’s motion to dismiss. After the parties
presented oral argunent, the court noted that the State’s
arguments regarding the statute of limitations, sovereign
inmunity, and res judicata did not warrant dismissal of the
complaint. However, the circuit court ruled:

Turning finally to the question of justiciability and
the political question. Thats where thio. (clourt believes

tthe Grux of the fight is on this matter. I chink that there
iano question that the supseme court in ol i made a
‘eierninstion that the dispute should eo back to the

ior chapter 10.-and without th

 

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ee
na ldveas the question

 

cecejodPlermeating everything that has been asserted.
in conhection with this’- # at bap it’
ek to ia

 

legislature the [sic] OHA is faced with
by'the legs che
case at bar, icugesl

and the (cloart simply could not get that out
of ike ming, ‘fotwithatanding the quality of briefing that

Ona suomiteed
go She —Iclourt does conclude that we still have at the
suecof the case at bar a political question, one that sacks:
Hecaeeaeest epi as Sg andthe beldna of Ok
tian, eSiAAT mnaseasie-atasard tor deternicioa
‘So for these and any cther good caus

record,

ieertrs
(Bmphases added.) The circuit court entered a written order

    

shown in the

 

@ismissing the first amended complaint on December 26, 2003.
2, The Plaintiffs’ Motion to Amend

After the State moved to diamiss the first amended
Complaint but prior to the court’s dismissal of the complaint,
the plaintiffs moved for leave to file a second anended complaint
on October 1, 2003. The proposed second amended complaint
(hereinafter, the original second amended complaint]: (1) added
“a cause of action for breach of the covenant of good faith and
fair dealing implied in the Act 304 Settlement because upon
further reflection counsel for [the plaintiffs] believe(] that
the State’s failure to oppose the FAA's position not only
constitutes a breach of the Act 304 Settlement as a contract but
@leo the covenant of good faith and fair dealing implied in the

Act 304 Settlement”; (2) deleted the clains for misrepresentation

-17-
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and non-disclosure; (3) deleted “relief seeking to reinstate Act
304 because upon further reflection [the plaintiffs] believe{]
that this can only be accomplished by the legislative branch";
and (4) clarified that, "although [the plaintiffs] alleged
damages measured by the standards established under Act 304, the
fact that {QHA I] effectively repealed Act 304 is not relevant

because the State’s alleged wrongs caused the effective repeal of

 

Act 304.*

On October 13, 2003, the State filed a memorandum in
opposition to the plaintiffe’ motion to amend, in which the state
argued that “the proposed amendments are futile" and that the
plaintiffs ‘knew or should have known of the proposed amendnents
when the initial complaint was filed.* In response to the

State’s memorandum, the plaintiffs a:

 

jerted that the proposed
anendnents were not futile.

After the circuit court orally dismissed the first
amended complaint, the plaintiffs’ filed a supplemental motion in
support of their motion to anend on Novenber 28, 2003. The
plaintiffs attached to the menorandum a revised second amended
complaint [hereinafter, the revised second amended complaint] .

In addition to changes proposed in the original second amended
complaint, the revised second amended complaint requested the
following declaratory relief:

(The plaintiffs are) entitied to a declaratory judgnent that
deciares that the State breached fiduciary duties ax trustee
Of the native Havaiian public trust, breached the Act 306
seelenent, breached the covenant of good faith and fair
Ling inplies in the Act 304 Settlement, violated H-R-S.

    

 

 

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Chapter 10 and/or violated Article XII, Sections 4-6 of the
Constitution of the State of Mavaii, and that the states
breaches, errors and omissions as set forth above were
Substantial factore that resulted in the passing of the
Forgiveness Act and the Mavall Supreme Court's invalidation
of Act 308 in (OHA 2].

On December 1, 2003, the State responded to the

 

      

plaintiffs’ supplemental memorandum and alleged that:

7o the extent that OHA seeks to engraft a “new claim
for deciarscory Judgment onto the old claim for declaratory
‘The law ie that
‘may only Senue in cases of actual
‘actual controversy,

 

   

cases

  

 

   

and injunctive
declaration that the State violated a fiduciary duty,
Breached a contract, ete., would be a purely advisory
‘Shinion, ‘Because OHA will not receive monetary oF.
Gnjuneeive relief sea reault of any such declaration, it
would have so judicial consequences for OHA.

 

 

(Sephases in original.) The State also asserted that, *[s]imply
as a matter of procedure, there is no basis for [the plaintiffs’)
filing.

on Decenber 19, 2003, without holding a hearing on the
matter, the circuit court entered an order denying the
plaintiffs’ notion to amend.

3. The Plaintiffs’ Motion to Bifurcate
After the circuit court had dismissed the first amended

complaint, the plaintiffs filed a motion to bifurcate on November

 

28, 2003. They asserted that the “request for bifurcation is in
part based on [their] request to amend [their] declaratory relief
prayer" in the revised second amended complaint. Thus, the
plaintiffs requested the court to ‘rule on the [the motion to
amend) before ruling on this motion because [the plaintiffs’)
prayer for declaratory liability relief is an important part of

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this motion." Specifically, the plaintiffe asked the circuit

court to “allow [them] to proceed with the liability issues in
this case including the pursuit of the declaratory liability
relief sought and any other relief that is not based on Act 304

(e.g., nominal damages, attorneys’ fees

 

a measure of danag

 

and costs), inasmich as these issues are clearly justiciable.*?
On December 1, 2003, the State filed its memorandum in
opposition to the plaintiffs’ motion to bifurcate. The state

argued that

 

 

Bifurcation is improper because: (2) (the plaintiffs)
ignore{] the expedition and econosy" requirenente of the
Pisin cext of Hawaii Role of Civil Procedure TllineP) Rule)
42(b) [(2372)"1; (2) [ene plaintiffs") position is,
Slogical, and the requested bifurcation can serve no legal
Purpose; and’ (3) ‘there is so case law supporting [the
Plaintiffs") request for bifurcation.

 

 

 

 

The State additionally asserted:

Even more fundamentally, [the plaintiffs’) request ie not
really « request for "bifurcation’ at all, Bifurcation
typically’ inves sparating two clains or issues and then
considering then sequentially. The purpore is to avoid
unnecessarily litigating the second claim or issue if the
Hirst is resolved a certain way (e-g., determining liability
first, #0 that issues of dasages need not be considered
unless and until the first phase results in a finding of
Liability). In stark contrast, there indisputably will not
bea second phase in this case because this court has
already ruled that there are no judicially manageable
Standards to provide OHA a renedy. OHA does not actually
Seek “bifurcation,” but, rather, seeks = one-step"
Fuling on Liability, with no Judicial remedy step ever to
fellow.

Rather than *bifurcater go that resolving a dependent
issue (e.g-, renedy) might be avoided once a preceding issue

        

 

   

 

 

& We note that the plaintiffs’ motion to bifurcate alternatively
Fequested “leave to conduct limited preservation discovery during the
indeterminate and potentially lengthy period of tine that this case may be on
appeal." “However, this issue is not reised on appeal

 

nce Rule 42(b) provides that courts ‘may order a separate trial
of any claim of issues, always preserving inviolate the right of trial
by Jury a8 given by the Constitution Or a statute of the State or the United

 

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ee

de determined (e.g., a ruling denying liability), OHA aske
for the exact opposite: it aeke this court to reach as
issue that it has already determined need not be reached
because no renedy can issue even if liability were found.
Move, rather than bifurcating to preserve scarce judicial
Fesources, OHA asks for "bifurcation" to burden judicial
resources for no practical purpose.

 

 

(Smphasis in original.)

After @ hearing on the matter, the circuit court
entered an order denying the plaintiffs’ request to bifurcate the
justiciable and nonjusticiable issues."

4. gudgment and Notice of Appeal

On May 19, 2004, the circuit court entered ite final
judgment in favor of the State and against the plaintiffs “as to
all clains asserted against [the state] in plaintiffs’ first
amended complaint.* The court also stated that “[t]here are no
Femaining claims” and that, in any case, “(any remaining claims
are diemissed without prejudice.”

On June 8, 2004, the plaintifés filed a timely notice

of appeal.

A ismiag Cor f

A trial court's dismissal for lack of subject matter
Jurisdiction is a question of law, reviewable
‘ve United . 850 Fad $50, 560° (3th Cir

3968), cert. denied, 469 0.5. 1052, 108's. ce. 13:2, 103 L.
4-24 561 (1989); age aleo Moir v. greater Clevela
Eegional Transit Auth. 695 F.2d 266, 269 {eth Cir 1990).
Moreover, we adopt the view of the Ninth circuit coure of
Appeals in Love v. U.S.) 871 7.26 1428 (3th Cir. 1985)

Our review fof a wotion to dismiss for lack of

subject matter jurisdiction 1s based on the

contents of the complaint, the allegations of

which we accept as true and construe in the

rect OES, that the court granted the plaintiffs’ motion with
te their request for leave to conduct limited discovery,

 

 

 

 

sect

 

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Light most favorable to the plaintife
Dismissal is improper unless "it appears beyond
Goube that the plaineif® can prove no set of
facte in support of his claim which would
entitle him to relief."

Ad, at 1491 (citations omitced) .

Norcia v. Hawaiian Airlines, Inc., 74 Haw. 235, 239-40, 942 P.2d
634, 637 (1992), aff'd, $12 U.S. 246, 266 (1994) (footnotes

 

omitted) (brackets added). Similarly, *[a] complaint should not
be dismissed for failure to state a claim unless it appears
beyond doubt that the plaintiff can prove no set of facts in
support of hie or her claim that would entitle him or her to
" Dunlea v. Dappen, 63 Hawai'i 28, 32, 924 P.2d 196, 200
(2996), overruled on other grounds by, Hac v. Univ, of Hawad't,
102 Hawai'i 92, 105-06, 73 P.34'46, 59-60 (2003).
B. Motion for Leave to Amend Complaint

Orders denying motions for leave to amend a complaint
are reviewed for an abuse of discretion. Hirasa v. Burtner, 68

Haw. 22, 26, 702 P.24 772, 776 (2985).

 

relie!

‘The trial court abuses its discretion if it bases its ruling
on an erroneoss view of the law or on 2 clearly

Rescussent of the evidence. Stated differently,
Gisererion occurs where the trial court has clearly exceeded
the bounde of reason or disregarded rules or principles of
‘Law or practice to the substantial detrinent of a Party
Litigane

Ranger Ins Co, v, Hinshaw, 103 Hawai'i 26, 30, 79 P.3d 119, 123

(2003) (citation omitted) .

 

    

 

TIT. DISCUSSION

Plaintiffs Bi aint
As previously indicated, the circuit court dismissed
the complaint after concluding that it was “left with judicially

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SSS

unmanageable standards or the lack of a judicially manageable
standard for determining damages{.]“ The court stated: “{k]e
still have at the crux of the case at bar a political question,
one that seeks to collaterally attack the ruling and the holding

of OHA L.* In other words, the circuit court concluded that the

 

Plaintiffs’ damages as requested in their complaint presented a
political question that collaterally attacked OHA I inasmuch a
the damages were sought pursuant to Act 304, which this court had
Previously invalidated in QHA Z.

The plaintiffs’ primary contention on appeal ie that,
contrary to the circuit court’s conclusion that the requested
danages were nonjusticiable, the complaint did request
justiciable relief and that, in any case, the court was not
Limited to the relief pleaded in the complaint, but “had the
should flow

 

obligation to formulate whatever appropriate remedi
from a finding of liability, even if it ie not the relief prayed
for by [the plaintifte).* Additionally, the plaintiffs argue
that the claims in the complaint were justiciable inasmuch as
determining whether the State breached ite trust or contractual
duties iv “for the courts to decide.

In response, the State first argues that the complaint
was properly dismissed inasmuch as the plaintiffs failed to state
@ claim upon which relief could be granted. Regarding the relief
Sought in the complaint, the State agrees with the circuit court

and posits that, because the plaintiffs’ relief relied upon the

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*** FOR PUBLICATION ***

 

now-invalid Act 304, the complaint lacked justiciability.

Specifically, the state assert:

 

(he plaintiee’) sole touchstone for relief in this
case ig invalidated Act 304. ‘The [complaint] sought (2)
the relief that OWA sought in OHA I under Act 304; (2) all
fecunte, including airport landing fees, "payable under Ack
43Ge that have not been paid" (exphasis addea); (3) an order
Ssrecting the State co reinstate Act 304 and to pay
equivalent alxport revenue anounts £0 OHA from nen-airport
sources, (4) the appointment of a trustee to oversee the
Teinstatenent of AEt 204 and the payment of equivalent
fizport revenue amounts to. [the plaintiffs) from non-airport
Sources; and (5) injunctive relief barring the state from
Spposing the reinstatenent of Act 304 and the payment of
equivalent airport revenue amounts to OWA from non-airport
Scurces. (IR 65, 78 p10 at $9 35-37) (App. A)

Gh shore, {the piaintitfe] asked che circuit court and
now aski] this court to pretend that OHA I never happened)
and to resurrect Act S04; Sut QHAI aid happen. This court
Cannot resurrect Act 304 wiehout running afoul of 49 U.5.C.
£47207, the Porgiveness Act, the Supremacy Clause, and § 16
of Act jos iteelt.

 

  

 

 

 

 

(Emphases in original.)
In the instant case, the circuit court dismissed the
complaint based only on its conclusion that the plaintiffs’
requested damages were nonjusticiable and sought to collaterally
attack QHAI. The court did not determine whether the complaint
stated a claim upon which relief could be granted. Moreover, ‘a
motion to dismiss may not be granted on the grounds that the

relief prayed for is improper, so long as plaintiffs may be

 

entitled to some relief if they are able to prove their clains.

Braun v. N, Ohio Bank, 430 F. Supp. 367, 380 (N.D. Ohio 1977)
(citation omitted); gee also Doss v. $. Cent, Bel) Tel. Co., 634

 

 

% Aw previously indicated, the State's motion to dismiss at
alternative grounds for diemiesal, including: (1) sovereign immunity; (2)
Statute of instations; (3) res judicata; and (4) collateral attack. Both
parties present argument on appeal regarding such alternative grounds
However, inasmuch ae we conclude that the complaint was properly dismissed for
yestons qiacussed intra, we deciine to address these alternative grounds for
Semiseal-

 

 

 

 

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SSS

F.2d 421, 424 n.3 (Sth Cir. 1987), reh’g denied 637 F.2d 1090
(2988) ("demand of an improper remedy is not fatal to a party's
pleading if the statement of the claim is otherwise sufficient to
show entitlenent to a different form of relief’ (citations
omitted)); Doe v. U.S. Dep't of Justice, 753 F.2d 1082, 1108
(D.C. Cir, 1985) (*A district court should not grant a [FRCP]
Rule 12(b) (6) motion to dismiss for failure to seek the
technically appropriate remedy when the availability of some
relief is readily apparent on the face of the complaint.*);
Sassidy v. Millers Cas. Ins. Co, of Texas, 1 F. Supp. 24 1200,
1214 (D, Colo. 1998) (“the test of a complaint pursuant to a
motion to dismiss lies in the claim, not in the denand{; t}hus,
the only issue on a motion [to] dismiss ie whether the claim as
stated would give the plaintiff a right to any relief, rather
than to the particular relief demanded” (citations omitted) ).
Accordingly, we must determine whether the plaintiffs’ complaint
stated any claim upon which relief could be granted rather than
determine, as did the circuit court, whether the plaintiffs’
demand for damages was justiciable.
2. The Plaintiffs’ claine

As previously indicated, the plaintiffs’ complaint

stated their claims as follows:

The state breached fiduciary duties as trustes of the native
Hawaiian public trust, breached the Act 304 settlement,
violated H.R.8. Chapter 10, violated Article Xi, Sections

 

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4-6 of the Constitution of the state of Hawaii, [] violated
the Contract Clause of the United states Constitution,
Article I, Section 10, clause 1, and is liable for
‘Sisrepresentation and’non-diaclowure 1

We note that the basis of each claim raised in the complaint

 

je Act. Essentially, the

 

concerns the passage of the Forgiven
plaintiffs allege that, had the State challenged the FAA

1d the Forgiveness Act.

 

Memorandum, Congress would not have p
The plaintiffs also allege that, had the state informed then of
ite decision not to challenge the memorandum, it would have
afforded then the “fair opportunity to take measures to step into
the State's position to oppose the FAA" and prevent the enactment
of the Forgiveness Act. We believe that such allegations are
mere speculation, and, more importantly, it would be impossible
for the plaintiffs to prove whether the State’s actions or
inactions led to Congresa’ passage of the Act. As such, each
claim necessarily relies upon the unprovable assertion that
Congress would not have passed the Forgiveness Act but for the

State’s actions. Nevertheless, we address the parties’ arguments

 

* _ Af previously indicated, article XII, section 4 provides that the
coded lande “shall be held by the state au a public trust for native Hawaiiane
‘and the general public." Haw. Const. art. XIT, § 4. article Xi1, section 5

sblishes OWA and states that *{OMA) shall hold titie to all the real and
personal property now or hereafter set aside or conveyed to ie which shall be
held in trust for native Hawaiians and Hawaiians." Haw. Const. art XII, § 5.
Article X12, section 6 details the powers of the OHA trustees. Haw. Conse.
art XII, § €. Accordingly, by positing that the State violated the foregoing
Sections of the Havai's Constitution, the plaintiffs argue that the seave
breached ite duties ae trustee of che public land eriet~

 

 

 

 

 

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and turn to whether each of the foregoing claims stated a claim
upon which relief could be granted.”

a. the plaintiffs’ claim for breach of trust

With respect to the plaintiffs’ claim for breach of
trust, the plaintiffs argue on appeal that “(t]he State, a

trustee of the ceded lands trust, may be held accountable under

 

standards applicable to trustees of private trusts." They also
assert that *[t]he questions raised by [their] breach of trust
claim do not present a political question because (1) they are in
fact the ‘traditional fare’ of the judiciary, (2) there are
adequate judicially manageable standards for resolving them, and
(3) they do not involve an initial policy determination of a kind

be

 

fe left to the legislature.*

In response, the State contends that the claim for
breach of trust is nonjusticiable because it violates the
separation of powers doctrine:

‘The FAA audit reports concerned improper diversion of
aixport revenues by the state. Under 49°U.8.C. § 471071),
fhe Stake vas the recipient of airport grant monies, and the
gate was bound by ite written assurances of non-diversion
Of airport revenues. FAA could seek reimbursement of
Liiegally diverced sonies only from the State, secause the
State was the FAA's sole target, resolution oF non=
Feolution of the claim by faa against the State vas the
sole responsibility of the Attorney General on behalf of all
the citizens of the state. For the judiciary to interpose
ite judgnent on how executive branch diseretion should be

 

 

 

vw __Although the plaintiffe’ first anended complaint stated a claim
for ‘misrepresentation and non-disclosure,” the plaintiffs, as noted above,
requested this clain be renoved from the complaint in thely motion to amend
and, in fact, renoved this claim fron their fevieed second amended Complaiat
Thus, the plaintiffs have consistently sought the resoval of this claim fron
their complaint. Additionally, on appeal, the plaintiffs do not mention this
claim or argue how it states a'claim upos which relief could be granted. fe.
Eherefore, decline to address whether the circuit court properly dismiased the
plaintiffs’ claim for sisrepresentation and non-disclosure

     

 

 

 

 

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exercised in state litigation matters would violate the
constitutional separation of executive and judicial powes

 

(Capital letters altered.) (Enpha:

 

in original.)
In the instant case, the complaint claims that the
State breached its trust duties by:

(2) failing to challenge the positions set forth in the PAA
Nenorandun; (2) resolving ite diapure with the PAA by
obtaining « forgiveness of the pricr $30 million payment in
exchange for a promise not to wake future airport revenue’
Payments to OHA and not to appeal the positions set forth in
fhe FAA Memorandum) (3) breaching the trust duty of
inpartiality by not challenging the positions set forth in
‘the PAA Mesorandum in order co use then as a aword in

(Gia {) and subsequent appeal; (4) failing to tinely advise
OWA that the State vas not going to continue to challens

the positions set forth in the FAA Memorandum or T@ Report,
and that it was planning to settle with the federal
Government, In order to provide OWA with a fair opportunity
fo take messures to ctep into the State's position to oppose
Ehe FAA; and, (5) failing to obtain instructions fron ehe
Court on how’ to proceed given its conflict position of
defending the state against OHA in OHA I and having 2 duty
to challenge the positions set forth in the FAA Memorandum.

 

 

 

 

 

 

 

 

In aum, the plaintiffs believed the State acted unlawfully when
it refused to challenge the FAA Memorandum, failed to advise the
plaintiffs that it would not challenge the FAA Menorandum, and
did not request instructions from this court as to how to proceed
im QUA I and against the federal governnent.
i, the State's decision to not challenge
the FAA Menorandum and to settle with
the federal government
The complaint first alleges that the state breached ite
trust duties when the State attorney general declined to
challenge the FAA Nencrandum and, instead, settled with the
federal government. During oral axguient, counsel for the
plaintiffs reiterated the plaintiffs’ theory that the State's

failure to challenge the FAA Memorandum caused the enactment of

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OT

the Forgiveness Act, which “procur led] the denise of Act 304" --
® result adverse to the plaintiffs’ interest. The plaintiffs
speculate that, *[i]f the state had timely and properly
challenged the positions set forth in the FAA Menorandum, it
would have prevailed because the payment to OHA for use of ceded
lands is a proper operating expense of the airport.’

This court stated, in Yamasaki, that, “Like the federal

government, ours is one in which the sovereign power is divided

  

and allocated anong three co-equal branches" -- the legislative,
executive, and judicial branches. Yamasaki, 69 Haw. at 167,
170-71, 737 P.2d at 454, 456 (citation omitted). “Thus, we have
taken the teachings of the (U.S.] Supreme Court to heart and

adhered to the doctrine that ws

 

of ‘judicial power to resolve
Public disputes in a system of government where there is a

separation of powers should be limited to those questions capable

 

Of judicial resolution(.]’* Id, at 171, 737 P.2d 456 (citation
omitted). In other words, “courts will not intrude into areas
committed to other branches of government." Id. at 168, 737 P.2d
at 455. Thus, this court has “adsonished our judges that ‘even
in the absence of constitutional restrictions, they must still
carefully weigh the wisdom, efficacy, and tineliness of an
exercise of their poner before acting, especially where there may
be an intrusion into areas committed to other branches of

government.‘* Id. at 171, 737 P.2d at 456 (citation omitted) .

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The attorney general is an officer of the executive

branch of the State. See Chun v. Bd. of Trs, of the Employees’
Ret. Sys, of the State of Hawai'i, 87 Hawai'i 152, 168, 952 P.2d
1215, 1231 (1998) ("The only constitutional provision that
@irectly pertains to the attorney general appeare in article V,
section 6 (“Executive and Administrative offices and

Departments!

 

/ within the context of describing the terms of
office of the various ‘single executives’ who head each
‘principal department of the executive branch of state
government [.]"); Newnan v, United States, 382 F.2d 479, 480 (D.c.
Cir, 1967) (noting that the attorney general is “the attorney for
the Executive, charged with faithful execution of the lawa,
protection of the interests of the United States, and prosecution
of offenses against the United states” (citation omitted). The
attorney general's “exclusive authority to control and manage for
the State all phases of civil litigation in which the State has
an interest . . . necessarily includes control of the settlenent
of inminent actions against the State.” Ieland-Gentry Joint
Venture v. State, $7 Haw. 259, 264-65, 554 P.2d 761, 765-66
(2976) hereinafter, Island-Gentry] (citations and footnote
omitted); see also HRS § 26-7 (1993) (*The department [of the
attorney general] shall administer and render state legal
services, . . . [and] represent the State in all civil actions in
which the State is a party"); Chun, 87 Hawai'i at 170, 952 P.2d

at 1233 (“HRS § 28-1 mandates that the attorney general

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*** FOR PUBLICATION ***

SSS

‘represent the State in all civil matters where the State may be
an interested party." (Citation and ellipses points omitted.));
State v. Klattenhoff, 71 Haw. 598, 602, 801 P.24 548, 550 (1990)
(“The [attorney general] is mandated, by law, to administer and
render legal services to the governor, legislature and to the
State departments and offices as the governor may direct.”
(Citation omitted.) .

In the instant case, the plaintiffs sought review of
the attorney general’s decision not to challenge the FAA
Memorandum and her alleged settlement with the federal
government. Based on the facts alleged in the complaint, both
the USDOT Inspector General and the FAA Acting Administrator
issued reports alleging that the State had been violating federal

law by paying airport-related revenues to OHA. The complaint

 

also concedes that, in the absence of the Forgiveness Act, the
State would have been obligated to repay the federal government
the $28.2 million previously paid to OHA. See also OHA I, 96
Hawai'i at 396, 31 P.3d at 908. Faced with the alleged
violations and the consequence of repaying the federal
governnent, the attorney general chose to resolve the dispute,
successfully obtaining forgiveness from repaying the federal
governnent the $28.2 million already given to OHA. The attorney
general's decision to resolve the dispute between the state and
the federal government fell squarely within her exclusive

authority to control and manage “the settlement of imminent

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SSS
actions against the State.” See Island-Gentry, 57 Haw, at

265-66, 554 P.2d at 765-66. Therefore, the circuit court would
have clearly intruded into an area committed to another branch of
government if it reviewed the attorney general's actions and, as
such, would have violated the doctrine of separation of powers.
Yamasaki, 69 Haw. at 168, 171, 737 P.2d at 455, 456.
Accordingly, we hold that the circuit court properly dismissed
the plaintiffs’ breach of trust claim regarding the state's
decision to not challenge the FAA Memorandum.
AA. the State's alleged failure to inform
the plaintiffs of its decision not to
challenge the FAA Memorandum

‘The complaint next asserts that the State breached its

 

duties as trustee when it “fail (ed) to timely advise [the
Plaintiffs] that the State was not going to continue to challenge
the positions set forth in the FAA Memorandum or 1G Report, and
that {t was planning to settle with the federal government, in
order to provide [the plaintiffs] with a fair opportunity to take
measures to step into the State's position to oppose the FAA[.]*
Tt appears that the plaintiffs believe the state breached a duty
to inform them, as a beneficiary, of the state’s position
regarding the 16 Report and the FAA Menorandun.

‘The common law of crusts identifies two instances

 

where a trustee is under a "duty to inform.” First, a
ets Saidus ef on
i rT o De ck

Goo 9t Fosa es,
(Second) of 7
circumstances,
Eo tne benef
request:

 

Ge (4th Cir. 1596) (quoting Restatement

'@ $173 (1959)). Second, in 1inites

trustee is required co provide information
‘there has been 0 specific

     

 

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*** FOR PUBLICATION ***

Ordinarily the trustee is not under a duty to the
beneficiary to furnish information to him in th
absence of a request for such information

 

Towever,)
nee fact thet

7 =

Bie oa a ira

keapect_to his interest]

Griggs v, B,J. DuPont de Nemours & Co,, 237 F.3d 371, 360-81 (4th

Cir. 2001) (emphases added) (ellipses points and some brackets in
original) (citation omitted); see algo Vartanian v, Monsanto Co.,

331 F.3d 264, 269 (1st Cir, 1997) (*[t)he common law impresses on

 

 

a trustee the duty to give a beneficiary upon his request at

 

to the

 

Teasonable times complete and accurate information
nature and amount of the trust property" (ellipses points and
quotation marks omitted)) (citation omitted); Faireloth v. Lundy
Packing Co., 91 F.3d 648, 656 (4th Cir, 1996) ("At common law,
trustees have a duty to give beneficiaries upon request ‘complete
and accurate information as to the nature and amount of the trust
property.’* (Citation omitted.) ; v. +1 Bank,
677 A.2d 1032, 1035 (D.C, 1996) ("the trustee is under a duty to
the beneficiary to give him upon his request at reasonable times
complete and accurate information as to the nature and amount of
the trust property” (citation and quotation marks omitted));

er v. Cent amste! 4 Welf: a, 12 F.3d
21292, 2300 (34 Cir, 1983) (*[t]he trustee is under a duty to
communicate to the beneficiary material facts affecting the
interest of the beneficiary which he knows the beneficiary does

not know and which the beneficiary needs to know for his

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protection in dealing with a third person” (citation and brackets
onitted)).

In the instant case, the complaint alleges that the
plaintifts requested from the State “all communications between
the State and the FAA regarding use of airport revenues to pay
OHAI.1* Because the plaintifts requested information from the
State, the state was under a duty to furnieh complete and
accurate infornation regarding the “nature and amount of the
trust property.” Gricgs, 237 F.3d at 380 (citation omitted)
However, the plaintiffs wanted the State to inform them of
whether it would “continue to challenge the positions set forth
in the PAA Memorandum or IG Report, and whether it was planning
to settle with the federal government [.]* This information does
not concern the nature and amount of trust property and, thus,
the State was not under a duty to provide such information to the
plaintifes.

Furthermore, as previously indicated, the State was
under a duty to inform the plaintiffs of material facts affecting
their interest which the State knew the plaintiffs did not know
and which they needed to know for their protection in dealing
with a third party. Geigs, 237 7.34 at 360. Based on the
plaintiffs’ claim, it appears that they are under the impression
that, had they known that the State would not challenge the FAA
Memorandum, they would have “step[ped] into the State's position

to oppose the FAA[.]” In that regard, the plaintiffs may have

o34-
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$A

believed that the information was necessary for their protection
in dealing with the federal government. However, the dispute
regarding the FAA Memorandum was solely between the State and the
federal government; the FAA Memorandum concluded that the State
w+ not the plaintiffs -- had been violating federal law, and the
State was faced with repaying the federal government the $26.2
million already paid to OHA. In other words, the plaintiffs were
not a party to the dispute between the state and the federal
government and, as such, the plaintiffs were not “dealing with"
not,

the federal government. Inasmuch as the plaintiffs we:

   

dealing with the federal government (iie., the third party), the
State could not have been under a duty to provide information to
the plaintiffs for use in dealing with the federal government.
Moreover, because the State attorney general had exclusive
sontrol over how the State handled the federal government's
allegations, the plaintiffs could not have “step[ped] into the
State’s position’ without depriving the attorney general of her
exclusive control over the matter. Accordingly, we believe that
the plaintiffs assertion regarding the state's failure to inform
failed to state a claim upon which relief could be granted and
that, therefore, the circuit court properly dismissed this claim,
iii, the State’s alleged failure to obtain
instructions from this court as to how
to proceed in OHA I and ite dispute with
the federal government
Lastly, the plaintiffs allege that the State “fail (ed)

to obtain instructions from the Court on how to proceed given its

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conflict position of defending the State against OHA in OHA I and
having a duty to challenge the positions set forth in the FAA

Memorandum." It app

 

8 that the plaintiffs believe the state

was faced with a conflict of interest inasmuch ae it had to

 

defend against OHA in QHAI while simultaneously settling the FAA
Memorandum dispute with the federal government. The plaintiffs
allege that, prior to resolving the dispute with the federal
government, the State attorney general should have inguired with
“the Court" for instructions on how to proceed, given its
conflict of interest, in QHA I and with regard to its dispute
with the federal government.

Initially, we note that the complaint is unclear as to
whether the plaintiffs claim the State should have obtained
instructions from this court or the circuit court. However, by
the time the FAA Memorandum was issued, the State had filed its
notice of appeal in QHA I, which divested the circuit court of
jurisdiction over the case and transferred jurisdiction to this
court. SA Int'l Ltd. v. Shimizu Corp., 92 Hawai'i 243, 265, 990
P.2d 713, 735, as amended, (1999) (citations omitted). As such,
the circuit court would have lacked jurisdiction to entertain
such a request by the State. Therefore, for purposes of this
claim, we believe the plaintiffs argue that the State should have
obtained instructions from thie court in QHA I and that the

State’s failure to do so was a breach of its trust duties.

W36-
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However, appellate courts “cannot . . . render advisory

opinions, or give legal advice as to future events.” Shipp v.
County of Kankakee, 345 T11. App. 34 250, 289 (I11. App. ct.
2003) (citation omitted), appeal denied, 813 N.z.2d 229 (2004);
see also Contenpo-Tempe Mobile Home Owners Ass'n v, Steinert, 696
P.2d 1376, 1378 (Ariz. Ct. App. 1985) (noting that appellate
courts do not act as “fountain{s] of legal advices) (citation
omitted). In fact, thie court has noted the “prohibition against
rendering ‘advisory opinions,’* Yamasaki, 69 Haw. at 172, 737
P.2d at 456 (citation omitted), and that prudential rules of
judicial self-governance caution against then. state v. Lagat,
97 Hawai": 492, 499, 40 P.34 at 894, 902 (2002). After all, an
advisory opinion Yis one of advice and not of judgment as there
are no parties whose rights are adjudicated, and it is not
binding on anyone.” George v, Town of Watertown, 858 A.24 800,
804 (conn. App. Ct.) (citation omitted), appeal denied, e58 A.2d
800 (conn. 2004) .

Had the state requested legal advice from this court on
how to proceed in the instant case, it would have essentially
asked this court to issue an advisory opinion, which thie court
would likely not have entertained, given the prohibition against
advisory opinions. Moreover, as previously indicated, the
attorney general had exclusive authority to litigate or settle
both the FAA Menorandum dispute and OHA I, Island-Gentry, 57 Haw.

at 264-65, 554 P.2d at 765-66 (citations and footnote omitted) ,

-37-
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and, thus, this court could not have advised the attorney general

 

‘as to how to proceed in either dispute without violating the
separation of powers. Therefore, we conclude that the circuit
court properly dismissed the plaintiffe’ claim that the state
breached ite trust duties by not seeking instructions from this
court in OHA Z.

b. the plaintiffs’ claim for breach of
settlement

As previously indicated, the plaintiffs claimed that
the State “breached the Act 304 Settlement” by failing to
challenge the FAA Memorandum. A claim alleging breach of
settlement requires that the plaintiffs establish that a

settlement agreement, or contract, see Haxxia v, Desoto, 80

 

Hawai'i 425, 432, 911 P.24 60, 67 (1996) (“a settlement agreement
is a contract”), existed between the parties. Eilak v. Georse,
594 8.8.24 610, 619 (Va, 2008) (“The elements of a breach of
contract action are (1) a legally enforceable obligation of a
defendant to a plaintiff; (2) the defendant’s violation or breach

of that obligation; and (3) injury or damage to the plaintiff

 

caused by the breach of obligation." (Citations omitted.)).
‘Therefore, the plaintiffs’ claim for breach of settlement
requires that they first establish that a contract or settlement

agreement existed between them and the State.

-38-
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4. whether this court must accept as true
the plaintiffs’ allegation that Act 304
constituted a contract or settlement
agreement

 

‘The plaintiffs urge this court to accept as true their
“factual” allegation that Act 304 constituted a contract or
settlement agreement. However, the State argues that the
plaintiffs’ allegation is a “conclusory legal allegation" that
this court need not accept as true.

As previously indicated, thie court’s review of the
circuit court’s dismissal of the plaintiffs’ complaint mst be
“based on the contents of the complaint, the [factual]
allegations of which we accept as true[.]" Norris, 74 Haw. at
240, 842 P.2d at 637 (citation omitted); see also McDonald v.
Santa Fe Trail Transp, Co., 427 U.S. 273, 276 (1976) ("Because

the [d]istrict [clourt dismissed this case on the pleadings, we

 

take as true the material facts alleged in petitioners

complaint.” (Citation omitted.)). However, this court need not

   

‘accept as true any legal conclusions asserted by the plaintiffs
in their complaint. See URCH Int‘] Local 911 v, UFCW Int’)
Union, 301 F.3d 468, 472 (6th Cir.), xeh’a denied, 30: F.3d 468

1 of a claim,

 

(2002) (when reviewing a district court’s diemi
“we need not accept as true unsupported conclusions and

unwarranted inferences" (citation omitted)); Doug Grant, Ine. v.
Greate Bay Casino Corp., 232 F.34 173,

("while our standard of review requires us to accept as true all

(3d cir. 2000)

 

factual allegations in the complaint, we need not accept as true

-39-
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‘unsupported conclusions* (citations and quotation marke
omitted), cert, denied, 532 U.S. 1038 (2001). ‘Therefore, if the
question of whether Act 304 constituted a valid and enforceable
contract or settlement agreement is one of law rather than fact,

this court need not accept the plaintiffs’ allegation as tru

 

Generally, whether a contract or settlement agreement
exists is a question of fact. Island Directory Co, v. Iva’s
Kinimaka Enters,, 10 Haw. App. 15, 23, 859 P.2d 935, 940 (1993)

(Whether or not the parties entered into an agreement is

(Citation omitted.); see also

 

yentially a question of fact.

 

Bu Am. Int’ + 808 A.2d 672, 680 (Conn. 2002)
(tthe existence of a contract is a question of fact” (citation
omitted); Sullivan v. Porter, 861 A.2d 625, 631 (Me. 2004)
("Generally, the existence of a contract is a question of fact to
be determined by the jury." (Citations, quotation marks, and
brackets omitted.)). Nevertheless, whether a valid and
enforceable contract exists is a question of law for the court to
decide. Found, Int'l, Inc. v. E.7. oe Constr., Inc., 102
Hawai'i 487, 494-95, 78 P.3d 23, 30-31 (2003) ("as a general
rule, the construction and legal effect to be given a contract is
‘@ question of law” (brackets and citations omitted).

In the instant case, because the plaintiffs euggest
that legislation -- ise., Act 304 -- constituted a contract or
settlement agreement, this court must review the language of the

act and the circumstances surrounding ite enactment. “The

~40-
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language and circumstances of the [legislation] must evince a
clear intent by the legislature to create contractual rights so
as to bind the state." Koster v. City of Davenport, 183 F.3d

762, 766 (Bth Cir. 1999) (citations omitted). Thus, determining
whether Act 304 constituted a valid and enforceable contract or
settlement agreement between the parties presente a question of
law for the court to decide. See Brown v, Smith, 64 Cal. Rptr.
2d 302, 307 (Cal. Ct. App. 1997) ("The construction of statutes
and the ascertainment of legislative intent are purely questions
of law.” (Citation, quotation marks, and brackets omitted.)).

As such, this court need not accept

 

true the plaineises’
allegation that Act 304 constituted a contract and settlement
agreement. Accordingly, we turn to the legal question of whether
Act 304 contractually bound the State to ite terms.

4d, whether Act 304 constituted a valid and
enforceable contract or settlement
agreement

‘The United States Supreme Court has addressed the
circumstances under which legislation contractually binds the

government:

For many decades, this Court has maintained that abeent sone
actual ree oerrs

intended to creste private contractual ox vested cichte but
shall ordain otherwise.~ Dodae v. Board of Education, 302
U.8. 7a, 79, 50 8, Ce 98, 100, 62 1. E687 (1997)-, Bee
ale Rector of christ church vi County of Philadelphia, 24
iow. 300, 302, 16 L. Ba. 602 (i861) ("Such an Interpretation
is not £9 be favored). This well-established presumption
is grounded in the elenentary proposition that the principal
function of a legislature is not to sake contracts, but to
make laws that establish the policy of the state. Indiana

, 303. U.S. 95, 204-205, S08. CF
443, 427-448, 62 L.Ed. 685 (1938). Policies, unlike

ae
*** FOR PUBLICATION ***

 

contracts, are inherently subject to revision and repeat
‘and to construe lavs as Contracts when the obligation
Clearly ané unegu:

Seastically the
Indeed, ** (t]he continued existence
of no. :
was disarmed of the powers neces
of ite creation.'* Keefe v. Clark, 322 0.8. 392, 297, 64
5. ct, 1072, 1074, ise (2944) (quoting Chatles

 

   

 
  

 

 

River Bridet v.Harcen Gridae, 11 Fet. 420, 548, 9 1. Ba.
333. ties7)) Thue,

Aupra, 302 U-5., ae 79, 585. Ce-, at 100, and we-proceed

upra, at 78, S88. Ct. at 100. ee alag
TREOG, EPS, Serooh ve Biacd’‘auora, 303S's tat 104,
58s. ce., at 447 (there the clain is that the state's
policy embodied n'a statute ie to bind ite
Instrumentalities by contract, the cardinal inguiry is as to
the terns of the statute supposed to create auch a
contract"). “if it provides for the execution of a written
Contract on_hehalt of the state the care for an obligation
Binding upon the state 16 clear." 302 U.S., at 78, 38

S. Cts, at 100 (emphasis supplied). But absent "an adequate
sxpression of an actual intent” of the State to bind icset,

 

 

 

 

iisconsin @ wichicsn #. Co. v. Powers, 1910.5. 378, 386
387,24 S.C. 107, 108-109, 48 L. Ba. 229 (1903), this
curt simply will ot Light

dition. s-private costract to which

4 esenger Corp. v. Atchison 7 “

470 U.S. 451, 465-67 (1985) (some emphasis in original, some
added); see also United States Trust Co. v. New Jersey, 431 U.S.
2, 16 n.14 (2977) ("In general, a statute is itself treated as a
contract when the language and circumstances evince a legislative
intent to create private rights of a contractual nature
enforceable against the State."). Courts proceed cautiously in
identifying those statutes which contractually bind the

government to its terms because:

-a2-
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Finding a public contractual obligation has considerable
Gtfect. re meane that a subsequent legislature 1a sot free
fo sigaiticantiy inpair that obligation for serely rational,
Feasons. Because of this constraint on subsequent
Iegislatures, and thus on subsequent decisions by those vho
Yepresent the public, there funigher burden to
Setablish that's contractual obligation has been created.

ve Re nt + Ret. 173 F.3d

 

 

 

 

46, 60 (1et cir. 1999).

Based on the foregoing principles, this court mst,
with regard to Act 304, first “examine the language of the
statute’ to determine whether it provides for “the execution of a
written contract on behalf of the atate” or otherwise evinces
clear intent to bind the State to ite terms. Nat'l RRL
Passenger Corp., 470 U.S. at 466-67 (citations omitted) (emphasis
An original). the plaintiffs fail -- as they did before the
cixcuit court -- to point to any language in Act 304 showing
legislative intent to enter into a contract. Indeed, nowhere in
Act 304 does it provide for the execution of a written contract
or utilize language indicating an intent to create a contract
Nevertheless, the plaintiffs urge this court to look to “the
circumstances of Act 304s passage, including the legislative
history reflecting ite characterization as a negotiated
Settlement’ and ‘conclusion’ or *resolution[.]'* specifically,
in their complaint, the plaintiffs contended that:

‘the State executive and legislative branches and OHA entered
inte negotiations to clarify O#A's “income and proceeds from
that pro rata portion of the trust referred to int Article
XIz, Bection 4 of the Constitution of the state of Hawai’
‘The’ settlenent agreenent they reached vas docunented ae Act
30s (1990), hereinafter referred to as the "Act 304
Settlenent.* In virtually every committee report or coment
fon Act 204, the term “settlement” or "resolution is used to
Characterize the agreenent reached. In addition, the

 

43
*** FOR PUBLICATION ***

SSS

legisiative history surrounding Act 304 clearly demonstrates
a legislative commitment not to unilatersily repeal oF
modify Act 3
(Some brackets in original.) (Some brackets added.)
We acknowledge that the legislative history behind act

304 utilizes the terms “settlement” and *

 

solution.” However,

 

the stated purpose of the Act wa:

to clarify the basis for detersining the revenue due to
[onal for'the betternent of the conditions of native
Ravaisans under provisions of the state Constitution and
Chapter 10, Cans}

More specifically, this bill amends the definitions of
r * 2

for native Hawaiians and the
‘General public and wf 7 ws

Enangfarzed to" ronat tosetaeet fom ARG BLoEaae Fas

Hse. Stand. Comm. Rep. No. 648-90, in 1990 House Journal, at 1082
(2990) (emphases added). Further, the legislative history
indicates that Act 304 was meant to be “the first step in the
resolution of a series of complex questions about what
constitutes the extent of the trust holdings and the trust
obligations of the state to the native Hawaiians” and “Leaves

epen_for future nesotiationa the question of entitlements for

Hawaiians with less than fifty per cent Hawaiian blood and the

 

question of establishing a separate trust fund to benefit all
Hawaiians regardiess of blood quantum." Hise. Stand. comm. Rep.

No. 306-90, in 1990 House Journal, at 960 (emphasis added) ; Hse.
Conf. Conm. Rep. No. 91, in 1990 House Journal, at 601 (emphasis
added); pee alec Hse. Stand. Conm. Rep. No. 648-90, in 1990 House

Journal, at 108:

 

Sen. Stand. Comm, Rep. No. 3073, in 1990 Senate

Journal, at 1253 (1990). Therefore, we believe that the clear

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and specific stated purpose of the Act reveals that the
legislature did not intend, as the plaintiffs urge, to enter into
an enforceable contract with the plaintiffs or restrict

successive legislatures from modifying or repealing any language

 

therein. Accordingly, absent the "clear and unambiguous" intent
required to contractually bind the State, we hold that Act 304
does not constitute a valid and enforceable contract or
settlement agreement between the parties.

444. whether the plaintiffs can prove any
of facts entitling them to relief

 

As previously indicated, to recover for breach of
settlenent agreement, the plaintiffs must establish: (1) a valid
and enforceable settlement agreenent between the parties; (2) an
obligation or duty arising out of the settlement agreement; (3) a
breach of that duty; and (4) damages caused by the breach. See
Foreman Sch, Dist, No. 25 v. Steele, 61 $.W.34 801, 807 (Ark.
2001); ase also Amelco Elec, v, City of Thousand Oaks, 38 P.34
1320, 1129-30 (Cal.), xeh’a denied, 38 P.3d 1120 (2002); Eilak,
594 8.B.2d at 619, Based on our conclusion that Act 304 did not
constitute a valid and enforceable settlement agreement, we
conclude that the plaintiffs’ claim for breach of settlenent was

properly dismissed."

 

Based on ovr conclusion that Act 304 did not constitute # contrs
or settienent agreenent, the plaineitfe’ claim regerding the Contract Claube
of the United States Constitution similarly fails to state a claim upon which
Fellef could be granted. See In ve Herrick, 62 Hawai'l 329, 340, 922 P.2d
342, 953 (2996) (noting that, deciding whether a state lav has violates
the’ (Contract Clause], we sust assay the following celeeriarn Gh
(continued...

 

    

 

 

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¢. violation of HRS chapter 10
‘The plaintiffs additionally allege in their complaint
that the State “violated H.R.S. Chapter 10[.]" HRS chapter 10 ie

entitled ‘office of Hawaiian Affaire" and is divided into two

 

Parte: (1) “GENERAL PROVISIONS” and (2) “REVENUE BONDS.” The
plaintiffs do not allege which sectione of HRS chapter 10 the
State violated; however, the only sections in HRS chapter 10 that

Rs

 

could be read as mandating any action by the state
§§ 10-1 (1993), 10-13.3 (Supp. 1997), 10-3.5 (1993), and 10-14.6
(2993).
4. MRS § 10-2
HRS § 10-1" reiterates the State's trust obligation to
native Hawaiians and places on the state the ‘duty and
responsibility" to actively work toward the goals of HRS chapter

10 and to cooperate with and assist OHA. If the plaintiffs

 

*(.. .continved)
whether the sta

relaticnship(.]*" (inphas:

% ups § 10-1 provides:

 

fed ag © substantial impairment of a contractual
‘dded.})

   

Declaration of purpose. (a) The people of the state of
Hawaii and the United states of America as set forth and
approved in the Admission Act, established a public trust
Which includes anong other responsibilities, betterment of
‘The people of the state of
Hawail reaffireed their solenn trust obligation and
Tesponsibility co native Hawaiians and forthernore declared
in the state constitution that there be an office of
Hawaiian affaire co address the needs of the aboriginal
class of people of Hawai!

(p) Ie shall be the duty and responsibility of all
state departments and instrunentalities of state government
providing services and prograns vhich affect native
Hawaiians and Havaiiane co actively vork toward the goals of
this chapter and to cooperate with and assist wherever
Possible the office of Hawaiian af

 

 

     

 

 

 

 

 

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believe that the State violated its duties and responsibilities
under this provision, their claim is essentially one for breach
of trust, which was discussed in section IIT.A.1.a., supra.
ii. HRS $6 10-13.3 and 10-14.6
HRS § 10-13.3* sete the amount of income and proceeds

for expenditure by OHA for fiscal years 1997-1998 and 199

 

-1999
at $15,100,000; however, the plaintiffs have not alleged any
facts in support of a claim that the State failed to make such
Payments to OHA. HRCP Rule 8(a) (noting that a complaint shall
contain ‘a short and plain statement of the claim showing that
the pleader is entitled to relief"); In xe Genesve Data Teche.,
Inc., 95 Hawai'i 33, 41, 18 P.3d 895, 903 (2001) (*Hawaii’s rules
of notice pleading require that a complaint set forth a short and
plain statement of the claim that provides defendant with fair
notice of what the plaintiff's claim is and the grounds upon

which the claim rests.” (Citations omitted.)). Similarly, HRS

 

HRS § 10-13.3 provides:

Interim revenue. Notwithstanding the definition of revenue
contained in this chapter and the provisions of section
30-15.5, and notwithstanding any claimed invalidiey of Act
308, Setsion Laws of Hawaii 1990, the incone and proceeds
from the pre rata portion of the public land trust under
article XII, section 6 of the state constitution for
expendicure by the office of Wavaiian affaire for the
Eetternent of the conditions of native Havaiiane for each of
Fiscal year 1997-1996 and fiscal year 1998-1999 shall be
$15,100,000.

 

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*** FOR PUBLICATION ***
§ 10-14.6% relates to various legislative duties; however, the
plaintiffs have not alleged any facts supporting an argument that

the legislature failed to perform such duties. HRCP Rule 8(a);

Inte Genesya Data Techa., Inc., 95 Hawai'i at 42, 18 P.3d at

903. Thus, without alleging any facts supporting a claim that

 

the State violated HRS §§ 10-13.3 or 10-14.6, we do not believe
that the plaintiffs stated a valid claim that the state violated
these provisions.
444, MRS § 10-23.5

HRS § 10-13.5" requires the state to pay twenty
percent of all funds derived from the public land trust to OHA.
Although Act 304 amended HRS § 10-13.5, the QHA I decision
invalidated Act 304 and reinstated the immediately preceding
version of HRS § 10-13.5, which was in effect at the time
Yamasaki was decided. HAI, 96 Hawai'i at 400, 31 P.3d at 913.
However, *[i]n Yamasaki, this court determined the issues
presented in this intragovernnental dispute to be nonjusticiable

due to the lack of judicially discoverable and manageable

% MRS § 10-16.6 provides:

Legislative review. The legislature shall consider the

boerd's proposed program and financial plan; evaluate

alternatives to the board's recomendations; and appropriate
y general fund portion of the budget and any matching

 

 

 

HRS § 10-13.5 provides:

Use of public and trust proceeds. Twenty per cent of all
funds derived fron the public land trust, described sn

ction 10-3, shall be expended by the office, as defined in
section 10-2, for the purposes of this chapter.

 

n48-
 

*** FOR PUBLICATION *

 

standards for determining the specific revenues to which OHA was
entitled to receive under HRS { 10-13.5." Id, at 400, 31 P.3d at
913 (citing Yamasaki, 69 Haw. at 175, 737 P.2d at 458) (emphasis
added). In other words, the Yamasaki court held that application
of HRS § 10-13.5 presented a nonjusticiable political question.

As such, the Yamasaki case was dismissed for lack of
justiciability, Similarly, after invalidating Act 304, the OHA T.

 

court was placed in the same position as the Yamasaki court and,

thus, dismissed the c

 

stating: "In the absence of the
substantive definition of ‘revenue’ provided in the now invalid
Act 304, this court is again left with no judicially manageable
standards by which to discern what specific funds OHA ie entitled
to receive under chapter 10, without making ‘an initial policy
determination . . . of a kind normally reserved for nonjudicial
@iscretion.’* Id, at 401, 31 P.3d at 924 (citing Yamasaki, 69
Haw, at 174-75, 737 P.2d at 458).

In the instant case, the plaintiffs may be under the
impression that the State violated HRS § 10-13.5 by not paying
various income, proceeds, and revenues to OHA thereunder.
However, inasmuch as the current version of HRS § 10-13.5
provides no “judicially discoverable and manageable standards for
determining the specific revenues to which OHA was entitled to
receive under HRS § 10-13.5[,]* any claim that the state violated
this provision presents a nonjusticiable political question and

must be dismissed as this court did in Yamasaki and HAI. Id.

-49-
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at 400, 31 P.3d at 913 (citation omitted). Therefore, we
conclude that the plaintiffs can prove no set of facts
establishing that the state violated any of the provisions in HRS
chapter 10 and, therefore, hold that the circuit court did not
err in dismissing thie claim.

Accordingly, inasmuch

 

the plaintiffs’ firet amended
complaint (asserting claims for breach of trust, breach of
settlement agreement, violation of the Contract Clause, violation

of HRS chapter 10, and mis

 

presentation and non-disclosure)
failed to state any claim upon which relief could be granted,
dismissal of the complaint was warranted and, as auch, we affirm
the circuit court's order dismissing the complaint.
Bow Circuit Court Abused Ite Discretion in
Denying the Plaintiffs’ Motion to Amend

‘The plaintiffs next contend that the circuit court
erred in denying their motion for leave to amend their first
amended complaint. They contend that the revised second amended
complaint sought justiciable declaratory relief and that,
therefore, they "should have been accorded a chance to pursue
justiciable relief[.]* Furthermore, although the plaintiffs
acknowledge that a court may deny a motion for leave to amend a
complaint when the amendments are futile, they argue that *[t]he
requested amendments were not futile, because [the plaintiffs’)
claims for declaratory relief and other non-danages relief was

not ‘frivolous’ or ‘legally insufficient on its face. (']*

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‘The state argues:

‘There is no abuse of discretion in denying a motion
tor leave te amend when the proposed amendnent. would be
futile. Here, the proposed amendments could not begin to
Overcone (the plaintiffs’) failure to state viable clains
for breach of contract or breach of trust, the
hon-Justiciability of the complaint, the jurisdictional bars
Sf sovereign immunity and the statute of limitations, the
Constitutional separation of powers chat requires
Yegisiative rather than judicial action to fill the Act 304
Yoid, and the legal consequences of the prior adjudication
Tn lat. “te circuit court properly exercised ite
Aleeretion in denying leave to re-anend.

 

 

ERCP Rule 15(a) (2000) governs the plaintiffs’ request

 

to amend their complaint and provides in pertinent part

Amendments. A party may anend the party's pleading once at
a'natter of course at any tine before a responsive

fe"terved or, if the pleading ie one to whieh no re
Pleading is persitted and the action has not been placed
pen the trial calendar, the party may 40 amend it at any
tine wiehin 20 days after ie is served. Otherwise a party

 

 

‘zitten consent of the adverse party: and leave shall be
(Euphasie added). Inasmuch as HRCP Rule 15(a) is identical to
FRCP Rule 15(a), this court has looked to the general standard
applied by federal courte in interpreting this rule. Gonsalves
v.Nissan Motor Corp,, 100 Hawai'i 149, 160, 58 P.3d 1196, 1207
(2002) (noting that, “[i]n interpreting (HRCP Rule 15(a)], this
court has looked to the general standard applied by federal
courts"); cf. Beneficial Hawai'i, Inc, v, Casey, 98 Hawai'i 159,
167 n.9, 45 P.34 359, 367 n.9, reconsideration denied, (2002)
(where, ag with HRCP Rule 15(a), a HRCP is patterned after an
equivalent rule within the FRCP, interpretations of the rule by
the federal courts are deemed to be highly persuasive in the
reasoning of this court.” (Citations omitted.)); Hirasa v.

Burtner, 68 Haw. 22, 25, 702 P.24 772, 775 (1985) (noting that

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SSS

HRCP Rule 15(a) “is identical to Rule 15(a) of the Federal Rules
of Civil Procedure). For example,

it
330, $88 Poza 1193 (ibe) 1
following statenent of the general standard enployed under
Rule i5(a) by the federal courte:

 

 

‘ich ag undue delay, bad faith or dilatory nerive os
Ehe part of the movant, repeated failure to cure
Geficiencies by anendnente previously allowed, undue
Brejudice to the opposing party by virtue of allovance
Sf tne srendnent . Eutility of amendneat. te. "~~ he
givenst (fonanv favig, 372 0.8. 176, at Te? #3
S.ce. 227, at 230, 9b. Ba, 24 232).

Fed. Hone Loan Mortgage Corp, v, Transamerica Ing. Co,, 89

Hawai'i 157, 162, 969 P.2d 1275, 1280 (1998) (citing Associated
Eng/ts_& Contractors v, State, 58 Haw. 187, 218-19, 567 P.24 397,
417 (1977)) (brackets and ellipses pointe in original) (emphasis
added); gee algo Gonsalves, 100 Hawai'i at 160, S@ P.3d at 1207.
Therefore, where the proposed amendments to a complaint are,
Anter alia, futii
the amended complaint. See, ¢.4,, Lucente v, IBM, 310 F.3d 243,

258 (2d Cir. 2002) (“One appropriate basia for denying leave to

@ court may deny a motion for leave to file

 

amend is that the proposed amendment is futile." (Citations
omitted.)). Federal courts have further explained that *[a]n
amendment to a pleading is futile if the proposed claim could not
withstand a motion to dismiss pursuant to [FRCP Rule] 12(b) (6).
lucente, 310 F.3d at 258 (citation omitted); see also Bradley v.
al-Meiias, 379 F.3d 892, 901 (10th Cir. 2004); Vargas-Harrison
Ws Racine Unified sch, Dist., 272 F.3d 964, 974-75 (7th Cir.),
reba denied, 272 F.3d 964 (2001), cert, denied, 537 U.s. 826
(2002); Alvin v. Suzuki, 227 F.3d 107, 121 (34 Cir. 2000).

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Accordingly, if this court determines that the proposed second

amended complaints could not withstand a motion to dismiss for

failure to state a claim, the circuit court did not abuse ite

 

discretion in denying the plaintiffs’ motion to amend.

Im the instant case, the plaintiffe twice sought to
amend their firet amended complaint -- once prior to the circuit
court’s oral dismissal of the firat amended complaint and once
thereafter. However, the claims presented in each proposed
second amended complaint were identical. specifically, both
second amended complaints deleted the claim for
*misrepresentation and non-disclosure and added a claim alleging
that the State “breached the covenant of good faith and fair
dealing implied in the Act 304 Settlement [.]* Inagmuch as this
court must determine whether the claims in the second amended
complaints would survive a motion to dianiss for failure to state
a claim and because we have already analyzed and concluded that
the claims in the first amended complaint were properly
dismissed, we now examine the sole new claim alleged in the
Proposed second amended complaints.

‘The plaintiffs’ claim for breach of good faith and fair
dealing is based on their belief that “the state’s failure to
oppose the FAA’s position not only constitutes a breach of the
Act 304 Settlement as a contract but also the covenant of good
faith and fair dealing implied in the Act 304 Settlement (.]" tn

other words, the new claim ie inextricably linked to the

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plaintiffs’ allegation that Act 304 constituted a settlement

yetion

 

agreement or contract. However, as discussed in

 

TIL.A.1.b.ii., supra, neither the language nor circunstanc
Surrounding Act 304’ enactment evinces the clear and unambiguous
legislative intent to contractually bind the state to Act 304s

terms and, as such, it cannot be said that Act 304 constituted a

settlement agreement. Inasmuch as the plaintiffe cannot

 

ablish that the State entered into a valid, enforceable, and

 

binding settlement agreement with the plaintiffs, we conclude
that the plaintifts can prove no set of facts entitling them to
relief based on this new claim. ‘Therefore, the proposed claim of
breach of good faith and fair dealing, Like the other claims in
the second amended complaints, fails to atate a claim upon which
relief could be granted and would not have aurvived a motion to

oni:

 

- Consequently, the proposed complaints are futile.
Accordingly, we hold that the circuit court did not abuse its

discretion in denying the plaintiffs’ motion to amend.”

 

inasmuch as the plaintiffs have failed to atate any claim upon
which relief could be granted, there existed no claine for the cirevit court
fo Biturcate. As such, we hold that the circuit court Gid not abuse ite
Giecretion in denying the plaintiffs’ motion to bifurcate!

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IV. CONCLUSION
Based on the foregoing analysis, we affirm the circuit

courts May 19, 2004 final judgment in favor of the state.

Robert G. Klein (Nadine Y.

‘Ando and Christopher J. GY
Cole, with him on the

briefs, of Mccorriston .
Miller’ Mukai MacKinnon) Deere
and William Meheula and

David F. Fasi, with him Nova Co Nmeane

cn the briefs, of Winer .
eneula & Devens, for Fee: Sos Bean
laine ets-appelants/
Exteovappeile

 

Dorothy Sellers (Charleen M.
Aina, Girard D. Lau, and
William J, wynhoff, ‘with
her on the brief, Deputy
Attorneys General) for
defendant -appellee/

 

CONCURRENCY

I concur in the result only.

a

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