Opinion ID: 870682
Heading Depth: 2
Heading Rank: 1

Heading: Dispute over whether Wai`ola must obtain a special use permit

Text: Wai`ola is a new century charter school, chartered pursuant to HRS chapter 302A (Supp.1999). In July of 2003, Wai`ola acquired ownership of a 28 acre parcel of land formerly known as the Sunshine Farm property, located in a district designated for agricultural use by the Land Use Commission (LUC) of the State of Hawai`i. Wai`ola intended to maintain the property as a working farm and to use it as a campus for its school. When residents in the area learned of the acquisition, they began contacting various county officials to express concern. On July 21, 2003, Ala Loop received a letter from the County of Hawai`i Planning Department stating that: We have received your letter dated July 11, 2003 regarding the Waters of Life Charter School in escrow to purchase the old Sunshine Farm property on Ala Loop. The Planning Department has received numerous inquiries regarding the operation of charter schools within the State Land Use Agricultural District in regards to H.R.S. § 302A-1184, [6] which exempts charter schools from state laws, except those relating to health and safety, and a few other exceptions. Based on this law and a legal opinion received from the County Corporation Counsel, we are exempting charter schools from state land use laws not expressly related to health and safety. The major effect of this exemption is that charter schools located in the State Land Use Agricultural District do not have to obtain special permits. Normally, a school in the agricultural district would need a special permit with a process that requires notice to nearby landowners and a public hearing. Charter school facilities may need other approvals and permits, including those related to building, fire, and sanitation. The law exempting the charter schools is open to interpretation and the courts have the final say. You, as homeowners concerned about the traffic impacts this operation may have on your community, have the right to take this matter to court to have a judge decide if this charter school needs a special permit. On August 14, 2003, Ala Loop through counsel wrote to the County of Hawai`i Office of the Corporation Counsel (Corp. Counsel), inquiring whether the proposed operation of Waters of Life Charter School upon land zoned for agriculture and accessed through Ala Loop Road in the absence of a state or county land use regulatory process was proper. The letter also stated that Wai`ola purchased the property for the purpose of operating a charter school, and included background on the property as well as the reasons for Ala Loop's opposition to the operation of the charter school. Ala Loop requested that Corp. Counsel review HRS § 302A-1184 (Supp.2002) which exempts new century charter schools from all applicable state laws except, inter alia, health and safety requirements. The letter explained Ala Loop's disagreement with the County's interpretation of HRS § 302A-1184 as follows: As we understand, the County of Hawaii has previously interpreted certain statutes, particularly HRS Section 302A-1184, as exempting charter schools from applicable State land use district law to the effect that charter schools have been deemed exempt from obtaining special permits for the operation of charter schools on lands within the State agricultural district. Based upon our review of Section 302A-1184 and other applicable law, we find that: 1. There is no exemption from land use regulatory law that has been established for the purpose of protecting the public health and safety, and 2. There is no express exemption from or preemption of county land use laws and regulations. We therefore believe that the County's interpretation is contrary to the plain language and intent of Section 302A-1184 and that the failure to require the Waters of Life school to undergo the scrutiny of a special permit or other land use approval process will severely compromise the health, safety and welfare of the residents of the Ala Loop community, students and others who work at or visit the proposed school, and the public at large. For this reason, we ask that you review the current interpretation that the County has apparently adopted in light of the [above] information and to provide us with your position on the issue. In summary, Ala Loop argued that a special permit was required for the charter school, pursuant to HRS § 205-6 (2001), county zoning laws, and Land Use Commission (LUC) rules, because the special permit requirements specifically involve a review of health and safety issues before an otherwise impermissible use can be established on land within the state agricultural district. [Ala Loop's] attorneys concluded that Wai`ola was not exempt from compliance with State land use laws and county zoning laws, and that a use permit was required under county zoning laws in the absence of a special use permit. In a letter to the Hawai`i County Council dated October 9, 2003, Corp. Counsel opined that HRS § 302A-1184 exempts new century charter schools from obtaining a special permit under HRS § 205-6, [7] but that such schools are required to obtain a county use permit under Chapter 25 of the Hawai`i County Code 1983 (1995 ed.). In a letter dated October 22, 2003, the Attorney General (AG) of the State of Hawai`i advised Corp. Counsel that Although the Office of the Attorney General has not issued a formal opinion concerning [whether charter schools are exempt from the special permit requirement set forth in HRS chapter 205], our position is that new century charter schools are required to adhere to special permit requirements prescribed in H.R.S. chapter 205. .... Based upon legislative intent and statutory language, our interpretation of H.R.S. § 302A-1184 is that new century charter schools are exempted from state laws that relate to the regulation of education. However new century charter schools are subject to laws that apply to the general public and other state agencies and entities (i.e. criminal statutes, zoning regulations, etc.). It would be inconceivable to conclude that H.R.S. § 302A-1184 exempts new century charter schools from laws that the general public and other state agencies are required to adhere to. .... ... As to the issue of whether new century charter schools are required to adhere to county use permit requirements, we would initially defer to the Office of the Corporation Counsel, but note that in considering the phrase health and safety requirements and its applicability to county use permit requirements, you may, of course, consider the rationale of this letter. On November 14, 2003, the County filed a Complaint for Declaratory Relief against Ala Loop and Wai`ola. The complaint sought, inter alia, judicial confirmation that new century charter schools are exempt from obtaining a State special permit, but are required to obtain a County use permit, pursuant to Chapter 25 of the Hawai`i County Code[.] On November 20, 2003, Ala Loop filed an answer to the County's complaint, a counterclaim against the County, and a cross-claim against Wai`ola. Ala Loop's counterclaim and cross-claim included five counts. In Count I, Ala Loop requested declaratory relief determining that [Wai`ola] must obtain a special permit from the Planning Commission and the LUC pursuant to HRS Section 205-6 and the applicable rules and regulations of the Planning Commission and the Land Use Commission, prior to operating a charter school on [the property]. In Count II, Ala Loop requested temporary and permanent injunctive relief enjoining and restraining: A. The County of Hawaii, its agencies, officers, directors, and employees from issuing any building permits, occupancy permits, or similar permits that would encourage, allow, or permit [Wai`ola] to operate a charter school, or any components or activities connected with the charter school, on [the property] until and unless a special permit has been issued for [the property] and [Wai`ola] has complied with all applicable conditions and laws for the operation as may be established by the Planning Commission and LUC and as may be required by applicable State and County law. B. [Wai`ola], its agents, officers, directors, employees, teachers or representatives from conducting any classes or school related activities on [the property] until and unless a special permit has been issued for [the property] and [Wai`ola] has complied with applicable conditions for the operation as may be established by the Planning Commission and LUC. In Count III, Ala Loop alleged that it was entitled to damages, attorneys' fees, and costs from the County. In Count IV, Ala Loop sought damages, attorneys' fees, and costs from Wai`ola based on nuisance per se and HRS § 607-25. Count V sought a production of documents from the County as well as attorneys' fees and costs related to obtaining those records. [8] Ala Loop's cross-claim was served on November 21, 2003. On November 24, 2003 Wai`ola sought legal representation from the AG. In a letter dated January 21, 2004 to James Killebrew, Chair of the Wai`ola School Board, AG Mark Bennett stated that the Rules of Professional Conduct would preclude the Department of the Attorney General from representing Wai`ola because, although we have concluded that [HRS] § 302A-1184 does not exempt charter schools categorically from the State's land use laws, [i]t is my understanding that [Wai`ola] rejects this advice. The letter advised Wai`ola to apply (through this Department) to the Governor for a waiver under [HRS] § 28-8.3 [9] so that [Wai`ola] may contract directly with a private attorney to represent it in that litigation (at [Wai`ola's] own expense). On January 30, 2004, the parties stipulated to an extension for Wai`ola to file an answer or responsive pleading from January 15, 2004 to February 16, 2004. The parties subsequently agreed to another extension giving Wai`ola until February 25, 2004 to file an answer or responsive pleading. On February 25, 2004, Deputy Attorney General (DAG) Charleen Aina, appearing specially on behalf of Wai`ola, filed a motion requesting an extension of time for Wai`ola to answer or otherwise respond to the complaint and cross-claim. The motion explained that the AG would ordinarily appear on behalf of Wai`ola in this action, inasmuch as Wai`ola is a state agency, however, the AG's position regarding whether HRS § 302A-1184 exempts Wai`ola from obtaining a special permit under HRS chapter 205 was contrary to Wai`ola's position. The motion further explained that although Wai`ola had been informed that the office would not be able to represent it and that it should avail itself of the provisions of HRS § 28-8.3, Wai`ola disagreed that it must bear the cost of retaining legal services. As to the extension of time requested, DAG Aina reasoned that [b]ecause this motion will not be heard until March 18, 2004, and that interval may be long enough to work out the differences that remain, we respectfully request an extension of no more than 30 days after the motion is decided for counsel to answer or otherwise file a responsive pleading to the complaint and cross-claim. On March 10, 2004, Ala Loop filed a memorandum in opposition arguing that the [AG] and [Wai`ola] have had more than ample time to sort out any differences between them as to who should represent [Wai`ola] and the terms of such representation and that [a]ny further delays in the case being at issue may result in irreparable harm to the public, the interests of the residents of Ala Loop, and possibly the students of [Wai`ola]. After a March 18, 2004 hearing, [10] the circuit court entered an order on April 6, 2004 granting Wai`ola's request for an extension of time to file an answer or responsive pleading. The order provided that: 2. Defendant Wai`ola [has] until April 19, 2004 to file an answer or other responsive pleading to the complaint of the County of Hawaii, and the cross-complaint of Defendant-Cross Complainant Ala Loop Homeowners Association filed herein; and 3. If an answer or other responsive pleading is not timely filed, the County of Hawaii and the Ala Loop Homeowners Association may take appropriate action for the entry of default against Wai`ola. On April 19, 2004, Sandra Pechter Song, an attorney appearing specially for Wai`ola, filed a motion for stay of proceedings, or in the alternative to extend time to file responsive pleadings (motion for a stay). Wai`ola alleged in its motion that it has a clear and definite right to representation by Bennett. However, Bennett has refused to defend Wai`ola in the subject action, either through his office or through special counsel appointed by his office and that [Wai`ola] has no funds to hire private counsel; nor does it have the ability to represent itself in this case. Accordingly, Wai`ola requested that this proceeding be stayed to permit it to obtain an order requiring Bennett to provide it with legal representation. In an attached declaration, Song stated that she had agreed to file a petition for a writ of mandamus in the Supreme Court on behalf of Wai`ola, directing Bennett and his office to represent Wai`ola in the subject case. On April 29, 2004, Song filed a petition for writ of mandamus with this court. In the petition, Song argued that AG Bennett was obliged to provide legal representation to Wai`ola, and requested that this court either compel him to defend Wai`ola or pay for special counsel to represent Wai`ola. In an attached declaration, the director of Wai`ola stated the following: 4. Although Wai`ola receives State and Federal funds, those funds are barely sufficient to provide for the daily classroom needs. The State has never given any funds to Wai`ola that were specifically earmarked for a school building or other capital improvement. To my knowledge, all non-conversion charter schools are left to find facilities for their schools without any State assistance. .... 16. Mr. Bennett has repeatedly offered to obtain the consent of the governor to permit Wai`ola to hire private counsel to represent Wai`ola in Civil No. 03-1-0308. However, Wai`ola has no funds to retain a private attorney. On May 4, 2004, Ala Loop opposed Wai`ola's motion for a stay on several grounds including that [f]urther delay would be unreasonable because [i]nstead of retaining special counsel to seek mandamus, [Wai`ola] could as well have retained counsel to defend it in this proceeding or alternatively have its current special counsel provide representation in its defense, and also concurrently seek the mandamus action it has threatened. On May 4, 2004, Ala Loop filed a request for entry of default against Wai`ola because Wai`ola did not file an answer to Ala Loop's cross-claim. At a May 13, 2004 hearing, [11] the circuit court orally denied Wai`ola's motion for a stay. The court entered a written order denying the motion on June 29, 2004, stating that: in the event that a request for a hearing on any issue [related to the entry of default judgment] is requested by any party herein, [Wai`ola] should have the opportunity to retain counsel for the purpose of representation of the school in any such hearing, and the Court considers a 45-day period of time after May 13, 2004 to be a reasonable period of time for [Wai`ola] to retain counsel for that purpose, should it choose to do so. Default was entered against Wai`ola on May 24, 2004. On June 2, 2004, the AG sent a letter to Wai`ola outlining the terms of its offer of representation, which included the stipulation that in defending Wai`ola against the default and in other aspects of the representation, the Department of the Attorney General will proceed without asserting the defense that `State Land Use laws do not apply to charter schools.' On June 2, 2004, Wai`ola accepted the AG's offer of representation. On June 10, 2004, this court issued an order denying Wai`ola's petition for writ of mandamus. On June 22, 2004, Wai`ola, now represented by the AG, filed an answer to Ala Loop's cross-claim. On July 6, 2004, Wai`ola filed a motion to set aside entry of default. Wai`ola argued that the entry of default should be set aside because the court may not have jurisdiction over the claims that Ala Loop asserts against Wai`ola, Ala Loop has not proven all of its claims, Wai`ola has made continuous efforts to secure counsel, Wai`ola's defenses are meritorious, and defaults are generally disfavored. On July 14, 2004, Ala Loop filed a memorandum in opposition. On August 11, 2004, the circuit court entered an order denying the motion, [12] finding and concluding that: 1. [Wai`ola] made a conscious choice not [to] be represented by private legal counsel and therefore, failed to answer Ala Loop's cross-claim in a timely manner. Therefore, it cannot be said that [Wai`ola] was guilty only of excusable neglect. 2. If it is assumed that [Wai`ola] is a State agency, Rule 55(e), Hawaii Rules of Civil Procedure (HRCP), does not prohibit a default judgment against a State agency. HRCP Rule 55(e) allows for a default judgment against a State agency if the claimant State agency establishes a claim or right to relief by evidence satisfactory to the court. Therefore, where there is an entry of default, a claimant may obtain a default judgment against a State agency, if there is a hearing in which the claimant presents sufficient evidence establishing a claim or right to relief. 10 Moore's Federal Practice § 55.3[2][a](Matthew Bender 3rd ed.) 3. [Wai`ola] has failed to satisfy the necessary criteria for setting aside an entry of default, and therefore, its Motion to Set Aside Entry of Default Dated May 24, 2004, Filed Herein July 6, 2004, should be denied. On October 20, 2004, Ala Loop filed a Motion for Entry of Default Judgment and Permanent Injunction Against Defendant Wai`ola (motion for entry of default judgment). The motion was supported, inter alia, by the record, pleadings, attached declarations of neighbors, excerpts of depositions of Wai`ola officials, and correspondence with county officials. The circuit court held a hearing on December 2, 2004. With respect to the declaratory relief sought by Ala Loop, the circuit court stated the following: The subject land abutting Ala Loop Road is classified as agricultural. Consistent with the State Deputy Attorney General's position set forth in that letter dated October 22nd, 2003, charter schools are required to comply with chapter 205 of the Hawaii Revised Statutes. As such, the subject real property may be used only for the purposes permitted under HRS Section 205-4 ... unless a special permit is granted pursuant to HRS Section 205-6. Wai`ola has indicated that it will not undertake construction on the land until a special permit is secured. However this does not mean that the matter is not ripe for adjudication at this juncture. Wai`ola initially indicated that it did not intend to obtain a special permit and now states that it will. The Court's concern is that unless there's a Court order in place, Wai`ola is free to change its mind and generate anothercreate another generation of litigation. Also there is the issue of whether Wai`ola's ongoing activities are permitted under HRS Section 205-4 ..., and we are here on a motion for entry of default judgment. So, the Court will order as follows. One, declare that Wai`ola is subject to the restrictions of Chapter 205 of the Hawaii Revised Statutes. Two, order that Wai`ola not construct facilities, educational facilities, on the real property unless it first receives a special permit. And, third, will order that Wai`ola not violate Chapter 205, HRS, with its ongoing activities. With respect to the injunctive relief sought by Ala Loop, the circuit court stated that no instruction or educational meetings are to occur on the premises[,] but that farming activities and a once-a-week field trip per student would be acceptable. On February 4, 2005, the circuit court entered Findings of Fact, Conclusions of Law and Judgment which stated in pertinent part: I. Findings of Fact. .... 12. Since the acquisition of the Subject Property, Wai`ola has used the Subject Property for the following purposes: (a) operating its administrative offices; (b) storing its office equipment, files, computers and books; (c) holding instructional and laboratory classes; and (d) the growing of crops and associated activities, such as testing, conducting experiments and making observations. 13. Wai`ola students have been bussed to the Subject Property. 14. It is Wai`ola's intention to use the Subject Property for school activities and associated facilities, to include a school building, an athletic field, athletic building, amphitheater and smaller structures for classes. 15. If Wai`ola is to use the Subject Property as a school, certain improvements relating to health and safety are necessary or appropriate: to include: (a) an expansion of the Ala Loop, (b) an increase in water availability to fight fires, and (c) an individual waste water system. 16. Members of [Ala Loop], as neighbors of the Subject Property, may suffer injury if the Subject Property is used as a school. 17. Initially, Wai`ola declined to obtain a special permit even though it understood from the Attorney General, State of Hawai`i, pursuant to a letter dated October 22, 2003, that it was the Attorney General's Office's opinion that Wai`ola, even though it was a new century charter school, was subject to the requirements of Chapter 205, HRS. 18. While Wai`ola now asserts that it intends to obtain a special permit, it seeks to use the Subject Property for uses other than permitted under Chapter 205, HRS, while its application for a special permit is pending. II. Conclusions of Law. 1. [Ala Loop] has standing to assert its claims regarding Wai`ola's use of the Subject Property. In particular, it has suffered an actual or threatened injury as a result of Wai`ola's conduct, the injury is fairly traceable to the conduct of Wai`ola and a favorable decision would likely provide relief for [Ala Loop's] injury. 2. Since the Subject Property is located in an agricultural use district, its use is limited by HRS § 205-4.5. Schools and school activities are not permitted under HRS § 205-4.5. 3. HRS § 302A-1184 does not apply to so as [sic] to exempt a new century charter school from complying with the requirements and limitations of Chapter 205, HRS. 4. Under HRS § 205-6, an entity may obtain [a] special permit to make unusual and reasonable uses of agricultural land which are not otherwise permitted under HRS § 205-4.5. 5. Since the acquisition of the Subject Property, Wai`ola has used the Subject Property in violation of Chapter 205, HRS, at least in the following ways: (a) operating its administrative offices; (b) storing its office equipment, files, computers and books; and (c) holding instructional and laboratory classes. 6. There is a reasonable apprehension that Wai`ola may use the Subject Property in violation of the requirements and limitations of Chapter 205, HRS, unless it is enjoined from doing so. 7. [Ala Loop] is entitled to a permanent injunction against Wai`ola enjoining Wai`ola from violating the requirements of Chapter 205, HRS. 8. There is an actual controversy regarding the applicability of Chapter 205, HRS, to Wai`ola. [Ala Loop] is entitled to a declaratory judgment against Wai`ola. 9. [Ala Loop] has provided evidence satisfactory to the Court that is entitled to relief as required by Rule 55(e), HRCP. III. Judgment. Based upon the foregoing, it is hereby ordered, adjudged and decreed as follows: 1. Notwithstanding HRS § 302A-1184, Wai`ola is subject to the limitations and requirements of Chapter 205, HRS. Accordingly, Wai`ola may not conduct school activities on the Subject Property which would otherwise violate Chapter 205, HRS, unless Wai`ola first receives a special permit under HRS 205-6. 2. Accordingly, Wai`ola, and its agents, representatives, faculty and students, are permanently enjoined from undertaking school activities on the Subject Property which would otherwise violate Chapter 205, HRS, unless Wai`ola first receives a special permit under HRS § 205-6 which permits the otherwise unpermitted activities. The prohibited school activities on the Subject Property, include, but are not limited to: a. Operating administrative offices; b. Storing office equipment, files, computers and books; c. Holding instructional and laboratory classes; d. Holding parent-teacher conferences and staff meetings; and e. The construction of educational facilities. However, Wai`ola, and its agents, representatives, faculty and students are specifically allowed use of the Subject Property as follows: a. A student may be bussed no more than once a week to the Subject Property during school hours for agricultural activities; and b. Permitted agricultural activities by students using the Subject Property include the cultivation of crops, the making of observations of crops, the undertaking of individual tests or experiments designed to improve the cultivation of crops and the receipt of individual advice from faculty members regarding the cultivation of crops or the [] individual tests or experiments. Final judgment was entered on March 4, 2005. Wai`ola filed a notice of appeal on March 4, 2005. On July 29, 2005, this court issued an order dismissing the appeal because the judgment did not comply with Jenkins v. Cades Schutte Fleming & Wright, 76 Hawai`i 115, 119-120, 869 P.2d 1334, 1338-39 (1994). On August 23, 2005, Ala Loop filed a motion for an award of attorney's fees and costs against Wai`ola. A hearing was held on the motion on September 13, 2005. On October 28, 2005, the circuit court entered an order granting Ala Loop all of its costs, but denying Ala Loop its attorney's fees. A First Amended Final Judgment was entered on December 12, 2005. The First Amended Final Judgment entered judgment in favor of Ala Loop and against Wai`ola on Counts I and II. As to Count IV, the circuit court dismissed with prejudice Ala Loop's cross-claim against Wai`ola alleging damages on the basis of nuisance per se, and entered judgment in favor of Wai`ola on Ala Loop's claim for attorney's fees, and against Wai`ola for costs in the sum of $3,878.64. [13] Wai`ola timely filed a Notice of Appeal on January 10, 2006. Ala Loop filed a Notice of Cross-Appeal on January 24, 2006.