Opinion ID: 2508213
Heading Depth: 2
Heading Rank: 1

Heading: The Circuit Court Abused Its Discretion In Awarding Postjudgment Interest Because Sovereign Immunity Bars Such An Award.

Text: On appeal, the ERS argues, inter alia, that the circuit court erred in entering the order granting fees and interest because sovereign immunity bars the award of postjudgment interest. The Retirees counter: (1) that HRS [ ] ง 661-8[, see supra note 9,] clearly waives sovereign immunity of the State ... for postjudgment interest; (2) that HRS[] ง 88-22 [(1993) [14] ] ... waiv[es] sovereign immunity against the ERS; (3) that the ERS admitted through [its] own action[ ] in paying the principal debt owed under the March 4, 1996 order and the March 11, 1996 order and judgment that said order and judgment were money judgments that are enforceable against the ERS and are not avoidable under the doctrine of sovereign immunity; (4) that Article XVI, Section 2 of the Hawai'i State Constitution provides that the relationship between the [Retirees] and the [ERS] ... shall be a contractual relationship, the accrued benefits of which shall not be diminished or impaired and therefore waives any sovereign immunity that the State ... and its instrumentalit[y,] the ERS, ... may have against liabilities of the [Retirees], all of whom are members of the ERS; (5) that the legislative history of the Hawai'i Constitution reflects that the framers envisioned that the [ERS] would be subject to legal action if the [ERS] reduced retirement benefits that were attributable to past services, betokening a clear waiver of sovereign immunity for legal actions seeking regress for a reduction in benefits that are attributable to past services; and (6) that insofar as the ERS has described its relationship with the Retirees as contractual, and because HRS ง 88-127 (1993) [15] provides that the benefits to be paid by the ERS are guaranteed by the State, the ERS has admitted that the State is liable for payments to the [Retirees], i.e., [that] the State is not immune as the sovereign from claims for payments due under HRS [ ] Chapter 88. We agree with the ERS. [I]t is well established that the State's liability is limited by its sovereign immunity, except where there has been a `clear relinquishment' of immunity and the State has consented to be sued. Taylor-Rice v. State, 105 Hawai'i 104, 109-10, 94 P.3d 659, 664-65 (2004) (citing Bush v. Watson, 81 Hawai'i 474, 481, 918 P.2d 1130, 1137, reconsideration denied, 82 Hawai'i 156, 920 P.2d 370 (1996), cert. denied, 519 U.S. 1149, 117 S.Ct. 1082, 137 L.Ed.2d 217 (1997) ([T]he sovereign state is immune from suit for money damages, except where there has been a `clear relinquishment' of immunity and the State has consented to be sued. (Citations omitted.))). Nevertheless, the State has clearly relinquished its immunity from suit as to `[a]ll claims against the State founded ... upon any contract, express or implied, with the State[.]' Fought & Co., Inc. v. Steel Engineering and Erection, Inc., 87 Hawai'i 37, 55, 951 P.2d 487, 505 (1998) (citing HRS ง 661-1, see supra note 8). In the present matter, the circuit court ruled that sovereign immunity did not bar postjudgment interest based on the following reasoning: The underlying decision dealt with the amount of money owed [to the R]etirees under the retirement statute. The Hawai'i State Constitution, Article 16, Section 2, defines the employee and [the] ERS relationship as contractual, which cannot be diminished. Thus, the action is in the nature of assumpsit, and postjudgment interest accrues pursuant to HRS Section 478-3[, see supra note 6]. The circuit court, however, failed to consider the full scope of the State's waiver of sovereign immunity. Taylor-Rice described the relevant legal principles as follows: In determining the extent to which the State has waived its immunity, this court has stated that federal immunity principles... are `relevant to our own principles of sovereign immunity.' Bush, 81 Hawai'i at 481, 918 P.2d at 1137 (citation omitted); see also Whittington v. State, 72 Haw. 77, 78, 806 P.2d 957, 957 (1991) (noting that the STLA was modeled on the preceding and parallel federal act); Figueroa v. State, 61 Haw. 369, 383-84, 604 P.2d 1198, 1206 (1979) (stating that the [STLA] was modeled after the Federal Tort Claims Act (citation omitted)). Thus, we turn to federal cases for guidance in construing the applicable statutes pertaining to the State's sovereign immunity. Federal courts have held that, when construing statutes regarding sovereign immunity, the following principles apply: (1)  a waiver of the Government's sovereign immunity will be strictly construed, in terms of its scope, in favor of the sovereign [,] Lane v. Pena, 518 U.S. 187, 192, 116 S.Ct. 2092, 135 L.Ed.2d 486 (1996) (citations omitted); (2) a waiver of sovereign immunity must be unequivocally expressed in statutory text,  id. (citation omitted); (3) [a] statute's legislative history cannot supply a waiver that does not appear clearly in any statutory text[,] id.; (4)  [i]t is not [a court's] right to extend the waiver of sovereign immunity more broadly tha[n] has been directed by the Congress [,] United States v. Shaw, 309 U.S. 495, 502, 60 S.Ct. 659, 84 L.Ed. 888 (1940); and (5) sovereign immunity is not to be waived by policy arguments [,] United States v. N.Y. Rayon Importing Co., 329 U.S. 654, 663, 67 S.Ct. 601, 91 L.Ed. 577 (1947). Specifically regarding interest on damages, federal courts have noted that  interest cannot be recovered in a suit against the Government in the absence of an express waiver of sovereign immunity from an award of interest.  United States v. Aisenberg, 358 F.3d 1327, 1345 (11th Cir.2004) (citations omitted); see also United States v. $277,000 U.S. Currency, 69 F.3d 1491, 1493 (9th Cir.1995). Moreover, [t]here can be no consent by implication or by use of ambiguous language. Nor can an intent on the part of the framers of a statute ... to permit the recovery of interest suffice where the intent is not translated into affirmative statutory ... terms. The consent necessary to waive the traditional immunity must be express, and it must be strictly construed. Spawn v. W. Bank-Westheimer, 989 F.2d 830, 834 (5th Cir.) (citation omitted), reh'g denied, 989 F.2d 830 (1993), cert. denied, 510 U.S. 1109, 114 S.Ct. 1048, 127 L.Ed.2d 371 (1994). Additionally, a general waiver of immunity to suit[ ] does not constitute an express waiver of immunity from an award of interest. Id. at 833 (citation omitted); see also Larson v. United States, 274 F.3d 643, 645 (1st Cir.2001). Taylor-Rice, 105 Hawai'i at 110, 94 P.3d at 665 (emphases added) (brackets in original). We also noted that  HRS ง 478-3 does not apply to the State,  Taylor-Rice, 105 Hawai'i at 111, 94 P.3d at 666 (emphasis added), quoting Littleton v. State, 6 Haw.App. 70, 708 P.2d 829, aff'd, 68 Haw. 220, 708 P.2d 824 (1985), with approval as follows: [ I]t is a general principle of law that statutory laws of general application are not applicable to the State unless the legislature in the enactment of such laws made them explicitly applicable to the State. [ Big Island Small Ranchers Ass'n v. State, 60 Haw. 228, 236, 588 P.2d 430, 436 (1978) (quoting A.C. Chock, Ltd. v. Kaneshiro, 51 Haw. 87, 89, 451 P.2d 809, 811 (1969)).] Here, HRS ง 478-[3] is a statute of general application and there is nothing making it explicitly applicable to the State. Taylor-Rice, 105 Hawai'i at 111, 94 P.3d at 666 (quoting Littleton, 6 Haw.App. at 73, 708 P.2d at 831-32) (some emphases added and some in original) (footnotes omitted). Thus, notwithstanding our holding in Fought that, pursuant to HRS ง 661-1, see supra note 8, the State has waived immunity to suits based on contract claims, HRS ง 478-3 does not expressly waive the State's immunity from postjudgment interest. See supra note 6. In fact, there is no statutory authority that expressly relinquishes the State's immunity from postjudgment interest with respect to claims for relief predicated upon HRS ง 661-1. By contrast, HRS ง 662-8 (1993) [16] expressly waives the State's sovereign immunity as to postjudgment interest on tort claims. Similarly, HRS ง 661-8 expressly waives the State's immunity from prejudgment interest on claims based upon a contract expressly stipulating for the payment of interest, or upon a refund of a payment into the `litigated claims fund' as provided by law. See supra note 9. Thus, insofar as the State has not expressly and statutorily waived its sovereign immunity from postjudgment interest in suits brought pursuant to HRS ง 661-1, we hold that the State is immune from awards of HRS ง 478-3 postjudgment interest in HRS ง 661-1 actions. See Taylor-Rice, 105 Hawai'i at 110, 94 P.3d at 665. Accordingly, the circuit court erred in ordering that [the] ERS pay statutory interest at the rate of 10% per annum, pursuant to HRS Section 478-3. See supra section I.B.