* * * F O R P U B L I C A T I O N I N W E S T ’ S H A W A I # I R E P O R T S A N D P A C I F I C R E P O R T E R * * *



## IN THE SUPREME COURT OF THE STATE OF HAWAI # I

---O0O---

DOUGLAS LEONE and PATRICIA A. PERKINS-LEONE, as Trustees under that certain unrecorded Leone-Perkins Family Trust Dated August 26, 1999, as amended, Plaintiffs-Appellants/Cross-Appellees,

vs.

COUNTY OF MAUI, a political subdivision of the State of Hawai # i; WILLIAM SPENCE, in his capacity as Director of the Department of Planning of the County of Maui,

Defendants-Appellees/Cross-Appellants.

SCAP-15-0000599

APPEAL FROM THE CIRCUIT COURT OF THE SECOND CIRCUIT (CAAP-15-0000599; CIVIL NO. 07-1-0496(2))

OCTOBER 16, 2017

RECKTENWALD, C.J., NAKAYAMA, McKENNA, POLLACK, AND WILSON, JJ.

OPINION OF THE COURT BY NAKAYAMA, J.

I. INTRODUCTION

Over seventeen years ago, Plaintiffs-Appellants/CrossAppellees Douglas Leone and Patricia A. Perkins-Leone Electronically Filed Supreme Court SCAP-15-0000599 16-OCT-2017 09:19 AM* * * F O R P U B L I C A T I O N I N W E S T ’ S H A W A I # I R E P O R T S A N D P A C I F I C R E P O R T E R * * *



## (collectively, the Leones) bought a beachfront lot in Makena,

Maui with the expressed intent of building a family house on it.

Today the house has not yet been built, and the Leones contend

that the County of Maui’s land use regulations and restrictions

prevented them from doing so. In 2007, the Leones filed suit

against Defendants-Appellees/Cross-Appellants County of Maui and

William Spence, in his capacity as Director of the Department of

Planning of the County of Maui (collectively, the County),

asserting, among other counts, that the County’s actions

constituted a regulatory taking for which the Leones were

entitled just compensation. On May 5, 2015, a jury delivered a

verdict in favor of the County.

This case requires this court to decide, inter alia,

whether the County’s land use regulations constituted a

regulatory taking of the Leones’ property. But we do not decide

on a blank slate. The jury determined that the County did not

deprive the Leones of economically beneficial use of their

property. We conclude that there was evidence to support the

jury’s verdict in favor of the County. As such, we affirm the

Circuit Court of the Second Circuit’s (circuit court): 1) June

1, 2015 judgment in favor of the County and against the Leones,

2) August 5, 2015 order denying the Leones’ renewed motion for

judgment as a matter of law or, in the alternative, motion for a

new trial, and 3) August 5, 2015 order granting in part and

2* * * F O R P U B L I C A T I O N I N W E S T ’ S H A W A I # I R E P O R T S A N D P A C I F I C R E P O R T E R * * *



## denying in part the County’s motion for costs.

II. BACKGROUND

In 1996, the Maui County Council (county council)

adopted Resolution No. 96-121, authorizing the Mayor to acquire

nine beach lots at Palau # ea Beach in Makena, Maui for the

creation of a public park. The county council noted that

Palau # ea Beach was “one of the last undeveloped leeward beaches

on Maui” and that the community supported the creation of a beach

park. Because of budgetary constraints, the County was able to

buy only two of the nine lots (Lots 18 and 19), and the seven

remaining lots were sold to private individuals.

The beach lots were subject to the following

regulations and designations:

1) The 1998 Kihei-Makena Community Plan (the community

plan), which designated the lots as “park” land. Maui Cty.,

Kihei-Makena Community Plan 59 (1998). This designation “applies

to lands developed or to be developed for recreational use.” Id.

2) A Special Management Area (SMA) designation

pursuant to the Hawai # i Coastal Zone Management Act (CZMA). Any

development within an SMA is prohibited unless the developer

applies for and receives an SMA permit. Hawai # i Revised 1

M o r e s p e c i f i c a l l y , u n d e r t h e C Z M A , “ d e v e l o p m e n t ” d o e s n o t i n c l u d e 1

t h e “ [ c ] o n s t r u c t i o n o f a s i n g l e

- f a m i l y r e s i d e n c e t h a t i s n o t p a r t o f a l a r g e r d e v e l o p m e n t

. ” H R S § 2 0 5 A

- 2 2 ( 2 0 0 1 )

. H o w e v e r , i f t h e “ a u t h o r i t y f i n d s t h a t

a n y e x c l u d e d u s e

. . . m a y h a v e a c u m u l a t i v e i m p a c t , o r a s i g n i f i c a n t ( c o n t i n u e d

. . . )



## 3* * * F O R P U B L I C A T I O N I N W E S T ’ S H A W A I # I R E P O R T S A N D P A C I F I C R E P O R T E R * * *



## Statutes (HRS) §§ 205A-21 and 205A-26 (2001).

3) A “Hotel-Multifamily” zoning designation, which

permits, inter alia, the building of single-family residences.

4) A Declaration of Covenants and Restrictions (the

declaration), which states, “[a] lot shall be used only for

single family residential purposes regardless of whether the

applicable zoning would permit a more intensive or different

use.”

In February 2000, the Leones bought one of the lots

(“Lot 15" or “the property”) for $3.7 million. The Leones

initially relisted the property for $7 million and, in 2002, they

received two offers for its purchase, which the Leones refused. 2



## Four years after buying Lot 15, the Leones hired a land

use planning firm, Munekiyo & Hiraga, Inc. (Munekiyo), to prepare

a draft environmental assessment (DEA) of Lot 15 so that they

could eventually apply for SMA and development permits to build a

single-family residence. As part of the environmental assessment

process, Munekiyo sent out an early consultation letter, seeking

comments from governmental agencies and non-profits on the

Leones’ proposed development of Lot 15. In this letter, Munekiyo

(

. . . c o n t i n u e d ) 1

e n v i r o n m e n t a l o r e c o l o g i c a l e f f e c t o n a s p e c i a l m a n a g e m e n t a r e a , ” t h e n t h e

e x c l u d e d u s e , i n c l u d i n g t h e c o n s t r u c t i o n o f a s i n g l e

- f a m i l y r e s i d e n c e , “ s h a l l b e d e f i n e d a s ‘ d e v e l o p m e n t ’ f o r t h e p u r p o s e o f t h i s p a r t

. ” H R S § 2 0 5 A

- 2 2

.

T h e o f f e r s w e r e f o r $ 4

. 5 m i l l i o n a n d $ 4

. 6 m i l l i o n

. 2



## 4* * * F O R P U B L I C A T I O N I N W E S T ’ S H A W A I # I R E P O R T S A N D P A C I F I C R E P O R T E R * * *



## described the property and the development plan as follows:

T h e p a r c e l i s l o c a t e d w i t h i n t h e “ U r b a n ” d i s t r i c t , i s

z o n e d H o t e l “ H

- M ” b y t h e C o u n t y o f M a u i a n d i s d e s i g n a t e d a s

“ P a r k ” u n d e r t h e K i h e i

- M a k e n a C o m m u n i t y P l a n

. T h e o w n e r i n t e n d s t o f i l e a c o m m u n i t y p l a n a m e n d m e n t a n d c h a n g e i n

z o n i n g a p p l i c a t i o n w i t h t h e C o u n t y o f M a u i , D e p a r t m e n t o f
P l a n n i n g f o r r e v i e w b y t h e M a u i P l a n n i n g C o m m i s s i o n , a n d
f i n a l a c t i o n b y t h e M a u i C o u n t y C o u n c i l t o a c h i e v e l a n d u s e

c o n s i s t e n c y f o r t h e p a r c e l

. S i n c e a c o m m u n i t y p l a n

a m e n d m e n t w i l l b e s o u g h t , t h e a p p l i c a n t w i l l s u b m i t a D r a f t
E n v i r o n m e n t a l A s s e s s m e n t ( D E A ) i n a c c o r d a n c e w i t h C h a p t e r 3 4 3 , H a w a i i R e v i s e d S t a t u t e s ( H R S )

. 

## On May 20, 2004, the County of Maui’s Department of

Planning (the Department) sent Munekiyo comments in response to

the early consultation letter. The Department initially noted

that “the proposed action requires a Community Plan Amendment

which therefore triggers Chapter 343, HRS.” The Department then

provided the following comments:

1

. P r o v i d e a v i e w a n a l y s i s f r o m M a k e n a

- K e o n e o l o R o a d

. T h e

a n a l y s i s s h o u l d a s s u m e a 6 0 % b u i l d a b l e a r e a a n d 4 0 % o p e n

v i e w c o r r i d o r f o r t h e p r o p e r t y a n d a d d r e s s i m p a c t s o f t h e

s t r u c t u r e ’ s m a s s i n g

. 2

. T h e E r o s i o n R a t e f o r t h e P r o p e r t y i s a p p r o x i m a t e l y o n e f o o t p e r y e a r

. A s s u c h , t h e s h o r e l i n e s e t b a c k a r e a i s

c a l c u l a t e d a s 6 0 f e e t f r o m t h e c e r t i f i e d s h o r e l i n e

. 3

. L a t e r a l a c c e s s a l o n g t h e s h o r e l i n e s h a l l b e p r o v i d e d

. 4

. I n a d d i t i o n t o t h e a p p l i c a t i o n s f o r a C o m m u n i t y P l a n A m e n d m e n t a n d C h a n g e i n Z o n i n g , t h e p r o p o s e d a c t i o n r e q u i r e s

a S p e c i a l M a n a g e m e n t A r e a a s s e s s m e n t

.


## On June 3, 2004, the Leones directed Munekiyo to stop

work on the project. In an intra-office email, Munekiyo

explained why the Leones instructed the firm to halt work on the

project:

I r e c e i v e d a c a l l f r o m D o u g L e o n e t h i s m o r n i n g

. H e

a s k e d t h a t w e s t o p w o r k a n d c l o s e t h e p r o j e c t

. H e f e l t t h a t
t h e p o l i t i c a l c l i m a t e i s m u c h t o o d i f f i c u l t t o b e s e e k i n g

a n y l a n d u s e e n t i t l e m e n t s f o r t h e p r o p e r t y

. H e w a s n o t

w i l l i n g t o a c c o m m o d a t e a 4 0 % r o a d f r o n t a g e v i e w c o r r i d o r a n d
f e l t t h a t i t w o u l d b e b e t t e r f o r h i m t o j u s t h o l d o n t o t h e



## 5* * * F O R P U B L I C A T I O N I N W E S T ’ S H A W A I # I R E P O R T S A N D P A C I F I C R E P O R T E R * * *

p r o p e r t y f o r n o w

. 

## In 2007, the Leones restarted the permitting process

and Munekiyo submitted the SMA assessment application to the

Department on September 28, 2007. One month later, the

Department sent a letter declining to process the SMA application

with the following explanation :

T h e s u b j e c t p r o p e r t y i s d e s i g n a t e d “ P a r k ” o n t h e K i h e i

- M a k e n a C o m m u n i t y P l a n ( C o m m u n i t y P l a n )

. T h e p r o p o s e d
S i n g l e

- F a m i l y d w e l l i n g i s i n c o n s i s t e n t w i t h t h e C o m m u n i t y P l a n

. A n a p p l i c a t i o n f o r a C o m m u n i t y P l a n A m e n d m e n t w a s n o t

s u b m i t t e d c o n c u r r e n t w i t h t h e s u b j e c t a p p l i c a t i o n

.

S e c t i o n 1 2

- 2 0 2

- 1 2 ( f ) ( 5 ) s t a t e s t h a t a n a p p l i c a t i o n

“ c a n n o t b e p r o c e s s e d b e c a u s e t h e p r o p o s e d a c t i o n i s n o t

c o n s i s t e n t w i t h t h e C o u n t y G e n e r a l P l a n , C o m m u n i t y P l a n , o r Z o n i n g , u n l e s s a G e n e r a l P l a n , C o m m u n i t y P l a n , o r Z o n i n g A p p l i c a t i o n f o r a n a p p r o p r i a t e a m e n d m e n t i s p r o c e s s e d

c o n c u r r e n t l y w i t h t h e S M A P e r m i t A p p l i c a t i o n

. ”



## The letter further explained that, in order for the Leones to

proceed, they would have to file a new application consistent

with the community plan and with the appropriate submittals.

A. Initial Circuit Court Proceedings 3



## On November 19, 2007, the Leones filed a lawsuit

against the County, alleging that, because of the County’s

actions, the Leones were left with no economically viable use of

their property. The Leones brought five counts against the

County: 1) inverse condemnation pursuant to article I, section

20 of the Hawai # i Constitution, 2) inverse condemnation pursuant

to the Fifth and Fourteenth Amendments of the United States

T h e H o n o r a b l e J o s e p h E

. C a r d o z a p r e s i d e d o v e r t h e i n i t i a l c i r c u i t 3

c o u r t p r o c e e d i n g s

.



## 6* * * F O R P U B L I C A T I O N I N W E S T ’ S H A W A I # I R E P O R T S A N D P A C I F I C R E P O R T E R * * *



## Constitution, 3) equal protection violation pursuant to 42 U.S.C.

§ 1983, 4) substantive due process violation pursuant to 42

U.S.C. § 1983, and 5) punitive damages under 42 U.S.C. § 1983.

The Leones asserted that the County was required to provide the

Leones with just compensation for their property, and that they

were also entitled to punitive damages in the amount of $50

million.

The County filed a motion to dismiss, which the circuit

court granted on March 2, 2009. The circuit court determined

that “there [were] effective remedies still available” to the

Leones, such as proceeding with a new application with

appropriate submissions, seeking an amendment to the community

plan, or applying for a special management use permit pursuant to

the provisions of HRS §§ 12-202-13 and 12-202-15. Because

“effective remedies” were still available to the Leones, the

circuit court concluded that the Leones had “failed to exhaust

their administrative remedies.” As such, the circuit court ruled

that the case was “not ripe for adjudication” and that the

circuit court lacked jurisdiction over the subject matter of the

case.

B. Initial ICA Proceedings

The Leones appealed this decision and on June 22, 2012,

the Intermediate Court of Appeals (ICA) published an opinion

which vacated the circuit court’s judgment and remanded the case

7* * * F O R P U B L I C A T I O N I N W E S T ’ S H A W A I # I R E P O R T S A N D P A C I F I C R E P O R T E R * * *



## for further proceedings. See Leone v. Cty. of Maui, 128 Hawai # i

183, 284 P.3d 956 (App. 2012) (Leone I). The ICA concluded that

the circuit court erred in determining that it lacked subject

matter jurisdiction because the Leones’ claims were not ripe for

adjudication. Id. at 196, 284 P.3d at 969. The ICA specifically

determined that the Department’s letter, which declined to

process the Leones’ SMA assessment application, satisfied the

finality requirement for ripeness, and that the Leones were not

required to seek a change in the community plan, which amounted

to seeking a change in the existing law, before they could bring

their inverse condemnation claims. Id. at 193-96, 284 P.3d at

966-69.

Of import to the proceedings on remand, the ICA

commented in a footnote on the inconsistencies of the Maui County

permitting process:

[ T ] h e p r o p o s e d u s e

- t h e c o n s t r u c t i o n o f s i n g l e

- f a m i l y

r e s i d e n c e s

- i s n o t c o n s i d e r e d a “ d e v e l o p m e n t ” u n d e r t h e C Z M A u n l e s s t h e a u t h o r i t y f i n d s a c u m u l a t i v e i m p a c t o r

s i g n i f i c a n t e n v i r o n m e n t a l e f f e c t s

. H R S § 2 0 5 A

- 2 2

. A l t h o u g h
t h e C Z M A d o e s n o t e x p r e s s l y r e q u i r e c o n s i s t e n c y f o r p r o p o s e d
l a n d u s e s t h a t a r e n o t c o n s i d e r e d “ d e v e l o p m e n t s , ” t h e M a u i
C o u n t y C o d e ( M C C ) r e n d e r s t h e C o m m u n i t y P l a n b i n d i n g o n a l l

c o u n t y o f f i c i a l s

. M C C 2

. 8 0 B

. 0 3 0 ( B ) ( 2 0 0 6 )

. U n d e r t h e

e x p r e s s l a n g u a g e o f t h e c o d e , n e i t h e r t h e d i r e c t o r n o r t h e P l a n n i n g C o m m i s s i o n m a y a p p r o v e l a n d u s e s t h a t a r e i n c o n s i s t e n t w i t h t h e K i h e i

- M a k e n a C o m m u n i t y P l a n

. T h e l a n g u a g e o f t h e S M A R u l e s c o m p o r t s w i t h t h i s o u t c o m e ,
s t a t i n g i n m a n d a t o r y t e r m s t h a t “ t h e d i r e c t o r s h a l l m a k e a d e t e r m i n a t i o n

. . . t h a t t h e p r o p o s e d a c t i o n e i t h e r :

. . . ( 5 ) C a n n o t b e p r o c e s s e d b e c a u s e t h e p r o p o s e d a c t i o n i s n o t

c o n s i s t e n t w i t h t h e c o u n t y g e n e r a l p l a n , c o m m u n i t y p l a n , a n d

z o n i n g [

. ] ” S M A R u l e 1 2

- 2 0 2

- 1 2 ( f ) ( e m p h a s i s a d d e d )

. I n a n y

c a s e , t h e D i r e c t o r ’ s d e c i s i o n t h a t A p p e l l a n t s ’ a s s e s s m e n t

a p p l i c a t i o n s c o u l d n o t b e p r o c e s s e d h a d t h e s a m e e f f e c t a s a d e t e r m i n a t i o n t h a t i t w a s a d e v e l o p m e n t

. I f , b e c a u s e o f a

“ c u m u l a t i v e i m p a c t o r a s i g n i f i c a n t e n v i r o n m e n t a l o r



## 8* * * F O R P U B L I C A T I O N I N W E S T ’ S H A W A I # I R E P O R T S A N D P A C I F I C R E P O R T E R * * *

e c o l o g i c a l e f f e c t , ” a s i n g l e

- f a m i l y r e s i d e n c e i s c o n s i d e r e d

a d e v e l o p m e n t , t h e n a n S M A p e r m i t w o u l d b e r e q u i r e d

. I f a
p e r m i t w e r e r e q u i r e d , i t c o u l d n o t b e a p p r o v e d b e c a u s e i t

w o u l d b e i n c o n s i s t e n t w i t h t h e C o m m u n i t y P l a n

. T h u s ,
r e g a r d l e s s o f t h e d e n o m i n a t i o n o f t h e a s s e s s m e n t

a p p l i c a t i o n , t h e D i r e c t o r ’ s d e t e r m i n a t i o n o f i n c o n s i s t e n c y

w i t h t h e C o m m u n i t y P l a n p r e c l u d e s f u r t h e r p r o c e s s i n g u n d e r

a p p l i c a b l e l a w

.


## Id. at 194 n.8, 284 P.3d at 967 n.8 (alterations in original)

(citations omitted). Accordingly, the ICA vacated and remanded

the case to the circuit court for further proceedings. Id. at

196, 284 P.3d at 969. 4



## C. Circuit Court Proceedings on Remand 5



## A jury trial was held from March 30 through May 5, 2015

on the same five counts. During opening statements, the Leones 6



## showed the jury a tax map that depicted the Palau # ea Beach

properties and explained who owned them and how they were

developed:

A n d t h e s e a r e t h e p r e s e n t o w n e r s o f p r o p e r t i e s

. T h e

n o r t h e n d o f t h e b e a c h y o u h a v e M r

. S w e e n e y a n d M r

. L a m b e r t ’ s p r o p e r t i e s

. T h e y h a v e h o m e s o n t h e m t o d a y , a n d
t h e r e a s o n w h y t h e y h a v e h o m e s o n t h e m , w e ’ l l e x p l o r e i n

m o r e d e t a i l

.

T h i s i s t h e L e o n e s ’ p r o p e r t y

. I t h a s a p a t h o n i t l e a d i n g f r o m O l d M a k e n a R o a d t o t h e b e a c h t h a t i s u s e d e v e r y d a y b y m e m b e r s o f t h e p u b l i c

.

T h i s i s t h e L a r s o n s ’ p r o p e r t i e s

. T h e s e t w o l o t s a r e

o w n e d b y B i l l a n d N a n c y L a r s o n

. T h i s p a r c e l , L o t 5 2 , i s n o w b e i n g b u i l t u p o n , a n d t h e r e a s o n s w h y M r

. L a r s o n g o t

O n O c t o b e r 2 9 , 2 0 1 2 , t h e C o u n t y a p p l i e d f o r a w r i t o f c e r t i o r a r i 4

t o t h i s c o u r t , w h i c h w a s d e n i e d o n D e c e m b e r 1 2 , 2 0 1 2

. L e o n e v

. C t y

. o f M a u i , N o

. S C W C

- 2 9 6 9 6 , 2 0 1 2 W L 6 2 0 0 4 0 1 ( H a w

. D e c

. 1 2 , 2 0 1 2 )

.

T h e H o n o r a b l e P e t e r T

. C a h i l l p r e s i d e d

. 5

P r i o r t o t h e s t a r t o f t h e j u r y t r i a l , t h e c i r c u i t c o u r t e n t e r e d a n 6

o r d e r g r a n t i n g t h e C o u n t y ’ s m o t i o n f o r s u m m a r y j u d g m e n t a s t o C o u n t V o f t h e L e o n e s ’ c o m p l a i n t , w h i c h a s s e r t e d a c l a i m f o r p u n i t i v e d a m a g e s p u r s u a n t t o 4 2
U

. S

. C

. § 1 9 8 3

. A s s u c h , o n l y c o u n t s I

- I V p r o c e e d e d t o t h e j u r y t r i a l

.



## 9* * * F O R P U B L I C A T I O N I N W E S T ’ S H A W A I # I R E P O R T S A N D P A C I F I C R E P O R T E R * * *

a p p r o v a l t o b u i l d o n h i s p r o p e r t y w e ’ l l g o i n t o a l s o

. T h e s e t w o l o t s i n t h e m i d d l e o f t h e b e a c h a r e o w n e d b y t h e C o u n t y

. T h e C o u n t y b o u g h t t h e m f o r b e a c h

- p a r k p u r p o s e s b a c k i n t h e e n d o f 1 9 9 9 , b u t n e v e r i m p r o v e d t h e p r o p e r t y

. .

. . T h i s p r o p e r t y i s o w n e d b y M r

. A l t m a n

. T h i s n e x t
p r o p e r t y i s o w n e d b y a n a s s o c i a t e o f M r

. L e o n e ’ s n a m e d D a n W a r m h o v e n , G a l a n d o , a n d L u z c o , a n d t h e s e t h r e e p r o p e r t i e s

a r e o n t h e r o c k y p o i n t a t t h e s o u t h e n d o f t h e b e a c h , a n d

t h e y ’ r e i m p r o v e d w i t h h o m e s o n t h e m t o d a y

.


## According to the Leones, the shifting political climate

on Maui was the reason why some landowners at Palau # ea Beach were

allowed to build homes on their properties, while the Leones were

denied that same right:

U n d e r M a y o r A p a n a ’ s a d m i n i s t r a t i o n , s o m e o f t h e o t h e r l o t o w n e r s w e r e a b l e t o g e t t h o s e a p p r o v a l s

. T h e y g o t S M A
A s s e s s m e n t A p p l i c a t i o n s f i l e d

. T h e e x e m p t i o n s w e r e g r a n t e d b y P l a n n i n g D i r e c t o r M i n , b u i l d i n g p e r m i t s w e r e i s s u e d , a n d
t h e y w e n t f o r w a r d a n d s t a r t e d b u i l d i n g t h e i r h o m e s ; L a m b e r t

a n d S w e e n e y a m o n g o t h e r s

. A f t e r M a y o r A r a k a w a t o o k o f f i c e , d u r i n g h i s f i r s t

a d m i n i s t r a t i o n , h e a p p o i n t e d a n e w P l a n n i n g D i r e c t o r n a m e d
M i c h a e l F o l e y , a n d w i t h i n e i g h t d a y s a f t e r t a k i n g o f f i c e , P l a n n i n g D i r e c t o r F o l e y a n n o u n c e d t h e r e w o u l d b e n o m o r e

a p p r o v a l s f o r h o m e s a t P a l a u e a B e a c h a n d s t o p p e d g r a n t i n g

e x t e n s i o n s a t P a l a u e a

.


## The Leones contended that it was at that time that they sought to

obtain permits for building a single-family residence on their

property, after Mayor Arakawa took office and the new Planning

Director decided to stop development at Palau # ea Beach. The

Leones further explained that after Mayor Arakawa took office for

the second time, the policy shifted again, but it was too late

for the Leones to build at that point:

N o w , a f t e r M a y o r A r a k a w a t a k e s o f f i c e f o r t h e s e c o n d
t i m e , t h e p o l i t i c a l w i n d s s h i f t a g a i n , a n d b e g i n n i n g i n 2 0 1 2 , t h e c u r r e n t A r a k a w a a d m i n i s t r a t i o n b e g i n s g r a n t i n g

a p p r o v a l s t o s o m e o f t h e o t h e r l o t o w n e r s t o b u i l d

. T h e p r o b l e m f r o m t h e L e o n e s ’ p e r s p e c t i v e i s t h a t i n S e p t e m b e r o f 2 0 1 1 , t h e r e w a s a 4 0

- y e a r s t o r m o f f o f N e w



## 10* * * F O R P U B L I C A T I O N I N W E S T ’ S H A W A I # I R E P O R T S A N D P A C I F I C R E P O R T E R * * *

Z e a l a n d , w h i c h c a m e u p o v e r t h e c o a s t a l d u n e s a n d i n t o t h e i r p r o p e r t y a n d l e f t d e b r i s m u c h f u r t h e r i n l a n d t h a n i t h a d b e e n b e f o r e

. T h e d e b r i s l i n e c r e a t e s a s h o r e l i n e , a n d s i n c e t h e d e b r i s l i n e c a m e s o m u c h f a r t h e r i n l a n d t h a n i t h a d b e f o r e , t h e L e o n e s w e r e u n a b l e t o b u i l d

. 7



## As such, the Leones contended that the “effect of the County’s

actions was to deprive the Leones of all economically viable use

of their land.”

For its part, the County presented the following

opening argument:

T h e C o u n t y s u b m i t s t h a t t h e e v i d e n c e i n t h i s c a s e i s

n o t g o i n g t o s h o w t h a t t h e L e o n e s w e r e d e n i e d t h e r i g h t t o b u i l d o n t h e i r l o t

. T h e e v i d e n c e i n t h i s c a s e i s g o i n g t o

s h o w t h a t t h e y d i d n o t w a n t t o g o t h r o u g h t h e s a m e p r o c e s s , t h e d i f f i c u l t p r o c e s s t h a t e a c h o f t h e o t h e r s e v e n l o t

o w n e r s o u t h e r e w h o h a v e s i n g l e f a m i l y r e s i d e n c e s o n t h e i r l o t w e n t t h r o u g h

. T h a t ’ s w h y w e ’ r e h e r e t o d a y

.

. . . .

R e g u l a t i o n s a r e n o t i n f l e x i b l e

. W e ’ v e g o t s e v e n o t h e r l o t o w n e r s o u t t h e r e w h o a r e , a g a i n , l i v i n g i n v e r y l u x u r i o u s s i n g l e f a m i l y h o m e s

. T h e y d e a l t w i t h t h e s e

r e g u l a t i o n s

. T h e y b u i l t o n t h e l o t

. T h e r e ’ s a g u y o u t
t h e r e b u i l d i n g n o w

.


## The testimony during trial focused almost exclusively

on two distinct but interrelated inquiries: 1) whether the

County’s regulations prevented the Leones from building a singlefamily residence, and 2) if so, whether this deprived the Leones

of economically beneficial use of their property. As to the

T h e L e o n e s c o n t e n d e d t h a t t h e y a p p l i e d f o r a s h o r e l i n e 7

c e r t i f i c a t i o n o n J a n u a r y 1 0 , 2 0 1 4 , b u t t h a t t h e y w e r e i n f o r m e d b y t h e D e p a r t m e n t o f L a n d a n d N a t u r a l R e s o u r c e s ( D L N R ) o f t h i s c o u r t ’ s r e c e n t o p i n i o n i n D i a m o n d v

. D o b b i n , 1 3 2 H a w a i # i 9 , 2 9 , 3 1 9 P

. 3 d 1 0 1 7 , 1 0 3 7 ( 2 0 1 4 ) , w h i c h

r e q u i r e d D L N R t o “ c o n s i d e r h i s t o r i c a l e v i d e n c e ” i n m a k i n g i t s s h o r e l i n e d e t e r m i n a t i o n

. T h e L e o n e s c o n t e n d e d t h a t , b e c a u s e o f t h e 2 0 1 1 s t o r m a n d t h i s

c o u r t ’ s d e c i s i o n i n D i a m o n d , t h e s h o r e l i n e s e t b a c k o n t h e p r o p e r t y w o u l d h a v e

o v e r l a p p e d t h e f r o n t y a r d s e t b a c k , l e a v i n g n o b u i l d a b l e a r e a o n t h e p r o p e r t y

. A t t h i s p o i n t , t h e L e o n e s w i t h d r e w t h e i r s h o r e l i n e c e r t i f i c a t i o n a p p l i c a t i o n

.



## 11* * * F O R P U B L I C A T I O N I N W E S T ’ S H A W A I # I R E P O R T S A N D P A C I F I C R E P O R T E R * * *



## first query, the circuit court ultimately instructed the jury

that the County’s actions had prevented the Leones from building

a house on their property:

L a d i e s a n d g e n t l e m e n , a t a n e a r l i e r p o i n t d u r i n g t h e t r i a l , I r e a d t o y o u t h e l a w a s y o u m u s t a p p l y i n t h i s c a s e

. I ’ m g o i n g t o r e a d t h r e e a d d i t i o n a l p o r t i o n s o f t h e l a w t h a t
y o u m u s t a p p l y t o t h e f a c t s o f t h i s c a s e

. T h e f i r s t i n s t r u c t i o n t o y o u i s a s f o l l o w s : F o l l o w i n g

a n a p p e a l a t a n e a r l i e r s t a g e o f t h i s c a s e , t h e H a w a i i

I n t e r m e d i a t e C o u r t o f A p p e a l s i s s u e d a n o p i n i o n e n t i t l e d
L e o n e , e t a l

. , v s

. C o u n t y o f M a u i , e t a l

. T h a t o p i n i o n i s t h e l a w o f t h i s c a s e a n d i s b i n d i n g o n t h e p a r t i e s a n d t h i s C o u r t

. S e c o n d i n s t r u c t i o n

. I n t h e L e o n e o p i n i o n , t h e I n t e r m e d i a t e C o u r t o f A p p e a l s s t a t e d a s f o l l o w s : T h e l a n g u a g e o f t h e S M A R u l e s s t a t e i n m a n d a t o r y t e r m s t h a t t h e D i r e c t o r s h a l l m a k e a d e t e r m i n a t i o n t h a t t h e p r o p o s e d a c t i o n

e i t h e r c a n n o t b e p r o c e s s e d

- - a c t u a l l y t h a t ’ s e i t h e r , f i v e ,
c a n n o t b e p r o c e s s e d b e c a u s e t h e p r o p o s e d a c t i o n i s n o t

c o n s i s t e n t w i t h t h e C o u n t y G e n e r a l P l a n , C o m m u n i t y P l a n , a n d
Z o n i n g

. T h a t ’ s S M A R u l e 1 2

- 2 0 2

- 1 2 , s u b p a r a g r a p h F

.

I n a n y c a s e , t h e D i r e c t o r ’ s d e c i s i o n t h a t t h e L e o n e s ’
A s s e s s m e n t A p p l i c a t i o n s c o u l d n o t b e p r o c e s s e d h a s t h e s a m e

e f f e c t a s a d e t e r m i n a t i o n t h a t i t w a s a d e v e l o p m e n t

. I f , b e c a u s e o f a c u m u l a t i v e i m p a c t o r a s i g n i f i c a n t

e n v i r o n m e n t a l o r e c o l o g i c a l e f f e c t , a s i n g l e f a m i l y

r e s i d e n c e i s c o n s i d e r e d a d e v e l o p m e n t t h e n a n S M A p e r m i t

w o u l d b e r e q u i r e d

.

I f a p e r m i t w e r e r e q u i r e d , i t c o u l d n o t b e a p p r o v e d b e c a u s e i t w o u l d b e i n c o n s i s t e n t w i t h t h e C o m m u n i t y P l a n

. T h u s , r e g a r d l e s s o f t h e d e n o m i n a t i o n o f t h e A s s e s s m e n t
A p p l i c a t i o n , t h e D i r e c t o r ’ s d e t e r m i n a t i o n o f t h e i n c o n s i s t e n c y w i t h t h e C o m m u n i t y P l a n p r e c l u d e s f u r t h e r p r o c e s s i n g u n d e r a p p l i c a b l e l a w

.

T h e f i n a l i n s t r u c t i o n a t t h i s p o i n t o f t h e c a s e i s a s f o l l o w s : U n d e r t h e M a u i S M A R u l e s , t h e P l a n n i n g D i r e c t o r

m a y n o t l e g a l l y p r o c e s s a n a p p l i c a t i o n f o r a n S M A e x e m p t i o n f o r a l a n d u s e t h a t i s i n c o n s i s t e n t w i t h t h e K i h e i

- M a k e n a C o m m u n i t y P l a n

.


## (Formatting altered.) These rulings shifted the parties’ focus

to the second inquiry: whether the County’s regulations deprived

the Leones of economically beneficial use of their property.

Both parties called expert witnesses to testify as to

the use and value of the Leones’ property. The County called Ted

Yamamura (Yamamura), a real estate appraiser with over thirty12* * * F O R P U B L I C A T I O N I N W E S T ’ S H A W A I # I R E P O R T S A N D P A C I F I C R E P O R T E R * * *



## five years of experience appraising Maui real property, to

testify on the value and use of the Leones’ property. At the 8



## outset, Yamamura testified that he has done thousands of real

estate appraisals on Maui over decades and that he determines the

“best uses” for the real estate in doing an appraisal. Yamamura

explained the test that he uses for determining highest and best

use: “There’s a four-item test; that use must be legally

permissible, physically possible, financially feasible, and

maximally productive, which means that use will yield the highest

value for that land.”

Counsel for the County then asked Yamamura about

investment use:

[ C O U N T Y : ] M r

. Y a m a m u r a , l e t m e s t a r t b y a s k i n g , w h a t i s

m e a n t b y i n v e s t m e n t i n l a n d ? [ Y A M A M U R A : ] I t ’ s t h e u s e o f l a n d a s a n i n v e s t m e n t t o o l

. I n

o t h e r w o r d s , p e o p l e w o u l d b u y l a n d , h o l d i t f o r a p e r i o d o f
t i m e , a n d a s i t i n c r e a s e s i n v a l u e a n d d e p e n d i n g o n t h e b u y e r ’ s s t r a t e g y a n d f i n a n c i a l o b j e c t i v e s , s e l l i t f o r p r o f i t

.

. . . .

[ C O U N T Y : ] D o y o u h a v e a n o p i n i o n a s t o w h e t h e r i n v e s t m e n t i s

a u s e o f l a n d ?

. . . .

[ Y A M A M U R A : ] I c o n s i d e r i n v e s t m e n t a s a b o n a f i d e u s e o f
l a n d

. I t h a p p e n s a l l t h e t i m e

. P e o p l e b y [ s i c ] l a n d , h o l d

o n t o i t ; a f t e r i t a p p r e c i a t e s o v e r t i m e , p e o p l e s e l l i t f o r p r o f i t

. I t h i n k t h a t ’ s a b o n a f i d e l a n d u s e

.

. . . .

P r i o r t o t r i a l , t h e L e o n e s f i l e d a m o t i o n t o e x c l u d e o r l i m i t 8

Y a m a m u r a ’ s t e s t i m o n y o n t h e b a s i s t h a t h e w a s n o t q u a l i f i e d t o o p i n e o n

“ e c o n o m i c a l l y v i a b l e u s e

. ” T h e c i r c u i t c o u r t g r a n t e d i n p a r t a n d d e n i e d i n
p a r t t h i s m o t i o n , e x p l a i n i n g t h a t Y a m a m u r a c o u l d n o t t e s t i f y o n t h e c u r r e n t

v a l u e o f t h e p r o p e r t y

.



## 13* * * F O R P U B L I C A T I O N I N W E S T ’ S H A W A I # I R E P O R T S A N D P A C I F I C R E P O R T E R * * *

[ C O U N T Y : ] I n y o u r o p i n i o n , L o t 1 5 a t P a l a u e a

– - b a s e d o n
y o u r a n a l y s i s o f L o t 1 5 a t P a l a u e a , d o e s i t h a v e p o t e n t i a l

u s e a s a n i n v e s t m e n t ?

. . . .

[ Y A M A M U R A : ] A b s o l u t e l y , y e s

. [ C O U N T Y : ] A n d l o o k i n g a t t h e f i r s t f a c t o r o f y o u r a n a l y s i s ,
w h i c h i s l e g a l l y p e r m i s s i b l e , w h y d o y o u d r a w t h a t

c o n c l u s i o n b a s e d o n t h a t p a r t i c u l a r f a c t o r ?

. . . .

[ Y A M A M U R A : ] L e g a l l y p e r m i s s i b l e

. I t ’ s

– - t h e u n d e r l y i n g Z o n i n g o f t h a t l o t i s H M

. [ C O U N T Y : ] M e a n i n g ? [ Y A M A M U R A : ] H o t e l

. [ C O U N T Y : ] H o t e l

. [ Y A M A M U R A : ] B u t t h e r e ’ s a c o n f l i c t i n t h e C o m m u n i t y P l a n , b u t i f

– - u n d e r t h e c o n t e x t o f l e g a l l y p e r m i s s i b l e , i f t h e i s s u e o f t h a t c o n f l i c t c a n b e m i t i g a t e d , t h e n w e c a n l o o k a t i t a s b e i n g a l e g a l l y p e r m i s s i b l e u s e i n t h e c o n t e x t o f
h i g h e s t a n d b e s t u s e b e c a u s e t h a t i s s u e o r t h a t c o n f l i c t c a n b e m i t i g a t e d

.


## The circuit court overruled the Leones’ objections to this

testimony.

Rick Tsujimura (Tsujimura), a real estate attorney,

testified as an expert witness for the Leones. Tsujimura opined

that the inconsistences between the community plan and the zoning

requirements left the Leones “deprived of all economically

beneficial use for that lot.” Tsujimura explained:

T h e C o m m u n i t y P l a n i s d e s i g n a t e d p a r k

. O n t h e Z o n i n g i t ’ s h o t e l , m u l t i

- f a m i l y

. S o a s y o u c a n s e e , t h e r e ’ s a n i n c o n s i s t e n c y b e t w e e n t h o s e t w o

. T h e y d o n ’ t l i n e u p

. T h e o r i g i n a l i n t e n t o f t h e S t a t e P l a n , t h e S t a t e l a n d

u s e , t h e G e n e r a l P l a n , t h e C o m m u n i t y P l a n w a s f o r a l l o f
t h i s t o l i n e u p a n d , c o n s e q u e n t l y , w h a t h a s h a p p e n e d i s

w e ’ r e i n a s i t u a t i o n , b e c a u s e o f t h i s i n c o n s i s t e n c y , w h e n t h e L e o n e s c o m e i n f o r a n S M A p e r m i t

– - A s s e s s m e n t
A p p l i c a t i o n , p a r t o f t h e l a w , b o t h a t t h e S t a t e l e v e l a n d
C h a p t e r 2 0 5 A a n d t h e C o u n t y S M A l a w i n C h a p t e r 1 2

- 2 0 2

- 1 2 , i t

r e q u i r e s t h a t t h e s e p i e c e s a l i g n

. A n d w h e n t h e y d o n ’ t , w h e n t h e y ’ r e n o t t h e s a m e , t h e s e a l l e n d u p c a u s i n g t h e A s s e s s m e n t A p p l i c a t i o n t o b e d e n i e d

. A n d t h i s i s t h e p r o b l e m f o r t h e l a n d o w n e r r i g h t n o w

. B e c a u s e o f t h i s i n c o n s i s t e n c y , t h i s p r e v e n t s t h e L e o n e s f r o m



## 14* * * F O R P U B L I C A T I O N I N W E S T ’ S H A W A I # I R E P O R T S A N D P A C I F I C R E P O R T E R * * *

d o i n g a n y t h i n g t o s t a r t t h e p r o c e s s t o d o a n y t h i n g w i t h t h e l o t , n o m a t t e r w h a t t h e y w a n t e d t o d o b e c a u s e t h e y c a n ’ t g e t
p a s t t h i s i n c o n s i s t e n c y

.

S o w h a t h a p p e n s i s y o u ’ r e b a s i c a l l y l e f t w i t h a p i e c e

o f p r o p e r t y t h a t ’ s z o n e d f o r h o t e l f a m i l y
- - m u l t i

- f a m i l y , C o m m u n i t y P l a n p a r k , a n d b e c a u s e o f t h a t , y o u c a n ’ t d o

a n y t h i n g

. A n d s o t h e r e ’ s n o e c o n o m i c a l l y b e n e f i c i a l u s e t h a t t h e y c a n u s e o n t h a t l o t b e c a u s e o f t h i s

.


## On cross-examination, Tsujimura explained why he did

not consider the property to have any investment value:

[ T S U J I M U R A : ] I n v e s t m e n t v a l u e i s p r e m i s e d u p o n a n a b i l i t y t o

u s e t h e p r o p e r t y , a n d m y o p i n i o n , a s I ’ v e a r t i c u l a t e d , i s t h a t b e c a u s e o f t h e i n c o n s i s t e n c y b e t w e e n t h e C o m m u n i t y P l a n

a n d t h e Z o n i n g , t h e r e i s n o a b i l i t y t o u s e t h e p r o p e r t y

.

S o i f y o u ’ r e a s k i n g m e f r o m a n i n v e s t m e n t p e r s p e c t i v e , I w o u l d s a y i n t h i s p a r t i c u l a r c a s e , i t w o u l d b e z e r o b e c a u s e y o u c o u l d n e v e r h a r v e s t t h a t v a l u e g i v e n t h e c u r r e n t

s i t u a t i o n

. [ C O U N T Y : ] S o w o u l d y o u d i s a g r e e w i t h m e , t h e n , t h a t t h e r e ’ s
p o t e n t i a l e c o n o m i c b e n e f i t i n t h e o w n e r s h i p a n d p o s s e s s i o n

o f a p i e c e o f r e a l e s t a t e ? [ T S U J I M U R A : ] I n a g e n e r a l s e n s e , y e s

. B u t s p e c i f i c a l l y t o t h i s p a r t i c u l a r p r o p e r t y , n o

. [ C O U N T Y : ] S o a r e y o u s a y i n g t h e r e ’ s n o e c o n o m i c b e n e f i t i n t h e L e o n e s ’ l o t a s a v e h i c l e f o r a n

– - a s a n i n v e s t m e n t ? [ T S U J I M U R A : ] N o t i n t h e c u r r e n t s i t u a t i o n b e c a u s e o f t h e i n c o n s i s t e n c y

. [ C O U N T Y : ] R e a l l y ? A r e y o u f a m i l i a r w i t h t h e D o u g S c h a t z ’ l o t

a t P a l a u e a ? [ T S U J I M U R A : ] N o

. [ C O U N T Y : ] A r e y o u a w a r e t h a t a f t e r D o u g S c h a t z g o t t h e v e r y

s a m e r e t u r n

– - t h e s a m e l e t t e r r e t u r n i n g h i s a p p l i c a t i o n

w i t h t h e s a m e l a n g u a g e a s t h e L e o n e s ’ l o t , t h a t h e t u r n e d

a r o u n d a n d s o l d t h a t p r o p e r t y t o s o m e b o d y n a m e d A l t m a n w h o ’ s
g o t a h o u s e o n i t t o d a y ? [ C O U N S E L F O R L E O N E S ] O b j e c t i o n ; r e l e v a n c e a n d b e y o n d t h e

s c o p e

. [ T H E C O U R T : ] S u s t a i n e d

.


## Also on cross-examination, the County examined

Tsujimura about whether the Leones’ property could be used for

other purposes, to which Tsujimura conceded that the property

could potentially be used for commercial purposes:

[ C O U N T Y : ] M r

. T s u j i m u r a , y o u w e r e a s k e d w h e t h e r t h e L e o n e s

c o u l d e n g a g e i n c o m m e r c i a l s a l e s o f c o n c e s s i o n s o n t h e i r l o t , a n d I b e l i e v e y o u a c k n o w l e d g e d t h a t u n d e r t h e h o t e l d i s t r i c t z o n i n g , t h a t t h e y c o u l d , i n f a c t , o p e r a t e a p a r k ;



## 15* * * F O R P U B L I C A T I O N I N W E S T ’ S H A W A I # I R E P O R T S A N D P A C I F I C R E P O R T E R * * *

c o r r e c t ? [ T S U J I M U R A : ] Y e s

. [ C O U N T Y : ] A n d t h e n y o u s a i d t h a t t h e y c a n o n l y e n g a g e i n

n o n c o m m e r c i a l u s e s u n d e r t h e h o t e l z o n i n g , b u t I ’ m g o i n g t o

r e a d t o y o u w h a t t h e h o t e l z o n i n g o r d i n a n c e a c t u a l l y s a y s

. A n d i t s a y s , “ P e r m i t t e d u s e s : ”

– - t h i s i s 1 9

. 1 4

. 0 2 0

– -

“ W i t h i n H o t e l D i s t r i c t s , t h e f o l l o w i n g u s e s s h a l l b e
p e r m i t t e d : A n y u s e p e r m i t t e d i n r e s i d e n t i a l a n d a p a r t m e n t d i s t r i c t s

. ”

T h e n w h e n y o u g o t o 1 9

. 0 8

. 0 2 0 , w h i c h s a y s , “ P e r m i t t e d

u s e s i n R e s i d e n t i a l D i s t r i c t s , ” w h a t i t a c t u a l l y s a y s , M r

. T s u j i m u r a , i s , “ P a r k s a n d p l a y g r o u n d s , n o n c o m m e r c i a l : C e r t a i n c o m m e r c i a l , a m u s e m e n t , a n d r e f r e s h m e n t s a l e

a c t i v i t i e s m a y b e p e r m i t t e d w h e n u n d e r t h e s u p e r v i s i o n o f
t h e g o v e r n m e n t a g e n c y i n c h a r g e o f t h e p a r k o r p l a y g r o u n d

. ”
W h i c h m e a n s a p r i v a t e l a n d o w n e r c a n e n g a g e i n t h e s e

c o m m e r c i a l a c t i v i t i e s , b u t i t ’ s j u s t s u b j e c t t o p e r m i t t i n g

r e q u i r e m e n t s a n d r e g u l a t i o n s u n d e r t h e a g e n c y , i n t h i s i n s t a n c e , t h e C o u n t y ; i s n ’ t t h a t c o r r e c t ? [ T S U J I M U R A : ] I a g r e e w i t h y o u , M r

. C o r p o r a t i o n C o u n s e l

. I t

s h o u l d h a v e b e e n u n d e r t h e s u p e r v i s i o n o f t h e C o u n t y

. [ C O U N T Y : ] A l l r i g h t

. A n d s o , i n f a c t , t h e a n s w e r t o t h e
q u e s t i o n , w h i c h y o u s a i d , a s t o w h e t h e r c o m m e r c i a l u s e s

w o u l d b e a l l o w e d a n d t o w h i c h y o u a n s w e r e d n o , y o u r a n s w e r i s a c t u a l l y i n c o r r e c t ; r i g h t ? [ T S U J I M U R A : ] W e l l , m y a n s w e r w a s t h a t i t w o u l d b e s u b j e c t t o

o p e r a t i o n b y t h e C o u n t y

. [ C O U N T Y : ] A n d t h a t ’ s w h e r e y o u r a n s w e r w a s i n c o r r e c t

. B e c a u s e t h e o r d i n a n c e w h i c h I a c t u a l l y j u s t r e a d t o y o u s a i d

u n d e r t h e

– - w a i t

. Y o u g o t t o l e t m e f i n i s h

– - s a y s u n d e r t h e s u p e r v i s i o n o f t h e C o u n t y , n o t t h e o p e r a t i o n

. T h a t ’ s d i f f e r e n t ; r i g h t ? [ T S U J I M U R A : ] E x c e p t i f y o u

– - a s y o u r e a d i t

– - i t w e n t f u r t h e r t o s a y t h a t t h e a g e n c y w o u l d h a v e c o n t r o l o v e r t h e
p a r k , w h i c h s u g g e s t s t h a t i t ’ s w h o c o n t r o l s t h e p a r k

. I f
t h e L e o n e s c o n t r o l t h e p a r k , i t ’ s n o t c o n t r o l l e d b y t h e P a r k s D e p a r t m e n t

. [ C O U N T Y : ] T h e w o r d “ c o n t r o l ” d i d n ’ t a p p e a r a n y w h e r e i n w h a t
I j u s t r e a d

– - [ T S U J I M U R A : ] S u p e r v i s e

. [ C O U N T Y : ]

– - s o I ’ m g o i n g t o r e a d i t a g a i n

. T h e r e ’ s a d i f f e r e n c e b e t w e e n t h e w o r d “ s u p e r v i s e ” a n d t h e w o r d

“ c o n t r o l

. ” C o r r e c t ? [ T S U J I M U R A : ] T h e r e c o u l d b e

. [ C O U N T Y : ]

. . . I s n ’ t w h a t t h a t s a y s , i s t h a t t h e L e o n e s c a n

e n g a g e i n r e f r e s h m e n t s a l e s a n d c e r t a i n c o m m e r c i a l

a c t i v i t i e s a s l o n g a s t h e y g e t t h e p r o p e r p e r m i t t i n g f r o m t h e D e p a r t m e n t o f P l a n n i n g ? I s n ’ t t h a t w h a t t h a t s a y s ? [ T S U J I M U R A : ] I f y o u c a n g e t t h e p r o p e r p e r m i t t i n g

. I f t h e y i n t e n t i o n a l l y t r y t o p u t a n y s o r t o f h a r d s c a p e [ s i c ] o n i t , i t w o u l d l e a d t o , a g a i n , t h i s p r o b l e m w i t h t h e S M A

. [ C O U N T Y : ] S o y o u r a n s w e r t o t h e q u e s t i o n o r i g i n a l l y w a s i n c o r r e c t b e c a u s e a p r i v a t e l a n d o w n e r c a n , i n f a c t , e n g a g e i n c o m m e r c i a l s a l e a c t i v i t i e s o n t h e i r l o t a s l o n g a s t h e y g e t t h e c o r r e c t p e r m i t s f r o m t h e C o u n t y o f M a u i ; i s n ’ t t h a t

c o r r e c t ? [ T S U J I M U R A : ] I f i t ’ s s u p e r v i s e d b y t h e C o u n t y

.



## 16* * * F O R P U B L I C A T I O N I N W E S T ’ S H A W A I # I R E P O R T S A N D P A C I F I C R E P O R T E R * * *

. . . .

[ C O U N T Y : ] S o s u b j e c t t o p e r m i t t i n g a n d s u p e r v i s i o n , i t ’ s

a l l o w e d , i s n ’ t i t ? [ T S U J I M U R A : ] Y e s , i f y o u c a n g e t a n S M A a s s e s s m e n t t h r o u g h

.


## Dr. William H. Whitney (Dr. Whitney), a real estate

economist, also testified as an expert witness for the Leones.

As part of his evaluation of the property’s economically

beneficial use, Dr. Whitney created a speculative real estate

investment model for Lot 15, which allowed him to predict the

profit value the Leones lost because they were not allowed to

develop their property. Dr. Whitney summarized his findings to

the jury, and estimated that, if the Leones had been allowed to

develop their property, they would have realized a value upwards

of $19 million by 2017.

On cross-examination, counsel for the County examined

Dr. Whitney about the possibility of using the Leones’ property

for commercial park uses. Dr. Whitney testified that one of the

main factors in determining whether the Leones’ property retained

economically beneficial use in a commercial context is whether

commercial activity is economically feasible. Dr. Whitney

explained that he did not fully study whether commercial

activities were economically feasible, because he was operating

under the assumption that commercial activities were not legally

permitted on the Leones’ property:

[ C O U N T Y : ] O k a y

. L e t ’ s a s s u m e

– - a n d I ’ m s u r e y o u c a n d o t h i s

. L e t ’ s a s s u m e t h a t y o u r o p i n i o n o n w h e t h e r p a r k s a n d
p l a y g r o u n d s a n d c e r t a i n c o m m e r c i a l a c t i v i t i e s a r e



## 17* * * F O R P U B L I C A T I O N I N W E S T ’ S H A W A I # I R E P O R T S A N D P A C I F I C R E P O R T E R * * *

p e r m i s s i b l e a t t h e P a l a u e a l o t s a r e i n c o r r e c t

.

L e t ’ s a s s u m e t h e y a r e p e r m i t t e d a s r e f l e c t e d i n t h e

a p p l i c a b l e Z o n i n g C o d e s

. A n d t h e n l e t ’ s t a l k a b o u t t h e s e c o n d c o m p o n e n t o f y o u r

a n a l y s i s , w h i c h i s t h e f i n a n c i a l f e a s i b i l i t y

. A n d I h a n d e d

y o u w h a t w a s m a r k e d a s

- - w h a t i s m a r k e d a s P

- 2 4 1 , w h i c h i s i n e v i d e n c e , a n d y o u r t e s t i m o n y y e s t e r d a y w a s t h a t , e v e n i f

y o u c o u l d e n g a g e i n t h e s e a c t i v i t i e s , t h e y ’ r e n o t g o i n g t o

c o v e r t h e p r o p e r t y t a x e s , a n d y o u s a i d t h a t i n 2 0 1 4 t h e
p r o p e r t y t a x e s w e r e $ 6 8 , 1 0 3

. 6 3

.

S o m y q u e s t i o n t o y o u w a s , d i d y o u d o a n y s o r t o f

a n a l y s i s t o d e t e r m i n e w h e t h e r o r n o t t h e t y p e s o f a c t i v i t i e s

w e ’ r e t a l k i n g a b o u t , r e c r e a t i o n a l o r a m u s e m e n t , w o u l d , i n f a c t , b e a b l e t o g e n e r a t e $ 6 8 , 1 0 3

. 6 3 , p e r a n n u m , t o c o v e r t h e p r o p e r t y t a x ?

. . . .

[ W H I T N E Y : ] I d i d n o t d o a n y a n a l y s i s

. I r e l i e d o n m y j u d g m e n t , a s o n e w h o h a s p r o v i d e d l e a s i n g a d v i s o r y s e r v i c e s

o v e r t h e y e a r s a n d d o n e p a r k f e a s i b i l i t y s t u d i e s , a n d I

w o u l d s a y , i n m y j u d g m e n t , i t ’ s v e r y u n l i k e l y t h a t t h a t k i n d

o f a c t i v i t y a t t h a t l o c a t i o n , o n m y j u d g e m e n t , w o u l d n ’ t

c o v e r t h e p r o p e r t y t a x e s a n d p e r h a p s t h e o t h e r c o s t s t h a t
t h e L e o n e s w o u l d f a c e ; t h e p r o v i s i o n o f u t i l i t i e s , s e c u r i t y ,
a n d o t h e r a c t i v i t i e s t h a t m i g h t b e n e c e s s a r y t o k e e p t h e
p r o p e r t y i n g o o d s t a n d i n g

.

. . . .

[ C O U N T Y : ] D i d y o u d o a n y e x p l o r a t i o n o n M a u i t o d e t e r m i n e h o w a m u s e m e n t a n d c o n c e s s i o n r e f r e s h m e n t a c t u a l l y w o r k o n t h e b e a c h e s a n d p a r k s i n M a u i ? [ W H I T N E Y : ] N o

. N o i n v e s t i g a t i o n

.

. . . .

[ C O U N T Y : ] D i d y o u a s k a n y b o d y o n M a u i , r u n n i n g t h a t t y p e o f

c o n c e s s i o n , h o w m u c h t h e y ’ r e a b l e t o g e n e r a t e a n n u a l l y i n i n c o m e ? [ W H I T N E Y : ] N o

. [ C O U N T Y : ] R e n t i n g s u r f b o a r d s , r e n t i n g k a y a k s , s e l l i n g

r e f r e s h m e n t s o n c r o w d e d b e a c h e s ; y o u d i d n ’ t a s k a n y b o d y t h a t , d i d y o u ? [ W H I T N E Y : ] N o

.


## Douglas and Patricia Leone also testified at trial.

Both testified on direct examination that they bought the

property with the expectation of building a single-family home on

it. Patricia testified that her family “love[d] Maui, and we

thought it would just be great to build a home where our family

18* * * F O R P U B L I C A T I O N I N W E S T ’ S H A W A I # I R E P O R T S A N D P A C I F I C R E P O R T E R * * *



## could come for years –- you know, for years and be together.”

Douglas similarly testified that he bought the property because

he “wanted a dream home for my wife, our four children, and

eventually our grandchildren.” On cross-examination, Patricia

testified that she and her husband, as trustees of the Leone

Family Trust, owned eight residential properties in addition to

Lot 15 at Palau # ea Beach. Patricia also acknowledged on crossexamination that one of the purposes of the trust was to “invest

and reinvest in real estate.” Neither of the Leones could recall

at trial having relisted Lot 15 for $7 million soon after buying

it or receiving and refusing offers for it.

At the close of evidence, the Leones moved for judgment

as a matter of law on Counts I and II -- the inverse condemnation

claims. The circuit court denied this motion.

9



## On May 1, 2015, the parties appeared before the court

to settle jury instructions. Of relevance to the issues raised

on appeal, the Leones requested the following three jury

instructions, which the circuit court either modified or refused.

First, the Leones requested a jury instruction

(proposed Jury Instruction No. 51) on economically beneficial

use:

D u r i n g t h e t r i a l , t h e L e o n e s v o l u n t a r i l y d i s m i s s e d C o u n t I V , t h e

9

s u b s t a n t i v e d u e p r o c e s s c l a i m , a n d C o u n t I I I t o t h e e x t e n t t h a t i t a l l e g e d a d e n i a l o f e q u a l p r o t e c t i o n

. A s s u c h , t h e o n l y c l a i m s r e m a i n i n g f o r t h e j u r y t o d e t e r m i n e w e r e t h e i n v e r s e c o n d e m n a t i o n c l a i m s

.



## 19* * * F O R P U B L I C A T I O N I N W E S T ’ S H A W A I # I R E P O R T S A N D P A C I F I C R E P O R T E R * * *

L a n d h a s e c o n o m i c a l l y b e n e f i c i a l u s e , i f , u n d e r t h e

a p p l i c a b l e r e g u l a t i o n s , a l l t h r e e o f t h e f o l l o w i n g a r e t r u e : ( 1 ) t h e r e i s a p e r m i s s i b l e u s e f o r t h e l a n d , o t h e r t h a n l e a v i n g t h e l a n d i n i t s n a t u r a l s t a t e , ( 2 ) t h e l a n d i s
p h y s i c a l l y a d a p t a b l e f o r s u c h u s e a n d ( 3 ) t h e r e i s a d e m a n d
f o r s u c h u s e i n t h e r e a s o n a b l y n e a r f u t u r e

.


## (Emphasis added.) The circuit court modified this jury

instruction (Jury Instruction No. 22) over the Leones’ objection,

deleting the underlined phrase “other than leaving the land in

its natural state[.]” The circuit court explained that it was

deleting that phrase because “this is a factual issue and better

left for argument[.]”

Second, the Leones requested the following jury

instruction (proposed Jury Instruction No. 73) on the burden of

production:

P l a i n t i f f s i n i t i a l l y b e a r t h e b u r d e n t o p r o d u c e

e v i d e n c e t h a t t h e y l a c k e c o n o m i c a l l y b e n e f i c i a l u s e o f t h e i r p r o p e r t y

. O n c e P l a i n t i f f s h a v e p r o d u c e d s u c h e v i d e n c e , t h e b u r d e n o f p r o d u c t i o n s h i f t s t o t h e D e f e n d a n t s

. T o m e e t
t h e i r b u r d e n o f p r o d u c t i o n o n a p r o p o s e d e c o n o m i c a l l y b e n e f i c i a l u s e , D e f e n d a n t s m u s t p r o d u c e e v i d e n c e o f

r e a s o n a b l e p r o b a b i l i t y t h a t t h e l a n d i s b o t h p h y s i c a l l y

a d a p t a b l e f o r s u c h u s e a n d t h a t t h e r e i s a d e m a n d f o r s u c h

u s e i n t h e r e a s o n a b l y n e a r f u t u r e

.


## However, the circuit court refused that jury instruction.

Instead, the circuit court issued the following jury instruction

on burdens (Jury Instruction No. 9): “Plaintiffs have the burden

of proving by a preponderance of the evidence every element of

each claim that plaintiffs assert. Defendants have the burden of

proving by a preponderance of the evidence every element of each

20* * * F O R P U B L I C A T I O N I N W E S T ’ S H A W A I # I R E P O R T S A N D P A C I F I C R E P O R T E R * * *



## affirmative defense that defendants assert.” The circuit court 1 0



## explained why it modified the Leones’ proposed jury instruction:

[ T ] h i s i s a n i s s u e t o b e d e t e r m i n e d b y t h e C o u r t a n d h a s b e e n d e t e r m i n e d b y t h e C o u r t i n t e r m s o f t h e m o t i o n s f o r d i r e c t e d v e r d i c t a n d j u d g m e n t b y t h e p l a i n t i f f s a n d [ t o ] i n s t r u c t t h e j u r y o n b u r d e n s o f p r o d u c t i o n w o u l d

u n n e c e s s a r i l y a n d p o t e n t i a l l y c o n f u s e t h e j u r y a n d s u g g e s t
t o t h e m t h a t t h e b u r d e n o f p r o o f h a s s o m e h o w s h i f t e d

. E v e n t h o u g h t h e w o r d s b u r d e n o f p r o d u c t i o n , t h i s i s a

v e r y c o m p l e x a r e a e v e n f o r e v i d e n c e p r o f e s s o r s a t l a w

s c h o o l , a n d t o n o w s t a r t t o d i s c u s s a l l o f t h e s e i s s u e s , I
t h i n k , w o u l d b e u n d u l y c o n f u s i n g t o t h e j u r o r s , a n d a l s o I

a m n o t s u r e t h a t i t ’ s

– - w h i l e i t m a y b e a n a c c u r a t e

r e f l e c t i o n o f w h a t t h e l a w i s , i t ’ s n o t a n a c c u r a t e

r e f l e c t i o n o f w h a t h a s o c c u r r e d i n t h i s c a s e , b a s e d o n m y

r u l i n g s

.


## Lastly, the Leones requested the following jury

instruction (proposed Jury Instruction No. 71) regarding the

effect of the declaration of covenants and restrictions:

P l a i n t i f f s ’ l o t i s s u b j e c t t o a d e c l a r a t i o n o f

c o v e n a n t s a n d r e s t r i c t i o n s ( “ D C R ” ) t h a t r e s t r i c t s w h a t
P l a i n t i f f s m a y d o w i t h t h e i r l a n d

. U n d e r t h e D C R , P l a i n t i f f s m a y u s e t h e i r l a n d o n l y f o r s i n g l e

- f a m i l y

r e s i d e n t i a l p u r p o s e s

. Y o u m a y c o n s i d e r t h e D C R w h e n d e t e r m i n i n g w h e t h e r P l a i n t i f f s h a v e a n y e c o n o m i c a l l y b e n e f i c i a l u s e o f t h e i r l a n d

.



## The circuit court refused this instruction.

The circuit court also issued the following relevant

jury instruction:

• Jury Instruction No. 23:

T h e r e i s a d i f f e r e n c e b e t w e e n e c o n o m i c a l l y b e n e f i c i a l

u s e a n d v a l u e

. A p r o p e r t y t h a t h a s v a l u e m a y n o t h a v e

“ e c o n o m i c a l l y b e n e f i c i a l u s e

. ” T o d e t e r m i n e w h e t h e r a d e f e n d a n t d e n i e d P l a i n t i f f s e c o n o m i c a l l y b e n e f i c i a l u s e o f
t h e i r p r o p e r t y , y o u m a y c o n s i d e r w h e t h e r P l a i n t i f f s w e r e

a b l e t o u s e t h e i r p r o p e r t y i n a n e c o n o m i c a l l y b e n e f i c i a l

w a y

.

A d d i t i o n a l l y , J u r y I n s t r u c t i o n N o

. 1 0 e x p l a i n e d t h a t “ [ t ] o ‘ p r o v e 10

b y a p r e p o n d e r a n c e o f t h e e v i d e n c e ’ m e a n s t o p r o v e t h a t s o m e t h i n g i s m o r e l i k e l y s o t h a n n o t s o

. I t m e a n s t o p r o v e b y e v i d e n c e w h i c h , i n y o u r o p i n i o n ,
c o n v i n c e s y o u t h a t s o m e t h i n g i s m o r e p r o b a b l y t r u e t h a n n o t t r u e

. ”



## 21* * * F O R P U B L I C A T I O N I N W E S T ’ S H A W A I # I R E P O R T S A N D P A C I F I C R E P O R T E R * * *



## On May 5, 2015, the jury returned a verdict in favor of

the County, concluding that the County had not deprived the

Leones of economically beneficial use of their land. On June 1,

2015, the circuit court entered judgment in favor of the County

and against the Leones.

On August 5, 2015, the circuit court: 1) denied the

Leones’ June 10, 2015 renewed motion for judgment as a matter of

law and, alternatively, motion for a new trial, and 2) granted in

part and denied in part the County’s June 12, 2015 motion for

taxation of costs, awarding the County $40,522.72 in costs.

The Leones appealed and challenged the County’s expert

testimony, certain jury instructions, the circuit court’s denial

of the Leones’ motion for judgment as a matter of law, and the

award of costs to the County. The County cross-appealed and

filed an application for transfer of the appeal to this court,

which was granted on June 29, 2016.

III. STANDARDS OF REVIEW

A. Expert Witness Qualifications and Testimony

[ I ] t i s n o t n e c e s s a r y t h a t t h e e x p e r t w i t n e s s h a v e t h e h i g h e s t p o s s i b l e q u a l i f i c a t i o n s t o t e s t i f y a b o u t a
p a r t i c u l a r m a n n e r [ s i c ] , . . . b u t t h e e x p e r t w i t n e s s m u s t h a v e s u c h s k i l l , k n o w l e d g e , o r e x p e r i e n c e i n t h e f i e l d i n
q u e s t i o n a s t o m a k e i t a p p e a r t h a t h i s o p i n i o n o r i n f e r e n c e

- d r a w i n g w o u l d p r o b a b l y a i d t h e t r i e r o f f a c t i n

a r r i v i n g a t t h e t r u t h

. . . . O n c e t h e b a s i c r e q u i s i t e
q u a l i f i c a t i o n s a r e e s t a b l i s h e d , t h e e x t e n t o f a n e x p e r t ' s k n o w l e d g e o f s u b j e c t m a t t e r g o e s t o t h e w e i g h t r a t h e r t h a n t h e a d m i s s i b i l i t y o f t h e t e s t i m o n y

.

“ ‘ W h e t h e r e x p e r t t e s t i m o n y s h o u l d b e a d m i t t e d a t t r i a l

r e s t s w i t h i n t h e s o u n d d i s c r e t i o n o f t h e t r i a l c o u r t a n d



## 22* * * F O R P U B L I C A T I O N I N W E S T ’ S H A W A I # I R E P O R T S A N D P A C I F I C R E P O R T E R * * *

w i l l n o t b e o v e r t u r n e d u n l e s s t h e r e i s a c l e a r a b u s e o f d i s c r e t i o n

. ’ ”



## Estate of Klink ex rel. Klink v. State, 113 Hawai # i 332, 352, 152

P.3d 504, 524 (2007) (alterations in original) (citations

omitted) (quoting Tabieros v. Clark Equip. Co., 85 Hawai # i 336,

351, 944 P.2d 1279, 1294 (1997)).

B. Jury Instructions

W h e n j u r y i n s t r u c t i o n s , o r t h e o m i s s i o n t h e r e o f , a r e

a t i s s u e o n a p p e a l , t h e s t a n d a r d o f r e v i e w i s w h e t h e r , w h e n

r e a d a n d c o n s i d e r e d a s a w h o l e , t h e i n s t r u c t i o n s g i v e n a r e
p r e j u d i c i a l l y i n s u f f i c i e n t , e r r o n e o u s , i n c o n s i s t e n t , o r

m i s l e a d i n g

. E r r o n e o u s i n s t r u c t i o n s a r e p r e s u m p t i v e l y h a r m f u l a n d a r e a g r o u n d f o r r e v e r s a l u n l e s s i t

a f f i r m a t i v e l y a p p e a r s f r o m t h e r e c o r d a s a w h o l e t h a t t h e

e r r o r w a s n o t p r e j u d i c i a l

.



## Nelson v. Univ. of Haw., 97 Hawai # i 376, 386, 38 P.3d 95, 105

(2001) (quoting Hirahara v. Tanaka, 87 Hawai # i 460, 462-63, 959

P.2d 830, 832-33 (1998)).

C. Judgment as a Matter of Law

I t i s w e l l s e t t l e d t h a t a t r i a l c o u r t ' s r u l i n g s o n

m o t i o n s f o r j u d g m e n t a s a m a t t e r o f l a w a r e r e v i e w e d d e

n o v o

.

W h e n w e r e v i e w t h e g r a n t i n g o f a [ m o t i o n

f o r j u d g m e n t a s a m a t t e r o f l a w ] , w e a p p l y t h e

s a m e s t a n d a r d a s t h e t r i a l c o u r t

. A [ m o t i o n f o r j u d g m e n t a s a m a t t e r o f l a w ]

m a y b e g r a n t e d o n l y w h e n a f t e r d i s r e g a r d i n g

c o n f l i c t i n g e v i d e n c e , g i v i n g t o t h e n o n

- m o v i n g
p a r t y ' s e v i d e n c e a l l t h e v a l u e t o w h i c h i t i s l e g a l l y e n t i t l e d , a n d i n d u l g i n g e v e r y l e g i t i m a t e i n f e r e n c e w h i c h m a y b e d r a w n f r o m t h e e v i d e n c e i n t h e n o n

- m o v i n g p a r t y ' s f a v o r , i t c a n b e s a i d
t h a t t h e r e i s n o e v i d e n c e t o s u p p o r t a j u r y

v e r d i c t i n h i s o r h e r f a v o r

.

M i y a m o t o v

. L u m , 1 0 4 H a w a i # i 1 , 6

- 7 , 8 4 P

. 3 d 5 0 9 , 5 1 4

- 1 5 ( 2 0 0 4 ) ( i n t e r n a l c i t a t i o n s o m i t t e d )

.


## Aluminum Shake Roofing, Inc. v. Hirayasu, 110 Hawai # i 248, 251,

131 P.3d 1230, 1233 (2006) (brackets in original).

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## IV. DISCUSSION

Before addressing the arguments, a brief summary of the

relevant law on takings provides useful context.

A. The Takings Clause

The Fifth Amendment to the United States Constitution

provides that private property shall not “be taken for public

use, without just compensation.” This -- the Takings Clause --

is made applicable to the states through the Fourteenth

Amendment. Murr v. Wisconsin, 137 S. Ct. 1933, 1942 (2017).

Similarly, article 1, section 20 of the Hawai # i Constitution

provides, “[p]rivate property shall not be taken or damaged for

public use without just compensation.”

The United States Supreme Court (Supreme Court) has

established two discrete categories of government action as

compensable: physical and regulatory takings. Lucas v. S.C.

Coastal Council, 505 U.S. 1003, 1015 (1992). The first are

“regulations that compel the property owner to suffer a physical

‘invasion’ of his property.” Id. The second are “regulation[s

that] den[y] all economically beneficial or productive use of

land.” Id.; see also Pub. Access Shoreline Haw. v. Haw. Cty.

Planning Comm’n, 79 Hawai # i 425, 451-52, 903 P.2d 1246, 1272-73

(1995) (“A regulatory taking occurs when the government’s

application of the law to a particular landowner denies all

economically beneficial use of his or her property without

24* * * F O R P U B L I C A T I O N I N W E S T ’ S H A W A I # I R E P O R T S A N D P A C I F I C R E P O R T E R * * *



## providing compensation.”). The relevant inquiry in the current

case is whether a regulatory taking occurred.

The Supreme Court in Lucas explained that a

regulatory taking occurs when the “regulation denies all

economically beneficial or productive use of land.” 505 U.S. at

1015 (emphasis added). The Supreme Court explained that

“regulations that leave the owner of land without economically

beneficial or productive options for its use -- typically, as

here, by requiring land to be left substantially in its natural

state -- carry with them a heightened risk that private property

is being pressed into some form of public service . . . .” Id.

at 1018.

More recently, in Palazzolo v. Rhode Island, 533 U.S.

606 (2001), the Supreme Court considered whether a taking could

still occur even though the regulation did not deprive a

landowner of all beneficial use of land. Palazzolo owned a

waterfront parcel of land in Rhode Island and almost all of it

was designated as coastal wetlands under state law. Id. at 611.

Because of this designation, Palazzolo’s development proposals

for portions of his property were rejected by the Rhode Island

Coastal Resources Management Council (the Council), and Palazzolo

sued, claiming that the Council’s application of its wetland

regulations constituted a taking without just compensation. Id.

In Palazzolo, the Supreme Court expanded the rule

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## established in Lucas when it stated:

W h e r e a r e g u l a t i o n p l a c e s l i m i t a t i o n s o n l a n d t h a t f a l l

s h o r t o f e l i m i n a t i n g a l l e c o n o m i c a l l y b e n e f i c i a l u s e , a t a k i n g n o n e t h e l e s s m a y h a v e o c c u r r e d , d e p e n d i n g o n a c o m p l e x

o f f a c t o r s i n c l u d i n g t h e r e g u l a t i o n ’ s e c o n o m i c e f f e c t o n t h e l a n d o w n e r , t h e e x t e n t t o w h i c h t h e r e g u l a t i o n i n t e r f e r e s

w i t h r e a s o n a b l e i n v e s t m e n t

- b a c k e d e x p e c t a t i o n s , a n d t h e

c h a r a c t e r o f t h e g o v e r n m e n t a c t i o n

. 

## Id. at 617 (citing Penn Cent. Transp. Co. v. City of New York,

438 U.S. 104, 124 (1978)). Utilizing this test, the Supreme

Court concluded that Palazzolo was left with more than a “token

interest” in his land because of the regulations. Id. at 631.

The Supreme Court explained that, while some portions of

Palazzolo’s property could not be developed because of the

regulations, an upland portion of the property could be improved

and actually retained $200,000 in development value even under

the State’s wetlands regulations. Id. at 630-31. As such, the

Supreme Court concluded that a “regulation permitting a landowner

to build a substantial residence on an 18-acre parcel does not

leave the property ‘economically idle.’” Id. at 631 (quoting

Lucas, 505 U.S. at 1019).

As the Supreme Court most recently noted, adjudication

of regulatory takings cases “requires a careful inquiry informed

by the specifics of the case.” Murr, 137 S. Ct. at 1943.

However, “[i]n all instances, the analysis must be driven ‘by the

purpose of the Takings Clause, which is to prevent the government

from forcing some people alone to bear public burdens which, in

all fairness and justice, should be borne by the public as a

26* * * F O R P U B L I C A T I O N I N W E S T ’ S H A W A I # I R E P O R T S A N D P A C I F I C R E P O R T E R * * *



## whole.’” Id. (quoting Palazzolo, 533 U.S. at 617-18).

With this framework in mind, we turn to the arguments

on appeal.

B. The Leones’ Arguments on Appeal

The Leones present four points for our review. The

Leones contend that the circuit court erred in: 1) denying the

Leones’ motion for judgment as a matter of law, 2) allowing

Yamamura to testify that “investment use” is an “economically

beneficial use” of land, 3) modifying Jury Instruction No. 22,

refusing proposed Jury Instruction No. 73 and replacing it with

Jury Instruction No. 9, and refusing proposed Jury Instruction

No. 71, and 4) awarding costs to the County.

We address the second and third points first, as their

resolution is helpful in considering the Leones’ renewed motion

for judgment as a matter of law.

1. The circuit court did not abuse its discretion in allowing Yamamura to testify.

The Leones take issue with the following testimony from

the County’s expert witness, real estate appraiser, Yamamura:

[ C O U N T Y : ] D o y o u h a v e a n o p i n i o n a s t o w h e t h e r i n v e s t m e n t i s

a u s e o f l a n d ?

. . . .

[ Y A M A M U R A : ] I c o n s i d e r i n v e s t m e n t a s a b o n a f i d e u s e o f
l a n d

. I t h a p p e n s a l l t h e t i m e

. P e o p l e b y [ s i c ] l a n d , h o l d

o n t o i t ; a f t e r i t a p p r e c i a t e s o v e r t i m e , p e o p l e s e l l i t f o r p r o f i t

. I t h i n k t h a t ’ s a b o n a f i d e l a n d u s e

.

. . . .

[ C O U N T Y : ] I n y o u r o p i n i o n , L o t 1 5 a t P a l a u e a

– - b a s e d o n



## 27* * * F O R P U B L I C A T I O N I N W E S T ’ S H A W A I # I R E P O R T S A N D P A C I F I C R E P O R T E R * * *

y o u r a n a l y s i s o f L o t 1 5 a t P a l a u e a , d o e s i t h a v e p o t e n t i a l

u s e a s a n i n v e s t m e n t ?

. . . .

[ Y A M A M U R A : ] A b s o l u t e l y , y e s

.



## The Leones argue that the circuit court abused its discretion in

allowing Yamamura to testify on investment use for two reasons.

First, the Leones argue that “investment use” is not an

economically beneficial use as a matter of law. Second, the

Leones argue that Yamamura was not qualified to opine on

“economically beneficial use.”

a. Testimony on investment use

The Leones contend that the circuit court abused its

discretion in allowing the County to introduce evidence that

“investment use” is an economically beneficial use of land.

While there is no Hawai # i legal authority on this

point, there is case law from other jurisdictions that discusses

this issue. For instance, in Del Monte Dunes at Monterey, Ltd.

v. City of Monterey, 95 F.3d 1422, 1425 (9th Cir. 1996) (Del

Monte Dunes I), aff’d, 526 U.S. 687 (1999), the City of Monterey

persistently denied Del Monte Dunes’ development permits for

thirty-seven ocean-front acres in which Del Monte Dunes sought to

build a residential complex. Del Monte Dunes sued the City, and

the jury found that the City’s actions denied Del Monte Dunes

equal protection and were an unconstitutional taking. Id. On

appeal before the Ninth Circuit, the City argued, inter alia,

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## that it was entitled to a judgment as a matter of law on both the

equal protection and inverse condemnation claims. Id.

In arguing that the City had not denied Del Monte Dunes

of all economically viable use of its property, the City noted

that Del Monte Dunes sold the property to the State of California

for $800,000 more than it originally paid for it. Id. at 1432.

The Ninth Circuit was not persuaded by this argument, noting that

“[f]ocusing the economically viable use inquiry solely on market

value or on the fact that a landowner sold his property for more

than he paid could inappropriately allow external economic

forces, such as inflation, to affect the takings inquiry.” Id.

at 1432-33 (emphasis added). Then, the Ninth Circuit explained

that “[a]lthough the value of the subject property is relevant to

the economically viable use inquiry, our focus is primarily on

use, not value” and that “the mere fact that there is one willing

buyer of the subject property, especially where that buyer is the

government, does not, as a matter of law, defeat a taking claim.”

Id. at 1433 (emphases added).

Thus, Del Monte Dunes I established that, while

property value should not be considered to the exclusion of other

factors, it is still a relevant factor in the economically viable

use analysis. See also MacLeod v. Santa Clara Cty., 749 F.2d

541, 547 n.7 (9th Cir. 1984) (“Holding property for investment

purposes can be a ‘use’ of property.”); Fla. Rock Indus., Inc. v.

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## United States, 791 F.2d 893, 902-03 (Fed. Cir. 1986) (noting that

a “qualified real estate dealer” testified that the property had

“fair market value subject to the regulation” because there were

“investors willing to forego immediate income in hope of longterm gain” and concluding that this was evidence of “sufficient

remaining use of the property to forestall a determination that a

taking had occurred”); City of San Antonio v. El Dorado Amusement

Co., 195 S.W.3d 238, 245 (Tex. App. 2006) (“A restriction denies

a landowner all economically viable use of the property or

totally destroys the value of the property if the restriction

renders the property valueless.”).

In the present case, Yamamura testified that the

Leones’ property had “investment use” or, in other words, that

the property had value because the Leones could hold on to

property, wait until it increased in value, and sell it for a

profit. While Del Monte Dunes I established that property value

should not be the sole focus in an economically viable use

inquiry, the Ninth Circuit did not foreclose the admissibility of

such evidence. In fact, the Ninth Circuit noted that “the value

of the subject property is relevant.” Del Monte Dunes I, 95 F.3d

at 1433. Thus, guidance from other jurisdictions suggests that

testimony on investment use is appropriate in takings cases.

Additionally, the circuit court took mitigating

measures in order to ensure that the jury did not improperly give

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## the “value” evidence more weight than it was legally entitled.

For example, Jury Instruction No. 23 instructed the jury that:

T h e r e i s a d i f f e r e n c e b e t w e e n e c o n o m i c a l l y b e n e f i c i a l

u s e a n d v a l u e

. A p r o p e r t y t h a t h a s v a l u e m a y n o t h a v e

“ e c o n o m i c a l l y b e n e f i c i a l u s e

. ” T o d e t e r m i n e w h e t h e r a d e f e n d a n t d e n i e d P l a i n t i f f s e c o n o m i c a l l y b e n e f i c i a l u s e o f
t h e i r p r o p e r t y , y o u m a y c o n s i d e r w h e t h e r P l a i n t i f f s w e r e

a b l e t o u s e t h e i r p r o p e r t y i n a n e c o n o m i c a l l y b e n e f i c i a l

w a y

. 

## (Emphasis added.) This instruction specifically explained to the

jury that the determination of whether property has any

economically beneficial use does not turn on whether the property

has value.

As such, we cannot conclude that the circuit court

abused its discretion in allowing testimony on investment use.

b. Testimony on economically beneficial use

The Leones also argue that Yamamura was not qualified

to opine on “economically beneficial use” and that the trial

court abused its discretion in permitting him to testify on that

topic. According to the Leones, Yamamura “is an appraiser, not

an economist, and his testimony should have been limited to the

field of real estate appraisal.”

Hawai # i Rules of Evidence (HRE) Rule 702 (1993)

provides:

I f s c i e n t i f i c , t e c h n i c a l , o r o t h e r s p e c i a l i z e d

k n o w l e d g e w i l l a s s i s t t h e t r i e r o f f a c t t o u n d e r s t a n d t h e

e v i d e n c e o r t o d e t e r m i n e a f a c t i n i s s u e , a w i t n e s s
q u a l i f i e d a s a n e x p e r t b y k n o w l e d g e , s k i l l , e x p e r i e n c e , t r a i n i n g , o r e d u c a t i o n m a y t e s t i f y t h e r e t o i n t h e f o r m o f a n

o p i n i o n o r o t h e r w i s e

. I n d e t e r m i n i n g t h e i s s u e o f

a s s i s t a n c e t o t h e t r i e r o f f a c t , t h e c o u r t m a y c o n s i d e r t h e t r u s t w o r t h i n e s s a n d v a l i d i t y o f t h e s c i e n t i f i c t e c h n i q u e o r

m o d e o f a n a l y s i s e m p l o y e d b y t h e p r o f f e r e d e x p e r t

.



## 31* * * F O R P U B L I C A T I O N I N W E S T ’ S H A W A I # I R E P O R T S A N D P A C I F I C R E P O R T E R * * *



## HRE Rule 702 commentary explains that “[t]he rule liberalizes the

traditional common law stricture limiting expert testimony to

some science, profession, business or occupation . . . beyond the

ken of the average layman” and that, now, “Rule 702 requires only

that the testimony be of assistance to the trier of fact.” HRE

Rule 702 cmt. (1993) (ellipsis in original) (quotations and

citations omitted).

In line with this rule, Hawai # i courts have noted that

“[i]t is not necessary that the expert witness have the highest

possible qualifications to testify about a particular [matter;]”

instead, “the expert witness must have such skill, knowledge, or

experience in the field in question as to make it appear that his

opinion or inference-drawing would probably aid the trier of fact

in arriving at the truth.” Klink, 113 Hawai # i at 352, 152 P.3d

at 524 (quoting State v. Wallace, 80 Hawai # i 382, 419 n.37, 910

P.2d 695, 732 n.37 (1996)). Additionally, “the determination of

whether or not a witness is qualified as an expert in a

particular field is largely within the discretion of the trial

judge and, as such, will not be upset absent a clear abuse of

discretion.” State v. Torres, 60 Haw. 271, 277, 589 P.2d 83, 87

(1978).

Yamamura testified to the following: he has been a

real estate appraiser for almost forty years, and that he has

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## been working for his current Maui-based firm, ACM Consultants,

Inc., for approximately thirty-five years; he has been a licensed

real estate appraiser in Hawai # i since 1991; as part of his job,

he conducts real estate appraisals on “single-family residential

properties, individual condominium units, improved and unimproved

vacant land,” as well as on commercial and industrial properties,

and open space and park uses; he conducts about 200 appraisals a

year, and that he is “intimately familiar with real estate on

Maui”; as part of his work, he has “to determine what the best

uses for those lands would be every time [he does] an appraisal”;

he determines the “highest and best use[es] of the property” by

conducting a “four-item test[:] that use must be legally

permissible, physically possible, financially feasible, and

maximally productive”; he has used this highest and best use test

“in connection with thousands of properties that [he] appraised

on Maui in [his] 35 years of experience.”

The Leones contend that “[a]s an appraiser, Mr.

Yamamura’s expertise is in opining as to the value, not the use,

of real property” and that Yamamura was not familiar with the

term “economically viable use.” However, Yamamura’s testimony

establishes that he has extensive knowledge and experience in

evaluating the “use” of real property. Yamamura testified that,

for over thirty-five years, he has been a real-estate appraiser

on Maui and that, as part of his work, he has to determine the

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## “highest and best use” of the properties he evaluates. Yamamura

estimated that he conducted this highest and best use test “in

connection with thousands of properties . . . on Maui.” Under

the parameters set by HRE Rule 702 and Hawai # i case law, this

testimony is enough to qualify Yamamura as an expert witness in

this area of expertise.

As such, given Yamamura’s considerable experience and

expertise in appraising real property, and specifically Maui real

property, the circuit court did not abuse its discretion in

allowing Yamamura to testify as an expert witness.

2. The circuit court did not err in issuing the challenged jury instructions.

The Leones also argue that the circuit court erred in

the issuance of three jury instructions. First, the Leones

contend that the circuit court erroneously defined “economically

beneficial use” in Jury Instruction No. 22. Second, the Leones

contend that the circuit court refused to instruct the jury, per

the Leones’ request, on the burden-shifting paradigm in takings

cases. Third, the Leones contend that the circuit court failed

to instruct the jury on the effect of the declaration. Each of

these arguments will be addressed in turn.

a. Jury Instruction No. 22: economically beneficial

use

First, the Leones assert that they requested the

following jury instruction on economically beneficial use:

34* * * F O R P U B L I C A T I O N I N W E S T ’ S H A W A I # I R E P O R T S A N D P A C I F I C R E P O R T E R * * *

L a n d h a s e c o n o m i c a l l y b e n e f i c i a l u s e , i f , u n d e r t h e

a p p l i c a b l e r e g u l a t i o n s , a l l t h r e e o f t h e f o l l o w i n g a r e t r u e : ( 1 ) t h e r e i s a p e r m i s s i b l e u s e f o r t h e l a n d , o t h e r t h a n l e a v i n g t h e l a n d i n i t s n a t u r a l s t a t e , ( 2 ) t h e l a n d i s
p h y s i c a l l y a d a p t a b l e f o r s u c h u s e a n d ( 3 ) t h e r e i s a d e m a n d
f o r s u c h u s e i n t h e r e a s o n a b l y n e a r f u t u r e

.


## (Emphasis added.) The Leones assert that the circuit court’s

Jury Instruction No. 22, which omitted the underlined text, was

erroneous because “it failed to correctly state the law by

omitting that such use cannot leave the land in its natural

state.”

The Leones’ interpretation of the law on this point is

too restrictive for a number of reasons. First, a regulation

could potentially require land to be left substantially in its

natural state and still not be considered a taking. It is true

that case law provides that regulations that require land to be

left “substantially in its natural state” suggest that the owner

of the land is being deprived of all economically beneficial use

of the land. See Lucas, 505 U.S. at 1018 (“[R]egulations that

leave the owner of land without economically beneficial or

productive options for its use –- typically, as here, by

requiring land to be left substantially in its natural state –-

carry with them a heightened risk that private property is being

pressed into some form of public service . . . .” (emphasis

added)). However, this rule does not state that regulations that

leave land in its natural state always constitute a taking. As

such, Jury Instruction No. 22 is an accurate articulation of the

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## law.

Second, as the circuit court noted when modifying the

language of the instruction, the issue of whether the government

has deprived the landowners of economically beneficial use of

their land is a factual query better left for the jury to decide:

O k a y

. I ’ m f a m i l i a r w i t h t h e c a s e s

. I a m d e l e t i n g i t , p r i n c i p a l l y , o n t h e g r o u n d s t h a t I d o t h i n k t h a t , a l t h o u g h
t h e l a n g u a g e i s u s e d , t h i s i s a f a c t u a l i s s u e a n d b e t t e r l e f t f o r a r g u m e n t , b u t t h e b a l a n c e o f t h e i n s t r u c t i o n i s a n

a c c u r a t e r e f l e c t i o n o f t h e l a w a s w e ’ v e d i s c u s s e d

.


## The circuit court’s reasoning is in line with well-established

case law. See City of Monterey v. Del Monte Dunes at Monterey,

Ltd., 526 U.S. 687, 720 (1999) (Del Monte Dunes II) (“In actions

at law predominantly factual issues are in most cases allocated

to the jury.”). Specifically, regulatory takings cases are “ad

hoc, factual inquiries” that are “informed by the specifics of

the case.” Murr, 137 S. Ct. at 1942, 1943. As such, “the issue

whether a landowner has been deprived of all economically viable

use of his property is a predominantly factual question” and “is

for the jury.” Del Monte Dunes II, 526 U.S. at 720-21.

Accordingly, the circuit court properly instructed the

jury on economically beneficial use.

b. Jury Instruction No. 9: burden of production

Second, the Leones assert that the circuit court erred

by refusing the following proposed jury instruction:

P l a i n t i f f s i n i t i a l l y b e a r t h e b u r d e n t o p r o d u c e

e v i d e n c e t h a t t h e y l a c k e c o n o m i c a l l y b e n e f i c i a l u s e o f t h e i r p r o p e r t y

. O n c e P l a i n t i f f s h a v e p r o d u c e d s u c h e v i d e n c e , t h e



## 36* * * F O R P U B L I C A T I O N I N W E S T ’ S H A W A I # I R E P O R T S A N D P A C I F I C R E P O R T E R * * *

b u r d e n o f p r o d u c t i o n s h i f t s t o t h e D e f e n d a n t s

. T o m e e t
t h e i r b u r d e n o f p r o d u c t i o n o n a p r o p o s e d e c o n o m i c a l l y b e n e f i c i a l u s e , D e f e n d a n t s m u s t p r o d u c e e v i d e n c e o f

r e a s o n a b l e p r o b a b i l i t y t h a t t h e l a n d i s b o t h p h y s i c a l l y

a d a p t a b l e f o r s u c h u s e a n d t h a t t h e r e i s a d e m a n d f o r s u c h

u s e i n t h e r e a s o n a b l y n e a r f u t u r e

.


## Instead, the circuit court instructed the jury that “[p]laintiffs

have the burden of proving by a preponderance of the evidence

every element of each claim that plaintiffs assert.” The Leones

argue that the circuit court prejudiced the Leones by not giving

the requested instruction because it relieved the County of

meeting its burden of production.

As support for their argument, the Leones ask us to

rely on two cases from other jurisdictions: Bowles v. United

States, 31 Fed. Cl. 37 (1994) and Loveladies Harbor, Inc. v.

United States, 21 Cl. Ct. 153 (1990). These cases, while

persuasive, are not binding on Hawai # i courts. Moreover, these

cases were federal bench trials and, as such, are distinguishable

from this case, which was tried by a jury. The circuit court

implicitly acknowledged this distinction when it explained why it

refused the proposed burden-shifting instruction:

[ T o ] i n s t r u c t t h e j u r y o n b u r d e n s o f p r o d u c t i o n w o u l d

u n n e c e s s a r i l y a n d p o t e n t i a l l y c o n f u s e t h e j u r y a n d s u g g e s t
t o t h e m t h a t t h e b u r d e n o f p r o o f h a s s o m e h o w s h i f t e d

. E v e n t h o u g h t h e w o r d s b u r d e n o f p r o d u c t i o n , t h i s i s a

v e r y c o m p l e x a r e a e v e n f o r e v i d e n c e p r o f e s s o r s a t l a w

s c h o o l , a n d t o n o w s t a r t t o d i s c u s s a l l o f t h e s e i s s u e s , I
t h i n k , w o u l d b e u n d u l y c o n f u s i n g t o t h e j u r o r s

. . .


## Additionally, even if this court were to rely on the

cases cited by the Leones, the Leones’ proposed jury instruction

regarding burden shifting is not an accurate articulation of the

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## law as reflected in Bowles and Loveladies. For instance, the

Leones requested that the court instruct the jury that

“[p]laintiffs initially bear the burden to produce evidence that

they lack economically beneficial use of their property. Once

Plaintiffs have produced such evidence, the burden of production

shifts to the Defendants.” This proposed instruction, as

written, suggests that once the Leones have produced any evidence

that their property lacks economically beneficial use, they have

satisfied their burden on that issue. This is incorrect.

Instead, a plaintiff in a takings case must produce sufficient

evidence to persuade the court that “it is more likely true than

not that there remains no economically viable use for their

property” before the burden shifts to the defendant. 1 1



## Loveladies, 21 Cl. Ct. at 158 (brackets omitted); Bowles, 31 Fed.

Cl. at 47. Thus, the Leones’ proposed jury instruction on this

topic is an inaccurate articulation of the law that they

themselves rely upon. The circuit court did not err in refusing

it.

c. Proposed Jury Instruction No. 71: effect of the

declaration

Third, the Leones argue that the circuit court erred

when it “failed to instruct the jury that the only permissible

A n d , i n f a c t , t h i s i s w h a t t h e c i r c u i t c o u r t t o l d t h e j u r y i n J u r y 11

I n s t r u c t i o n N o

. 1 0 : “ T o ‘ p r o v e b y a p r e p o n d e r a n c e o f t h e e v i d e n c e ’ m e a n s t o
p r o v e t h a t s o m e t h i n g i s m o r e l i k e l y s o t h a n n o t s o

. I t m e a n s t o p r o v e b y

e v i d e n c e w h i c h

. . . c o n v i n c e s y o u t h a t s o m e t h i n g i s m o r e p r o b a b l y t r u e t h a n

n o t t r u e

. ” ( E m p h a s e s a d d e d

. )



## 38* * * F O R P U B L I C A T I O N I N W E S T ’ S H A W A I # I R E P O R T S A N D P A C I F I C R E P O R T E R * * *



## economically beneficial use of the Property is as a single-family

residence.” The Leones explain that they requested the following

jury instruction, which was refused by the circuit court:

P l a i n t i f f s ’ l o t i s s u b j e c t t o a d e c l a r a t i o n o f

c o v e n a n t s a n d r e s t r i c t i o n s ( “ D C R ” ) t h a t r e s t r i c t s w h a t
P l a i n t i f f s m a y d o w i t h t h e i r l a n d

. U n d e r t h e D C R , P l a i n t i f f s m a y u s e t h e i r l a n d o n l y f o r s i n g l e

- f a m i l y

r e s i d e n t i a l p u r p o s e s

. Y o u m a y c o n s i d e r t h e D C R w h e n d e t e r m i n i n g w h e t h e r P l a i n t i f f s h a v e a n y e c o n o m i c a l l y b e n e f i c i a l u s e o f t h e i r l a n d

.


## The Leones contend that “[t]he jury must consider restrictive

covenants when making takings determinations.” The Leones’

argument here is unpersuasive for two reasons.

First, there is no authoritative legal support for the

Leones’ contention that a jury must be instructed on the effect

of a private restrictive covenant on a regulatory takings

analysis. The circuit court, in giving jury instructions, is

limited to instructing the jury on the applicable law. See

Tittle v. Hurlbutt, 53 Haw. 526, 530, 497 P.2d 1354, 1357 (1972)

(“The function served by jury instructions is to inform the jury

of the law applicable to the current case.”); Udac v. Takata

Corp., 121 Hawai # i 143, 149, 214 P.3d 1133, 1139 (App. 2009)

(“The boundaries of the trial judge’s discretion in informing the

jury of the law applicable to the current case are defined ‘by

the obligation to give sufficient instructions and the opposing

imperative against cumulative instructions.’” (quoting Tittle, 53

Haw. at 530, 497 P.2d at 1357)). The Leones cite to no Hawai # i

or Supreme Court case for their contention that a jury must be

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## informed on the effect of private restrictive covenants. As

such, the circuit court acted well within its discretion when it

refused a jury instruction not grounded in the law.

Second, the two cases relied upon by the Leones for

their persuasive weight are inapposite to the issue before this

court. In both Bowles v. United States and Knight v. City of

Billings, the government defendants argued that the restrictive

covenants -- not their own action -- were responsible for the

taking. Bowles, 31 Fed. Cl. at 49 (“[T]he government also argues

that the diminution in value of Lot 29 was somehow ‘caused’ by

non-federal action.”); Knight, 642 P.2d 141, 146 (Mont. 1982)

(“We turn now to consider whether the declaration of restrictions

of Lillis Subdivision limiting the use of plaintiffs’ lots to

residential purposes until the year 2000 prevents recovery

through inverse condemnation.”). Both courts rejected this

argument, determining that it was the government action, not the

private restriction, that resulted in the elimination of the

economically beneficial use of the property. Bowles, 31 Fed. Cl.

at 49 (“In this case it is only because of the federal

government’s refusal to issue a fill permit that Lot 29 has no

fair market value or economically viable use.”) (emphasis in

original); Knight, 642 P.2d at 146 (“It is not the restrictions

that are damaging plaintiffs’ properties; it is the action of the

City in making the improvements that is making their properties

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## nearly unusable and unmarketable for residential purposes.”).

Essentially, these cases assert that the existence of a

restrictive covenant is irrelevant to a takings analysis.

Here, the Leones argue the opposite -- that “[t]he jury

must consider restrictive covenants when making takings

determinations.” (Emphasis added.) This is certainly not the

holding of Bowles and Knight. Additionally, such a reading of 1 2



## the law contravenes takings jurisprudence, which contemplates,

first and foremost, government action. Just as the Bowles and

Knight courts determined that the existence of private

restrictive agreements cannot be used as a defense for government

actions, we similarly determine that the existence of such

private agreements cannot saddle the government with liability in

a takings analysis. At all times in a takings analysis, it is

solely the government action that must be evaluated.

For these reasons, the circuit court did not err in

declining to instruct the jury on the effect of the declaration.

3. The circuit court did not err in concluding that the Leones were not entitled to judgment as a matter of law.

Next, we must determine whether the trial court erred

in concluding that the Leones were not entitled to a judgment as

a matter of law. The Leones assert that the evidence presented

S i g n i f i c a n t l y , B o w l e s a n d K n i g h t d i d n o t t o u c h o n t h e i s s u e o f 12

w h e t h e r j u r y i n s t r u c t i o n s m u s t i n c l u d e i n f o r m a t i o n a b o u t t h e e x i s t e n c e o f

r e s t r i c t i v e c o v e n a n t s

.



## 41* * * F O R P U B L I C A T I O N I N W E S T ’ S H A W A I # I R E P O R T S A N D P A C I F I C R E P O R T E R * * *



## at trial permitted only one reasonable conclusion: the County’s

regulation of the Leones’ property constituted a taking for which

they are owed just compensation. We review a trial court’s

ruling on a motion for judgment as a matter of law de novo.

Aluminum Shake Roofing, 110 Hawai # i at 251, 131 P.3d at 1233. A

motion for judgment as a matter of law can be granted only when

“it can be said that there is no evidence to support a jury

verdict in [the non-moving party’s] favor.” Id. Additionally, a

court must give to the non-moving party’s evidence “all the value

to which it is legally entitled,” and to indulge “every

legitimate inference which may be drawn from the evidence in the

non-moving party’s favor.” Id.

This point on appeal presents a two-part inquiry: 1)

whether the County’s regulations prohibited the Leones from

building a single-family residence, and, if so, 2) whether the

County’s regulations deprived the Leones of economically

beneficial use of their land. Because the circuit court

instructed the jury that the County’s regulations prohibited the

Leones from building a single-family residence on their property,

see supra Section II.C, we need only address the second inquiry:

whether there is evidence to support the jury’s finding that the

County did not deprive the Leones of economically beneficial use

of their land.

The parties offered conflicting testimony on whether

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## the Leones’ property retained economically beneficial use. The

Leones’ expert witnesses included Tsujimura and Dr. Whitney, who

both testified unequivocally on direct examination that the

County’s regulations deprived the Leones of all economically

beneficial use of their property. Tsujimura testified that

“[b]ecause of this [community plan] inconsistency, this prevents

the Leones from doing anything to start the process to do

anything with the lot” and that “there’s no economically

beneficial use that they can use on that lot because of this.”

Dr. Whitney similarly testified that the community plan

prohibited the Leones from building a single-family home on their

property, and that this regulation prevented the Leones from

realizing upwards of $19 million in value for their property.

On the other hand, the County introduced expert

testimony from Yamamura, who testified on direct examination that

the Leones’ property had great “investment use.” Yamamura

testified that “investment in land” means “the use of land as an

investment tool” and further explained that this occurs when

“people . . . buy land, hold it for a period of time, and as it

increases in value and depending on the buyer’s strategy and

financial objectives, sell it for profit.” When asked if the

property had potential as an investment, Yamamura answered,

“[a]bsolutely, yes.” Yamamura then explained that the property

had “tremendous opportunities for increases in value[]” because

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## it was “a very scarce commodity” and “an ocean front lot on one

of the best beaches in south Maui . . . .”

Indeed, the Leones’ attempts at selling their property

soon after buying it support Yamamura’s investment use testimony.

A year after purchasing the property, the Leones relisted it for

$7 million, a $4 million increase in the price they paid for it,

and received two offers, which the Leones eventually refused.

The offers –- one for $4.5 million and the other for $4.6 million

–- would have garnered the Leones, if accepted, close to $1

million in profit. Also supporting Yamamura’s investment use

theory is the fact that the property is included in the Leone

Family Trust, which Patricia Leone conceded at trial was created,

at least in part, for the purpose of “invest[ing] and

reinvest[ing] in real estate.” Because we have already

determined that investment use is a relevant consideration in a

takings analysis, see supra Section IV.B.1.a, we conclude here

that the record adduces some evidence that the property retained

a reasonable, economically viable use, specifically in the form

of an investment.

In addition to Yamamura’s testimony about investment

use, there is also some evidence to support the County’s

contention that the property had economically beneficial use in

the commercial context. For instance, on cross-examination,

Tsujimura conceded that the Leones could potentially conduct

44* * * F O R P U B L I C A T I O N I N W E S T ’ S H A W A I # I R E P O R T S A N D P A C I F I C R E P O R T E R * * *



## commercial activities on their property as a park.

Additionally, on cross-examination, Dr. Whitney similarly

conceded that point, and also conceded that he did not undertake

any research to determine whether commercial activity on the

Leones’ property was economically viable.

As such, there is evidence to support the jury’s

finding that the property retained some economically beneficial

use. Although the Leones were prevented from building a singlefamily residence on the property, evidence was presented showing

that the property had value as an investment property and could

potentially be used in the commercial context as well. See Penn

Cent., 438 U.S. at 130 (“[T]he submission that appellants may

establish a ‘taking’ simply by showing that they have been denied

the ability to exploit a property interest that they heretofore

had believed was available for development is quite simply

untenable.”).

In sum, we conclude that there is evidence to support

the jury’s verdict that the County’s regulations did not amount

to a taking of the Leones’ property. See Aluminum Shake Roofing,

110 Hawai # i at 251, 131 P.3d at 1233 (“A [motion for judgment as

a matter of law] may be granted only when . . . it can be said

there is no evidence to support a jury verdict in [the non-moving

party’s] favor.” (first brackets in original) (emphasis added)).

Accordingly, the circuit court did not err in denying the Leones’

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## motion for judgment as a matter of law. 1 3



## 4. The circuit court did not err in awarding costs to the County.

The Leones argue that the circuit court erred in

awarding costs to the County because the County is not the

“prevailing party” under Hawai # i Rules of Civil Procedure (HRCP)

Rule 54(d). This argument is contingent on this court’s decision

to vacate and remand this case on the grounds the Leones raised

in the previous sections. Because we affirm the circuit court’s

judgment, the Leones’ argument that the circuit court erred in

awarding costs to the County is unavailing.

C. The County’s Arguments on Cross-appeal

Because we rule in favor of the County, we may quickly

dispense with its cross-appeal. In its cross-appeal, the County

raises seven points for our review. The Leones argue that the

County’s cross-appeal is not permitted by law because the County

is not an aggrieved party.

“Generally, the requirements of standing are (1) the

person must first have been a party to the action; (2) the person

seeking modification of the order of judgment must have had

standing to oppose it in the trial court; and (3) such person

must be aggrieved by the ruling.” Waikiki Malia Hotel, Inc. v.

T h e L e o n e s a l s o c o n t e n d t h a t t h e y a r e e n t i t l e d t o a j u d g m e n t a s a 13

m a t t e r o f l a w o n t h e i r c i v i l r i g h t s a c t c l a i m

. B e c a u s e w e a f f i r m t h e c i r c u i t

c o u r t ’ s j u d g m e n t t h a t a t a k i n g d i d n o t o c c u r , w e n e e d n o t a d d r e s s t h e L e o n e s ’

c i v i l r i g h t s a r g u m e n t h e r e

.



## 46* * * F O R P U B L I C A T I O N I N W E S T ’ S H A W A I # I R E P O R T S A N D P A C I F I C R E P O R T E R * * *



## Kinkai Props. Ltd. P’ship, 75 Haw. 370, 393, 862 P.2d 1048, 1061

(1993) (emphasis added). This court defines an aggrieved party

in the civil context “as ‘one who is affected or prejudiced by

the appealable order.’” Id. (quoting Montalvo v. Chang, 64 Haw.

345, 351, 641 P.2d 1321, 1326 (1982)). Thus, under the general

rule, the County is not an aggrieved party and would not be able

to appeal its case.

However, as this court noted in City Exp., Inc. v.

Express Partners, 87 Hawai # i 466, 468 n.2, 959 P.2d 836, 838 n.2

(1998), “[w]hile the general rule is that a prevailing party may

not file a direct appeal, there is an exception for crossappeals.” This court specifically determined that “[i]f the

appellate court reverses the ruling of the lower court, then it

must address any relevant issues properly raised on crossappeal.” Id. In Express Partners, because we affirmed the

circuit court’s directed verdict in favor of the crossappellants, we concluded that the cross-appeal was moot. Id.

Similarly, because we affirm the circuit court’s

judgment in favor of the County, we find its cross-appeal moot.

V. CONCLUSION

For the foregoing reasons, we affirm the circuit

court’s: 1) June 1, 2015 judgment in favor of the County and

against the Leones, 2) August 5, 2015 order denying the Leones’

renewed motion for judgment as a matter of law or, in the

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## alternative, motion for a new trial, and 3) August 5, 2015 order

granting in part and denying in part the County’s motion for

costs.

Andrew V. Beaman, Leroy E. Colombe, and Daniel J. Cheng for plaintiffs-appellants/ cross-appellees

Patrick K. Wong, Brian A. Bilberry and Thomas Kolbe for defendants-appellees/ cross-appellants /s/ Mark E. Recktenwald

/s/ Paula A. Nakayama

/s/ Sabrina S. McKenna

/s/ Richard W. Pollack

/s/ Michael D. Wilson

48