Title: Captain Andys Sailing, Inc. v. Department of Land and Natural Resources, State of Hawaii. S.Ct. Order Denying Motion for Reconsideration, filed 11/30/2006 [pdf].

State: hawaii

Issuer: Hawaii Supreme Court

Document:

‘++ FOR PUBLICATION IN WEST'S HAWAII REPORTS AND PACIFIC REPORTER *

IN THE SUPREME COURT OF THE STATE OF HAWAI'I

 

‘000-==

 

CAPTAIN ANDY’S SAILING, INC., 2 Hawai'i corporation,
Plaintiff-Appellant,

DEPARTMENT OF LAND AND NATURAL RESOURCES, STATE OF HAWAI'I;
PETER T. YOUNG, Director of the Department’ of Land and Natural
Resources and Chairperson of the Board of Land and Natural
Resources, State of Hawai'l'; MASON YOUNG, Acting Administrator,
Division of Boating and Ocean Recreation, Department of Land and
Natural Resources, State cf Hawai'i; and DAVID PARSONS,
Administrator, Division of Boating and Ocean Recreation,
Department of Land and Natural Resources, State of Hawai'i,
Defendant s-Appellees.

save

ee
No. 25387

da

APPEAL FROM THE FIRST CIRCUIT COURT
(CIV. NO. 02-21-0951)

 

ocToBER 26, 2006 =

MOON, C.J., LEVINSON, NAKAYAMA, ACOBR, AND DUFFY, JJ.

OPINION OF THE COURT BY NAKAYAMA, J.
Plaintiff-Appellant Captain Andy's Sailing, Inc.
(hereinafter “CASI"), appeals from the judgment of the Circuit
Court of the First Circuit? (“circuit court”) filed on
September 13, 2002, following the grant of judgment on the
pleadings, or, in the alternative, summary judgment in favor of

Defendants-Appellees Department of Land and Natural Resources,

 

2 pursuant to Hawai'i Rules of Appellate Procedure ("HRAPY) Rule
43101, (2000), Feter 7. Young has been substituted ee a party te the Snstant
appeal in place of Gilbert Colona-Agaran, in his cfficisl capacity.

       

   

‘The Honorable Eden Elizsbeth Bite presided.
 

FOR PUBLICATION IN WEST'S HAWAII REPORTS AND PACIFIC REPORTER +

State of Hawai'i (“DLNR”) and DINK officials Feter 7. Young,
Mason Young, and David Parsons (hereinafter collectively referred
“the DLWR Defendants"), ail of whom were sued in their

official capacities.’ The circuit court found, inter alia,‘ that

all of CASI’s claims against DINR and the DINK officials in their

 

official capacities for recovery of $40,682.52 of what the U.S.
District Court of the District of Hawai'i (“federal district
sessed tonnage fees

 

court”) determined to be unconstitutionally
were barred by Hawai'i Revised Statutes (“HRS”) § 662-18(3)
(Supp. 1999)* because CASI had an alternative remedy under HRS §
40-35 (1993). The circuit court expressed no opinion as to

 

+ wasen Young was also sued personally.

court else found that CASI"s claine sgsinst Mason
Young in his personel capacity were barred, but it deez not eppear that this
portion of the circuit court's ruling is being appealed. See HAP Rule

Be tp) (a) (2000) ("Points not presented will be dieregergea.”

   

© the etre

 

 

+ ins § ¢€2-28 1iete seven enumerated exceptions to thé State of
Kawase exprese wasver of soverergn inmunity for the tarts of see employees.
Specificelly, ARS S 662-15(3) states that HRS Chapter 662 does not apply te
Sfa}ny claim for wich g renedy 2 provided elsewhere in the laws of the

statel.)”
© Rs § 40-38 provides in pertinent part:

ofthe State nay be caid under protest toa sublic accountant of
hetdscerteent. beard. bores. comission, or other asency of the

‘Sisie with whith the Cleinant has che distite. The protest shall
be inuriting, signed by the person asking the payment, or by the
person's agent, and shall set forth the grounds of protest. if any
Payment, oF any portion of any payment, is made under protest, the
Public accountant to whom the payment is made shall hold that
Portion of the moneye paid under protest ins trust account in the
State treasury fora period of thirty daye from the date of
payment

) cover neneve

 

 

 

 

 
 

FOR PUBLICATION IN WEST'S HAWAII REPORTS AND PACIFIC REPORTER *

whether any applicable stetute of limitations had run on @

 

potential HRS § 40-35 claim.
on appeal, CASI advances three distinct points of
error: (1) the circuit court erroneously dismissed CASI’s claims
on the basis of lack of subject matter jurisdiction, because the
tax appeal court does not properly have jurisdiction over CASI’s
claims; (2) HRS § 40-35 did not divest the court of subject
matter jurisdiction, because “(t]he remedies afforded by [HRS §
40-35) do not supplant the conmon law remedies available in a
contract dispute over which the circuit court has subject matter

jurisdiction under HRS § 661-2"7" and (3) ineemuch as the BLNR
seve

 

Defendante conceded below that the $40,882.52 in fees a
“were paid pursuant to a contract,” the circuit court erred in
finding sovereign immunity from tort claims to be 8 bar to the
instant case in tote, where CASI had “nade clear that it was

invoking HRS § 661-1 [(waiver of sovereign immunity for certain

fealisaticn. Any action to recover paynent of taxes under protest
Thali be commenced in the ta¥ appeal court.

(Enphases added.)

BRE § 661-1 (1993) provider Sn pertinent part:

 

The several circuit courts of the state have original
Surieaictien to hear snd determine the following matters

(2) ALL claine against the State founded upon any statute
of the State? er upon any Fegulaticn ef an executive
Gepartment; or upch any contract, expressed or
implied, with the stare

 

 

 
 

FOR PUBLICATION IN WEST'S HAWAII REPORTS AND PACIFIC REPORTER,

 

is for subject matter jurisdiction.”
) BRS

 

contract claims)] as 2 bas

 

Based upon the following analysis, we hold: (
40-35, when read together with its legislative history, clearly
encompasses the disputed fees in issue such that it was the
statute under which relief had to be sought; (2) on account of
this alternate remedy at law, the circuit court properly found
CASI’s tort claims barred under HRS § 662-15(3); (3) HRS § 661-1
is inapplicable because the ORMA permit under which fees are due
is a revocable license, rather then a contract; and (4) CASI has
not filed a claim pursuant to HRS § 40-35 within the thirty-day
statute of limitations, such that any claim made thereunder is
time-barred. Thus, although we are not unmindful of the
ostensible inequity visited upon CASI, we are nevertheless
compelled to affirm the judgment of the circuit court

1. BACKGROUND
A. Background to the Federal Lawsuit!

CASI is @ Hawai" corporation which is, as pertains to
the instant appeal, “engaged in the commercial operation of the
[49-Ipassenger carrying catamaran, Hula Kai, from the conmercial
pier at Port Allen, Island of Kauai, State of Hawai'i.” CAST

 

+ cast asserted 2 total of five points of error. However,
fourth and fifth pointe of error are duplicative of its third and
points of error, respectively. Thus, we heed not seperately addrers them

 

  

+ the federal district court iawsuit involved different cefencants
than in ene instant case. CAST noted that an instrumentality of a state [auch
Se DLR) could net be sued uncer 42.U.5.C. $1983 (2000) (allowing for civil
suits against “persone” for “deprivation cf rights”), which was « stetute
Spparentiy snvoked during the federal litigation. However, since the
Soltinate” defendant for both cases, DLNR/State of Havai'ty ts the sane for
all intents snd purposes, we will use the designation “OLMR Defendants” to
Eefer to the defendants in both cases,

     
 

+++ FOR PUBLICATION IN WEST'S HAWAII REPORTS AND PACIFIC REPORTER *

 

 

began operating the Hula Kai on or about December 1999, and at
least part of its operation sreas included the navigable ocean
Captain Andy's Sailing, inc.
vs Johns, 195 F. Supp, 24 1187, 1161-63 (D. Haw. 2001). Sometime

waters off Kauai’s Na Pali Coast

 

in 1986, the State of Hawai'i designated certain ocean waters off
Keuai's Na Pali Coast as an “ccean recreation management area”
(hereinafter “ORMA”). Id. at 1162, The Hawai'i Administrative
Rules (“HAR”) promulgated by DINR provided, inter alia, that

commercial motorboats operating within an ORMA were required to

have a “commercial operating use permit” and be assessed a “use

fee” of $78 per month or 2% of monthly gross receipts, whichever
is greater. See HAR § 11-256-11(a) (3) (1994)."" Hula Kai wes to
operate within the Na Pali Coast ORMA, and so CASI applied for

 

and was issued @ commercial operating use permit, (“ORMA permit”)
for the craft in duly 2000. Captain Andy's, 195 F. Supp. 2d at
1163. CASI was reissued an ORMA permit for the Hula Kai on

July 20, 2001, effective for one year from its issue. date. Id.
at 1164.

CAST took unbrage with the 28 ORMA permit use fee,
ostensibly because CASI was already paying the State of Hawai'i a
different commercial use fee (1.858 of the Hula Kai's gross

HAR § 313-256-114) (3) provides in pertinent part:

as follows:

 

Fees required to be peid te the [DLNR) a

(3) Commercial opersting area vse permit fee. A monthly
comercial use permit fee shall be the greater of 575.00 per
Sonth, payable in advance, of Zt of the monthly gross receipts,
The report of gross receipts shall be submitted to and received by
the Geparinent not later than the end of the nenth following the
honth covered by the report and shall be submitted on a form

le te the depertnent

 

 

 

 
FOR PUBLICATION IN WEST'S HAWAII REPORTS AND PACIFIC REPORTER **¢

 

revenues}, to the Hawai'i Department of Transportation. For this
and other reasons, CASI filed 2 complaint against DINR in federal
district court on January 20, 2000, seeking to, inter alia, have

sed against the Hula Kai declared an

 

the ORMA permit fees ass
impermissible duty of tonnage in violation of article 1, section
10, clause 3 of the United States Constitution, which provides
that “[nJo State shall, without the Consent of Congress, lay any
Duty of Tonnage . . . in time of Feace[.J” See Captain Andy's,
195 F. Supp. 2¢ at 1172, CASI continued to pay the required ORMA
permit fees during the pendency of the federal litigation, :
because failure to pay would result in automatic revocation of
the permit. Sse HAR § 13-256-11(b) (1994) ("Delinguency in the
payment of any fees owed to the department will result in
automatic revocation of the {RMA permit] {]").
The language of the Hula Kai ORMA permit issued on July
21, 2000 reads in pertinent part:
1 agree to the following terms, conditions and charges:
1, The permite agrees to abide by a1? Hawas"i Administrative
Fules for shail Best Harbors and the waters of the stave
promslgated by (OUR), for [in the event of) eny violations
Ef the provisions of the aforenenticned roies, in agdition

Eo any Fines or penalties a court cf law may inpoee, this
permit to operate a vessel commercially on the NA BALL COAST

‘OCEAN WATERS nay be rev

 

 

 

 

The charge for this commercial permit will be the OR fee
of $18.00 per month, ot g¥ of the vessel's gross receipts,
Whichever is the greater

   

6. The OfWA use charge of $25.00 is due and payable in advance
on the first Gay cf the month in the (SINKS) Division of
Boating and Ocean Recreation office. Not later than 20 days
following the end of the month, the pernitee shall submit to
the Divisicn of Boating and Ocean Recreation 2 report of
gross receipts for the month... . Unless peld on tine,

This: permit MILL AUTOMATICALLY EXPIRE

é

  

 
 

FOR PUBLICATION IN WEST'S HAWAI REPORTS AND PACIFIC REPORTER

 

comercia! permit may be terminated by [LNA] by
tten crcer of ite representative for proper cause ang the

     

 

 

said vessel will cease commercial operations on the MA BALE
SOAST CCE WATERS.

11, The permit charges are for the [DLUR's) cost of regulating
the privilege cf operating this conpercial vessel en the HA.

 

in the manner stated above. Any
Ether use of barber property and services must be yequested
and approved seperately.

‘Te permit shall nct exceed one (1) year fron JULY 20, 2000

 

 

 

 

18. The pemitee understand{s] that the captain(s) of said
vessel shall be a representative of Seiad company and that
they shall have the knowledge of all ORMA roles end,
regulations.

(Emphases and underlining in original.) (Some emphases

red.) When CASI renewed its permit for the Hula

  

formatting a:
Kai for the following year, it was issued a permit with identical
language, except that the words “NA PALI COAST OCEAN WATERS” were
replaced with “THE [ORMA] OF KAUAT.”

The federal district court case eventually proceeded to
a trial on the merits. In connection with the ORMA permit fee
issue, the federal district court found that (1) the ORMA permit
fee had no relationship to any supposed service offered for the
“readily perceptible” benefit of conmercial vessels in the Na
Pali Coast ORMA, (2) “(t]he record is bereft of any evidence
corroborating the existence of any regulatory scheme specific to
the Na Pali Coast [ORMA],” and (3) “there is a complete absence
of accounting for any costs specifically allocable to the Na Pali
Coast [ORMA], including those alleged to relate specifically to
regulating and/or preserving those waters{.)" Captain Andv's,

 

7
 

‘+ FOR PUBLICATION IN WEST'S HAWAI REPORTS AND PACIFIC REPORTER,

74 (citations omitted). The federal

© (1) “{t]he ORMA (permit) [flee

 

195 F. Supp. 2d at 11

district court concluded thi

 

appears . . . to be @ revenue measure that is used to recoup the

atewide boati

    

costs of a 19 Program whose many components are

not limited to commercial navigation within the Na Pali Coast
ocean waters{,)" such that (2) “{blased on the overvhelning
evidence, the [clourt finds (DLNR’s} assessment of a [28 ORMA
permit fee) against the ‘Hule Kai’ to be an impermissible tax in
vielation of the prohibition against tonnage duties." 1d. at
1174 (footnote omitted).

The State of Hawai'i did not appeal the federal |
district court's Decenber 28, 2001 ruling, and did not thereafter
assess the ORMA permit fee against the Hula Kai. “However, the
State of Hawai'i refused to refund any of the $40,662.52 in ORMA
permit fees that it had collected until the time of ruling,
despite demand from CASI. The instant state court proceedings
ensued.

C. State Circuit Court Proceedings
1, GASI"s complaint:

on April 17, 2002, CAST brought a “complaint for

declaratory and monetary relief” against the DLNR Defendants in

circuit court. (Capitalization omitted.) Specific jurisdiction

 

was claimed under HRS § €62-3 (1993). CASI sought recovery of,

2 RS § 6€2-3 provides in pertinent part

The cizcuit courts of the State and, except ax otherwise provided
by statute or rule, the state aistrict courts shall have original
jurisdiction of ali tort actions on clains against the state, for
Roney damages, accruing cn and after July 1, 1957, for injury oF
Toss of property»

  

 
 

FOR PUBLICATION IN WEST'S HAWAII REPORTS AND PACIFIC REPORTER

or, in the alternative, future setoff of, DLNR usage fees in the
amount of the $40,862.52 in Hula Kai ORMA permit fees paid to
DLNR. CASI additionally made the following allegations:

29. At all tines relevant hereto, [the DLNR] Defendants and
theiz predecessors in office were unwilling to allow CASI to pay
Under protest or segregate the disputed use payments, oF allow the
faynente to be deposited with the clerk of the court in [federal
Eletrice court setien) pending @ finsl determination of the
Sonstitutionalsty of the (OAML permit fee]

 

 

    

30. (The DLNR} Defendants and their predecessor
intentieneily ane knowingly tock thse position despite asserting
the position sn the (federal aistrict court actien) that the

Eleventh Anencnent to the United states [Constitution] barred the
federal court fron ordering the state to refund te CASI the ancunt
of the wrongfel sesessnent, citing Edelman v, Jordan, 415 0.5. 681

 

 

37. When [DLNR) refused to reconsider its assesomertt of the
ORM (peinit) [flees, CAS! requested a contested case Nearing
furevant to HRS. Chapter $i, which request (the DINR] Defendants
Seated.

 

 

As to paragraph 30 of CASI’s complaint, the DLNR Defendants
admitted that the eleventh amendment to the United States
Constitution precluded an avard of money damages against the

State of Hawai'i in federal court.

 

CASI asserted a total of seven claims in its complaint
(2) “lack of authority” for the DLNR Defendants to assess the
ORMA permit fees under HRS § 200-10(c) (4) (1993),** (2) “unlawful
withholding” of the ORMA permit fees by the “individual” DLNR
Defendants despite demand for their return, (3) wrongful
conversion of the ORMA permit fees such that defendant Mason

Young, acting administrator of the DLNR subdivision that assessed

 

* BRE § 200-20(c} (4) (2993) reads, in pertinent part

If a veesel ie used for commercial purposes from ite permitted
necting, the permittee shall pay, in lies of the mocrage and
Tveansara fee, 2 fee based of & percentage of the grose revenues
Gerives from the use of the vesse! = = =

°
‘S11 FOR PUBLICATION IN WEST'S HAWAII REPORTS AND PACIFIC REPORTER ***

the fees, was personally liable, (4) “unjust enrichment and
equitable restitution,” ($) “bad faith and unfair dealing” such
that Mason Young (on this alternative basis) was personally
Liable to repay the ORMA permit fees to CASI, (6) "malicious
misconduct” by Mason Young and co-defendant Oavid Parsons (a DLNR
ocean subdivision administrator) rendering both jointly ahd
severally liable to CASI, and (7) in the alternative, future DLNR
fee setoff for CASI in the amount of the Hula Kai ORMA permit
fees. (Some capitalization omitted.)

2. Gross-motions for judament on the pleadinas/

‘summary iudament”

‘The DLNR Defendants filed their answer to CASI’s:
complaint on May 20, 2002. On June 19, 2002, appioximately one
month later, the DLNR Defendants filed a motion for judgment on
the pleadings, or, in the alternative, for summary judgment
against CASI on all claims (hereinafter “motion for summary
judgment”). As relates to the instant appeal, the DLNR
Defendants argued that (1) as per State v. Figueroa, 61 Haw. 369,
383-84, 604 P.2d 1198, 1206-07 (1979), the State of Hawai'i was
immune from all tort claims asserted under HRS § 662-3 for
recovery of money damages due to constitutional violations, and
(2) in any event, CASI’s claims were specifically barred under

HRS § 662-15(1) and (2)," because (a) the DLNR Defendants were

 

insofar ge the issues of defendant Mazon Young's personal
bility fer alleged convereion, bad faith and unfair dealing do ct appear
to be raised by CAS! for consideration in this appeal, they are decned weived
in this appeal. See supra nete 4.

“uns § 6e2-18

 

 

and (2) provide in pertinent part
Taie chapter shell not apely to
10
 

FOR PUBLICATION IN WEST'S HAWAII REPORTS AND PACIFIC REPORTER *

 

merely following “existing sdministrative rules,” and (b) the
federal court found the ORMA permit fee to be a “tax.”

on July S, 2002, CASI filed a cross-motion for sunmary
Judgment, asserting, in relevant part, that (1) the ORMA permit
for the Hula Kai was, or in the alternative was tantamount to, an
express contract between the DLNR Defendants and CASI, with an
“implied promise of refund” in the event the contract was illegal
and void," arising from a contracting party's duty of good faith
and fair dealing: and (2) the DLNR defendants owed CAST a “duty
of restitution" arising from their “tortious conver (sicn]" of the

ORMA permit fees. (Empheses emitted.) CASI argued that the

 

State of Hawaii's sovereign immunity to suit was waived on
account of both HRS § 662-2 (1993) as to tort claims, and HRS §

Any claim besed upon an act or omission of an employee of
the State, exercising due care, in the execution of 3
statute or regulation, whether or not such statute oF
Feguistion is valid, cr based upon the exercise oF
performance or the failure to exercise or perform
Slecretionary fonction of duty on the part of 2 state
cfficer or employee, uhether cr not the discretion involved

has been abused

 

 

 

(2) Aey claim arising in respect of the assessment or collection
of any tox
in Ste eroee-notion for summary judgrent, CAST essentie}ly took

 

tthe position that the contract was net "seversbie” in sny form, such that the
HeGefsi distzice court's reling en the OR permit fees also rendered the OR
permit (its, an express contract) entirely void and unenforceable.

HRS § 6€2-2 provides as follows:

yy waives ite immunity for Lisbility for the torte

 

he
of ite employ

 

Shall not be Lésbie fer interest prior to joggeent or fer punitive
Garager
FOR PUBLICATION IN WEST'S HAWAII REPORTS AND PACIFIC REPORTER ***

 

661-1 (1993) as to contract claims.” This wae the first time

that CASI had raised the specter of a contract claim and invoked

 

HRS chapter 661 as a basis for jurisdiction.
On July 17, 2002, CASI filed its opposition to the DLNR

Defendants’ motion for summary judgment. CASI, inter alia,

“motion for summary

 

reiterated ite July $, 2002 position on cr
judgnent, albeit more explicitly this time, that “CASI’s claims
sound in tort and contract.” (Emphasis added.)

The DLNR Defendants also filed their opposition to
caSI's cross-notion for summary judgment on July 17, 2002, in
which they pertinently argued as follows: (1) “applying [HRS §
40-35] to [CASI’s] situation, the [ORMA permit fees] refund issue

‘ty-day [statute of limitations} passed

 

is moct because the tl

 

long ago and the circuit court lacks jurisdiction over the matter
(the tax appeal court has jurisdiction) []” (while noting ina
following footnote that HRS § 662-15(3) “bars [CASI"s}, tort
claims” on account of this alternate remedy at law); (2) there
was “absolutely no hint in any ORMA permit of an implied promise
that [CASI] would be given a refund if the [ORMA permit fee]
assessment was subsequently determined to be unconstitutional (;]”
(3) the ORMA permit was a valid contract; and (4) CASI's

conversion claim must fail because the ORMA permit fees paid by

HRS § 661-1 provides in pertinent part

the several circuit courts of the State and, except as otherwise
provided by statute or rule, the several ctate district courts
Shall, subject to appeal ae provided by law, have origin:
Jurisdiction to hear end determine the following matters

   

 

ALL claine against the State founded upen. . . any
Contract, expressed oF implied, sith the State

 

2
 

FOR PUBLICATION IN WEST'S HAWAII REPORTS AND PACIFIC REPORTER

 

CASI “were never segregated or kept as an intact fund for [CAST

 

 

and the fees were never intended to be returned to [CAST] {
This was the first time that the DLNR Defendants had raised HRS §
662-15 (3) and the HRS § 40-35 claim and statute of limitations a
diction and CASI"'s claims in general,

 

a bar to circuit court jur
bot no objection was made by CAST.

CAST and the DLNR Defendants filed their replies to the
oppositions to the cross-notions on duly 22, 2002. CAST noted in
its reply thet (1) the ORMA permit fees were not taxes and DINK
had no constitutional authority te impose any form of taxes, (2)
contrary to the DINK Defendants’ assertions, the ORNA permit was
an express contract, (3) CAST was actually in compliance with HRS
§ 40-35 insofar as it effectively “paid under protest” and
properly ond tinely initiated suit in “a court of conpetent
jurisdiction,” namely federel disteict court, on January 2000, or
roughly six months prior to the initial issuance of the ORMA
permit on July 2000," (4) in any event, the ORMA permit fees are
not recoverable under HRS § 40-25 because they do not constitute
taxes, and (5) principles of equity require the OLNR Defendants
to refund the ORKA permit fees on account of the OLNR Defendants?
failure to comply with HRS § 40-25 and deposit the disputed fees
into a “itigated clains fund” pending the outcone of the federal
Litigation.

‘The DLNR Defendants asserted in their reply, inter
alia, that: (2) the circuit court should disregard CASI’ s

 

By
of ite payment cf the ORWA permae fe
Eeteict Zourt Ligigerton conetieute

“payment under protest,” CASI appears to sean that the mere act
Goring the pendency cf the federal
Sone Sort of "esntinving protest.”

 

   
   

1
 

++ FOR PUBLICATION IN WEST'S HAWAII REPORTS AND PACIFIC REPORTER.

contract claims and assertion of HRS § 661-1 as a basis for
jurisdiction inasmuch as neither was raised within CASI’s

complaint, and (2) in any event, CASI “hes not pled that any

express contract requires [the State of Hawai'i] to provide a

refund if the fee assessment was subsequently deemed

unconstitutional (.)”"
Hearing on the cross-motions was held on July 25, 2002,

and the circuit court granted summary judgment in favor of the

DLNR Defendants. It orally ruled as follows:

1 an persuaded that che State has the better argument that
when the theory that you use that was uleinately aueceseful Se,
that this was en inpersiceible tax or 9 fee oF whatever you want
tovcall it that wae prohibited because of the constitutional
prohibition against tonnage duties? then yoo are required to use
Ehe concomitant renedy for obtaining relief agaanst taxes, be they.
higher than they're suppese[a) to be or unconstitutional, and that
would be the statute, HRS Section 40-35.

 

 

 

 

 

. . there was nothing, so far as T ¢an tell, to prevent
cast iron} having filed under {HRS §] 4035 and having the matter
ge to Tax Court end having 1itigated it there, altheugh on lanl
Bdaitional secona track {(eic)] and, perhaps, having stayed st
Until the (federal district court] Geesced whatever chey cid-

 

 

So my best judgnent ie, it's not that there's no renedy, but
the reneay that i2 available ha to have been timely invoked.
Apparently, the reqairenents cf HRS Section 40-35 were not neti
ahd therefore the Court grants [the DINK Defencante’) motion

‘The circuit court’s August 28, 2002 order granting

summary judgment in favor of the DLNR Defendants read in

pertinent part:

With respect to [CASI's) claims against [the DLNR Defendante] . .

such claims are barred by (HRS) § 6€2-15(3) ‘because
cist] has @ reneay provided by state law, specifically {ike}
40-381.) {CAS] 8 not foreclosed from bringing an ection under
[aRS) § 40-35. “but the [eleurt does not address whether the
Eine hae passed to\ersng such an ection

 

 

The circuit court’s final judgment was entered on September 13,

2002, and CASI timely appealed on October 7, 2002.

ua
 

s+ FOR PUBLICATION IN WEST'S HAWAI REPORTS AND PACIFIC REPORTER *

I. STANDARDS OF REVIEW

A. Summary Judgment
With respect to review of sunmary judgment, this court

has recently stated:
we review the circuit court's grant or ok
ge neve.” verses ewe A 107 Rawai's
237,°228, Tig pose 73, 71 (2005) (citing Hawai cety. Feds
Gredst Union vi Keka, 9¢ Hawai's 213, 221, 12 P34 3, 8 (2000))
She standard for granting « moticn for summary judgment is well
establisnea:

al of summary judgment

 

[slunmazy jucgnent is appropriate if the pleadings,
Sepositicns, anewers co interrogatorses, end sdmiscions on
file, together with the affigavies, if any, show that there
Se no genuine sesue ae to any materia fact and that the
moving party se entities te Judgnent ae a matter of law. A
Tact ds'material sf proof of that fact would have the effect,
of establishing cr refuting one of the eseentiol elenents of
f cause of action oF defense asserted by the parties. the
Evidence mort be viewed in the light most favorable to the
Ropvacving party. Jn ether words, we must view all of the
svidence snd the inferences drawn therefrom in the Light
fable to the party opposing the neticn.

carcnae, 107 Hawes" 48, $6, 108 P.36 688, €97 (2008)
(eitstions onitted) (brackets in original)

Orthopedic Assocs, of Hawai'i, Inc. v, Hawaiian Ins, & Guar. Cow
Ltd., 109 Hawai'i 185, 194, 124 P.3d 930, 939 (2005).
Given that the DLNR Defendants’ motion for judgment on

 

 

 

 

 

  

    

 

 

the pleadings, or, in the alternative, for summary judgment
contained three exhibits, including the federal district court’s
findings of fact, conclusions of law and order in Captain Andy's
Sailing, Inc. v. Johns, and also given a variety of other matters
outside the pleadings submitted to (and not excluded by) the
court, the DLNR Defendants’ motion is one for sunmary judgment,

such that this standard of review governs. See Hawai'i Rules of
**+ FOR PUBLICATION IN WEST'S HAWAII REPORTS AND PACIFIC REPORTER ***

 

Civil Procedure (“HRCP”) Rule 12(c) (2000).

Jurisdiction
This court has previously stated that “[t]he existence

 

of jurisdiction ie 8 question of law that we review de novo under
the right/wrong standard.” Lester v. Rapp, 5 Hawai'i 238, 261,
942 P.2d $02, 505 (1997) (citation omitted).
XII. DIscussrow

We initially note cur agreement with CASI that the ORMA
permit fees at issue, which were collected by DLNR, were just
that -- fees, rather than taxes of any kind. However, the
circuit court nonetheless properly held, albeit for the wrong
reasons, that it was divested of jurisdiction because of CASI’s
failure to seek relief under HRS § 40-35, because the statute
encompasses the ORMA permit fees at issue ae well as taxes.
AL HRS § 40-35

As noted supra, HRS § 40-35 provides in pertinent part:

 

sfshe state
Enetdevertnent. beard. bureau, comission, or other asenee or the
~The protest shail

Bevin writing, sloned by the person making the payment, or by the
person's agent, afd shall set. forth the grounds of protest. If any
Baynent, Gr any portion of any payment, ir made onder protest, the
Public accountant to whom the payment le made shell hold that

 

RCP Rule 12(c) provides in pertinent part:

After the pleadings are closed but within such tine es not to
Gelay the trial, any perty ney move for Judgment on the pleadings
If, on a motion’ fer Judgment on the pleadings, matters outeide the
pleadings are presentea to and not excluded by the court, the
Rotion shall be treated as one fer sunnary judgment and disposed
Cf as provided in Rule 56

© $00 Lee v, bette, 61 Mawai's 1, 20.2, 911 F.26 121, 722 0.2
tagee) iguceing Biaxen exaelos, 76 Hanas't 474, ée6, 679 7.20 Sot, Toes
(3994), ‘ane Stace Gauche, 712 How. 235, 240, 618 P.2d 24, 26 (1991))

 

 

 

 

16
‘++ FOR PUBLICATION IN WEST'S HAWAM REPORTS AND PACIFIC REPORTER *

portion of the moneys peid under protest in a trust account in the
tiem the cate of

   

 

 

(b) Action te reco 2
diust the clain may be commences BY the paver Or Claimant against,
‘Hhe public ecccuntont to whon the samen’ was Gade, ine court of
aos a ton ene cate-or

Ebiment- Ui no suit or proceeding ts Brought within the Thirty-day

   

 

Peried, the money paid under protest shall be deposited into ©
Epprepriote account in the treasury of the State by the accountant
Pe the ancunt cepceites shall thereupon becene # governnent

 

(emphases added.) We initially cbserve that a payer's ability to
make payments under protest “to a public accountant of the
Gepartnent, board, bureau, commission, or other agency of the
State with which the claimant has the dispute” encompasses all
State of Hawai'i inetrumentalities as per the plain lenguage of
HRS § 40-35, and not just the Department of Taxation. We also
note that, as seen infra, the legislative history of HRS § 40-35
makes clear that fees such as the ORMA permit fees are included
within the class of payments to the State from which timely
protest and lawsuit must be made.

HRS § 40:
Hawai's -- specifically, Section 15234 of the Revised Lavs of

5 has its origins in the territorial laws of

 

Hawai'i, which wae enacted in 1907. See 1907 Haw. Sess. Laws 52~
53, The new statute set up a process by which “{mJoneys
representing a claim in favor of the Territory of Hawai'i may be

paid to a public accountant of the Territory under protest . . «

 

See id. at 52 (emphasis added). As (1) the term “claim in
favor of the Territory of Hawai'i” was not defined either within
the statute itself or the surrounding chapter, and (2) this term

has remained eesentially unchanged up to the present (the

W
 

s+ FOR PUBLICATION IN WEST'S HAWAI REPORTS AND PACIFIC REPORTER.

statutory language now reads, “claim in favor of the State”), we
next examine the legislative history of Section 1521A in aid of

interpretation. See £08 Development, LLC v. Murakami, 111

Hawai'i 349, 355, 141 P.3d 996, 1002 (2006) (citation omitted).
A single standing conmittee report as to then-Section

1521A was released by the Judiciary Committee of the Senate in

 

1907, which reads in pertinent par

[T]he proposed Bill under consideration (Section 2821A)} $2
to provide fer s contingency which sonetines occurs and fer which

no provision is sade. Jt sonetines bacpens that ditferences of
Sxite Letwser, che pooseeeee baspens that a ieereneee oe
Scmetines the simplest ond pert direct way to settle
Seen a contreverey ie for the Citizen to pay the amount claimed
Gneer protest and then fo submit the matter for josietal
secision,
When money is paid under protest under such or i
Unere ie no provision of !aw by which the
may be helo by the Sessurer until the cose is decided, but onder
he present statutes it ss hie duty to earn the money in as a
government reslizstic
‘The cbject of the Bil) is to meet svch cases and provides
rarer nay held the money for thirty daye, anc Lf
wathin that tine action or proceedings ere brought he shail hold
The money s# 8 specsal deposit pending
proceedings cr action is net brought w
Honey shell become s govermment realizat

Sen. Stand. Comm. Rép. No. 72, in 1907 Senate Journal, at 451-52,

 

 

 

 

that the Tre:

   
   

(emphasis added). The legislative history makes clear that the
term “claim in favor of the Territory of Hawai'i,” and by
extension the current language “claim in favor of the State,”
includes precisely the kinds of fees as those assessed by the

ORMA permit, inasmuch a “claim” necessarily includes any “amount

 

which may be due the Government {.)” See 1907 Haw. Sess. Laws 5:
BRS § 40-35; Sen. Stand. Comm. Rep. No. 72, in 1907 Senate
Journal, at 451-52. Clearly, “amounts which may be due the

Government” includes fees, which are specifically mentioned in

1
‘OR PUBLICATION IN WEST'S HAWAII REPORTS AND PACIFIC REPORTER *

 

the legislative history, as well as tex payments. As such, we
hold that HRS-§ 40-25 is the proper avenue for recovery of the

ORMA permit fees.

B. Because an Alternate Renedy at Law was Available to CAST,
HRS § 662-15(3) Acted as a Bar to CASI’s Tort Claims

Because we hold that HRS § 40-35 applied to CASI’s ORMA
permit fee dispute, we also hold that all of CASI’s tort cleins
are barred under HRS § 662-15(3), which unambiguously provides
that HRS chapter 662 (i.e,, the State of Hewaii’s general waiver
of sovereign immunity for tort cleims) is inapplicdble to “Jalay
claim for which a remedy is provided elsewhere in the laws of the
State{.]” (Emphasis added.) The circuit court therefore did not
err in determining that HRS § 662-15(3) barred all of CASI’s tort

 

C. HRS § 661-1 is Inapplicable to the Instant C:
Permits are Licenses and Not Contracts.

 

Having determined that CASI’s tort claims are barred,
we next address the question of whether CASI could assert any
contract cleins against the DLNR Defendants pursuant to HRS §
61-1, At the hearing on their respective cross-motions for
summary judgment, CASI end the DNR Defendants were in agreement
that the ORMA permit constituted an express contract. On appeal,
however, the DLNR Defendants assert for the first time that the
ORMA permit is @ revocable license rather than a contract. The
DLNR Defendants, by way of footnote in their answering brief,

explain that

[t]he [DLNR Defendants) acknowiedse{] that [they] previously took
the poestion that the ORMA permit was an express contract
However, the subject matter Jurisdiction question is valid at any

  

 
 

+++ FOR PUBLICATION IN WEST'S HAWAI REPORTS AND PACIFIC REPORTER,

stage of the case, and appellate courte have the power te correct
errors in juriscsction. [citation enitted.| The appellate court
Se cbiigea te sneure {isic)) that st has subject matter
jurieaieticn, [Citation eaitted.) The Lack of esbject
Jurisdiction cen never be waived by any party at any tin
Icitation omitted]

Although the CLNA Defendants’ change of legal position

 

 

 

 

is being made at an extrenely late stage of this case, we must
agree with the DLNR Defendants’ assessment of the law. It is
axiomatic that “(t]he lack of jurisdiction over the subject
matter cannot be waived by the parties.” application of Rice, 68

Haw. 334, 338, 713 P.2d 426, 427 (1986) (citation émitted)

 

(internal quotation marks omitted). And even “[i]f the parti
do not raise the issue, a court sua sponte will, for unless
jurisdiction of the court over the subject matter exists, any
judgment rendered is invalid.” Id. (citations omitted) (internal
quotation marks omitted). Thus, the question of the existence of
jurisdiction “is in order at any stage of the case{.]” Id.
(citation omitted) (internal quotation marks omitted).

In Zerritory vy, Fung, 34 Haw. 52 (1936), the
Territorial Court addressed the question of whether a certificate
of “public convenience and necessity" for a conmon carrier of
passengers on public highways (namely, the Checker Cab Co. of
Hawai'i) was a government franchise (ise., a contract) or mere
revocable license. See Territory v, Fung, 34 Haw. at 53-54.
Fung, the trustee for Checker Cab Co., contended that the
certificate was the former, while the Territory argued that it
was the latter. Id. at 60, The Territorial Court set forth the
following:

X franchise has been defines ae a right, privilege or power of
Public concern, which sught not to be exercised By privete

 

20
 

AWAI REPORTS AND PACIFIC REPORTER,

 

ST

 

s+ FOR PUBLICATION,

Andividvele at their nere will and pleasure, but should be
reserved for public centre! end sominietration, either bY the
Government cirectly, sr by public agents, scting under such
Sonaitiens and regulations ar the government may inpose in the
pabiic interest, end for the public security." *  Uncer cur,
Bysten, their existence and dispose] ave under the control of the
Legislative departuent cf the government, and they cannot be
astuned or exercised without legislative authority. lo private
person can estabiish @ gublic highway, or a public ferry, or
FeilroaG, or charge telie for the use of the sane, without
authority from the legieisture, direct or derived." california
Pocifse Reiircad Co., 127 U. €- ly 40. A governmental License has
Been defines os 2 “enporary permit to do what otherwise would be
Unlawful." Fublée Service Commission, Second Dist. v. Booth, 156
Boye 8. 140, d4i; city ef Goliae ¥. Gill, 1998. W. (Tex. 2166,
dies

 

     

 

 

     

 

 

1 franchise and a governmentel license differ widely in origin and
Segal cheractersatice. A franchise i# derived fron a grant of the
severeign power. The power conferred emanates from, ane 28 6
fortion of the power ef the government that confers :t.
Governmental 2icense, not ispesea for revenue, has ite

the police power: nceiea et
Eontbects cerestuelif-net-iiniteg or qualified en te cova
Tee tt tarien aR eevetmrental Lucene
ee nt sie sihened ana nore oriviiese: 42 not of
net ness suigedt J

 

 

  

See id. at 60-62 (emphasis added) (some citations omitted) (some
internal quotation marks omitted) (some punctuation omitted); see
also Morita v. Public Utilities Commission of the Territory of
Hawai'i, 40 Haw. $79, 589-90 (1954) (citing the franchise/
‘government license distinction in Fung). While not squarely on
point, the franchise/license discussion is highly instructive in
the instant appeal. In Fung, the Territorial Court determined
the certificate of public convenience and necessity to be a
License, because, inter alia, (1) it granted a privilege, (2) it
was limited in duration (four years), (2) the public utilities
commission was able to revoke the license for cause, (4) the
certificate holder was required to strictly comply with its terms
and conditions, and [5] the certificate was impliedly

ai
 

FOR PUBLICATION IN WEST'S HAWAI REPORTS AND PACIFIC REPORTER

 

 

nontransferable. See Bung, 34 Haw.
Similarly, in the instant case: (1) the ORMA permit

 

charges were only “for the [DLNR’s) cost of reaulating the
privilege of operating [the Hula Kai] on [the Na Pal! Coast ORYA]

ion No. 11) (emphases added); (2)

 

«(ORM Permit Provi
the permit had @ duration ef no greater than one year (ORMA
Permit Provision No. 12)7 (3) DLNR specifically reserved the
right to “terminate(]” the ORMA permit “for proper cause” (ORMA
Permit Provisions Nos. 1 and 7); (4) the terms of the ORMA permit
required compliance with “all Hawai'i Administrative Rules for
Small Boat Harbors and the waters of the State promulgated: by
(DNR) (]" (ORMA Permit Provision No. 1); and (5) the ORMA permit
was impliedly nontransferable, in that (a) it was expressly
issued to CASI as to the Hula Kai, and (b) it required that any
and all captains of the Hula Kai be representatives of CASI (ORMA
Permit Provision No. 15). Thus, based on the analysis set forth
in Fung, combined with the lack of any indicia of bargained-for
exchange or reciprocal obligations on the part of DLNR, we agree
With the DLNR Defendants’ position on appeal and hold that the
ORMA permit at issue is a revocable license, rather than a
contract.

Even if we were to assume arquendo that the permit is
void in Lote as being an unconstitutional tax, that does not
change the essential nature of the permit as a license. Put
differently, the federal district court's finding that the permit
was apparently @ general revenue measure, given the lack of any
DLNR regulation and preservation activities in the Na Pali Coast
ORMA, or costs that could be specifically allocated thereto, ace

22
IN WEST’S HAWAN REPORTS AND PACIFIC REPORTER *

 

FOR PUBLICATIO

 

captain Andy's, 195 F. Supp. 2d at 1173-74, does not transform
the permit into @ contract.

Because the ORMA permit at issue is @ revocable license
rather than a contract, we hold that HRS § 661-1 is not a basis
for subject matter jurisdiction.

D. CASI/s HRS § 40-35 Claim is Barred by the Statute of
Limitation!

 

We finally address the question of whether CASI may
Inasmuch as

 

timely bring # claim for relief under HRS § 40.
CASI has asserted that it has timely advanced a HRS § 40-35
claim, albeit only once and by way of reply briefing in ite
cross-motion for sunmary judgment, we must next determine as to
whether CASI has preserved the claim by bringing suit “against
the public accountant to whom the payment was made, in a court of
competent jurisdiction, within thirty days from the date of
payment.” See HRS § 40-35(b).

In order for CASI to possibly be entitled to any
recovery under HRS § 40-35, it would have to have brought suit in
a court of competent jurisdiction within thirty days after its
last ORMA permit fee payment. Inasmuch as the record indicates
that HRS § 40-35 was never at issue in the federal district court
action,* the proper inguiry is whether CASI made a proper and

district court leevit in January 20,
40-35(a), but we find to the

% _caSI clans that its feders
2000 satiefsea the requirenents of i
Etnersry. First, a5 cA? sanite, the ORMA permit for the Hula Ke was not
Sven cbtained untsi 2u1y 2000, about ix months after the federes Litigation
Ecanences. Second, CASI Goes net point cut any evidence that « written and
Signed protest hed ever been delivered to any of the DLNR defendants, much
Seles Ginn poblic sccountant, pricr te snitiating the federal lawsuit, See
ike s'so-a5(a), Third, the recera ie devoid of any indication that HRS § 0
3 ftace statute, was ever invoked ge 8 basis for relief in the federa)
Proceesing|

 

   

   

 

   

   

23
s+ FOR PUBLICATION IN WEST'S HAWAII REPORTS AND PACIFIC REPORTER **+

timely claim under that statute in state court. As per CASI's

fee payment was made on August

 

complaint, the last ORMA per
2001. However, CASI’s state court complaint was not filed until
April 17, 2002, and the HRS § 40-35 statute of limitations had
expired thirty days after the last payment, ise., sometime in
September 2001. We also note the complete lack of any evidence
in the record tending tc show that CASI had lodged a written and

signed protest with anyone at DINK, much less with a DLNR public

  

accountant. See HRS § 40-25(a). Moreover, CASI does not assert
that it would have been impossible to have filed a'state court
suit under HRS § 40-35 for recovery of the disputed ORMA permit
fee payments during the pendency of the federal district court
Litigation (e.a., on July 2000, when the Hula’Kai ORMA permit was
first issued, or immediately thereafter, when CASI made its first
ORMA permit fee payments for the Hula Kai). We therefore hold
that CASI is time-barred from seeking relief pursuant to HRS §
40-38.
IV. coNcLUsION

We are not without sympathy for CASI‘s plight, inasmuch
as (1) there is no contract with the DLNR Defendants in dispute,
and (2) an extremely short statute of limitations within an
admittedly obscure, near-100-year-old statute has effectively
barred all of CASI‘s claims for relief. However, we are
constrained to hold that HRS § 40-35 unmistakably governs the
instant appeal, and that the DLNR Defendants (and by extension,
the State of Hawai'i) cannot be legally compelled to refund the
ORMA permit fees, despite the federal district court's explicit
FOR PUBLICATION IN WEST'S HAWAII REPORTS AND PACIFIC REPORTER ***

 

and unchallenged finding that such fees were unconstitutionally
exacted as applied tc the Na Pali Coast ORMA. We must therefore

affirm the circuit court's judgment.

on the briefs:

(of Paul, Johnson, Park & Niles)

for Plaintiff-Appellant :

Geptein Andy's Selling, Inc.
Wichael Q.Y. Lau and Sonia Ysa rede

Faust, Deputy Attorneys
General, for Defendant-

Appellee State of Hawai’
‘and Mason Young owe =H

en «.0ndiy dh,